Ethical Business Decision Making Williams 4e Chapter 04

Ethical and Unethical Workplace Behavior
Ethics The set of moral principles or values that defines right and wrong for a person or group.
Chapter 4 Copyright 2007 by South-Western, a division of Thomson Learning. All rights reserved
Ethics and the Nature of Management Jobs

Unethical Managerial Behavior
Authority and Power Handling Information Influencing the Behavior of Others Setting Goals
1
Ethics and the Nature of Management Jobs

Managers can encourage ethical behaviors by
using resources for company business only handling information confidentially not influencing others to engage in unethical behavior not creating policies that reward employees for unethical behavior setting reasonable goals 1
Workplace Deviance
Workplace Deviance
Unethical behavior that violates organizational norms about right and wrong
Two dimensions
Degree of deviance Target of deviant behavior
2
Types of Workplace Deviance

Organizational
Production Deviance
Property Deviance
Minor
Serious
Political Deviance
Interpersonal
Personal Aggression
2
Chapter 4 Copyright 2007 by South-Western, a division of Thomson Learning. All rights reserved Adapted from Exhibit 4.1
Production Deviance

Leaving early Taking excessive breaks Intentionally working slow Wasting resources
2
Property Deviance

Sabotaging equipment Accepting kickbacks Lying about hours worked Stealing from company
2
Political Deviance

Showing favoritism Gossiping about coworkers Blaming coworkers Competing nonbeneficially
2
Personal Aggression

Sexual harassment Verbal abuse Stealing from coworkers Endangering coworkers
2
U.S. Sentencing Commission Guidelines

Companies can be prosecuted and punished even if management didnt know about the unethical behavior.
3
10
Who, What, and Why?

Nearly all businesses are covered Punishes a number of offenses Encourages businesses to be proactive
3.1
11
Partial List of Offenses

Invasion of privacy Price fixing Fraud Customs violations Antitrust violations Civil rights violations Theft Money laundering Conflicts of interest Embezzlement Dealing in stolen goods Copyright infringements Extortion and more
3.1
12
Compliance Program Steps
Steps in determining fine size

1. determine the base fine 2. compute a culpability score 3. multiply the base fine by the culpability score Smaller fines for companies that are proactive
3.2
13
Compliance Program Steps

1. Establish standards and procedures. 2. Assign upper-level managers to be in charge.
Revise if required
3. Delegate decision-making authority only to ethical employees. 4. Encourage employees to report violations. 5. Train employees on standards and procedures. 6. Enforce standards consistently and fairly. 7. Improve program after violations.
3.2
14
Influences on Ethical Decision Making

Ethical Intensity of Decision Ethical Answers Depend on
Moral Development of Manager
Ethical Principles Used
4
15
Ethical Intensity Depends on

Magnitude of consequences Social consensus Probability of effect Temporal immediacy Proximity of effect Concentration of effect 4.1
16
Moral Development
Kohlbergs Stages of Moral Development
Preconventional
Conventional Societal Expectations
Postconventional Internalized Principles
Selfish
4.2
17
Stages of Moral Development

Preconventional Conventional Postconventional
1. Punishment and 3. Good boy, Obedience nice girl 2. Instrumental Exchange 4. Law and order
5. Social contract
6. Universal principle
4.2
18
Principles of Ethical Decision Making

Long-term self-interest Personal virtue Religious injunctions Government requirements Utilitarian benefits Individual rights
4.3
Distributive justice
19

Principle of long-term self-interest
Never take any action not in your organizations long-term self-interest.
4.3
20

Principle of Personal Virtue
Never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers or on TV.
4.3
21

Principle of Religious Injunctions
Never take any action that is not kind and that does not build a sense of community.
4.3
22

Principle of Government Requirements
Never take any action that violates the law, for the law represents the minimal moral standard.
4.3
23

Principle of Utilitarian Benefit
Never take any action that does not result in greater good for society.
4.3
24

Principle of Individual Rights
Never take any action that infringes on others agreed-upon rights.
4.3
25

Principle of Distributive Justice
Never take any action that harms the least among us: the poor, the uneducated, the unemployed.
4.3
26
Practical Steps to Ethical Decision Making

Select and hire ethical employees
Establish a Code of Ethics
Train employees to make ethical decisions
Create an ethical climate
5
27

Select and hire ethical employees
If you found a wallet containing $50, would you return it with the money?

Overt Integrity Tests Personality-Based Integrity Tests
5.1
28
Doing the Right Thing

If You Cheat in College, Will You Cheat in the Workplace?
College students who cheat are likely to cheat again. 70 percent of students dont see cheating as a problem. People who cheat and cheat again see their behavior as normal. 60 percent of people who cheat their employers dont feel guilty for doing so.
29
What Really Works
Studies show that Integrity Tests Help reduce workplace deviance Help hire workers who are better performers
However they have a smaller effect on assessing theft.
30
Ethics Question

What is?
What are your personal ethics? What are your organizations ethics? What are the ethics of your industry? What are societys ethics? What are global ethics?
31
Ethics Question

What ought to be?
How ought we treat our aging employees? How safe ought we make this product? How clean an environment should we aim for? How should we treat long-term employees when downsizing?
32
Ethics Question

How do we get from What is to What ought to be? What is our Motivation?
33

Establish a Code of Ethics

Communicate code of ethics to both inside and outside the company Develop ethical standards and procedures specific to business
5.2
Web Link
http://www.nortelnetworks.com
34
Ethics Training
Ethics Training

Develops employee awareness of ethics Achieves credibility with employees Teaches a practical model of ethical decision making
5.3
Web Link
http://ethics.bellsouth.com Ethics Scenarios Game

35
A Basic Model of Ethical Decision Making

1. Identify the problem 2. Identify the constituents 3. Diagnose the situation 4. Analyze your options 5. Make your choice 6. Act 5.3
36
Ethical Climate
Establishing an Ethical Climate
Managers:
1. 2. 3. 4.
Act ethically Are active in company ethics programs Report potential ethics violations Punish those who violate the code of ethics
5.4
Web Link
http://www.whistleblowers.org
37
What Is Social Responsibility?

Social Responsibility A businesss obligation to pursue policies make decisions take actions that benefit society
38
To Whom Are Organizations Socially Responsible?
Shareholder Model
Maximize Profits
Stakeholder Model
Satisfy Interests of Multiple Stakeholders
6
39
Shareholder Model
Pros Cons
Firm maximizes shareholder wealth and satisfaction The company stock increases in value
Organizations cannot act effectively as moral agents for shareholders Time, money, and attention diverted to social causes undermine market efficiency
6
40
Stakeholder Model
Primary Stakeholders:
Shareholders Employees Customers Suppliers Governments Local Communities
Secondary Stakeholders:
Media Special Interest Groups Trade Associations
6
41
Organizations Social Responsibilities

Serve a social role Abide by principles of right and wrong Obey laws and regulations Be profitable
7
Discretionary
Ethical
Legal Economic
$
42
Responses to Demands for Social Responsibility

Accommodative
Be progressive Legal Approach
Reactive
Fight all the way
Defensive
Do only what is required Public Relations Approach
Proactive
Lead the industry Problem Solving
Withdrawal
Bargaining
DO NOTHING
DO MUCH
8
43
Social Responsibility and Economic Performance
Can cost a company

Realities of Social Responsibility
Sometimes it does pay Does not guarantee profitability
9
44

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Ethical and Unethical Workplace Behavior

Ethics and the Nature of Management Jobs

Ethics and the Nature of Management Jobs

Types of Workplace Deviance

U.S. Sentencing Commission Guidelines

Who, What, and Why?

Partial List of Offenses

Compliance Program Steps

Steps in determining fine size

Compliance Program Steps

Influences on Ethical Decision Making

Moral Development of Manager

Ethical Principles Used

Ethical Intensity Depends on

Conventional Societal Expectations

Postconventional Internalized Principles

Stages of Moral Development

Principles of Ethical Decision Making

Principles of Ethical Decision Making

Never take any action not in your organizations long-term self-interest.

Principles of Ethical Decision Making

Principles of Ethical Decision Making

Principles of Ethical Decision Making

Principles of Ethical Decision Making

Principles of Ethical Decision Making

Never take any action that infringes on others agreed-upon rights.

Principles of Ethical Decision Making

Practical Steps to Ethical Decision Making

Establish a Code of Ethics

Train employees to make ethical decisions

Create an ethical climate

Practical Steps to Ethical Decision Making

Overt Integrity Tests Personality-Based Integrity Tests

Doing the Right Thing

What Really Works

However they have a smaller effect on assessing theft.

Practical Steps to Ethical Decision Making

http://ethics.bellsouth.com Ethics Scenarios Game

A Basic Model of Ethical Decision Making

What Is Social Responsibility?

To Whom Are Organizations Socially Responsible?

Satisfy Interests of Multiple Stakeholders

Organizations Social Responsibilities

Responses to Demands for Social Responsibility

Social Responsibility and Economic Performance

Can cost a company

Sometimes it does pay Does not guarantee profitability

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