Managing Business Ethics

1. Managing Business Ethics Chapter 3 Treviño & Nelson – 5th Edition

2. Chapter 3 Overview • Ethical Awareness and Ethical Judgment • Individual Differences, Ethical Judgment, and Ethical Behavior • Facilitators to and Barriers to Good Ethical Judgment • Toward Ethical Action • Gioia’s Personal Reflections on the Pinto Fires Case

3. The Relationship between EthicalAwareness, Judgment, and Action EthicalAwareness Ethical Judgment Ethical Action

4. Case You’ve just started a new job in the financial services industry. One afternoon, your manager tells you that he has to leave early to attend his son’s softball game, and he asks you to be on the lookout for an important check that his boss wants signed before the end of the day. He tells you to do him a favor—simply sign his name and forward the check to his boss. What might influence whether you see this as an ethical issue or not?

5. Influences on ethical awareness • If peers agree • If ethical language is used • If potential for serious harm

6. Individual Differences Influence How We Make Ethical Decisions Individual Differences Ethical Decision-Making Style Cognitive Moral Development Locus of Control Machiavellianism Moral Disengagement Ethical Awareness Ethical Judgment Ethical Actions

7. Cognitive Moral Development • Level I (Preconventional) • Stage 1 – Obedience and Punishment Orientation • Stage 2 – Instrumental Purpose and Exchange • Level II (Conventional) • Stage 3 - Interpersonal Accord - Conformity – Mutual Expectations • Stage 4 – System Maintenance - Upholding duties, laws • Level III (Postconventional or Principled) • Stage 5 – Social contract and rights • Stage 6 - Theoretical stage only

8. Why is Cognitive Moral Development Important? • Because most people reason at the conventional level and are looking outside themselves for guidance • That makes “leading” on ethics essential

9. Locus of Control An individual’s perception of how much control he or she exerts over events in life. External Internal

10. Connection to Ethical Behaivor? • Internals are more likely to see the connection between their own behavior and outcomes and therefore take responsibility for their behavior. • Therefore, internals are more likely to do what they think is right

11. Machiavellianism • Self interested • Opportunistic • Deceptive • Manipulative

12. Moral Disengagement • The tendency for some individuals to deactivate their internal control system in order to feel okay about doing unethical things • Eight mechanisms used for doing this • Euphemistic language • Moral justification • Displacement of responsibility • Advantageous comparison • Diffusion of responsibility • Distorting consequences • Dehumanization • Attribution of blame

13. Moral Disengagement STOPANDTHINK “It’s not my responsibility - my boss told me to do it.” “It’s not my responsibility – my team decided this.” “It’s no big deal!” “It’s not as bad as (what someone else) is doing.” “They deserve whatever they get.” “They brought this on themselves.”

14. Cognitive Barriers to Good Ethical Judgment • Barriers to Fact Gathering • Overconfidence • “Confirmation Trap” • Barriers to Consideration of Consequences • Reduced number • Self vs. others • Ignore consequences that affect few • Risk underestimated: illusion of optimism, illusion of control • Consequences over time – escalation of commitment

15. More Cognitive Barriers • Thoughts about integrity • Illusion of superiority or illusion of morality • Paying attention to gut • Careful! Gut may be wrong

16. Unconscious Biases • The IAT and race bias • The role of emotions

17. How it felt to be a recall coordinator… “The recall coordinator’s job was serious business. The scripts associated with it influenced me more than I influenced [it]. Before I went to Ford I would have argued strongly that Ford had an ethical obligation to recall. After I left Ford, I now argue and teach that Ford had an ethical obligation to recall. But, while I was there, I perceived no obligation to recall and I remember no strong ethical overtones to the case whatsoever. It was a very straightforward decision, driven by dominant scripts for the time, place, and context.” Dennis Gioia, former recall coordinator at Ford

18. Toward Ethical Action • Script Processing • Cognitive frameworks that guide our thoughts and actions • Cost-Benefit Analysis • Too simplistic a way of analyzing • No moral dimension

19. Case Mary, the director of nursing at a regional blood bank, is concerned about the declining number of blood donors. It’s May, and Mary knows that the approaching summer will mean increased demands for blood and decreased supplies, especially of rare blood types. She is excited, therefore, when a large corporation offers to host a series of blood drives at all of its locations, beginning at corporate headquarters. Soon after Mary and her staff arrive at the corporate site, Mary hears a disturbance. Apparently, a nurse named Peggy was drawing blood from a male donor with a very rare blood type when the donor fondled her breast. Peggy jumped back and began to cry. Joe, a male colleague, sprang to Peggy’s defense and told the donor to leave the premises. To Mary’s horror, the male donor was a senior manager with the corporation. • - What is the ethical dilemma in this case? • What values are in conflict? • How should Mary deal with Peggy, Joe, the donor, and representatives of the corporation?