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Managing Business Ethics

Chapter 5
Treviño & Nelson – 5th Edition
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Chapter 5 Overview
 Organizational Ethics as Culture

 Ethical Culture: A Multisystem Framework

 Ethical Leadership

 Other Formal Cultural Systems

 Informal Cultural Systems

 Organizational Climates: Fairness, Benevolence, Self-Interest, Principles

 Developing and Changing Ethical Culture

 A Cultural Approach to Changing Organizational Ethics

 The Ethics of Managing Organizational Ethics

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Influence of Culture on Individuals

Individual Differences

Ethical Awareness Ethical Judgment Ethical Action

Ethical Culture
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Organizational Culture

 Expresses shared assumptions, values and beliefs and is the social

glue that holds the organization together. It’s “how we do things
around here.”
 Strong - assumptions, values, beliefs widely shared
 Weak - subgroup norms more influential
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Culture

 A body of learned beliefs, traditions, and guides for behavior shared

among members of a society or a group
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Ethical Culture:
A Multisystem Approach
Formal Systems Informal Systems

Executive Leadership
Selection System Role Models/Heroes
Ethical/ Norms
Policies/Codes
Unethical
Orientation/Training Behavior Rituals

Performance Management Myths/Stories

Authority Structure Language

Decision Processes

Alignment?
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Alignment and Misalignment

With alignment, all systems are “pushing”

employees in the same direction – either
ethical or unethical
Withmisalignment, employees get mixed
messages about expectations
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Leadership

 Executive Leaders Create Culture

 Leaders Maintain or Change Organizational Culture

 Ethical Leadership and Ethical Culture

 Unethical Leadership
 Hypocritical Leadership
 Ethically Neutral or “Silent” Leadership
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Executive Ethical Leadership Rests on
Two Pillars
Moral Person Moral Manager
Tells followers how leader behaves
Tells followers how they should behave and
 Traits holds them accountable
 Honesty  Role modeling
 Integrity,
 Takes visible ethical action
 Trust
 Rewards/Discipline
 Behaviors
 Openness  Hold people accountable for
 Concern for people
ethical conduct
 Personal morality  Communicating
 Decision-making  Sends an “ethics and values”
 Values based message
 Fair
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Reputation Matrix

Strong Hypocritical leader Ethical leader

Moral Manager

Weak Unethical leader

Ethically neutral leader

Weak Strong
Moral Person
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Other Formal Cultural Systems

 Selection Systems
 Values and Mission Statements
 Policies and Codes
 Orientation and Training Programs
 Performance Management Systems
 Organizational Authority Structure
 Decision-making Processes
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Informal Cultural Systems

 Role Models and Heroes

 Norms: “The Way We Do Things Around Here”
 Rituals

 Myths and Stories

 Language
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Ethical Climates

 Fairness
 Benevolence
 Self-Interest
 Principles
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Ethical Culture Change

 From ethical to unethical

 From unethical to ethical
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Ethical Culture Change

 Long-term view
 Systems view
 Diagnose/Audit
 Intervene
 Evaluate