Managing Business Ethics

1. Managing Business Ethics Chapter 7 Treviño & Nelson – 5th Edition

2. Chapter 7 Overview • Introduction • In Business, Ethics Is about Behavior • Our Multiple Ethical Selves • Rewards and Discipline • “Everyone’s Doing It” • People Fulfill Assigned Roles • People Do What They’re Told • Responsibility Is Diffused in Organizations • Conclusion

3. Underlying Assumptions • Managers want to be ethical • Managers want their subordinates to be ethical • Based on their experience, managers will have insight into the unique ethical requirements of the job

4. Advice: Ethical Behavior • Think of ethics in behavioral terms – what behavior are you looking for? • Specify the behavior you want and explain why • Create a work environment that supports that behavior

5. Multiple Ethical Selves • Ken Lay • Dennis Levine • Practical Advice: • Analyze yourself • Observe your subordinates • Identify what influences them Ken Lay

6. Reward systems What gets rewarded, gets done! • People will go the extra mile to achieve goals set by management • Goals combined with rewards can encourage unethical behavior

7. Reward systems What gets rewarded, gets done! • Practical Advice: • Think about what kind of behavior and attitudes are being rewarded explicitly and implicitly • Think about goals, likely behavior, unintended consequences • Ethical Pygmalion effect – expectations of high standards and ethical behavior

8. Recognize the Power of Indirect Rewards and Punishments • Social learning theory • Tailhook example • Rewarding ethical behavior • Difficult in the short term • Easier over the long term

9. Punishment • Critical part of a manager’s job • Must be administered fairly • Fits the crime • Consistent with what others have received • Employee has input • Conducted in private • Explanation that ties punishment to misconduct • Recognize punishment’s indirect effects • Thomas J. Watson, Jr. IBM example

10. Discipline Practical advice for managers: • Adults differentiate between fair and unfair discipline • Punishment is expected if rules are broken • Discipline fairly • Be concerned about observers and implicit messages

11. People Follow Group Norms • Rationalizing unethical behavior • Pressure to go along • Practical advice for managers • Be aware of group norms • Consider whether the reward system implicitly rewards misconduct • Slade Company example

12. Deindividuation – People Fulfill Assigned Roles • Cagney & Lacey example • Research: Zimbardo Prison experiment • Roles at work • Conflicting roles can lead to unethical behavior • Roles can support ethical behavior • Practical advice for managers • Roles influence behavior • Analyze roles and role conflicts • Determine whether jobs need to be altered

13. People Do What They’re Told • Research: the “shocking” Milgram experiment • Obedience to authority at work • Practical advice for managers • Recognize the power managers hold as legitimate authority figures • Use this power to set high ethical standards

14. Diffused Responsibility • “Don’t worry – we’re taking care of everything” • Workers encouraged to turn over responsibility to those in higher levels • Diffusion of responsibility in groups • Bystander research • Groupthink and “illusion or morality” • Ensure that alternative views are aired • Divide responsibility • Specialization • “Fragmentation of conscience” • Create psychological distance

15. Diffused Responsibility • Practical advice for managers: • Make responsibility a relevant issue and reinforce • Appoint devil’s advocate or multiple advocates in groups • Spell out accountability associated with specific positions

16. Walk the talk • Talk about the ethical implications of decisions • Make it clear you don’t want to be protected from bad news • Provide guidance on ethical decision making • Weave ethical goals into performance management • Reward ethical conduct; discipline unethical conduct • Demand accountability • Be aware of the standards I am setting • How would people describe me?

17. Case You’ve recently been promoted into the position of marketing manager in the communications division of your company. Your new job involves managing a staff and creating the publications and marketing materials for insurance sales professionals in three regions. You have met the directors of the three regional sales forces before, and now you ask each one for a meeting to discuss in depth how your team can best meet their needs. Two of the sales directors were very cordial, and each explained what the technical demands of their areas are and how your department can best meet their needs. However, during your meeting with Bill—the sales director of the third region and one of your firm’s biggest moneymakers—he lays down the law. He says that his area is the largest of the three regions, and it produces significantly more revenue for your company than the other two regions combined. “You and your people need to know that when I say, ‘Jump,’” he says, “they need to ask, ‘How high?’” In return, he says, he’ll recommend you and your people for every award the company has to offer. In addition, he says he’ll personally give you a monetary bonus, based on your team’s performance, at the end of the year. Although you have never heard of a manager giving someone a bonus out of his own pocket, you suspect that your company would frown on such a practice.