CHAPTER 5
R
I
C
A
R
D
,
A
D
R
I
E
N
N
E
9
T
S
©Stanislav Bokrach, Shutterstock
ETHICAL DECISION2 MAKING AND
4
ETHICAL LEADERSHIP
7
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 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
R
an important element influencing the ethical
decision-making process
I
t To introduce individual factors that may
influence ethical decision making in
business
t To introduce organizational factors that
may influence ethical decision making
in business
C
A
R
D
,
t To explore the role of opportunity in ethical
decision making in business
A
t To explain how knowledge about the ethical
D
decision-making framework can be used to
R
improve ethical leadership
t To provide leadership styles and habits thatI
promote an ethical culture
E
N
N
E
AN ETHICAL DILEMMA*
2
4
7
9
T
S
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
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.
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.”
T
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
R
1. What should Troy do?
I
2. Describe one process through which Troy might
Cattempt to resolve his dilemma.
3.A
Consider the impact of this company’s approach
on young editors. How could working long hours
Rbe an ethical problem?
D
,
*This case is strictly hypothetical; any resemblance to real persons,
companies, or situations is coincidental.
A
o improve ethical decision making in business, one must first understand how individuals make ethical decisions in anDorganizational environment. Too often it is assumed that individuals in organizations make ethical decisions in the same way that
R
they make ethical decisions at home, in their families, or in their personal lives. Within
I however, few individuals have the freedom to
the context of an organizational work group,
decide ethical issues independent of organizational
pressures.
E
This chapter summarizes our current knowledge of ethical decision making in busiN making in organizations. Although it is
ness and provides insights into ethical decision
impossible to describe exactly how any one
N individual or work group might make ethical
decisions, we can offer generalizations about average or typical behavior patterns within
E on many studies and at least six ethical deciorganizations. These generalizations are based
sion models that have been widely accepted by academics and practitioners.1 Based on these
models, we present a framework for understanding ethical decision making in the context
2
of business organizations. In addition to business,
this framework integrates concepts from
philosophy, psychology, sociology, and organizational
behavior. This framework should be
4
helpful in understanding organizational ethics and developing ethical programs.
7
9
T ETHICAL DECISION
A FRAMEWORK FOR
S BUSINESS
MAKING IN
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
Opportunity
R
I
C
A
R
D
Ethical Issue Intensity
,
Ethical or
Unethical
Behavior
The first step in ethical decision making is to recognize that an ethical issue requires an individual or work group to choose among several actions that various stakeholders inside or
A
outside the firm will ultimately evaluate as right or wrong. The intensity of an ethical issue
Dmaker.2 Ethical issue intensity, then, can
relates to its perceived importance to the decision
be defined as the relevance or importance of an ethical issue in the eyes of the individual,
R
work group, and/or organization. It is personal and temporal in character to accommoI characteristics of the situation, and the
date values, beliefs, needs, perceptions, the special
3
personal pressures prevailing at a particular place
Eand time. Senior employees and those
with administrative authority contribute significantly to intensity because they typically
N instance, insider trading is considered
dictate an organization’s stance on ethical issues. For
to be a serious ethical issue by the government as
Nthe intent is to take advantage of inside
information not available to the public. Therefore, it is an ethical issue of high intensity
E the government’s investigation of sofor regulators and government officials. Consider
called “expert-network” firms. These firms try to appear as legitimate consultants, but the
government believes they might be providing inside information. Technology companies
2 other innovations that will affect their
that are on the verge of new products, patents, or
market price are especially targeted by these consultants.
However, if investigations show
4
these firms to be legitimate, it is possible that the ethical issues they have raised will not
7
turn out to be of high intensity.4
Under current law, managers can be held liable
9 for the unethical and illegal actions of
subordinates. In the United States, the Federal Sentencing Guidelines for Organizations
T
contain a liability formula that judges use as a guideline regarding illegal activities of corS and managers who were aware of
porations. For example, many of the Enron employees
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
Organizational
Factors
Business Ethics
Evaluations and
Intentions
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.
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 inrelates to individuals’ perceptions of social prestention to act unethically.7 Moral intensity R
sure and the harm they believe their decisions
will have on others.8 All other factors in
I
Figure 5.1, including individual factors, organizational factors, and intentions, determine
why different individuals perceive ethical C
issues differently. Unless individuals in an organization share common concerns about ethical
A issues, the stage is set for ethical conflict.
The perception of ethical issue intensity can be influenced by management’s use of rewards
and punishments, corporate policies, and R
corporate values to sensitize employees. In other
words, managers can affect the degree to D
which employees perceive the importance of an
ethical issue through positive and/or negative incentives.9
, not reach the critical awareness level if managFor some employees, ethical issues may
ers 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
A
from internal pressures and ambiguity surrounding internal organizational rules. Many employees fail to anticipate these issues beforeDthey arise.10 This lack of preparedness makes it
difficult for employees to respond appropriately when they encounter an ethics issue. For
R
example, subprime lenders such as Countrywide Financial failed to educate brokers about
the damages of misrepresenting financial Idata to help individuals secure loans. This contributed to widespread organizational misconduct.
Organizations that consist of employees
E
with diverse values and backgrounds must therefore train them in the way the firm wants
specific ethical issues handled. Identifying N
the ethical issues and risks that employees might
encounter is aN
significant step toward developing their ability
to make ethical decisions. Many ethical issues are identified by
E or through general information available to a
industry groups
“Identifying the ethical
firm. Flagging certain issues as high in ethical importance could
issues and risks that
trigger increases in employees’ ethical issue intensity. The per2 of an ethical issue has been found to have a
ceived importance
employees might encounter
strong influence
4 on both employees’ ethical judgment and their
is a significant step toward
behavioral intention. In other words, the more likely individuals
7
are to perceive an ethical issue as important, the less likely they
developing their ability to
are to engage in
9questionable or unethical behavior.11 Therefore,
make ethical decisions.”
ethical issue intensity should be considered a key factor in the
T
ethical decision-making process.
S
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 perforR to groups with no “bad apples.”13 The
mance loss of 30 percent to 40 percent compared
actions of specific individuals in scandal-plagued
I financial companies such as AIG and
Countrywide Financial often raise questions about those individuals’ personal character
Cself-interest or in total disregard for the
and integrity. They appear to operate in their own
law and the interests of society.
A
Although an individual’s intention to engage in ethical behavior relates to individual values, organizational and social forces also R
play a vital role. An individual’s attitudes
as well as social norms will help create behavioral
D intentions that will shape his or her
decision-making process. While an individual may intend to do the right thing, organiza,
tional or social forces can alter this intent. For example,
an individual may intend to report
the misconduct of a coworker, but when faced with the social consequences of doing so,
may decide to remain complacent. In this case, social forces have overcome a person’s inA
dividual values when it comes to taking appropriate action.14 At the same time, individual
D ethical responsibilities in the work
values have a strong influence over how people assume
environment. In turn, individual decisions can be heavily dependent on company policy
R
and the corporate culture.
I generally varies according to the profesThe way the public perceives individual ethics
sion in question. Telemarketers, car salespersons,
Eadvertising practitioners, stockbrokers,
and real estate brokers are often perceived as having the lowest ethics. Research regardN judgment, intent, and behavior include
ing individual factors that affect ethical awareness,
gender, education, work experience, nationality, age,
N and locus of control.
Extensive research has been done regarding the link between gender and ethical decision making. The research shows that in many E
aspects there are no differences between
men and women, but when differences are found, women are generally more ethical than
men.15 By “more ethical,” we mean that women seem to be more sensitive to ethical scenar2 on gender and intentions for fraudulent
ios and less tolerant of unethical actions. In a study
financial reporting, females reported higher intentions
to report them than male par4
ticipants.16 As more and more women work in managerial positions, these findings may
7
become increasingly significant.
Education is also a significant factor in the ethical
9 decision-making process. The important thing to remember about education is that it does not reflect experience. Work
T
experience is defined as the number of years in a specific job, occupation, and/or industry.
S that a person has, the better he or she
Generally, the more education or work experience
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
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.
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 individualsR
of different nationalities. The reality of today is
that multinational companies look for businesspeople
who can make decisions regardless
I
of nationality. Perhaps in 20 years, nationality will no longer be an issue in that the multinational individual’s culture will replaceC
national status as the most significant factor in
ethical decision making.
A
Age is another individual factor that has been researched within business ethics.
Several decades ago, we believed that ageR
was positively correlated with ethical decision
making. In other words, the older you are,
Dthe more ethical you are. However, recent research suggests that there is probably a more complex relationship between ethics and
age.19 We do believe that older employees, with more experience have greater knowledge
to deal with complex industry-specific ethical issues. Younger managers are far more influenced by organizational culture than are older managers.20
A
Locus of control relates to individual differences in relation to a generalized belief about
D events or reinforcements. In other words,
how one is affected by internal versus external
the concept relates to how people view themselves in relation to power. Those who beR
lieve in external control (that is, externals) see themselves as going with the flow because
I events in their lives are due to uncontrollable
that is all they can do. They believe that the
forces. They consider that what they wantE
to achieve depends on luck, chance, and powerful people in their company. In addition, they believe that the probability of being able to
Nefforts is low. Conversely, those who believe in
control their lives by their own actions and
internal control (that is, internals) believe that
N they control the events in their lives by their
own effort and skill, viewing themselves as masters of their destinies and trusting in their
capacity to influence their environment. E
Current research suggests that we still can’t be sure how significant locus of control
is in terms of ethical decision making. One study that found a relationship between locus
2
of control and ethical decision making concluded
that internals were positively correlated
whereas externals were negatively correlated.
4 21 In other words, those who believe that their
fate is in the hands of others were more ethical than those who believed that they formed
7
their own destiny.
9
Organizational
Factors
T
S ethical choices in business situations, no one
Although people can and do make individual
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) R
of an organization share. As time passes,
stakeholders come to view the company or organization
as a living organism with a mind
I
and will of its own. The Walt Disney Co., for example, requires all new employees to take a
course in the traditions and history of DisneylandC
and Walt Disney, including the ethical dimensions of the company. The corporate culture A
at American Express stresses that employees help customers out of difficult situations whenever possible. This attitude is reinforced
R who have gone above and beyond the
through numerous company legends of employees
call of duty to help customers. This strong tradition
Dof customer loyalty might encourage an
American Express employee to take unorthodox steps to help a customer who encounters a
, that they can take some risks in helping
problem while traveling overseas. Employees learn
customers. Such strong traditions and values have become a driving force in many companies, including Starbucks, IBM, Procter & Gamble, Southwest Airlines, and Hershey Foods.
A
An important component of corporate, or organizational, culture is the company’s
D values and norms that prescribe a wide
ethical culture. Whereas corporate culture involves
range of behavior for organizational members, ethical culture reflects whether the firm
R
also has an ethical conscience. Ethical culture is a function of many factors, including corI
porate policies on ethics, top management’s leadership
on ethical issues, the influence of
coworkers, and the opportunity for unethical behavior.
Communication
is also important in
E
the creation of an effective ethical culture. There is a positive correlation between effective
N
communication and empowerment and the development
of an organizational ethical cli24
can develop within individual
mate. Within the organization as a whole, subclimates
N
departments or work groups, but they are influenced by the strength of the firm’s overall
E
ethical culture, as well as the function of the department
and the stakeholders it serves.25
The more ethical employees perceive an organization’s culture to be, the less likely they are to make unethical decisions.
“The more ethical
2
Corporate culture and ethical culture are closely associated
with
the idea that significant others within the organization
employees perceive an
4 help determine ethical decisions within that organization. Research also
organization’s culture to be,
7
indicates that the ethical values embodied in an organization’s
culture are positively correlated to employees’ commitment
to the
9
the less likely they are to
firm and their sense that they fit into the company. These findT
make unethical decisions.”
ings suggest that companies should develop and promote ethical
26
S
values to enhance employees’ experiences in the workplace.
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
Rboss told me to do it this way.” In addition, the
say, “I was only carrying out orders,” or “My
type of industry and the size of the organization
have also been researched and found to be
I
relevant factors, with bigger companies more at risk for unethical activities.29
C
A
Opportunity
Opportunity describes the conditions in anR
organization that limit or permit ethical or unethical behavior. Opportunity results fromD
conditions that either provide rewards, whether
internal or external, or fail to erect barriers against unethical behavior. Examples of in, and personal worth generated by performing
ternal rewards include feelings of goodness
altruistic acts. External rewards refer to what an individual expects to receive from others
in the social environment in terms of social approval, status, and esteem.
A
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
D
absence of punishment essentially provides an opportunity for unethical behavior because
R
it allows individuals to engage in such behavior without fear of consequences. The prosI also create an opportunity for questionable
pect of a reward for unethical behavior can
decisions. For example, a salesperson who
Eis given public recognition and a large bonus
for making a valuable sale that he or she obtained through unethical tactics will probably
N if such behavior goes against the salesperson’s
be motivated to use such tactics again, even
personal value system. If 10 percent of employees
report observing others at the workplace
N
abusing drugs or alcohol and there is a failure to report and respond to this conduct, then
E activities exists.30
the opportunity for others to engage in these
Opportunity relates to individuals’ immediate job context—where they work, whom
they work with, and the nature of the work. The immediate job context includes the motivational “carrots and sticks” that superiors2use to influence employee behavior. Pay raises,
bonuses, and public recognition act as carrots,
4 or positive reinforcements, whereas demotions, firings, reprimands, and pay penalties act as sticks, or negative reinforcements. The
U.S. Chamber of Commerce reports that 7
75 percent of employees steal from their workplaces, and most do so repeatedly.31 As Figure
9 5.2 shows, many office supplies, particularly
smaller ones, tend to “disappear” from the workplace. Pens, pencils, and highlighters apT
pear to be the most commonly pilfered items, with 81 percent of respondents to an Office
Smissing most often. If there is no policy against
Max survey reporting that these supplies go
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.
135
Chapter 5: Ethical Decision Making and Ethical Leadership
FIGURE 5.2 Office Supplies Reported Missing Most Often
Pens, Pencils, or Highlighters
Paper Products
Paper Clips or Binder Clips
Stapler
Scissors
Tape Dispenser
Printer Ink
Binders
Other
0
10
20
R
I
C
A
30
R
D
,
40
50
60
70
80
90
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).
response to the criticisms levied against academic economists over the consulting services
A
and derivative risk models that they provided to financial companies such as Lehman
Brothers—services that have been partially blamed
D for the U.S. financial crisis.32 Financial
companies—such as banks, savings and loan associations, and securities companies—have
R
also developed elaborate sets of rules and procedures to avoid creating opportunities for
I
individual employees to manipulate or take advantage
of their trusted positions. In banks,
one such rule requires most employees to take a vacation
and stay out of the bank a certain
E
number of days every year so that they cannot be physically present to cover up embezzleN the opportunity for inappropriate
ment or other diversions of funds. This rule prevents
conduct.
N
Despite the existence of rules, misconduct can still occur without proper oversight.
E
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
that the bank had made questionable loans that could cost it hundreds of millions of
2 banking system in Afghanistan to coldollars. Failure of the bank could cause the entire
lapse. How did the bank manage to get away with
4 such a widespread fraud? Investigators
believe the bank may have been paying off certain government officials for years to look
7 also include some of the country’s
the other way. If this is true, the corruption would
33
must be checks and balances that create
top leaders. To avoid similar situations, there 9
transparency.
T
Opportunity also comes from knowledge. A major type of misconduct observed
among employees in the workplace is lying toS
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
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.
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 imR in question and terminated his employment.
mediately traveled to the office of the buyer
He then traveled to the supplier (manufacturer)
I selling jewelry to his stores and terminated
his relationship with the firm. The message was clear: Taking a bribe is unacceptable for the
C companies could cost their firm significant
store’s buyers, and salespeople from supplying
sales by offering bribes. This type of policyAenforcement illustrates how the opportunity to
commit unethical acts can be eliminated or at least significantly reduced.
R
D
Business Ethics Evaluations
and Intentions
Ethical dilemmas involve problem-solving,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
A that ethical dilemmas can be plugged into
magic formulas, nor is there computer software
to get a solution. Even if they mean well, most
D businesspeople will make ethical mistakes.
Therefore there is no substitute for critical thinking and the ability to take responsibility for
R
our own decisions.
I decision regarding what action he or she will
An individual’s intentions and the final
take are the last steps in the ethical decision-making process. When the individual’s intenE
tions and behavior are inconsistent with his or her ethical judgment, the person may feel
N
guilty. For example, when an advertising account
executive is asked by her client to create
an advertisement that she perceives as misleading,
she has two alternatives: to comply or to
N
refuse. If she refuses, she stands to lose business from that client and possibly her job. Other
E need to keep her job to pay her debts and livfactors—such as pressure from the client, the
ing expenses, and the possibility of a raise if she develops the advertisement successfully—
may influence her resolution of this ethical dilemma. Because of these other factors, she
2the advertisement even though she believes it
may decide to act unethically and develop
to be inaccurate. Because her actions are 4
inconsistent with her ethical judgment, she will
probably feel guilty about her decision.
7 an unethical decision has occurred. The next
Guilt or uneasiness is the first sign that
step is changing one’s behavior to reduce 9
such feelings. This change can reflect a person’s
values shifting to fit the decision or the person changing his or her decision type the
T
next time a similar situation occurs. Finally, one can eliminate some of the problematic
situational factors by resigning one’s position.
S 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 canRbe defined. Another concept that affects
behavior is the probability of rewards and punishments, an issue that will be explained
I
further in Chapter 6.
C
A
USING THE ETHICAL DECISION-MAKING
R
FRAMEWORK TO IMPROVEDETHICAL DECISIONS
, in this chapter cannot tell you if a busiThe ethical decision-making framework presented
ness 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
A by telling you what to do in a specific
decisions. Although this chapter does not moralize
situation, it does provide an overview of typicalDdecision-making processes and factors
that influence ethical decisions. The framework is not a guide for how to make decisions,
R and knowledge about typical ethical
but instead is intended to provide you with insights
decision-making processes in business organizations.
I
Because it is impossible to agree on normative judgments about what is ethical, busiE
ness ethics scholars developing descriptive models have instead focused on regularities in
N interact in a dynamic environment to
decision making and the various phenomena that
produce predictable behavioral patterns. Furthermore, it is unlikely that an organization’s
N
ethical problems will be solved strictly by having a thorough knowledge about how ethical
E involves value judgments and collecdecisions are made. By its very nature, business ethics
tive agreement about acceptable patterns of behavior.
We propose that gaining an understanding of typical ethical decision making in busi2 decision making could be improved.
ness organizations will reveal several ways that such
With more knowledge about how the decision process
4 works, you will be better prepared
to analyze critical ethical dilemmas and to provide ethical leadership regardless of your role
7 should be taken from our framework
in the organization. One important conclusion that
is that ethical decision making within an organization
9 does not rely strictly on the personal
values and morals of individuals. Knowledge of moral philosophies or values must be balT of the complexities of the dilemma
anced with business knowledge and an understanding
requiring a decision. For example, a manager who
S 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 theirR
own viewpoints. Leaders are key to influencing
an organization’s corporate culture and ethical
I posture. Research suggests that ethical leadership has a positive correlation to follower organizational citizenship and a negative correC
lation to deviance. In other words, ethical business leaders are more likely to have employees
A follow their example and less likely to have
that
deviants that create trouble in the company.37
R Although we often think of CEOs and other
DEBATE ISSUE TAKE A STAND
D managers as the most important leaders in
top
an
, organization, the corporate governance reExamining Warren Buffett as an Effective
forms discussed in Chapter 4 make it clear that
Leader
a firm’s board of directors is also an important
leadership
component. Indeed, directors have a
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
D interests of the corporation.” To determine
best
been viewed as an ethical leader who emphasizes
what
R is in the best interest of the firm, directors
integrity in his manager choices. His conglomerate
can
consider the effects that a decision may have
is one of the largest companies in the United States.
I only on shareholders and employees but also
not
Buffett relies on the character of the CEOs of the
on
E other important stakeholders.38 Therefore,
various companies in his conglomerate, and in
when we discuss leadership, we include corpomany cases, he may only have a few conversations
N
rate directors as well as top executives.
with the CEO over the course of a year. His trust in
N In the long run, if stakeholders are not reahis associates was undermined when David Sokol,
sonably
satisfied with a company’s leader, he
the leading contender to succeed him, resigned
E she will
or
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
respect
but
must
also provide a standard of ethirecommending the purchase of the company to
2
cal
conduct.
The
former
chairman of the Korean
Buffett. This broke the company’s insider trading
4
electronics
giant
Samsung
Group, Lee Kun-hee,
rules and duty of candor. While Sokol’s trading may
resigned
in
disgrace
after
20
years on the Samsung
7
fall in a gray area of the law, there are certainly
board
after
being
accused
of
evading $128 mil39
questions about Sokol’s disclosures.
9 in taxes. His son and heir to the company,
lion
1. Warren Buffett is correct in trusting those around
Lee
T Jae-yong, also resigned from the board. This
him to have high integrity and the ability to make
was only the last in a long string of corruption
S
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
R
I
C
A
LEADERSHIP STYLES
R INFLUENCE
ETHICAL DECISIONS
D
,
Leadership styles influence many aspects of organizational
behavior, including employ6. Communicate with stakeholders to establish shared commitment and values
for ethical conduct
©Cengage Learning 2013
3. Determine ethical risks and develop contingency plans
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
A
conduct. They also influence the organization’s transmission and monitoring of values,
D style of an organization influences
norms, and codes of ethics.41 In short, the leadership
how its employees act. The challenge for leaders is in gaining the trust and commitment of
R
organizational members, which is essential if organizational leaders are to steer their comI
panies toward success. Those leaders who are recognized
as trustworthy are more likely
firm’s leadership styles and attitudes can
to be perceived as ethical stewards.42 Studying aE
also help to pinpoint where future ethical issues may arise. Even for actions that may be
N
against the law, employees often look to their organizational
leaders to determine how to
respond.
N
Ethical leadership by a CEO requires an understanding of his or her firm’s vision
E
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 they view the organization’s ethical culture as
being outside the realm of decision making that2exists in the home, family, and community. This phenomenon has been observed in countless
4 cases of so-called good community
citizens engaging in unethical business activities. For example, Robin Szeliga, former CFO
7
of Qwest, who pleaded guilty for insider trading, was an excellent community leader, even
serving on a business college advisory board. 9
Ethical leaders need both knowledge and experience to make decisions. Strong ethical
T
leaders must have the right kind of moral integrity. Such integrity must be transparent; in
other words, they must “do in private as if it wereSalways 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—consideredRto be one of the most effective styles—inspires
employees to follow a vision, facilitates change, and creates a strongly positive perforI
mance climate.
The affiliative leader values people,C
their emotions, and their needs and relies on
friendship and trust to promote flexibility,
A innovation, and risk taking.
3.
4.
5.
6.
The democratic leader relies on participation and teamwork to reach collaborative
R
decisions. This style focuses on communication and creates a positive climate for
D
achieving results.
The pacesetting leader can create a negative
climate because of the high standards that
,
he or she sets. This style works best for attaining quick results from highly motivated
individuals who value achievement and take the initiative.
The coaching leader builds a positiveA
climate by developing skills to foster long-term
success, delegating responsibility, andD
skillfully issuing challenging assignments.
The most successful leaders do not rely on
R one style but alter their techniques based on
the characteristics of the situation. Different styles can be effective in developing an ethical
I of risks and the desire to achieve a positive
culture depending on the leader’s assessment
climate for organizational performance. E
Another way to consider leadership styles is to classify them as transactional or transN
formational. Transactional leaders attempt to create employee satisfaction through negotiating, or “bartering,” for desired behaviors or
Nlevels of performance. Transformational leaders
strive to raise employees’ level of commitment and to foster trust and motivation.44 Both
E
transformational and transactional leaders can positively influence the corporate culture.
Transformational leaders communicate a sense of mission, stimulate new ways of
thinking, and enhance as well as generate2new learning experiences. They consider employee needs and aspirations in conjunction with organizational needs. They also build
4 effective responses to ethical issues. Thus,
commitment and respect for values that promote
transformational leaders strive to promote7activities and behavior through a shared vision
and common learning experience. As a result, they have a stronger influence on coworker
9an ethical culture than do transactional leadsupport for ethical decisions and building
ers. Transformational ethical leadership is
Tbest suited for organizations that have higher
levels of ethical commitment among employees and strong stakeholder support for an ethical culture. A number of industry trade S
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
R and empowered leaders to improve
cross-functional leadership, improved accountability,
corporate culture. Pillmore helped install a newI ethics program that changed leadership
policies and allowed him direct communications with the board in order to help impleC
ment the leadership transition.46
A
R
HABITS OF STRONG ETHICAL
LEADERS
D
, professor, crafted “7 Habits of Highly
Archie Carroll, a University of Georgia business
TABLE 5.2 Seven Habits of Strong Ethical Leaders
1. Ethical leaders have strong personal character.
2. Ethical leaders have a passion to do right.
3. Ethical leaders are proactive.
4
7
9
T
S
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
Moral Leaders” based on the idea of Stephen Covey’s The 7 Habits of Highly Effective
People.47 We have adapted Carroll’s “7 Habits of Highly Moral Leaders”48 to create our own
“Seven Habits of Strong Ethical Leaders” (Table A
5.2). In particular, we believe that ethical
leadership is based on holistic thinking that embraces
D the complex and challenging issues
that companies face on a daily basis. Ethical leaders need both knowledge and experience
R
to make the right decisions. Strong ethical leaders have both the courage and the most
complete information to make decisions that will
I be best in the long run. Strong ethical
leaders must stick to their principles and, if necessary, be ready to leave the organization if
E
its corporate governance system is so flawed that it is impossible to make the right choice.
N Bill Gates, Milton Hershey, Michael
Many corporate founders—such as Sam Walton,
Dell, Steve Jobs, and Ben Cohen and Jerry Greenfield—left
their ethical stamp on their
N
companies. Their conduct set the tone, making them role models for desired conduct in
the early growth of their respective corporations.EIn 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 on a course of rapid growth after his death
2 various stakeholder groups, especially
and became involved in numerous conflicts with
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
R
focus should be on developing “ethical reasoning”
rather than on being a “moral person.”
According to White, the ability to resolveIthe complex ethical dilemmas encountered in a
corporate culture requires intellectual skills.50 For example, when Lawrence S. Benjamin
took over as president of U.S. Food ServiceC
after a major ethical disaster, he initiated an ethics and compliance program to promote transparency
and to teach employees how to make
A
difficult ethical choices. A fundamental problem in traditional character development is
that specific values and virtues are used toR
teach a belief or philosophy. This approach may
be inappropriate for a business environment
D where cultural diversity and privacy must be
respected. On the other hand, teaching individuals who want to do the right thing regard, equipping these individuals with the intellecing corporate values and ethical codes, and
tual skills to address the complexities of ethical issues, is the correct approach.
A
Ethical Leaders Have
D a Passion to Do Right
The passion to do right is the glue that holds ethical concepts together. Some leaders deR
velop this trait early in life, whereas others develop it over time through experience, reason,
I arguments for doing right—to keep society
or spiritual growth. They often cite familiar
from disintegrating, to alleviate human suffering,
to advance human prosperity, to resolve
E
conflicts of interest fairly and logically, to praise the good and punish the guilty, or just
because something “is the right thing toN
do.”51 Having a passion to do right indicates a
personal characteristic of recognizing theN
importance of ethical behavior and having the
willingness to face challenges and make tough choices. Courageous leadership requires
EConsider the crisis faced by Harry Kraemer,
making and defending the right decision.
the CEO of Baxter International, after 53 dialysis patients died during treatment. “We have
this situation,” he said. “The financial people will assess the potential financial impact. The
legal people will do the same. But at the 2
end of the day, if we think it’s a problem that a
Baxter product was involved in the deaths
4 of 53 people, then those other issues become
pretty easy. If we don’t do the right thing, then we won’t be around to address those other
7
issues.”52
9
Ethical Leaders
T Are Proactive
S for ethical problems to arise. They anticipate,
Ethical leaders do not hang around waiting
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
R
Ethical leaders consider the interests of and implications
for all stakeholders, not just those
that have an economic impact on the firm. This Ilevel of oversight requires acknowledging
and monitoring the concerns of all legitimate stakeholders; actively communicating and
C
cooperating with them; employing processes that are respectful of them; recognizing interdependencies among them; avoiding activitiesA
that would harm their human rights: and
recognizing the potential conflicts between leaders’ “own role as corporate stakeholders
R
and their legal and moral responsibilities for the interests of other stakeholders.”55
D stakeholder interests to ensure that
Ethical leaders have a responsibility to balance
the organization maximizes its role as a responsible
, corporate citizen. For instance, while
Waste Management is the largest waste management provider in the United States, it is
also the nation’s largest recycler. Its environmental initiatives have earned it a spot among
Ethisphere’s 2010 World’s Most Ethical Companies.
AAlthough Waste Management is known
for its green trucks hauling trash to the dump, CEO David Steiner is taking the company
D
in a more ecofriendly direction. With its tagline “Think
Green,” the company has invested
in about 25 businesses to capture and reuse the energy
R and materials found in waste. Waste
Management’s LampTracker business is also the largest recycler of compact fluorescent
I zero waste practices represent a threat
light bulbs in the nation. Although recycling and
to traditional waste management services, WasteE
Management is taking a long-term stakeholder perspective with the belief that such practices are the future of the industry.56
N
N
Ethical Leaders Are Role Models for the
E
Organization’s Values
If leaders do not actively serve as role models for the organization’s core values, then those
values become nothing more than lip service. 2
According to behavioral scientist Brent
Smith, as role models, leaders are the primary influence
on individual ethical behavior.
4
Leaders whose decisions and actions are contrary to the firm’s values send a signal that the
7
firm’s values are trivial or irrelevant.57 Firms such as Countrywide Financial articulated
core values that were nothing more than window9dressing. On the other hand, when leaders model the firm’s core values at every turn, the results can be powerful.
T
Consider Whole Foods, the world’s largest organic and natural grocer. Ever since its
S has demonstrated a commitment to soconception in Austin, Texas, in 1980, Whole Foods
cial 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
R
t 1SPNPUJOHUIFIFBMUIPGPVSTUBLFIPMEFSTUISPVHIIFBMUIZFBUJOHFEVDBUJPO
I
C
A
5 percent of profits to local communities in which it operates. Many people are drawn to
R
Whole Foods because of its high quality standards,
educational initiatives, and close relationships with suppliers.58
D
,
Ethical Leaders Are Transparent and Actively Involved
in Organizational Decision Making
A
Transparency fosters openness, the freedom to express ideas, and the ability to question
D
conduct. It also encourages stakeholders to learn about and comment on what a firm is doing. Transparent leaders will not be effective
R unless they are personally involved in the key
decisions that have ethical ramifications. Transformational leaders are collaborative, which
I
opens the door for transparency through interpersonal exchange. Earlier we noted that
E and respect for values that provide guidance
transformational leaders instill commitment
on how to deal with ethical issues. Herb Baum,
N former CEO of the Dial Corp., says, “In today’s business environment, if you’re a leader—or want to be—and you aren’t contributing
N
to a values-based business culture that encourages
your entire organization to operate with
integrity, your company is as vulnerable E
as a baby chick in a pit of rattlesnakes.” Baum’s
t $SFBUJOHPOHPJOHXJOXJOQBSUOFSTIJQTXJUIPVSTVQQMJFST
Source: “Our Core Values,” Whole Foods Markets, www.wholefoodsmarket.com/company/corevalues.php (accessed March 1, 2011).
three remarkably simple principles of transparency are to (1) tell the whole truth, (2) build
a values-based culture, and (3) hire “people people.”59
2
Ethical Leaders Are Competent
Managers Who Take
4
a Holistic View of the
7 Firm’s Ethical Culture
Ethical leaders can see a holistic view of their
9 organization and therefore view ethics as a
strategic component of decision making, much like marketing, information systems, proT
duction, and so on. For instance, Bill Marriott of Marriott Hotels was selected as one of the
S by the Ethisphere Institute in 2010. Marriott
100 Most Influential People in Business Ethics
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
20
R
I
C46.4%
A
R
59.1%
D 40
60
Percent
,
Top 20 Companies
91.4%
91.0%
80
100
All Respondents
A
D
understanding of key social and global concernsRif they hope to lead their companies to
success. Leadership continues to be one of the most important drivers of ethical conduct
I
in organizations.
E
N
UNDERSTANDING ETHICAL DECISION
N
MAKING AND THE ROLE OF LEADERSHIP
E
Source: Bloomberg BusinessWeek/Hay Group 2009 Best Companies for Leadership Survey. Used with permission of Bloomberg L.P. Copyright© 2011.
All rights reserved.
Our ethical decision-making framework demonstrates the many factors that influence
ethical decisions. Ethical issue intensity, individual factors, organizational factors, and
opportunity result in business ethics evaluations2and decisions. An organizational ethical
culture is shaped by effective leadership. Without4top level support for ethical behavior, the
opportunity for employees to engage in their own personal approaches to ethical decision
7
making will evolve. An ethical corporate culture needs shared values along with proper
oversight to monitor the complex ethical decisions
9 being made by employees. It requires
the establishment of a strong ethics program to educate and develop compliance policies.
T
Consider Kathleen Edmond, the Chief Ethics Officer at Best Buy. Edmond, a continual
S Business Ethics list, has created a culwinner of Ethisphere’s Most Influential People in
ture 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
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.
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
R decision making in business, the more likely
Finally, the more you know about ethical
you will be to make good decisions. There Iare many challenges in organizations that are beyond the control of any one individual. On the other hand, as you move to higher levels of
C ethical leadership to become a role model for
the organization, there is the opportunity for
good ethics. The descriptive framework ofAethical decision making in this chapter should
provide many insights into the relationships that can contribute to an ethical culture.
R
D
SUMMARY
,
The key components of the ethical decision-making framework include ethical issue
intensity, individual factors, organizational
A factors, and opportunity. These factors are
interrelated and influence business ethics evaluations and intentions, which result in ethiD
cal or unethical behavior.
R is to recognize that an ethical issue requires
The first step in ethical decision making
an individual or work group to choose among several actions that will ultimately be evaluI
ated as ethical or unethical by various stakeholders. Ethical issue intensity is the perceived
E to an individual or work group. It reflects the
relevance or importance of an ethical issue
ethical sensitivity of the individual or workNgroup that triggers the ethical decision-making
process. Other factors in our ethical decision-making framework influence this sensitivity,
N ethical issues differently.
and therefore different individuals often perceive
Individual factors such as gender, education,
nationality, age, and locus of control can
E
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
on an individual’s decisions than that person’s
2 own values. In addition, decisions in business are most often made jointly, in work groups and committees, or in conversations and
4
discussions with coworkers. Corporate cultures
and structures operate through the ability of individual relationships among the organization’s
members to influence those mem7
bers’ ethical decisions. A corporate culture can be defined as a set of values, beliefs, goals,
9
norms, and ways of solving problems that members (employees) of an organization share.
Corporate culture involves norms that prescribe
T a wide range of behavior for the organization’s members. The ethical culture of an organization indicates whether it has an ethical
S
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
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
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 signifiR
cantly influence business ethics.
Leadership styles and habits promote an organizational
ethical climate. Leadership
I
styles include coercive, authoritative, affiliative, democratic, and coaching elements. TransC Transformational leaders strive for a
actional leaders negotiate or barter with employees.
shared vision and common learning experience.A
Strong ethical leaders have a strong personal character, have a passion to do the right thing, are proactive, focus on stakeholdRvalues, make transparent decisions, and
ers’ interests, are role models for the organization’s
take a holistic view of the firm’s ethical culture. D
,
IMPORTANT TERMS FOR REVIEW
ethical issue intensity
education
external control
ethical culture
opportunity
transactional leader
A
moral intensity
D
nationality
R
internal control
I
significant other
E
immediate job context
transformational leader
N
N
E
gender
locus of control
corporate culture
obedience to authority
leadership
2
4
7
9
T
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.
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.
RHowever, Zyedego had even deeper problems,
I which was what primarily concerned Peter.
The problem really started when Peter was still an
Cmanager, and involves one family. Guy Martin
HR
started
A working for Zyedego 20 years ago. At the
time he was married with two children and had a
R
mortgage. A little over a year ago, Guy separated
D his wife, and they eventually divorced, only to
from
remarry six months later. When Guy was hired, Pe,
ter had made sure that Guy’s son, who has asthma,
would be covered by health insurance. Peter also
helped
A out the family several times when money
was tight, and provided Guy with overtime work.
Dtragedy struck the Martins when Guy was killed
But
inR
the hurricane. Police and rescue workers hunted
for his body, but it was never found. Because MarI Guy’s wife, was a stay-at-home mother, their
tha,
only
E income had been from Zyedego. The company’s death benefits would provide only 50 percent of
theNdeceased’s pension for a surviving spouse. Also,
because
N the body had not been found, there was the
legal question of death. Usually it takes seven years
E
before one can claim any type of insurance or deathbenefit payments, as well as medical insurance, for
the family. Even with Social Security benefits, Mar2
tha would probably lose the house and could be
4 to seek employment.
forced
7 Zyedego had sustained substantial losses since
the hurricane. Insurance companies were extremely
9 concerning payments to all the small businesses,
slow
arguing
T about wind versus water damage. Impeding
the process of obtaining benefits was the lack of many
S
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.” R
“But he was killed on the job!” exclaimed Peter.
I
“Did you require him to work that day? Did he
C
punch in or out? Is there any record that he was called
in from Zyedego to help? The answer is no to all of the
A
above. He helped because he felt obligated to Zyedego.
R
But I am not Zyedego, and I do not have any obligation to the Martins,” Darrell said with a smile.
D
“Peter,” continued Darrell, “I know that Zye,
dego is under intense financial pressure, but we are
too. You have approximately 100 families that we
will have to pay something to. You and I can spend
A
the next 12 months going over every case, bit by bit,
D
item by item, but if that’s what you want, Zyedego
will go into bankruptcy. We don’t want that to hapR
pen. But we also are not going to pay for everything
I
that you claim you are due. Our lawyers will stall
the system until you go broke, and your 100 families
E
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.
N
CHECK YOUR
EQ
N
E
Check your EQ, or Ethics Quotient, by completing the following. Assess your performance to evaluate your
overall understanding of the chapter material.
2
4
“Opportunity” describes the conditions within an organization that limit
7
or permit ethical or unethical behavior.
Transactional leaders negotiate compliance and ethics.
9
The most significant influence on ethical behavior in an organization is
T
the opportunity to engage in (un)ethical behavior.
S
Obedience to authority relates to the influence of corporate
culture.
1. The first step in ethical decision making is to understand the individual
factors that influence the process.
2.
3.
4.
5.
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
R
I
C
A
R
D
,
A
D
R
I
E
N
N
E
9
T
S
©Stanislav Bokrach, Shutterstock
2
INDIVIDUAL FACTORS:
4
MORAL PHILOSOPHIES
AND VALUES
7
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 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, R
deontological, virtue, and justice
perspectives of moral philosophy
I
C
t To discuss the impact of philosophies
A
on business ethics
t To recognize the stages of cognitive moral R
D
development and its shortcomings
t To introduce white-collar crime as it relates ,
to moral philosophies, values, and corporate
culture
A
D
R
AN ETHICAL DILEMMA*
I
One of the problems that Lael Matthews has had toE
deal with in trying to climb the corporate ladder is
N
the glass ceiling faced by minorities and women. And
now, in her current position, she must decide whichN
of three managers to promote, a decision that, as
her superior has informed her, could have serious E
repercussions for her future. The following people are
the candidates.
Liz is a 34-year-old African American, divorced2
with one child, who graduated in the lower half
4
of her college class at Northwest State. She has
7
been with the company for four years and in the
industry for eight years, with mediocre performance
9
ratings but a high energy level. She has had some
T
difficulties in managing her staff. Her child has had
various medical problems, so higher pay would be S
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
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
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
R and that Liz would have to miss some work
serious
to help with the recuperation process. Lael also
I
realized that this accident would create a financial
C for Liz, which a promotion could help solve.
problem
AThe next day seemed very long and was
punctuated by the announcement that Roy’s son
Rgetting married to the vice president’s daughter.
was
The
Dwedding would be in June, and it sounded as
though it would be a company affair. By 4:30 that
,
afternoon,
Lael had gone through four aspirins and
two antacids. Her decision was due in two days.
What should she do?
A
QUESTIONS
| EXERCISES
D
1. Discuss the advantages and disadvantages
Rof each candidate.
2.I What are the ethical and legal considerations
Efor Lael?
3. Identify the pressures that have made her
Npromotion decision an ethical and legal
Nissue.
4. Discuss the implications of each decision that
ELael could make.
*This case is strictly hypothetical; any resemblance to real persons,
companies, or situations is coincidental.
2
4
7
ost discussions of business ethics address the role of the individual in ethical
decision making, and the model9we provided in Chapter 5 identifies individual
moral perspectives as a central component of ethical decision making. In this
T
chapter, we provide a detailed description and analysis of how individuals’ backgrounds
S People often use their individual moral phiand philosophies influence their decisions.
M
losophies 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 co...
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