Ethical Dilemmas

How do ethical dilemmas complicate the

workplace?
An ethical dilemma occurs when choices offer
potential for personal and/or organizational
benefit but may be considered unethical.
Ethical dilemmas include:
Discrimination
Sexual harassment
Conflicts of interest
Customer confidence abuse
Organizational resources

RATIONALIZATIONS FOR UNETHICAL CONDUCT

Its not really illegal...

Its in everyones best interests...
Nobody will ever find out
The organization will protect me...
Source: Saul W. Gellerman, Harvard Business Review, 1986

DOUBLE-CHECK FOR ETHICAL DECISIONS

Question 1 How will I feel about this

if my family finds out?

Question 2 How will I feel about this

if it is printed in the (local) newspaper?

Where do pressures
for unethical acts come from?
Who hold
a lot of power

Sometimes, perhaps
too often
BOSSES

Who depend on
them for raises,
promotions, etc.

Bosses may ask:

support an inccorrect
view
sign a false document
overlook a wrong doing
do business with my
friends
LOWER LEVELS

that will almost always be

viewed as

unethical

?
6

Sexual intimacy with

clients

Libeling or slandering a client

Sharing confidences without compelling

professional reasons

Assaulting, causing physical injuries,

placing clients in danger

or

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Discriminatory
practices

11

Withdrawing services precipitously

(abandoning a client)

12

Failure to warn and protect the victim of

a violent crime

13

Failure to exercise reasonable

precautions with a potentially suicidal
client

14

Promising cures for problems without

fulfilling them

15

Ethical Dilemmas
Factors influencing ethical behavior include:
The person
Family influences, religious values, personal

standards, and personal needs

The organization
Supervisory behavior, policy statements and

written rules, and peer group norms and

behavior

The environment
Government laws and regulations, societal

norms and values, and competition climate in an

industry

Figure 3.3 Factors influencing ethical managerial

behaviorthe person, organization, and environment.

Management Fundamentals - Chapter 3

17

How can high ethical standards be maintained?

Checklist for dealing with ethical dilemmas:
Step 1. Recognize the ethical dilemma
Step 2: Get the facts
Step 3. Identify your options
Step 4. Test each option: Is it legal? Is it right? Is it
beneficial?
Step 5. Decide which option to follow
Step 6. Double-check decision by asking the
spotlight
questions: How would I feel if my family found
out
about my decision? How would I feel about
this if
my decision were printed in the local
newspaper?
Step 7. Take action.
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Maintaining High Ethical

Standards
Who is a Whistleblower?

19

Maintaining High Ethical

Standards
Whistleblower

Protection
Whistleblowers expose
misdeeds of others to
preserve ethical
standards
protect against wasteful,
harmful, illegal acts

20

How can high ethical standards be

maintained?

How can high ethical standards be

maintained?

Laws protecting whistleblowers vary.

Reasons for not reporting:
Believe no corrective action will be taken
Fear that reports will not be kept confidential

Barriers to whistleblowing include:

Strict chain of command
Strong work group identities
Ambiguous priorities

Organizational methods for overcoming

whistleblowing barriers:
Ethics advisors
Moral Quality Circles (some countries:

How can high ethical standards be

maintained?
Top managers serve as ethical

role models.
All managers can influence the

ethical behavior of people who

work for and with them.

How can high ethical standards be

maintained?
Excessive pressure

can foster unethical

behavior.
Managers should be

realistic in setting
performance goals
for others.

How can high ethical standards be

maintained?
Codes of ethics:
Official written guidelines on how to behave in
situations susceptible to the creation of ethical
dilemmas.
Areas often covered by codes of ethics:

Workforce diversity
Bribes and kickbacks
Political involvement
Honesty and Loyalty
Customer/supplier relationships
Confidentiality of corporate information

The Nature of Ethics

Ethical Dilemma
quandary people find themselves in
when they have to decide if they should
act in a way that might help another
person although doing so might go
against their own self-interest

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The Nature of Ethics

Ethics
The inner-guiding moral principles,
values, and beliefs that people use
to analyze or interpret
a situation and then decide what is
the
right or appropriate way to
behave

4-27

Dealing with Ethical Issues

There are no absolute rules or
principles that can be developed
to decide if an action is ethical
or unethical

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Ethics and the Law

Neither laws nor
ethics are fixed
principles (On a
long term basis)

4-29

Ethics and the Law

Ethical beliefs lead to the
development of laws and
regulations to prevent
certain behaviors or
encourage others

4-30

Ethics and the Law

Laws can change
or disappear as
ethical beliefs
change

4-31

Changes in Ethics Over Time

Managers must confront the
need to decide what is
appropriate and
inappropriate as they use a
companys resources to
produce goods and services

4-32

Question?
Who has a claim on a companys
resources?
A. Employees
B. Customers
C. Suppliers
D. Stakeholders

4-33

Stakeholders and Ethics

Stakeholders
people and groups affected by
the way a company and its
managers behave
supply a company with its
productive resources and have a
claim on its resources

4-34

Stakeholders and Ethics

When the law does not specify
how companies should behave,
managers must decide what is
the right or ethical way to
behave toward the people and
groups affected by their actions

4-35

Types of Company Stakeholders

4-36

Stockholders
Want to ensure that managers
are behaving ethically and not
risking investors capital by
engaging in actions that could
hurt the companys reputation
Want to maximize their ROI

4-37

Managers
Responsible for using a
companys financial capital and
human resources to increase its
performance
Have the right to expect a good
return or reward by investing
their human capital to improve a
companys performance
Frequently juggle multiple
interests
4-38

Managers
Problem has been that in many
companies corrupt managers
focus not on building the
companys capital and
stockholders wealth but on
maximizing their own personal
capital and wealth

4-39

Employees
Companies can act ethically
toward employees by creating
an occupational structure that
fairly and equitably rewards
employees for their
contributions

4-40

Suppliers and Distributors

Suppliers expect to be paid fairly and
promptly for their inputs
Distributors expect to receive quality
products at agreed-upon prices

4-41

Vendor Conduct

Gaps Code of
Vendor Conduct

4-42

Customers
Most critical stakeholder
Company must work to increase
efficiency and
effectiveness in
order to create
loyal customers
and attract new
ones

4-43

Community, Society, and Nation

Community
Physical locations like towns or cities
in which companies are located
A community provides a company with
the physical and social infrastructure
that allows it to operate

A company contributes to the

economy of the town or region
through salaries, wages, and taxes
4-44

Ethical Decision Making

Figure 4.3

4-45

Question?
Which ethical decision rule produces the greatest
good for the greatest number?
A. Utilitarian Rule
B. Moral Rights Rule
C. Justice Rule
D. Practical Rule

4-46

Ethical Decision Models

Utilitarian Rule
Decision that produces the greatest
good for the greatest number
How do you measure the benefits and
harms that will be done to each
stakeholder group?
How do you evaluate the rights and
importance of each group?

4-47

Effects of Ethical/Unethical Behavior

Figure 4.4

4-48

Ethical Decision Models

Moral Rights rule
Decision that best maintains and
protects the fundamental or
inalienable rights and privileges of
the people affected by it

Justice rule
Decision that distributes benefits
and harms among people and
groups in a fair, equitable, or
impartial way
4-49

Ethical Decision Models

Practical rule
- Decision that a manager has
no hesitation about
communicating to people
outside the company because
the typical person would think
it is acceptable

4-50

Practical Decision Model

1. Does my decision fall within the
acceptable standards that apply
in business today?
2. Am I willing to see the decision
communicated to all people and
groups affected by it?
3. Would the people with whom I
have a significant personal
relationship approve of the
decision?
4-51

Why should managers behave ethically?

The relentless pursuit of selfinterest can lead to a

collective disaster when one
or more people start to
profit from being unethical
because this encourages
other people to act in the
same way
4-52

Trust and Reputation

Trust willingness
of one person or
group to have
faith or confidence
in the goodwill of
another person

4-53

Trust and Reputation

Reputation esteem or high repute
that individuals or organizations
gain when they behave ethically

4-54

Determinants of Ethics

Figure 4.5

4-55

Societal Ethics
Standards that govern how
members of a society should
deal with one another in
matters involving issues such as
fairness, justice, poverty, and
the rights of the individual
People behave ethically because
they have internalized certain
values, beliefs, and norms
4-56

Occupational Ethics
Standards that govern how members
of a profession, trade, or craft
should conduct themselves when
performing work-related activities
Medical & legal ethics

4-57

Individual Ethics
Personal standards and values
that determine how people
view their responsibilities to
other people and groups
How they should act in situations
when their own self-interests are
at stake

4-58

Organizational Ethics
Guiding practices and beliefs
through which a particular
company and its managers view
their responsibility toward their
stakeholders
Top managers play
a crucial role in
determining a
companys ethics
4-59

Social Responsibility
Way a company views its duty or
obligation to make decisions
that protect, enhance, and
promote the welfare and wellbeing of stakeholders and
society as a whole

4-60

Approaches to Social
Responsibility
Obstructionist approach Companies choose
not to behave in a social responsible way and
behave unethically and illegality

4-61

Approaches to Social
Responsibility
Defensive approach companies and managers
stay within the law and abide strictly with legal
requirements but make no attempt to exercise
social responsibility

4-62

Approaches to Social
Responsibility
Accommodative approach Companies behave
legally and ethically and try to balance the
interests of different stakeholders against one
another so that the claims of stockholders are
seen in relation to the claims of other
stakeholders

4-63

Approaches to Social
Responsibility
Proactive approach
Companies actively embrace socially
responsible behavior, going out of their way to
learn about the needs of different stakeholder
groups and utilizing organizational resources to
promote the interests of all stakeholders

4-64

Why Be Socially Responsible?

1. Demonstrating its social
responsibility helps a company
build a good reputation
2. If all companies in a society act
socially, the quality of life as a
whole increases

4-65

Role of Organizational Culture

Ethical values and norms help
organizational members:
Resist self-interested action
Realize they are part of something
bigger than themselves

4-66

Johnson & Johnson

Credo

Source: Johnson & Johnson Annual Report.

Figure 4.7
4-67

Code of Ethics Exercise

1. In pairs, develop what you consider to

be an appropriate Code of Ethics for

students at HEM.

2. Develop a formal classroom Code of

Ethics that will apply to students at

HEM.

3. Have one group member write out a

final copy of both codes. You will

present your answers to the class.

Cases:
A purchasing manager giving purchase orders
to a cousin (otherwise well qualified) who
could be in financial straits?
Show special consideration to friends and
relatives who apply for jobs within the
organization. Using your influence to get a
relative / friend a job though he is adequately
qualified: Nepotism
Using organizations stationery or
reprographic facilities for work of a charitable
organization with which he / she is associated.
A financial journalist use the knowledge
gained from doing the job to tip off friends
about risky investments