Kinh tế học - Chapter 8: Personal and organizational ethics

© 2015 Cengage Learning1Chapter 8Personal and Organizational Ethics© 2015 Cengage Learning2Learning OutcomesUnderstand the different levels at which business ethics may be addressed.Differentiate between consequence-based and duty-based principles of ethics.Enumerate and discuss principles of personal ethical decision making and ethical tests for screening ethical decisions.Identify the factors affecting an organization’s ethical culture and provide examples.Describe and explain actions, strategies, or “best practices” to improve an organization’s ethical climate.Identify and describe concepts from “behavior ethics” that affect ethical decision making and behavior in organizations. © 2015 Cengage Learning3Chapter OutlineEthics Issues Arise at Different LevelsPersonal and Managerial EthicsManaging Organizational EthicsBest Practices for Improving an Organization’s Ethical Culture Behavior Ethics – Striving Towards a Deeper UnderstandingMoral Decisions, Moral Managers, and Moral OrganizationsSummary© 2015 Cengage Learning4Personal and Organizational EthicsManagers encounter day-to-day ethical challenges in such areas as:conflicts of interest sexual harassment customer dealingspressure to compromise on personal standards, and moreMany managers have no training in ethics or ethical decision making.Ethics is vital to business success.© 2015 Cengage Learning5Ethics Issues Arise at Different LevelsPersonal level - Situations faced in our personal lives outside the context of our employment.Organizational level -Workplace situations faced by managers and employees.Industry or profession level -A manager or organization might experience business ethics issues at the industry or professional level.Societal and global levels -Managers acting in concert through their companies and industries can bring about constructive changes.© 2015 Cengage Learning6Personal and Managerial EthicsThree major approaches to ethical decision making - Conventional Approach -Discussed in chapter 7Principles Approach -Managers desire to make decisions based on a more solid foundation than is provided by the conventional approach to ethics.A principle of business ethics is an ethical concept, guideline, or rule that assists you in taking the ethical course.Ethical Tests Approach -Discussed later in this chapter.© 2015 Cengage Learning7Types of Ethical Principles Teleological theories -Focuses on consequences or results of an action.Deontological theories -Focuses on duties, without regard to consequences.Aretaic theories -Focuses on the virtue of an action.© 2015 Cengage Learning8 Principles Approach to EthicsMajor principles of ethics -UtilitarianismKant’s Categorical ImperativePrinciple of RightsPrinciple of JusticeEthical Due ProcessRawl’s Principle of JusticeEthics of careVirtue ethicsServant leadershipThe Golden Rule© 2015 Cengage Learning9Ethical Tests Approach10© 2015 Cengage LearningManaging Organizational EthicsEthical decision-making is at the heart of business ethics.One must sharpen one’s decision-making skills to avoid amoral thinking, and achieve moral management.A manager must see the organization's ethical climate as part of its corporate culture. An ethical climate is shaped through actions taken, policies established, and examples set. © 2015 Cengage Learning11Factors Affecting the Morality of Managers and Employees12Society’s Moral ClimateBusiness’s Moral ClimateIndustry’s Moral ClimateIndividualOne’s PersonalSituationSuperiorsPoliciesPeersOrganization’s Moral Climate© 2015 Cengage LearningFactors Affecting the Organization’s Moral ClimateBehavior of superiors – the number one influence on moral climateBehavior of one’s peers – the second influence; people do pay attention to what their peers in the firm are doingIndustry or professional ethical practices – ranked in the upper half; these context factors are influentialPersonal financial need – ranked last© 2015 Cengage Learning13Improving the Organization’s Ethical CultureThe emphasis is on creating an ethical organizational culture or climate, one in which ethical behavior, values and policies are displayed, promoted and rewarded. Compliance vs. Ethics Orientation- Ethics thinking is principles based; compliance thinking is rule-bound and legalistic. A compliance orientation can undermine ethical thinking.Compliance can squeeze out ethics.Managers many not consider tougher issues that a more ethics-focused approach might require.© 2015 Cengage Learning14Best Practices for Improving an Organization’s Ethical Culture Three key elements that must exist if an ethical organizational culture is to be developed and sustained: 1. The continuous presence of ethical leadership reflected by the board of directors, senior executives and managers. 2. The existence of a set of core ethical values infused throughout the organization by way of policies, processes and practices; and 3. A formal ethics program which includes a code of ethics, ethics training and an ethics officer.© 2015 Cengage Learning15Improving Ethical Culture16© 2015 Cengage LearningTop Management Leadership(Moral Management) (1 of 2)This premise cannot be overstated:The moral tone of an organization is set by top management. In a poll of communication professionals, more than half believed that top management is an organization’s conscience. Managers and employees look to their bosses at the highest levels for their cues as to what practices and policies are acceptable. © 2015 Cengage Learning17Top Management Leadership(Moral Management) (2 of 2)Weak Ethical Leadership – led an employee to embezzle $20,000 over a 15 year period, explaining that she thought it was ok because her boss used firm employees for personal needs, took money from the firm’s petty cash box, raided the soft drink machine, and used company stamps. Her boss said it was all true, and that she should not be dealt with too harshly. Strong Ethical Leadership – When a batch of tubes in production failed a critical safety test, leaving in question the 10,000 already manufactured, the VP, without hesitation, said “scrap them.” That act set the tone for the corporation for years, because everyone present knew of situations in which faulty products had been shipped under pressure of time and budget. © 2015 Cengage Learning18Two Pillars of Leadership19TraitsMoral PersonMoral ManagerEthical LeadershipBehaviorsDecisionMakingRoleModelingEthicsCommunicationEffective Rewards and Discipline© 2015 Cengage LearningEffective Communication of Ethical MessagesRequires - Written and verbal communicationNon-verbal communicationCandor – forthright, sincere and honestFidelity – be faithful to detail, accurate, avoid deception or exaggerationConfidentiality – exercise care in deciding what information to disclose to others. Trust can be shattered if confidences are breached. © 2015 Cengage Learning20Ethics Programs and Ethics OfficersEthics programs typically include:Written standards of conductEthics trainingMechanisms to seek ethics advice or informationMethods for reporting misconduct anonymouslyDisciplinary measures for employees who violate ethical standardsInclusion of ethical conduct in the evaluation of employee performance© 2015 Cengage Learning21Setting Realistic Objectives -Managers must be keenly sensitive to the possibility of unintentionally creating situations in which others may perceive a need or incentive to cut corners or do the wrong thing. Unrealistic expectations are the primary driver of employees perceiving excessive pressure to achieve goals. Example: A marketing manager set a sales goal of a 20% increase for the next year when a 10% increase was all that could be realistically and honestly expected, even with outstanding performance. A subordinate might believe he or she should go to any lengths to achieve the 20% goal. © 2015 Cengage Learning22Ethical Decision-Making Processes23© 2015 Cengage LearningEthics Check - Ethics Check - Is it legal?Is it balanced?How will it make me feel about myself?© 2015 Cengage Learning24Ethics Quick Test -Is the action legal?Does it comply with our values?If you do it, will you feel bad?How will it look in the newspaper?If you know it’s wrong, don’t do it.If you’re not sure, ask.Keep asking until you get an answer.© 2015 Cengage Learning25Codes of Conduct -A way of establishing standards of behavior and communicating them to managers and employees.The single most important element of an ethics and compliance program.Virtually all major corporations have codes of conduct today.Many have worldwide codes or standards.Some codes of conduct are designed around stakeholders, others on conduct. © 2015 Cengage Learning26Content of Codes of Conduct -Employment practicesEmployee, client, and vendor informationPublic information and communicationsConflicts of interestRelationships with vendorsEnvironmental issuesEthical management practicesPolitical involvement© 2015 Cengage Learning27Disciplining Violators of Ethics Standards -Management must discipline violators of accepted ethical norms and standards.One reason many question the sincerity of business with regard to codes of conduct is that many business are unwilling to discipline violators, implicitly approving their behavior.Before disciplining anyone, the firm needs to have communicated its ethics standards clearly and convincingly. © 2015 Cengage Learning28Ethics Hotlines and Whistle Blowing -An effective ethical culture is contingent on employees having (with support of top management) a mechanism for reporting violations. 78% of companies have anonymous reporting systems (Hotlines).Among firms subject to Sarbanes-Oxley, 91% have such systems. Hotlines are the most common way to report corporate fraud.Can be telephone, web, or email-based.© 2015 Cengage Learning29Business Ethics Training -© 2015 Cengage Learning30Goals of Training are to learn:the fundamentals of business ethicsto solve ethical dilemmasto identify causes of unethical behaviorabout common managerial ethical issueswhistle-blowing criteria and risksto develop a code of ethics and execute an internal ethical auditEthics Audits and Risk Assessments -Ethics Audits -Intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs. Sustainability Audit - Helps to identify sustainability issues within an organization.Fraud Risk Assessment -Review processes that identify and monitor conditions that may pertain to the company’s exposure to compliance/misconduct risk and to review methods for dealing with concerns.© 2015 Cengage Learning31Corporate TransparencyCorporate Transparency -A quality, characteristic, or state in which activities, processes, practices, and decisions that take place in companies become open or visible to the outside world.The degree to which an organization:Provides public access to information.Accepts responsibility for its actions.Makes decisions more openly.Establishes incentives for leaders to uphold standards.© 2015 Cengage Learning32Board of Director Leadership and Oversight - Leadership and oversight of ethical initiatives by boards has not been a given.The Sarbanes-Oxley ActCompanies are required to protect whistle-blowers without fear of retaliation.It is a crime to alter, destroy, conceal, cover up, or falsify documents to prevent their use in a federal government lawsuit.© 2015 Cengage Learning33Behavioral Ethics – Striving Towards a Deeper Understanding (1 of 3)Behavioral Ethics helps us to understand many of the behavioral processes that are taking place:Bounded ethicality – occurs when managers and employees find that behaving ethically is difficult because of various organizational pressures. Conformity bias – the tendency people have to take their cues for ethical behavior from their peers, rather than exercising their own, independent judgment. Overconfidence bias –people may be more confident of their moral character than they have reason to be. © 2015 Cengage Learning34Behavioral Ethics – Striving Towards a Deeper Understanding (2 of 3)Self-serving bias – people may process information in a way that supports their preexisting beliefs & self-interest.Framing – ethical judgments are affected by how an issue is posed; if posed as an “ethical” issue, they make more ethical decisions. Incrementalism –a predisposition toward the “slippery slope.” Role morality – a tendency to use different ethical standards for different roles in life. Moral equilibrium – a tendency for people to keep an ethical scoreboard in their heads, and use this information when making future decisions, balancing decisions, and avoiding a moral “surplus”.© 2015 Cengage Learning35Behavioral Ethics – Striving Towards a Deeper Understanding (3 of 3)Ill-conceived goals – poorly set goals that encourage negative behaviors.Motivated blindness – overlooking the questionable actions of others when it is in one’s own best interest. The slippery slope – causes people not to notice others’ unethical behavior when it gradually occurs in small increments. Overcoming values – the act of letting questionable behaviors pass if the outcome is good. This can occur when managers put more emphasis on results rather than on HOW the results are achieved. © 2015 Cengage Learning36Moral Decisions, Moral Managers, and Moral OrganizationsThe goal of managers should be to create moral decisions, moral managers, and ultimately, moral organizations, while recognizing that what we frequently observe in business is the achievement of moral standing at only one of these levels. The ideal is to create a moral organization that is fully populated by moral managers, making moral decisions (and practices, policies, and behaviors), but this is seldom achieved. © 2015 Cengage Learning37© 2015 Cengage Learning38Aretaic theoriesBehavioral ethicsBounded ethicalityCategorical imperativeCodes of conductCodes of ethicsCompensatory justiceCompliance orientationConformity biasCore ethical valuesCorporate transparencyDeontological theories Distributive justiceEthical due processEthical leadershipEthical testsEthic of reciprocityEthics auditsEthics of careEthics officerEthics orientationEthics programsEthics screenFormal ethics programFramingFraud risk assessmentsGolden RuleIll-conceived goalsIncrementalismIndirect blindnessLegal rights© 2015 Cengage Learning39Key Terms (1 of 2) Legal rightsMoral equilibriumMoral rightsMotivated blindnessNegative rightsOpacityOrganizational Sentencing GuidelinesOvercoming valuesOverconfidence biasPositive rightsPrinciple of justicePrinciple of rightsPrinciple of utilitarianismProcedural justiceProcess fairnessRightsRole moralitySelf-serving biasServant leadershipSlippery slope“smell” testSustainability auditTeleological theoriesTransparencyUtilitarianismVirtue ethics© 2015 Cengage Learning40Key Terms (2 of 2)