Ethical Decision Making

Course Notes Table of Contents

  • Define Kohlberg's stages of moral reasoning, and their association with locus of control.
  • Describe the relationship of whistle-blowing to moral development
  • Describe how servant leadership can influence one's level of moral development
  • Define the concept of socially responsible investing, and give examples of these types of funds; also, provide examples of companies that engage in socially responsible practices, and how these incorporate the "go global act local" concept
  • Define the Foreign Corrupt Practices Act
  • Describe the concept of voice
  • Explain how ethical behavior applies to downsizing
  • Explain proactive behaviors that companies are taking with respect to the environment
  • Define the difference between quid pro quo and hostile environment sexual harassment
  1. Understand decision making heuristics and keys to making good decisions

Individual Differences and Ethics

Moral development refers to the stage of ethical reasoning that an individual has achieved. Kohlberg has divided this into three broad categories:

  1. Pre-Conventional:  the individual bases a decision on the consequences, reward or punishment, that the individual sees for him or herself personally.
  2. Conventional:  the degree to which individuals are concerned with living up to others' expectations.
  3. Principled:  the degree to which individuals use their own compass to define what is right and wrong in a circumstance.

Kohlberg's Six Stages of Moral Development

http://www.vtaide.com/blessing/Kohlberg.htm

The majority of adults reside in Stage 4 (Robbins & Coulter, 2005).  Whistle-blowers, or those who bring questionable organizational practices to light, mostly likely reside in Stage 5.  Some of the whistle-blowers who made national news in recent years include Sherron Watkins (Enron), Cynthia Cooper (Worldcom), and Colleen Rowley (FBI).  These women were named the Time 2002 Persons of the Year.
 

The Golden Rule: http://www.jcu.edu/philosophy/gensler/goldrule.htm

Locus of Control

Internals are more likely to:

  • Reside in higher stages of moral development
  • Rely on internal standards to make determinations of right and wrong

    Externals are more likely to:
  • Blame others for their behavioral consequences
  • Rely on the expectations of outside influences to define their behavior

    Source: Robbins & Coulter, 2005
Socially Responsible Investing

Both individuals and organizations exist in different stages of moral development.  Organizations that feel social responsibility to the greater society engage in such practices as protecting the environment, promoting social welfare around the world, and engaging in environmental conservation. 

One of these is Bayer, which tailors its socially responsible stance to the cultures in which it operates.  http://www.bayer.com/social-responsibility/international-projects/page1289.htm

Belgium: *donations to cystic fibrosis patients
              information campaign to teach school children about Lyme disease

Russia:  *donations benefited women's prisons by running child care centers at correctional 
              facilities

See "Academic turns city into a social experiment" and "MicroCredit Pioneers"

When individuals choose to invest in companies that either are proactive in social causes and/or limit their portfolios to funds based on some type of social screening, this is known as socially responsible investing.  Check out www.socialfunds.com 

Also:  Blue Marble at www.bluemarbleinv.com

Focus:  energy, trees, recycling, and conservation
Avoids: pollution, tobacco, gambling and firearms

Parnassus:  http://www.parnassus.com/

Focus:  effective equal employment opportunities, good community relations and ethical business dealings
Avoids:  companies that manufacture alcohol, tobacco, weapons, engage in gambling, or those that generate energy from nuclear power

What about ethical standards in other countries? 

Sometimes, activities that would be illegal here are accepted practice in other countries, such as bribes for example.  The Foreign Corrupt Practices prohibits bribes, but, "facilitating" or "grease" payments, in order to expedite shipments, secure permits, or obtain adequate police protection may be permitted, provided they are small payoffs, and are part of a larger system of accepted payments to administrative or clerical personnel (Robbins & Coulter, 2005).

Fair Trade Coffee: http://www.globalexchange.org/campaigns/fairtrade/coffee/
                           http://www.eartheasy.com/eat_shadegrown_coffee.htm
                           Coffee Country

Economic exploitation can led to subsequent economic collapse, to the disintegration of a country's social fabric (through displacement of families), and in the inability of affected countries (like Vietnam and Ethiopia) to repay their international debt.  Fair trade practices make it easier for third world countries to remain solvent.

Environmental conservation and preservation - dark green approach

Environmental conservation is a defining factor in the approach of Tom's of Maine

Tom's of Maine Mission statement: to address community concerns, in Maine and around the globe...to be distinctive in products and policies which honor and sustain our natural world.

From Tom's of Maine statement of beliefs: We believe in products that are safe, effective, and made of natural ingredients; also see Toyota's commitment to social responsibility

[Manners quiz]

In "Talk to the Hand" Lynn Truss argues that everyday pleasantries such as "excuse me"
are on the decline.

Variables from corporate codes of business ethics: courtesy, respect, honesty, and fairness Source:  Robbins & Coulter, Management, Pearson/Prentice-Hall, 2005.

"Benevolence is expected at Tom's of Maine, which is why we put our money where our values are by encouraging employees to donate five percent of their time at work - for which we still pay them their usual wages - to community needs." examples: mentoring programs for the young, assisting nonprofits in planning and finances, and soup kitchens for the poor and homeless

The above are examples of values based management, in which managers and employees are expected to abide by overarching ethical principles established at the corporate level.

Source:  The Soul of a Business: Managing for Profit and the Common Good, by Tom Chappell, Bantam Press, 1993

McDonald's & Corporate Social Responsibility
Work at McDonald's

[Ethics test]

Contrast this culture with that of Enron, which emphasized that the ends justify the means - http://bodurtha.georgetown.edu/enron/At%20Enron,%20Lavish%20Excess%20Often%20Came%20Before%20Success.htm

p. 129 – Skilling – arrogant and ultra-competitive – known to himself as smartest human being to walk they face of the earth. It was a place where people learned to watch their backs.  p. 130:  "Managers lied and altered personnel records to get rid of certain employees. It was a place that revolved around a kind of daily emotional violence. Top executives set the tone."

Source:  The Cheating Culture, by David Callahan, Harcourt Books, 2004

Field Trips for Execs:  Prison  hhttp://www.highbeam.com/doc/1G1-106763054.html

Which graduate students are most likely to cheat?

  • Business
  • Engineering
  • Physical Science
  • Law
  • Liberal Arts

 "'A person has to lie or cheat sometimes in order to succeed.' 43% of 12,000 high school students surveyed in 2002 agreed with this statement."
"A 2002 study of high school students showed that the number who said they had cheated on an exam at least once in the last year jumped to 75 percent."
Source:  Robbins & Coulter, 2005, from "High school students show ethical decline," in USA Today, 2002.

p. 125 - "Hatch, a corporate trainer, won survivor. Modern management techniques, it turns out, are pretty helpful if you’re trying to make it on a cutthroat island.  No one cared how Hatch had won."
Source:  The Cheating Culture, by David Callahan, Harcourt Books, 2004

E-Commerce Business Ethics Case Study: http://www.merlot.org/merlot/viewMaterial.htm?id=85696 

Voice

p. 26: "Reduce cheating by strengthening democracy so that we all have a more equal say in how the rules are made and so rules get fairly enforced."

From The Cheating Culture:  p. 263 "[We need] a  new social contract. Everyone has a say in how the rules get made. Everyone who breaks the rules suffers the same penalties."

The Sarbanes-Oxley prohibits retaliation against whistleblowers; in addition, some companies in attempt to promote democratic management and stave off unfairness and potential lawsuits promote the concept of "voice."

From Leadership is an Art, by Max DePree: Herman Miller Company provides -

"The Right to Appeal.  We need to build into our group structures a non-threatening avenue of appeal. The purpose of this is to ensure against any arbitrary leadership that may threaten any of a person's rights we have been discussing. One of the most important responsibilities of leaders is to work hard at offering these rights to those we lead."
 

Sexual Harassment

Sexual harassment may be tolerated in a company that only values results, and not the means in which they were obtained.

EEOC's definition of sexual harassment:   "unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when submission to or rejection of this conduct explicitly or implicitly affects an individual's employment,
unreasonably interferes with an individual's work performance, or creates an intimidating, hostile, or offensive work environment." http://www.eeoc.gov/laws/types/sexual_harassment.cfm


In a "quid pro quo" case, or one in which a tangible employment action is taken, the Supreme Court has decided that supervisors are liable regardless of whether the managers
had knowledge of the supervisor's actions. In a hostile environment case, a company can defend itself if it can prove it had an avenue of recourse that the employee failed to utilize Source:  Nation's Business, 1998

Definition of quid pro quo vs. hostile environment harassment; also, check out "hidden harassment"

Example of quid pro quo sexual harassment: A junior due for promotion felt that he/she had to accept the affections of his/her manager.

scenario from Robbins & Coulter, 2005, p. 119


The landmark of Meritor Savings Bank vs. Vinson concerned the harassment of Michele Vinson by her boss, Mr. Taylor. http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/cochran604.htm

Upon hearing the case, the Supreme Court decided (among other rulings) the following:

  1. Unwelcome sexual advances that create a hostile or offensive work environment
    constitute discrimination based on sex and are a Title VII violation.
  2. The burden is not upon the employee to show resistance

Ethical stance should pertain to layoffs as well

How would you want your company to tell you that you are being laid off?
 Tips for Handling Layoffs: http://www.hrmguide.net/usa/layoff_tips.htm

WARN:  Worker Adjustment and Retraining Notification mandates that advance notification (60 days prior in writing) must be given in the case of a plant closing (at least 50 or more terminations of full time employees), or in the case of a mass layoff, in which 50 full time employees and at least 33% of the full time employees at a "single site of employment," or 500 employees worldwide experience terminations.  Source: SHRM Legal Report, March-April, 2002.

WARN and Inacom: http://www.bizjournals.com/eastbay/stories/2002/02/11/story2.html

Alternatives to layoffs: 

  1. delaying or freezing raises, cutting bonuses, cutting salaries
  2. higher deductibles and larger co-payments in healthcare
  3. cutting back matching contributions to 401K plans
  4. Reduction of perks
    Source:  A Smarter Squeeze, BusinessWeek, 2001

Also:

  1. Voluntary early retirement
  2. Voluntary separation
  3. Lincoln Electric and the "change your spots" program
  4. Virgin Atlantic Airways career breaks
  5. Increase in variable pay

Check out  Help in Making Those Tough Layoff Decisions in ABI Inform electronic database
 [Supervisory Management, Jan 1990, Vol. 35, Iss. 1; p. 3 (1 page)].


Decision Making Techniques

Cost of a Disengaged workforce


Here Come the Duppies

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