Principles of Management, Unit 3

Cooper, Santora, and Sarros wrote

"Universalism is the outward expression of leadership character and is made manifest by respectfulness for others, fairness, cooperativeness, compassion, spiritual respect, and humility."

Corporate Social Responsibility

a business's concern for society's welfare

corporate culture

a pattern of shared tacit assumptions learned or developed by a group as it solves its problems of external adaptation and internal integration that have worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems

Organizational leadership

an important first step toward identifying and enacting purpose and ethical values that are central to internal alignment, external market effectiveness, and responsibility toward stakeholders.

stakeholder

any group or individual who can affect or is affected by an organization's strategies, major transactions, and activities. Stakeholders include employees, suppliers, customers, shareholders, the government, media, and others.

Organizations operating on a global basis

face particularly tough ethical challenges because of various cultural, political, economic, technological, and market factors

expatriate

foreign employee who moves to and works in another country for an extended period of time

trade agreements

government policies through which countries agree to eliminate cross-border barriers to trade and to promote global integration

TBL

incorporates and assists businesses measure accountability in their funding of and support for social, environmental (ecological), and financial benefits to allow for a greater good

Emerging market multinationals

influential companies from emerging markets that compete head-on with established multinationals and rewrite the rules of competition by using new business models

The 3 P's

profit, people, planet or the "triple bottom line" TBL or 3BL

PVA (Personal Values Assessment)

A helpful assessment for discovering your values https://www.valuescentre.com/our-products/products-individuals/personal-values-assessment-pva.

Ethical Relativism: A Self-Interest Approach

Ethical relativism is really not a "principle" to be followed or modeled. It is an orientation that many use quite frequently. -Ethical relativism holds that people set their own moral standards for judging their actions -Only the individual's self-interest and values are relevant for judging his or her behavior. Moreover, moral standards, according to this principle, vary from one culture to another. -"When in Rome, do as the Romans do."

Globalization Factor 2

Foreign Direct Investment

The servant-leadership approach

Formulated by Robert K. Greenleaf, who believed that leadership is a natural corollary of service

The Ethics & Compliance Initiative

Found 22 percent of global workers reported pressure to compromise their standards

Emerging market multinationals examples

CEMEX-Mexican cement Shoprite-South African retailer WIPRO and Infosys-India's leading software companies

Kenneth Goodpaster and Laura Nash

Characterized at least three dimensions or levels of ethics that help explain how individual and group values, norms, and behaviors of different stakeholders interact and respond with the aim of bringing orderly, fair, and just relationships with one another in transactions.

Stewardship

Concerned with empowering followers to make decisions and gain control over their work.

Terminal values

Desired goals, objectives, or end states that individuals wish to pursue -Examples of terminal values—at a higher level—are freedom, security, pleasure, social recognition, friendship, accomplishment, comfort, adventure, equality, wisdom, and happiness

NGOs (nongovernmental organizations)

Emergent groups internationally representing the public's interests and common good, and political action movements are beginning again to give voice to injustices and potentially dangerous ethical as well as fiscal (income inequality), health (the environment), and discriminatory (racism and stereotyping large segments of the society) problems that require stakeholder as well as stockholder actions.

Ethical Principles vs. Values

Ethical principles are different from values in that the former are considered as rules that are more permanent, universal, and unchanging, whereas values are subjective, even personal, and can change with time. Principles help inform and influence values.

The European Union (EU)

Has produced policy studies that are forerunners of laws to safeguard against potentially harmful uses of robotics.

Hofstede's model Cultural Dimenesion 1

Power Distance- the degree to which members of a society accept differences in power and authority

Instrumental values

Preferred means of behavior used to obtain those goals. -Examples of instrumental values are being helpful, honest, courageous, independent, polite, responsible, capable, ambitious, loving, self-contained, and forgiving .

Normative Ethics

Refers to the field of ethics concerned with our asking how should and ought we live and act?

Global Leadership and Organizational Behavior Effectiveness (GLOBE)

Second important cultural framework -provides managers with an additional lens through which they can better understand how to perform well in an international environment -Developed in the 1990s

Ethical dilemmas

Situations and predicaments in which there is not an optimal or desired choice to be made between two options, neither of which solves an issue or delivers an opportunity that is ethical -often originate and occur from an unawareness of how to sort out and think through potential consequences of our actions or inaction

An organization's culture

Defined by the shared values and meanings its members hold in common and that are articulated and practiced by an organization's leaders

The 2015 Cone Communications Millennial CSR Study

"[m]ore than nine-in-10 Millennials would switch brands to one associated with a cause (91% vs. 85% U.S. average), and two-thirds use social media to engage around CSR (66% vs. 53% U.S. average)."

Simple Summary of Justice

1. Is it fair? 2. Is it right? 3. Who gets hurt? 4. Who has to pay for the consequences? 5. Do I/we want to assume responsibility for the consequences?

Limits to Utilitarianism

- it does not consider individuals -there is no agreement on the definition of "good for all concerned."

Low Individualism/High collectivism

-Employees act in the interest of the group -Employee commitment to company relatively low -Employee-employer is almost like family link -Hiring and promotion takes in-group into consideration -Better to reward based on equality rather then equity -Relatives of employees preferred in hiring -Training best when focused at group level -Belief in collective decisions -Treating friends better than others is normal -Support of teamwork -Less mobility across occupations -Personal relationships very critical in business

High Individualism/Low Collectivism

-Employees act in their own self interests -Employee commitment high -Employee-employer relationship based on the market -Hiring and promotions based on rules -Family relationships unimportant in hiring -Better reward based on equity -Training done best individually -Belief in individual decision making -Treating friends better than others in the workplace is considered unethical -More mobility across occupations within company -Tasks and company prevail over personal relationships in business

Low Power Distance

-Flat organizational hierarchies -Decentralized structures -Dispersed authority -Managers rely on personal experience -More consultative or collaborative -Subordinates often expected to be consulted -Ideal manger is seen as democratic leader -Openness to sharing information -Low salary gap between top and bottom of company -Managers feel paid adequately and are satisfied

High Masculinity

-Live in order to work -Preference to high pay -Workers look for security, pay and interesting work -Managers seen as cultural heroes -Successful managers primarily exhibit male characteristics -Managers need to be competitive, firm, aggressive, and decisive -Managers very ambitious -Fewer women in management -Managers prepared to move family for career reasons -Large pay gap between genders -Job applicants oversell their abilities -Absences due to sickness lower -General preference for larger companies -Conflicts resolved through fighting until the "best man wins"

Good Ethic Practices

-Show respect for others -Treat all stakeholders fairly -Work toward a common good -Build community -Be honest -Stewardship & servant leadership styles

high uncertainty avoidance

-Strong loyalty to employing organizations -Employment are long term in duration -Preference for larger companies -Superiors pessimistic about subordinate ambition -Top managers often feel less involved in operations -Power of superiors based on control of uncertainties -Hierarchical control roles preferred -Innovators feel constrained by rules -Rational championing -Formalized management structures Innovation resisted

High Power Distance

-Very centralized -Tall hierarchies -Managers rely on formal rules to manage -Authoritative managerial style -Subordinates expect to be told what to do -Perfect boss is seen as one who is an autocrat -Information sharing constrained by hierarchy -Wide salary gab between top and bottom of organization -Managers often feel underpaid and dissatisfied with careers

Low Uncertainty Avoidance

-Weal loyalty to companies -Average duration of employment shorter -Preference for smaller organizations -Superiors optimistic about subordinate ambition and leadership abilities -Top managers usually involved in strategy -Power of superiors based on relationships and position -Transnational leaders preferred -Innovators feel less constrained by rules -Renegade championing -Tolerance for ambiguity in procedures and structures -Innovation welcomed

Low Masculinity

-Work in order to live -Preference to low number of work hours -Workers look for better working conditions and relationships in work -Managers are employees like others -Successful managers are seen as possessing both male and female characteristics -Managers hold fairly modest career ambition -More women in management -Managers less prepared to uproot family because of career move -Low salary gap between top and bottom -Managers feel paid adequately and are satisfied -Absences because of sickness higher -Preference for smaller companies -Conflicts are resolved through compromise and negotiations

2008 subprime lending crisis

-economic effects still persist -revealed widespread corruption of large investment banks and lending institutions internationally

Limitations to Virtue Ethics

-some individuals may disagree about who is virtuous in different situations and therefore would refuse to use that person's character as a principle -the issue arises, "Who defines virtuous, especially when a complex act or incident is involved that requires factual information and objective criteria to resolve?"

Limits to Universalism

-that using this principle may not always prove realistic or practical in all situations -using this principle can require sacrifice of human life—that is, giving one's life to help or save others—which may seem contrary to the principle

7 symptoms of the failure of ethical leadership

1. Ethical blindness 2. Ethical muteness 3. Ethical incoherence 4. Ethical Paralysis 5. Ethical hypocrisy 6. Ethical schizophrenia 7. Ethical complacency

Caroucci found that "five ways organizations needlessly provoke good people to make unethical choices"

1. People feel psychologically unsafe to speak up 2. Excessive pressure to reach unrealistic performance targets compromises people's choices 3. When individuals face conflicting goals, they feel a sense of unfairness and compromise their reasoning 4. Only talking about ethics when there is a scandal 5. When there is no positive example available, individuals react instead of choose ethical decisions.

Limitations to Rights

1. it can be used to disguise and manipulate selfish and unjust political interests 2. it is difficult to determine who deserves what when both parties are "right," 3. individuals can exaggerate certain entitlements at the expense of others

Culture is transmitted through and by

1. the values and styles that leaders espouse and practice 2. the heroes and heroines that the company rewards and holds up as models 3. the rites and symbols that organizations value 4.the way that organizational executives and members communicate among themselves and with their stakeholders

Five criteria for a Ethics Quotient (EQ)

1.A company's ethics and compliance program, which accounts for 35% of the EQ 2.Whether or not and the extent to which ethics is embedded into a company's culture. 3. Corporate citizenship and responsibility, elements that measure companies' environmental impact 4.Corporate governance—whether a firm's CEO and board chair are held by one or separate people. An increased focus recently emphasized diversity in board and leadership positions 5.Leadership, innovation, and reputation

Predicted trends in ethics, compliance, and corporate social responsibility for Fortune 500 companies, governments, groups, and professionals by Navex Global include

1.A shift in the 'power of voice in the story of harassment. 2.The "Glassdoor" effect (when people trust online reviews of their companies more than what companies communicate) and the effect of trust when employee messages go viral on social media. 3.Assisting national disasters that suddenly occur causes havoc not only for vulnerable populations but also for unprepared organizations 4.The acceleration of the need for compliance and ethics programs as economies begin again to grow; "growth without ethics and governance does nobody any favors. 5.Creating a "culture of compliance" in corporations (a culture of integrity and ethics) over one of "vicious compliance" (an overreliance on laws and regulations) 6.An increasing need for compliance's role in prevention and mitigation as cybersecurity evolves. 7.Giving new voice to whistle-blowers is predicted as "regulatory scrutiny is increasing, and the voice of the whistleblower in the [Silicon] Valley is growing louder as well. 8.Managing culture and free speech in the workplace during "polarizing times" continues about "race, gender, sex, sexual orientation, gender identity, national origin, and religion—and people's right to fair treatment, protection, and the rights and benefits enjoyed by others." 9.Data privacy is becoming a larger concern for chief compliance officers in companies as "privacy laws and the environments they regulate, have evolved." 10.The role of the compliance professional evolves and innovates as "old networking models are giving way to online networks that provide new and unprecedented opportunities to share ideas and collaborate."

5 Central Components of Servant Leadership

1.Placing service before self-interest 2.Listening to others. 3.Inspiring through trust. 4.Working toward feasible goals. 5.Helping others whenever possible

five strategic questions that relate to organizational cultural sensitivities when doing business abroad as well as in a home country

1.What do customers and stakeholders in our market expect from our organization? (Will their standard of living be raised? Will their cultural expectations be violated?) 2.What is our strategy to be successful in this competitive marketplace? (What can we realistically hope to achieve? What results are we willing to commit to?) 3.What are our governing values that define how we will work with stakeholders and with each other? 4.What organizational capabilities do we need in order to achieve these results? 5.What do our work processes, roles, and systems need to do so that we are consistent with all of the above?"

World's Most Ethical Companies Honorees

3M Company Accenture Aflac Inc Allstate Insurance Company Alyeska Pipeline Service Co Applied Materials Inc Arthur J. Gallagher & Co Avnet Inc Baptist Health South Florida

A study by Horizon Media's Finger on the Pulse

81 percent of Millennials expect companies to make a public commitment to good corporate citizenship

Business Ethics

Applied to ethics that focuses on real-world situations and the context and environment in which transactions occur- How should we apply our values to the way we conduct business?

Ethics

How we act, live, lead our lives, and treat others

Cultural Dimension 2

Individualism-the degree to which a society focuses on the relationship of the individual to the group and Collectivism-the degree to which a society focuses on the relationship of the group as a whole

The stewardship approach

Instructs leaders to lead without dominating followers. Leaders who practice stewardship sincerely care about their followers and help them develop and accomplish individual as well as organizational goals.

Servant leadership

Involves selflessly working with followers to achieve shared goals that improve collective, rather than individual, welfare

Globalization Factor 1

Lowering Trade Barriers

Cultural Dimension 4

Masculinity-degree to which a society emphasizes traditional masculine qualities such as advancement and earnings

immigration

Movement of individuals into a population

Scientific and ethical practices in corporate social responsibility (CSR)

One way that ethicists, business leaders, and consumers can support moral self-regulation of technologies. Some scientific and technological firms have adopted ethics boards to help safeguard against harmful social uses of AI technologies

Globalization Factor 3

The Internet

AACSB (Association to Advance Collegiate Schools of Business)

The accrediting national body of business schools

The Common Good

The common good is defined as "the sum of those conditions of social life which allow social groups and their individual members relatively thorough and ready access to their own fulfillment."

In the early 2000s, CEOs and top-level leaders from notable corporations such as Enron, Tyco, WorldCom, and others were caught committing outrageously greedy and fraudulent crimes of white-collar theft from their organizations and shareholders.

The now classic film The Smartest Guys in the Room depict how Enron's leaders during that time, Kenneth Lay (now deceased), Jeff Skilling (still serving prison time), and Andrew Fastow (released from prison in 2011), deceived employees, Wall Street, and shareholders. Enron's crisis took an estimated $67 billion of shareholder wealth out of the U.S. economy.3 These criminal activities ushered in national laws such as the Sarbanes-Oxley Act, which we discuss below.

Utilitarianism: A Consequentialist, "Ends Justifies Means" Approach

The utilitarianism principle basically holds that an action is morally right if it produces the greatest good for the greatest number of people. - An action is morally right if the net benefits over costs are greatest for all affected compared with the net benefits of all other possible choices.

Ethical incoherence

They are not able to see inconsistencies among values they say they follow; e.g., they say they value responsibility but reward performance based only on numbers

Ethical hypocrisy

They are not committed to their espoused values. They delegate things they are unwilling or unable to do themselves.

Ethical paralysis

They are unable to act on their values from lack of knowledge or fear of the consequences of their actions.

Ethical complacency

They believe they can do no wrong because of who they are. They believe they are immune.

Ethical schizophrenia

They do not have a set of coherent values; they act one way at work and another way at home.

Ethical muteness

They do not have or use ethical language or principles. They "talk the talk" but do not "walk the talk" on values.

Ethical blindness

They do not perceive ethical issues due to inattention or inability

Justice: Procedures, Compensation, and Retribution

This principle has at least four major components that are based on the tenets 1. all individuals should be treated equally 2. justice is served when all persons have equal opportunities and advantages (through their positions and offices) to society's opportunities and burdens 3. fair decision practices, procedures, and agreements among parties should be practiced 4. punishment is served to someone who has inflicted harm on another, and compensation is given to those for a past harm or injustice committed against them.

Rights: A Moral and Legal Entitlement-Based Approach

This principle is grounded in both legal and moral rights. - Legal rights are entitlements that are limited to a particular legal system and jurisdiction -Moral (and human) rights, on the other hand, are universal and based on norms in every society, for example, the right not to be enslaved and the right to work.

Cultural Dimension 3

Uncertainty Avoidance-degree to which people in a society are comfortable with risk, uncertainty, and unpredictable situations

Universalism: A Duty-Based Approach

Universalism is a principle that considers the welfare and risks of all parties when considering policy decisions and outcomes. -Also needs of individuals involved in a decision are identified as well as the choices they have and the information they need to protect their welfare.

Virtue Ethics: Character-Based Virtues

Virtue ethics is based on character traits such as being truthful, practical wisdom, happiness, flourishing, and well-being. -It focuses on the type of person we ought to be, not on specific actions that should be taken. - Grounded in good character, motives, and core values, the principle is best exemplified by those whose examples show the virtues to be emulated. -Related to universalism

Strategic Organizational Alignment

What business are we in? What is our product or service? What are our core competencies? Who is our customer?

Values

What do we stand for and believe in? What standards can be used to evaluate and judge us?

Mission

What is our strategic purpose for operating?

Vision

Who are we? Who will we become?

Limitation for Common Good

Who determines what the common good is in situations where two or more parties differ over whose interests are violated?

CSR and stakeholder management

complementary approaches -Stakeholder theory argues that corporations should treat all their constituencies fairly and that doing so can strengthen companies' reputations, customer relations, and performance in the marketplace

Geert Hofstede Dutch social psychologist

culture is "the collective programming of the mind which distinguishes the member of one group or category of people from another."

Chester Barnard

defined a values-based leadership approach in 1939 as one that inspires "cooperative personal decisions by creating faith in common understanding, faith in the probability of success, faith in the ultimate satisfaction of personal motives, and faith in the integrity of common purpose

Emerging markets

markets in nondeveloped countries that present tremendous potential for multinationals, have played a critical role in the global business environment for the last decade

Ed Schein

one of the most influential experts on culture

high power distance

people are more likely to accept that power inequality is good and acceptable.

FCPA (Foreign Corrupt Practices Act)

prohibits American firms from accepting or offering bribes to foreign government officials. U.S. individuals who cannot defend their actions with regard to the FCPA's antibribery provisions can face harsh penalties.

Foreign direct investment (FDI)

refers to deliberate efforts of a country or company to invest in another country through the form of ownership positions in companies in another country. In 2017, global FDI flows amounted to USD $1.52 trillion.

Ethisphere

renowned third think tank dedicated to furthering business ethics and corporate social responsibility

Ten principles of the UN Global Compact

serve as guidelines for international firms doing business in LDCs (least developed countries), and abroad 1. support and respect the protection of internationally proclaimed human rights 2.ensure that they are not complicit in human rights abuses 3.uphold the freedom of association and the effective recognition of the right to collective bargaining 4. eliminate of all forms of forced and compulsory labor 5.abolish child labor 6.eliminate the discrimination of employment and occupation 7.support a precautionary approach to environmental challenges 8.promote greater environmental responsibility through initiatives 9. encourage the development and diffusion of environmentally friendly technologies 10. work against corruption, including extortion and bribery.

Tariffs

taxes that are added to the price of imported international products.

low power distance

tend to consider that all members are equal.

e-commerce

the buying and selling of goods over the internet

World Trade Organization (WTO)

the only truly global organization that deals with the rules of trade around the world. It was established January 1, 1995, and had 164 country members as of July 2016.

globalization

the worldwide phenomenon whereby the countries of the world are becoming more interconnected and where trade barriers among nations are disappearing