7-11

Personal and Personal and Organizational EthicsOrganizational Ethics

Search the WebNortel has posted its ethics policies on the Internet. To read it, navigate your web browser to: http://www.nortelnetworks.com

7-22

Chapter Seven Objectives

• To understand the different levels at which business ethics may be addressed

• To appreciate principles of personal ethical decision-making

• To identify factors affecting an organization’s moral climate

• Describe actions or strategies to improve ethical climate

7-3

Chapter Seven Outline

• Levels at which Ethical Issues May Be Addressed

• Personal and Managerial Ethics• Managing Organizational

Ethics• From Moral Decisions to Moral

Organizations• Summary

7-4

Introduction to Chapter Seven

• This chapter focuses on the day-to-day ethical issues that managers face

7-5

Levels at Which Ethical Issues May Be Addressed

• Personal level—situations faced in personal life (income tax, doing kid’s homework, etc.)

• Organizational level—workplace situations faced as managers and employees (cutting corners, etc.)

7-6

Levels at Which Ethical Issues May Be Addressed

• Industrial level—situations confronted as professionals (the practices of stockbrokers, accountants, etc.)

• Societal and international levels—local-to-global situations confronted indirectly as a management team

7-7

Personal and Managerial Ethics

Resolving Ethical ConflictsThree Approaches

• Conventional (covered in Chapter 6)

• Principles• Ethical tests

7-8

Personal and Managerial Ethics

• Utilitarianism• Rights• Justice

• Caring• Virtue ethics• Servant leadership• Golden Rule

Principles ApproachAnchors decision making on an ethical principle such as:

7-9

Personal and Managerial Ethics

Principle of Utilitarianism focuses on an act that produces the greatest ratio of good to evil for everyone– Consequentialist theory

7-10

Personal and Managerial Ethics

Principle of Rights focuses on examining and possibly protecting individual moral or legal rights

7-11

Personal and Managerial Ethics

7-12

Personal and Managerial Ethics

• Principle of justice involves considering what alternative promotes fair treatment of people

• Types of justice– Distributive– Compensatory– Procedural– Rawlsian

7-13

Personal and Managerial Ethics

Rawls’ Justice• Each person has an equal right to

the most basic liberties comparable with similar liberties for others

• Social and economic inequalities are arranged so that they are both: a) reasonably expected to be to everyone’s

advantage and b) attached to positions and offices open

to all people

7-14

Personal and Managerial Ethics

• Principle of caring focuses on a person as a relational (cooperative) and not as an individual– Feminist theory

• Virtue ethics focuses on individuals becoming imbued with virtues– Aristotle and Plato

7-15

Personal and Managerial Ethics

Servant leadership focuses on serving others first such as employees, customers, community and so on

7-16

Personal and Managerial Ethics

• Listening• Empathy• Healing• Persuasion• Awareness

• Foresight• Conceptualization• Commitment to the

growth of people• Stewardship• Building

community

Characteristics of Servant Leaders

7-17

Personal and Managerial Ethics

Golden rule focuses on the premise that you should of unto others as you would have them do unto you

7-18

Personal and Managerial Ethics

Concerns to be Addressed in Ethical Conflicts

• Obligations• Ideals• Effects

7-19

Personal and Managerial Ethics

When Our Obligations, Ideals and Effects Conflicts

• When two or more moral obligations conflict, use the stronger one

• When two or more ideals conflict, or when ideals conflict with obligations, honor the more important one

• When effects are mixed, choose the action that produces the greatest good and the least harm

7-20

Personal and Managerial Ethics

Ethics Test Approach• Test of common sense• Test of one’s best self• Test of making something public• Test of ventilation• Gag test

7-21

Managing Organizational Ethics

SuperiorsSuperiors

PoliciesPolicies

PeersPeersIndividual

(One’s personal situation)

Individual(One’s

personal situation)

Society’s Moral Climate

Business’s Moral Climate

Industry’s Moral Climate

Factors Affecting the Morality of Managers

7-22

Managing Organizational Ethics

Factors Influencing Unethical Behavior

• Behavior of superiors• Ethical practices of one’s industry or

profession• Behavior of one’s peers in the organization• Formal organizational policy (or lack of

one)• Personal financial need

7-23

Managing Organizational Ethics

6-23

7-24

Managing Organizational Ethics

• Amoral decision making• Unethical acts, behaviors or

practices• Acceptance or legality as the

standard behavior• Absence of ethical leadership

Questionable Behaviors of Superiors or Peers

7-25

Managing Organizational Ethics

• Objects and evaluation systems overemphasizing profits

• Insensitivity toward how subordinates perceive pressure to meet goals

• Inadequate formal ethics policies

Questionable Behaviors of Superiors or Peers

7-26

Improving Ethical Climate

Top Management Leadership

Ethics Programs & Officers

Realistic Objectives

Ethical Decision-making Processes

Codes of Conduct

Ethics Audit

Ethics Training

Whistle-blowing Mechanisms (“Hotlines”)

Discipline of Violators

Effective Communication

Codes of Conduct

7-27

Ethical Decision-MakingIdentify decision you are about to make

Articulate all dimensions of proposed decision

Conventional ApproachStandards/Norms-Personal-Organizational-Societal-International

Principles ApproachEthical Principles-Justice-Rights-Utilitarianism-Golden Rule

Ethical Tests ApproachEthical Tests-Common sense-One’s best self-Public disclosure-Gag test . . .

Course of action passes ethics screen

Engage in course of action

Course of action fails ethics screen

Do not engage in course of action

Identify new course of action

7-28

Ethics Audits and Self-Assessment

7-29

From Moral Decisions to Moral Organizations

Moral Decision(s)

Moral Manager(s)

Moral Organization

7-30

• Codes of conduct• Codes of ethics• Compensatory justice• Distributive justice• Ethical tests• Ethical audits• Golden rule• Legal rights• Moral rights

• Principle of caring• Principle of justice• Principle of rights• Principle of

utilitarianism• Procedural justice• Rights• Servant leadership• Utilitarianism• Virtue ethics

Selected Key Terms