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◆ Essence
of Ethics
◆ Morally Questionable Acts
◆ Dynamic Relationships that Affect
Ethical Decision Making
◆ Factors Affecting Ethical Decisions
◆ Norms and Counter-norms
◆ Managing Ethics
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TEXACO - racial discrimination $176 M
MERCURY FINANCE - overstating profit $ 2.2 B
ADM - price fixing $100 M
GENETECH - tying personal loan
to business deal CEO loses job
BANKER’S TRUST - deliberately misled or
deceived customers Damaged
image
W.R. GRACE - sexual harassment CEO loses job
BAUSCH & LOMB - manipulation of
accounting data earnings fell 54%
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1. Responsibility to address corporate 58% execs
issues (58% Execs)
2. Corp. leaders’ responsibility is to 52% execs
the greatest good (52% Execs; 35% MBAs
35% MBAs)
3. Switch brands (76% consumers) 76% consumers
4. Skepticism about ‘cause’ related
marketing (58% consumers; 21% 58% consumers
today) 21% today
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1. Social responsibility is important (26%
1. 26% investors
investors)
2. Company image (84% employees)
2. 84% employees
3. Innovative workplace practices
associated with productivity
4. Employee ownership leads to
productivity (60% companies)
4. 60% companies
5. Business has too much power (71 %)
5. 71%
6. Corporate role is more than to make a
profit (95%) 6. 95%
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Profit at Any Cost
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◆ Codes do not produce ethical
behavior.
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◆ Get support by CEO for support of key
stakeholders
◆ Get stakeholders participation
◆ Expand words/ phrases into expectations
◆ Establish feedback mechanism
◆ Assure implementation/ monitoring of results
◆ Reward employees who perform and deliver
on values
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◆ Non-job failures:
– Cheating on your expense accounts
– Stealing supplies
– Sandbagging
◆ Job failures:
– Superficial performance appraisal
– Not confronting expense account
– Cheaters
– Falsely praising poor performers
– Denial of training opportunities
– Undermine management
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◆ Job distortions:
– Bribery
– Manipulation of suppliers/buyers
– Differential pricing
– Falsifying information
◆ Job “creation”:
– Bending policies for certain customers
– Bending policies for salespeople
– Caught violating rules
– Arranging for promotions
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FACTORS AFFECTING
ETHICAL DECISIONS
UNCERTAINTY
OF
INPUTS POWER
CENTRALITY
OF
CONTROL OF
WORKFLOW
ETHICAL
BEHAVIOR
CONTINGENCIES
SUBSTITUTABILITY
OF
COPING
ACTIVITIES
ROUTINIZATION
PREVENTIVE
ROUTINIZATION
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A General Framework of the
Ethical Decision-Making Process
CHARACTERISTICS OF
THE DECISION MAKER
SIGNIFICANT
INFLUENCES
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Individual Characteristics of the
Decision Maker that Influence the
Ethical Decision-Making Process
CHARACTERISTICS OF
THE DECISION MAKER
ETHICAL
DECISION OUTCOMES
SITUATION
SIGNIFICANT INFLUENCES
ETHICAL
DECISION OUTCOMES
SITUATION
SIGNIFICANT INFLUENCES
* Performance * Feedback
* Rewards * Promotions
* Satisfaction * Learning
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Significant Influences on the Ethical
Decision-Making Process
CHARACTERISTICS OF
THE DECISION MAKER
* Opportunity
* Ethical decision history
* Moral intensity of the situation
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Elements of the Ethical Characteristics of
Decision Makers
Significant
Influences
Information acquired
PERCEIVED ETHICAL Information processed
PROBLEM
ORGANIZATION B
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NORMS COUNTERNORMS
◆ LT relationships with customers ◆ Sandbagging
◆ Objectivity
◆ Openness ◆ Emotional Involvement
◆ Candor ◆ Secrecy
◆ Honesty ◆ Stonewalling
◆ Flexibility/Adaptability ◆ Lying
◆ Cost-effectiveness ◆ Dogmatism
◆ Taking responsibility ◆ Padding expenses
◆ Customer Service ◆ Passing the buck
◆ Develop younger salespeople ◆ Sales force
◆ Team effort ◆ Look out for “Number 1”
◆ Consensus ◆ Individual goals first
◆ Loyalty ◆ Taking unfair credit
◆ Criticize the company
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▼ The OLD Ethic Favors ▼ The NEW Ethic Favors
✦ Work ✦ Leisure
✦ Savings ✦ Debt
✦ Responsibility ✦ Rights
✦ Competition ✦ Protection
✦ Sex roles ✦ Unisexism
✦ Sacrifice ✦ Self-interest
✦ Equality - Inequality ✦ Equality
✦ Wealth accumulation ✦ Wealth redistribution
✦ Absolution ✦ Situationalism
✦ Risk assumption ✦ Risk aversion
✦ Efficiency/Productivity ✦ Quality of life
✦ Thrift/Investment ✦ Consumerism
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◆ Diagnose the reward system
◆ Analyze rules and procedures
◆ Training and education
◆ Develop investigative structures
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◆ Leaders exhibit moral courage by being
willing to make personal sacrifices
◆ Leaders should not become to preoccupied
with pleasing constituents
◆ Leaders focus on needs of others - they have
a commitment to serve
◆ Business as usual may be evidence of a
leadership failure
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CEO’S Set the Tone for How to Handle
Questions of Ethics
(Hymowitz)
Hymowitz
◆ Determination and a winning personality
equal success
◆ Employees rarely complain
◆ Employees take their cues from
management
◆ Top management actions are more
important than codes of ethics
◆ Employees wrestle with the short-run vs.
long-run
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THE ESSENCE OF ETHICS I
(Article by Williams)
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THE ESSENCE OF ETHICS II
(Article by Williams)
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THE ESSENCE OF ETHICS II
(Article by Williams)
✼ encourages...…
✼ open and honest communication
✼ continual learning
✼ personal development
✼ respect for people
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Background
Slides
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Company Threats to Ethical Behavior
▼A firm that…
✦ routinely ignores or violates internal codes of ethics
✦ always looks for simple solutions to ethical problems and is satisfied
with “quick fixes”
✦ unwilling to take an ethical stand when there is financial cost to the
decision
✦ creates an internal environment that either encourages unethical
behavior or discourages ethical behavior
✦ usually sends its ethical problems to the legal department
✦ looks at ethics solely as a public relations tool to enhance its image
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Company Threats to Ethical Behavior
▼A firm that…
✦ treats its employees differently from its customers
✦ is unfair or arbitrary in its performance appraisal standards
✦ has no procedures or policies for handling ethical problems
✦ provides no mechanisms for internal whistle-blowing
✦ lacks clear lines of communication within the organization
✦ is sensitive only to the needs of shareholders
✦ encourages its employees to leave their personal ethical values
at the door
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FIVE WARNING SIGNS OF ETHICAL COLLAPSE
(Jennings article)
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Do College Honor Codes Make Moral
Sense on Today’s Campus?
(Brownfield)
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Can we arrive at consistency in global
ethics standards?
– Companies are identified by their corruption
– Who will want to partner with such
companies?
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PR vs. Performance
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Chapter #5 - Conducting Business
Ethically and Responsible
◆ Companies must be
committed to ethics
✱ Codes ◆ Company
✱ Ethics Programs
Responsibilities
✱ Ethics Orientation
✱ Customers
◆ Social ✱ Employees
Responsibility ✱ Investors
✱ Not the same as ✱ Others
ethics
✱ Related to ethics
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Chapter #5 - Conducting Business
Ethically and Responsible
◆ Can businesses that conduct
themselves in an ethical way be
profitable?
◆ How can ethical behavior be
encouraged?
◆ What do short-term and long-term
thinking have to do with ethics?
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You Will be Responsible for
this Material on the TEST
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Alternative Courses of Action
Available in Ethical Situations
ACTIONS ADVANTAGES DISADVANTAGES
◆NOT THINK Avoids the danger of The risk of going in the
ABOUT IT getting into a zero-sum wrong direction
game with colleagues
◆PROTEST
Individual feels good Organization disregards
about making effort to protest & punishes
stop unethical protester
behavior
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Alternative Courses of Action
Available in Ethical Situations
ACTIONS ADVANTAGES DISADVANTAGES
◆CONSCIENTIOUSLY
Makes clear statement Few organizations
OBJECT
that one person feels recognize individual
that action is unethical rights to object
Person feels good May hurt chances for
about self for making rewards and
effort to stop unethical advancement
behavior
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SELECTED PRINCIPLES OF
ETHICAL CONDUCT
◆ KANT’S CATEGORICAL IMPERATIVE: Act in a way that you
believe is right and just for any other person in a similar
situation.
◆ CARR’S CONVENTIONALIST ETHIC: Bluff and take advantage
of all legal opportunities and widespread practices and
customs
◆ THE DISCLOSURE RULE: Ask how it would feel to see the
thinking and details of the decision disclosed to a wide
audience
◆ THE GOLDEN RULE: Look at the problem from the position of
another party affected by the decision and try to determine
what response the other person would expect as the most
virtuous
SELECTED PRINCIPLES OF
ETHICAL CONDUCT
◆ THE HEDONISTIC ETHIC: Do whatever you find to be in
your own self-interest
◆ MOORE’S INTUITION ETHIC: Go with your “gut” feeling or
what you understand to be right in a given situation
◆ SMITH’S MARKET ETHIC: Take selfish actions and be
motivated by personal gains in business dealings
◆ MACHIAVELLI’S MEANS-END ETHIC: Ask whether some
overall good justifies any moral transgression
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Models of Personal and
Organizational Moral Development
PERSONAL MORAL ORGANIZATIONAL MORAL
DEVELOPMENT
PERSONAL MORAL DEVELOPMENT
ORGANIZATIONAL MORAL
DEVELOPMENT DEVELOPMENT
5. Tolerance for rational 5. Democratic participation -
dissent and acceptance of Participation in decision-making
majority rule become reliance on majority rule become
organizational moral standards.
primary ethical concerns Participative management
becomes institutionalized
6. What is right and good is Organizational integrity-
a matter of individual Justice and individual rights
conscience and are the moral ideals. Balanced
responsibly chosen judgment between competing
commitment. Morality is interests shapes organizational
based on principled character which, in turn,
determines the validity of the
personal convictions behavior
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