Ethical Development: Stages & Training

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  • 0:04 Introduction to…
  • 1:19 Stages of Ethical Development
  • 2:46 Ethics Training
  • 4:59 Lesson Summary
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Lesson Transcript
Instructor: Rodney Michael

Rodney has taught university accounting classes and has a doctorate in accounting.

In this lesson, we'll define the different stages of ethical development and look at specific examples. We'll then explore the ways that businesses promote ethical behavior and provide ethics training for their employees.

Introduction to Ethical Development

A thought-provoking definition for ethical behavior is found in Ernest Hemingway's statement that 'what is moral is what you feel good after, and what is immoral is what you feel bad after.' The problem with this approach is that the same thing that makes one person feel good, can make another person feel bad. For example, one person might enjoy ignoring traffic laws for things like speeding, turning at corners, right-of ways, and stop signs. It makes them feel adventurous and powerful. Another person might find it illogical and dangerous to intentionally violate traffic laws. Which is the most ethical person?

Hemingway's definition would imply that they are both ethical, as long as they are comfortable with their actions. However, a business organization does not have the luxury of such an individual-based approach to ethical behavior. Since a firm can be legally and financially responsible for the actions of employees, the survival of the organization as a whole depends upon the behavior of the individuals within the firm. Therefore, as a form of self-defense, most contemporary businesses provide ethics training for their employees. Let's explore the nature of this training.

Stages of Ethical Development

To provide a context for our discussion, let's look at Lawrence Kohlberg's concept of ethical development. In general, he lists three stages. In the first stage of ethical development, a person's behavior is driven by simplistic concerns, such as fear of punishment or a quick appraisal of the immediate benefits to be obtained. In the second stage of ethical development, a person's behavior is constrained by their interpretation of social norms and their desire to be perceived as a good person. This can be described as a follow-the-rules approach. The third stage of ethical development is more complex. Behavior tends to be concerned with the relationship of the individual to society as a whole, rather than local or institutional values. A person's actions reflect universal principles and consideration of, and respect for, different perspectives.

Simply put, these are like the stages of a person's life. A child's behavior is based upon their immediate needs and their desire to avoid being punished for inappropriate behavior. Later, as we begin to mature, we want to 'fit in.' At this stage of our lives, we value social conformity and peer acceptance. Finally, as a person reaches maturity, they become comfortable with their personal value structure and are less dependent upon social conformity. Next, let's look at how Kohlberg's viewpoint relates to the legal and financial environment of a business organization.

Ethics Training

Let's be blunt: business owners and managers do not want to be sued, fined, or arrested. If you are legally responsible for the actions of someone else, it is in your best interest to make a real effort to guide their behavior in the right direction. But, according to Kohlberg, the best guidance for an individual should be based upon their stage of ethical development.

Sometimes the threat of job loss is an adequate deterrent. In other situations, a carefully constructed organizational culture based upon peer approval for appropriate behavior is more effective. The potential issues and corrective actions within a firm are very diverse. For example, common inappropriate behaviors within a business include insider trading, sexual harassment, bullying, discrimination, conflicts of interest, accepting improper gifts, and theft of company assets.

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