Mngt exam chapters 5, 6, and 9
Porter and kramer's share value framework
-CSR insufficient to address grand challenges. -Proposes CSV instead. CSR and CSV complementary to each other.
Support for Prahalad and Hart's ideas from under bill gates under rubric of creative capitalism
-Corporations likely to be better than governments in assisting the poor to rise above their poverty.
Case 6.1
"Mayo Elton is the chief ethics officer at Hawthorne Manufacturing. He has established a code of conduct that prohibits stealing supplies and equipment from the factory floor and also imposes strict punishments up to, and including, being fired and prosecuted. Elton ensures that these policies and procedures are communicated to all new hires at an annual ethics training. Despite this, theft is persistently high at the plant, so much so that it is making a noticeable dent in profits. Elton is very disappointed by this, especially because he constantly refers to and tries to live up to Hawthorne's core values, which include integrity. Elton offers to hire you for a handsome sum to resolve the theft problem at his plant. After accepting Elton's offer, you get to work gathering data to try to understand the underlying reasons the code of conduct on stealing is not working at Hawthorne (step 2 of the weight-of-reasons framework.) Based on the lessons of this chapter, identify three plausible reasons that theft is taking place. Use the weight-of-reasons framework to recommend solutions to the problem"
Case 6.3
"Pithos Internet Company is known for its innovative software products. The secret to Pithos's success is in large part its ability to create a climate in which its smart and ambitious employees are motivated to work together to develop new ideas, products, and services. One consequence of the emphasis on freedom of expression at Pithos is a very open conversation among employees about the company's diversity and inclusion programs. Some employees are very supportive of the programs, others think the programs should be more aggressive in trying to make the Pithos workforce more diverse, and yet others do not support the programs at all. Employees in this last group think the reason that nearly three fourths of the company's employees are white and Asian men is that workers in these categories are simply more deserving of and better at their jobs. The diversity debate at Pithos is not mere water cooler talk. Much like the broader national debate in which it is taking place, it has become very hostile. Assume you are a senior human resources manager at Pithos. You embrace the company's core values of collaboration, sharing of ideas, and freedom of expression, but you also wonder whether the diversity debate needs to be managed. Employing the lessons of this chapter, use the weight-of-reasons framework to identify steps you could take to ensure that the diversity debate at Pithos is healthy and productive."
Firms should focus on areas where the business intersects with grand challenges
"Shared value" takes a both/and approach to the question of whether business primarily serves shareholders or rather all of its stakeholders and society. Whereas companies often take profit maximization and competitive advantage as the targets of strategic decision-making, the shared value framework takes into account a broader set of principles and a broader set of consequences. In these ways it is consistent with the weight of reasons framework
Holmes / Theranos Scandal Case
"The Theranos Scandal This chapter concludes with the cautionary tale of an entrepreneur who went badly astray in attempting to address—or pretending to address—a grand challenge. Elizabeth Holmes, the founder of Theranos, preyed on the gullibility of investors while purporting to make a revolutionary dent on the grand challenge of health and well-being (SDG-3). The company produced a semiportable device that Holmes alleged could do thousands of blood tests with a pin prick and produce results within 1 hour or less. The device would have been an extraordinary breakthrough because it would have provided users with real-time information and enable them to monitor their health and make adjustments in ways that human beings never have before. Other companies have tried but failed to solve the problem of how to conduct many different kinds of blood tests with such a small sample. This problem was one that Theranos never came close to solving, though Holmes claimed it had. Holmes was the daughter of an ex-Enron executive and a scion of the Fleischmann family that built a food product empire. A chemical engineering dropout from Stanford, she was determined to follow in the footsteps of entrepreneurs like Steve Jobs. Her attachment to Jobs was so great that she regularly dressed in black turtlenecks in imitation of her hero. Holmes burnished her credentials by alleging that she had learned programming at an early age and started a successful business while still in high school selling C++ compilers to Chinese universities. These claims were similar to those of other entrepreneurs like Agassi and Musk. In addition, she cultivated a speaking style in which she affected a deep baritone voice in her public appearances to make her sound mature and hyperserious. This style of speaking provided her with an authoritative demeanor, which made her appear very believable. To further enhance her credibility and build her company's image, Holmes created an influential board of directors that included well-regarded diplomats, politicians, military figures, and corporate executives, including Henry Kissinger, George Shultz, William Perry, Sam Nunn, Bill Frist, James Mattis, and Dick Kovacevich, the ex-CEO of Wells Fargo. None of these luminaries had any substantive knowledge of health care. Holmes succeeded in raising $92 million in venture capital prior to 2011 to research her blood testing concept. From the start, however, there were serious concerns from members of the medical community that what she was trying to do was impossible. The number of tests she promised from a pinprick of blood in a short period was beyond what any known technology could accomplish. In 2013, Holmes sold the use of the device to Walgreens's stores in Arizona and California. The sale enabled the drugstore chain to have in-store blood sample collection centers. Selling the use of the device to Walgreens suggested that the device was a fully functioning innovation with great accuracy and entirely ready for commercialization. Walgreens's buy-in boosted Holmes's stature and provided her with the credibility to approach other wealthy investors for funding. In raising money, Holmes continued to avoid sophisticated Silicon Valley medical technology investors. Instead, she made her pitch to extremely rich and gullible individuals who had little experience in investing in the health sector and who lacked the sophistication to seriously investigate or challenge her claims. By all accounts, she was an exceptionally charismatic and convincing liar. She seemed very knowledgeable and beyond reproof and told a very good story. Holmes raised millions of dollars from among others the media mogul Rupert Murdoch; the Cox family, which controlled an Atlanta-based media empire; Carlos Slim, the Mexican business magnate who is one of the world's wealthiest persons; and the family of U.S. Secretary of Education Betsy DeVos, who is the daughter-in-law of Amway's billionaire cofounder Richard DeVos. In 2014, Holmes was on the cover of Fortune, Forbes, The New York Times Style Magazine, and Inc. magazine. Forbes added to her renown by proclaiming that she was the world's youngest self-made female billionaire. In the magazine's list of billionaires in 2014, she ranked #110, with Forbes estimating her net worth as $9 billion. In 2015, Theranos was able to craft agreements with well-regarded medical institutions, including the Cleveland Clinic, to use its technology. Holmes's sales skills were exceptional. The problem was that her product simply did not work, a secret she tried to keep from everyone."
Case 5.2
"You are a marketing professional who is offered a promotion that would place you as the leader of a team developing a new recreational vehicle. This vehicle has a rough ride and few amenities but can travel at high speeds and take people to places "where highways dare not go." The vehicle will be marketed to young people interested in thrills and adventure. The product will have to sell at a low price, so there will be severe limits on engineering and material costs. The vehicle might have to sacrifice safety to keep its price low. Foreign competition has created financial difficulties, but your company is betting on this product becoming very profitable. Accepting the promotion would put you in line for a top management spot."
Case 5.1
"You work for Brighten Enterprises, a Fortune 500 company with annual sales of more than $23 billion. Your company has been on the cutting edge in new product innovation. It has grown rapidly and has produced many good jobs that help stimulate the local economy. Recently, you persuaded a small company, Sunshine Electronic Devices and Precision Equipment, to purchase, finance, install, and maintain new equipment that would be used almost exclusively to produce components for Brighten. You told Sunshine, which has about $10 million in annual sales, that it could possibly earn $70 million in sales over a number of years. The total cost of the equipment was about $15 million. It was a big step for Sunshine but one it was eager to take. You got along well with Sunshine's managers and looked forward to working with them. The negotiations lasted more than 10 months, and you were pleased with the capability of Sunshine's people. The equipment was now more than 85% installed. Brighten Enterprises was then hit with some bad news. Marketing forecasts were not met, and revenues were much lower than anticipated. Your unit was the hardest hit; sales were down by 3l%. Although your business is cyclical, these numbers surprised you. Top management at Brighten decided your unit could not afford any new investments at this point. All new projects were terminated immediately until a fuller evaluation could be carried out and decisions made about restructuring. Though your job was secure because of your strong track record in product development, Sunshine was sure to suffer. Without the Brighten contracts, Sunshine could not service its debt. It faced bankruptcy. More than 300 Sunshine workers might lose their jobs. To your mind, Sunshine had taken a chance, while Brighten, cautious as usual, had cut its losses. This was the best way to manage the risk of new ventures. Brighten is the local powerhouse, the engine that gives dynamism to the economy and provides many people with jobs. Its impact is also large at the national and international levels, and its health is more important than that of Sunshine. Sunshine can be sacrificed, or so you think."
•Companies now have ethics programs with:
-Codes of conduct, -Ethics officers, -Ethics training, -Ethics communication systems, and -Systems for producing accurate financial statements.
•Team-based decision-making processes address difficulty of putting other approaches into practice.
-Constructive conflict in teams can help develop long-term solutions to ethical problems. -Use of incremental decision-making processes by teams to address uncertainties. - Smaller steps help to gradually move toward long-term solutions. Decision-making approaches such as systems thinking, both/and thinking, and moral imagination can improve ethical decision-making in theory, but due to bounded rationality and cognitive biases managers are likely to have difficulty putting them into practice.
Systems thinking
-A form of double-loop learning. -Addresses whole systems of actors, patterns, and structures. -Enables a better understanding of underlying roots of problems and envisions actions to address them. -Helps to connect ethical dilemmas to organization's broader context and strategies.
Managing ethical contradictions as paradoxes.
-Acceptance of co-existence of opposing elements which cannot be reconciled. -First step in exploring possibility that opposing objectives can be met simultaneously. -Resistance to contradictory viewpoints due to influence of contextual factors.
Gates' reasons for corporations to emphasize people at the base of the pyramid
-Access to a very large market. -Ability to recruit idealistic, young, enthusiastic and highly motivated workers. -Cost breakthroughs. -Product innovations. -Enhanced brands and reputations.
Most widely accepted grand challenge addressed by SDGs adopted by the UN in 2015
-Address complex economic, social, and environmental problems.
Short term solutions
-Adequate for simple ethical issues. -May not be sufficient because they address symptoms but not the underlying problems. -Decision-makers may not have all the facts, time and resources for diagnosis and forecast of consequences of actions.
Business is the leading role in all approaches
-All approaches morally imaginative. -All require an understanding of the larger systems in which the company is operating. -All take a both/and approach to the tension between earning profit and doing good. -All deal with environmental uncertainty by taking an incremental approach to decision-making. -All involve deep interaction and learning with stakeholders.
Long term solutions
-Decision-making must be viewed as a process and not a one-time fix. -Requires recognition of patterns of ethical problems. -Requires engagement in organizational learning. -Important to move from single-loop learning to double- or triple-loop learning.
•CSV:mobilizes firm's resources to aid society, and to enhance firm profitability.
-Deploys core operations to make world better and meet firm's economic needs. -Agendas internally generated (based on company's unique business value chain) -Can summon entire company budget because it is integral to profit maximization.
Describes acceptable and unacceptable behaviors of specific situations at work
-Direct employees to conduct themselves with integrity. -Companies also have codes of conduct for stakeholders they do business with. -Vary in range of situations covered and prescriptiveness of appropriate behavior.
four key decisions in organizational structure
-Division of labor, extent of formalization of work, extent of centralized or decentralized decision-making, hierarchy. 1. division of labor: Should employees have highly specialized jobs, where they do one or a few tasks repeatedly, or should their jobs include many different tasks? 2. Managers must decide on the extent to which work should be formalized, i.e., the degree to which an organization's policies, procedures, job descriptions, and rules must be written and explicitly articulated. When jobs are highly formalized, employees know exactly what tasks they are supposed to do and how to do them, but have little autonomy; they do not decide for themselves how to accomplish their work and meet their goals or even what their goals are. 3. Managers must choose the extent to which decision-making should be centralized or decentralized. In centralized organizations, decision-making is concentrated at higher levels in the organization. In contrast, in decentralized organizations, senior managers make relatively few decisions, and employees at lower levels are given more authority and autonomy to make decisions and solve problems. 4. Managers must decide on the organization's hierarchy, and whether it will be tall or flat. Tall organizations have many different levels of management, and each manager closely manages the work of relatively few employees. In contrast, flat organizations have few levels of management and each manager has potentially many employees reporting to her. This generally means that managers do not closely monitor and control the work of each employee.
Dewey
-Engaging in moral imagination involves picturing ourselves carrying out our various action alternatives. -In identifying imaginative solutions, we start with known options and then modify them.
Push to establish corporate ethics programs in the US started in the 1970s.
-FCPA passed after investigations revealed companies were bribing foreign government officials in exchange for business favors.
•Designated by company to:
-Hear anonymous/confidential claims of ethics violations. -Investigate claims without revealing the source. -Make a decision about how the claim should be handled and implement appropriate changes. •Operates independently within organization, is impartial, maintains employee confidentiality, and addresses claims outside of company's formal processes.
a form of double loop learning
-Helps to understand the possibility of satisfying seemingly irreconcilable objectives. -Can produce transformative solutions to ethical problems and win-win results that ease or erase tensions. -Plays a role in applying weight of reasons framework.
Servant leadership theory
-Leaders help organizations achieve goals by serving others' needs. -Emphasis on •Setting a vision, •Listening and building trust with employees, •Serving them in meeting their needs and goals in a way that serves the needs of the organization.
Compliance based ethics programs
-Make sure employees comply with rules of code of conduct and ethics-related policies. -Take a legalistic, "law-and-order" approach to ethics. -Set out rules for behavior giving employees little discretion. -Punish those who fail to follow those rules. -An ethics program that sets out rules for behavior and punishes failure to comply with those rules
Learning spirals
-Makes ethical decision-making effective. -Involves continuous process of learning by using tools such as •Systems thinking, both/and thinking, and moral imagination; and •Uncertainty-reduction techniques like trial-and-error learning. Ethical decision-making more effective using continuous process of learning. •Tools help economize time fixing errors, changing course, and revisiting problems addressed earlier.
Learning spiral never real ends...
-No long-term solutions last forever. -Long-term solution seen as beginning of process to reach ever-higher levels of knowledge. -Cyclical process of developing transformative long-term solutions begins with narrow "either/or" view of issue at hand. -Long-term solutions may seem inadequate as additional contradictions surface. -Never-ending learning processes provide long-term but not permanent solutions to ethical problems.
CSR programs undertaken without explicit thought to benefits to company
-Often include "worthy or noble" charitable activities, but marginal to core profit-generating activities. -Determined by external demands. -Limited by budget allocated.
Organizational structure is an informal element of ethical organizations
-Shared assumptions and values about appropriate behavior within an organization. -Material artifacts that express these assumptions and values (While culture exists in our minds and the symbols we use to express our thoughts, it also is comprised of art, furniture, dress, ceremonies, and other objects. Managers must be sure their efforts to express ethical values through organizational artifacts are thorough and comprehensive.)
•Precautionary principle has:
-Shifts the burden of proof in risk management. -Forces companies to have second thoughts prior to commercializing their discoveries (could lead to reduced innovation) -Is meant to prevent the problem of escalation of commitment. -Can be seen as an element of incremental decision-making.
•Organizational leaders:
-Should build these values into every aspect of the organization. -Must establish a context to easily address the impediments to ethical decision-making.
hiring processes
-Should comply with applicable hiring laws and live up to its shared values during the process. -Use of instruments to gather information about candidates' ethical behavior and dispositions. -Administering of personality tests to check conscientiousness: Organization citizenship behavior, "social dominance orientation." -Use of post-interview tests, such as drug tests.
Conflict
-Stimulates greater engagement, creativity, and innovation. -More constructive when it is task-related rather than interpersonal or relationship-oriented.
Moral Imagination
-Surfaces and challenges ethical beliefs and assumptions. -Considers alternative viewpoints; and -Uses creative ways to solve ethical problems. -Takes decision-makers beyond double-loop learning.
Aspects of systems
-Systems structure determines work units, roles, authority and accountability, and flow of information. -Systems processes, which are sequences of activities that recur over time. •Person's behavior emerges from a web of interconnections.
•Companies can contribute to solving grand challenges through:
-Systems thinking. -Incremental approaches to decision-making. -Collaboration through multi-sector partnerships. -Political skills. -Clear statements of mission, vision, and values. -Values-based ethics programs.
Propounded by Prahalad and Hart (the base of the pyramid)
-Up to 4 billion poor people in need of new products, services and technologies under-served by the private sector. -Helping the world's poor to elevate themselves an opportunity to do well by doing good. -Established companies can play a role in addressing the grand challenges facing the poor.
Both and thinking
-Used when long-term solutions are difficult due to irreconcilable organizational tensions. -Willingness to probe deeper can help to develop long-term solutions. Example of both/and thinking: When a company such as Costco, which has developed a business model that emphasizes worker satisfaction - and increases productivity and profits in the process by increasing motivation and reducing absenteeism, turnover, and hiring costs.
Some companies go
-beyond the minimum requirements of the law in meeting ethical obligations to stakeholders -take the lead in addressing pressing environmental and social problems
Team decision making can
-improve on individual decision-making. -Can be a double- or triple-loop learning process that generates new ways of thinking and actions. -Can help to build chemistry and generate commitment to implement solutions. -Helps to apply weight of reasons framework more thoroughly. -Helps to develop long-term solutions to ethical challenges.
Alternative to teleological view:
-innovation should harm nobody and respect the rights of all. -These principles have deep philosophical roots, as discussed in Chapter 2. For over 2000 years the Hippocratic Oath has required doctors to not knowingly harm their patients.
Informal elements of ethical leadership
-organizational culture -leadership -ethical climate
Mintzburg's incremental decision making model
-procecss does not follow smooth path -has "decision interrupts" where decision makers gain new information, resolve uncertainty and revisit decision Decision interrupts: Examples of what may take place at decision interrupts include the emergence of new action options, new data about the consequences of a possible action, recognition that a particular option will not work, or the arrival of new leadership that wants to go in a different direction.
3 Approaches to addressing grand challenges
1. Innovation 2. Relax Regulation 3. Loss of profit? Innovation (you have to take a risk)- from government's point, you have to relax your regulation. The risk here is the risk of losing profit. Grand Challenges help address 17 sustainable goals
In countries taking a more teleological approach to risk-taking and innovation, it is fundamentally important that before proceeding:
1.Firms assess the degree of harm they might cause. 2.To balance the twin imperatives of taking risks to address grand challenges and ensuring safety, companies should operate transparently, obtain the voluntary and informed consent of those who knowingly may be harmed. 3.Do their best to mitigate the adverse consequences that they did not foresee. 4.In addition, they should try to resolve uncertainty about the consequences of their innovations. This means trying to counter cognitive biases such as escalation of commitment and organizational decision-making biases such as groupthink, and instead use the decision-making approaches for developing long-term solutions described in Chapter 5. As well they should build ethical organizations (Chapter 6) and engage with stakeholders in collective problem-solving that benefits all (Chapter 8). By taking steps such as these, companies can be sure that they are not making light of the possible adverse consequences of their innovations to address grand challenges.
Case 6.1 Analysis
3 Plausible reasons for theft 1. Lack of a compliance based ethics program - no true punishments that are occurring for those who steal 2. Organizational culture - Tainted organizational culture that does not hold those who are stealing accountable or does not incentivize ratting the people who are stealing out. 3. Lack of an Ombudsperson until hiring me
Werhane's definition of moral imagination.
: "the ability in particular circumstances to discover and evaluate possibilities not merely determined by that circumstance, or limited by its operative mental models, or merely framed by a set of rules or rule-governed concerns". -An approach to slow thinking to overcome cognitive and organizational limitations. -A means of making sense of ethical issues creatively rather than based on habit, instinct, and rules.
Simple ethical issues
: issues that are not symptomatic of deeper tensions and problems. -short term solutions
inquiry based decision making
A collaborative and open exchange of viewpoints serving to generate new ideas. Participants in inquiry-based decision-making come to the decision process with the idea of helping the team make the best possible decision.
Grand challenge
A complex global problem impacting many people and that can only be addressed through widespread coordination.
values statement
A formal statement of the core beliefs, principles, and priorities that are shared within an organization.
Sterotypes
A generalized belief about people of a particular social category. Judgments based on stereotypes can translate into workplace discrimination: For example, one person might fail to give a challenging assignment to another based on a stereotype that the other individual was not strong, intelligent, or dedicated enough to do a job well because of that individual's age, gender, or race. Equally, a person might consciously or unconsciously favor another individual whom she perceived to be a member of the same social category as her or himself. Stereotypes often are incorrect and unfair. The Implicit Association Test is a research tool that can be used to reveal implicit attitudes such as stereotypes.
Grand Challenges
A grand challenge is a challenge that affects thousands of people
Incremental decision-making processes:
A series of small decisions that ultimately produce a major one. In these cases, managers realize they do not have an adequate definition of the issue, and they need more information and a better understanding of the options and their expected consequences.
Code of conduct
A set of rules, principles, standards, and policies regarding acceptable and unacceptable behavior within an organization.
Paradox:
A statement that individually appears to be based on sound reasoning but when interrelated to another statement seems irrational and contradictory.
Systems thinking definition
A system is a group of interdependent parts that is organized into a coherent, unified whole and exists for a specific purpose.
Uncomfortable truths:
Although managers must take responsibility for addressing ethical issues, they may not control all the elements causing the issues to arise in the first place.
base of the pyramid
An approach that seeks to target a large population of underserved to provide new products, services, and technologies; the size of the market would enhance and expand the businesses market-base.
Creating shared value
An approach to business in which companies deploy their core resources and capabilities to create value for shareholders and society simultaneously.
Creative capitalism
An approach to business in which companies, governments, and nongovernmental organizations work together to use capitalism to address grand challenges.
omubudsperson
An employee who has been designated to hear anonymous or confidential claims of ethics violations, investigate these claims, decide how the claim should be handled, and implement appropriate changes. -Ombudsperson should investigate ethical violations, reports of unlawful activity and uncover if any transgressions against the law has been committed.
values based ethics program
An ethics program that emphasizes living up to shared ethical values in addition to compliance with laws (also known as integrity based ethics programs) -Bring ethics to life in the organization. -Emphasis on taking action based on shared ethical values. -Codes of conduct, norms, and laws cannot address all ethical issues of organizations. -Not a substitute for compliance-based systems; they build upon them. -Begin with a statement of the company's core values.
Ethical organizations
An organization into which ethical values have been built into every element (structure, culture, etc.) All things being equal, the use of decision-making frameworks such as the weight of reasons is more likely in ethical organizations. In ethical organizations: -Employees are inclined to use frameworks, such as the weight of reasons. -Members perceive that ethical behavior is normal. -Rewarded for acting ethically. -Designed so there are many influences leading employees to act ethically.
Decision-makers must be ready to revisit earlier steps regularly:
As the members of a decision-making team consider their action options (step 4 of the weight of reasons framework) they may realize they need more data (step 2), or as they consider the facts they may realize there are deeper issues than the ones they initially identified (step 1.) Perhaps after identifying a short-term course of action (step 6), someone in the team will have a nagging feeling that an important principle is being violated, taking the team back to step 5. Whether individually or in teams, decision-makers are likely to learn more about the early steps of the weight of reasons framework as they undertake the later ones.
Objective appraisal
Assessing whether an employee has attended ethics trainings, has had ethics complaints brought against her, or has been found to violate the company's code of conduct.
Is it fair and just to keep a blind eye to child labor?
BOP?
Feedback loops
Behavior of a system in which one action impacts additional actions.
Face retaliation that can come in many forms:
Being demoted, fired, and physically threatened.
Ethics officers play strategic role by interacting and building relationships with stakeholders:
By playing this role, ethics officers and their staff signal to stakeholders that the company is a good business partner because it takes ethics seriously and has integrity.
CSR versus CSV:
CSR programs typically are undertaken without explicit thought given to the benefits they provide the company. They often include charitable activities that are valuable, worthy, and even noble, but marginal to core profit-generating activities. In contrast, CSV mobilizes all of the firm's resources and is intended not just to aid society in solving urgent problems but also to enhance firm profitability. CSV is intended to make the firm more competitive while simultaneously advancing economic and social conditions in the world.
Changing whole system, beyond the power or resources of single individual:
Can be effected by starting with changes in parts of systems that can be influenced; using an incremental approach to set up decision processes for long-term solutions; and working though frameworks.
Despite laws prohibiting many forms of discrimination, workplace discrimination continues:
Civil Rights Act of 1964 prohibits discrimination based on gender, race, ethnicity, religion, age, national origin, age, physical and mental disability, sexual orientation, and gender identity. Example: the #metoo movement has called attention to many instances of sexual misconduct in the workplace and elsewhere and it stigmatizes this behavior and seeks to support its victims.
Which of the following is missing from the UN Sustainable Development Goals?
Climate change 4/9 ( 44%) b.Poverty alleviation 1/9 ( 11%) c.National security 4/9 ( 44%) d.environmental protection 0/9 ( 0%) e.diversity, equity, and inclusion 0/9 ( 0%) Correct answer: c
Ensures that sentences for corporate crimes are consistent across cases:
Companies cannot go to prison, but they can be fined, ordered to compensate their victims, and required to issue public notices that they have been convicted of crimes. Companies can be found guilty and held liable for the actions of their employees, and their employees can go to prison.
Porter and Kramer's shared valued approach
Companies taking the shared value approach strategically engage in a set of activities that simultaneously benefits many stakeholders, including shareholders.
Use of email and other modes of communication at work:
Computers and cell phones should be used only for company business, and the company has the right to monitor how they are used. It can prescribe what constitutes acceptable and unacceptable communication. For example, it can specify that ageist, racist, and sexist communications are prohibited. Many employees seem unaware that their communications using company resources are not private and must meet the code of conduct. Companies should regularly update their codes of conduct to keep pace with new situations and issues.
Task related conflict
Conflict in which there is disagreement about tasks and goals. Task conflict involves disagreement about the team's goals and the tasks for accomplishing them
Interpersonal (or relationship-oriented) conflict:
Conflict that is personal, in which those involved view themselves as in conflict with each other. Interpersonal conflict is personal; the people engaged in it perceive themselves and not just their ideas as being in conflict. Whereas interpersonal conflict breeds animosity and defensiveness, task conflict can lead to an exchange and examination of ideas, and the development of new ones. The challenge, then, is to get all team members to advocate their viewpoints, but to separate task from interpersonal conflict. Creating a climate of inquiry helps them to do this.
Contradictions viewed as dualities makes is possible to explore actions that satisfy needs of all opposing parties:
Contradictions viewed as dualities shows opposing elements as interdependent and complementary. One does not necessarily have to privilege one element at the expense of the other.
Contradictions viewed as dualisms leave little chance of resolution
Contradictory elements seen as separate and adversarial, favoring one party or interest at the expense of another.
experimentation
Crafting an if/then statement based upon what is known and testing the statements. -this can enhance incremental decision making -clarify why particular actions are effective -in experimentation you use what you know to develop "if-then" statements about the relationship between inputs and outcomes and then test these statements
Uncertainty a significant barrier to long-term solutions to ethical problem
Decision-makers may feel they do not have adequate information to define dilemmas they face, let alone evaluate decision alternatives and their consequences. Under such circumstances, decision-makers are not willing to make the major commitments that are often needed to get at the problems underlying an ethical issue and implement solutions to them.
Sustainable development goals
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. -ensuring a better quality of life for the generations to come
Example: The New York Stock Exchange suggests its member companies adopt codes of conduct that require employees to:
Do what is in the best interests of the company when they face a conflict between their own interests and those of the company; •Not take advantage of opportunities to use corporate information and resources for personal gain; •Not disclose nonpublic information that could benefit competitors or harm the organization; •Not unfairly treat any of the company's stakeholders - e.g., lie to them or conceal information from them; •Use the company's assets efficiently, prevent their theft, and not use them carelessly or wastefully; •Comply with all applicable laws, rules, and regulations; and •Encourage the reporting of any illegal or unethical behavior.
Advocacy-based decision-making:
Each participant seeks to persuade others that his or her way is best. Those involved seek to persuade others that they are correct. They want to win rather than contribute.
Theranos Trial
Elizabeth Holmes- she still maintains her innocence even though she deceived investors Misrepresented what she was doing to the stakeholder She delivered an emotional testimony that her partner was emotionally and sexually abusive and she adored and poured faith in to him A fraud Chapter 9 case Public health is a grand challenge- she promised that blood testing and a pin prick would run several tests that would tell you all sorts of things. This was not true and it was unheard of. Company collapsed WOR framework was used unethically- to commit fraud One reason it took the government so long to go after her, they didn't want to appear aggressive by addressing her grand challenge of public health Utilitarianism is all about freedom She was able to persuade a lot of people to provide funds by using the WOR framework- investors were hurt, consumers who gave the false positive results and false negative results, soldiers in combat situations- she persuaded the department of defense to sell to them Her sales skills were exceptional She took advantage of investors by deceiving them and manipulating them to believe in her product. She deflected them She manipulated her employees and exercised the leadership style of "my way or highway" Musk Vs Holmes Musk pushes employees to reach goals. Musk is arrogant. However he will not deceive others.
Use post-interview tests such as drug tests
Employers are permitted under US law to administer drug tests during the hiring process, and drug testing is required in some industries with strong public safety risks such as transportation (airlines, trucking, railroads.) Drug testing is seen by many as invasive of job candidates' privacy, however. Whether or not to use drug testing is itself an ethical dilemma that requires careful consideration.
Asking for advice is a sign of weakness in individualistic societies:
Especially in more individualistic societies such as the United States, we tend to believe that individuals make the tough choices. They often sit at the top of society and organizations. Decision-making is one of the key tasks that leaders and high-level managers perform when no one else knows what to do and is willing to step to the forefront and make the "tough calls." President George W. Bush famously referred to himself as the "decider."
Case 5.2 Analysis
Ethical Issue: Lacking safety to lower price Options: Not to take the job Whistle blow Take the job and let the project happen Take the job and form a coalition or shape the project to increase the safety Consequences: The cars go on the market and people die Whistle blow you lose your job most likely or quit while telling about the problem with the car and cannot be hired You take the job and are a bystander people die You take the job and shape the car project to become safer and reduce deaths Short Term actions: Voice to your team the unethicalness of making dangerous cars Long term: Lead the project in another direction that increases the safety standards of the cars
Culture influences ethical behavior:
Ethical behavior likely to be higher when employees are comfortable using ethical terms: rather than trying to "hide ethics" by talking about ethical issues in technical and financial language.
Conducted for both new hires as well as experienced employees:
Ethics training should be conducted for both new hires as part of their onboarding and also for experienced employees, to make sure they are aware of new developments and issues, and also to ensure they have not developed bad habits.
Subjective appraisal
Evaluation based on whether they have conducted themselves according to the company's shared values. Acting in conformance with shared values means evaluating employees not just on the outcomes they achieved (e.g., no legal violations, good environmental performance) but also on the processes by which they achieved those outcomes. Do they treat fellow employees with respect, ask questions about how they can do their jobs more ethically, and listen to stakeholders? Organizations also can reward employees for proactively addressing ethical dilemmas by using tools such as the weight of reasons framework.
Cognitive diversity
Exists in groups when members have different perspectives and ways of thinking. Individuals often have very different and even conflicting beliefs, perspectives, and sets of facts that inform their decisions. Individuals from different functions within the organization (e.g., marketing, manufacturing, finance) tend to come from different "thought worlds."
Extrinsic and intrinsic
Extrinsic rewards are tangible rewards that are given by someone else, such as compensation and benefits, while intrinsic rewards are those that arise inside the employee such as a sense of fulfillment and the opportunity to solve problems. Both types of rewards may be used to motivate ethical behavior, with the right mix of rewards depending on the employee.
FSGO (enactment of 1991)
Federal Sentencing Guidelines for Organizations. -Ensures that sentences for corporate crimes are consistent across cases.
Managing ethical contradictions as paradoxes:
For example, a plant manager may conclude that because safety measures hurt the bottom line, the company's goal will be to spend as little as possible on safety. Due to pressure the manager may compromise, spend a bit more than she wants, and accept a small if unwanted hit to the company's profits. One reason managers tend to see only one side of a contradiction is bounded rationality
Positive loops take place when changes reinforce each other
For example, there would be a positive feedback loop if an accounting manager's lack of concern for details came on top of a Human Resources department's tendency to hire careless employees.
Person's behavior emerges from a web of interconnections:
For example, while a company might hold an accounting manager responsible for whether she delivers honest and factual monthly financial statements, whether she does so in fact depends upon the actions of many people in the organization and outside of it.
Corporations likely to be better than governments in assisting the poor to rise above their poverty:
Gates has held that the incentive for corporations to become involved is self-interested as well as philanthropic. While he acknowledges obstacles to doing business as the base of the pyramid such as inability to pay and a lack of infrastructure, Gates maintains that companies can work with host governments and nongovernmental organizations to overcome these obstacles. He identifies many strong reasons that corporations should emphasize people at the base of the pyramid.
Humans understand world in terms of opposites:
Good is meaningless without bad, light makes no sense without darkness, and fast is incomprehensible without slow. Inside makes no sense without outside, stability cannot be understood without change, and means fail to exist without ends.
Code of conduct addresses distinction between business gifts and bribery:
Handling bribes is specifically and frequently covered in codes of conduct. There is a fine line between business gifts and bribery; the former can be a genuine token of appreciation and a means of building a strong business relationship, while the latter is done to illegally steer business in the company's direction. Distinguishing between the two typically has to do with the value of what is given. It has been found that the more specifically a code of conduct addresses this distinction, the more likely it is to prevent bribery.
Teleological approach:
Harm to some is an acceptable price of actions and policies that benefit many. Indeed, some have argued that in the development of bridge building, auto transport, civilian aviation, dams, nuclear power, and other technologies, societies have chosen to tolerate some risk even when that means a great number of mishaps and casualties. The tendency to tolerate risk for the sake of innovation varies, however, between societies and even within them. In the US, for instance, federal government agencies apply different standards when judging the riskiness of technologies and their willingness to tolerate the risk.
Rewards based solely or primarily on financial performance can create a "bottom-line" mentality that leads to unethical behavior:
Harris and Bromiley show that the greater the extent to which a CEO's compensation comes in the form of stock options, the more likely a company is to engage in financial misconduct.
Bill gates
He has maintained that capitalism does a very good job of caring for the well-off, but it should take its resources and capacity for innovation to also provide the world's poorest people vital goods and services such as health care, banking, communications, and nutrition. Gates believes that over the long run capitalism can solve some of the globe's most intractable problems, such as preventing tropical diseases, providing potable water, and the need for reliable and environmentally sound sources of energy.
Mechanistic organizations
Highly specialized and formalized work, centralized decision-making, tall hierarchy. They function like machines; they operate very precisely and efficiently. Employees in them do a narrow set of tasks, following orders and rules that have proven to be effective and efficient. The main weakness of mechanistic organizations is that they are not able to adapt to changing circumstances.
The Formal Elements of an Ethics Organization:
Hiring Processes •Organizations that hire ethical people more likely to exhibit ethical behavior. •Ways of building ethics into the hiring process: -Job descriptions and announcements should include ethics screens (they should strongly indicate that ethics are important within the organization. Ethics screens should go beyond noting that the company complies with laws and speak to the company's shared ethical values.)
Role modelling
If a leader exhibits ethical behavior by being conscientious, caring, and honest, then employees are more likely to be as well. In contrast, unethical behaviors by leaders are likely to beget unethical behaviors by employees. Leaders can talk about integrity all they want; if they are known to blame subordinates for their mistakes and cheat on their expense reports, then employees will find their talk to be meaningless and hypocritical.
Must establish a context to easily address the impediments to ethical decision-making:
If an organization is to consistently improve the ethical decision-making of managers and employees it must establish a context that makes it easy for them to address the impediments to ethical decision-making. Without this context managers and employees will feel pressured to ignore ethics and to take unethical actions. They will be unable to effectively apply the weight of reasons framework for ethical decision-making. With this context in place, they will be more encouraged to use the weight of reasons framework to develop long-term solutions that can be implemented and sustained.
Must possess adequate power, status, and resources within the company:
If top ethics officers are seen as close confidantes of the CEO and other senior managers and are a designated as senior executives, then their efforts are taken more seriously in the company. Without sufficient power and resources, ethics officers will be unable to "close the circle."
fraud
Illegal deception for the purpose of financial or other personal gain.
Sarbanes-Oxley Act of 2002:
Imposes criminal penalties of up to ten years in prison for retaliation against whistleblowers in all publicly traded companies and their subcontractors. A 2014 Supreme Court decision held that the SOX whistleblower protections covered employees of privately held companies as well.
Policies about social media presence and use:
In general, such policies should seek to strike a balance between protecting the company's legitimate business interests and respecting employees' rights to privacy and freedom of speech. Legally, companies generally can ban social media use in the workplace, and they are able to protect their reputations by setting standards for employees' social media posts.
Whistleblowers not protected in all states:
In the US an assortment of federal and state laws protect whistleblowers, although whistleblowers are not protected in all states and not all types of whistleblowing are protected. -Face retaliation in many forms. -Could gain reputation for being uncooperative or a traitor.
Long-term solutions to complex issues best handled by teams:
Individuals have particular and biased viewpoints and cannot understand or imagine other people's perspectives. They may have a limited view of a dilemma and the factors behind it. They may not see a situation as an ethical dilemma at all or have a limited repertoire of options for addressing it. By themselves they are unlikely to possess the resources needed to gather more information and understand the facts, especially if circumstances are changing. Moreover, it is unlikely that any individual by herself or himself would have power to implement a solution. It is unlikely that a lone individual can close the circle. Even when individuals engage in systems thinking, both/and thinking, and moral imagination, they are likely to run into these limitations. We simply are not aware of our own mental habits and assumptions.
whistleblowers
Individuals who call attention to unethical conduct. They can do so internally, e.g., by using ethics hotlines to report unethical behavior to a supervisor, ethics officer, or the human resources department; or by informing someone outside the organization, be it a government regulator, law enforcement official, or media reporter.
Industry-transforming innovation:
Innovation that produces products and services that disrupt or destroy existing industries. Develop new products and business models that overcome the tension between profits and addressing grand challenges. -uses both moral imagination and both/and thinking
Importance of organic organizational structure for ethical decision-making:
Jason Stansbury captures the importance of an organic organizational structure for ethical decision-making when he writes that "valid moral discourse is likely to be promoted by organizational structures that encourage collaborative inquiry when employees are faced with moral problems."
Single loop learning
Learning that occurs through questioning one's actions, but without challenging organizational assumptions and goals. •Questions courses of action. •Does not challenge organizational assumptions and goals. A manager engaging in single-loop learning would ask, "When was the last time we reviewed our suppliers? It's time for another review."
Triple loop learning
Learning that occurs through questioning underlying cultural assumptions and values, and by being open to other cultural assumptions and values. -Examination of actions, goals, and heuristics. -Questions deep assumptions and values of cultures. Accepts validity of other cultures. Example: A supply chain manager practicing triple-loop learning would examine working conditions among suppliers and also assess the cultural norms and values in home countries that regularly produce abuses. A manager engaging in triple-loop learning might say, "We must reexamine our business model. Why do we rely on suppliers in this part of the world? Would we be better off if we no longer contracted the work out to these suppliers and did it inside the company?"
Double loop learning:
Learning that occurs through questioning underlying goals and assumptions. -Challenges organizational assumptions and goals. -Searches for relevant facts. Addresses patterns underlying facts. -a manager engaging in double-loop learning would say, "We keep having persistent problems with worker mistreatment among our suppliers. We must reconsider how we do the reviews. Do we follow up to make sure our suppliers comply with recommendations?
FCPA (Foreign Corrupt Practices Act):
Legislation passed making bribery illegal and requiring companies to maintain adequate internal accounting systems and accurate records of transactions.
Organic organizations
Low degrees of specialization and formalization, decentralized decision-making, flat hierarchy. They tend to operate less efficiently and reliably than mechanistic organizations, but they are better able to adapt to change. This is because the employees in them do not so much follow rules and do what they are told as decide for themselves what needs to be done and how to do it, without receiving approvals from superiors
Lynn Paine's integrity-based approach to management:
Lynn Paine was one of the first to do so. According to her integrity-based approach to management, ethics becomes the organization's driving force. Core ethical values shape how managers design the organization, make decisions, and motivate their workers, and they empower these workers to use their own discretion and judgment in addressing ethical dilemmas. Paine concludes that integrity strategies not only can prevent unethical behavior but also "tap into powerful human impulses for moral thought and action."
incremental decision making
Making quick short-term decisions to take small steps toward a longer term solution. Incremental decision-making processes rest on rapid feedback and learning. They help managers to gradually move toward bold long-term solutions by taking a series of smaller steps.
Values-based compliance programs lead to more ethical behavior in organizations:
More effective when they are used in ethical organizations.
Adoption of noble cause enterprise strategies
Muhammad Yunus, the founder of the Grameen Bank, provides an example of someone who innovated to address a grand challenge. Grameen Bank, which bills itself as "a bank for the poor," is a for-profit "micro-enterprise" lender that makes loans to the poor so they can start small businesses. Founder Muhammad Yunus started Grameen to address poverty and end predatory lending by commercial banks in his native Bangladesh. The bank also helps address the problem of gender inequality by making many of its loans to women. Grameen has made loans to over nine million borrowers and has extended beyond Bangladesh to numerous other countries, including the United States.
Numerous ethical questions at play:
Of particular importance in addressing grand challenges are the questions of whether the business environment rewards innovation, and who bears the costs and risks of innovation. In addressing grand challenges, societies must grapple with questions such as 1. whether it is preferable to allow innovations that solve one problem but might have other adverse consequences, or 2. instead stifle innovations that have unpredictable consequences to ensure that nobody is harmed? Societies must make decisions about what risks they are willing to accept and which ones they are not, and who will bear the costs.
Company's core values
Often, when companies develop their mission and vision statements, they also develop values statements. Whereas a mission statement is generally viewed as a statement of the organization's identity and purpose and the vision statement expresses the organization's objectives and what it hopes to become, the values statement indicates the principles that the company intends to live by as it carries out its mission and seeks to achieve its vision. Values are the standards of behavior organizations intend to maintain in their conduct.
Unethical behavior can still take place in such organizations due to other influences:
One reason is that there are other influences within the organization that encourage such behavior. These influences include demands from unethical leaders and norms of unethical behavior.
The Formal Elements of an Ethics Organization:
Organizational structure
The Formal Elements of an Ethics Organization:
Performance Evaluation and Reward Systems •Measurement of worker performance in terms of ethics: -Rewards for ethical behavior. -Punishment for unethical behavior -Extrinsic and intrinsic rewards.
Reasearch indicates
Research indicates that law and code climates and rules-based climates reduce unethical behavior, and that professionals prefer to work in these climates; employee satisfaction is higher in independence ethical climates; employees feel a higher degree of organizational commitment in caring ethical climates; and unethical behavior is highest in instrumental ethical climates. Independence climates are likely to be supportive of employees facing complex ethical dilemmas, if the organization is guided by strong ethical values. In situations where rule-following is insufficient and frameworks such as the weight of reasons are needed, a climate of independence climate is the most suitable.
Dodd-Frank Act of 2008:
Rewards a share of funds recovered to those who provide information about violations of securities law.
SDG list 1-16
SDG 1 End poverty in all its forms everywhere SDG 2 End hunger, achieve food security and improved nutrition, and promote sustainable agriculture SDG 3 Ensure healthy lives, and promote well-being for all at all ages SDG 4 Ensure inclusive and equitable quality education, and promote lifelong learning opportunities for all SDG 5 Achieve gender equality, and empower all women and girls SDG 6 Ensure availability and sustainable management of water and sanitation for all SDG 7 Ensure access to affordable, reliable, sustainable, and modern energy for all SDG 8 Promote sustained, inclusive, and sustainable economic growth; full and productive employment; and decent work for all SDG 9 Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation SDG 10 Reduce income inequality within and among countries SDG 11 Make cities and human settlements inclusive, safe, resilient, and sustainable SDG 12 Ensure sustainable consumption and production patterns SDG 13 Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy SDG 14 Conserve and sustainably use the oceans, seas, and marine resources for sustainable development SDG 15 Protect, restore, and promote sustainable use of terrestrial ecosystems; sustainably manage forests; combat desertification; halt and reverse land degradation; and halt biodiversity loss SDG 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable, and inclusive institutions at all levels SDG 17 Strengthen the means of implementation, and revitalize the global partnership for sustainable development
Strong systems of internal accounting and financial controls prevent or detect many of the ethical violations that occur in companies:
Separating accounting duties, standardized documentation, and ongoing internal audits prevent and detect financial crimes.
Weight of reasons to address challenges
Step 1: For example, a company that wanted to address poverty in a region where it operated would need to understand the economic, social, political and other factors that could have led to the region being poor. Step 2: Identifying all the stakeholders and gathering all of the information needed to understand the issue also would be challenging. Step 3: One of the main reasons is that no individual or organization has the resources, expertise, and skills needed to address the challenge by itself. Therefore, addressing grand challenges often requires an ambitious effort to coordinate business, government, and nongovernmental actors through mechanisms such as multi-sector partnerships. Another big challenge in identifying courses of action to address a grand challenge is finding a way to make all stakeholders better off. Because grand challenges involve so many different actors, avoiding tradeoffs is difficult; almost invariably someone will be neglected or harmed. Efforts to develop new sustainable industries could come at the expense of existing "dirtier" industries. Scarce resources may dictate that an anti-poverty initiative will include some needy people but not others. Efforts to empower the women of a community through commerce may threaten the existing power structure. Or perhaps comprehensive efforts to address a grand challenge will not add up financially, leaving the company's owners with less (or no) profit. Step 4: Because of decision-making uncertainty, the consequences of particular actions that could be taken to address a grand challenge can be hard to predict. In complex systems, small acts can have large unintended consequences. Example 1: Tom's Shoes provides one free pair of shoes to youth in developing countries for every pair it sells. While the company was founded with the best of intentions, the act of giving shoes away has had the unintended consequence of undermining local shoe producers in the recipient communities and stifling economic development. (To its credit, Tom's has responded to this problem by sourcing shoes locally.) Example 2: The Energy Independence and Security Act (EISA) was enacted to stimulate plant-based fuel production and reduce air pollution and greenhouse gas emissions, but has led to social and environmental disaster in Southeast Asia. Step 5: because important ethical principles can sometimes come into conflict in addressing a grand challenge. What should one do when the option that creates the most utility infringes on fundamental rights? Or the most effective solution to a problem is not fair to some?
Team decision making and the weight of reasons
Step 1: identify and evaluate different ways of understanding the key ethical issues step 2: compile and consider a broader range of facts step 3 and 4: identify alternative solutions and evaluate the consequences step 5-7: select their guiding principles and their short term and long term courses of action step 8: identify key lessons for future learning
grand challenges facing the poor
Such as poverty, inequality, and discrimination.
Incremental approaches to decision making
Such as trial-and error learning can help companies to deal with the uncertainty associated with grand challenges.
SDG
Sustainable Development Goals
Wells Fargo Case
The Wells Fargo case illustrates the point that behavior emerges from within a system. The bank's employees created new accounts for existing customers and charged these customers fees without their knowledge or consent, illegally generating millions of dollars in revenue. Systems thinking helps us to see this illegal behavior was not simply the fault of unethical employees taking advantage of the opportunity to boost their performance numbers. Rather, the employees were under great pressure from the company's top management, who imposed performance criteria that were impossible to meet and created a culture that tolerated and even rewarded unethical behavior. The employees' behavior cannot be understood without understanding the broader system in which they operated. In fact, one could say that the system itself emerges; it is produced through actions even as it influences those actions.
Organizational learning:
The ability to recognize repeated patterns to effect change
Discrimination
The act of treating a person unfairly based on the social category one puts that person into.
Child Labor and Batteries - Is it okay to exploit child labor to create batteries?
The answer must be yes because for the company to move forward they must.
Ethical climate
The atmosphere of an organization regarding how to address ethical issues. •Shared perception of what is correct behavior, •Handling ethical issues in an organization. •A strong ethical climate can be built through: -Role modeling ethical behavior, -Recognizing and rewarding ethical behavior
Prahalad and Hart's based of the pyramid approach (and bill gate's creative capitalism)
The base of the pyramid approach has a similar flavor, emphasizing that businesses can flourish in the long run by offering products and services that meet the needs of and are affordable to society's poorest people. Similarly, Bill Gates's creative capitalism, which is treated as synonymous with the base of the pyramid approach, calls for reorienting the firm's offerings around essential services the poor need, such as health care, nutrition, clean air and water, and energy.
constructive conflict
The combining of inquiry and advocacy; the intention of making the best decision for the team. Team conflict takes place when some members of the team have beliefs or take actions that are unacceptable to other members of the team, and the opposing sides perceive they cannot both have their way. They cannot put their differences aside because they perceive that trying to achieve one of the party's goals will block the achievement of the other party's goals.
Money laundering:
The concealment of illegally obtained money, typically by transferring it through a seemingly legitimate transaction.
Duality
The division of a thing into two interdependent and complementary elements
Dualism
The division of a thing into two separate and opposed elements.
Tax evasion
The illegal non-payment or under-payment of taxes owed.
Systems structure:
The make-up of the rules and arrangements that influence the activities that occur within the system. Example: An accounting executive has responsibility to prepare monthly financial statements, authority to decide how to prepare them, and the right to delegate responsibility for tasks to others. She may assign responsibility for collecting sales information to one person, accounts receivable to someone else, and accounts payable information to still another employee.
Use of 360-degree appraisal to assess employee's ethical behavior
The measures that a firm can employ to assess whether an employee has behaved ethically range from the simple and objective to the complex and more subjective.
vision
The organization's objective; the state it hopes to attain.
mission
The organization's purpose; what it is and why it exists.
System processes:
The patterns of activities that recur over time within the system. Example: The accounting department is likely to have an established sequence in which the other departments submit preliminary information and the accounting department generates preliminary financial statements. Then it makes adjustments, reviews monthly financial statements, and finally, releases them. When they are released they have effects on the broader systems of which the company is part, such as the industry and society.
values
The principles by which the organization will conduct itself as it seeks to achieve its vision. -standards of behavior organizations intend to maintain in their conduct.
Ethical leadership
The process of taking ethical actions to influence others to act ethically to achieve organizational goals. Involves demonstration of appropriate conduct through personal actions and interpersonal relationships, and its promotion to followers through two-way communication, reinforcement, and decision-making.
Both and thinking
The recognition that two seemingly irreconcilable objectives can be reconciled; the framing of a contradiction as a duality rather than a dualism.
Diversity
The state of having variety (different elements). •potential source of innovation and strength.
Who bears the risk and who is being rewarded for innovation?
The utilitarian view is yes
embezzlement
Theft or misappropriation of an employer's funds.
Use instruments to gather information about candidates' ethical behavior and dispositions
These instruments typically include evaluating resumes, checking references, conducting background checks, and administering integrity or honesty tests. In these tests, job candidates usually are asked questions about whether they have ever engaged in illegal activity, how they feel about particular types or instances of dishonesty, or how they would handle a hypothetical situation involving dishonesty. These tests have been shown to help companies distinguish individuals who act honestly from those who do not, although they do pose the risk that they may screen out some job candidates who would have behaved honestly. For this reason these tests should be used in conjunction with other ethics screens.
Recognition that just developing new products is not enough
They develop networks of businesses (e.g., suppliers, distributors) with complementary resources and capabilities, and they sometimes get involved in politics to work for institutional changes (e.g., tax credits, regulatory approvals) that support their new products. -uses systems thinking and political skill to imagine and build the supporting business context -develop networks of businesses with complementary resources and capabilities
Grand challenges are inherently ethical challenges:
They involve questions about individuals' ability to live with dignity, enjoy basic rights and freedoms, and be treated fairly.
Could gain reputation for being uncooperative or a traitor:
They may gain a reputation for being uncooperative or a traitor, which harms their ability to find future employment. Whistleblowers must carefully balance the benefits of addressing ethical issues against practical considerations such as their physical safety (and that of their family) and their ability to continue to earn a living. While we do not take these risks lightly, we would also say that whistleblowers can reduce the chances of these outcomes by engaging in moral imagination and using political tactics to effectively close the circle.
Requires recognition of patterns of ethical problems:
They must not only search for relevant facts, but find and address the patterns underlying them.
Garvin and Roberto's steps for teams to productively combine inquiry and advocacy:
They suggest that in situations where there is concern about groupthink, team leaders should: appoint one participant to serve as "devil's advocate" and challenge the consensus; refrain from expressing their opinions so as not to bias other participants; encourage outsiders who are not typically part of the team to participate in the decision because they are more apt to bring a fresh perspective; and above all, be considerate of others. We should always remember to listen and really hear what others are saying, not just tune out or wait for them to stop talking so that we can start talking again. Garvin and Roberto, 2001.
Industry transforming entrepreneurship
This approach focuses on developing new technologies that address grand challenges. Examples: Shai Agassi and Elon Musk, the founders of the electric vehicle (EV) companies Better Place and Tesla; and Elizabeth Holmes, who started Theranos, a company that intended to bring about a revolution in health care with a new diagnostic device. Agassi's company failed, Holmes was an outright fraud and, the jury is still out on Tesla. Doing good for the world can be profitable but often is not. Addressing grand challenges requires, in addition to a desire to make the world a better place, vision, a solid strategy and business model, and the desire and ability to follow through.
Characterized by interdependence of systems
This means each element influences and is influenced by other elements. For example, the work of a particular employee influences and is influenced by that of other employees in her department, as well as by that of individuals in other departments and organizations. An accounting executive responsible for preparing a company's monthly financial statements cannot do the job without exchanging information with people in the company's sales logistics, manufacturing, design, engineering, and other departments.
Should comply with applicable hiring laws and live up to its shared values during the process:
This means, for example, ensuring that all employees who participate in the interview process are aware of the types of questions they legally and ethically can and cannot ask in interviews, as well as establishing techniques such as group decision-making to ensure interviewers do not fall prey to their own decision-making biases and discriminate against particular types of job candidates.
Beyond compliance
Treat stakeholders ethically and make society better off by engaging in approaches such as corporate citizenship and sustainable business.
Trusting team members ensures that conflict is task-related and not interpersonal:
Trust among teammates provides psychological safety to listen, share, propose risky ideas and confront each other. Trust also motivates individuals to contribute to the team, helps them to maintain their relationships even as they disagree, and stick together and stay committed when they face a difficult situation and are uncertain about how to address it. Further, trust makes things cheaper. When one person trusts another, he does not have to monitor the other person to make sure she is keeping her word.
Moral imagination
Using creativity to apply ethical responses to situations in new and unique ways.
Case 6.3 Analysis
WOR Ethical Issue: Is it ethical to debate the diversity at Pathos Options: 1. Host a debate with a moderator 2. Host a session around diversity and inclusion and the benefits for the firm and its stakeholders when there are diverse teams Consequences: 1. Debate could be hostile and turn employees against minorities 2.Teams become more polarized after the diversity event Short Term Actions: Host a debate that allows for people to express their opinions and learn from different groups and their needs Long Term: Change the hiring process, Change of leadership that is more diverse, practice quarterly meetings around diversity that show the benefits and needs to be a stronger company
Holmes Exam notes:
WOR can be used to make unethical decisions and make fraud -"John Carreyrou broke the story that Holmes was lying about the product." Holmes tried to discredit the journalist using systems thinking -she was able to persuade big companies like walgreens as a customer. They agreed to buy her blood testing kits- she believed she was going to change the world -to change the world takes innovation (you do not regulate). Because of this- it took the government so many years to learn about her fraudulence
Compliance based programs
Weaver and colleagues found that while compliance-based ethics programs influence behavior, their content actually does not matter; what matters is that the program is undertaken within the context of a strong ethical culture -"Associated with higher levels of ethical awareness, reporting of misconduct, and employee integrity, and Lower levels of observed misconduct and perceived role conflict."
Grojean and collegues
argue that role modeling ethical behavior, recognizing and rewarding ethical behavior, and strong training and mentoring in ethics help produce a strong ethical climate.
Case 5.1 Analysis
What are the issues at stake in this case? How should be they be addressed - Was it ethical to force Sunshine to get new equipment for a contract that Brighten will no longer honor - Enter the market with Sunshine and accept a loss of 31% in sales - Do not enter the market and avoid failure and cut losses (Choice that was chosen) - Sunshine most likely goes bankrupt Consequences - Sunshine no longer wants to work with Brighton A siginifcant loss does not occur by not selling the product What can you do to navigate from a quick fix to a long - term solution? Short term actions: Find a new way to offer an existing contract to Sunshine for something they can produce. Long term actions: Look for a new product that could be done with Sunshine to save their company Look to acquire Sunshine when they company is financial insecure
Value based ethics program
When employees are free to decide for themselves how to do their jobs and have the authority to make decisions for themselves, they will be more likely to address ethical issues by trying to live up to shared values rather than trying to just comply with rules.
rial-and-error learning to see what happens:
When team members face a novel situation, they do not know what will work; they may have difficulty in forecasting the consequences of particular courses of action or even identifying actions. In these circumstances, rather than trying to identify an optimal solution, they may simply try different courses of action to see what happens. Doing so provides useful information about how to move toward a solution. One weakness of trial-and-error learning is that it may demonstrate that a particular action option seems effective but not make clear why that option worked.
Which of the following questions represents triple-loop learning?
When was the last time we audited our suppliers? 0/14 ( 0%) b.What will we do if one of our suppliers fails our audit this time? Last time we did not impose any sactions against non-compliance. 6/14 ( 43%) c.Why don't we start our own supplying network, rather than having to rely on suppliers in China? 4/14 ( 29%) d.All of the above 2/14 ( 14%) e.none of the above 1/14 ( 7%) No Answer 1/14 ( 7%) Correct answer: c
Using double loop learning
When you recognize and examine not only issues and facts, but also assumptions, goals, policies, and motivations for actions you engage in double-loop learning. You must be willing to question a company's procedures and the logic behind them.
Informal elements tend to have the most impact:
While all of the elements of the organization can be important influences on behavior, informal elements such as leadership, culture, and hence climate tend to have the most impact. People's behaviors are more affected by what they see and feel happening around them than by rules and policies. They tend to live according to an organization's shared ethical values and will apply the weight of reasons framework only if they see that others consider it normal and appropriate. As the leader of an organization, an important part of your job is to build an organization that values ethics.
Innovative business approaches to facing challenges:
While these three are not always distinct in practice, it is analytically useful to separate them. All three are forms of going beyond compliance and are compatible with the ideas of corporate citizenship and sustainable business. All three involve working with stakeholders to develop innovative ways of solving big problems and at the same time earning a profit.
Series of small decisions that ultimately produce a major one
With each small decision, they arrive at a better understanding of the larger problem they face and how to resolve it. They do so without making big resource commitments so they can more easily revise their course of action as they learn more and circumstances change.
A contradiction
a "dynamic tension between opposite elements that together form a unity and logically presuppose each other for their very existence and meanings
Team based decision making
a decision-making process involving members of a team to gather information, present options, and assess outcomes.
System
a group of interdependent parts organized into a coherent, unified whole, which exists for a specific purpose.
Which is more ethical under the justice view of ethics?- justice is about being equitable not equal (rights is all about equality. Everyone has the same right)
a. Give all employees a $2/hour pay raise 7/13 ( 54%) b.Give the $2/hour pay raise based on performance 6/13 ( 46%) B is correct
From employee's point of view, drug testing is unethical because it
a. Ignores the effects of prescription drugs***
Which of the following is the definition of sustainable development? (Apply:05:50:31 PM)
a.Development that meets the needs of the future generation without compromising current needs 3/9 ( 33%) b.Development that involves both social and economic benefits 2/9 ( 22%) c.Development that meets the needs of the present generation without sacrificing future generation's ability to meet their needs 4/9 ( 44%) Correct answer: c
Which is more ethical under the utilitarian view of ethics?- the answer is b because it costs the employers more if they have to give everyone a $2 an hour raise.
a.Give all employees a $2/hour pay raise 6/13 ( 46%) b.Give the $2/hour pay raise based on performance 7/13 ( 54%) Correct answer: b
.Which of the following questions represents double-loop learning?
a.When was the last time we audited our suppliers? 3/14 ( 21%) b.What will we do if one of our suppliers fails our audit this time? Last time we did not impose any sactions against non-compliance. 4/14 ( 29%) c.Why don't we start our own supplying network, rather than having to rely on suppliers in China? 4/14 ( 29%) d.all of the above 3/14 ( 21%) e.none of the above 0/14 ( 0%) Correct answer: b
According to systems thinking, one should:
a.attribute an unethical behavior to a single person 1/14 ( 7%) b.attribute an unethical behavior to a broader context within which the unethical behavior emerged 6/14 ( 43%) c.all of the above 5/14 ( 36%) No Answer 2/14 ( 14%) Correct answer: b
The both/and thinking means that we should view contraditions as:
a.dualisms 9/21 ( 43%) b.dualtities 6/21 ( 29%) c.binary 0/21 ( 0%) d.dichotomous 0/21 ( 0%) No Answer 6/21 ( 29%) Correct answer: b
Grand challenges are complex problems of ___ ethics.
a.social 0/9 ( 0%) b.economic 0/9 ( 0%) c.environmental 0/9 ( 0%) d.all of the above 9/9 ( 100%) Correct answer: d
To learn from the decision-making process, we should rely on:
a.systems thinking 3/14 ( 21%) b.team-based decision-making process 0/14 ( 0%) c.both/and thinking 4/14 ( 29%) d.moral imagination 0/14 ( 0%) e.all of the above 5/14 ( 36%) No Answer 2/14 ( 14%) Correct answer: e
Sustainable development is about which of the following?
a.total utility of the policy or innovation 2/9 ( 22%) b.Human rights 3/9 ( 33%) c.fairness 4/9 ( 44%) Correct answer: c
In assessing consequences of your action to address the dilemma, you reflect on the following question: Will my action make the world a better place for all now and in the future? This is an example of:
a.trial-and-error approach 1/23 ( 4%) b.experimental approach 1/23 ( 4%) c.ethical learning spirals 1/23 ( 4%) d.moral imagination 2/23 ( 9%) No Answer 18/23 ( 78%) Correct answer: d
3.Electric cars produce fewer greenhouse gases and air pollution than conventional gas-powered vehicles. However, the electricity to power those vehicles is mostly made by burning fossil fuels, thus the air pollution is transferred from the roads to the powerplant. The promotion of electric vehicles is an example of:
a.trial-and-error approach 3/23 ( 13%) b.experimental approach 4/23 ( 17%) c.ethical learning spirals 6/23 ( 26%) d.moral imagination 0/23 ( 0%) No Answer 10/23 ( 43%) Correct answer: c
Testing organic produce using a focus group to find out if customers would like the organic produce is an example of:
a.trial-and-error approach 4/23 ( 17%) b.experimental approach 5/23 ( 22%) c.ethical learning spirals 1/23 ( 4%) d.moral imagination 0/23 ( 0%) No Answer 13/23 ( 57%) Correct answer: b
When facing a dilemma, you start by defining the problem as "it is impossible to protect consumer privacy and have consumer surveillance in-store implemented at the same time", you are
a.using systems thinking 0/21 ( 0%) b.applying both/and thinking 9/21 ( 43%) c.using dualisms 3/21 ( 14%) d.using dualities 3/21 ( 14%) No Answer 6/21 ( 29%) Correct answer: c
Peter Drucker:
avoiding harm is quintessential business ethic that no firm should violate.
Moral imagination takes decision-makers beyond double-loop learning
because it involves not only challenging assumptions but also developing innovative solutions.
Important to provide training to middle managers and supervisors:
because they have the most influence on the behavior of frontline employees. In addition, they often feel a high level of pressure to engage in unethical behavior since they must try to achieve challenging goals set by senior managers while operating with limited resources.
•Values-based ethics programs facilitate and reward ethical behavior in organizations:
by trying to ensure that employees are motivated by shared values and a desire to act ethically, rather than an obligation to follow rules.
negative or balancing feedback
can act as a check on the momentum that positive feedback generates. Changes in the actions of one element in the system can offset or dampen changes in another. This type of feedback stabilizes the system because changes in one element are contained
Political skills
can enable them to effectively implement preferred courses of action.
Clear statements of mission, vision, and values
can help clarify principles that decision-makers should apply and those that should be disregarded.
Systems thinking:
can help companies to identify stakeholders and understand consequences of different courses of action. Both/and thinking, moral imagination and inquiry/advocacy decision-making can help them as they try to resolve conflict among stakeholders' interests in innovative ways.
Values-based ethics programs
can help ensure that decision-makers live up to those principles.
Collaboration through multi-sector partnerships:
can provide a platform for ongoing mutual learning and problem-solving.
Organizational context has a big influence on ethical decision making
can stimulate it
Personality tests
companies often administer personality tests, which can be used to gauge job candidates' ethical qualities and, more broadly, their fit with the organization and their prospective jobs. A number of personality traits are predictors of ethical behavior including conscientiousness, organizational citizenship behavior, and social dominance.
CORP BOARD DEBATE: Is it ethical for government to impose a gender quota on corporate?
consistent with utiliarinism
CORP BOARD DEBATE: from shareholders its unethical because it would violate their right to choose board
deontology view
Two types of innovation
disruptive and radical innovation
Vision statement
expresses organization's objectives and what it hopes to become.
Exercising multiple types of power:
formal authority (the power that comes with the job title, such as the ability to delegate tasks to employees); the control of rewards and punishments; referent power, which is the ability to influence people's behavior through personal characteristics such as charm; and the ability to influence behavior by demonstrating expertise. Ethical leaders who rely on authority and coercion alone tend not to inspire ethical behavior among their subordinates; on the other hand, leaders who possess expertise and winning personalities are more likely to induce ethical behavior among their employees.
common corporate crimes
include fraud, illegal environmental pollution, breaking tax laws, antitrust violations.
Effective decision making
includes both advocacy and inquiry decision making
Social dominance orientation (SDO)
is the personality trait of being predisposed to see the dominance of some social groups and individuals over others as natural and good. It is positively associated with unethical behaviors such as racism and sexism. It is usually negatively associated with ethical behavior.
CORP BOARD DEBATE: ethical because disproportionate distribution of women
justice ethics
Your company's code of conduct clearly states that office theft is punishable ranging from written warning to termination. However, theft is reportedly going up during the pandemic. Which of the following is a plausible reason?
lack of severe punishment 0/13 ( 0%) b.lack of ethics training 3/13 ( 23%) c.lack of pay equity within the organization 1/13 ( 8%) d.all of the above 9/13 ( 69%) Correct answer: c- answer is c because the linkage between performance evaluation and ethical behavior, lack of pay equity is when employees percieve that the employers make so much more than them and stealing is okay because it closes the gap between pay. Peoples behaviors are more affected by what they feel and see- like when others stole
creation of business value
long term strategies and increase competitiveness
creation of shared value
long term strategies, increase competitiveness, simulataneously addressing social, environmental and business objectives
Ethical values
organization's values that explicitly pertain to ethics. The principles by which the organization will conduct itself as it seeks to achieve its vision. The principles that govern behavior in addressing ethical issues.
Radical innovation
produces products and services that create all new industries and render existing industries obsolete.
Organization citizenship behavior (OCB)
refers to the willingness to engage in helping behaviors outside of one's job description.
Conscientiousness
refers to whether an individual is responsible, dependable, and hardworking. It is a strong predictor of not only ethical behavior but also job performance. It is strongly associated with empathy, which is the ability to understand how other people feel.
Disruptive innovation
results in products and services that are introduced into existing industries and displace established companies.
Creation of social value
social objectives, environmental objectives
Businesses prioritize
some stakeholders over others when making decisions
Ethics officers
sometimes referred to as a compliance officer or ethics and compliance officer.
Ethics programs
standards and regulations outlining acceptable behavior within a company. -Provides companies with an incentive to detect and prevent corporate crime. -Identified characteristics of effective ethics programs.
Resistance to contradictory viewpoints due to influence of contextual factors:
such as incentives and organizational culture, people have taken-for-granted ethical assumptions and resist contradictory viewpoints. Example: The famous case of Nike's reliance on "sweatshop labor" illustrates this point. Prior to public shaming of the company, Nike's managers may have not adequately considered they bore any responsibility for working conditions in their subcontractors' facilities.
Companies also have codes of conduct for stakeholders they do business with:
such as their suppliers. Example: Ford provides trainings in corporate social responsibility and human rights to the more than 11,000 supplier companies on which it depends.
Precautionary principle:
the belief that new technologies and practices that have uncertain consequences should not be undertaken. The principle has been adopted into European law as well as incorporated into numerous United Nations environmental treaties
Pyschological safety
the belief that the environment provides a safe place for interpersonal risk-taking. A psychologically safe environment is one in which the team members do not fear negative consequences from sharing their viewpoints
Unintended consequence
the ethanol EISA act, stimulate plant based good- had good intention- destroys land and forests in south east asia (indonesia)
A values based ethics program is not a substitute for compliance based systems
they build upon them. They have a compliance-based component that holds employees accountable for following rules as well as a component that motivates employees to take positive actions based on shared values. Both pieces are important; the values-based component would not work by itself. This is because employees who are motivated by shared values expect ethical violations to be punished. They can come to feel that stated values are not taken seriously in the organization if they are not punished.
CORP BOARD DEBATE: is it ethical because morality cannnot be legistalitve (MLK quote)
you cannot coherce people to having a good heart- consistent with virtue ethics
Base of Pyramid
you don't have a lot of money- because of this, you must educate your consumers or seek government subsidy. This would be the only way you can pay your premium.
The process of moral imagination
•A three-step process in which one -Immerses oneself in the ethical issue at hand; -Detaches from issue and considers various perspectives; and -Re-immerses in issue to develop creative, feasible, and morally justifiable solutions.
Codes of conduct
•Addresses distinction between business gifts and bribery. •Includes policies about: -Employees' social media presence and use. -Use of email and other modes of communication at work. •Companies must regularly update of codes of conduct to keep pace with new situations and issues.
Agendas of CVS
•CSV agendas internally generated based on a company's deep understanding of its unique business value chain. •CSV involves companies working collaboratively with the entire "cluster" of stakeholders.
Other things with serving the base of the pyramid
•Earliest achievements in telecommunications industry. •Many failures, both commercially and in terms of solving social problems. •Early BOP efforts came under criticism for exploiting the poor. •Recent efforts to serve the base of the pyramid accounted for these problems and criticisms.
The Added Value of Moral Imagination
•Emphasis on slow thinking from outside of own self-interest (As an "impartial spectator" making decisions from behind a "veil or ignorance") •Application of general ethical principles rather than specific rules (For example, if confronted by Nazi officers who asked whether you were hiding any Jews in your house, should you follow a rule that you should never lie under any conditions, if the almost-certain consequence is the death of a family?)
Functions of an ethics officer
•Establish and maintain the code of conduct •Establish systems for measuring and monitoring ethical performance •Establish appropriate incentives for ethical behavior and punishments for unethical behaviour •Oversee ethics training program •Establish and maintain ethics communication systems—assist line, ombudsperson, whistle-blowing mechanism •Provide a safe haven for ethics discussions
Ethics or compliance officers:
•Establish and maintain the code of conduct, •Establish systems for monitoring and measuring corporate ethical performance, •Oversee ethics training programs and ethics communication system, and •Investigate and punish unethical behavior.
Diversity programs
•Establishing diversity programs. •People are diverse in many ways. •Various forms of diversity are basis for discrimination. •Despite laws prohibiting many forms of discrimination, it continues. •Judgments based on stereotypes can translate into workplace discrimination. -People are diverse in many different ways: Race, ethnicity, age, gender, sexual orientation, physical dis/ability, physical characteristics, levels and types of education, religion, marital status, organizational roles, such as job title, department, and level of seniority.
Leadership (informal)
•Ethical leadership involves designing an ethical organization. •Behaviors associated with ethical leadership: -Role modeling. -Exercising multiple types of power. -Matching leadership style to the employee.
Financial reporting systems
•Ethical violations in companies usually occur on financial records and systems (Crimes associated with producing and reporting financial information include fraud, bribery, embezzlement, money laundering, and tax evasion) •Strong systems prevent or detect ethical violations in companies. •Laws, such as Sarbanes-Oxley Act, require companies to have strong accounting and reporting systems.
Bringing it all together
•Ethics programs helpful in establishing and promoting ethical behavior. •All aspects of organization influence how organizational members act. •Organizational components must reinforce each other for an ethical climate to exist. •Informal elements tend to have the most impact. •Lynn Paine's integrity-based approach to management.
Moral imagination and weight of reasons steps
•First step of immersion in details applies mainly to steps 1 and 2 of weight of reasons framework. -Decision-makers may not fully understand situations or analyze ethical dilemmas. •Second step of disengagement and consideration of alternative viewpoints applies to all steps of framework. •Final step of identifying novel courses of ethical action applies to steps 3, 6, and 7 of weight of reasons framework (What Werhane referred to as free reflection. Free reflection ensures not taking too narrow a view when assessing the consequences of alternative courses of action.)
Systems thinking points
•Gives a good understanding of ethical problems and options to address them. •Characterized by interdependence of systems. •Analysis of the whole instead of individual parts. •Helps overcome cognitive and social biases.
Organizational structure
•How work is divided up and coordinated. •Determines many factors (employees are grouped; assignment of tasks; formal reporting relationships; determines who has authority to control the work of others.) •Usually represented in an organization chart. -four key decisions
inquiry and advocacy
•Inquiry and advocacy together produce constructive conflict. •Also helps to make informed choices based on valid information in which participants -Become open rather than defensive, -Share an orientation to grow and learn, and -Become willing to take risks.
Five types of ethical climates: as per Victor and Cullen's research.
•Instrumental climates encourage employees act out of narrow self-interest; •Caring climates compel employees to "look out for each other's good;" •Rules-based climates expect employees to go by the book;" •Law and code climates encourage strict adherence to rules, influence employees to follow external sets of rules too; •Independence climates encourage employees to follow own beliefs and make decisions about how to handle ethical issues.
Reporting and Communication Systems: Ethics Assist Lines
•Is an avenue for employees to address ethical questions that arise at work. •To be effective, ethics assist lines must guarantee anonymity or confidentiality of employees. •Using ethics assist lines, employees can: -Report unethical behavior in the workplace. -Seek help in addressing an ethical dilemma or guidance on what is permissible under the code of conduct.
Grand challenges and business
•Most companies address grand challenges; some go "beyond compliance" to do so. -Adoption of "noble cause" enterprise strategies to explicitly achieve SDGs as company purpose.
Conditions for Effective Inquiry and Advocacy
•New ideas more likely when participants are empowered to be part of decision-making process. -Empowerment leads to more inquiry and advocacy, and therefore, better decisions. •Individuals likely to support and implement decisions they participated in. -makes better decisions with cognitive diversity -lead to creative approaches to complex problems within context of psychological safety
Identified characteristics of effective ethics programs:
•Policies and procedures to detect and prevent criminal conduct. •Oversight of ethics program by senior personnel. •High-level supervision of personnel responsible for implementing the program. •Provision of ample resources and power to those personnel. •Effective communication of policies and procedures to all levels of employees. •Systems for monitoring, auditing, and reporting program effectiveness. •"Whistleblower" mechanisms. •Incentives for compliance and disciplinary actions for non-compliance. •Ongoing updating of the program.
Industry transformation through entrepreneurship
•Radical innovation produces products and services that create all new industries. •Realistic assessment of difficulties of entrepreneurship to address grand challenges through examples: -Tesla and Better Place's electric cars. -Theranos' medical technology innovations.
Sarbanes-Oxley Act requires:
•Senior executives to take individual responsibility. •Strong internal controls, and audits. •Reporting of "off-balance sheet" transactions. •Prompt reporting of significant changes in the company's financial condition. •Restrictions on the auditors that companies hire. -require companies to have strong accounting and reporting systems.
Systems behaviors
•System behaviors determined by positive or negative feedback loops. •Brings to light uncomfortable truths about ethical decision-making. •Changing whole system, beyond the power or resources of single individual;
Ethics programs and WOR framework
•Value-based ethics programs provide a conducive environment for using weight of reasons framework (more than compliance programs). •In such organizations, employees feel stimulated to "go the extra mile" (When employees are motivated by the values of integrity, honesty, and concern for stakeholders, they can come to see the use of the weight of reasons framework as a normal part of doing their jobs.)
Grand challenges require companies to
•continuously collaborate to develop innovations in policies, practices, and business models.
Ethics training teaches
•employees about laws relevant to their jobs, company's code of conduct, other elements of ethics programs. -In the form of workshops and seminars. •Conducted for both new hires as well as experienced employees. •Important to provide training to middle managers and supervisors.
