Fig 1.1: Bust of Socrates, one of the founder fathers of the study of ethics

According to the Greek philosopher Socrates (see Fig 0.1) writing 2500 years ago, “Our true happiness is promoted by doing what is right.” More recently, a number of writers on management have suggested something closer to “The success of organisations depends on them behaving ethically”

The financial scandals of the 2000s, and the related near collapse of the financial system in 2008, suggest that there may be truth in that second statement

For example, think about the effect that reputation has on customers. Would you choose to buy products made by young children working in sweatshops? This issue was highlighted in campaigns against Nike in the 1990s and resulted in a major change in policy by the company. Would you choose to eat in a restaurant that employed migrant workers on levels of pay below the legal minimum rates? Would you buy a car from a second-hand dealer who had been caught selling dangerously unsafe vehicles

It seems clear that doing what is right and ethical will have benefits for the organisation, its employees, customers, suppliers and the wider community

Unfortunately, it is not always easy to decide on what we mean by ‘the right action’. For example, think of the company that produces excessive amounts of waste in its factory. Closing the factory will harm the employees and shareholders, and will reduce the amount of money available in the local community. Keeping it open without reducing waste will damage the environment for local people and for future generations. Closure of the factory during the replacement of old equipment may create financial problems and lead to closure of the company. Which of the options is the most ethically correct

The first section of this module looks at this question in some detail. You’ll see that philosophers over centuries have developed three broad approaches to ethical questions. Should we aim to create the greatest long-term benefit, even if this results in short-term damage to some people? How important are the rights of individual people? How do we balance ‘internal’ rights (the rights of the organisation and the people within it) against the ‘external’ rights (the rights of people such as suppliers, customers and local residents). And finally, how can we balance the benefits of a policy against the damage that it may cause

The second section then looks at a technique for identifying every individual or group that may be affected by the organisation. The technique is known as stakeholder analysis, and you’ll see how it can be used to identify the relevant people and groups, assess the influence and power that they have, and suggest how managers should approach each group

Section three goes on to look at the effects of legislation and regulation. It highlights that legislation generally applies to four aspects of the organisation. Firstly, the law tries to ensure that everyone in the workplace is treated fairly, without discrimination. Secondly, that everyone in the workplace should be employed in a safe and healthy workplace and thirdly that the organisation should act to minimise the damage that it does to the environment

The final section describes the concept of Corporate Social Responsibility. This emphasises that organisation should act ethically in three