Managing Business Ethics

1
Managing Business Ethics

• Chapter 7
• Treviño Nelson 5th Edition

2
Chapter 7 Overview

• Introduction
• In Business, Ethics Is about Behavior
• Our Multiple Ethical Selves
• Rewards and Discipline
• Everyones Doing It
• People Fulfill Assigned Roles
• People Do What Theyre Told
• Responsibility Is Diffused in Organizations
• Conclusion

3
Underlying Assumptions

• Managers want to be ethical
• Managers want their subordinates to be ethical
• Based on their experience, managers will have
  insight into the unique ethical requirements of
  the job

4
Advice Ethical Behavior

• Think of ethics in behavioral terms what
  behavior are you looking for?
• Specify the behavior you want and explain why
• Create a work environment that supports that
  behavior

5
Multiple Ethical Selves

• Ken Lay
• Dennis Levine
• Practical Advice
• Analyze yourself
• Observe your subordinates
• Identify what influences them

Ken Lay
6
Reward systems

• What gets rewarded, gets done!
• People will go the extra mile to achieve goals
  set by management
• Goals combined with rewards can encourage
  unethical behavior

7
Reward systems

• What gets rewarded, gets done!
• Practical Advice
• Think about what kind of behavior and attitudes
  are being rewarded explicitly and implicitly
• Think about goals, likely behavior, unintended
  consequences
• Ethical Pygmalion effect expectations of high
  standards and ethical behavior

8
Recognize the Power of Indirect Rewards and
Punishments

• Social learning theory
• Tailhook example
• Rewarding ethical behavior
• Difficult in the short term
• Easier over the long term

9
Punishment

• Critical part of a managers job
• Must be administered fairly
• Fits the crime
• Consistent with what others have received
• Employee has input
• Conducted in private
• Explanation that ties punishment to misconduct
• Recognize punishments indirect effects
• Thomas J. Watson, Jr. IBM example

10
Discipline

• Practical advice for managers
• Adults differentiate between fair and unfair
  discipline
• Punishment is expected if rules are broken
• Discipline fairly
• Be concerned about observers and implicit messages

11
People Follow Group Norms

• Rationalizing unethical behavior
• Pressure to go along
• Practical advice for managers
• Be aware of group norms
• Consider whether the reward system implicitly
  rewards misconduct
• Slade Company example

12
Deindividuation People Fulfill Assigned Roles

• Cagney Lacey example
• Research Zimbardo Prison experiment
• Roles at work
• Conflicting roles can lead to unethical behavior
• Roles can support ethical behavior
• Practical advice for managers
• Roles influence behavior
• Analyze roles and role conflicts
• Determine whether jobs need to be altered

13
People Do What Theyre Told

• Research the shocking Milgram experiment
• Obedience to authority at work
• Practical advice for managers
• Recognize the power managers hold as legitimate
  authority figures
• Use this power to set high
• ethical standards

14
Diffused Responsibility

• Dont worry were taking care of everything
• Workers encouraged to turn over responsibility to
  those in higher levels
• Diffusion of responsibility in groups
• Bystander research
• Groupthink and illusion or morality
• Ensure that alternative views are aired
• Divide responsibility
• Specialization
• Fragmentation of conscience
• Create psychological distance

15
Diffused Responsibility

• Practical advice for managers
• Make responsibility a relevant issue and
  reinforce
• Appoint devils advocate or multiple advocates in
  groups
• Spell out accountability associated with specific
  positions

16
Walk the talk

• Talk about the ethical implications of decisions
• Make it clear you dont want to be protected from
  bad news
• Provide guidance on ethical decision making
• Weave ethical goals into performance management
• Reward ethical conduct discipline unethical
  conduct
• Demand accountability
• Be aware of the standards I am setting
• How would people describe me?

17
Case

• Youve recently been promoted into the position
  of marketing manager in the communications
  division of your company. Your new job involves
  managing a staff and creating the publications
  and marketing materials for insurance sales
  professionals in three regions. You have met the
  directors of the three regional sales forces
  before, and now you ask each one for a meeting to
  discuss in depth how your team can best meet
  their needs. Two of the sales directors were very
  cordial, and each explained what the technical
  demands of their areas are and how your
  department can best meet their needs. However,
  during your meeting with Billthe sales director
  of the third region and one of your firms
  biggest moneymakershe lays down the law. He says
  that his area is the largest of the three
  regions, and it produces significantly more
  revenue for your company than the other two
  regions combined. You and your people need to
  know that when I say, Jump, he says, they
  need to ask, How high? In return, he says,
  hell recommend you and your people for every
  award the company has to offer. In addition, he
  says hell personally give you a monetary bonus,
  based on your teams performance, at the end of
  the year. Although you have never heard of a
  manager giving someone a bonus out of his own
  pocket, you suspect that your company would frown
  on such a practice.