Chapter 1

Unethical Behaviors in
Organizations and Human Nature
 Ethical Issues at Work
Businesses significantly improve quality of life by
providing goods and services that fulfill consumer
needs.
Service to others, at the heart of business operations,
is one of the most admirable ethical principles.

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 Ethical Issues at Work

A well-managed organization is a community of people

on a common mission to be effective, efficient, and
ethical.

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 Ethical Issues at Work
An organization is:
• Effective when it accomplishes its goals
• Efficient when it wastes no resources
• Ethical when it respects each person’s dignity and
integrity

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 Daily Occurrence of Ethical Issues
Federal, state, and local governments create rules and
regulations to protect business stakeholders.
A stakeholder is any person or organization that is
affected by, or could affect an organization.

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 Daily Occurrence of Ethical Issues
How many times today did you think or say something
that was “right” or “wrong,” or “good” or “bad”?
We make many decisions each day that are ethical in
nature. When we do we are performing an ethical
analysis.

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 Daily Occurrence of Ethical Issues
• Humans possess free will and can choose to behave
ethically or unethically in everyday situations.
• Choices are often made subconsciously and we do
not consider the ethical nature of our many daily
decisions.

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 Daily Occurrence of Ethical Issues
As employees, we bring our ethics to work with us.
• Ethics: the set of principles we use to determine
whether an action is good or bad

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 Daily Occurrence of Ethical Issues
• Ethical dilemmas: choices between what is “right” or
“wrong,” and “good” or “bad”
Example: Should you inform your boss about your
colleague’s questionable behavior?

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 Daily Occurrence of Ethical Issues
There are two types of ethical dilemmas:
Conscious ethical dilemma: you know an action is
right/good but you are tempted to do what is wrong/bad.
Unconscious ethical dilemma: you are not aware a
situation is a moral issue, yet others are.

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 Daily Occurrence of Ethical Issues
There are obvious right/wrong decisions and there are
unclear or questionable right/wrong decisions.
Ethical analysis helps us make good decisions by
considering all aspects of an action sequence.

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 Daily Occurrence of Ethical Issues
An action sequence consists of:

Motivation behind Consequences

The Act
the Act of the Act
(Morally
(Ethical or (Ethical or
Neutral)
Unethical) Unethical)

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 Extent of Unethical Behaviors
Surveys reveal the prevalence of unethical behavior in
organizations.
Businesses typically score poorly on Gallup poll public
trust surveys and even the most admired companies,
such as Wells Fargo, have engaged in ethical
misconduct.

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Extent of Unethical Behaviors

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 Profession and Industry Issues

Accountants: over/under reporting revenues

Lawyers/Consultants: claiming unearned billable hours
Public Relations/Sales: exaggerating the truth
Military/Government: cheating on proficiency exams

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 Operation Areas
Every employee level and operational area is confronted
with ethical issues.
• Employees, mid-level managers, executives
• Accounting, finance, human resources, marketing

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 Costs Associated with
Unethical Behaviors
• Legal costs
• Employee theft (money, products, time)
• Monitoring costs
• Reputation costs
• Abusive treatment costs
• Recruitment and turnover costs

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 Competitive Advantages of
Ethical Organizations
The choice for an organization is no longer between
ethical performance and financial performance. Today
organizations choose ethical performance because
doing so contributes to financial performance.

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Competitive Advantages of
Ethical Organizations

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Competitive Advantages of
Ethical Organizations

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 Human Nature
Human nature refers to the moral, psychological, and
social characteristics of human beings.
Philosophers have 4 views on our morality at birth.

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 Human Nature
Some philosophers believe we are born with prior
knowledge of right and wrong.
Ancient Greeks thought individuals are born with
complete knowledge. We rediscover this knowledge
through age and experience.

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 Human Nature

Some philosophers believe we are born good.

Theologians think we are born with a conscience, the
voice of pure goodness within us.
Today, scientists claim positive emotions like kindness
are part of our DNA.

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 Human Nature

Some philosophers believe we are born with inherited

sin.
Some religions (Catholicism, Buddhism, Hinduism)
believe we are born imperfect. By choosing to do good
the soul is healed.

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 Human Nature

Some philosophers believe we are born morally

neutral.
Aristotle argued that our mind is a “tabula rasa” at birth,
or blank slate. Through life experiences, we learn
morality from others and our own reason.

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 Cognitive and Moral Development

Cognitive development represents patterns of decisions

that form over time. One of these patterns is our desire
to experience pleasure and avoid pain.
We learn this as infants, and parenting style influences
this development.

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 Cognitive Development
Jean Piaget, a famous psychologist, outlined stages of
cognitive development:
• Ethnocentric view of the world
• Socio-centric view of the world
• Empathy and self-regulation of emotions
• Mental scripts for socially appropriate behavior

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 Stages of Moral Development
Preconventional Level
• Stage 1: Obedience and punishment orientation
• Stage 2: Instrumental orientation
Conventional Level
• Stage 3: “Good Boy”—“Nice Girl” orientation
• Stage 4: Law and order orientation
Postconventional Level
• Stage 5: Social contract orientation
• Stage 6: Universal ethical principles orientation
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 Stages of Moral Development
Cognitive dissonance is a feeling of moral discomfort
that occurs when an individual holds inconsistent or
contradictory attitudes and beliefs.
We attempt to resolve this by reasoning at the next
highest level of moral development

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 Lies and Cheating
Moral imperatives are principles that compel people to
action and are found in all cultures and major religions.
“Do not lie” is one moral imperative. Yet, lying and
cheating are prevalent in children and adults.

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 Lies and Cheating
“Do unto others as you want done to you” is a second
moral imperative.
This represents altruistic behaviors, or deliberate
pursuit of actions intended to benefit the interests or
welfare of others.

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 Why Do Good People
Behave Unethically?
Four general reasons for unethical behavior:
• Unintended unethical behavior
• Choosing between competing values
• Intentional unethical behaviors
• Failure to report unethical behaviors

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Up for Debate

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