Managerial Ethics Ethics Defined The rules and principles

Managerial Ethics • Ethics Defined – The rules and principles that define right and wrong conduct • Four Views of Ethics – – Utilitarian view Rights view Theory of justice view Integrative social contracts theory Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 9

Managerial Ethics • Utilitarian View – Greatest good is provided for the greatest number • Encourages efficiency and productivity and is consistent with the goal of profit maximization • Rights View – Respecting and protecting individual liberties and privileges • Seeks to protect individual rights of conscience, free speech, life and safety, and due process Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 10

Managerial Ethics • Theory of Justice – Organizational rules are enforced fairly and impartially and follow all legal rules and regulations • Protects the interests of underrepresented stakeholders and the rights of employees • Integrative Social Contracts Theory – Ethical decisions should be based on existing ethical norms in industries and communities • Based on integration of the general social contract and the specific contract between community members Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 11

Exhibit 4. 6 Factors That Affect Ethical and Unethical Behaviour Individual Characteristics Ethical Dilemma Stage of Moral Development Issue Intensity Moderators Structural Variables Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada Ethical/Unethical Behaviour Organizational Culture 12

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity A measure of independence from outside influences Levels of Individual Moral Development Pre-conventional level Conventional level Principled level Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 13

Exhibit 4. 7 Stages of Moral Development Source: Based on L. Kohlberg, “Moral Stages and Moralization: The Cognitive. Development Approach, ” in T. Lickona (ed. ). Moral Development and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 34– 35. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 14

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Stage of moral development interacts with: Individual characteristics The organization’s structural design The organization’s culture The intensity of the ethical issue Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 15

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Research Conclusions: • People proceed through the stages of moral development sequentially • There is no guarantee of continued moral development • Most adults are in Stage 4 (“good corporate citizen”) Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 16

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Values • Basic convictions about what is right or wrong on a broad range of issues Ego strength • A personality measure of the strength of a person’s convictions Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 17

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Locus of Control A personality attribute that measures the degree to which people believe they control their own life • Internal locus: the belief that you control your destiny • External locus: the belief that what happens to you is due to luck or chance Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 18

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Organizational characteristics and mechanisms that guide and influence individual ethics: –Performance appraisal systems –Reward allocation systems –Behaviours (ethical) of managers –An organization’s culture –Intensity of the ethical issue Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 19

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Good structural design minimizes ambiguity and uncertainty and fosters ethical behaviour Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 20

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Cultures high in risk tolerance, control, and conflict tolerance are most likely to encourage high ethical standards Weak cultures have less ability to encourage high ethical standards Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 21

Exhibit 4. 8 Determinants of Issue Intensity How much agreement is there that this action is wrong? How likely is it that this action will cause harm? How many people will be harmed? Consensus of Wrong Greatness of Harm Probability of Harm Issue Intensity Concentration of Effect How concentrated is the effect of the action on the victim(s)? Immediacy of Consequences Proximity to Victim(s) Will harm be felt immediately? How close are the potential victims? Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 22

Ethics in an International Context • Ethical standards are not universal – Social and cultural differences determine acceptable behaviours Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 23

The Global Compact Human Rights • Principle 1: Support and respect the protection of international human rights within their sphere of influence • Principle 2: Make sure business corporations are not complicit in human rights abuses Labour Standards • Principle 3: Freedom of association and the effective recognition of the right to collective bargaining • Principle 4: Eliminate all forms of forced and compulsory labour • Principle 5: Abolish child labour • Principle 6: Eliminate discrimination in respect of employment and occupation Source: The Global Compact Web Site (www. unglobalcompact. org), November 7, 2004. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 24

The Global Compact Environment • Principle 7: Support a precautionary approach to environmental challenges • Principle 8: Undertake initiatives to promote greater environmental responsibility • Principle 9: Encourage the development and diffusion of environmentally friendly technologies Anticorruption • Principle 10: Work against all forms of corruption, including extortion and bribery Source: The Global Compact Web Site (www. unglobalcompact. org), November 7, 2004. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 25

How Managers Can Improve Ethical Behaviour in an Organization • Hire individuals with high ethical standards. • Establish codes of ethics and decision rules. • Lead by example. • Delineate job goals and performance appraisal mechanisms. • Provide ethics training. • Conduct independent social audits. • Provide support for individuals facing ethical dilemmas. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 26

Code of Ethics • A formal statement of an organization’s primary values and the ethical rules it expects its employees to follow – Be a dependable organizational citizen – Don’t do anything unlawful or improper that will harm the organization – Be good to customers Source: F. R. David, “An Empirical Study of Codes of Business Ethics: A Strategic Perspective. ” Paper presented at the 48 th Annual Academy of Management Conference, Anaheim, California, August 1988. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 27

Effective Use of a Code of Ethics • Develop a code of ethics to guide decision making • Communicate the code regularly • Have all levels of management show commitment to the code • Publicly reprimand consistently discipline those who break the code Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 28

Exhibit 4. 9 Examining Ethics Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 29

Ethical Leadership • Managers must provide a good role model by: – Being ethical and honest at all times – Telling the truth – Admitting failure and not trying to cover it up – Communicating shared ethical values to employees through symbols, stories, and slogans – Rewarding employees who behave ethically and punishing those who do not – Protecting employees (whistleblowers) who bring to light unethical behaviours or raise ethical issues Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 30

The Value of Ethics Training • Training can make a difference in ethical behaviours • Training increases employee awareness of ethical issues in business decisions • Training clarifies and reinforces the standards of conduct • Employees are more confident of support when taking unpopular but ethically correct stances Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 31

Summary and Implications • What is corporate social responsibility? – Defined as a business’s obligation, beyond that required by law and economics, to pursue longterm goals that are good for society • Can being socially responsible help performance? – There is little evidence to say that a company’s social actions hurt its long-term economic performance Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 32

Summary and Implications • How do organizations go green? – One model uses the phrase shades of green to describe the different approaches that organizations take to go green • How do values influence management? – An organization’s values reflect what it stands for and what it believes in • What is ethics and how can ethical behaviour be encouraged? – Ethics refers to rules and principles defining right and wrong behaviour. Ethical behaviour is encouraged or discouraged through organizational culture Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Ninth Canadian Edition Copyright © 2009 Pearson Education Canada 33