Management Ch. 4

What two things must be done for a company's code of ethics to encourage ethical decision making and behavior?

1. Communicate it's code to others both inside and outside the company. 2. Develop practical ethical standards and procedures specific to the business.

What is the process the U.S. Sentencing Commission uses to fine unethical organizations?

1. Compute a base fine by determining the level of offense 2. Computes a culpability score

What are the three objectives of ethics training?

1. Develop employee' awareness of ethics. 2. Achieve credibility with employees. Ex. have top managers teach ethics training. 3. Teach employees a practical model of ethical decision making.

Compliance Program Steps

1. Establish standards and procedures 2. Assign upper-level managers to be in charge 3. Delegate decision-making authority only to ethical employees 4. Encourage employees to report violations 5. Train employees on standards and procedures 6. Enforces standards consistently and fairly 7. Improve program after violation

Fundamental challenges preventing employees from speaking up

1. Futility: speaking up isn't worth it. 2. Fear of retribution or harsh reactions.

Steps to establish an ethical climate

1. Managers must act ethically themselves 2. Top Management must be active in and committed to the company ethics program. 3. Reporting systems for potential ethics violations (whistle-blowing). 4. Management fairly and consistently punishes those who violate the company's code of ethics.

Social Responsibility

A business's obligation to pursue policies, make decisions, and take actions that benefit society.

Social Responsiveness

A company's strategy to respond to stakeholders' economic, legal, ethical, or discretionary expectations concerning social responsibility.

Accommodative Strategy

Accepts responsibility for a problem and takes a progressive approach by doing all that could be expected to solve the problem.

Defensive Strategy

Admits responsibility for a problem but would do the least required to meet societal expectations.

Social consensus

Agreement on whether behavior is good or bad.

Proactive Strategy

Anticipates responsibility for a problem before it occurs, do more than expected to address the problem, and lead the industry in its approach.

Who is subject to the U.S. Sentencing Commission?

Any organization that can be characterized as a business or nonprofit.

Secondary Stakeholders

Can influence or be influenced by the company; they include the media and special interest groups. They don't engage in regular transactions, but can affect public perceptions and opinions about socially acceptable behavior.

Reactive Strategy

Do less than society expects.

True or False: A social responsibility problem exists whenever company actions do not meet shareholder expectations.

False. Stakeholder expectations.

Ethical Behavior

Follows accepted principles of right and wrong.

Primary Stakeholders

Groups on which the organization depends for its long-term survival; they include shareholders, employees, customers, suppliers, governments, and local communities.

What are the two qualities employees want the most from their superiors?

Honesty and communication.

Personal Aggression

Hostile or aggressive behavior toward others. Ex. sexual harassment, verbal abuse, threats.

Concentration of effect

How much an act affects the average person.

Production Deviance

Hurts the quality and quantity of work produced. Ex. leaving early, taking excessively long work breaks, intentionally working slower, or wasting resources.

Personality-based Integrity Tests

Indirectly estimate job applicants' honesty by measuring psychological traits such as dependability and conscientiousness.

Postconventional Level of Moral Development

Internalized Principles. Social Contract, Universal Principle. Use internalized ethical principles to solve ethical dilemmas. Will you not watch it because you don't want to violate the rights of the producers, or because it's your principle of wrong?

What do the guidelines of the U.S. Sentencing Commission cover?

Invasion of privacy, price fixing, fraud, customs violations, civil rights violations, theft, money laundering, dealing in stolen goods, copyright infringements, etc.

What is the greatest factor for employees who considering leaving their job?

Lack of trust, believing the company is unethical.

Economic Responsibility

Making a profit by producing a product or service valued by society.

Stakeholder Model

Management's most important responsibility is the firm's long-term survival, by satisfying the interests of multiple corporate stakeholders (not just shareholders).

Legal Responsibility

Obey society's laws and regulations as it tries to meet its economic responsibilities.

Preconventional Level of Moral Development

Self-interest. Punishment and Obedience, Instrumental Exchange. Your primary concern will be to avoid trouble for yourself.

Conventional Level of Moral Development

Social Expectations. Good boy, Nice girl, Law and Order. Make decisions based on societal expectations.

The U.S. Sentencing Commission Guidelines for Organizations says what about management and unethical behavior?

That they can be prosecuted and punished even if they didn't know about unethical behavior.

Probability of effect

The chance of that something will happen that results in harm to others.

Ethical Intensity

The degree of concern people have about an ethical issue.

Principle of Government Requirements

The law represents the minimal moral standards of society, so you should never take any action that violates the law.

Shareholder Model

The only social responsibility that organizations have is to satisfy their owners (shareholders), aka, maximize profit.

Employee Shrinkage

When employees steal company merchandise.

Which of the six factors has the most impact on ethical intensity?

When magnitude of consequences is high and there is social consensus.

Principle of Personal Virtue

You should never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers or on TV.

Principle of Utilitarian Benefits

You should never take an action that does not result in greater good for society. In short, you should do whatever creates the greatest good for the greatest number.

Principle of Individual Rights

You should never take an action that infringes on others' agreed-upon rights.

Principle of Religious Injunctions

You should never take an action that is unkind or that harms a sense of community.

Principle of Distributive Justice

You should never take any action that harms the least fortunate among us in some way.

Principle of Long-term Self-Interest

You should never take any action that is not in your or your organization's long-term self-interest.

Cyberloafing

Wasting time on the job with non-work-related social media or retail sites.

Overt Integrity Tests

Estimate job applicants' honesty by asking them directly what they think or feel about theft or about punishment of unethical behaviors.

Ethics

The set of moral principles or values that defines right and wrong for a person or group.

Discretionary Responsibilities

The social roles that businesses play in society beyond their economic, legal, and ethical responsibilities.

Proximity of Effect

The social, psychological, cultural, or physical distance of a decision maker from those affected by the decision. Greater = when the manager knows the person they're laying off.

Describe the carrot-and-stick approach that the U.S. Sentencing Commission uses?

The stick is the threat of heavy fines. The carrot is a greatly reduced fine, but only if the company has started an effective compliance program to encourage ethical behavior before the illegal activity occurs.

Temporal Immediacy

The time between an act and the consequences the act produces. Stronger = shorter time between.

What is the purpose of the U.S. Sentencing Commission?

To encourage companies to take proactive steps that will discourage or prevent white-collar crime before it happens, and give companies an incentive to cooperate with and disclose illegal activities to federal authorities.

Ethical Responsibility

To not violate accepted principles of right and wrong when conducting its business.

Magnitude of consequences

Total harm or benefit derived from an ethical issue.

True or False: A strong ethical culture fosters less unethical behavior, and employees are more likely to report that behavior versus a weak ethical culture.

True

True or False: Being socially responsible may be the right thing to do, and it is usually associated with increased profits, but it doesn't guarantee business success.

True.

Property Deviance

Unethical behavior aimed at company property or products. Ex. stealing, damaging equipment or products.

Workplace Deviance

Unethical behavior that violates organizational norms about right and wrong.

Political Deviance

Using one's influence to harm others in the company. Ex. favoritism, spreading rumors.