1. Organizational Behavior
Organizational Behavior
13th Edition
Don Hellriegel & John W. Slocum, Jr.

2. Individual and Organizational Ethics
Individual and Organizational Ethics
Chapter 2

3. Learning Goals Describe the stages of moral and ethical development
Learning Goals
Describe the stages of moral and ethical development
Explain and apply the core concepts used by individuals and organizations to make ethical decisions
Describe some ethics-based initiatives for fostering diversity in organizations
Explain the nature of stakeholder responsibility and its ethical basis
Chapter 2: PowerPoint 2.1

4. Learning from Experience: Anne Mulcahy, Chairman of Xerox, Commits to Business Ethics
Learning Insights
Proactively transformed an ethics scandal
Emphasizes importance of transparency
Advanced and ensured outstanding ethics and governance practices
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5. Stages of Moral Development
Stages of Moral Development
Stages through which individuals evolve, ranging from the lowest stage (obedience and punishment orientation) to the highest stage (universal ethical principles)
No assumption that everyone progresses through all stages
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6. Figure 2.1 Kohlberg’s Stages of Moral Development
Figure Kohlberg’s Stages of Moral Development
Obedience & Punishment
Instrumental
Interpersonal
Law & Order
Social Contract
Universal Principles
through
Adulthood
Childhood
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7. Moral Intelligence
The mental capacity to determine how universal human principles that cut across the globe should be applied to personal values, goals, and actions. The moral principles in moral intelligence include:
Integrity: acting consistently with principles, values, and belief, telling the truth; standing up for what is right; and keeping promises
Responsibility: taking responsibility for personal choices; admitting mistakes and failures; embracing responsibility for several others
Compassion: actively caring about others
Forgiveness: letting go of one’s own mistakes; and letting go of others’ mistakes
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8. Ethics Competency: Anne Mulcahy’s Ethical Leadership
Ethics Competency: Anne Mulcahy’s Ethical Leadership
Learning Insights
Results are important, equally important are the means to achieve results
Ethical issues are serious
Employees have ethical obligations
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9. Ethics-Based Principles Concern for Affected Individuals
Figure 2.2: Basic Components for Making Ethical Decisions
Ethics-Based Principles
Benefits and Costs
Determination of
Rights
Concern for Affected Individuals
Ethical Intensity
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10. Figure 2.3: Determinants of Ethical Intensity
Magnitude of Consequence
Probability of Effect
Social Consensus
plus
plus
plus
plus
Temporal Immediacy
Concentration of Effect
Proximity
plus
plus
Chapter 2: PowerPoint 2.8

11. Ethical Intensity Factors
Ethical Intensity Factors
Magnitude of Consequences: the harm or benefits accruing to individuals affected by a decision or behavior
Probability of Effect: the likelihood that if a decision is implemented it will lead to the harm or benefit predicted
Social Consensus: the amount of public agreement that a proposed decision is bad or good
continued
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12. Ethical Intensity Factors (continued)
Ethical Intensity Factors (continued)
Temporal Immediacy: the length of time that elapses between making a decision and when the consequences of that decision are known
Proximity: the sense of closeness (social, cultural, psychological, or physical) that the decision maker has for victims or beneficiaries of the decision
Concentration of effect: the inverse function of the number of people affected by a decision
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13. Self-Serving Principles
Self-Serving Principles
Hedonist principle: Do whatever is in your own self- interest
Might-equals-right principle: Do whatever you are powerful enough to impose on others without respect to socially acceptable behaviors
Organization interests principle: Act on the basis of what is good for the organization
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14. Balancing Interests Principles
Balancing Interests Principles
Means-end principle: Act on the basis of whether some overall good justifies any moral transgression
Utilitarian principle: Act on the basis of whether the harm from a decision is outweighed by the good in it— that is, the greatest good for the greatest number
Professional standards principle: Act on the basis of whether the decision can be explained before a group of your peers
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15. Concern for Others Principles
Concern for Others Principles
Disclosure principle: Act on the basis of how the general public would likely respond to the disclosure of the rationale and facts related to the decision
Distributive justice principle: Act on the basis of treating an individual or group equitably rather than on arbitrarily defined characteristics (e.g., gender, race, age)
Golden rule principle: Act on the basis of placing yourself in the position of someone affected by the decision and try to determine how that person would feel
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16. Ethics Insight
Our system of capitalism is built on investor trust— trust that corporate leaders and boards of directors will be good stewards of their investments and provide investors with a fair return. There is no doubt that some leaders of corporations have violated that trust.
William George, Former Chairman and CEO, Medtronic, and Author, True North: Discover Your Authentic Leadership
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17. Ethics Insights for Leaders
Ethics Insights for Leaders
Leaders must commit to and model ethical behaviors and decisions
Develop a code of ethics and follow it
Have procedures for organization members to report unethical behavior, such as whistle-blowing policy
continued
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18. Ethics Insights for Leaders (continued)
Ethics Insights for Leaders (continued)
Involve leaders and employees in identifying and solving ethical problems
Include ethics in performance appraisal
Publicize the organization’s ethical orientation
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19. Benefits and Costs in Ethical Decision Making
Benefits and Costs in Ethical Decision Making
Benefits—whatever a party considers desirable
Costs—whatever a party considers undesirable
Requires a determination of the interests and values of those affected by the decision(s)
One party’s benefits in a decision may create or be perceived to create costs for one or more other parties
Conflicting assessments can lead to different interpretations of ethical responsibilities
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20. Determination of Rights in Ethical Decision Making
Determination of Rights in Ethical Decision Making
Complex and continually changing
One dimension focuses on who is entitled to benefits or participation in decisions
Union-management negotiations frequently involve conflicts and dilemmas over management’s rights to hire, promote, fire, reassign union employees, and outsource work
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21. Procedural and Interactional Justice
Procedural and Interactional Justice
Procedural justice: the perceived fairness of the rules, guidelines, and processes for making decisions
Interactional Justice: the quality of interpersonal treatment individuals receive during the use of organizational procedures
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22. Performance Reviews: Procedural and Interactional Justice
Managers should be given specific and clear instructions on procedures
Managers should be trained in how to administer the review
Results should be discussed with employees
Employee participation should be allowed in the review process (e.g., setting goals, providing input on performance)
The review should be developmental (e.g., indicate how to improve)
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23. Change Competency: James McNerney, CEO of Boeing
Change Competency: James McNerney, CEO of Boeing
Learning Insights
Critical to adhere to highest ethical standards from the top-down
Many changes made to advance ethics and compliance
Cultural change was vital to creating an ethical environment
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24. Insights: Diversity and Ethical Cultures
Insights: Diversity and Ethical Cultures
People with different perspectives and approaches need to be valued
Recognize both the learning opportunities and the challenges of a culturally diverse workforce
Create an expectation of high standards of performance and ethics from everyone
Stimulate personal development and support openness to ideas
Make workers feel valued
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25. Generation Diversity and Ethics
Generation Diversity and Ethics
Mature: born from 1925 through 1944
Baby boomers: born from 1945 through 1964
Generation X: born from 1965 through 1981
Generation Y: born from 1982 through 2000
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26. Ethics-Related Commonalities Among Generations
All generations attach importance to family, integrity, achievement, love, and competence
Everyone wants respect; they just define it differently
Trust matters
Leaders are wanted who are credible and trustworthy
Organizational politics are seen as a common problem
No one really likes change, unless it benefits them
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27. Gen Y and 2008 World of Work Report—Do You Agree?
Generation Y respondents think that 22 percent of their Gen Y coworkers as a group are ethical
Generation X respondents think that 28 percent of Gen Y coworkers as a group are ethical
Baby boomer respondents think that 16 percent of Gen Y coworkers as a group are ethical
Is this due to small numbers bias: The tendency to view a few incidents, cases, or experiences with individuals as representative of a larger population
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28. Harassment
Harassment: verbal or physical conduct that denigrates or shows hostility or aversion toward an individual because of that person’s race, skin color, religion, gender, national origin, age, or disability
Impacts of Harassment
Creates an intimidating, hostile, or offensive work environment
Unreasonably interferes with an individual’s work performance
Adversely affects an individual’s employment opportunities
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29. Sexual Harassment
Sexual harassment: unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature
Quid pro quo harassment: submission to harassment is used as the basis for employment decisions
Hostile work environment: occurs when an employee is subjected to comments of a sexual nature, offensive sexual materials, or unwelcome physical contact as a regular part of the work environment
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30. Harassment Policy Define harassment Prohibition statement
Harassment Policy
Define harassment
Prohibition statement
Complaint procedure
Disciplinary measures
Protection against retaliation
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31. Harassment Policy: Include Provisions On
Harassment Policy: Include Provisions On
Verbal harassment
Physical harassment
Visual harassment
Sexual favors
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32. Leader Insights: Positive Diversity
Leader Insights: Positive Diversity
Understand and perhaps change key aspects of the organization’s culture
Understand and perhaps change key aspects of the ethical dimensions of the organization culture, leadership that models ethical behaviors, and formal policies and mechanisms to ensure ethical decisions
Portfolio of diversity initiatives, diversity policies, and supportive diversity practices
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33. Diversity Competency: Verizon’s Workplace Diversity
Learning Insights
Top leaders must set tone and expectations for ethical conduct and diversity
Diversity means embracing it as part of company culture, viewing it as integral to the business, and rewarding it
Develop diversity strategy with measurable components and feedback indicators
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34. Stakeholder Responsibility and Ethics
Stakeholder Responsibility and Ethics
Stakeholder responsibility: leaders and other employees have obligations to identifiable groups that are affected by or can affect the achievement of an organization’s goals
Stakeholders: individuals or groups that have interests, rights, or ownership in an organization and its activities
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35. Table 2.3: Examples of Types of Pressures from Primary Stakeholders
EMPLOYEES
Pay and benefits
Safety and health
Rights at work/global labor standards
Fair/ethical treatment in hiring, reviews, promotion, and related areas
SHAREHOLDERS
Demands for efficiency/profitability
Viability (sustainability)
Growth of investment
Ethical disclosure of financial information
continued
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36. Table 2.3: Examples of Types of Pressures from Primary Stakeholders (continued)
CUSTOMERS
Competitive prices
Quality and safe products
Respect for customers’ privacy
Concern for environment
Truthful/ethical advertising and sales practices
SUPPLIERS
Meet commitments
Repeat business
Fair trade practices/ethical treatment
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37. Ethics Competency: Johnson & Johnson’s Stakeholder Ethics and Principles
Learning Insights
First responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services
Responsible to employees and communities
Responsible to stockholders
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38. Sustainable Development
Sustainable Development
Pattern of resource use that strives to meet current human needs without compromising the ability of future generations to meet their own needs
United Nations Division for Sustainable Development identifies 96 core indicators of sustainable development within a framework that contains 14 themes
Chapter 2: PowerPoint 2.36

39. Assessing Responsibility to Stakeholders
Assessing Responsibility to Stakeholders
Disclosure
Communication and engagement
Proactive management
Creating shareholder value
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40. Discussion Questions
Go to In the search box, type in “corporate governance guidelines.” Open the document titled “Corporate Governance Guidelines at Xerox.” Identify at least two of the specific ethical principles that are reflected in this document. What is a specific provision that illustrates each of the principles identified?
Review the Learning from Experience feature on Anne Mulcahy, chairman and former CEO of Xerox, and other discussions of her leadership in this chapter. How would you evaluate her in relation to each of the six attributes of the diversity competency presented in Chapter 1? For each attribute on which Mulcahy is evaluated, identify the specific statement(s) about her that serve as a basis of your assessment.
continued
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41. Discussion Questions (continued)
Discussion Questions (continued)
Think of an organization in which you have been employed (or are currently employed). What are your assessments of the stage of moral development and moral intelligence of the manager for whom you worked? What specific examples of this manager’s behaviors and decisions serve as the basis for your assessments?
What are the similarities and differences between the organization interests principle and the utilitarian principle?
What are the similarities and differences between the professional standards principle and the distributive justice principle?
continued
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42. Discussion Questions (continued)
Discussion Questions (continued)
From your personal perspective, what is your assessment of the ethical intensity of the grading system and practices used by an instructor in a course that you have completed? Your assessment should include an assessment of each of the six components of ethical intensity.
What specific aspects of procedural justice are suggested in the Change Competency feature on James McNerney, CEO of Boeing?
How would you assess Generation Y individuals as a group with respect to their general pattern of ethical behaviors and decision making within the work environment? Explain. If a generalization is possible, what is your overall assessment? Explain.
continued
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43. Discussion Questions (continued)
Discussion Questions (continued)
How did (or does) an organization for which you have worked (or do work) compare with the policies, practices, and goals of Verizon’s workplace diversity as presented in the Diversity Competency feature? Give specific comparisons of similarities and/or differences.
What specific ethical principles for guiding decisions and actions are illustrated in the Ethics Competency feature titled “Johnson & Johnson’s Stakeholder Ethics and Principles”? You should relate specific statements in the code to specific ethical concepts.
Sustainable development is discussed as an application of stakeholder responsibility. Think of an organization for which you have worked (or currently work). In what ways did it implement or fail to implement sustainable development initiatives?
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44. Experiential Exercise: Ethics Competency—What Is Your Decision?
Ethical Incident #1
What ethical principle or principles reflect your decisions?
How would you assess the ethical intensity in this situation?
Ethical Incident #2
What ethical principle or principles reflect your decision?
How would you evaluate the ethical intensity in this situation?
continued
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45. Experiential Exercise: Ethics Competency—What Is Your Decision
Experiential Exercise: Ethics Competency—What Is Your Decision? (continued)
Ethical Incident #3
What ethical principle or principles reflect your decision?
How would you assess the ethical intensity in this situation?
Ethical Incident #4
What ethical principle or principles reflect your decision?
How would you assess the ethical intensity in this situation?
Chapter 2: PowerPoint 2.43
Chapter 2: PowerPoint 2.

46. Case: Diversity Competency—Consensual Relationship Agreements
Critics of CRAs assert that they are too intrusive, ineffective, and unnecessary and that they can cause as many problems as they solve. Identify the specific reasons and examples that might justify these criticisms.
How would you assess the ethical intensity of CRAs from the perspective of the employer? From the perspective of the employees in a consensual relationship?
continued
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47. Case: Diversity Competency—Consensual Relationship Agreements (continued)
What specific ethical principles might be used to justify the use of CRAs? Explain.
What ethical principles might be used by employees in consensual relationships to oppose signing such an agreement? Explain.
Do you personally favor or oppose the use of CRAs in the workplace? Explain.
Chapter 2: PowerPoint 2.45