Business Ethics - Chapter 5-8 test review

MOTIVATIONAL "CARROTS AND STICKS"

"CARROTS" = pay raises, bonuses, and public recognition or positive reinforcement act as "carrots" "STICKS" = Demotions, firings, reprimands and pay penalties act as "sticks"

TELEOLOGY

(From the Greek word for "end" or "purpose") refers to moral philosophies in which an act is considered morally right or acceptable if it produces some desired result such as pleasure, knowledge, career growth, wealth, or even fame.(Consider the ends associated with an action)

DEONTOLOGY

(From the Greek word for "ethics") Refers to moral philosophies that focus on the right s of individuals and the intentions associated with a particular behavior rather than its consequences. (Considere the means associated with an action)

REASONS THAT A COMPETITION MAY INDUCE UNETHICAL BEHAVIOR

1) Barriers to entry into the industry. 2) Available substitutes for the products produced by the industry rivals. 3) The power of the industry rivals over their customers 4) The power of the industry rivals suppliers over the industry rivals.

FOUR TYPES OF ORGANIZATIONAL CULTURES

1. A caring culture. Example = Ben & Jerry's. They embrace community causes and more. 2. An apathetic culture. Example = Countrywide Financial. The company's culture appeared to encourage unethical conduct in exchange for profits. 3. An integrity culture. Example = Starbucks. They always look for way to expand our improve performance. 4. An exacting culture: Example = United Parcel Systems. Employees are held to high standards to ensure maximum performance.

KOHLBERGS LEVELS OF ETHICAL CONCERN

1. A person is concerned with his or her own immediate interests and with external rewards and punishments. 2. An individual equates right with conformity to the expectations of good behavior of the larger society or some other significant reference group. 3. Finally, an individual sees beyond the norms, laws, and authority of groups or individuals.

RESPONSIBILITIES OF ETHICS OFFICERS

1. Assessing the needs and risks an organization-wide ethics program must address; 2. Developing and distributing a code of conduct or ethics; 3. Conducting training programs for employees; 4. Establishing and maintaining a confidential service to answer employees' questions about ethical issues; 5. Making sure the company is in compliance with government regulations; 6. Monitoring and auditing ethical conduct; 7. Taking action on possible violations of the company's code; 8. Reviewing and updating the code.

MAIN REASONS PEOPLE DON'T REPORT MISCONDUCT

1. Fear of retaliation 2. Making personal value judgements about whether it would be worthwhile to report the misconduct.

ETHICS TRAINING REQUIRMENTS

1. It must star with a theoretical foundation based on values 2. A code of ethics 3. Procedures for airing ethical concerns 4. Line and staff involvements 5. Clear executive priorities on ethcis

IMPORTANCE OF REFLECTING UNIQUE CHARACTERISTICS OF AN ORGANIZATION IN TRAINING AND COMMUNICATION

1. Its size 2. Culture 3. Values 4. Management style 5. Employee base

ETHICS PROGRAM RESOURCES

1. Observing employees 2. Conducting internal audits and investigations 3. Circulating surveys 4. Instituting reporting systems

KOHLBERG'S SIX STAGES OF DEVELOPMENT

1. Punishment and obedience. 2. Individual instrumental purpose and exchange 3. Mutual interpersonal expectations, relationships, and conformity. 4. Social systems and conscience maintenance 5. Prior rights, social contract or utility 6. Universal ethical principles

FIVE TYPES OF POWER

1. Reward Power = Influence behavior by offering them something desirable 2. Coercive Power = Uses power to penalize the actions and behaviors not demanded by others 3. Legitimate Power = The demand of actions and behavior by someone powerful to others obligation to accept it. 4. Expert Power = Perception that a person is an expert on a specific topic, thus expert power. 5. Referente Power = Perceives that his or her goals or objectives are similar to another's.

KEY REASONS WHY CODE OF ETHICS FAIL

1. The code is not promoted and employees do not read it; 2. The code is not easily accessible; 3. The code is written too legalistically and therefore is not understandable by average employees; 4. The code is written too vaguely, providing no accurate direction; 5. TOP MANAGEMENT never refers to the code in body or spirit.

TYPICAL CORE VALUES OR PRINCIPLES IN CODES OF ETHCIS

1. Trustworthiness 2. Respect 3. Responsibility 4. Fairness 5. Caring 6. Citizenship

VARIATION IN EMPLOYEE CONDUCT AND RELATIVE PERCENTAGES

10% = Follow their own values and beliefs; Also, believe that their values are superior to those of others in the company 40% = Always try to follow company policies 40% = Go along with the work group 10% = Take advantage of situations if they penalty is less than the benefit and the risk of being caught is low

CORE VALUES AS THEY PROVIDE A BLUE PRINT

A firm's core values provide a blueprint into the firm's purpose as well as how it views ethical decision making and prioritized stakeholders. Core Values might include operating in a sustainable manner, collaboration and teamwork and avoiding bribery. Organizations that have ethics programs based on a values orientation are found to make a greater contribution than those based simply on compliance or obeying laws and regulations.

CORPORATE CULTURE

A set of values, norms, and artifacts, including ways of solving problems that members (employees) of an organization shares.

ADAM SMITH AND MILTON FRIEDMAN DIFFERENT VIEWS ON THE RESPONSIBILITY OF BUSINESSES FOR SOCIETAL CONCERN

Adam Smith = Believed business was and should be guided by the morals of good people. Milton Friedman = Under capitalism, some mangers view profit as the ultimate goal of an enterprise and may not be concerned about the impact of their firms' decisions on society.

INTERCHANGEABILITY WITH CORPORATE CULTURE

All organizations, not just corporations, have some sort of culture, and therefore we use the terms Organizational culture and corporate culture interchangeably. A company's history and unwritten rules are a part of its culture. Values, beliefs, customs, rules, and ceremonies that are accepted, shared, and circulated throughout an organization represent culture.

JOHN RAWLS PRINCIPLES OF JUSTICE - "LIBERTY PRINCIPAL"

Also known as the quality principle; states that each person has basic rights that are compatible to the basic liberties of others. Example: This is similar to the U.S Constitution's statement that everyone has certain inalienable rights such as life, liberty and pursuit of happiness.

THE RELATIVISTIC PERSPECTIVE

Are derived subjectively from the experiences of individuals and groups. Example: They us themselves or the people around them as their basis for defining ethical standards.

WORK GROUPS

Are used to subdivide duties within specific functional areas of a compay

ETHICS AND AGE

Before it was know that the older your are, the more ethical you were. However, a recent research believes older employees with more experience have greater knowledge to deal with complex industry-specific ethical issues. Younger managers are far more influenced by organizational culture than older managers.

INTERNAL CONTROL

Believe they control the events in the their lives by their own effort and skill; viewing themselves as masters of their destinies and trusting in their capacity to influence their environment.

ETHICAL DECISION-MAKING MODEL - WHAT IT CAN AND CAN NOT DO

Can not do = It ca not tell you if a business decision is ethical or unethical. It is not a guide for how to make decisions Can do = It is intended to provide you with insights and knowledge about typical ethical decision-making processes in business organizations.

ECONOMIC INSTITUTIONS AND COMPETITION

Competition is also important to economic institutions and ethical decision making. The nature of competition can be shaped by the economic system as it helps determine how a particular country or society distributes its resources in the production of products.

COMPLIANCE ORIENTATION

Creates order by requiring employees to identify with and commit to specific required conduct

CENTRALIZED ORGANIZATIONS

Decision making authority is concentrated in the hands of top-level managers, and little is delegated to lower levels.

DECENTRALIZED ORGANIZATIONS

Decision making authority is delegated as far down the chain of command as possible. Such organizations have relatively few formal rules, and coordination and control are usually informal and personal.

EGOISM

Defines right or acceptable behavior in terms of its consequences for the individual. Example = Egoist believe they should make decisions that maximize their own self-interest.

OBLIGATION THEORIES

Emphasize the means and motives by which actions are justified, and are decided in to the categories of teleology and deontology.

SARBANES-OXLEY 404 AUDITS

Enacted after the Enron, Tyco International, and WoldCom scandals. The Characteristics of an ethical corporate culture were codified within the compliance section. This section includes a requirement that management assess the effectiveness of the organization's internal controls and commissions internal controls and commission on audit of these controls by an external auditor in conjunction with the audit of its financial statements.

IMPORTANCE OF ALIGNING MANAGEMENT SENSE OF ORGANIZATION'S CULTURE WITH THE VALUES AND BELIEFS THAT ACTUALLY GUIDE A FIRM'S EMPLOYEES.

Ethical issues may arise because of conflicts between the cultural values perceived by management and those actually at work in the organization. Example: managers, may believe their firm's organizational culture encourages respect for peers and subordinates. On the other hand, employees appreciate working in an environment designed to enhance workplace experiences through goals that encompass more than just maximizing profits. "Therefore, it is important for top managers to determine their organization's culture and monitor its values, traditions, and beliefs to ensure they represent the desired culture."

OBEDIENCE TO AUTHORITY

Explains why many employees resolve business ethics issues by simply following the directives of a superior. Employees may feel they are expected to carry out orders by a supervisor even if those orders are contrary to employees' sense of right and wrong.

CODES OF CONDUCT

Formal statements that describe what an organization expects of its employees

DECENTRALIZED ORGANIZATIONAL BENEFITS

Give employees extensive decision-making autonomy because management empowers employees.

JOHN RAWLS PRINCIPLES OF JUSTICE

He believed justice principles were beliefs that everyone could accept - a key element in our own definition of principles.

MORAL PHILOSOPHY AND THE INEXACT NATURE OF HOW TO ASSESS THEM

Implementing more philosophies from an individual perspective requires individuals to apply their own accepted value systems to real-word situations. Individuals make judgements about what they believe to be right or wrong, but in their business lives they make decisions that take into consideration how to generate the greatest benefits its the least harm.

EGOISTS AND RELATIVE CONCERN FOR WELL-BEING OF OTHERS AND FOR THEMSELVES

In an ethical decision-making situation, an egoist will probably choose the alternative that contributes most to his or her self-interest. Egoist people and companies are inherently unethical, short-term oriented, and willing to take advantage of any opportunity for gain.

ORGANIZATIONAL CULTURE

Includes shared values, norms, and artifacts that influence employees and determine behavior, including ways of solving problems that members (employees) of an organization share.

MOTIVATION

Is a force within the individual that focuses his or her behavior toward achieving a goal

FORMAL GROUP

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

CULTURAL AUDIT

Is an assessment of an organization's values. The audit its usually conducted by outside consultants by may be top performed internally as well.

DEONTOLOGIST BELIEF ABOUT EQUAL RESPECT

Is the idea that equal respect must be given to all persons.

DIFFERENTIAL ASSOCIATION

Is the idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or belong to other intimate personal groups. Example: Senior sales people pad their expense report since the company doesn't pay a certain area. As a result they begin teaching the new hires how to pad their accounts and are told that failure to engage in this conduct makes other report look too high. Therefore, the new employee is pressured to engage in misconduct.

CODE OF ETHICS

Is the most comprehensive and consists of general statements, something's altruistic or inspirational, that serve as principles and as the basis for rules of conduct.

THE FIRST STEP IN ETHICAL DECISION

Is to recognize that an ethical issue exists

IMPORTANCE OF UNIFORM STANDARDS AND POLICIES

It is difficult for employees to determine what behaviors are acceptable within a company. In the absence of such programs and standards, employees generally make decisions based on their own observations of how their coworkers and superiors behave. A strong ethics program includes a written code of conduct; an ethics officer to oversee the program; careful delegation of authority; formal ethics training; and rigorous auditing, monitoring, enforcement, and revision of program standards.

MOTIVATING ETHICAL BEHAVIOR

It offers a way to relate business ethics to the broader social context in which workers live and the moral assumptions on which society depends. Workers are individuals and will be motivated by a variety of personal interests. Although we emphasize that mangers are positioned to exert pressure and force individuals' compliance on ethically related issues, we also acknowledge an individuals' personal ethics and needs will significantly affect his or her ethical decisions.

NORMATIVE APPROACHES

Its how organizational decision makers should approach an issue. Concepts like fairness and justice are highly important in a normative structure.

THE CONCEPT THAT PEOPLE CHANGE DECISION-MAKING PRIORITIES AND / OR VALUES AND ETHICAL BEHAVIOR OVER TIME

Kohlberg suggests people continue to change their decision-making priorities after their formative years, and as result of time, education, and experience, they may change their values and ethical behavior.

WHISTLE-BLOWING

Means exposing an employer's wrong doing to outsiders such as the media or government regulatory agencies. Example: Known as a anonymous reporting mechanisms of then allied hotlines.

ACT DEONTOLOGIST VIEWS ON HOW ACTIONS ARE THE BASIS TO JUDGE

Morality and ethicalness. Requires a person use equity, fairness, and impartiality when making and enforcing decisions.

INSTITUTIONS

Political institutions influence the development of values. Political influences can also take place within the organization.

Three categories of institutions

Political, economic, and social.

HOTLINES

Provide support and give employees the opportunity to ask questions or report concerns. They operate anonymous basis and are supported 24 hours a day, 365 days a year. Approximately 50% of hotline calls occur at night or on the weekends.

ETHICAL CULTURE

Reflects the integrity of decisions made and is fiction of many factors, including corporate policies, top managements leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior.

LOCUS OF CONTROL

Relates to individual differences in relation to a generalized belief about how you are affected by internal versus external events or reinforcements. IN OTHER WORDS, the concept relates to how people view themselves in relation to power.

MORAL INTENSITY

Relates to individuals perceptions of social pressure and the harm they believe their decisions will on others.

EXTERNAL CONTROL

See themselves as going with the flow because that is all they can do.

UTILITARIANISM

Seeks the greatest good for the greatest number of people. They believe they should make decisions that result in the greatest total utility, or the greatest benefit for all those affected by a decision.

BAD APPELS AND BAD BARRELS

Some people are simply "bad apples" who will always do things in their self-interest regardless of their organization's goals or accepted standards of conduct. Eliminating bad apples through screening techniques and enforcement of a firm's ethical standards can improve the firm's overall behavior.

JOHN RAWLS PRINCIPLES OF JUSTICE - " THE DIFFERENCE PRINCIPAL"

States that economic and social equalities or inequalities should be arranged to provide the most benefit to the least advantaged members of society. Example : This means that most ethical course of action is one that increases the benefits of those that are the least well-off.

VALUES ORIENTATION

Strives to develop shared values; Has added benefit of sparking ethical reasoning among employees.

NORMATIVE BUSINESS ETHICS

TAKES INTO ACCOUNT THE POLITICAL REALITIES OUTSIDE THE LEGAL REALM IN THE FORM OF INDUSTRY STANDARDS.

ETHICAL AWARENESS

The ability to perceive whether a situation or decision has an ethical dimension.

ORGANIZATIONAL VALUES AND INFLUENCE ON DECISIONS

The organization's values often have greater influence on decisions than a person's own values. Employees approach ethical issues on the basis of what they learned not only from their own backgrounds, but also from others in the organization.

ETHICAL ISSUE INTENSITY

The relevance or importance of an event or decision in the eyes of the individual, work group, and/or organization.

WHAT ARE THE SIX "SPHERES OF INFLUENCE"

The workplace, family, religion, legal system, community, and profession.

IMMEDIATE JOB CONTEXT

This is known as: where they work, whom they work with, and the nature of the work. The immediate job context includes the motivational "carrots and sticks" superiors use to influence employee behavior.

SIGNIFICANT OTHERS

Those who have influence in a work group, including peers, managers, coworkers, and subordinates. They help workers on a daily basis with unfamiliar tasks and provide advice and information in both formal and informal ways.

NEED FOR ORGANIZATIONAL EHTICS PROGRAMS

To sensitize employees to the potential legal and ethical issues within their work environments. Such programs can increase employees' ethical awareness, participation in ethical decision making and ethical behavior.

CONCERN ABOUT UPWARD COMMUNICATION IN CENTRALIZED ORGANIZATIONS

Top level managers may not be aware of problems and unethical activity. Some companies' use of sweatshop labor may be one manifestation of this lack of upward communication.

INFORMAL GROUP

Two or more individuals with a common interest but without an explicitly organizational structure.

GOODNESS THEORIORIES

Typically focus on the end result of actions and the goodness or happiness created by them. A discussion of moral value often revolves around the nature of goodness.

RELATIVE ETHICAL BEHAVIOR IN THESE TYPES OF ORGANIZATION

Unethical behavior is possible in both of these organized structures when specific corporate cultures permit or encourage worker to deviate from accepted standards or ignore corporate legal and ethical responsibilities.

MORAL PHILOSOPHY

refers to the specific principles or values people use to decide what is right and wrong