Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethical and Unethical Workplace Behavior 1 Ethics The set of moral principles or values that defines right and wrong for a person or group.

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethics and the Nature of Management Jobs 2 Unethical Managerial Behavior Authority and Power Handling Information Influencing the Behavior of Others Setting Goals 1 1

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethics and the Nature of Management Jobs Managers can encourage ethical behaviors by… – using resources for company business only – handling information confidentially – not influencing others to engage in unethical behavior – not creating policies that reward employees for unethical behavior – setting reasonable goals 3 1 1

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Workplace Deviance Unethical behavior that violates organizational norms about right and wrong  Two dimensions  Degree of deviance  Target of deviant behavior

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Types of Workplace Deviance Adapted from Exhibit 4.1 Production Deviance Property Deviance Political Deviance Personal Aggression MinorSerious Organizational Interpersonal

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Production Deviance Leaving early Taking excessive breaks Intentionally working slow Wasting resources 6 2 2

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Property Deviance Sabotaging equipment Accepting kickbacks Lying about hours worked Stealing from company 7 2 2

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Political Deviance Showing favoritism Gossiping about coworkers Blaming coworkers Competing nonbeneficially 8 2 2

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Personal Aggression Sexual harassment Verbal abuse Stealing from coworkers Endangering coworkers 9 2 2

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved U.S. Sentencing Commission Guidelines Companies can be prosecuted and punished even if management didn’t know about the unethical behavior

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Who, What, and Why? Nearly all businesses are covered Punishes a number of offenses Encourages businesses to be proactive

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Partial List of Offenses Invasion of privacy Price fixing Fraud Customs violations Antitrust violations Civil rights violations Theft Money laundering Conflicts of interest Embezzlement Dealing in stolen goods Copyright infringements Extortion …and more

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Compliance Program Steps Smaller fines for companies that are proactive 13 Steps in determining fine size 1.determine the base fine 2.compute a culpability score 3.multiply the base fine by the culpability score Steps in determining fine size 1.determine the base fine 2.compute a culpability score 3.multiply the base fine by the culpability score 3.2

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Compliance Program Steps 14 Adapted from Exhibit Establish standards and procedures. 7. Improve program a fter violations. 6. Enforce standards consistently and fairly. 5. Train employees on standards and procedures. 3. Delegate decision-making authority only to ethical employees. 4. Encourage employees to report violations. 2. Assign upper-level managers to be in charge. 3.2 Revise if required

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Influences on Ethical Decision Making 15 Ethical Answers Depend on… Ethical Intensity of Decision Moral Development of Manager Ethical Principles Used 4 4

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethical Intensity Depends on… 16 Concentration of effect Magnitude of consequences Social consensus Probability of effect Proximity of effect Temporal immediacy 4.1

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Moral Development Adapted from Exhibit 4.4 Societal Expectations Selfish Internalized Principles PreconventionalPreconventionalConventionalConventionalPostconventionalPostconventional Kohlberg’s Stages of Moral Development

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Stages of Moral Development 18PreconventionalPreconventional 1.Punishment and Obedience 2.Instrumental Exchange 1.Punishment and Obedience 2.Instrumental ExchangeConventionalConventional 3.Good boy, nice girl 4.Law and order 3.Good boy, nice girl 4.Law and orderPostconventionalPostconventional 5.Social contract 6.Universal principle 5.Social contract 6.Universal principle 4.2

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 19 Long-term self-interest Personal virtue Religious injunctions Government requirements Utilitarian benefits Individual rights Distributive justice 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 20 Principle of long-term self-interest Never take any action not in your organization’s long-term self-interest. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 21 Principle of Personal Virtue Never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers or on TV. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 22 Principle of Religious Injunctions Never take any action that is not kind and that does not build a sense of community. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 23 Principle of Government Requirements Never take any action that violates the law, for the law represents the minimal moral standard. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 24 Principle of Utilitarian Benefit Never take any action that does not result in greater good for society. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 25 Principle of Individual Rights Never take any action that infringes on others’ agreed-upon rights. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Principles of Ethical Decision Making 26 Principle of Distributive Justice Never take any action that harms the least among us: the poor, the uneducated, the unemployed. Never take any action that harms the least among us: the poor, the uneducated, the unemployed. 4.3

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Practical Steps to Ethical Decision Making 27 Select and hire ethical employees Establish a Code of Ethics Train employees to make ethical decisions Create an ethical climate 5 5

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Practical Steps to Ethical Decision Making Overt Integrity Tests Personality-Based Integrity Tests 28 Select and hire ethical employees If you found a wallet containing $50, would you return it with the money? 5.1

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Doing the Right Thing 29 If You Cheat in College, Will You Cheat in the Workplace?  College students who cheat are likely to cheat again.  70 percent of students don’t see cheating as a problem.  People who cheat and cheat again see their behavior as normal.  60 percent of people who cheat their employers don’t feel guilty for doing so. If You Cheat in College, Will You Cheat in the Workplace?  College students who cheat are likely to cheat again.  70 percent of students don’t see cheating as a problem.  People who cheat and cheat again see their behavior as normal.  60 percent of people who cheat their employers don’t feel guilty for doing so.

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved What Really Works 30 Studies show that Integrity Tests…  Help reduce workplace deviance  Help hire workers who are better performers Studies show that Integrity Tests…  Help reduce workplace deviance  Help hire workers who are better performers However they have a smaller effect on assessing theft.

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethics Question What is? What are your personal ethics? What are your organization’s ethics? What are the ethics of your industry? What are society’s ethics? What are global ethics? 31

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethics Question What ought to be? How ought we treat our aging employees? How safe ought we make this product? How clean an environment should we aim for? How should we treat long-term employees when downsizing? 32

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethics Question How do we get from What is to What ought to be? What is our Motivation? 33

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Practical Steps to Ethical Decision Making Communicate code of ethics to both inside and outside the company Develop ethical standards and procedures specific to business 34 Establish a Code of Ethics Web Link

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethics Training Develops employee awareness of ethics Achieves credibility with employees Teaches a practical model of ethical decision making 35 Ethics Training “Ethics Scenarios Game” Web Link

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved A Basic Model of Ethical Decision Making Identify the problem 2. Identify the constituents 3. Diagnose the situation 4. Analyze your options 5. Make your choice 6. Act Adapted from Exhibit

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Ethical Climate Managers: 1.Act ethically 2.Are active in company ethics programs 3.Report potential ethics violations 4.Punish those who violate the code of ethics 37 Establishing an Ethical Climate Web Link

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved What Is Social Responsibility? 38 Social Responsibility A business’s obligation to…  pursue policies  make decisions  take actions that benefit society

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved To Whom Are Organizations Socially Responsible? 39 Stakeholder Model Stakeholder Model Satisfy Interests of Multiple Stakeholders Satisfy Interests of Multiple Stakeholders Shareholder Model Maximize Profits 6 6

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Shareholder Model Firm maximizes shareholder wealth and satisfaction The company stock increases in value 40 Pros 6 6 Cons  Organizations cannot act effectively as moral agents for shareholders  Time, money, and attention diverted to social causes undermine market efficiency

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Stakeholder Model 41 Primary Stakeholders: Shareholders Employees Customers Suppliers Governments Local Communities Primary Stakeholders: Shareholders Employees Customers Suppliers Governments Local Communities Secondary Stakeholders: Media Special Interest Groups Trade Associations Secondary Stakeholders: Media Special Interest Groups Trade Associations 6 6

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Organization’s Social Responsibilities 42 Abide by principles of right and wrong Obey laws and regulations Ethical Legal Economic Discretionary Be profitable Serve a social role 7 7 $ ?

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Responses to Demands for Social Responsibility Reactive Defensive Accommo- dative Proactive Fight all the way DO NOTHING DO MUCH Withdrawal Do only what is required Legal Approach Bargaining Problem Solving Public Relations Approach Be progressive Lead the industry

Chapter 4 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved Social Responsibility and Economic Performance 44 Realities of Social Responsibility Can cost a company Sometimes it does pay Does not guarantee profitability 9 9