ethics final

land issues

Land pollution (hazardous waste and other contaminants-"brown fields") Waste management (U.S. largest contributor) Deforestation (clear cutting and excessive harvesting of forest products) Urban sprawl (land management, mass transportation, highways, etc.) Biodiversity (eco-systems) Genetically modified organisms (long term effects are unknown)

exacting culture

Little concern for people but a high concern for performance. Focuses on the interests of the organization.

top 10%

Maintain formal ethical standards that focus on rights, duties, and rules. Embrace values that assert certain inalienable rights and actions, which they perceive to be always ethically correct. Believe their values are right and superior to the values of others or even to the company's value system. Have a tendency to report or speak out about employee or firm misconduct even if the company defines it as ethical. Members of this group will probably report colleagues who take office supplies.

uncertainty avoidance

How members of a society respond to uncertainty or ambiguity.

individualism/collectivism

How self-oriented members of a culture are in their behavior. Individualist cultures place high value on individual achievement and self-interest.

qui tam relator

If an employee provides information to the government about a company's wrongdoing under the Federal False Claims Act, the whistle-blower is known as a the whistle blower can receive between 15-25% of the recovered funds

undesirable common values

Ignorance, pride and egoism, selfish desires, lust greed, adultery, theft, deceit, lying, murder, hypocrisy, slander, and addiction

Sustainability

Includes the assessment and improvement of business strategies, economic sectors, work practices, technologies, and lifestyles in the maintaining of the natural environment.

desirable common values

Integrity, family and community unity, equality, honesty, fidelity, sharing, and unselfishness

power

It can be used to motivate individuals ethically or unethically. It refers to the influence managers and leaders have over the behavior and decisions of subordinates.

International Monetary Fund (IMF)

Makes short-term loans to member countries with deficits. Provides foreign currencies for its members. Provides information about countries that might default on their debts. Member states provide resources to fund the IMF through a system of quotas proportional to the size of their respective economies.

social responsibility

Maximizing positive and minimizing negative impacts on stakeholders. (Remember the four elements of Social Responsibility: economic, legal, ethical, and philanthropic)

sustainable development

Meeting the needs of the present without compromising the ability of future generations to meet their own needs

apathetic culture

Minimal concern for either people or performance. Individuals focus on their own self-interest.

greenwashing

Misleading a consumer into thinking that a good or service is more environmentally friendly than it really is Negatively relates to financial performance

genetically modified organism (GMO)

created through manipulating plant and animal DNA to produce a desired effect like resistance to pests and viruses, drought resistance, or high crop yield

vertical system

created when a channel member (manufacturer, wholesaler, distributor, or retailer) has control of the entire business system, via ownership or contract, or through its purchasing ability

cultural relativism

The idea that Morality varies from one culture to another and "right" and "wrong" are defined differently.

power distance

The power inequality between superiors and subordinates. Saudi Arabia ranks high on the power distance scale.

Environmental Protection Agency (EPA)

U.S. government enforcement agency for all things environmental. Created to coordinate environmental agencies involved in: - Conducting environmental research - Providing assistance in fighting pollution - Enforcing the nation's environmental laws - EPA is the enforcement agency for environmental laws

work groups

Used to subdivide duties within specific functional areas of a company. (e.g. all accounting, or marketing,or finance, etc.) - Enables specialization. - Ethical conflicts may arise because team members come from different functional areas. - Conflicts when members of different organizational groups interact.

green marketing

Using stakeholder assessment to create long-term relationships with customers while maintaining, supporting, and enhancing the natural environment

human rights

an inherent dignity with equal and inalienable rights and the foundation of freedom, justice, and peace in the world

growth needs

are satisfied by creative or productive activities.

value orientation

Strive to develop shared values. Penalties are attached but the focus is on an abstract core of ideals (accountability and commitment). The foundation of an organizational ethical culture. Gives employees a clearly defined basis on which to make decisions. Fairness, compassion, respect, and transparency are paramount. Increase employees' work ethics awareness, integrity, willingness to deliver information to supervisors, use of reporting mechanisms, and the reinforcement that ethical decisions are being made. Research shows: When personal and organizational values are compatible with one another, it tends to positively influence workplace ethics. Careful hiring is absolutely important, Research shows: Both approaches can interact or work toward the same end.

bottom 10%

Take advantage of situations to further their own personal interests. More likely to manipulate, cheat, or act in a self-serving manner. May choose to take office supplies from work for personal use if the only penalty they suffer is paying for the supplies. The lower the risk of being caught, the higher the likelihood that the 10 percent most likely to take advantage of the company will be involved in unethical activities.

ethics officers

responsible for managing their organizations' ethics and legal compliance programs

relatedness needs

satisfied by social and interpersonal relationships.

centralized structure weakness

top down approach can lead to unethical acts

formal group

An assembly of individuals with an organized structure that is explicitly accepted by the group.

capitalism

An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state (gov't)

John Maynard Keynes

(1930's forward) Gov't intervention in economic policy. The state can and should stimulate growth and improve stability in private sector.

decentralized organization

- Decision making authority is delegated as far down the chain of command as possible. - Relatively few formal rules, and coordination and control are usually informal and personal. - Focus on increasing the flow of information. - Independent profit centers may deviate from organizational objectives. - May have fewer internal controls and use shared values for their ethical standards. - May have more variation in behavior. - May be harder to control rogue employees engaging in misconduct. - google, southwest

world trade organization

- Provides legally binding ground rules for international commerce and trade policy - Facilitates trade negotiations and settles disputes - Addresses economic and social issues of many industries and attempts to reduce trade barriers - Administers trade agreements NOTE: It is the only international quasi-gov't organization with enforcement power.

values-based culture

- Relies on an explicit mission statement that defines the core values of the firm and how customers and employees should be treated. - Board of directors/upper management should add to value statements by formulating specific value statements for its strategic business units (SBU). - Certain areas may have rules associated with stated values, enabling employees to understand the relationship between the two. - The focus is on values such as trust, transparency, and respect to help employees identify and deal with ethical issues. - When using this approach, explain why rules exist, what the penalties are if rules are violated, and how employees can help improve the ethics of the company.

compliance-based culture

- Rules create a compliance culture organized around risk. - Compliance-based cultures use a legalistic approach to ethics. - Codes of conduct are established with compliance as their focus, with rules and policies enforced by management. - Instead of revolving around an ethical culture, the company revolves around risk management. - The approach is good in the short term because it helps management, stakeholders, and legal agencies ensure laws, rules, and the intent of compliance are fulfilled. - when developing an ethical culture, there has to be a compliance element because every organization has employees that will try to take advantage it there is opportunity for misconduct.

differential association

- Simply learning and interacting with others. - People learn ethical or unethical behavior while interacting with others. - The learning process is more likely to result in unethical behavior if the individual associates primarily with persons who behave unethically. - Associating with others who are unethical, combined with the opportunity to act unethically, is a major influence on ethical decision making. -influences ethical decision making, and superiors in particular, have a strong influence on the ethics of their subordinates. - Employees, especially young managers, tend to go along with their superiors' moral judgments to demonstrate loyalty.

decentralized structure weakness

- Weakness: Difficult to respond quickly to changes in policy and procedures established by top management.

8 responsibilities of ethics officers

1. Assess needs/risks an organization-wide ethics program must address. 2. Develop/distribute the code of conduct or ethics. 3. Conduct training programs. 4. Establish/maintain confidential services to answer employees' ethical questions. 5. Make sure company is in compliance. 6. Monitoring and auditing ethical conduct. 7. Take action on code violations. 8. Review/update code.

Current Global Issues Perceived by Upper Management

1. Economic conditions may significantly restrict growth. 2. Regulatory changes and scrutiny may affect the manner in which products and services are produced or delivered. 3. Cyber threats that disrupt core operations and/or damage our brand. 4. Rapid speed of disruptive innovations, new technologies outpacing firms. 5. Privacy/identity management and information security/systems.

Common Mistakes in Designing and Implementing an Ethics Program

1. Failure to understand and appreciate goals. 2. Setting unrealistic and unmeasurable program objectives. 3. Senior management's failure to take ownership of the ethics program. 4. Developing program materials that do not address the needs of the average employee. 5. Transferring an "American" program to a firm's international operations. 6. Designing an ethics program that is little more than a series of lectures.

10 benefits of a strong ethics code

1. Guide employees in situations where the ethical course of action is not immediately obvious. 2. Help the company reinforce—and acquaint new employees with—its culture and values. A code can help create a climate of integrity and excellence. 3. Help the company communicate its expectations for its staff to suppliers, vendors, and customers. 4. Minimize subjective and inconsistent management standards. 5. Help a company remain in compliance with complex government regulations. 6. Build public trust and enhance business reputations. 7. Offer protection in preempting or defending against lawsuits. 8. Enhance morale, employee pride, loyalty, and the recruitment of outstanding employees. 9. Promote constructive social change by raising awareness of the community's needs and encouraging employees and other stakeholders to help. 10. Promote market efficiency, especially in areas where laws are weak or inefficient, by rewarding the best and most ethical producers of goods and services.

questions to ask before engaging in external whistle-blowing

1. Have I exhausted internal anonymous reporting opportunities within the organization? 2. Have I examined company policies and codes that outline acceptable behavior and violations of standards? 3. Is this a personal issue that should be resolved through other means? 4. Can I manage the stress that may result from exposing potential wrongdoing in the organization? 5. Can I deal with the consequences of resolving an ethical or legal conflict within the organization?

8 goals of a successful ethics program

1. Identify key risk areas employees will face. 2. Provide experience in dealing with hypothetical or disguised ethical issues within the industry through mini-cases, online challenges, DVDs, or other experiential learning opportunities. 3. Let employees know wrongdoing will never be supported in the organization and employee evaluations will take their conduct in this area into consideration 4. Let employees know they are individually accountable for their behavior. 5. Align employee conduct with organizational reputation and branding. 6. Provide ongoing feedback to employees about how they are handling ethical issues. 7. Allow a mechanism for employees to voice their concern that is anonymous, but provides answers to key questions (24-hour hotlines). 8. Provide a hierarchy of leadership for employees to contact when they are faced with an ethical dilemma they do not know how to resolve.

MNC Criticisms

1. MNCs use labor-saving devices that increase unemployment in countries where they manufacture. 2. Size and financial clout enable them to control money, supplies, employment, and even the economic well-being of less-developed countries. 3. Size and power of MNCs create ethical issues involving the exploitation of both natural and human resources. 4. MNCs can borrow money from local capital markets in much higher volume and often at a lower cost than smaller local firms. 5. MNCs have been accused of failing to carry an appropriate share of the cost of social development.

Keynes and Friedman AGREED

1. People have rational preferences among outcomes that can be identified and associated with value. 2. Individuals maximize utility and firms maximize profits. 3. People act independently on the basis of full and relevant information.

sarbanes-oxley 404

1. Requirement that management assess the effectiveness of the organization's internal controls and commission audits of these controls by an external auditor in conjunction with the audit of its financial statements. 2. Requires firms to adopt a set of values that forms a portion of the company's culture. 3. Mandates an evaluation of corporate culture to provide insight into the character of an organization, its ethics, and transparency. 4. The intent is to expose mismanagement, fraud, theft, abuse, and to sustain a corporate culture that does not allow these conditions and actions to exist.

motivation

A force within that focuses behavior toward achieving a goal.

code of conduct

A formal statement of what an organization expects of its employees. It provides rules and guidelines for employees and should be written to help employees address what behaviors are acceptable. They should be specific enough to reasonably prevent misconduct. More like a regulatory set of rules. (Often Compliance based) Reasons codes fail: 1. Not promoted so employees don't read it. 2. Not easily accessible. 3. Written too legalistically. 4. Written vaguely, providing no accurate direction. 5. Top management never refers to the code in body or spirit.

reward power

Ability to influence the behavior of others by offering them something desirable (money, status, or promotion).

atmospheric issues

Air pollution, acid rain, and global warming

social democracy

Allows private ownership of property and also features a large government equipped to offer such services as education and health care to its citizens. (started in U.S. in 1930's)

upper 40%

Always try to follow company policies and rules. Have a strong grasp of acceptable behavior and attempt to comply with codes of ethics, ethics training, and other communications about appropriate conduct. If a policy prohibiting taking office supplies from work, these employees probably will observe it. Not likely to speak out about the 40 percent who choose to go along with the work group. Prefer to focus on their jobs and steer clear of any organizational misconduct. If the company fails to communicate standards of appropriate behavior, members of this group will devise their own.

self-reference criterion

An unconscious reference to one's own cultural values, experiences, and knowledge.

work teams

Are comprised from members from different departments and bring different perspectives and expertise to decision making process.

cultural audit

Assessment of an organization's values. Usually conducted by outside consultants but may be performed internally as well. Communication about ethical expectations and support from top management help to identify a corporate culture that encourages ethical conduct or leads to ethical conflict.

behavioral economics

Assumes humans act irrationally because of genetics, emotions, learned behavior, and heuristics, or rules of thumb.

rational economics

Based on the assumption that people are predictable and will maximize the utility of their choices relative to their needs and wants.

national culture

Broader concept than organizational culture. Includes everything—both tangible items, such as artifacts, and intangible entities, such as concepts and values.

integrative culture

Combines a high concern for people and performance. An organization becomes integrative when superiors recognize employees are more than interchangeable parts—employees have an ineffable quality that helps the firm meet its performance criteria.

statement of values

Conceived by management, fully developed with input from all stakeholders. The terms "code of ethics" and "statement of values" are often used interchangeably.

global ethics issues

Corruption Variations in international regulation Supply chain issues involving human rights violations Bribery Antitrust activity: Vertical systems Internet security and privacy (Hacking has recently become a major business ethics issue.) Natural resource exploitation Human rights Gender and Race discrimination Health care: Right or privilege? U.S.--privilege; France, Germany, Canada and Sweden among others—healthcare is a right. Labor and right to work Compensation Executive compensation Consumerism and Consumption Made-to-break (planned obsolescence) Dumping:

centralized organization

Decision making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels. - Responsibility, both internal and external, rests with top-level managers. - Structure especially suited to organizations that make high-risk decisions and have lower-level managers are not highly skilled in decision making. - Suitable for organizations when production processes are routine and efficiency is of primary importance. - Division of labor is typically well defined and a clear understanding of how to carry out assigned tasks. - Stress formal rules, policies, and procedures backed up with elaborate control systems. - Codes of ethics may specify the techniques used for decision making. - General Motors, US army

expert power

Derived from a person's knowledge (or a perception that a person possesses knowledge). Usually stems from a superior's credibility with subordinates. Credibility (expert power), is positively correlated to the number of years a person worked in a firm or industry, education, and honors he/she has received for performance.

socialism

Economic theories advocating the creation of a society when wealth and power are shared and distributed evenly based on the amount of work expended in production.

referent power

Exists when one person perceives that his/her goals or objectives are similar to another's with an attempt to influence the first to take actions that allows both to achieve their objectives. Identification with others helps boost the decision maker's confidence, thus increasing the referent power.

whistle-blowing

Exposing an employer's wrongdoing to outsiders such as the media or government regulatory agencies. - - Sometimes used to refer to internal reporting of misconduct to management, especially through anonymous reporting mechanisms often called hotlines.

U.K. Anti-Bribery Act

Foreign companies with operations in the United Kingdom, can be held liable for bribery, no matter where the offense is committed or who in the company commits the act, even if the bribe itself has no connection with the United Kingdom. "Facilitation payments are not allowed. - Law classifies bribes between private businesspeople as illegal.

middle 40%

Go along on most matters. Most concerned about the social implications of their actions and want to fit into the organization. Easily influenced by what the people around them are doing. May know using office supplies for personal use is improper, yet they view it as acceptable because their coworkers do so. Rationalize their actions by saying the use of office supplies is a benefit of working at their particular company and it must be acceptable because the company does not enforce a policy prohibiting the behavior. Rationalize that no one will get into trouble for doing what everybody else is doing.

committee

Group assigned to a specific task, represent different constituencies, meet regularly to review performance, develop plans, or make decisions. - Weaknesses: lack of individual responsibility and Groupthink mentality.

group norms

Help define acceptable and unacceptable behavior within a group. Define the limit allowed on deviations from group expectations. Provide explicit ethical directions. Can relate directly to managerial decisions. Have the power to enforce a strong degree of conformity among group members. Can define the different roles for various positions within the organization. If there is a statistically sound sample size, substantially every organization will have employees who fit the following example.

caring culture

High concern for people but minimal concern for performance issues. It is difficult to find nationally recognizable companies that maintain little or no concern for performance.

decentralized structure strength

Strength: Adaptability and early recognition of external change. With greater flexibility, managers can react quickly to changes in their ethical environment.

code of ethics

Most comprehensive of the codes of conduct; consists of general statements, sometimes altruistic or inspirational, that serve as principles and as the basis for rules of conduct. (Values Based) - Generally specifies methods for reporting violations, disciplinary action for violations, and a structure of due process. It sets the expectations of ethical conduct and decisions for all employees. - Six universal values that are desirable for codes of ethics: (1) trustworthiness, (2) respect, (3) responsibility, (4) fairness, (5) caring, and (6) citizenship. (Universal values....again)

bimodal wealth distribution

Occurs when the middle class shrinks, resulting in highly concentrated wealth among the rich and increased numbers of poor people with few resources.

coercive power

Penalizes actions or behavior and relies on fear to change behavior. More effective in changing behavior in short versus long run. Often employed where there is an extreme imbalance of power. People continually subjected to coercion may seek a counterbalance and align themselves with other, more powerful persons or leave the organization.

problems with compliance culture

Problem 1: Its lack of long-term focus on values and integrity. Problem 2: Does not teach employees to navigate ethical gray areas.

The U.S. Foreign Corrupt Practices Act (FCPA)

Prohibits American companies from making payments to foreign officials for the purpose of obtaining or retaining business.

United Nations global compact

Promote worldwide peace, establish beneficial relationships between countries, and support the creation of better standards and human rights on a global scale. Set of 10 principles that promote these four initiatives: (1.) Human rights, (2.) Labor rights and protection (3.)Sustainability, and (4.) The eradication of corruption.

multinational corporations

Public companies that operate on a global scale without significant ties to any one nation or region. Represent the highest level of international business commitment and are characterized by a global strategy focusing on opportunities throughout the world. are characterized by a global strategy of focusing on opportunities throughout the world.

compliance orientation

Requires employees to identify with and commit to specific required conduct. Uses legal terms, statutes, and contracts to teach employees the rules and penalties for noncompliance. Heavy focus on risk management as main priority. Helps employees understand rules of conduct when there are identified risks. Linked to employees' awareness of ethical risks at work and a clear understanding of rules and expectations that facilitates decision making.

legitimate power

Stems from the belief that a certain person has the right to exert influence and certain others have an obligation to accept it (titles and positions of authority).

global common values

Values shared across most cultures.

water issues

Water quality Water quantify Both issues include conservation, purification, and allocation

risk compartmentalization

When profit centers within corporations are unaware of the overall consequences of their actions on the firm as a whole.

consumerism

a particular concern for the developing economies of China and India, two of the world's largest populations. the belief that the interests of consumers, rather than those of producers, should dictate the economic structure of a society

global business

a practice that brings together people from countries with different cultures, values, laws, and ethical standards

Adam smith

a professor of logic and moral philosophy during the late eighteenth century who developed critical economic ideas still considered important today. observed the supply and demand, contractual efficiency, and division of labor of various companies within England and wrote about what he saw.

milton friedman

capitalism (1980's forward-believed that with deregulation, economy could reach equilibrium without government intervention.

dumping

charging high prices for product in home market and selling at or below cost in foreign market. (examples include shoes, cars and steel)

business for social responsibility

globally based organization for MNC's, - Tracks emerging issues and trends - Provides information on corporate leadership and best practices - Conducts educational workshops and training - Assists organizations in developing practical business ethics tools - Members include Coca Cola, DuPont, Hewlett-Packard, Levi Strauss, Walmart, and many global companies.

job performance

is considered to be a function of ability and motivation [job performance = ability × motivation]. An increase in promotion touches higher-order needs (social connections, esteem, and recognition) rather than lower-order (salary, safety, and job security).

recycling

is one of the most successful initiatives in reducing energy requirements and consumption of natural resources, and is an example of sustainability.

10-40-40-10 rule

it explains variation in employee conduct through generalizing on the percentage of employees in any given organization who will seek to do right versus how many will be indifferent.

Laissez-faire (adam smith)

markets naturally manage themselves through supply and demand along with consumer choices/decision making. Assumes ethical behavior is a given.

made-to-break

planned obsolescence, products are better for business since they keep consumers returning to buy more