Mod 13

A financial services organization has experienced several incidents of unethical behavior. The HR director points out that high-quality studies in the realm of medicine have demonstrated that in healthcare organizations, role models—people we can identify with, who have qualities we would like to have, or who are in positions we would like to reach—have an important impact on the professional values, attitudes, and behavior of medical students and doctors. For this reason, he argues, it is important that the company's senior managers function as a role model: when they are perceived as ethical, employees are less likely to engage in unethical behavior. Do you agree with the HR director that the findings of studies on the importance of role models (doctors) in healthcare organizations are also applicable to role models (senior managers) in a financial services organization?

Agree why: Correct. Obviously, the PICOC is different here: the population (doctors versus senior managers) and the context (healthcare organizations versus financial services organizations) are not the same. Nevertheless, we would argue that the finding that role models have a (positive or negative) effect on the values, attitudes, and behavior of other people seems to reflect a general psychosocial mechanism applicable to all people. In addition, the finding also aligns with the social theory of reference groups, which states that individuals tend to use other people as a standard for evaluating their own behavior.

Beneficence

Beneficence deals with the welfare of stakeholders, particularly whether the benefits from a decision exceed the harms that it might bring.

Read this excerpt from a newspaper article. A new meta-analysis published in the Journal for Organizational Behavior shows that employees high in impulsivity are more likely to engage in unethical behavior. In addition, it was found that they are also more willing to comply with supervisors' requests for compliant misconduct. This finding is consistent with self-regulation theory, which maintains that impulsive individuals have less willpower and self-control. Imagine you are responsible for the recruitment and selection of new employees for a bank. Would you test candidates for impulsive behavior?

I need more information. why: The article fails to provide information about how much more likely individuals high in impulsivity are than individuals low in impulsivity to engage in unethical behavior: 2 times more likely, 10 times, or maybe even 100 times? In addition, we do not know whether there may be other (more effective, or easier) methods to prevent people from engaging in unethical behavior. We need more information.

A large international brewery produces beer that is sold in 12 countries across Europe. The beer is brewed in the United Kingdom and then transported to a large distribution station in Belgium where the beer gets bottled and distributed. The company has noticed that in the past year, the number breakdowns and stops in the bottling process have increased. To improve this situation, the company considers introducing Q-management, a business process improvement program widely used in many industries. The company's risk manager estimates the chance that the new program will have a negative impact on the quality of the beer to be 5 to 10 percent, which is considered acceptable. Within a week after the implementation, however, the bottling process must be stopped twice because batches of beer are contaminated—resulting in an operational loss of $2 million. The company's CEO considers firing the risk manager—obviously, his risk estimate was totally inaccurate. Do you agree that the risk manager's estimate was inaccurate?

I need more information. why: The fact that within a week, the bottling process had to be stopped twice does not mean that the risk estimate of 5 to 10 percent was too low. Even a risk estimate of only 1 percent does not guarantee a trouble-free implementation. To determine whether the risk manager's estimate was accurate, more information is needed.

Justice

Justice is the ethical principle to treat people equitably and distribute benefits and burdens fairly. One of the major concerns in organizational decisions is when decisionmakers ignore adverse effects on parties "not in the room" or stakeholders with little power and voice.

Read the following scenario. A small but fast-growing international company with offices in Finland and the United States needs to hire new employees. The company has 23 employees, but the founder-CEO expects this number to increase to 40 within a year. The CEO feels that the current selection procedure (testing candidates' general mental ability [GMA, also called general intelligence] and conducting structured interviews) is not sufficient and therefore suggests screening candidates through an assessment center instead. When you consult the research literature, you find a recent meta-analyses that summarizes what 85 years of research in personnel psychology has revealed about the predictive validity of selection methods. In this meta-analysis, a table is included that lists widely used selection methods and their correlation with job performance. In addition, the table shows the added value (% gain) when a selection method is combined with a GMA test. A copy of this table is depicted below. Based on the evidence presented in the table, would recommend replacing the company's current selection procedure (GMA test and structured interviews) with a procedure in which candidates are screened by an assessment center?

No, because assessment centers cost a lot of money but add hardly any value. why: Correct. As you can see in the table, the predictive validity of an assessment center is r = 0.36, which is lower than a GMA test (0.65) and structured interviews (0.58). Even combining a GMA test with an assessment center leads to only a very small increase of the predictive validity (2%). This means that the current selection procedure gives you the biggest bang for your buck.

Respect for Persons

Respect for persons is the ethical principle promoting the exercise of autonomy in managing one's life and making personal decisions. It involves avoiding imposing undue demands or risks that undermine an individual's well-being and providing appropriate information to help people make choices that reflect their own goals and interests.

Read the scenario below. A British food delivery company considers implementing a new smartphone app to communicate with its 450 delivery agents who deliver food from restaurants to its customers in Central London. It is expected that the app will lead to a faster delivery process (within 30 minutes), which will result in a productivity increase of $300,000. According to the company's IT director, there is an 85 percent chance that the app will work as planned. This, of course, means that there is a 15 percent chance that the app will not work, in which case the company won't be able to communicate with its delivery agents and may not be able to deliver food for at least two days. The company's daily revenue is on average $50,000.

Yes, because the expected value is $240,000. why: The expected value is 255,000 (0.85 × 300,000) minus 15,000 (0.15 × 100.000) = $240,000. Of course, you should also take into account potential intangible costs, such as a decrease in customer satisfaction or reputational damage.

1. A randomized controlled study found that having a range of different tasks to do in one's job is negatively associated with unethical behavior. In this study, participants were assigned to a low task variety or high task variety condition, and then presented with a scenario in which they had the opportunity to cheat. The authors found that those with higher task variety were less likely to cheat than those with low task variety. These findings suggest that feelings of disinterest toward one's job can translate into unethical behavior.

actionable why: Although the findings do not state how you could increase task variety, as a manager, you can do several things, such as • Ask people whether they enjoy variety and challenge in their daily work • Discuss with those who perceive their daily work as boring how task variety could be increased • Promote job crafting—allowing people to alter their jobs in such a way as to better suit their skills and interests thereby increasing job variety

Introducing a new production technique, the manufacturing costs of a medical device your company makes has dropped by 50 percent. One of the company's customers, a large hospital chain, asks you for a discount; the hospital's head of purchasing tells you he knows about the 50 percent cost reduction because he is best friends with your company's vice president. Your director of sales approves the discount. A few days later, two other customers, a small local community hospital and an academic hospital, place the same order. You decide not to tell the other customers about the drop in manufacturing costs and not to offer them a similar discount. Which ethical principle is of concern here?

justice why: Justice

You are asked by an important client, a multinational firm with a large budget for consulting services, whether your consulting firm can deliver a two-day MBTI workshop for its top 100 executives. Your initial enthusiasm about this 100k+ assignment wears off, however, when you look into the scientific literature on MBTI. You learn that MBTI stands for Meyer Briggs Type Indicator, a popular personality test that is seriously flawed and gives an oversimplified and non-evidence-based view of human personality. In contrast, the Big 5 Inventory is the most valid and reliable model of personality, supported by a large body of scientific evidence and widely used by psychologists. Most likely, you will explain to your client that the MBTI is seriously flawed and recommend the use of the Big 5 instead. But what would you do if the client still insists on using the MBTI and threatens to go to another consulting firm? Would you accept the assignment and do the workshop?

no why: You are taking a principled stand that reflects both beneficence (the firm's well-being) and respect for persons (giving people valid information with which to make decisions)

A recent controlled study indicated that, when the organization is in competition with other organizations, individuals are more inclined to engage in pro-organizational unethical behavior when faced with ethical dilemmas.

not actionable why: The finding that a competitive market may lead to an increase in unethical behavior is not really actionable. There may be a way to cushion this risk, but this information is not provided.

By introducing a new production technique, the manufacturing costs of a medical device your company makes has dropped by 50 percent. The sales revenue of the medical device is your company's only source of income, and because of the reduction in production costs, the company will finally make a healthy profit. One of the company's customers, a large hospital chain, asks you for a discount. The hospital's head of purchasing tells you he knows about the 50 percent cost reduction because he is best friends with your company's vice president. Your director of sales approves the discount. A few days later, two other customers, a small local community hospital and an academic hospital, place the same order. Do you tell the other customers about the drop in manufacturing costs, and do you offer them a similar discount?

yes why: tYour firm offered a cost reduction to the large hospital chain because of private information its purchasing manager had access to. That decision was not made for legitimate business reasons. Your decision to offer a similar discount is consistent with concerns for the ethical principle of justice.