CHAPTER 5
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©Stanislav Bokrach, Shutterstock
5
ETHICAL DECISION4 MAKING
2
ETHICAL LEADERSHIP
7
B
U
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER OBJECTIVES
CHAPTER OUTLINE
t To provide a comprehensive framework
A Framework for Ethical Decision Making
in Business
Ethical-Issue Intensity
for ethical decision making in business
t To examine the intensity of ethical issues as
an important element influencing the ethical
S
decision-making process
K
t To introduce individual factors that may
I
influence ethical decision making in
business
N
t To introduce organizational factors that N
may influence ethical decision making
E
in business
R
t To explore the role of opportunity in ethical
,
decision making in business
t To explain how knowledge about the ethical
decision-making framework can be used toE
improve ethical leadership
D
t To provide leadership styles and habits thatW
promote an ethical culture
AN ETHICAL DILEMMA*
A
R
D
5
4
2
7
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Troy Buchanan was in a bind. As a recent graduate
of a prestigious journalism school, he had taken a job
in the editorial department of Circa Communications,
a fast-growing company in the online publications
industry. Circa relocated Troy, his wife, and their
two-year-old son from the Southwest to Atlanta,
Georgia. On arriving, they bought their first home and
Individual Factors
Organizational Factors
Opportunity
Business Ethics Evaluations and Intentions
Using the Ethical Decision-Making Framework
to Improve Ethical Decisions
The Role of Leadership in a Corporate Culture
Leadership Styles Influence Ethical Decisions
Habits of Strong Ethical Leaders
Ethical Leaders Have Strong
Personal Character
Ethical Leaders Have a Passion to Do Right
Ethical Leaders Are Proactive
Ethical Leaders Consider
Stakeholders’ Interests
Ethical Leaders Are Role Models
for the Organization’s Values
Ethical Leaders Are Transparent and Actively
Involved in Organizational Decision Making
Ethical Leaders Are Competent
Managers Who Take a Holistic View
of the Firm’s Ethical Culture
Understanding Ethical Decision Making
and the Role of Leadership
a second car. Troy was told that the company had
big plans for him. Therefore, he did not worry about
being financially overextended.
Several months into the job, Troy found that he
was working late into the night, and even on his days
off, to complete his editorial assignments before the
deadlines passed. He knew that the company did not
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
128
Part 3: The Decision-Making Process
want its clients billed for excessive hours and that
he needed to become more efficient if he wanted
to move up in the company. He asked one of his
co-workers, Mary Jo, how she managed to be so
efficient in completing her editing duties.
Mary Jo quietly explained: “Troy, there are times
when being efficient isn’t enough. You need to do
what is required to get ahead. The owners just want
results—they don’t care how you get them.”
“I don’t understand,” said Troy.
“Look,” Mary Jo explained, “I had the same
problem you have a few years ago, but Mr. Hunt [the
supervisor of the editorial department] explained that
everyone works ‘off the clock’ so that the editorial
department shows top results and looks good. And
when the editorial department looks good, everyone
in it looks good. No one cares if a little time gets lost
in the shuffle.”
Troy realized that “off the clock” meant not
reporting all the hours required to complete a
project. He also remembered one of Circa’s classic
catch phrases, “results, results, results.” He thanked
Mary Jo for her input and went back to work. Troy
thought of going over Mr. Hunt’s head and asking for
advice from the general manager, but he had met
her only once and did not know anything about her.
QUESTIONS | EXERCISES
S
1. What should Troy do?
2.K
Describe one process through which Troy might
I attempt to resolve his dilemma.
3. Consider the impact of this company’s approach
Non young editors. How could working long hours
Nbe an ethical problem?
*This case is strictly hypothetical; any resemblance to real persons,
companies, or situations is coincidental.
E
R
,
T
o improve ethical decision making in business, one must first understand how individuals make ethical decisions in an organizational environment. Too often it is asE
sumed that individuals in organizations make ethical decisions in the same way that
they make ethical decisions at home, in their
D families, or in their personal lives. Within
the context of an organizational work group, however, few individuals have the freedom to
W
decide ethical issues independent of organizational pressures.
This chapter summarizes our currentAknowledge of ethical decision making in business and provides insights into ethical decision
R making in organizations. Although it is
impossible to describe exactly how any one individual or work group might make ethical
D average or typical behavior patterns within
decisions, we can offer generalizations about
organizations. These generalizations are based on many studies and at least six ethical decision models that have been widely accepted by academics and practitioners.1 Based on these
5
models, we present a framework for understanding
ethical decision making in the context
of business organizations. In addition to business,
this
framework integrates concepts from
4
philosophy, psychology, sociology, and organizational behavior. This framework should be
2 and developing ethical programs.
helpful in understanding organizational ethics
7
B
A FRAMEWORK FOR
U ETHICAL DECISION
MAKING IN BUSINESS
As Figure 5.1 shows, our model of the ethical decision making process in business includes
ethical issue intensity, individual factors, and organizational factors such as corporate culture and opportunity. All of these interrelated factors influence the evaluations of and intentions behind the decisions that produce ethical or unethical behavior. This model does
not describe how to make ethical decisions, but it does help one to understand the factors
and processes related to ethical decision making.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
129
Chapter 5: Ethical Decision Making and Ethical Leadership
FIGURE 5.1 Framework for Understanding Ethical Decision Making in Business
Ethical Issue
Intensity
Individual Factors
Ethical or
Unethical
Behavior
S
K
I
Opportunity
N
N
E
Ethical Issue Intensity
R
The first step in ethical decision making is to recognize that an ethical issue requires an in,
dividual or work group to choose among several actions
that various stakeholders inside or
Organizational
Factors
outside the firm will ultimately evaluate as right or wrong. The intensity of an ethical issue
relates to its perceived importance to the decision maker.2 Ethical issue intensity, then, can
E
be defined as the relevance or importance of an ethical issue in the eyes of the individual,
work group, and/or organization. It is personal D
and temporal in character to accommodate values, beliefs, needs, perceptions, the special characteristics of the situation, and the
W
personal pressures prevailing at a particular place and time.3 Senior employees and those
A to intensity because they typically
with administrative authority contribute significantly
dictate an organization’s stance on ethical issues. For
R instance, insider trading is considered
to be a serious ethical issue by the government as the intent is to take advantage of inside
D it is an ethical issue of high intensity
information not available to the public. Therefore,
for regulators and government officials. Consider the government’s investigation of socalled “expert-network” firms. These firms try to appear as legitimate consultants, but the
5 information. Technology companies
government believes they might be providing inside
that are on the verge of new products, patents, or
4 other innovations that will affect their
market price are especially targeted by these consultants. However, if investigations show
2 ethical issues they have raised will not
these firms to be legitimate, it is possible that the
4
turn out to be of high intensity.
7
Under current law, managers can be held liable for the unethical and illegal actions of
B
subordinates. In the United States, the Federal Sentencing
Guidelines for Organizations
contain a liability formula that judges use as a guideline
regarding illegal activities of corU
porations. For example, many of the Enron employees and managers who were aware of
the firm’s use of off-balance-sheet partnerships—which turned out to be the major cause of
the energy firm’s collapse—were advised that these partnerships were legal, so they did not
perceive them as an ethical issue. Although such partnerships were legal at that time, the
way that some Enron officials designed them and the methods they used to provide collateral (that is, Enron stock) created a scheme that brought about the collapse of the company.5 Thus, ethical issue intensity involves individuals’ cognitive state of concern about
an issue, or whether or not they have knowledge that an issue is unethical, which in turn
©Cengage Learning 2013
Business Ethics
Evaluations and
Intentions
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
130
Part 3: The Decision-Making Process
indicates their involvement in making choices. The identification of ethical issues often
requires the understanding of complex business relationships.
Ethical issue intensity reflects the ethical sensitivity of the individual and/or work
group that faces the ethical decision-making process. Research suggests that individuals
are subject to six “spheres of influence” when confronted with ethical choices—the workplace, family, religion, legal system, community, and profession—and that the level of importance of each of these influences will vary depending on how important the decision
maker perceives the issue to be.6 Additionally, the individual’s moral intensity increases his
or her perceptiveness of potential ethical problems, which in turn reduces his or her intention to act unethically.7 Moral intensity relates to individuals’ perceptions of social presS
sure and the harm they believe their decisions will have on others.8 All other factors in
K
Figure 5.1, including individual factors, organizational
factors, and intentions, determine
why different individuals perceive ethical Iissues differently. Unless individuals in an organization share common concerns about ethical issues, the stage is set for ethical conflict.
Nbe influenced by management’s use of rewards
The perception of ethical issue intensity can
and punishments, corporate policies, and N
corporate values to sensitize employees. In other
words, managers can affect the degree to which employees perceive the importance of an
E incentives.9
ethical issue through positive and/or negative
For some employees, ethical issues may
Rnot reach the critical awareness level if managers fail to identify and educate employees about specific problem areas. One study found that
more than a third of the unethical situations, that lower and middle-level managers face come
from internal pressures and ambiguity surrounding internal organizational rules. Many employees fail to anticipate these issues before they arise.10 This lack of preparedness makes it
E
difficult for employees to respond appropriately when they encounter an ethics issue. For
example, subprime lenders such as Countrywide
D Financial failed to educate brokers about
the damages of misrepresenting financial data to help individuals secure loans. This conW
tributed to widespread organizational misconduct. Organizations that consist of employees
with diverse values and backgrounds mustAtherefore train them in the way the firm wants
specific ethical issues handled. Identifying R
the ethical issues and risks that employees might
encounter is a significant step toward developing their ability
to make ethicalDdecisions. Many ethical issues are identified by
industry groups or through general information available to a
“Identifying the ethical
firm. Flagging certain issues as high in ethical importance could
5 in employees’ ethical issue intensity. The perissues and risks that
trigger increases
ceived importance
4 of an ethical issue has been found to have a
employees might encounter
strong influence on both employees’ ethical judgment and their
2 In other words, the more likely individuals
is a significant step toward
behavioral intention.
are to perceive7an ethical issue as important, the less likely they
developing their ability to
are to engage in questionable or unethical behavior.11 Therefore,
B
make ethical decisions.”
ethical issue intensity
should be considered a key factor in the
ethical decision-making
process.
U
Individual Factors
When people need to resolve ethical issues in their daily lives, they often base their
decisions on their own values and principles of right or wrong. They generally learn
these values and principles through the socialization process with family members, social groups, and religion, and in their formal education. Good personal values have been
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 5: Ethical Decision Making and Ethical Leadership
131
found to decrease unethical practices and increase positive work behavior. The moral philosophies of individuals, discussed in more detail in Chapter 6, provide principles and
rules that people use to decide what is right or wrong. Values of individuals can be derived
from moral philosophies to apply to daily decisions. However, values are subjective and
vary a great deal across different cultures. For example, one individual might place greater
importance on keeping one’s promises and commitments than another would. Values
could also relate to negative rationalizations, such as “Everyone does it,” or “We have to do
what it takes to get the business.”12 Research demonstrates that individuals with destructive personalities who violate basic core values can cause a work group to suffer a performance loss of 30 percent to 40 percent compared to groups with no “bad apples.” 13 The
S
actions of specific individuals in scandal-plagued financial companies such as AIG and
K those individuals’ personal character
Countrywide Financial often raise questions about
and integrity. They appear to operate in their own
I self-interest or in total disregard for the
law and the interests of society.
N in ethical behavior relates to individAlthough an individual’s intention to engage
ual values, organizational and social forces also N
play a vital role. An individual’s attitudes
as well as social norms will help create behavioral intentions that will shape his or her
E intend to do the right thing, organizadecision-making process. While an individual may
tional or social forces can alter this intent. For example,
R an individual may intend to report
the misconduct of a coworker, but when faced with the social consequences of doing so,
, forces have overcome a person’s inmay decide to remain complacent. In this case, social
dividual values when it comes to taking appropriate action.14 At the same time, individual
values have a strong influence over how people assume ethical responsibilities in the work
E
environment. In turn, individual decisions can be heavily dependent on company policy
and the corporate culture.
D
The way the public perceives individual ethics generally varies according to the profesW
sion in question. Telemarketers, car salespersons, advertising practitioners, stockbrokers,
A the lowest ethics. Research regardand real estate brokers are often perceived as having
ing individual factors that affect ethical awareness,
R judgment, intent, and behavior include
gender, education, work experience, nationality, age, and locus of control.
Extensive research has been done regardingD
the link between gender and ethical decision making. The research shows that in many aspects there are no differences between
men and women, but when differences are found, women are generally more ethical than
5 to be more sensitive to ethical scenarmen.15 By “more ethical,” we mean that women seem
ios and less tolerant of unethical actions. In a study
4 on gender and intentions for fraudulent
financial reporting, females reported higher intentions to report them than male par2
ticipants.16 As more and more women work in managerial
positions, these findings may
become increasingly significant.
7
Education is also a significant factor in the ethical decision-making process. The imB it does not reflect experience. Work
portant thing to remember about education is that
experience is defined as the number of years in aU
specific job, occupation, and/or industry.
Generally, the more education or work experience that a person has, the better he or she
is at ethical decision making. The type of education someone has received has little or no
effect on ethics. For example, it doesn’t matter if you are a business student or a liberal
arts student—you are pretty much the same in terms of ethical decision making. Current
research, however, shows that students are less ethical than businesspeople, which is likely
because businesspeople have been exposed to more ethically challenging situations than
students.17
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
132
Part 3: The Decision-Making Process
Nationality is the legal relationship between a person and the country in which he or
she is born. In the twenty-first century, nationality is being redefined by regional economic
integration such as the European Union (EU). When European students are asked their
nationality, they are less likely to state where they were born than where they currently live.
The same thing is happening in the United States, as someone born in Florida who lives in
New York might consider him- or herself to be a New Yorker. Research about nationality
and ethics appears to be significant in that it affects ethical decision making; however, just
how nationality affects ethics is somewhat hard to interpret.18 Because of cultural differences, it is impossible to state that ethical decision making in an organizational context
will differ significantly among individuals of different nationalities. The reality of today is
S
that multinational companies look for businesspeople who can make decisions regardless
K will no longer be an issue in that the mulof nationality. Perhaps in 20 years, nationality
tinational individual’s culture will replaceInational status as the most significant factor in
ethical decision making.
Nhas been researched within business ethics.
Age is another individual factor that
Several decades ago, we believed that ageN
was positively correlated with ethical decision
making. In other words, the older you are, the more ethical you are. However, recent reE complex relationship between ethics and
search suggests that there is probably a more
19
age. We do believe that older employeesRwith more experience have greater knowledge
to deal with complex industry-specific ethical issues. Younger managers are far more influ, managers.20
enced by organizational culture than are older
Locus of control relates to individual differences in relation to a generalized belief about
how one is affected by internal versus external events or reinforcements. In other words,
E
the concept relates to how people view themselves in relation to power. Those who believe in external control (that is, externals)Dsee themselves as going with the flow because
that is all they can do. They believe that the events in their lives are due to uncontrollable
W
forces. They consider that what they want to achieve depends on luck, chance, and powerful people in their company. In addition, A
they believe that the probability of being able to
control their lives by their own actions and
Refforts is low. Conversely, those who believe in
internal control (that is, internals) believe that they control the events in their lives by their
Dmasters of their destinies and trusting in their
own effort and skill, viewing themselves as
capacity to influence their environment.
Current research suggests that we still can’t be sure how significant locus of control
5 study that found a relationship between locus
is in terms of ethical decision making. One
of control and ethical decision making concluded
that internals were positively correlated
4
whereas externals were negatively correlated.21 In other words, those who believe that their
2 than those who believed that they formed
fate is in the hands of others were more ethical
their own destiny.
7
B
Organizational Factors
U
Although people can and do make individual ethical choices in business situations, no one
operates in a vacuum. Indeed, research has established that in the workplace, the organization’s values often have greater influence on decisions than a person’s own values.22 Ethical
choices in business are most often made jointly, in work groups and committees, or in conversations and discussions with coworkers. Employees approach ethical issues on the basis
of what they have learned not only from their own backgrounds, but also from others in the
organization. The outcome of this learning process depends on the strength of each person’s
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 5: Ethical Decision Making and Ethical Leadership
133
personal values, the opportunities he or she has to behave unethically, and the exposure
he or she has to others who behave ethically or unethically. An alignment between a person’s own values and the values of the organization help to create positive work attitudes
and organizational outcomes. Research has further demonstrated that congruence in personal and organizational values is related to commitment, satisfaction, motivation, ethics,
work stress, and anxiety.23 Although people outside the organization, such as family members and friends, also influence decision makers, an organization’s culture and structure
operate through the relationships of its members to influence their ethical decisions.
A corporate culture can be defined as a set of values, norms, and artifacts, including ways
of solving problems that members (employees) of an organization share. As time passes,
S
stakeholders come to view the company or organization as a living organism with a mind
K requires all new employees to take a
and will of its own. The Walt Disney Co., for example,
course in the traditions and history of DisneylandIand Walt Disney, including the ethical dimensions of the company. The corporate culture at American Express stresses that employN possible. This attitude is reinforced
ees help customers out of difficult situations whenever
through numerous company legends of employees
N who have gone above and beyond the
call of duty to help customers. This strong tradition of customer loyalty might encourage an
E to help a customer who encounters a
American Express employee to take unorthodox steps
problem while traveling overseas. Employees learn
Rthat they can take some risks in helping
customers. Such strong traditions and values have become a driving force in many compa, Southwest Airlines, and Hershey Foods.
nies, including Starbucks, IBM, Procter & Gamble,
An important component of corporate, or organizational, culture is the company’s
ethical culture. Whereas corporate culture involves values and norms that prescribe a wide
E
range of behavior for organizational members, ethical culture reflects whether the firm
also has an ethical conscience. Ethical culture is aDfunction of many factors, including corporate policies on ethics, top management’s leadership on ethical issues, the influence of
W
coworkers, and the opportunity for unethical behavior. Communication is also important in
the creation of an effective ethical culture. ThereA
is a positive correlation between effective
communication and empowerment and the development
of an organizational ethical cliR
mate.24 Within the organization as a whole, subclimates can develop within individual
D by the strength of the firm’s overall
departments or work groups, but they are influenced
ethical culture, as well as the function of the department and the stakeholders it serves.25
The more ethical employees perceive an organization’s cul5 decisions.
ture to be, the less likely they are to make unethical
“The more ethical
Corporate culture and ethical culture are closely associated
with
4
the idea that significant others within the organization help deemployees perceive an
termine ethical decisions within that organization.2Research also
organization’s culture to be,
indicates that the ethical values embodied in an 7
organization’s
culture are positively correlated to employees’ commitment to the
the less likely they are to
BThese findfirm and their sense that they fit into the company.
make unethical decisions.”
ings suggest that companies should develop and promote
U ethical
values to enhance employees’ experiences in the workplace.26
Those who have influence in a work group, including peers, managers, coworkers, and
subordinates, are referred to as significant others. They help workers on a daily basis with
unfamiliar tasks and provide advice and information in both formal and informal ways.
Coworkers, for instance, can offer help in the comments they make in discussions over lunch
or when the boss is away. Likewise, a manager may provide directives about certain types
of activities that employees perform on the job. Indeed, an employee’s supervisor can play a
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
134
Part 3: The Decision-Making Process
central role in helping employees develop and fit in socially in the workplace.27 Numerous
studies conducted over the years confirm that significant others within an organization may
have more impact on a worker’s decisions on a daily basis than any other factor.28
Obedience to authority is another aspect of the influence that significant others can exercise. Obedience to authority helps to explain why many employees resolve business ethics issues by simply following the directives of a superior. In organizations that emphasize
respect for superiors, for example, employees may feel that they are expected to carry out
orders by a supervisor even if those orders are contrary to the employees’ sense of right and
wrong. Later, if the employee’s decision is judged to have been wrong, he or she is likely to
say, “I was only carrying out orders,” or “My boss told me to do it this way.” In addition, the
S
type of industry and the size of the organization have also been researched and found to be
K at risk for unethical activities.29
relevant factors, with bigger companies more
I
Opportunity
N
Opportunity describes the conditions in anN
organization that limit or permit ethical or unethical behavior. Opportunity results from conditions that either provide rewards, whether
E against unethical behavior. Examples of ininternal or external, or fail to erect barriers
ternal rewards include feelings of goodness
R and personal worth generated by performing
altruistic acts. External rewards refer to what an individual expects to receive from others
, approval, status, and esteem.
in the social environment in terms of social
An example of a condition that fails to erect barriers against unethical behavior is a
company policy that does not punish employees who accept large gifts from clients. The
Ean opportunity for unethical behavior because
absence of punishment essentially provides
it allows individuals to engage in such behavior
D without fear of consequences. The prospect of a reward for unethical behavior can also create an opportunity for questionable
W
decisions. For example, a salesperson who is given public recognition and a large bonus
A
for making a valuable sale that he or she obtained
through unethical tactics will probably
be motivated to use such tactics again, even if such behavior goes against the salesperson’s
R
personal value system. If 10 percent of employees report observing others at the workplace
D to report and respond to this conduct, then
abusing drugs or alcohol and there is a failure
the opportunity for others to engage in these activities exists.30
Opportunity relates to individuals’ immediate job context—where they work, whom
5 The immediate job context includes the motithey work with, and the nature of the work.
vational “carrots and sticks” that superiors4use to influence employee behavior. Pay raises,
bonuses, and public recognition act as carrots, or positive reinforcements, whereas demo2 act as sticks, or negative reinforcements. The
tions, firings, reprimands, and pay penalties
U.S. Chamber of Commerce reports that 7
75 percent of employees steal from their workplaces, and most do so repeatedly.31 As Figure 5.2 shows, many office supplies, particularly
Bworkplace. Pens, pencils, and highlighters apsmaller ones, tend to “disappear” from the
pear to be the most commonly pilfered items,
U with 81 percent of respondents to an Office
Max survey reporting that these supplies go missing most often. If there is no policy against
this practice, one concern is that employees will not learn where to draw the line and will
get into the habit of taking even more expensive items for personal use.
The opportunities that employees have for unethical behavior in an organization
can be eliminated through formal codes, policies, and rules that are adequately enforced
by management. For instance, the American Economic Association is considering new
ethical guidelines to help academic economists become more transparent about their
relationships with hedge funds, banks, and financial institutions. These guidelines are a
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 5: Ethical Decision Making and Ethical Leadership
135
FIGURE 5.2 Office Supplies Reported Missing Most Often
Pens, Pencils, or Highlighters
Paper Products
Paper Clips or Binder Clips
Stapler
Scissors
Tape Dispenser
S
K
Binders
I
Other
N 40 50 60 70 80 90
0
10
20
30
N
E
R
, economists over the consulting services
response to the criticisms levied against academic
Printer Ink
Source: “The Truth behind Disappearing Office Supplies,” OfficeMax, May 2010, http://multivu.prnewswire.com/mnr/officemax/44541/docs/44541Report_OfficeMaxWorkplaceUncoveredSurvey.pdf (accessed January 6, 2011).
and derivative risk models that they provided to financial companies such as Lehman
Brothers—services that have been partially blamed for the U.S. financial crisis.32 Financial
E
companies—such as banks, savings and loan associations,
and securities companies—have
also developed elaborate sets of rules and procedures
D to avoid creating opportunities for
individual employees to manipulate or take advantage of their trusted positions. In banks,
W
one such rule requires most employees to take a vacation and stay out of the bank a certain
number of days every year so that they cannot beA
physically present to cover up embezzlement or other diversions of funds. This rule prevents the opportunity for inappropriate
R
conduct.
Despite the existence of rules, misconduct D
can still occur without proper oversight.
In Kabul, Afghanistan, a major scandal in the country’s largest bank nearly led to its ruin.
Two top executives were implicated in a massive fraud, and later investigations revealed
5 could cost it hundreds of millions of
that the bank had made questionable loans that
dollars. Failure of the bank could cause the entire
4 banking system in Afghanistan to collapse. How did the bank manage to get away with such a widespread fraud? Investigators
2 government officials for years to look
believe the bank may have been paying off certain
the other way. If this is true, the corruption would
7 also include some of the country’s
top leaders.33 To avoid similar situations, there must be checks and balances that create
B
transparency.
Opportunity also comes from knowledge.U
A major type of misconduct observed
among employees in the workplace is lying to employees, customers, vendors, or the
public or withholding needed information from them. 34 A person who has expertise or
information about the competition has the opportunity to exploit this knowledge. An
individual can be a source of information because he or she is familiar with the organization. Individuals who have been employed by one organization for many years become “gatekeepers” of its culture and often have the opportunity to make decisions related
to unwritten traditions and rules. They help socialize newer employees to abide by the
rules and norms of the company’s internal and external ways of doing business, as well
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
136
Part 3: The Decision-Making Process
as understanding when the opportunity exists to cross the line. They may function as
mentors or supervise managers in training. Like drill sergeants in the army, these trainers mold the new recruits into what the company wants. Their training can contribute to
either ethical or unethical conduct.
The opportunity for unethical behavior cannot be eliminated without aggressive
enforcement of codes and rules. A national jewelry store chain president explained to us
how he dealt with a jewelry buyer in one of his stores who had taken a bribe from a supplier. There was an explicit company policy against taking incentive payments to deal with
a specific supplier. When the president of the firm learned about the accepted bribe, he immediately traveled to the office of the buyer in question and terminated his employment.
S
He then traveled to the supplier (manufacturer) selling jewelry to his stores and terminated
his relationship with the firm. The messageKwas clear: Taking a bribe is unacceptable for the
store’s buyers, and salespeople from supplying
I companies could cost their firm significant
sales by offering bribes. This type of policy enforcement illustrates how the opportunity to
Nat least significantly reduced.
commit unethical acts can be eliminated or
N
Business Ethics Evaluations
and Intentions
E
Ethical dilemmas involve problem-solvingR
situations in which the rules governing decisions
are often vague or in conflict. The results of an ethical decision are often uncertain; it is not
always immediately clear whether or not,we have made the right decision. There are no
magic formulas, nor is there computer software that ethical dilemmas can be plugged into
to get a solution. Even if they mean well, most businesspeople will make ethical mistakes.
Therefore there is no substitute for criticalE
thinking and the ability to take responsibility for
our own decisions.
D
An individual’s intentions and the final decision regarding what action he or she will
W
take are the last steps in the ethical decision-making process. When the individual’s intentions and behavior are inconsistent with his
A or her ethical judgment, the person may feel
guilty. For example, when an advertising account executive is asked by her client to create
R
an advertisement that she perceives as misleading, she has two alternatives: to comply or to
D from that client and possibly her job. Other
refuse. If she refuses, she stands to lose business
factors—such as pressure from the client, the need to keep her job to pay her debts and living expenses, and the possibility of a raise if she develops the advertisement successfully—
5 dilemma. Because of these other factors, she
may influence her resolution of this ethical
may decide to act unethically and develop
4the advertisement even though she believes it
to be inaccurate. Because her actions are inconsistent with her ethical judgment, she will
probably feel guilty about her decision. 2
Guilt or uneasiness is the first sign that
7 an unethical decision has occurred. The next
step is changing one’s behavior to reduce such feelings. This change can reflect a person’s
values shifting to fit the decision or theB
person changing his or her decision type the
next time a similar situation occurs. Finally,
U one can eliminate some of the problematic
situational factors by resigning one’s position. For those who begin the value shift, the following are the usual justifications that will reduce and finally eliminate guilt:
1.
2.
3.
I need the paycheck and can’t afford to quit right now.
Those around me are doing it, so why shouldn’t I? They believe it’s okay.
If I don’t do this, I might not be able to get a good reference from my boss or company
when I leave.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 5: Ethical Decision Making and Ethical Leadership
4.
5.
This is not such a big deal, given the potential benefits.
Business is business with a different set of rules.
6.
If not me, someone else would do it and get rewarded.
137
The road to success depends on how the businessperson defines success. The success
concept drives intentions and behavior in business either implicitly or explicitly. Money,
security, family, power, wealth, and personal or group gratification are all types of success
measures that people use. The list described is not comprehensive, and in the next chapter,
you will understand more about how success can be defined. Another concept that affects
S
behavior is the probability of rewards and punishments,
an issue that will be explained
further in Chapter 6.
K
I
N
USING THE ETHICAL DECISION-MAKING
FRAMEWORK TO IMPROVENETHICAL DECISIONS
E
The ethical decision-making framework presented
Rin this chapter cannot tell you if a business decision is ethical or unethical. It bears repeating that it is impossible to tell you what
is right or wrong; instead, we are attempting to, prepare you to make informed ethical
decisions. Although this chapter does not moralize by telling you what to do in a specific
situation, it does provide an overview of typical decision-making processes and factors
that influence ethical decisions. The framework E
is not a guide for how to make decisions,
but instead is intended to provide you with insights
D and knowledge about typical ethical
decision-making processes in business organizations.
Wjudgments about what is ethical, busiBecause it is impossible to agree on normative
ness ethics scholars developing descriptive models
A have instead focused on regularities in
decision making and the various phenomena that interact in a dynamic environment to
R
produce predictable behavioral patterns. Furthermore, it is unlikely that an organization’s
ethical problems will be solved strictly by havingD
a thorough knowledge about how ethical
decisions are made. By its very nature, business ethics involves value judgments and collective agreement about acceptable patterns of behavior.
5 typical ethical decision making in busiWe propose that gaining an understanding of
ness organizations will reveal several ways that such
4 decision making could be improved.
With more knowledge about how the decision process works, you will be better prepared
2ethical leadership regardless of your role
to analyze critical ethical dilemmas and to provide
in the organization. One important conclusion that
7 should be taken from our framework
is that ethical decision making within an organization does not rely strictly on the personal
B philosophies or values must be balvalues and morals of individuals. Knowledge of moral
anced with business knowledge and an understanding
U of the complexities of the dilemma
requiring a decision. For example, a manager who embraces honesty, fairness, and equity
has to understand the diverse risks associated with a complex financial instrument such as
options or derivatives. Business competence must exist, along with personal accountability, in ethical decisions. Organizations take on a culture of their own, with managers and
coworkers exerting a significant influence on ethical decisions. While formal codes, rules,
and compliance are essential in organizations, an organization built on informal relationships is more likely to develop a high integrity corporate culture.35
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
138
Part 3: The Decision-Making Process
©Cengage Learning 2013
THE ROLE OF LEADERSHIP IN
A CORPORATE CULTURE
Top managers provide a blueprint for what a firm’s corporate culture should be.36 If these
leaders fail to express desired behaviors and goals, a corporate culture will evolve on its own
but will still reflect the values and norms of the company. Leadership, the ability or authority
to guide and direct others toward achievement of a goal, has a significant impact on ethical
decision making because leaders have the power to motivate others and enforce the organization’s norms and policies as well as theirSown viewpoints. Leaders are key to influencing
an organization’s corporate culture and ethical posture. Research suggests that ethical leadership has a positive correlation to followerKorganizational citizenship and a negative correlation to deviance. In other words, ethical business
leaders are more likely to have employees
I
that follow their example and less likely to have
N
deviants that create trouble in the company.37
N Although we often think of CEOs and other
DEBATE ISSUE TAKE A STAND
top managers as the most important leaders in
E
an organization, the corporate governance reExamining Warren Buffett as an Effective
R discussed in Chapter 4 make it clear that
forms
Leader
a, firm’s board of directors is also an important
leadership component. Indeed, directors have a
Warren Buffett has been the leader of Berkshire
legal obligation to manage companies “for the
Hathaway, Inc., for more than 40 years. Buffett has
best
E interests of the corporation.” To determine
been viewed as an ethical leader who emphasizes
what
is in the best interest of the firm, directors
integrity in his manager choices. His conglomerate
D
can
consider
the effects that a decision may have
is one of the largest companies in the United States.
not
only
on
shareholders
and employees but also
W
Buffett relies on the character of the CEOs of the
38 Therefore,
on
other
important
stakeholders.
various companies in his conglomerate, and in
A
when we discuss leadership, we include corpomany cases, he may only have a few conversations
rate
R directors as well as top executives.
with the CEO over the course of a year. His trust in
In the long run, if stakeholders are not reahis associates was undermined when David Sokol,
D
sonably
satisfied with a company’s leader, he
the leading contender to succeed him, resigned
or
she
will
not retain a leadership position. A
after revelations that he had purchased $10 million
leader
must
not only have his or her followers’
in shares of a chemical maker a week before
5
respect
but
must
also provide a standard of ethirecommending the purchase of the company to
4
cal
conduct.
The
former
chairman of the Korean
Buffett. This broke the company’s insider trading
electronics
giant
Samsung
Group, Lee Kun-hee,
rules and duty of candor. While Sokol’s trading may
2
resigned
in
disgrace
after
20
years on the Samsung
fall in a gray area of the law, there are certainly
7
board
after
being
accused
of
evading $128 mil39
questions about Sokol’s disclosures.
lion
in
taxes.
His
son
and
heir
to the company,
B
1. Warren Buffett is correct in trusting those around
Lee Jae-yong, also resigned from the board. This
U only the last in a long string of corruption
him to have high integrity and the ability to make
was
ethical decisions based on their character.
charges against Lee. He was also convicted of
bribery 12 years ago. Since his resignation, the
2. Warren Buffett needs to focus more on
company has sought to improve its image.40 Table
organizational ethical codes and compliance and
5.1 summarizes the steps executives should take
less on the character of the manager that he puts
to demonstrate that they understand the imporin charge of the company.
tance of ethics in doing business.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
139
Chapter 5: Ethical Decision Making and Ethical Leadership
TABLE 5.1 The Managerial Role in Developing Ethics Program Leadership
1. Obtain organizational commitment from the board of directors and top management
2. Develop organizational resources for ethics initiatives
4. Develop an effective ethics program to address risks and maintain compliance
with ethical standards
5. Provide oversight for implementation and audits of ethical programs
S
K
I
N
LEADERSHIP STYLES INFLUENCE
N
ETHICAL DECISIONS
E
Leadership styles influence many aspects of organizational
behavior, including employR
ees’ acceptance of and adherence to organizational norms and values. Styles that focus on
,
building strong organizational values among employees
contribute to shared standards of
6. Communicate with stakeholders to establish shared commitment and values
for ethical conduct
©Cengage Learning 2013
3. Determine ethical risks and develop contingency plans
conduct. They also influence the organization’s transmission and monitoring of values,
norms, and codes of ethics.41 In short, the leadership style of an organization influences
E
how its employees act. The challenge for leaders is in gaining the trust and commitment of
organizational members, which is essential if organizational
leaders are to steer their comD
panies toward success. Those leaders who are recognized as trustworthy are more likely
W
to be perceived as ethical stewards.42 Studying a firm’s leadership styles and attitudes can
also help to pinpoint where future ethical issuesAmay arise. Even for actions that may be
against the law, employees often look to their organizational
leaders to determine how to
R
respond.
D
Ethical leadership by a CEO requires an understanding
of his or her firm’s vision
and values, as well as of the challenges of responsibility and the risks involved in achieving organizational objectives. Lapses in ethical leadership can occur even in people who
possess strong ethical character, especially if they5view the organization’s ethical culture as
being outside the realm of decision making that4exists in the home, family, and community. This phenomenon has been observed in countless cases of so-called good community
citizens engaging in unethical business activities.2For example, Robin Szeliga, former CFO
of Qwest, who pleaded guilty for insider trading,7was an excellent community leader, even
serving on a business college advisory board.
B
Ethical leaders need both knowledge and experience
to make decisions. Strong ethical
leaders must have the right kind of moral integrity.
U Such integrity must be transparent; in
other words, they must “do in private as if it were always public.” This type of integrity relates to values and is discussed in later chapters. Ethical leaders must be proactive and ready
to leave the organization if its corporate governance system makes it impossible to make
the right choice. Such right choices are complex by definition. The ethical leader must balance current issues with potential future issues. Such a person must be concerned with
shareholders as well as with the lowest-paid employees. Experience shows that no leader
can always be right or judged ethical by stakeholders in every case. The acknowledgment
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
140
Part 3: The Decision-Making Process
of this fact may be perceived as a weakness, but in reality it supports integrity and increases
the debate exchange of views on ethics and openness.
Six leadership styles that are based on emotional intelligence—the ability to manage
ourselves and our relationships effectively—have been identified by Daniel Goleman.43
1.
The coercive leader demands instantaneous obedience and focuses on achievement,
initiative, and self-control. Although this style can be very effective during times of
crisis or during a turnaround, it otherwise creates a negative climate for organizational
performance.
2.
The authoritative leader—considered to be one of the most effective styles—inspires
Schange, and creates a strongly positive perforemployees to follow a vision, facilitates
mance climate.
K
The affiliative leader values people,Itheir emotions, and their needs and relies on
friendship and trust to promote flexibility, innovation, and risk taking.
3.
4.
5.
6.
N
The democratic leader relies on participation and teamwork to reach collaborative
decisions. This style focuses on communication
and creates a positive climate for
N
achieving results.
E
The pacesetting leader can create a negative climate because of the high standards that
R attaining quick results from highly motivated
he or she sets. This style works best for
individuals who value achievement and
, take the initiative.
The coaching leader builds a positive climate by developing skills to foster long-term
success, delegating responsibility, and skillfully issuing challenging assignments.
E
The most successful leaders do not rely on one style but alter their techniques based on
D styles can be effective in developing an ethical
the characteristics of the situation. Different
culture depending on the leader’s assessment
W of risks and the desire to achieve a positive
climate for organizational performance.
A is to classify them as transactional or transAnother way to consider leadership styles
formational. Transactional leaders attempt to
Rcreate employee satisfaction through negotiating, or “bartering,” for desired behaviors or levels of performance. Transformational leaders
D and to foster trust and motivation.44 Both
strive to raise employees’ level of commitment
transformational and transactional leaders can positively influence the corporate culture.
Transformational leaders communicate a sense of mission, stimulate new ways of
5
thinking, and enhance as well as generate new learning experiences. They consider em4 with organizational needs. They also build
ployee needs and aspirations in conjunction
commitment and respect for values that promote effective responses to ethical issues. Thus,
2
transformational leaders strive to promote activities and behavior through a shared vision
7 they have a stronger influence on coworker
and common learning experience. As a result,
support for ethical decisions and building
Ban ethical culture than do transactional leaders. Transformational ethical leadership is best suited for organizations that have higher
U and strong stakeholder support for an ethlevels of ethical commitment among employees
ical culture. A number of industry trade associations—including the American Institute
of Certified Public Accountants, Defense Industry Initiative on Business Ethics and Conduct, Ethics and Compliance Officer Association, and Mortgage Bankers Association of
America—are helping companies provide transformational leadership.45
In contrast, transactional leaders focus on ensuring that required conduct and
procedures are implemented. Their negotiations to achieve desired outcomes result in a
dynamic relationship with subordinates in which reactions, conflict, and crisis influence
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
141
Chapter 5: Ethical Decision Making and Ethical Leadership
the relationship more than ethical concerns. Transactional leaders produce employees
who achieve a negotiated level of performance, including compliance with ethical and
legal standards. As long as employees and leaders both find this exchange mutually rewarding, the relationship is likely to be successful. However, transactional leadership is
best suited for rapidly changing situations, including those that require responses to ethical problems or issues. For example, when Eric Pillmore took over as senior vice president
of corporate governance at Tyco after a major scandal involving CEO Dennis Kozlowski,
the company needed transitional leadership. To turn the company around, many ethics
and corporate governance decisions needed to be made quickly. The company also needed
cross-functional leadership, improved accountability, and empowered leaders to improve
S
corporate culture. Pillmore helped install a new ethics program that changed leadership
Kwith the board in order to help implepolicies and allowed him direct communications
ment the leadership transition.46
I
N
N
HABITS OF STRONG ETHICAL
LEADERS
E
Archie Carroll, a University of Georgia business
Rprofessor, crafted “7 Habits of Highly
Moral Leaders” based on the idea of Stephen Covey’s The 7 Habits of Highly Effective
,
Moral Leaders”48 to create our own
People.47 We have adapted Carroll’s “7 Habits of Highly
“Seven Habits of Strong Ethical Leaders” (Table 5.2). In particular, we believe that ethical
leadership is based on holistic thinking that embraces the complex and challenging issues
E need both knowledge and experience
that companies face on a daily basis. Ethical leaders
to make the right decisions. Strong ethical leaders
D have both the courage and the most
complete information to make decisions that will be best in the long run. Strong ethical
W be ready to leave the organization if
leaders must stick to their principles and, if necessary,
its corporate governance system is so flawed thatA
it is impossible to make the right choice.
Many corporate founders—such as Sam Walton, Bill Gates, Milton Hershey, Michael
R
Dell, Steve Jobs, and Ben Cohen and Jerry Greenfield—left their ethical stamp on their
companies. Their conduct set the tone, making D
them role models for desired conduct in
the early growth of their respective corporations. In the case of Milton Hershey, his legacy
endures, and Hershey Foods continues to be a role model for ethical corporate culture. In
the case of Sam Walton, Walmart embarked on5a course of rapid growth after his death
and became involved in numerous conflicts with
4 various stakeholder groups, especially
1. Ethical leaders have strong personal character.
2. Ethical leaders have a passion to do right.
3. Ethical leaders are proactive.
2
7
B
U
4. Ethical leaders consider stakeholders’ interests.
5. Ethical leaders are role models for the organization’s values.
6. Ethical leaders are transparent and actively involved in organizational decision making.
7. Ethical leaders are competent managers who take a holistic view of the firm’s ethical culture.
©Cengage Learning 2013
TABLE 5.2 Seven Habits of Strong Ethical Leaders
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
142
Part 3: The Decision-Making Process
employees, regulators, competitors, and communities. Despite the ethical foundation left
by Sam Walton, Walmart, like most large corporations, deals with hundreds of reported
ethical lapses every month.49
Ethical Leaders Have Strong Personal Character
There is general agreement that ethical leadership is highly unlikely without a strong personal character. The question is how to teach or develop a moral person in a corporate
environment. Thomas I. White, a leading authority on character development, believes the
focus should be on developing “ethical reasoning” rather than on being a “moral person.”
S
According to White, the ability to resolve the complex ethical dilemmas encountered in a
K 50 For example, when Lawrence S. Benjamin
corporate culture requires intellectual skills.
took over as president of U.S. Food ServiceIafter a major ethical disaster, he initiated an ethics and compliance program to promote transparency and to teach employees how to make
N
difficult ethical choices. A fundamental problem
in traditional character development is
that specific values and virtues are used toN
teach a belief or philosophy. This approach may
be inappropriate for a business environment where cultural diversity and privacy must be
E
respected. On the other hand, teaching individuals
who want to do the right thing regarding corporate values and ethical codes, and
Requipping these individuals with the intellectual skills to address the complexities of ethical issues, is the correct approach.
,
Ethical Leaders Have a Passion to Do Right
E
The passion to do right is the glue that holds ethical concepts together. Some leaders develop this trait early in life, whereas othersD
develop it over time through experience, reason,
or spiritual growth. They often cite familiar arguments for doing right—to keep society
W
from disintegrating, to alleviate human suffering, to advance human prosperity, to resolve
Apraise the good and punish the guilty, or just
conflicts of interest fairly and logically, to
because something “is the right thing toR
do.”51 Having a passion to do right indicates a
personal characteristic of recognizing the importance of ethical behavior and having the
willingness to face challenges and make D
tough choices. Courageous leadership requires
making and defending the right decision. Consider the crisis faced by Harry Kraemer,
the CEO of Baxter International, after 53 dialysis patients died during treatment. “We have
5 will assess the potential financial impact. The
this situation,” he said. “The financial people
legal people will do the same. But at the 4
end of the day, if we think it’s a problem that a
Baxter product was involved in the deaths of 53 people, then those other issues become
pretty easy. If we don’t do the right thing, 2
then we won’t be around to address those other
issues.”52
7
B
Ethical Leaders Are Proactive
U
Ethical leaders do not hang around waiting for ethical problems to arise. They anticipate,
plan, and act proactively to avoid potential ethical crises.53 One way to be proactive is to
take a leadership role in developing effective programs that provide employees with guidance and support for making more ethical choices, even in the face of considerable pressure to do otherwise. Ethical leaders who are proactive understand social needs and apply
or even develop the best practices of ethical leadership that exist in their industry. One of
Fortune magazine’s “Best Companies to Work for” in 2011 was DreamWorks Animation,
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 5: Ethical Decision Making and Ethical Leadership
143
which takes a proactive stance toward seeking top talent. CEO Jeffrey Katzenberg calls job
candidates personally to encourage them to join the company. Additionally, DreamWorks
has adopted a culture that supports employee contributions and creativity. Any employee
at DreamWorks can pitch a movie idea to the top executives, and the company even sponsors workshops to help employees learn how to do so.54 Such strong leadership is crucial in
maintaining impressive credentials over the long term.
Ethical Leaders Consider Stakeholders’ Interests
Ethical leaders consider the interests of and implications
for all stakeholders, not just those
S
that have an economic impact on the firm. This level of oversight requires acknowledging
K
and monitoring the concerns of all legitimate stakeholders;
actively communicating and
cooperating with them; employing processes that
I are respectful of them; recognizing interdependencies among them; avoiding activities that would harm their human rights: and
N
recognizing the potential conflicts between leaders’ “own role as corporate stakeholders
and their legal and moral responsibilities for the interests
of other stakeholders.”55
N
Ethical leaders have a responsibility to balance stakeholder interests to ensure that
E
the organization maximizes its role as a responsible corporate citizen. For instance, while
R provider in the United States, it is
Waste Management is the largest waste management
also the nation’s largest recycler. Its environmental
, initiatives have earned it a spot among
Ethisphere’s 2010 World’s Most Ethical Companies. Although Waste Management is known
for its green trucks hauling trash to the dump, CEO David Steiner is taking the company
in a more ecofriendly direction. With its tagline “Think
Green,” the company has invested
E
in about 25 businesses to capture and reuse the energy and materials found in waste. Waste
Management’s LampTracker business is also theDlargest recycler of compact fluorescent
light bulbs in the nation. Although recycling and
Wzero waste practices represent a threat
to traditional waste management services, Waste Management is taking a long-term stakeA are the future of the industry.56
holder perspective with the belief that such practices
R
D Models for the
Ethical Leaders Are Role
Organization’s Values
If leaders do not actively serve as role models for5the organization’s core values, then those
values become nothing more than lip service. 4
According to behavioral scientist Brent
Smith, as role models, leaders are the primary influence on individual ethical behavior.
Leaders whose decisions and actions are contrary2to the firm’s values send a signal that the
firm’s values are trivial or irrelevant.57 Firms such
7 as Countrywide Financial articulated
core values that were nothing more than window dressing. On the other hand, when leaders model the firm’s core values at every turn, theB
results can be powerful.
Consider Whole Foods, the world’s largest organic
and natural grocer. Ever since its
U
conception in Austin, Texas, in 1980, Whole Foods has demonstrated a commitment to social responsibility and strong core values (see Table 5.3). In addition to providing consumers with fresh, healthy foods, Whole Foods cares for its employees by creating a transparent
and friendly work environment. The company encourages a sense of teamwork through
imposing a salary cap for top executives. The company also works to support growers and
the environment through sourcing from sustainable growers and supporting such efforts
as recycling and reducing energy whenever possible. Whole Foods donates a minimum of
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
144
Part 3: The Decision-Making Process
TABLE 5.3 Whole Food’s Core Values
t 4FMMJOHUIFIJHIFTURVBMJUZOBUVSBMBOEPSHBOJDQSPEVDUT
t 4BUJTGZJOHBOEEFMJHIUJOHPVSDVTUPNFST
t 4VQQPSUJOHUFBNNFNCFSIBQQJOFTTBOEFYDFMMFODF
t $SFBUJOHXFBMUIUISPVHIQSPGJUTBOEHSPXUI
t $BSJOHBCPVUPVSDPNNVOJUJFTBOEPVSFOWJSPONFOU
t $SFBUJOHPOHPJOHXJOXJOQBSUOFSTIJQTXJUIPVSTVQQMJFST
S
K
I
5 percent of profits to local communities N
in which it operates. Many people are drawn to
Whole Foods because of its high quality standards, educational initiatives, and close relaN
tionships with suppliers.58
E
R
Ethical Leaders Are Transparent
and Actively Involved
, Decision Making
in Organizational
t 1SPNPUJOHUIFIFBMUIPGPVSTUBLFIPMEFSTUISPVHIIFBMUIZFBUJOHFEVDBUJPO
Source: “Our Core Values,” Whole Foods Markets, www.wholefoodsmarket.com/company/corevalues.php (accessed March 1, 2011).
Transparency fosters openness, the freedom to express ideas, and the ability to question
conduct. It also encourages stakeholders toElearn about and comment on what a firm is doing. Transparent leaders will not be effective unless they are personally involved in the key
D
decisions that have ethical ramifications. Transformational
leaders are collaborative, which
opens the door for transparency throughW
interpersonal exchange. Earlier we noted that
transformational leaders instill commitment and respect for values that provide guidance
A
on how to deal with ethical issues. Herb Baum, former CEO of the Dial Corp., says, “In toR
day’s business environment, if you’re a leader—or
want to be—and you aren’t contributing
to a values-based business culture that encourages your entire organization to operate with
D
integrity, your company is as vulnerable as a baby chick in a pit of rattlesnakes.” Baum’s
three remarkably simple principles of transparency are to (1) tell the whole truth, (2) build
59
a values-based culture, and (3) hire “people
5people.”
4
Ethical Leaders Are Competent Managers Who Take
2
a Holistic View of the Firm’s Ethical Culture
7
Ethical leaders can see a holistic view of their organization and therefore view ethics as a
B like marketing, information systems, prostrategic component of decision making, much
duction, and so on. For instance, Bill Marriott
U of Marriott Hotels was selected as one of the
100 Most Influential People in Business Ethics by the Ethisphere Institute in 2010. Marriott
has demonstrated a commitment to social responsibility by guiding his company toward
more ethical sourcing practices and working toward equal rights worldwide.60
As the business environment constantly changes, effective leaders must learn to
change their strategies accordingly. Figure 5.3 shows four important trends at companies
with strong leadership. Note that many of these trends, such as working from home, have
only taken on significant importance in the last few years. Top leadership must have a clear
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
145
Chapter 5: Ethical Decision Making and Ethical Leadership
FIGURE 5.3 Leadership Is More Challenging in Today’s Business Environment
Best-in-Class Are Shifting Their Focus
My Organization Uses Corporate
Social Responsibility to
Recruit Employees
94.8%
60.4%
66.2%
We Have a High Proportion of
Women in Senior Leadership
36.5%
At My Company it is Easy for
People to Work from Home
At My Company an Appreciation
of Global Issues is a Key
Job Requirement
0
S
91.4%
K
46.4%
I
91.0%
N
59.1%
N
20
80
E 40 Percent 60
R
Top 20 Companies
All Respondents
,
100
Source: Bloomberg BusinessWeek/Hay Group 2009 Best Companies for Leadership Survey. Used with permission of Bloomberg L.P. Copyright© 2011.
All rights reserved.
E
understanding of key social and global concerns if they hope to lead their companies to
D important drivers of ethical conduct
success. Leadership continues to be one of the most
in organizations.
W
A
R
UNDERSTANDING ETHICAL
DECISION
D OF LEADERSHIP
MAKING AND THE ROLE
Our ethical decision-making framework demonstrates the many factors that influence
5 factors, organizational factors, and
ethical decisions. Ethical issue intensity, individual
opportunity result in business ethics evaluations4and decisions. An organizational ethical
culture is shaped by effective leadership. Without top level support for ethical behavior, the
2 personal approaches to ethical decision
opportunity for employees to engage in their own
making will evolve. An ethical corporate culture
7 needs shared values along with proper
oversight to monitor the complex ethical decisions being made by employees. It requires
B
the establishment of a strong ethics program to educate
and develop compliance policies.
Consider Kathleen Edmond, the Chief Ethics Officer
U at Best Buy. Edmond, a continual
winner of Ethisphere’s Most Influential People in Business Ethics list, has created a culture of transparency at Best Buy. Edmond created a blog that is available to the public that
discusses ethics issues, including instances of misconduct at Best Buy. Such transparency
keeps the company accountable to its stakeholders. Consequently, Best Buy has also earned
a spot as one of Ethisphere’s World’s Most Ethical Companies.61
On the other hand, some companies that have a strong reputation for ethical leadership sometimes fail to maintain their ethical culture. For example, Johnson and Johnson’s
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
146
Part 3: The Decision-Making Process
quick action during the Tylenol murders secured its reputation for putting customer safety
first. However, Johnson and Johnson has experienced several quality control issues that
have put its reputation as an ethical company into jeopardy. The company underwent
50 product recalls in 15 months due to product contamination or defects. The government
has accused it of not acting quickly enough in recalling products. A unit of Johnson and
Johnson, DePuy Orthopedics, also recalled two types of replacement hips that had been
causing pain in patients, but 93,000 of these devices had already been implanted. This has
led to a string of lawsuits as well as increased government scrutiny of Johnson and Johnson
plants.62
Finally, the more you know about ethical decision making in business, the more likely
S
you will be to make good decisions. There are many challenges in organizations that are beyond the control of any one individual. OnKthe other hand, as you move to higher levels of
the organization, there is the opportunity for
I ethical leadership to become a role model for
good ethics. The descriptive framework of ethical decision making in this chapter should
N that can contribute to an ethical culture.
provide many insights into the relationships
N
E
SUMMARY
R
The key components of the ethical decision-making
framework include ethical issue
,
intensity, individual factors, organizational factors, and opportunity. These factors are
interrelated and influence business ethics evaluations and intentions, which result in ethical or unethical behavior.
E
The first step in ethical decision making is to recognize that an ethical issue requires
D
an individual or work group to choose among several actions that will ultimately be evaluated as ethical or unethical by various stakeholders.
Ethical issue intensity is the perceived
W
relevance or importance of an ethical issue to an individual or work group. It reflects the
A
ethical sensitivity of the individual or work group that triggers the ethical decision-making
R
process. Other factors in our ethical decision-making
framework influence this sensitivity,
and therefore different individuals often perceive
ethical
issues differently.
D
Individual factors such as gender, education, nationality, age, and locus of control can
affect the ethical decision-making process, with some factors being more important than
others. Organizational factors such as an organization’s
values often have greater influence
5
on an individual’s decisions than that person’s own values. In addition, decisions in business are most often made jointly, in work 4
groups and committees, or in conversations and
discussions with coworkers. Corporate cultures
and structures operate through the abil2
ity of individual relationships among the organization’s members to influence those members’ ethical decisions. A corporate culture7can be defined as a set of values, beliefs, goals,
norms, and ways of solving problems thatB
members (employees) of an organization share.
Corporate culture involves norms that prescribe a wide range of behavior for the organization’s members. The ethical culture of an U
organization indicates whether it has an ethical
conscience. Significant others—including peers, managers, coworkers, and subordinates—
who influence the work group have more daily impact on an employee’s decisions than any
other factor in the decision-making framework. Obedience to authority may explain why
many business ethics issues are resolved simply by following the directives of a superior.
Ethical opportunity results from conditions that either provide rewards, whether internal or external, or limit barriers to ethical or unethical behavior. Included in opportunity
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 5: Ethical Decision Making and Ethical Leadership
147
is a person’s immediate job context, which includes the motivational techniques superiors
use to influence employee behavior. The opportunity employees have for unethical behavior in an organization can be eliminated through formal codes, policies, and rules that are
adequately enforced by management.
The ethical decision-making framework is not a guide for making decisions. It is
intended to provide insights and knowledge about typical ethical decision-making processes in business organizations. Ethical decision making within organizations does not
rely strictly on the personal values and morals of employees. Organizations have cultures
of their own, which when combined with corporate governance mechanisms may significantly influence business ethics.
S
Leadership styles and habits promote an organizational ethical climate. Leadership
K
styles include coercive, authoritative, affiliative, democratic,
and coaching elements. Transactional leaders negotiate or barter with employees.
Transformational
leaders strive for a
I
shared vision and common learning experience. Strong ethical leaders have a strong perN are proactive, focus on stakeholdsonal character, have a passion to do the right thing,
ers’ interests, are role models for the organization’s
Nvalues, make transparent decisions, and
take a holistic view of the firm’s ethical culture.
E
R
IMPORTANT TERMS, FOR REVIEW
ethical issue intensity
education
external control
ethical culture
opportunity
transactional leader
moral intensity
E
nationality
internal control D
significant other W
immediate job context
A
transformational leader
R
D
gender
locus of control
corporate culture
obedience to authority
leadership
5
4
2
7
B
U
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
148
Part 3: The Decision-Making Process
RESOLVING ETHICAL BUSINESS CHALLENGES*
Peter had been a human resource (HR) manager
for 18 years and vice president for two more years
at Zyedego Corporation, a small company in New
Orleans. In the last decade, there have been many
changes to what potential/actual employees can be
asked and what constitutes fair and equitable treatment. As a result, Peter was having trouble reconciling his individual values with what could be
best for the company. Some of the human resource
problems that Peter was facing also had legal implications that he would have to consider.
The first issue began with Hurricane Katrina.
In its wake, Zyedego employees worked around the
clock to get the company up and running again. The
company called all employees (if they could locate
them) to get them to return to work. Gwyn, one of
Peter’s HR managers, was planning on asking Dana
Gonzales to return to work but found out that Dana
was pregnant. Because of the rough condition of the
workplace, Gwyn was concerned for Dana’s safety.
Due to the extreme cutbacks the company was facing after the hurricane, Gwyn felt that the company
could not afford to pay Dana for maternity leave or
handle any interruptions in productivity that Dana’s
pregnancy could impose. In addition, Gwyn had
some concerns over Dana’s citizenship because her
passport appeared to be questionable. The flooding had destroyed the original documents, and although Gwyn requested new documents, Dana was
slow in providing them. Gwyn asked some difficult
questions about Dana’s citizenship, and Dana stated
that if she did not return to work soon, she would
go to a competitor and expected the company to
pay severance of two weeks’ wages for the time she
was out of work during the hurricane.
Another human resource issue involved the
hiring of truck drivers. Zyedego hired many truck
drivers and routinely requested driving records as
part of the preemployment process. Several of the
potential new hires had past DWI records. All stated
that they would never do it again, had maintained a
clean record for at least five years, and understood
the consequences of another infraction. Gwyn hired
some drivers with infractions to secure the necessary
number of drivers needed for the company. However,
Gwyn had some concerns over whether she was exposing the company to unnecessary risk because of
the increased potential for accidents or repeat DWI
violations. Gwyn needed guidance from Peter on the
wisdom of continuing these hiring practices.
S However, Zyedego had even deeper problems, which was what primarily concerned Peter.
K problem really started when Peter was still an
The
HR
I manager, and involves one family. Guy Martin
started working for Zyedego 20 years ago. At the
N he was married with two children and had a
time
mortgage.
A little over a year ago, Guy separated
N
from his wife, and they eventually divorced, only to
E
remarry six months later. When Guy was hired, PeterRhad made sure that Guy’s son, who has asthma,
would be covered by health insurance. Peter also
,
helped out the family several times when money
was tight, and provided Guy with overtime work.
But
Etragedy struck the Martins when Guy was killed
in the hurricane. Police and rescue workers hunted
forDhis body, but it was never found. Because Martha,
WGuy’s wife, was a stay-at-home mother, their
only income had been from Zyedego. The compaAdeath benefits would provide only 50 percent of
ny’s
theRdeceased’s pension for a surviving spouse. Also,
because the body had not been found, there was the
D question of death. Usually it takes seven years
legal
before one can claim any type of insurance or deathbenefit payments, as well as medical insurance, for
the5family. Even with Social Security benefits, Martha
4 would probably lose the house and could be
forced to seek employment.
2 Zyedego had sustained substantial losses since
the7hurricane. Insurance companies were extremely
slow concerning payments to all the small businesses,
B
arguing about wind versus water damage. Impeding
theUprocess of obtaining benefits was the lack of many
documents that had been destroyed in the storm.
The trouble really began for Peter when he
met with the insurance company about medical reimbursements, death benefits, and pension
plans. Darrell Lambert was the chief adjuster for
Zyedego’s insurance and pension provider.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
149
Chapter 5: Ethical Decision Making and Ethical Leadership
“Here’s another case that we will not cover,” said
Darrell as he flipped the file to Peter. “We can’t help
the Martins for a variety of reasons. There is no body,
which means no payment until after a judge declares
him legally dead. That will take at least a year. While
that is being settled, Mrs. Martin and her family will
not be eligible for medical coverage unless Zyedego
is going to pay their full amount. Finally, and I know
this may sound heartless, but Mrs. Martin will only
get a maximum of half of Mr. Martin’s pension.”
S
“But he was killed on the job!” exclaimed Peter.
K
“Did you require him to work that day? Did he
punch in or out? Is there any record that he was called
I
in from Zyedego to help? The answer is no to all of the
N
above. He helped because he felt obligated to Zyedego.
But I am not Zyedego, and I do not have any obligaN
tion to the Martins,” Darrell said with a smile.
E
“Peter,” continued Darrell, “I know that Zyedego is under intense financial pressure, but we are
R
too. You have approximately 100 families that we
,
will have to pay something to. You and I can spend
the next 12 months going over every case, bit by bit,
item by item, but if that’s what you want, Zyedego
E
will go into bankruptcy. We don’t want that to happen. But we also are not going to pay for everything
D
that you claim you are due. Our lawyers will stall
W
the system until you go broke, and your 100 families
A
will get nothing. Well, maybe something in five to
seven years. What I am proposing is a way for you
to stay in business and for my company to reduce
its financial payouts. Remember, we have hundreds
of small businesses like you to deal with.”
Darrell then calmly said, “My proposal is that
you look over these files and reduce your total
reimbursements to us by 40 percent. To help you
out, I’ll start with this case [Martin’s]. You decide
whether we pay out 40 percent or nothing. Tomorrow at 9:00 a.m., I want you to have 25 cases, including this one, pared down by 40 percent. If not,
well, I’m sure my superiors have informed your
superiors about this arrangement by now. You
should be getting a call within the hour. So, I’ll see
you here at 9:00,” and Darrell walked out the door.
Several hours later, Peter received a phone call
from upper management about the deal he was to
implement to save the company.
QUESTIONS | EXERCISES
1. What are the legal and ethical risks associated with
the decision about hiring truck drivers at Zyedego?
2. What should Peter recommend to Gwyn about
Dana’s case?
3. Do you think Peter is too emotionally attached to
the Martin case to make an objective decision?
*This case is strictly hypothetical; any resemblance to real
persons, companies, or situations is coincidental.
R
D
CHECK YOUR EQ
Check your EQ, or Ethics Quotient, by completing the following. Assess your performance to evaluate your
overall understanding of the chapter material.
5
4
2
“Opportunity” describes the conditions within an organization
that limit
or permit ethical or unethical behavior.
7
Transactional leaders negotiate compliance and ethics.
B
The most significant influence on ethical behavior in an organization is
the opportunity to engage in (un)ethical behavior. U
1. The first step in ethical decision making is to understand the individual
factors that influence the process.
2.
3.
4.
5. Obedience to authority relates to the influence of corporate culture.
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
ANSWERS 1. No. The first step is to become more aware that an ethical issue exists and to consider its relevance to the
individual or work group. 2. Yes. Opportunity results from conditions that provide rewards or fail to erect barriers against unethical
behavior. 3. Yes. Transactional leaders barter or negotiate with employees. 4. No. Significant others have more impact on ethical
decisions within an organization. 5. No. Obedience to authority relates to the influence of significant others and supervisors.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER 6
S
K
I
N
N
E
R
,
5
INDIVIDUAL FACTORS:
4
2
MORAL PHILOSOPHIES
AND VALUES
7
B
U
©Stanislav Bokrach, Shutterstock
E
D
W
A
R
D
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER OBJECTIVES
CHAPTER OUTLINE
t To understand how moral philosophies and
Moral Philosophy Defined
values influence individual and group ethical
decision making in business
t To compare and contrast the teleological,
S
K
I
t To discuss the impact of philosophies
on business ethics
N
t To recognize the stages of cognitive moral N
development and its shortcomings
E
t To introduce white-collar crime as it relates R
to moral philosophies, values, and corporate
,
culture
deontological, virtue, and justice
perspectives of moral philosophy
Moral Philosophies
Instrumental and Intrinsic Goodness
Teleology
Deontology
Relativist Perspective
Virtue Ethics
Justice
Applying Moral Philosophy to Ethical
Decision Making
Cognitive Moral Development
White-Collar Crime
Individual Factors in Business Ethics
E
D
AN ETHICAL DILEMMA*
W
One of the problems that Lael Matthews has had to
deal with in trying to climb the corporate ladder is A
the glass ceiling faced by minorities and women. And
R
now, in her current position, she must decide which
of three managers to promote, a decision that, as D
her superior has informed her, could have serious
repercussions for her future. The following people are
5
the candidates.
Liz is a 34-year-old African American, divorced4
with one child, who graduated in the lower half
of her college class at Northwest State. She has 2
been with the company for four years and in the 7
industry for eight years, with mediocre performance
B
ratings but a high energy level. She has had some
difficulties in managing her staff. Her child has hadU
various medical problems, so higher pay would be
helpful. If promoted, Liz would be the first African
American female manager at this level. Although
Lael has known Liz only a short time, they seem
to have hit it off; in fact, Lael once babysat Liz’s
daughter, Janeen, in an emergency. One downside
to promoting Liz might be a perception that Lael is
playing favorites.
Roy is a 57-year-old Caucasian, married with
three children, who graduated from a private
university in the top half of his class. Roy has been
with the company for 20 years and in the industry
for 30, and he has always been a steady performer,
with mostly average ratings. Roy has been passed
over for promotions in the past because of his
refusal to relocate, but that is no longer a problem.
Roy’s energy level is average to low; however, he
has produced many of the company’s top sales
performers. This promotion would be his last
before retirement, and many in the company feel
he has earned it. In fact, one senior manager
stopped Lael in the hall and said, “You know, Lael,
Roy has been with us for a long time. He has done
many good things for the company, sacrificing not
only himself but also his family. I really hope that
you can see your way to promoting him. It would
be a favor to me that I wouldn’t forget.”
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
152
Part 3: The Decision-Making Process
Quang Yeh, a single, 27-year-old Asian
American, graduated from State University in
the top 3 percent of her class and has been with
the company for three years. She is known for
putting in 60-hour weeks and for her meticulous
management style, which has generated some
criticism from her sales staff. The last area that she
managed showed record increases, despite the loss
of some older accounts who, for some reason, did
not like dealing with Quang. Moreover, Quang sued
her previous employer for discrimination and won.
Lael had heard that Quang was intense and that
nothing would stop her from reaching her goals.
As Lael was going over some of her notes, another
upper-management individual came to her office
and said, “You know, Lael, Quang is engaged to my
son. I’ve looked over her personnel files, and she
looks very good. She looks like a rising star, which
would indicate that she should be promoted as
quickly as possible. I realize that you’re not in my
division, but the way people get transferred, you
never know. I would really like to see Quang get this
promotion.”
As she was considering the choices, Lael’s
immediate supervisor came to her to talk about Liz.
“You know, Lael, Liz is one of a very few people
in the company who is both an African American
woman and qualified for this position. I’ve been
going over the company’s hiring and promotion
figures, and it would be very advantageous for me
personally and for the company to promote her. I’ve
also spoken to public relations, and they believe
that this would be a tremendous boost for the
company.”
As Lael pondered her decision, she mentally
went through each candidate’s records and found
that each had advantages and disadvantages. While
she was considering her problem, the phone rang. It
was Liz, sounding frantic. “Lael, I’m sorry to disturb
you at this late hour, but I need you to come to the
hospital. Janeen has been in an accident, and I
don’t know who to turn to.” When Lael got to the
hospital, she found that Janeen’s injuries were fairly
serious and that Liz would have to miss some work
S
to help with the recuperation process. Lael also
K that this accident would create a financial
realized
problem for Liz, which a promotion could help solve.
I The next day seemed very long and was
N
punctuated
by the announcement that Roy’s son
was
getting
married
to the vice president’s daughter.
N
The wedding would be in June, and it sounded as
E it would be a company affair. By 4:30 that
though
afternoon,
Lael had gone through four aspirins and
R
two antacids. Her decision was due in two days.
, should she do?
What
QUESTIONS | EXERCISES
1.E
Discuss the advantages and disadvantages
Dof each candidate.
2. What are the ethical and legal considerations
W
for Lael?
3.A
Identify the pressures that have made her
decision an ethical and legal
Rpromotion
issue.
4.D
Discuss the implications of each decision that
Lael could make.
*This case is strictly hypothetical; any resemblance to real persons,
companies, or situations is coincidental.
5
4
2
ost discussions of business ethics
7 address the role of the individual in ethical
decision making, and the model we provided in Chapter 5 identifies individual
B
moral perspectives as a central component
of ethical decision making. In this
chapter, we provide a detailed descriptionUand analysis of how individuals’ backgrounds
M
and philosophies influence their decisions. People often use their individual moral philosophies to justify decisions or explain their actions. To understand how people make
ethical decisions, it is useful to have a grasp of the major types of moral philosophies. In
this chapter, we discuss the stages of cognitive development as they relate to these moral
philosophies. We also examine white-collar crime as it relates to moral philosophies
and personal values.
Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party co...
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