ITS 321: Legal and Ethical Issues in Information Technology

Lesson 1 - Overview of Ethics

Objectives:

This lesson introduces the student to basic concepts and terminology about ethics, morality, and legality. Objectives important to this lesson:

  1. Defining ethics and related terms
  2. Reasons for business ethics
  3. Legal incentives to require company ethics (laws and penalties in the United States)
  4. Decision making
  5. Four classic types of ethics
  6. Information technology ethics
Concepts:

Chapter 1 begins with a story, as all chapters in this book do. It introduces some ideas about people behaving unethically, getting caught, and being sentenced to public service and a fine. The outcome of their actions is left for discussion, which will be more meaningful once we discuss the content of the first chapter.

The text moves on to discuss some related terms. Unfortunately, their definitions are related as well, so it is harder to differentiate between them than it might be. Let's consider a few:

  • morality - conventions about right and wrong that are the consensus of some social group
  • morals - personal beliefs about what is right and what is wrong; this may vary greatly from one person to another
  • virtues - habits that are or lead to acceptable behavior
  • vices - habits that are or lead to unacceptable behavior
  • ethics - beliefs about right and wrong, shared by a group (social, professional, political, etc.), that describe expected behaviors
  • laws - formal statements about prohibited behavior and the penalties for engaging in them; typically issued by a law making body of a government
  • integrity - behaving consistently with one's personal morals, beliefs, principles

The text discusses some differences between morals (personal beliefs and values) and laws (rules of a governing body). Laws may be broken and lawbreakers may be punished. Morals may be ignored, but there is typically no social judgment. The text moves on to discuss a middle ground, ethics that have been accepted by or imposed on businesses.

When a large, publicly known company or celebrity breaks a code of ethics, it is often newsworthy and the effect of the news stories can affect the entity. The text lists five reasons for a business to have and follow a code of ethics:

  1. To gain good will from the public
  2. To provide rules for consistent operation of the business
  3. To create and follow good business practices
  4. To avoid legal action, or to protect corporate officers from legal action
  5. To avoid bad publicity

Good Will

The text lists several companies that contribute money and time to charitable causes. It explains that this creates a good image for the company in the minds of customers and stakeholders. (The text defines a stakeholder as someone who stands to gain or lose from outcomes, such as the company stock price changing.) The theory is that a good public image improves the bottom line, and a bad public image hurts it.

Consistent Operation

Any organization has problems with consistency. No two employees will see their jobs the same way, and differences in attitude, perception, and performance will occur. Ideally, the business managers should want each entity that interacts with the company (stakeholders, customers, suppliers, partners, etc.) to have the same good experience regardless of who they interact with next. To this end, some standard values may be promoted by the organization, which may standardize the experience.

  • Set principles for the organization to be honest and show integrity
  • Set standards for ethical conduct
  • To have respect for everyone you interact with should be a goal
  • Be the best at what the company needs (note this is focused on the company's needs, not your own)
  • Value diversity
  • Use facts and company principles to make decisions

Good Business Practices

The text lists business practices that lead to less trouble, more business, and repeat business. It should be obvious that these are good ideas, since they lead to good outcomes, but some businesses will be pressured to cut corners, to provide a poorer product, or to accept risk of discovery for the gain of making an unsafe or lesser product that brings a large return. Once this sort of thing is brought to light, it becomes hard for a customer or other stakeholder to go back to the illusion that the company cares about doing the right thing. The fact is that the company does not care: the people in it have to do so.

Some good business practices recommended in the text:

  • produce safe, effective products (example: Qantas)
  • provide excellent service (example: Nordstrom)
  • maintain strong employee relations (article: CNN, Best Companies 2011)

Protection from Legal Action

The text defines the legal term respondeat superior as the principle that an employer can be held responsible for the actions of an employee. The text implies that the principle goes back to 1909, but the link provided here indicates it goes back to the seventeenth century. The principle establishes a reason for an employer to be aware of what employees do. Note the qualifier in the text on page 11, that a company with an established ethics program can make a case that they tried to get the employee to act ethically, and should not be held as responsible for unethical actions as they might have been. Does this mean that a company could benefit from an ethics program whether they use it or not?

Avoiding Unfavorable Publicity

This relates to the first concept of good will from the public, since stories about bad actions lead to bad perceptions and a reduction of good will. So should the company make sure there is nothing bad to report, or should it control the media so that nothing bad is reported?

Improving Corporate Ethics

The text lists several several attributes that might be found in a successful ethics program. Several of them may be particularly hard to attain.

  • Employees seek advice about ethics issues.
    This would be a good indicator that ethics are important to the work environment.
  • Employees feel prepared to handle ethical issues.
    This would indicate that there is relevant training for employees and that they remember it.
  • Employees are rewarded for ethical behavior.
    This leads me to ask how we know it occurs. Shall the employee nominate their own behavior? Shall supervisors be encouraged to write up memos about ethical choices made by employees?
  • Employees are not rewarded for unethical behavior.
    The text says this differently, but that is the meaning that I see. Again, shall someone monitor behavior at all times to judge its nature?
  • Employees feel positively about the company.
    This may be the hardest one in times of bad profits, layoffs, cutbacks, and general fear about jobs.

Code of Ethics

Skip ahead to page 13 to the discussion of developing a code of ethics. The text mentions some aspects of the Sarbanes-Oxley Act of 2002 (US Pub.L. 107-204, 116 Stat. 745, enacted July 30, 2002) that relate to the subject. Section 404 of the act requires that corporate statements filed with the SEC must be accurate and provides penalties up to $5,000,000 and 20 years in prison for corporate officers who file false corporate reports. Section 406 requires that public companies disclose whether they have a code of ethics and if their code of ethics allows senior management to ignore it (by a waiver).

Social Audit

The text discusses social audits, performed by some companies, that are reports on how the company is meeting ethical and social responsibility goals, and what its plans are for the coming year. This kind of document would give the company an opportunity for disclosure of its efforts to correct faults, and its successful efforts to do some good.

Requiring Ethics Training and Evaluating Ethical Decisions

As noted above, employees who have received ethics training are more likely to act in compliance with the code of ethics in question. This is logical, in that it is hard to comply with something you have not been told about or trained on. The text also discusses including ethical decision making in an employee's performance evaluations. This may be difficult for those employees who don't make that kind of decision on a regular basis.

Implementing these changes in a company can also reduce the company's liability for unethical actions of employees.

Decision Making Flowchart

Page 17 begins a discussion of a decision making process that can include ethical evaluation of the decision.

  • State the problem - if you can't define a problem, you are unlikely to resolve it
  • Identify alternatives - brainstorming by yourself or in groups
  • Evaluate alternatives and choose one - evaluate based on a ethical standard (four appear in the chapter)
  • Implement your choice - depending on the problem, you may need to get others to buy in to the decision
  • Evaluate the results - check the situation again, to see if things are actually better or worse
  • Start over if unsuccesful - eventually, you start again anyway because things change

The ethical evaluation of the decision is addressed in the third step, and the author provides a decription of four types of ethics that could be used to choose an alternative.

  • Virtue ethics - the right choice would be the one that fits the virtues that you and your community believe in
  • Utilitaritan ethics - the right choice would be the one that produces the best result for everyone affected by the decision; this approach means that some may not benefit as much as others, but the best result for as many as possible would be the right one
  • Fairness - the right choice would treat all people affected by the decision the same, favoring no one and no group
  • Common good - the right choice would be the one with the best outcome for "the common good"; it would produce the best result for society in general, not just the people immediately concerned

Which is the better system? All and none, depending on who stands to benefit from the decision. Sometimes they lead to different choices.

Ethics in Information Technology

The text closes the chapter with a short list of concerns. We will discuss them in class. Be prepared to explain why you believe each is or is not an issue to be concerned about. After the list, the author presents two reasons for writing this text. Consider whether his reasons apply to your situation.