Part I: AN OVERVIEW OF BUSINESS ETHICS. 1. The Importance of Business Ethics. 2. Stakeholder Relationships, Social Responsibility, and Corporate Governance. Part II: ETHICAL ISSUES AND THE INSTITUTIONALIZATION OF BUSINESS ETHICS. 3. Emerging Business Ethics Issues. 4. The Institutionalization of Business Ethics. Part III: THE DECISION-MAKING PROCESS. 5. Ethical Decision Making and Ethical Leadership. 6. Individual Factors: Moral Philosophies and Values. 7. Organizational Factors: The Role of Ethical Culture and Relationships. Part IV: IMPLEMENTING BUSINESS ETHICS IN A GLOBAL ECONOMY. 8. Developing an Effective Ethics Program. 9. Managing and Controlling Ethics Programs. 10. Ethical Leadership. 11. Business Ethics in a Global Economy. 12. Sustainability: Ethical and Social Responsibility Dimensions Part V: CASES. CASE 1. Monsanto Attempts to Balance Stakeholder Interests. CASE 2. Starbucks'''' Mission: Social Responsibility and Brand Strength. CASE 3. Walmart Manages Ethical and Compliance Challenges. CASE 4. Managing Risks in the Oil Industry. CASE 5. New Belgium Brewing: Ethical and Environmental Responsibility. CASE 6. National Collegiate Athletic Association: Football Compliance. CASE 7. Google: The Quest to Balance Privacy with Profits. CASE 8. Zappos: Delivering Happiness to Stakeholders. CASE 9. Enron: Questionable Accounting Leads to Collapse. CASE 10. Home Depot Implements Stakeholder Orientation. CASE 11. Frauds of the Century. CASE 12. Insider Trading at the Galleon Group. CASE 13. Whole Foods Strives to Be an Ethical Corporate Citizen. CASE 14. Apple Inc.''''s Ethical Successes and Challenges. CASE 15. PepsiCo''''s Journey Toward an Ethical and Socially Responsible Culture. CASE 16. Recreational Equipment Incorporated (REI): A Responsible Retail Cooperative. CASE 17. Better Business Bureau: Protecting Consumers and Dealing with Organizational Ethics Challenges. CASE 18. Managing the Risks of Bribery in Global Business. CASE 19. Mattel Responds to Ethical Challenges. CASE 20. Best Buy Fights Against Electronic Waste.
Part Three The Decision Making Process Chapter Organizational Factors: The Role of Ethical Culture and Relationships © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Defining Corporate Culture Corporate culture has many definitions A set of values, norms, and artifacts, including ways of solving problems shared by organizational members The shared beliefs top mangers have about how they should manage themselves and other employees and how they should conduct their business Gives organizational members meaning and sets the internal rules of behavior All organizations have culture © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Sarbanes-Oxley 404 Culture is codified by the SarbanesOxley 404 compliance section Includes assessment of effectiveness of controls by management and external auditors Forces firms to adopt a set of values that make up part of the culture Compliance with 404 requires cultural change, not only accounting changes © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Corporate Culture May be formal through statements of values, beliefs, and customs Comes from upper management Memos, codes, manuals, forms, ceremonies May be informal through direct or indirect comments conveying management’s wishes Dress codes, promotions, extracurricular activities The “tone at the top” is critical in creating ethical corporate culture © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, U.S Bank’s Principles For Integrity Being a role model for ethical behavior Promoting our culture of integrity Fostering open communication Recognizing behavior that exemplifies our ethical principles and values Responding to misconduct and reporting violations Source: U.S Bank, Do the Right Thing: Code of Ethics and Business Conduct , https://www.usbank.com/hr/docs/policies/coeHandbook.pdf (accessed March 8, 2011) © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Two Dimensions of Organizational Culture Concern for people The organization’s efforts to care for its employees’ well-being Concern for performance The organization’s efforts to focus on output and employee productivity © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Traits to Look for in Future Leaders Source: “Robert Half Management Resources Survey: CFOs Cite Integrity as Most Important Trait for Future Leaders,” PR Newswire, September 30, http://www.prnewswire.com/news-releases/robert-half-management-resources-survey-cfoscite-integrity-as-most-important-trait-for-future-leaders-104072008.html (accessed April 26, 2013) © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Four Organizational Culture Types Apathetic: Minimal concern for people or performance Caring: High concern for people; minimal concern for performance Exacting: Minimal concern for people; high concern for performance Integrative: High concern for people and performance © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Four Organizational Culture Types A cultural audit is an assessment of the organization’s values Usually conducted by outside consultants; can be handled internally © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, Company Examples of the Four Organizational Cultures © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 10 Whistle-Blowing Exposing an employer’s wrongdoing to company outsiders Some legal protections exit The Sarbanes-Oxley Act, the FSGO, and the Dodd-Frank Act have institutionalized whistle-blowing protections to encourage discovery of misconduct Whistle-blowers fear retaliation © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 14 Questions to Ask before Engaging in External Whistle-Blowing Have I exhausted internal anonymous reporting opportunities within the organization? Have I examined company policies and codes that outline acceptable behavior and violations of standards? Is this a personal issue that should be resolved through other means? Can I manage the stress that may result from exposing potential wrongdoing in the organization? Can I deal with the consequences of resolving an ethical or legal conflict within the organization? © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 15 Percentage of Employees Who Experience Retaliation after Reporting Misconduct Source: Ethics Resource Center, 2011 National Business Ethics Survey: Workplace Ethics in Transition (Arlington, VA: Ethics Resource Center, 2012), 15 © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 16 How Employees Report Observed Misconduct Source: Ethics Resource Center, 2011 National Business Ethics Survey: Workplace Ethics in Transition (Arlington, VA: Ethics Resource Center, 2012), 21 23715_ch07_lores_181212.indd 195 13/07/13 5:14 PM © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 17 Leaders Influence Corporate Culture An effective leader is one who does well for the stakeholders of the corporation Effective leaders are good at getting followers to common goals effectively and efficiently Power refers to the influence that leaders and managers have over the behavior and decisions of subordinates A individual has power when his/her presence causes people to behave differently Power and influence shape corporate culture © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 18 Five Power Bases Reward power: Offering something desirable to influence behavior Coercive power: Penalizing negative behavior Legitimate power: The consensus that a person has the right to exert influence over others Expert power: Derives from knowledge and credibility with subordinates Referent power: Exists when goals or objectives are similar © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 19 Motivation A force within the individual that focuses behavior toward achieving a goal Job performance: A function of ability and motivation An individual’s hierarchy of needs may influence motivation and ethical behavior Relatedness needs: Satisfied by social and interpersonal relationships Growth needs: Satisfied by creative or productive activities Needs or goals may change over time © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 20 Centralized Organizational Structure Decision making authority is concentrated in the hands of top-level managers Little authority delegated to lower levels Best for organizations… That make high-risk decisions Whose lower-level managers are not skilled in decision-making Where processes are routine May have a harder time responding to ethical issues © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 21 Decentralized Organizational Structure Decision making authority is delegated as far down the chain of command as possible Flexible and quicker to recognize external change Can be slow to recognize organizational policy changes Units may diverge and develop different value systems Ethical misconduct may result © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 22 Structural Comparison of Organizational Types Emphasis Characteristic Centralized Decentralized Centralized Decentralized Flexibility Low High Adaptability Low High Problem recognition Low High Implementation High Low Dealing with changes Poor environmental complexity Good Rules and procedures Many and formal Few and informal Division of labor Clear-cut Ambiguous Span of control Many employees Few employees Extensive Minimal Formal and impersonal Informal and personal Hierarchy of authority Use of managerial techniques Coordination and control © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 23 Examples of Centralized and Decentralized Corporate Cultures © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 24 Examples of Centralized and Decentralized Corporate Cultures Organizational Culture Characterized by Nike Decentralized Creativity, freedom, informality Southwest Airlines Decentralized Fun, teamwork orientation, loyalty Centralized Unions, adherence to task assignments, structured Decentralized Creative, investigative, fast paced Centralized Experienced, dependable, a rich history and tradition of products, powerful Company General Motors Microsoft Proctor & Gamble © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 25 Groups in Corporate Structure and Culture Formal groups Committees, work groups, and teams Informal groups The grapevine Group norms Standards of behavior that groups expect of members Define acceptable/unacceptable behavior within the group © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 26 Variation in Employee Conduct* 10% 40% Follow their own Always try to values and follow company beliefs; believe policies that their values are superior to those of others in the company 40% Go along with the work group 10% Take advantage of situations if the penalty is less than the benefit and the risk of being caught is low * Estimates based on the author’s research and reports from ethics and compliance officers from many industries 23715_ch07_lores_181-212.indd 205 13/07/13 5:14 PM © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 27 Can People Control Their Actions Within a Corporate Culture? Ethical decisions are often made by committees and formal and informal groups Many decisions are beyond the influence of individuals Congruence between individual and organizational ethics—increases potential for making ethical decisions Individuals need experience to understand how to resolve ethical issues © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, 28 ... Source: Ethics Resource Center, 2011 National Business Ethics Survey: Workplace Ethics in Transition (Arlington, VA: Ethics Resource Center, 2012), 21 2 371 5_ch 07_ lores_181212.indd 195 13/ 07/ 13 5:14... in part, 10 Ethics and Corporate Culture Ethical corporate culture is a significant factor in ethical decision making If a firm’s culture encourages/rewards/does not monitor unethical behavior,... benefit and the risk of being caught is low * Estimates based on the author’s research and reports from ethics and compliance officers from many industries 2 371 5_ch 07_ lores_181-212.indd 205 13/ 07/ 13