Ethics Midterm, Ethics Midterm (2)

Agency (Deontology--Ethics Toolkit)

It allows other people to make their own choices. Am I giving others an opportunity to make their own decisions? Will people feel disempowered or alienated by our decision?

Dignity (Deontology--Ethics Toolkit)

It treats other people as ends in themselves, and not just as a means. Am I protecting the rights and dignity of other people? Will our decisions make some people feel that they are just being used?

Understand Ethics

It's critically important that we all understand ethics, because good ethics represents the very essence of a civilized society. Each of us must understand that ethics is the bedrock for all of our relationships; it's about how we relate to our employers, our employees, our coworkers, our customers, our communities, our suppliers, and one another. Ethics is not just about the connection we have to other beings—we are all connected; rather, it's about the quality of that connection. That's the real bottom line and our society is threatened when we ignore it.

Utility (Utilitarianism--Ethics Toolkit)

John Stuart Mill It provides the greatest benefit to the most people. Who will be affected by my decision? Who will benefit, and who will be harmed? Let's talk about who our decision will impact the most. Who are the key stakeholders here?

Confidentiality

Privacy is a basic customer right. Privacy and the obligation to keep customer information in confidence often go beyond protecting sales projections or financial information. It can also mean keeping in strict confidence information concerning acquisitions, mergers, relocations, layoffs, or an executive's health or marital problems. In some industries, confidentiality is so important an issue that companies prohibit their employees from publicly acknowledging a customer relationship. In the financial services industry, for example, it's common practice to refuse to divulge that XYZ Company is even a customer. On occasion, third parties may ask for customer information. For example, a reporter or a client may ask you about customer trends. It's never acceptable to discuss specific companies or individuals with a third party or provide any information that might enable a third party to identify a specific customer. If you want to provide information, you can offer aggregate data from a number of companies, as long as the data doesn't allow any one customer to be identified.

Illusion of Superiority (or morality)

Psychologists know that people have an illusion of superiority or illusion of morality. Surveys have found that people tend to think of themselves as more ethical, fair, and honest than most other people. 50 It's obviously an illusion when the large majority of individuals claim to be more honest than the average person, or more ethical than their peers.

Prescriptive Approach

derived from ethical theories in philosophy and offers decision-making tools (ways of thinking about ethical choices) that help you decide what decision you should make as a "conscientious moral agent" who thinks carefully about ethical choices 1 and who wants to make the ethically "right" decision. Our assumption is that your intentions are good and that your goal is to do the right thing.

Descriptive Approach

relies on psychological research to describe how people actually make ethical decisions (rather than how they should make them). It focuses in particular on individual characteristics that influence how individuals think and on cognitive limitations that often keep people from making the best possible ethical decisions.

Conflict of Interest

A conflict of interest occurs when your judgment or objectivity is compromised. The appearance of a conflict of interest—when a third party could think your judgment has been compromised—is generally considered just as damaging as an actual conflict.

Preconventional (Stage 1 and 2)

A level I individual (labeled the preconventional level and including stages 1 and 2) is very self-centered and views ethical rules as imposed from outside the self. Unfortunately, a small percentage of adults never advance beyond this stage, and managers must be ready for that possibility. Stage 1 individuals are limited to thinking about obedience to authority for its own sake. Avoiding punishment by authority figures is the key consideration. It's easy to imagine a child thinking, "I should share my toy because, if I don't, Mom will yell at me" (i.e., I'll be punished). A stage 1 response to the Evelyn situation might argue that it would be wrong to contradict her boss because she must obey her superiors, and she would certainly be punished if she disobeyed. At stage 2, concern for personal reward and satisfaction become considerations in addition to a kind of market reciprocity. What is right is judged in terms of a "you scratch my back, I'll scratch yours" reciprocal relationship. A stage 2 child might think, "If I share my toy with my brother, he might share his with me later." A stage 2 response in the Evelyn situation might argue that Evelyn should support her boss because he is responsible for her performance appraisals; and, if she lets this one go, hemight overlook some of her problems from the past. Also, if her boss has been kind or helpful to her in the past, she may consider her obligation to repay the favor. In general, a level I person can be expected to consider questions like "What's in it for me?" At stage 1, the questions might be "Can I get away with it?" or "Will I get caught, punished?" At stage 2, the questions might be "How will I benefit or what will I get in return if I do this?"

Postconventional (Step 5 & 6)

A level III (postconventional, sometimes called principled reasoning—stages 5 and 6) principled individual has developed beyond identification with others' expectations, rules, and laws to make decisions more autonomously. Such an individual looks to ethical principles of justice and rights (similar to the deontological principles we discussed in Chapter 2). Note that stage 6 is thought to be a theoretical stage only, so we focus below only on stage 5. At stage 5, the emphasis is still on rules and laws because these represent the recognized social contract, but stage 5 thinkers are willing to question the law and to consider changing the law for socially useful purposes. When deciding what to do, a stage 5 person would likely ask, "What does the law say?" and then "Is the law consistent with principles of justice and rights? and "What's best for society?" Stage 6: Universal Ethical Principles; Following ethical principles of justice and right. Acting in accord with principles when laws violate principles.

The Importance of Trust

A more elusive benefit of ethics is trust. Although it's difficult to document, trust has both economic and moral value. Scientists are beginning to understand the "biology of trust." In trusting relationships, neuroscientists have found that the brain releases a hormone, oxytocin, that makes cooperating feel good. Trust is essential in a service economy, where all a firm has is its reputation for dependability and good service. Individuals and organizations build trust accounts that work something like a bank account. 43 You make deposits and build your trust reserve by being honest and by keeping commitments.

Distorting Consequences

A second category of moral disengagement mechanisms has to do with distorting consequences or reducing personal responsibility for bad outcomes. For example, with displacement of responsibility, individuals will reduce personal accountability by thinking of their actions as resulting from an authority figure's dictates ("my boss made me do it"). With diffusion of responsibility, individuals will reduce personal accountability by looking to others or the group ("it's not my job," or "my team made the decision"). With distorting consequences, individuals will think of negative consequences as less serious than they are (it's "no big deal" to fudge the numbers on my expense report).

Ethical Dilemma (definition)

A situation in which two or more "right" values are in conflict.

Veil of Ignorance (John Rawls)

Additional moral rules come from the work of the highly regarded American political philosopher John Rawls. Rawls proposed that decision makers use a veil of ignorance exercise to arrive at fundamental principles of justice that should guide ethical decision making. In his approach, imaginary people come together behind a hypothetical veil of ignorance. These imaginary people do not know anything about themselves, their identities, or their status. They don't know if they (or others they are thinking about) are male or female, young or old, rich or poor, black or white, the CEO or a janitor, intelligent or mentally retarded, physically fit or disabled, sick or healthy, patient or doctor. According to Rawls, rational people who use this veil of ignorance principle will be more likely to develop ethical rules that do not unfairly advantage or disadvantage any particular group. 4 Because humans are fundamentally risk averse and wary of being the worst off, such neutral people would arrive at fair principles that grant all individuals equal rights to basic liberties and equality of opportunity and that benefit the least advantaged in society. This approach was designed to be used as a guide in any ethical decision, but it may be most useful when fairness concerns are central to the decision at hand. It offers yet another way to broaden your view and urges you to consider the needs of those who are less advantaged than yourself. .

Emotions (in Ethical Decision Making)

Age-old philosophical prescriptions assume cool, rational, ethical decisions, but we are also beginning to understand how important emotions are to the ethical decisionmaking process. 56 Importantly, emotions are not just an interference to good ethical judgment, as many used to believe. Instead, emotions often lead to right action. 57 For example, when we consider hurting someone, our brain reacts with a visceral negative emotion ("an internal alarm") that keeps violence in check. 58 And these reactions tend to happen very quickly, before we even have time to engage in rational thought. The bottom line here is that we often act not because we have coolly and rationally decided on the best course of action, but rather because it "feels" like the right thing to do at the time. Often, emotions can lead us to act ethically. But emotions can also interfere with good decision making when they lead to a (perhaps irrational) desire for revenge.

Personal Responsibility

Another basic customer right involves our taking personal honesty and responsibility for the products and services that we offer. There's probably no issue that will more seriously affect our reputation than a failure of responsibility. Many ethical disasters have started out as small problems that mushroomed. Especially in service businesses, where the "products" are delivered by individuals to other individuals, personal responsibility is a critical issue.

Locus of Control

Another individual characteristic that has been found to influence ethical action is locus of control. 32 Locus of control refers to an individual's perception of how much control he or she exerts over life events. Locus of control can be thought of as a single continuum from a high internal locus of control to a high external locus of control. An individual with a high internal locus of control believes that outcomes are primarily the result of his or her own efforts, whereas an individual with a high external locus of control believes that life events are determined primarily by fate, luck, or powerful others. If an individual takes personal responsibility for his or her behavior, it seems likely that person will also behave more ethically. For example, studies have found that internals are more likely to help another person, even if there's a penalty for doing so. doing so. Internals see themselves as being in charge of their own fates. Therefore, they should also be less willing to be pressured by others to do things they believe to be wrong. One interesting study asked subjects to complete a story in which the main character was pressured to violate a social norm. The more internal the subject's locus of control, the more likely the story completion had the hero resisting the pressure. an internal locus of control and more principled thinking are generally associated with ethical action,

Overt Bribe or Kickback

Anything that could be considered a bribe or kickback is a clear conflict of interest. It doesn't matter whether the bribe or kickback is in the form of money or something else of substantial value that is offered in exchange for access to specific products, services, or influence.

Personal Virtues (Virtue Ethics-Ethics Toolkit)

Aristotle It helps me become a better person. Who am I? What kind of person would this action make me? Let's consider what kind of organizational identity we want to covey to the public.

Ethical Assumption

As human beings and members of society, all of us are hardwired with a moral and ethical dimension as well as self-interested concerns. People care about ethics for reasons that stem from both of these sources.

Conventional (Stage 3 & 4)

At level II (labeled the __________ and including stages 3 and 4), the individual is still externally focused on others but is less selfcentered and has internalized the shared moral norms of society or some segment like a family or work group. What's ethically right is explained in terms of living up to roles and the expectations of relevant others, fulfilling duties and obligations, and following rules and laws. At stage 3, what's right is thought to be that which pleases or helps others or is approved by those close to you. Interpersonal trust and social approval are important. For example, a stage 3 response to the Evelyn dilemma might say that Evelyn shouldn't contradict her boss because he would perceive her as disloyal, and she might lose the social approval and trust of her boss and peers. On the other hand, what if Evelyn shares her dilemma with close family members whose opinions are important to her, and they feel strongly that she must contradict her boss? In this case, she would likely reason that she should contradict her boss because the people she trusts and whose approval she values say that it's the right thing to do. At stage 4, the perspective broadens to consider society. The individual is concerned about fulfilling agreed-upon duties and following rules or laws that are designed to promote the common good. A stage 4 person recognizes that rules and laws often exist for good reason, and she follows them because the social system works better when everyone does that. Therefore, a stage 4 response might say that Evelyn should contradict her boss because of her duty to society. What if the noises do represent a safety problem? She has a responsibility as a good member of society to report it. She would feel particularly strongly about this if she were aware of product safety laws that required her to report the problem.

Escalation of Commitment

Because you've already made the decision to buy the car, and you've already invested a lot of money in it, your tendency will be to continue your commitment to this previously selected investment. This tendency has been called "escalation of commitment to a losing course of action" or "throwing good money after bad." A perfectly rational decision maker would consider the time and expenses already invested as "sunk costs." They aren't recoverable and shouldn't be considered in a decision about what to do. Only future costs and benefits should be considered. But this is difficult. Norms in our society and in our organizations support trying, persisting, and sticking with a course of action. Also, if others are involved, we're likely to feel the need to justify our original decision—whether it was to buy a car, a piece of equipment, or land. So when you're in a situation that involves decisions about whether to continue to invest in an ongoing project, be careful! One way to overcome escalation of commitment is, as with many biases, to recognize that it exists and try to adjust for it. Ask yourself explicit questions about whether you're committed to a decision just because failure would make your original decision look bad.

escalation of commitment

Because you've already made the decision to purchase, your tendency will be to continue your commitment to this previously selected investment. This tendency has been called "escalation of commitment to a losing course of action" or "throwing good money after bad."

Confirmation Trap

Being overconfident can make you fail to search for additional facts or for support for the facts you have. 42 Even if you gather additional facts or support, another cognitive bias termed the confirmation trap may influence your choice of which facts to gather and where to confirmation In an attempt to overcome the confirmation trap, it's important that you consciously try to think of ways you could be wrong. Incorporate questions in your individual and group decision-making processes such as, "How could I/we be wrong?" "What facts are still missing?" and "What facts exist that might prove me/us to be wrong?" You may still miss some important facts, but you'll miss less of them than if you didn't ask these questions at all.

Justice (Deontology--Ethics Toolkit)

Benefits and costs are equitably distributed. Will this decision be fair to all involved? Will any of our stakeholders feel this decision is unfair to them?

employer-employee contract

Both parties have expectations, and rights, and offer consideration to the other—all are characteristics of a contractual relationship. Your employer pays you in salary and benefits to perform a job, and your organization expects you to behave in a certain way; you have a responsibility to be "part of the family" and exhibit loyalty and other corporate "virtues" and to refrain from other, less desirable behaviors. On the other hand, you expect not only a salary for the work you perform but also a modicum of fairness. Most people expect employers to treat them decently and to provide an appropriate work environment. Whenever we discuss the employer-employee contract in this chapter, it's this complicated set of expectations that we're referring to.

(Subtle) Bribes

Bribes can be interpreted to include gifts and entertainment. Some organization have instituted policies that allow no gifts at all, even gifts of nominal value. Accepting discounts on personal items from a vendor will also be interpreted as a conflict. The formula to use when determining whether to accept a discount is simple: if it's a formal arrangement between your company and a supplier and it's offered to all employees, it's probably acceptable; if the discount is being extended only to you, it's generally not considered acceptable.

Using Power Responsbily

Business is learning that it must use its power responsibly or risk losing it. Using power responsibly means being concerned for the interests of multiple stakeholders—parties who are affected by the business and its actions and who have an interest in what the business does and how it performs.

Behavior Economists

Classical economists assume that practically all human behavior, including altruism, is motivated solely by self-interest—that humans are purely rational economic actors who make choices solely on the basis of cold cost-benefit analyses. However, a new group of economists who call themselves behavioral economists have found that people are not only less rational than classical economists assumed, but more moral. Much evidence suggests that people act for altruistic or moral purposes that seemingly have little to do with cost-benefit analyses.

High Moral Managers

Cognitive moral development theory and research tell us that most of the people you manage are going to be strongly influenced by what you do, say, and reward. They can be thought of as "good soldiers" who are looking up and looking around for guidance from you and their peers, and they're likely to mimic what they see around them. Therefore, it's the manager's responsibility to structure the work environment in a way that supports ethical conduct. If you avoid this responsibility, these people will look elsewhere for guidance, probably to their peers, and the guidance they receive may not support ethical conduct at all. A small percentage of individuals may never advance beyond preconventional thinking. Such individuals can be thought of as "loose cannons." They will do whatever they can get away with. People like this require close supervision and clear discipline when they get out of line. Those individuals who have reached principled levels of moral reasoning should be singled out to lead key decision-making groups, to manage situations where ethical ambiguities are likely to arise, and to lead organizations. Research on ethical decision making in groups has found that when less-principled individuals lead a group, the group's ethical decision-making performance decreases. Also, when an organization's leader is high in cognitive moral development, the entire ethical climate of the organization is stronger. This is particularly true for leaders whose choices are consistent with their ethical reasoning capacity and for leaders who run young organizations that are more open to their influence. Finally, when employees and the organization's leader are similar in their level of cognitive moral development, the employees are more satisfied and more committed to the organization. Employee satisfaction and commitment are especially negative when the leader's cognitive moral development is lower than the moral development of employees.

Fiduciary Responsibilities

Concern the obligations resulting from relationships that have their basis in faith, trust, and confidence. certain professions, such as banking, accounting, law, religion, and medicine have special obligations to customers. These obligations are commonly referred to as fiduciary responsibilities. The law and the judicial system have recognized these special obligations, and they are spelled out in the codes of ethics for those professions. Fiduciary responsibilities hold these professionals to a high standard, and when they violate those responsibilities, the punishment is often harsh.

Hiring

Effective managers need to be proficient at hiring the best people who fit the organizational culture, evaluating their performance, recognizing and praising excellence, and disciplining or even terminating poor performers. Hiring, promotions, and terminations should be based on qualifications, period. Talent and ability come in a variety of packages. When managers use anything other than those two factors to evaluate qualifications for hiring, promotions, or work assignments, they shortchange not only the individual but also their employer and their customers One way to hire is to deeply understand your own organizational culture and to hire based on how well a candidate will "fit" into the existing culture. Both the organization and the employee are likely to be more satisfied when a good fit is achieved. So, managers must strike a delicate balance. They need to hire people who fit the current culture, but also they need to be open to people who fit, but may be different. To be successful, organizations need to nurture strong cultures that have enough differences to encourage innovation and balance and that counter the tendency to hire to a "profile."

Customer Confidence Issues

Excellent customer service also means providing a quality product or service at a fair price, honestly representing the product or service, and protecting the customer's privacy. Customer confidence issues include a range of topics such as confidentiality, product safety and effectiveness, truth in advertising, and special fiduciary responsibilities. We use the term customer confidence issues as an umbrella to address the wide range of topics that can affect your relationship with your customer. These are ethical issues because they revolve around fairness, honesty, responsibility, truth, and respect for others. Customer relationships can't survive without these basics of trust. .

Potential for Harm (Ethical Awareness)

Finally, and perhaps most important, an issue or situation that has the potential to produce serious harm to others is more likely to be seen as an ethical issue. Thomas Jones proposed that individuals are more likely to recognize the ethical nature of issues that are morally intense. 8 The moral intensity of an issue is higher when the consequences for others are potentially large, the consequences are relatively immediate and likely to occur, and the potential victims are psychologically or physically close to the decision maker.

Values

For individuals, values can be defined as "one's core beliefs about what is important, what is valued, and how one should behave across a wide variety of situations.

Office Romance

From an ethics perspective, it's most important to avoid romance with anyone you supervise or who supervises you because of the conflict of interest involved and the potential for unfair treatment of other direct reports (and most companies have antinepotism policies). The supervisor's judgment is likely to be compromised by the relationship, and others in the work group are likely to lose respect for both parties and be concerned about preferential treatment. Honesty is another ethical issue that emerges.

Good Managers

Good managers do four things really well: hire good people, define clear expectations (including ethical expectations), recognize excellence and praise it, and finally, show their people that they care. To employees, managers are the company, and if managers are not able to manage the basics well, it will be extremely difficult to inspire people to meet business goals or live organizational values.

Harassment (is Discriminatory)

Harassment (sexual or otherwise) is considered to be a form of discrimination. It is therefore an ethical issue because it unfairly focuses job satisfaction, advancement, or retention on a factor other than the employee's ability to do the job. Most instances of sexual harassment have nothing to do with romance and everything to do with power and fairness..

Autonomous Principled (Thinking & Action)

Higher-stage thinking is more independent of these external influences. The postconventional principled thinker looks to justice and rights-based principles to guide ethical decision making. Research has demonstrated that these individuals are also more likely to behave consistently with their principle-based decisions—they're more likely to carry through and do what they think is right. More principled individuals also have been found to be less likely to cheat, more likely to resist pressure from authority figures, more likely to help someone in need, and more likely to blow the whistle on misconduct.

Golden Rule

How does a deontologist determine what rule, principle, or right to follow? One way is to rely on moral rules that have their roots in Western biblical tradition. For example, the Golden Rule, a basic moral rule found in every major religion, is familiar to most of us and provides an important deontological guide: The most familiar version tells us to "Do unto others as you would have them do unto you." In our layoff situation, the Golden Rule would suggest that Pat should tell her friend what she knows because she would want her friend to do the same for her if the situation were reversed. But note that the Golden Rule leads you to the best decision only if you're highly ethical. For example, do you think that the Golden Rule would expect you to lie for a friend who has broken the law because you would want the friend to do that for you? No, because a highly ethical person wouldn't ask a friend to lie. The ethical person would be responsible and would accept the consequences of his or her illegal actions.

Integrity (Eudaimonism--Virtue Ethics--Ethics Toolkit)

I am doing the type of work that I am called to do. Am I on a path that allows me to express my personal gifts? Am I being true to who I am? Is this consistent with our mission and vision? Is this really what we are best at doing as an organization?

Universality (Deontology-Ethics Toolkit)

I would be willing for it to become universal law. What are the core principles at stake? would we be content if other (organizations, employees, partners) did what we plan to do?

Disclosure (Virtue Ethics-Ethics Toolkit)

I would be willing to have it broadcast to the public. How would I feel if my reasoning and decision appeared on the news? How will this decision affect our image or reputation if it goes public?

Cognitive Moral Development

Kohlberg's moral reasoning theory is a cognitive developmental theory that focuses primarily on how people think about and decide what course of action is ethically right. Kohlberg's cognitive moral development theory proposes that moral reasoning develops sequentially through three broad levels, each composed of two stages. As individuals move forward through the sequence of stages, they are cognitively capable of comprehending all reasoning at stages below their own, but they cannot comprehend reasoning more than one stage above their own. Development through the stages results from the cognitive disequilibrium that occurs when an individual perceives a contradiction between his or her own reasoning level and the next higher one. This kind of development can occur through training, but it generally occurs through interaction with peers and life situations that challenge the individual's current way of thinking. According to Kohlberg, the actual decision an individual makes isn't as important as the reasoning process used to arrive at it. However, he argued—and this is an important concept—that the higher the reasoning stage, the more ethical the decision, because the higher stages are more consistent with prescriptive ethical principles of justice and rights

Machiavellianism

Machiavellianism, has been associated with unethical action. Perhaps you have heard the term Machiavellian used to describe individuals who act in self-interested, opportunistic, deceptive, and manipulative ways to win no matter what the cost or how it affects other people. The personality trait known as Machiavellianism was named after Niccol o Machiavelli, a sixteenth-century philosopher, statesman, and political theorist who is associated with promoting a pragmatic leadership style that included amoral, if not clearly unethical, behavior with the aim of achieving self-interested outcomes. The idea that "the ends justify the means" is often associated with Machiavelli. Machiavellianism has found that individuals high on Machiavellianism are significantly more likely to have unethical intentions and to engage in unethical action such as lying, cheating, and accepting kickbacks. 37 Managers should be on the lookout for employees who they think might be Machiavellian because they are likely to engage in self-interested action that can put the entire organization at risk. Organizations may also want to consider including Machiavellianism among other personality characteristics when assessing job applicants.

Moral Justification

Moral disengagement mechanisms can be organized into three categories. One of these categories involves ways of thinking about our behavior that makes bad behavior seem more acceptable. A mechanism in this category is the use of euphemistic language (discussed earlier in relation to ethical awareness). Another is called moral justification, whereby unethical behavior is thought to be okay because it contributes to some socially valued outcome. For example, mortgage lenders may have believed that it was okay to sell those no-doc loans to people because they were helping individuals who would otherwise not be able to purchase a home to take part in the "American dream."

Spindle Cells

Neuroscience is also beginning to substantiate the moral sense that develops in humans. New imaging technologies have allowed scientists to locate a unique type of neuron in the brain—spindle cells—that light up when people perceive unfairness or deception. Only humans and African apes have these cells.

Discrimination

Occurs whenever something other than qualifications affects how an employee is treated. Unequal treatment, usually unfavorable, can take many forms. Racial, ethnic, religious, or sexual stereotypes can creep into the behavior of even the most sophisticated individuals, even without their conscious awareness. Discrimination can be a subtle or not-so-subtle factor not only in working relationships but also in hiring, promotions, and layoff decisions. People who don't fit a "corporate profile" may be passed over for advancement because they're female, or a member of a minority group, or too old, or for other reasons that may or may not be covered in protectionist legislation.

Emotions

Often, emotions can lead us to act ethically. But emotions can also interfere with good decision making when lead to a (perhaps irrational) desire for revenge.

Ethical Judgement

Once people are aware of the ethical dimensions of a situation or decision, they engage in ethical judgment processes that can contribute to ethical (or unethical) conduct. By ethical judgment, we mean making a decision about what is the right thing to do. As with ethical awareness, neuroscience (fMRI) research is finding that certain parts of the brain are activated more during ethical decision making compared to when the same individuals are making other kinds of decisions. 10 These findings suggest that ethical judgment is truly a unique form of decision making.

Whistleblowing

Once you decide to blow the whistle, you need to think carefully about how to go about it. Unless you want to be branded as someone with poor judgment, you have to be very careful about how you raise ethical concerns. Usually, the CEO is one of your last resorts, to be approached only after you've exhausted every other internal resource. Some of the triggers to help you determine whether an issue is serious enough to be raised beyond your immediate manager include an issue that involves values such as truth, employee or customer (or other stakeholder) rights, trust, fairness, harm, your personal reputation or the reputation of your organization, and whether the law is being broken or compromised.

Looking up and around

One reason understanding cognitive moral development is so important is that most adults are at the conventional level of cognitive moral development (level II). This means they're highly susceptible to external influences on their judgment about what is ethically right and their subsequent action. Their decision about what's ethically right, and therefore their likely action, is inextricably linked with what others think, say, and do. We call this "looking up and looking around" for ethical guidance. These individuals aren't autonomous decision makers who strictly follow an internal moral compass. They look up and around to see what their superiors and their peers are doing and saying, and they use these cues as a guide to action. Therefore most people are likely to do what's expected of them as a result of the reward system, role expectations, authority figure demands, and group norms.

Unconscious Biases

One relatively new research tool that can help us understand the potential (often negative) role of the unconscious in a certain type of ethical thinking is the Implicit Association Test (IAT). Results reveal most people's preferences for young people over old, straight people over gay, able people over disabled, and a variety of other categories. For example, hundreds of studies with the"race IAT"lead to the conclusion that the large majority of us have an unconscious tendency to value white people more than black people even if we consciously disavow such views and truly believe that we have no racial bias.

Consequentialist (Teleological)

One set of philosophical theories is categorized as consequentialist (sometimes referred to as teleological, from the Greek telos for "end" and logos for "reason"). When you're attempting to decide what's right or wrong, consequentialist theories focus attention on the results or consequences of the decision or action. The consequentialist approach remains particularly important to ethical decision making in business for a variety of reasons. First, utilitarian thinking—through its descendant, utility theory—underlies much of the business and economics literature. Second, on the face of it, most of us would admit that considering the consequences of one's decisions or actions for society is extremely important to good ethical decision making. In fact, studies of ethical decision making in business have found that business managers generally rely on such an approach. 3 As we'll see, though, other kinds of considerations are also important.

Illusion of Optimism

One way to think about consequences is to think in terms of decision making about risk. Managers are in the business of assessing risk. But, research suggests that people tend to underestimate potential risks because of an illusion of optimism. They overestimate the likelihood of good future events and underestimate the bad. For example, even though around one-half of marriages end in divorce, newlyweds are highly optimistic that their own new marriages will be everlasting. And, although some analysts may knowingly have lied about the future prospects of mortgagebacked securities, it's likely that many were simply overly optimistic and believed that the housing market would never simultaneously crash everywhere in the country, bringing down an entire market and the U.S. economy with it.

Management Responsibility to Teach Ethics

Organizations that neglect to teach their members "ethical" behavior may be tacitly encouraging "unethical behavior" through benign neglect. It's management's responsibility to provide explicit guidance through direct management and through the organization's culture. The supervisor who attempts to influence the ethical behavior of subordinates should be viewed not as a meddler but as a part of the natural management process.

Illusion of Control

People also generally believe that they're less susceptible to risks than other people are. This belief is supported by the illusion of control, the general belief that we really are in charge of what happens. And if we think we can control events, we also think bad things are less likely to happen. This illusion of control has been demonstrated to exist in MBA students from top U.S. business schools, suggesting that managers are certainly vulnerable. 47 Managers whose judgment is influenced by these cognitive biases are likely to underestimate the risk facing the firm as a result of a particular decision. But if managers ignore risks, they're also ignoring important consequences. So it's important to recognize this tendency to ignore risk, and design risk analysis into your decision-making processes.

Disclosure Rule

Remember the _________________ It asks whether you would feel comfortable if your activities were disclosed in the light of day in a public forum like the New York Times or some other news medium. In general, if you don't want to read about it in the New York Times, you shouldn't be doing it. If you would be uncomfortable telling your parents, children, spouse, clergy, or ethical role model about your decision, you should rethink it. Thomas Jefferson expressed it like this: "Never suffer a thought to be harbored in your mind which you would not avow openly. When tempted to do anything in secret, ask yourself if you would do it in public for all to see. If you would not, be sure it is wrong." This kind of approach can be especially valuable when a decision needs to be made quickly. Suppose someone in your organization asks you to misrepresent the effectiveness of one of your company's products to a customer. You can immediately imagine how a story reporting the details of your conversation with the customer would appear in tomorrow's paper. Would you be comfortable having others read the details of that conversation? The ideal is to conduct business in such a way that your activities and conversations could be disclosed without your feeling embarrassed. .

Ethical Awareness Triggers

Research has found that people are more likely to be ethically aware, to recognize the ethical nature of an issue or decision, if three things happen: (1) if they believe that their peers will consider it to be ethically problematic; (2) if ethical language is used to present the situation to the decision maker; and (3) if the decision is seen as having the potential to produce serious harm to others.

employee engagement

Research indicates that perhaps the best way to encourage ethical behavior is to create an organizational culture that is built to enhance employee engagement and that uses as its linchpin the quality of managers. short, it is discretionary effort, or how committed employees are to their work. Are they willing to provide excellent customer service? Are they willing to work overtime if needed to meet a deadline? Are they willing to go the extra mile in providing solutions? We can divide employees into three groups along an engagement continuum. For our purposes, let's just call them actively engaged, not engaged, and actively disengaged.

Ethical Awareness (Brain Study)

Researchers used functional magnetic resonance imaging (fMRI) in a study showing that when Executive MBA students identified "an important point or issue" in scenarios, a different part of the brain was more active when the issue had ethical overtones compared to more neutral issues. 1 In a different study, a part of the brain associated with emotional processing was activated when participants viewed morally relevant pictures compared to more neutral ones. 2 So, it seems that something different happens in our brains when we begin thinking about an issue we recognize as having ethical overtones.

Eight Steps (to Sound Ethical Decision Making)

Step One: Gather the Facts Step Two: Define the Ethical Issues Step Three: Identify The Affected Parties (The Stakeholders) Step Four: Identify the Consequences Step Five: Identify the Obligations Step Six: Consider Your Character and Integrity Step Seven: Think Creatively About Potential Actions Step Eight: Check Your Gut

illusion of superiority (or morality)

Surveys have found that people tend to think of themselves as more ethical, fair, and honest than most other people.

Categorical Imperative

The German philosopher Emmanuel Kant provided another useful moral rule with his categorical imperative: "Act as if the maxim of thy action were to become by thy will a universal law of nature." This rule asks you to consider whether the rationale for your action is suitable to become a universal law or principle for everyone to follow. For example, if you break a promise, the categorical imperative asks, "Is promise breaking a principle everyone should follow?" The answer is no; if everyone did this, promises would become meaningless. In fact, they would cease to exist. A practical Kantian question to ask is, "What kind of world would this be if everyone behaved this way or made this kind of decision in this type of situation?" What kind of world would this be if everyone broke promises at will?

Conflict of Interest (Why Unethical?)

The basis of every personal and corporate relationship is trust, and it exists only when individuals and corporations feel they're being treated fairly, openly, and on the same terms as everyone else. Conflicts of interest erode trust by making it look as if special favors will be extended for special friends; that attitude can enhance one relationship, but at the expense of all others. If you're suspected of a conflict of interest, the least you can expect is an investigation by your company. If it determines that your behavior demonstrates a conflict or the appearance of a conflict, you may be warned, disciplined, or even fired depending on the nature of your behavior. If you've accepted a bribe or kickback, you could face termination and even arrest. Being involved in a conflict of interest means that your judgment has been compromised, and this can severely damage your professional reputation.

Moral Disengagement

The idea behind moral disengagement 38 is that most of us behave ethically most of the time because we've internalized standards of good conduct and judge our behavior against these standards. If we consider behaving unethically, we feel guilty and stop ourselves. All of us probably recognize that process. But research has found that individual people have a higher (or lower) propensity to deactivate that self-control system through eight moral disengagement mechanisms. These moral disengagement mechanisms allow individuals to engage in unethical behavior without feeling bad about it.

Ethics

The principles, norms, and standards of conduct governing an individual or group. Focuses on conduct.

Reduce Identification

The third category of moral disengagement mechanisms reduces the person's identification with the victims of unethical behavior. With dehumanization, individuals make those who would be harmed less worthy of ethical consideration because they're thought to be different, stupid, or not even human. This mechanism characterizes thinking among those who commit genocide. One can also imagine mortgage lenders thinking that people who took out loans they clearly couldn't afford were just dumb and not worthy of concern. Attribution of blame lays blame on the victims of harm for a variety of reasons ("it's their own fault").

Use of Corporate Resources

The use of corporate resources involves your fulfilling your end of the employer--employee "contract." It means being truthful with your employer and management and being responsible in the use of corporate resources, including its finances and reputation. The important thing is to treat your company's resources with as much care as you would your own.

Virtue Ethics

The virtue ethics approach focuses more on the integrity of the moral actor (the person) than on the moral act itself (the decision or behavior). The goal here is to be a good person because that is the type of person you wish to be. Although virtue ethics as a philosophical tradition began with Aristotle, a number of contemporary ethicists (including business ethicists) have returned it to the forefront of ethical thinking. A virtue ethics perspective considers the actor's character, motivations, and intentions (something we didn't discuss at all under the other two perspectives). According to virtue ethics, it is important that the individual intends to be a good person and exerts effort to develop him- or herself as a moral agent, to associate with others who do the same, and to contribute to creating an organizational context that supports ethical behavior. This doesn't mean that principles, rules, or consequences aren't considered, just that they're considered in the context of assessing the actor's character and integrity. One's character may be assessed in terms of principles such as honesty, in terms of rule following (did this actor follow his profession's ethics code?) or in terms of consequences (as in the physician's agreement to, above all, do no harm) In virtue ethics, one's character may be defined by a relevant moral community, a community that holds you to the highest ethical standards. Therefore, it's important to think about the community or communities in which the decision maker operates.

Deontological

The word deontological comes from the Greek deon, meaning "duty." Rather than focusing on consequences, a deontological approach would ask, "What is Pat's ethical duty now that she knows about the layoff?" Deontologists base their decisions about what's right on broad, abstract universal ethical principles or values such as honesty, promise keeping, fairness, loyalty, rights (to safety, privacy, etc.), justice, responsibility, compassion, and respect for human beings and property. According to some deontological approaches, certain moral principles are binding, regardless of the consequences. Therefore some actions would be considered wrong even if the consequences of the actions were good. In other words, a deontologist focuses on doing what is "right" (based on moral principles or values such as honesty), whereas a consequentialist focuses on doing what will maximize societal welfare. An auditor taking a deontological approach would likely insist on telling the truth about a company's financial difficulties even if doing so might risk putting the company out of business and many people out of work.

Social Obligations (Social Contracts--Ethics Toolkit)

Thomas Hobbes I am fulfilling my obligation to contribute to a harmonious society. Am I fulfilling my societal duties? What are my obligation or promises (explicit or implicit) to others? What do we owe our stakeholders? How might this decision benefit or harm out environment (citizens, donors, society, etc.) at large?

Principled

To be principled in terms of cognitive moral development theory, one must have arrived at the decision autonomously based on principles of justice, rights, and the greater good. To understand Kohlberg's theory, you must also remember that it is a cognitive theory. What matters are the reasoning processes and considerations involved in a decision. Although these considerations are likely to affect the decision made, it is the reasoning process that counts.

Three Qualities to Look For

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, had perhaps the best idea about ethics and integrity when he said, "Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you. You think about it; it's true. If you hire somebody without the first, you really want them to be dumb and lazy."

Ethical Action

We can now begin to address the second requirement for ethical behavior: doing what's right, or ethical action. Recall that to behave ethically, people must first decide what course of action is ethically right, probably depending to a large degree on their ethical awareness and ethical judgment (stage of cognitive moral development). Then they must choose the ethically right path over others.

Ethical Awareness

We refer to this initial step in the ethical decision-making process as _______________. With ___________, a person recognizes that a situation or issue is one that raises ethical concerns and must be thought about in ethical terms. It is an important step that shouldn't be taken for granted. Sometimes people are simply unaware that they are facing an issue with ethical overtones. And, if they don't recognize and label the issue as an ethical one, ethical judgment processes (like those we studied in Chapter 2) will not be engaged.

fairness

When most people think about fairness, they mean equity, reciprocity, and impartiality. Most people think of fairness as being inconsistent with prejudice and bias. It's important to remember that, to employees, fairness is not just about the outcomes they receive (pay, promotion, etc). Employees care at least as much about the fairness of decision-making procedures and about the interpersonal treatment they receive when results are communicated. People are more likely to accept bad news if they believe the decision was made fairly. An organization that uses fair procedures and treats with sensitivity sends a powerful message to all employees that it values them as important members of the community.

Ethical problems (workplace)

are not caused entirely by bad apples. The're also the product of bad barrels--work environments that either encourage unethical behavior or merely allow it to occur

Virtue Ethics Development

a virtue ethics perspective assumes that your identity as a moral actor is important to you and that you are devoted to continuously developing that aspect of yourself. Being an ethical person is just an important part of who you are. Those of us who have made such a commitment know that life and careers present ongoing ethical challenges and opportunities to work on the ethical aspect of ourselves. Are you following an ethical fitness program by practicing good behavior over time and developing good habits? Just as an exercise program challenges your muscles, balance, and coordination, an ethical fitness program challenges your ethical thinking and leads to improvement. Such an ethical fitness program can help you develop your comfort with speaking up on behalf of your values. It can also reinforce your view of yourself as a person of integrity and contribute to improving your ethical fitness over time. Identifying ethical role models in your life, choosing to interact with people of integrity, and choosing to work in an ethical environment can all be ways to support this aspect of your personal development.

ethical behavior in business

behavior that is consistent with the principles, norms, and standards of business practices that have been agreed upon by society

Quid pro quo

harassment means that sexual favors are a requirement--or appear to be a requirement-- for advancement in the workplace.

domain of ethics

includes the law but extends well beyond it to include ethical standards and issues that the law does not address.

Idealism

individuals who are keen on ___________ believe that one should always avoid harming other people in ethical dilemma situations, while non-idealists believe that "it depends" because "harm is sometimes . . . necessary to produce good." 12 Relativism is more related to deontological theories and our focus on principles in Chapter 2. For example, individuals who are low on relativism believe that all situations are subject to universal ethical principles (such as honesty).

Relativism

individuals who value relativism believe that people should weigh the particular circumstances in a situation when making decisions, because there are no universal ethical principles that determine right action in every situation. Research suggests that those who focus on idealism are more likely to have ethical intentions and to be critical of unethical behavior. This is probably because idealists are more concerned about anything they might do that would harm others. 14 By contrast, high relativism has been found to be associated with unethical intentions, perhaps because relativists who do not follow clear ethical principles find it easier to rationalize unethical behavior.

Hostile work environment

means that a worker has been made to feel uncomfortable because of unwelcome actions or comments relating to sexuality.

Valuing Diversity

means treating people equally while incorporating their diverse ideas. Discrimination means treating people unequally because they are, or appear to be, different. Valuing diversity is a positive action, while discrimination is a negative action. Valuing diversity tries to incorporate more fairness into the system, while discrimination incorporates unfairness into the system. The key to valuing diversity is understanding that different doesn't mean deficient, and it doesn't mean less. Different means different.

Peer Pressure (Ethical Awareness)

most people look to others in their social environment for guidance in ethical dilemma situations. So, if you believe that your coworkers and others around you are likely to see a decision as ethically problematic, it probably means that the issue has been discussed, perhaps in a company-sponsored ethics training program or informally among coworkers or with your manager. Such discussions prime you to think about situations in a particular way. When a similar situation arises, it triggers memories of the previous ethics-related discussion, and you are more likely to categorize and think about the situation in ethical terms.

illusion of optimism

overestimating the likelihood of good future events and underestimate the bad. For example, even though around one-half of marriage end in divorce, newlyweds are highly optimistic that their own new marriages will be everlasting.

Utilitarianism

probably the best-known consequentialist theory. According to the principle of utility, an ethical decision should maximize benefits to society and minimize harms. What matters is the net balance of good consequences over bad for society overall. A utilitarian would approach an ethical dilemma by systematically identifying the stakeholders in a particular situation as well as the alternative actions and their consequences (harms and/or benefits) for each. A utilitarian would approach an ethical dilemma by systematically identifying the stakeholders in a particular situation as well as the alternative actions and their consequences (harms and/or benefits) for each. A stakeholder is any person or group with a stake in the issue at hand. So who are the stakeholders in the layoff situation? Key stakeholders would include Pat's friend, her friend's family, Pat's boss, Pat, her family, other workers, and the company—quite a list! And, what would be the consequences (societal harms and benefits) for each stakeholder of a decision to tell or not tell? The consequentialist approach requires you to do a mental calculation of all the harms and benefits of these consequences, stakeholder by stakeholder. Remember, according to this approach, the most ethical decision maximizes benefits and minimizes harm to society. The challenge of making the best ethical decision is to step outside of oneself and think as broadly as possible about all of the consequences for all of those affected. Taking this step is guaranteed to widen your decision-making lens and allow you to take into account consequences that you otherwise might not consider.

Ethical Decision-Making Style

research suggests that individuals have preferences for particular prescriptive ethical theories. Forsyth proposed that we think about these individual preferences in terms of two factors: (1) idealism or the person's concern for the welfare of others; and (2) relativism or the person's emphasis on ethical principles being dependent on the situation rather than being applicable to all situations. 11 Idealism is related to what we referred to as thinking about consequences

Ethical Language (Ethical Awareness)

situations can be represented or "framed" in different ways—using ethical language or more neutral language. Using ethical language (positive words like integrity, honesty, fairness, and propriety, or negative words such as lying, cheating, and stealing) will trigger ethical thinking because these terms are attached to existing cognitive categories that have ethical content.

Four Drivers of Engagement

the four drivers of engagement are as follows: 1. Line of sight. Employees understand the company's strategic direction, how the company makes money, and how their individual efforts play a role in that revenue-generating enterprise. Note: Business goals and ethical values are important elements in an organization's strategic direction. 2. Involvement. Employees are involved in the enterprise; they actively participate, and their ideas are heard. Note: This kind of employee involvement encourages the two-way communication that is critical for ethical issues to be identified and resolved . 3. Information sharing. People get the information they need to be effective, when they need it, and information goes in all directions—up, down, and across the organization as needed. Note: Cultures that encourage information sharing are more likely to be open organizations that identify and resolve ethical issues rather than sweeping them under the rug . 4. Rewards and recognition. Business goals and values are clearly spelled out, and employees know what they need to do and how they need to behave to get rewarded. Note: It is critical for companies to pay close attention to the incentives that goals and values will provide for ethical (or unethical) behavior.

illusion of control

the general belief that we really are in charge of what happens. If we think we can control events, we also think bad things are less likely to happen.

confirmation bias

the tendency to attend to information that will help confirm the decisions we would prefer to make.

Sexual harassment

unwelcome sexually oriented behavior that makes someone feel uncomfortable at work. It usually involves behavior by someone of higher status toward someone of lower status or power. Sexual harassment claims are not initiated only by women.

Conceptual Tools

we introduce conceptual tools drawn from philosophical approaches to ethical decision making that are designed to help you think through these tough ethical dilemmas from multiple perspectives. None of the approaches are perfect. In fact, they may lead to different conclusions. The point of using multiple approaches is to get you to think carefully and comprehensively about ethical dilemmas and to avoid falling into a solution by accident. At the very least, you can feel good because you've thought about the issue thoroughly, you've analyzed it from every available angle, and you can explain your decision-making process to others if asked to do so.

People issues

we use this term to describe the ethical problems that occur when people work together. The problems may concern privacy, discrimination, sexual and other types of harassment, or simply how people get along.

Providing Honest Information

we're talking about telling the truth within your organization and providing honest information to others within your company. "Fudging" numbers can have serious consequences since senior management may make crucial decisions based on flawed data. If you're asked to skew any kind of corporate information, you should consult with someone outside your chain of command—such as the legal, human resources, or audit department—and then decide whether it's time to move on. Serious corporate scandals, sometimes leading to jail terms for those involved, often begin with these "one-time" requests. Once you're involved, it's almost impossible to extricate yourself from an almost inevitable downward spiral.

Advantageous Comparison

whereby people compare their own behavior to more reprehensible behavior and thus make their own behavior seem more okay. For example, the same mortgage lender may feel okay about selling these loans because she counsels clients to be sure to pay the mortgage every month and avoid credit card debt, while colleagues in her office don't bother to do any counseling and care only about making their commissions.