Chapter 3:Philosophical Ethics

& Business

Team 3:Angela Van Strander

Matt Vital

The Justification of Human Rights

By: Denis G. Arnold

Human Rights

• Moral rights that apply to all persons in all nations, regardless of whether the nation in which a person resides acknowledge and protects those rights

• Human rights are inalienable

Philosophical Questions

• #1. How can human rights be justified?– Are they a Western

concept?

• #2. What specific human rights exists?

• #3. How do human rights differ from other rights?– Such as legal rights.

Activity #1

• Reflection– Group yourselves and for a couple

minutes think about the 3 previous questions & try to answer them.

Conclusion

• Have a sense of personhood– “Metaphysical” rather than biological

• Capable of acting in a manner consistent with one’s considered preferences

Caux Principles of Business

The Caux Round Table (CRT) is an international network of experienced business leaders, who

work with business and political leaders to design the intellectual strategies, management tools and practices to strengthen private enterprise and public governance to improve our global

community.http://www.cauxroundtable.org/

Motives

• Improve economic and social changes

• Seek to begin a process that identifies shared values, reconciles differing values, and develop a share perspective on business behavior acceptable to and honored by all.

2 Basic Ethical Ideals:

– Kyosei• Japanese concept meaning “living and

working together for the common good”; thus enabling cooperation and mutual prosperity to coexist with healthy and fair competition

– Human dignity• sacredness or value of each person as an

end—not simply as a means to the fulfillment of others’ purposes or even majority prescription

Section I: Preamble/Introduction

• Business can be a powerful agent of positive social change.– They offer the following principles as a

foundation for dialogue and action by business leasers in search of responsibility.

– Necessary for moral values in business decision-making

Section II: General Principles

• The Responsibilities of Business: Beyond Stakeholders toward Stakeholders

• The Economic and Social Impact of Business Toward Innovation, Justice and World Community

• Business Behavior: Beyond the Letter of Law toward a Spirit of Trust

Section II: General Principles (cont’d)

• Respect for Rules• Support for Multilateral Trade• Respect for the Environment• Avoidance of Illicit Operations

Section III: Stakeholder Principles

• Customers• Employees• Owners/Investors• Suppliers• Competitors• Communities

Do CEOs Get Paid Too Much?

By: Jeffrey Moriarty

BusinessWeek estimated that, in 2003, CEOs of 365 largest US corporations were paid on average $8 million, 301 times as

much as factory workers.

CEO packages includes:– Salary, bonus, and restricted stock & stock

option grants– And increased by 340% from 1991-2001,

while workers’ paychecks increased by only 36%.

What is wrong with this?

3 Views of Justice in Wages

• In general, what makes a wage just?

• Agreement View• Desert View• Utility View

Agreement View

• Based on arm’s length negotiation between informed CEOs and owners

• Meet 2 requirements:– Independent of the

CEO– Must be informed

• Problems:– Mainly occurs on

company’s owners– No guarantee that

shareholders would choose independent and informed representatives in elections

– Shareholders do not elect directors in a meaningful way

Agreement View (continued)

• Board of Directors may be informed, but they may not act independently

• 3 factors that compromise director’s independence from CEOs:– Gratitude– Self-interest– Absence of a reason

directors have to favor shareholders

Agreement View (continued)

• While admitting that these influences are problematic, directors are usually assisted by compensation consultants that can make accurate and bias-free assessments of a CEO’s worth– Problem: Sometimes they don’t always

consider all the consultant’s advice

Desert View

• Company assumes that a CEO should get the wage deserved which is determined by contributions to the firm and the proper measure of contribution is firm performance

Problem #1:Identifying the standard for deservingness

• Contribution to the firm

• Amount of ability, skill, or training the job requires

• Difficulty, stress, dangerousness, risk, and unpleasantness

• Degree of responsibility/importance

Problem #2:How does the job fare?

• After determining the deserving factor, decide on what wage is deserved for the CEO

• Based on:– Physical effort– Degrees of

responsibility– Contributions to the

firm– Formal education

and years of experience

Desert View (cont’d)

• While admitting that these influences are problematic, there is still justification of current disparities between CEOs and worker pay.

• If employee pay cannot be increased, then this view demands that CEO pay is reduced drastically.

Utility View

• Wages are not rewards, but as incentives for future work

• Purpose:– To maximize firm

wealth by attracting, retaining, and motivating talented workers

• Motivate CEOs toward bonuses

• Wealth created by CEO must be weighed against the cost of their services

Utility View (cont’d)Attraction & Retention• Reasons why

employees get paid more based on their:– Effort– Skill– Difficulty

Motivation• Pay motivates CEO to

work harder– No guarantee extra

headwork will translate into extra revenue

• Compensation packages make stock prices rise because stock is include within their compensation package

Utility View (cont’d)

• Pay of a CEO may be an effective motivational tool, but not likely cost effective

Conclusion

• How to Reduce CEO Pay– CEO’s should be

removed from the director election process

– Directors should be required to make meaningful investments in firms

• Overall, this should make you think about the moral dimensions of wages.

Activity #2

Bingo word choices:Caux Principles of Business

KyoseiHuman Dignity

Section 1: PreambleSection 2: General Principles (7)

Section 3: Stakeholder Principles (6)Do CEOs Get Paid Too Much?

BusinessWeekCEO packages

Agreement View (6)Desert View (5)Utility View (7)

How to Reduce CEO Pay