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Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 1
Chapter 4
Management
4th Edition
Chuck Williams
Ethics and
Social
Responsibility
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 2
What Would You Do?
Gap has received negative news
coverage regarding sweatshop
labor exploitation
Retailers rely on foreign
factories to keep their prices low
How do you decide whose interests take precedence?
Is Gap responsible for poor treatment of workers?
What would you do?
Gap, Inc. Headquarters
Protest groups are calling for boycotts; Gap is losing $$
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 3
Ethical and Unethical
Workplace Behavior
Ethics
The set of moral principles or values
that defines right and wrong for a
person or group.
Chapter 4
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What Is Ethical and Unethical
Workplace Behavior?
After reading these sections,
you should be able to:
1. discuss how the nature of management jobs
creates the possibility for ethical abuses.
2. identity common kinds of workplace deviance.
3. describe the U.S. Sentencing Commission
Guidelines for Organizations and explain how
they both encourage ethical behavior and punish
unethical behavior by businesses.
Chapter 4
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Ethics and the
Nature of Management Jobs
Unethical Managerial Behavior
Authority and Power
Handling Information
Influencing the Behavior of Others
Setting Goals
1
Chapter 4
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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
1
Chapter 4
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Workplace Deviance
2
Workplace Deviance
Unethical behavior that violates
organizational norms about
right and wrong
Two dimensions
Degree of deviance
Target of deviant behavior
Chapter 4
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Types of Workplace Deviance
2
Adapted from Exhibit 4.1
Production Deviance
Property Deviance
Political Deviance
Personal Aggression
Minor Serious
Organizational
Interpersonal
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Production Deviance
Leaving early
Taking excessive breaks
Intentionally working slow
Wasting resources
2
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Property Deviance
Sabotaging
equipment
Accepting
kickbacks
Lying about
hours worked
Stealing from
company
2
Chapter 4
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Political Deviance
Showing favoritism
Gossiping about
coworkers
Blaming coworkers
Competing nonbeneficially
2
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Personal Aggression
Sexual harassment
Verbal abuse
Stealing from coworkers
Endangering coworkers
2
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Partial List of Offenses
3.1
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
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How Do You Make Ethical Decisions?
After reading the next two sections,
you should be able to:
4. describe what influences ethical decision making.
5. explain what practical steps managers can
take to improve ethical decision making.
Chapter 4
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Influences on Ethical Decision Making
Ethical
Answers Depend
on…
Ethical Intensity of Decision
Moral Development of Manager
Ethical Principles Used
4
Chapter 4
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Ethical Intensity Depends on…
Concentration of effect
Magnitude of consequences
Social consensus
Probability of effect
Proximity of effect
Temporal immediacy
4.1
Chapter 4
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Moral Development
4.2
Adapted from Exhibit 4.4
Societal
Expectations Selfish
Internalized
Principles
Preconventional
Conventional
Postconventional
Kohlberg’s Stages of Moral Development
Chapter 4
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Stages of Moral Development
Preconventional
1. Punishment and
Obedience
2. Instrumental
Exchange
Conventional
3. Good boy,
nice girl
4. Law and order
Postconventional
5. Social contract
6. Universal
principle
4.2
Chapter 4
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Principles of
Ethical Decision Making
Long-term self-interest
Personal virtue
Religious injunctions
Government requirements
Utilitarian benefits
Individual rights
Distributive justice 4.3
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Principle of long-term self-interest
Never take any action not in your
organization’s long-term self-interest.
4.3
Principles of
Ethical Decision Making
Chapter 4
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Principles of
Ethical Decision Making
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
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Principles of
Ethical Decision Making
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
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Principles of
Ethical Decision Making
Principle of Government Requirements
Never take any action that violates the law,
for the law represents the minimal
moral standard.
4.3
Chapter 4
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Principles of
Ethical Decision Making
Principle of Utilitarian Benefit
Never take any action that does not result in
greater good for society.
4.3
Chapter 4
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Principles of
Ethical Decision Making
Principle of Individual Rights
Never take any action that infringes on
others’ agreed-upon rights.
4.3
Chapter 4
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Principles of
Ethical Decision Making
Principle of Distributive Justice
Never take any action that harms the
least among us:
the poor, the uneducated,
the unemployed.
4.3
Chapter 4
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Practical Steps to
Ethical Decision Making
Select and hire ethical employees
Establish a Code of Ethics
Train employees to make ethical decisions
Create an ethical climate
5
Chapter 4
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Practical Steps to
Ethical Decision Making
Overt Integrity Tests
Personality-Based Integrity Tests
Select and hire ethical employees
If you found a wallet containing $50,
would you return it with the money?
5.1
Chapter 4
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Doing the Right Thing
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
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What Really Works
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
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What Really Works (continued)
Overt Integrity Tests & Workplace Deviance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 82%
Workplace Deviance (Counterproductive Behaviors)
Personality-Based Integrity Tests & Workplace Deviance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 68%
Chapter 4
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What Really Works (continued)
Overt Integrity Tests & Job Performance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 69%
Job Performance
Personality-Based Integrity Tests & Job Performance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 70%
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 33
What Really Works (continued)
Overt Integrity Tests & Theft
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 57%
Theft
Chapter 4
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Practical Steps to
Ethical Decision Making
Establish a Code of Ethics
Communicate code of ethics to both inside and outside the company
Develop ethical standards and procedures specific to business
5.2
http://www.nortelnetworks.com
Web Link
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 35
Ethics Training
Ethics Training
Develops employee awareness of ethics
Achieves credibility with employees
Teaches a practical model of ethical
decision making
5.3
http://ethics.bellsouth.com
“Ethics Scenarios Game”
Web Link
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 36
Ethics Training
Tower Records
Lockheed
Boeing
Bell South
U.S. Dept. of
Justice
3M
City of
Philadelphia
And more require employees to take ethics training
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 37
A Basic Model of
Ethical Decision Making
1. Identify the problem
2. Identify the constituents
3. Diagnose the situation
4. Analyze your options
5. Make your choice
6. Act
Adapted from Exhibit 4.6
5.3
Chapter 4
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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
Establishing an Ethical Climate
5.4
http://www.whistleblowers.org
Web Link
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 39
What Is Social Responsibility?
After reading these sections,
you should be able to explain:
6. to whom organizations are socially responsible.
7. for what organizations are socially responsible.
8. how organizations can choose to respond to
societal demands for social responsibility.
9. whether social responsibility hurts or helps an
organization’s economic performance.
Chapter 4
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What Is Social Responsibility?
Social Responsibility
A business’s obligation to…
pursue policies
make decisions
take actions that benefit society
Chapter 4
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What Is Social Responsibility?
Recall from
Chapter 3 that
PETA and
Procter &
Gamble have
an ongoing
disagreement
about what is
socially
responsible.
Chapter 4
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To Whom Are Organizations
Socially Responsible?
Stakeholder
Model
Satisfy Interests
of Multiple Stakeholders
Shareholder
Model
Maximize Profits
6
Chapter 4
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Pros
Shareholder Model
Firm maximizes
shareholder wealth and
satisfaction
The company stock
increases in value
6
Cons
Organizations cannot act
effectively as moral agents
for shareholders
Time, money, and attention
diverted to social causes
undermine market
efficiency
Chapter 4
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Stakeholder Model
Primary
Stakeholders:
Shareholders
Employees
Customers
Suppliers
Governments
Local Communities
Secondary
Stakeholders:
Media
Special Interest Groups
Trade Associations
6
Chapter 4
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Organization’s Social Responsibilities
Abide by principles of right and wrong
Obey laws and
regulations
Ethical
Legal
Economic
Discretionary
Be profitable
Serve a social role
7
$
?
Chapter 4
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Responses to Demands
for Social Responsibility
8
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 47
Social Responsibility and
Economic Performance
Realities of Social
Responsibility
Can cost a company
Sometimes it does pay
Does not guarantee profitability
9
Chapter 4
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Solve the Dilemma
Customer Privacy
• Checkers Pizza offered home delivery first but the larger pizza
chains soon took away their competitive advantage
• Jon Barnard, Checker’s founder, developed a database to
track phone customer’s orders, and regain his advantage
• Using information from the database, Barnard planned to
reward the family who ordered the most pizzas
• But, would that family want the recognition?
? What are some of the ethical issues in giving customers an
award for consumption behavior without notifying them first?
? Do you see this as a potential violation of privacy? Explain.
? How would you handle the situation if you were Barnard? 2-48
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