Dr.

Gajender Sharma

Dr. Gajender Sharma

of Ethics  Morally Questionable Acts  Dynamic Relationships that Affect Ethical Decision Making  Factors Affecting Ethical Decisions  Norms and Counter-norms Dr. Gajender Sharma 2  Managing Ethics Dr. Gajender Sharma
 Essence

TEXACO racial discrimination $176 M MERCURY FINANCE - overstating profit $ 2.2 B ADM price fixing $100 M GENETECH tying personal loan to business deal CEO loses job BANKERS TRUST - deliberately misled or deceived customers Damaged image W.R. GRACE sexual harassment CEO loses job BAUSCH & LOMB manipulation of accounting data earnings fell 54%

Dr. Gajender Sharma

Dr. Gajender Sharma

1. Responsibility to address corporate issues (58% Execs) 2. Corp. leaders responsibility is to the greatest good (52% Execs; 35% MBAs) 3. Switch brands (76% consumers) 4. Skepticism about cause related marketing (58% consumers; 21% today) 5. Do not buy (75% consumers)

58% execs 52% execs 35% MBAs 76% consumers 58% consumers 21% today 75% consumers

Dr. Gajender Sharma

Dr. Gajender Sharma

1. Social responsibility is important (26% investors) 2. Company image (84% employees) 3. Innovative workplace practices associated with productivity 4. Employee ownership leads to productivity (60% companies) 5. Business has too much power (71 %) 6. Corporate role is more than to make a profit (95%)

1. 26% investors 2. 84% employees

4. 60% companies 5. 71% 6. 95%

Dr. Gajender Sharma

Dr. Gajender Sharma

Profit at Any Cost

- Corporate layoffs - Wall Street sins - Pentagon fraud - age discrimination - retaliation against employees who exposed unsafe/illegal practices - theft - selling products that do not meet specs.

- price fixing - use of banned chemicals - power in the market place * Who is responsible? Captain of the ship? * Does profitability excuse questionable behavior?
Dr. Gajender Sharma
Dr. Gajender Sharma 6

Codes

do not produce ethical behavior. ethics tend to flow from our core values. have intrinsic worth.
Dr. Gajender Sharma
Dr. Gajender Sharma 7

Our

People

Conflicts of interest lead to ethical problems Individual behavior is strongly influenced by incentive Self-regulation and standard setting organizations fall short
Dr. Gajender Sharma
Dr. Gajender Sharma 8

 Get

support by CEO for support of key stakeholders  Get stakeholders participation  Expand words/ phrases into expectations  Establish feedback mechanism  Assure implementation/ monitoring of results  Reward employees who perform and deliver on values
Dr. Gajender Sharma
Dr. Gajender Sharma 9

Non-job failures: Cheating on your expense accounts Stealing supplies Sandbagging Job failures: Superficial performance appraisal Not confronting expense account Cheaters Falsely praising poor performers Denial of training opportunities Dr. Gajender Sharma Undermine management Dr. Gajender Sharma

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Job distortions: Bribery Manipulation of suppliers/buyers Differential pricing Falsifying information Job creation: Bending policies for certain customers Bending policies for salespeople Caught violating rules Arranging for promotions
Dr. Gajender Sharma
Dr. Gajender Sharma 11

FACTORS AFFECTING ETHICAL DECISIONS

UNCERTAINTY OF INPUTS CENTRALITY OF WORKFLOW POWER

CONTROL OF ETHICAL CONTINGENCIES

BEHAVIOR

SUBSTITUTABILITY OF ACTIVITIES PREVENTIVE ROUTINIZATION

Dr. Gajender Sharma

COPING ROUTINIZATION

Dr. Gajender Sharma

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A General Framework of the Ethical Decision-Making Process

CHARACTERISTICS OF THE DECISION MAKER

ETHICAL SITUATION

DECISION

OUTCOMES

SIGNIFICANT INFLUENCES
Dr. Gajender Sharma 13

Dr. Gajender Sharma

Individual Characteristics of the Decision Maker that Influence the Ethical Decision-Making Process
CHARACTERISTICS OF THE DECISION MAKER

ETHICAL SITUATION

DECISION
SIGNIFICANT INFLUENCES

OUTCOMES

* Achievement motivation * Need for affiliation * Ego strength * Locus of control Dr. Gajender Sharma
Dr. Gajender Sharma

* Knowledge * Experience * Risk taking * Machiavellianism 14

Outcomes that Result from the Ethical Decision-Making Process

CHARACTERISTICS OF THE DECISION MAKER

ETHICAL SITUATION

DECISION
SIGNIFICANT INFLUENCES

OUTCOMES

* Performance * Rewards * Satisfaction

Dr. Gajender Sharma

Dr. Gajender Sharma

* Feedback * Promotions * Learning

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Significant Influences on the Ethical Decision-Making Process

CHARACTERISTICS OF THE DECISION MAKER

ETHICAL SITUATION

DECISION
SIGNIFICANT INFLUENCES

OUTCOMES

* The organization * Technology * Work * Significant others; customers, * The law peers, immediate supervisor, * Economics top managers, family, friends, Dr. Gajender Sharma * ProfessionalismDr. Gajender Sharma opinion leaders 16 other

Elements of the Ethical Situation

CHARACTERISTICS OF THE DECISION MAKER

ETHICAL SITUATION

DECISION
SIGNIFICANT INFLUENCES

OUTCOMES

* Opportunity

* Ethical decision history * Moral intensity of the situation Dr. Gajender Sharma
Dr. Gajender Sharma

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Elements of the Ethical Decision-Making Process

ELEMENTS OF THE DECISION
PERCEIVED ETHICAL PROBLEM

Characteristics of Decision Makers

Ethical Situation

DECISION Significant Influences

Outcomes

Information acquired Information processed Ethical decision history Expectations Sent and received roles Ethics norms (personal & those of others) Information acquired Information processed

PERCEIVED ALTERNATIVES, PRODUCT, PRICE, PROMOTION, DISTRIBUTION INFO

JUDGMENT

PERCEIVED CONSQUENCES

Probability of consequences Desirability of consequences

ORGANIZATION A

ORGANIZATION B

Dr. Gajender Sharma

Dr. Gajender Sharma

19

NORMS
            

COUNTERNORMS
            

LT relationships with customers Objectivity Openness Candor Honesty Flexibility/Adaptability Cost-effectiveness Taking responsibility Customer Service Develop younger salespeople Team effort Consensus Loyalty
Dr. Gajender Sharma

Sandbagging Emotional Involvement Secrecy Stonewalling Lying Dogmatism Padding expenses Passing the buck Sales force Look out for Number 1 Individual goals first Taking unfair credit Criticize the company
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Dr. Gajender Sharma

 The OLD Ethic Favors

 The NEW Ethic Favors

Leisure Debt Rights Protection Unisexism Self-interest Equality Wealth redistribution Situationalism Risk aversion Quality of life 21 Consumerism

Work Savings Responsibility Competition Sex roles Sacrifice Equality - Inequality Wealth accumulation Absolution Risk assumption Efficiency/Productivity Thrift/Investment Dr. Gajender Sharma
Dr. Gajender Sharma

Diagnose Analyze

the reward system

rules and procedures and education

Training Develop

investigative structures
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 Leaders

exhibit moral courage by being willing to make personal sacrifices should not become to preoccupied with pleasing constituents

 Leaders

 Leaders

focus on needs of others - they have a commitment to serve

 Business

as usual may be evidence of a leadership failure Sharma Dr. Gajender 23

Dr. Gajender Sharma

CEOS Set the Tone for How to Handle Questions of Ethics

(Hymowitz Hymowitz)
 Determination

and a winning personality

equal success  Employees rarely complain  Employees take their cues from management  Top management actions are more important than codes of ethics  Employees wrestle with the short-run vs. long-run Dr. Gajender Sharma
Dr. Gajender Sharma

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THE ESSENCE OF ETHICS I

(Article by Williams)
 Codes

of ethics do not necessarily lead to ethical behavior.  The core values we profess are not necessarily those by which we live.  There is a place for compassion in leadership.  Bureaucracy can come in conflict with ethics.  Managers who vent their frustration on subordinates (who can do little about it) are not acting ethically. Dr. Gajender Sharma 25
Dr. Gajender Sharma

THE ESSENCE OF ETHICS II

(Article by Williams)
 Study

the ethics of organizations which have reputations for being ethical.

 Build

ethics into organization policies and practices.

 Make

sure quality and service and integrity permeate the entire organization. high expectations of all members of your organization.
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Dr. Gajender Sharma 26

 Develop

THE ESSENCE OF ETHICS II

(Article by Williams)

Create

an organizational culture that

encourages...

open and honest communication continual learning personal development respect for people
Dr. Gajender Sharma
Dr. Gajender Sharma 27

Company Threats to Ethical Behavior

A

firm that
routinely ignores or violates internal codes of ethics always looks for simple solutions to ethical problems and is satisfied with quick fixes unwilling to take an ethical stand when there is financial cost to the decision creates an internal environment that either encourages unethical behavior or discourages ethical behavior usually sends its ethical problems to the legal department looks at ethics solely as a public relations tool to enhance its image Gajender Sharma Dr. 28
Dr. Gajender Sharma

Company Threats to Ethical Behavior

A

firm that
treats its employees differently from its customers is unfair or arbitrary in its performance appraisal standards has no procedures or policies for handling ethical problems provides no mechanisms for internal whistleblowing lacks clear lines of communication within the organization is sensitive only to the needs of shareholders encourages its employees to leave their personal ethical values at the door
Dr. Gajender Sharma
Dr. Gajender Sharma 29

FIVE WARNING SIGNS OF ETHICAL COLLAPSE

(Jennings article)
 surround yourself with subordinates who are

young, inexperienced, enthralled with power and deep in debt  send a clear message that you expect results at any cost  be certain the CEO is tyrannical and prone to anger  when an employees public statements bring criticism to the company, cut the employee loose  when an ethical lapse is discovered, never admit anything. Conceal, spin and gloss.
Dr. Gajender Sharma
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Do College Honor Codes Make Moral Sense on Todays Campus? (Brownfield) Information on College Students
70% have cheated on a test at least once 87% have cheated on some type of written work 49% have collaborated with others on an assignment 52% have copied from someone 87% business majors have cheated at least once

Conclusion: grade > learning

chaos > standards laziness > diligence
Dr. Gajender Sharma
Dr. Gajender Sharma

short-run > long-run negligence > integrity

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Do College Honor Codes Make Moral Sense on Todays Campus? (Brownfield)

Is an Honor Code a reasonable ideal for Todays students???

Today, we have a
Questionable moral climate, Lack of strong, value-based up-bringing, and Celebration of negative role models

Dr. Gajender Sharma

Dr. Gajender Sharma

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Can we arrive at consistency in global ethics standards?

Companies are identified by their corruption Who will want to partner with such companies?

Dr. Gajender Sharma

Dr. Gajender Sharma

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PR vs. Performance Real transformations require a change in core values, attitudes, relationships, leadership with experience for change Sound organizations provide freedom to act, but also have some controls A culture built around star players cannot foster teamwork
Dr. Gajender Sharma
Dr. Gajender Sharma 34

Chapter #5 - Conducting Business Ethically and Responsible

Companies must be

committed to ethics
Codes Ethics Programs Ethics Orientation
Social Company

Responsibilities
Customers Employees Investors Others

Responsibility
Not the same as ethics Related to ethics
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Dr. Gajender Sharma

35

Chapter #5 - Conducting Business Ethically and Responsible

Can

businesses that conduct themselves in an ethical way be profitable?

How

can ethical behavior be encouraged?

What

do short-term and longterm thinking have to do with ethics?

Dr. Gajender Sharma
Dr. Gajender Sharma 36

You Will be Responsible for this Material on the TEST

Dr. Gajender Sharma

Dr. Gajender Sharma

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Alternative Courses of Action Available in Ethical Situations

ACTIONS
NOT THINK

ADVANTAGES
Avoids the danger of getting into a zero-sum game with colleagues Same as not think about it

DISADVANTAGES
The risk of going in the wrong direction Same as not to think about it Individuals slowly conform maybe to the wrong direction Organization disregards protest & punishes protester

ABOUT IT

GO ALONG &

GET ALONG

PROTEST

Individual feels good about making effort to stop unethical behavior

Dr. Gajender Sharma
Dr. Gajender Sharma

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Alternative Courses of Action Available in Ethical Situations

ACTIONS
CONSCIENTIOUSLY

ADVANTAGES
Makes clear statement that one person feels that action is unethical Person feels good about self for making effort to stop unethical behavior Signals that organization will lose good people if unethical behavior continues Person who leaves may join a competitor, feels better because he/she did not cooperate with unethical Dr. Gajender Sharma behavior
Dr. Gajender Sharma

DISADVANTAGES
Few organizations recognize individual rights to object May hurt chances for rewards and advancement Most people are replaceable and if replacement cooperates with unethical behavior, what is gained?

OBJECT

 LEAVE

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Alternative Courses of Action Available in Ethical Situations

ACTIONS
SECRETLY BLOW

ADVANTAGES
Can be very effective If whistle-blower remains secret, retaliation cannot occur Can be effective Whistle-blower may be treated as a hero by many

DISADVANTAGES
- Feelings of cowardice - Creation of atmosphere of mistrust - What will whistle-blower do if confronted by firm - tell the truth or lie? - Organization may attack the whistle-blower - It is difficult to interact with those one is criticizing - It may be difficult to work with those who hold a grudge - Does not permit dialogue between upper&lower managers - Might prevent injured consumers or clients from 40 receiving remedies

THE WHISTLE

PUBLICLY BLOW

THE WHISTLE

SECRETLY

THREATEN TO BLOW THE WHISTLE

Can be very effective When it works, organization is not hurt by bad publicity

Dr. Gajender Sharma

Dr. Gajender Sharma

Alternative Courses of Action Available in Ethical Situations

ACTIONS
SABOTAGE

ADVANTAGES
Can be effective Identity of saboteur might be protected

DISADVANTAGES
Sabotage is not dialogue Retaliation might occur against the saboteur or against others Innocent people may be fired

NEGOTIATE

Individual action may lead to small-group consensus that will be more effective than individual action Win-win solutions are possible
Dr. Gajender Sharma

Does not work well in situations that are zerosum, lose-win, in nature Individual who perceives ethical problem may not know how to negotiate, my lose cool
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Dr. Gajender Sharma

SELECTED PRINCIPLES OF ETHICAL CONDUCT



KANTS CATEGORICAL IMPERATIVE: Act in a way that you believe is right and just for any other person in a similar situation. CARRS CONVENTIONALIST ETHIC: Bluff and take advantage of all legal opportunities and widespread practices and customs THE DISCLOSURE RULE: Ask how it would feel to see the thinking and details of the decision disclosed to a wide audience THE GOLDEN RULE: Look at the problem from the position of another party affected by the decision and try to determine what response the other person would expect as the most virtuous

SELECTED PRINCIPLES OF ETHICAL CONDUCT



THE HEDONISTIC ETHIC: Do whatever you find to be in your own self-interest MOORES INTUITION ETHIC: Go with your gut feeling or what you understand to be right in a given situation SMITHS MARKET ETHIC: Take selfish actions and be motivated by personal gains in business dealings MACHIAVELLIS MEANS-END ETHIC: Ask whether some overall good justifies any moral transgression NIETZSCHE/MARX MIGHT-EQUALS-RIGHT ETHIC: Seize what advantage you are strong enough to use without respect to ordinary social conventions and laws

SELECTED PRINCIPLES OF ETHICAL CONDUCT



THE ORGANIZATION ETHIC: Ask whether actions are consistent with organizational goals and do what is good for the organization GARRETTS PRINCIPLE OF PROPORTIONALITY: Do whatever you will if there is a proportional reason for doing so THE PROTESTANT ETHIC: Do only that which can be explained before a committee of your peers THE REVELATION ETHIC: Pray, mediate, or otherwise commune with a superior force or being BENTHAM / MILLS UTILITARIAN ETHIC: Determine whether the harm in an action is outweighed by the good

MORAL TYPES

DESCRIPTORS
1. Make physical pleasures the supreme goal in their lives.  KEY QUESTION: Which course of action will yield the greatest pleasure? 2. Goal of making as much money as possible  KEY QUESTION: which course of action will make the most money?  All their feelings and associations can be melted down to dollars 3. A social butterfly, a party animal  KEY QUESTION: Which course of action will help me best get along with the group?  If you want to know what this person thinks, find out who spoke to him or her most recently

Hedontist

Profitmaximizer

Socialite

MORAL TYPES

DESCRIPTORS
4. Life centers around power and glory.  KEY QUESTION: Which course of action will increase my power and glory?  These people have enormous egos, boundless ambitions, and undertake reckless actions. 5. Spiritual values predominate  KEY QUESTION: which course of action will help me become a better person?  These people have new insights, reform old ways, initiate new ways of thinking, strike out on new paths
 

Politician

Selfactualizer

Craftsman 6. A technician
POSITIVES: Creative, knowledgeable, independent, self-reliant, hardworking NEGATIVES: Sadistic, forceful, manipulative, non-trustworthy

MORAL TYPES

DESCRIPTORS
7. Main goal in life to belong to an organization  POSITIVES: Service oriented, loyal, responsible, humble, sensitive to the needs of others, dependable, pleasant, trustworthy  NEGATIVES: Fear, worry, dependency, lacking vision, risk aversive, low drive, indecisive, change resistant 8. Dominant goal in life to gain prestige, glory, fame  POSITIVES: Inventive, flexible, change oriented, competitive, team player, independent, risk taker, impartial, high energy, idealistic  NEGATIVES: Lack of conviction, rebellious, manipulative, lack of intimacy, lonely

Company person

Gamesman

Models of Personal and Organizational Moral Development

PERSONAL MORAL PERSONAL MORAL DEVELOPMENT

DEVELOPMENT 1. Physical consequences determine moral behavior. Avoidance of punishment and deference to power are typical of this stage 2. Individual pleasure needs are the primary concern and dictate attitudes toward behavior

ORGANIZATIONAL MORAL ORGANIZATIONAL MORAL DEVELOPMENT

DEVELOPMENT 1. Social Darwinism - Fear of extinction and the urgency of financial survival dictate moral conduct. The direct use of force is the acceptable norm.

Dr. Gajender Sharma

2. Machiavellianism Organizational gain guides actions. Successfully attaining goals justifies the use of any effective means, including individual manipulation Dr. Gajender Sharma 48

Models of Personal and Organizational Moral Development

PERSONAL MORAL PERSONAL MORAL DEVELOPMENT

DEVELOPMENT DEVELOPMENT 3. The approval of others 3. Cultural conformity - A tradition of standard determines behavior. operating procedures and The good person is one caring groups. Peer who satisfies family, professional pressure to friends, associates. adhere to social norms dictates what is the right and wrong behavior 4. Compliance with Allegiance to authorityauthority, upholding of Directions from legal authority the social order, and determine moral standards. Right and wrong are based on doing ones duty are the decisions of those with primary concerns Dr. Gajender Sharma 49 legitimate hierarchical power
Dr. Gajender Sharma

ORGANIZATIONAL MORAL DEVELOPMENT ORGANIZATIONAL MORAL

Models of Personal and Organizational Moral Development

PERSONAL MORAL ORGANIZATIONAL MORAL DEVELOPMENT DEVELOPMENT PERSONAL MORAL ORGANIZATIONAL MORAL

DEVELOPMENT DEVELOPMENT 5. Tolerance for rational 5. Democratic participation Participation in decision-making dissent and acceptance reliance on majority rule become of majority rule become organizational moral standards. primary ethical concerns Participative management
becomes institutionalized

6. What is right and good is Organizational integritya matter of individual Justice and individual rights conscience and are the moral ideals. Balanced judgment between competing responsibly chosen interests shapes organizational commitment. Morality is character which, in turn, based on principled determines the validity of the behavior personal convictions Dr. Gajender Sharma 50
Dr. Gajender Sharma