CH 4. Ethics

CH 4. Ethics

1. DEFINE - THE SET OF MORAL PRINCIPLES OR VALUES THAT DEFINES RIGHT AND WRONG FOR A PERSON OR GROUP

2. Michael Gould, Bloomingdale's CEO says the fundamental basis of leadership is trust.

3. Types of Workplace Deviance

   • PRODUCTION
     • HURTS THE QUALITY AND QUANTITY OF WORK PRODUCED
   • PROPERTY
     • AIMS AT ORGANIZATIONS PROPERTY OR PRODUCTS
   • POLITICAL
     • USING ONE'S INFLUENCE TO HARM OTHERS IN COMPANY
   • PERSONAL
     • HOSTILE OR AGGRESSIVE BEHAVIOR TOWARDS OTHERS
   • ETHICAL BEHAVIOR

4. ETHICAL DECISION MAKING

   • DEFINE - THE DEGREE OF CONCERN PEOPLE HAVE ABOUT AN ETHICAL ISSUE
   • ETHICAL INTENSITY OF THE DECISION
     • MAGNITUDE OF CONSEQUENCES IS THE TOTAL HARM OR BENEFIT DERIVED FROM AN ETHICAL DECISION
     • SOCIAL CONSENSUS IS AGREEMENT ON WHETHER BEHAVIOR IS BAD OR GOOD
     • PROBABILITY OF EFFECT IS THE CHANCE THAT SOMETHING WILL HAPPEN THAT RESULTS IN HARM TO OTHERS
     • TEMPORAL IMMEDIACY IS THE TIME BETWEEN AN ACT AND THE CONSEQUENCES THE ACT PRODUCE
     • PROXIMITY OF EFFECT WHERE THE SOCIAL PSYCHOLOGICAL , CULTURAL, OR PHYSICAL DISTANCE BETWEEN A A DECISION MAKER AND THOSE AFFECTED BY HIS OR HER DECISION
     • MANAGERIAL DECISIONS DIFFER IN THEIR ETHICAL INTENSITY
   • MORAL DEVELOPMENT
     • PRECONVENTIONAL LEVEL
     • CONVENTIONAL LEVEL
     • POST CONVENTIONAL LEVEL
     • KOHLBERG'S STAGES OF MORAL DEVELOPMENT
   • PRINCIPLES OF ETHICAL DECISION MAKING
     • LONG TERM SELF INTEREST
     • RELIGIOUS INJUCTIONS
     • GOVERNMENT REQUIREMENTS
     • INDIVIDUAL RIGHTS
     • PERSONAL VIRTUE
     • DISTRIBUTIVE JUSTICE
     • UTILITARIAN BENEFITS

5. CEO OF VOLKSWAGEN GROUP, MATTHIAS MUELLER CALLED FOR THE COMPANY TO LEARN FROM ITS MISTAKES FOLLOWING THE DEVASTATING FINANCIAL IMPACT OF AN EMISSION TEST CHEATING SCANDAL

6. PRACTICAL STEPS TO ETHICAL DECISION MAKING

   • SELECTING AND HIRING ETHICAL EMPLOYEES
     • USING OVERT INTEGRITY TESTS AND PERSONALITY BASED INTEGRITY TEST
   • CODE OF ETHICS
     • DEVELOP A "DO UNTO OTHERS AS YOU HAVE OTHERS DO UNTO YOU" MANAGEMENT
   • ETHICS TRAINING
     • DEVELOPING EMPLOYEES AWARENESS OF ETHICS
       • HELPING EMPLOYEES RECOGNIZE WHICH ISSUES ARE ETHICAL AND THEN AVOIDING RATIONALIZING UNETHICAL BEHAVIOR BY THINKING
     • HOWARD WINKLER, A PROJECT MANAGER FOR ETHICS AND COMPLIANCE AT SOUTHERN, CO. HAD A CONVICTED FELON COME IN TO TALK ABOUT HOW SMALL ETHICAL COMPROMISES EVENTUALLY LEAD TO BIGGER UNETHICAL BEHAVIOR, SUCH AS FRAUD.
     • TRAIN EMPLOYEES HOW TO ACHIEVE CREDIBILITY
     • INTUITIVE RESEARCH AND TECHNOLOGY CORP. CO-FOUNDER AND PRESIDENT, HAROLD BREWER, WHO IS CONSIDERED THE "ETHICS CHAMPION" FOR HIS COMPANY SAYS EVERY NEW EMPLOYEE ATTENDS A SESSION CALLED "LET'S TALK ETHICS" WHERE THEY EXPLAIN HOW EMPLOYEES' DECISIONS IMPACT THE COMPANY, SITUATIONS THEY WILL LIKELY ENCOUNTER WITH OUTSIDE ORGANIZATIONS THEY DO BUSINESS WITH, AND THEN HOW TO RESPOND.
     • TEACH A BASIC MODEL OF ETHICAL TRAINING
       • IDENTIFY THE PROBLEM
       • IDENTIFY THE CONSTITUENTS
       • DIAGNOSE THE SITUATION
       • ANALYZE YOUR OPTIONS
       • MAKE YOUR CHOICE
       • ACT
   • ETHICAL CLIMATE
     • MAKING SURE MANAGERS AT ETHICALLY THEMSELVES
     • MANAGERS NEED TO BE ACTIVE IN AND COMMITTED TO THE COMPANY ETHICS PROGRAM
       • BEING CONSISTENT WHEN TALKING ABOUT ETHICS AND BACKING UP THAT TALK BY PARTICIPATING IN THEIR COMPANIES' ETHICS PROGRAMS SENDS CLEAR MESSAGES THAT ETHICS MATTER
     • WHISTLE BLOWING
       • DEFINE - REPORTING OTHER ETHICS VIOLATIONS TO MANAGEMENT OR LEGAL AUTHORITIES
     • MANAGERS SHOULD FAIRLY AND CONSISTENTLY PUNISH WHOSE WHO VIOLATE THE COMPANY'S CODE OF ETHICS

7. SOCIAL RESPONSIBILITY OF AN ORGANIZATION

   • DEFINE - A BUSINESS'S OBLIGATION TO PURSUE POLICIES, MAKE DECISIONS, AND TAKE ACTIONS THAT BENEFIT SOCIETY
   • TO WHOM ARE ORGANIZATIONS SOCIALLY RESPONSIBLE
     • SHAREHOLDERS MODEL
       • Organization’s overriding goal should be profit maximization for the benefit of shareholders
       • MILTON FRIEDMAN (NOBEL PRIZE -WINNING ECONOMIST) ONCE SAID, "THE ONLY SOCIAL RESPONSIBILITY THAT ORGANIZATIONS HAVE IS TO SATISFY THEIR OWNERS, THAT IS, COMPANY SHAREHOLDERS"
     • STAKEHOLDERS MODEL
       • Management’s important responsibility—firm's long-term survival, can be achieved by satisfying the interests of multiple corporate stakeholders
   • STAKEHOLDERS
     • DEFINE - PERSONS OR GROUPS WITH A STAKE, OR LEGITIMATE INTEREST, IN A COMPANY'S ACTIONS
   • COMPANIES CAN BEST BENEFIT THEIR STAKEHOLDERS BY FULFILLING THEIR ECONOMIC, LEGAL, ETHICAL, AND DISCRETIONARY RESPONSIBILITIES.
     • ECONOMIC RESPONSIBILITIES
       • TO MAKE A PROFIT BY PRODUCING A VALUED PRODUCT OR SERVICE
         • 16-29% OF CEO'S OF LARGE COMPANIES ARE FIRED EACH YEAR
     • ETHICAL RESPONSIBILTIES
       • TO OBIDE BY ACCEPTING PRINCIPLES OF RIGHT AND WRONG WHEN CONDUCTING ITS BUSINESS
     • LEGAL RESPONSIBILITIES
       • TO OBEY SOCIETY'S LAWS AND REGULATIONS
     • DISCRETIONARY RESPONSIBILITIES
       • A SOCIAL ROLE THAT A COMPANY FULFILLS BEYOND IT'S ECONOMIC, LEGAL, AND ETHICAL RESPONSIBILITIES
   • SOCIAL RESPONSIVENESS
     • A COMPANY'S STRATEGY TO RESPOND TO STAKEHOLDERS' ECONOMIC, LEGAL, ETHICAL, OR DISCRETIONARY EXPECTATIONS CONCERNING SOCIAL RESPONSIBILITY
   • STRATEGIES OF COMPANIES
     • REACTIVE STRATEGY
       • Company does less than society expects
     • DEFENSIVE STRATEGY
       • Company admits responsibility for a problem but does the least required to meet societal expectations
     • ACCOMODATIVE STRATEGY
       • Company accepts responsibility for a problem and does all that society expects to solve that problem
     • PROACTIVE STRATEGY
       • Company anticipates a problem before it occurs and does more than society expect
   • SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE
     • THERE IS NO TRADE-OFF BETWEEN BEING SOCIALLY RESPONSIBLE AND ECONOMIC PERFORMANCE
     • Relationship becomes stronger when a company has a strong reputation for social responsibility
     • No guarantee that socially responsible companies will be profitable