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Organizational Behavior

Chapter 2 The Role of Ethics in Decision Making
1. Contemporary Business Ethics
a. Ethics and Society- our diverse society formed from many ethnic backgrounds, races, and religions resulting in few shared ethical values to guide behavior

a.i. Public Education and Family Structure- decline in public education and family structure as sources for ethical teaching

a.ii. Economic Interdependence- increasing economic interdependence promotes concerns about business ethics a.iii. News Media and the Internet- extensive coverage of business decisions and their impact on society makes us more aware than ever of failure of business ethics

b. Ethics and Government- changes in society have been accompanied by changes in the role of government. When business fail to make ethical decisions governments may step in resulting in business leaders becoming increasingly concerned with business ethics because they want to limit the amount of government regulation. 2. The Nature of Ethics

a. Ethics and Morality- sharing of moral values promotes social cooperation and is a significant means of social control a.i. Morality- the collection of values that guides our behavior a.ii. Ethics- a systematic statement of right and wrong together with a philosophical system that both justifies and necessitates rules of conduct b. Ethics and Law- both consist of rules to

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guide conduct and foster social cooperation; both deal what is right and wrong

b.i. Society’s ethical values may become law through legislation or court decisions, and obedience to law is often viewed as being ethically correct b.ii. The legal system is an institution of the state unlike ethics

b.iii. Motivation to observe ethics comes from within

b.iv. Motivation to observe the law comes from outside the individual in the form of state sanctions 3. Two Systems of Ethics
a. Formalism- an approach to ethics that affirms an absolute morality a.i. A particular act is in itself right or wrong, always and in every situation a.ii. Primarily a duty-based view of ethics

a.iii. Duty- moral obligation
a.iv. Categorical imperative- emphasis on consistency; you have a moral duty to act in the way you believe everyone should act a.v. Social Contract theory- concerns itself with how to construct a just society given the many inequalities of wealth, knowledge, and social status

b. Consequentialism- concerns itself with the moral consequences of actions rather than with the morality of the actions themselves b.i. Utilitarianism- the dominant form of consequentialism; judges actions by usefulness, by whether they serve to increase the common good; the end justifies the means

b.ii. Protestant Ethic- the importance of the individual; each person had the means to address God personally; religion provided the motivation to hard work and achievement b.ii.1. decline of this type of ethics has resulted in a focus on consequentialism;

c. Comparing the Two Ethical Systems

c.i. Formalists and consequentialists can arrive at the same conclusion for an ethical curse of action, but they use different evaluation processes. c.ii. Formalists think secret monitoring treats employees only as a means to the end of increasing organizational efficiency and does not respect their self-worth as individuals. Conclusion: Secret monitoring is unethical so explaining the problem to the employees and asking for their consent is the ethical action to take c.iii. Consequentialists do not think the act of secret monitoring itself is ethically neither right nor wrong. Then end result is ethically important. Secret monitoring is useful in improving productivity, but the punishment of wrongdoing will reveal to the employees that their e-mail has been secretly monitored resulting in a breach of trust that can lower employee morale and lessen employee loyalty to the company which can cause productivity to fall. Conclusion: explain the problem to the employees and ask for their consent to monitor all e-mail messages 4. Sources of Values for Business Ethics

a. Legal Regulation- a significant source of values for business ethics. At least five major ethical rules can be drawn from the law a.i. Respect for the liberty and rights of others
a.ii. The importance of acting in good faith- all sales of goods must be carried out in good faith, meaning “honesty in intent” a.iii. The importance of exercising due care-derives from society’s expectations about how fair and reasonable actions are a.iv. The importance of honoring confidentiality-

a.v. Avoidance of conflicts of interest
b. Professional Codes of Ethics
b.i. Self-regulation-codes not enforced by the state, but have sanctions to back them up by professional organizations that use them c. Organizational Codes of Ethics
c.i. Few industrywide codes of ethics, so businesses have adopted ethical codes at the individual organization level; also referred to as Codes of Conduct c.ii. Organizational codes of business ethics should cover:

c.ii.1. Fundamental honesty and adherence to the law
c.ii.2. Product safety and quality
c.ii.3. Health and safety in the workplace
c.ii.4. Conflicts of interest
c.ii.5. Fairness in selling/marketing practices
c.ii.6. Financial reporting
c.ii.7. Supplier relationships
c.ii.8. Pricing, billing, and contracting
c.ii.9. Trading in securities/using inside information
c.ii.10. Payments to obtain business/Foreign Corrupt Practices Act c.ii.11. Acquiring and using information about others
c.ii.12. Security
c.ii.13. Political activities
c.ii.14. Protection of the environment
c.ii.15. Intellectual property/proprietary information
d. Individual Values
d.i. Ultimate source of ethical values for business decision making comes from the individual d.ii. Five questions that you can ask yourself that will help you explore your ethical values before making personal or business decisions about what to do: d.ii.1. Have I thought about whether the action I may take is right or wrong? d.ii.2. Will I be proud to tell of my action to my family? To my employer? To the news media? d.ii.3. Am I willing for everyone to act as I am thinking of acting? d.ii.4. Will my decision cause harm to others or to the environment? d.ii.5. Will my actions violate the law?

5. Achieving an Ethical Business Corporation
a. The Obstacles
a.i. The Emphasis on Profit
a.ii. The Effect of the Group- individuals in a large group feel less responsibility for what happens in the group than they do for what happens in their individual lives. (e.g. “I did it because everyone else did it”) a.iii. The Control of Resources by Non-owners-top management of many corporations effectively possess and control vast resources that they do not own b. The Steps

b.i. Involve Top Management-to management must act as a role model for values it wishes corporate employers to share b.ii. Openness in Communication- corporate employees must be willing to talk with each other about ethical issues; openness promotes trust b.iii. Consideration of All Stakeholders- the many different groups in society b.iii.1. Stakeholder theory- ethical corporate behavior depends on managers who recognize and take into account the various stakeholders whose interests the corporation impacts c. The Rewards

c.i. Business plays a vital role in serving society and cannot isolate the impact of important business decisions from their social consequences d. The Morality of Property
d.i. Criticism of Property
d.ii. Support of Property
6. Property as a System of Personal Ethics
a. Types of problems that arise in business
a.i. The fairness of the employment contract in terms of pay and working conditions, both in the U.S. and internationally a.ii. Race, gender, religion, disability, sexual orientation, and national origin discrimination issues a.iii. Environmental and pollution problems

a.iv. Anti-competitiveness issues like price fixing
a.v. Marketing fairness involving advertising and other marketing strategies like marketing to children a.vi. Conflict between managerial self-interest
and what is best for shareholders and other stakeholders a.vii. Conflicts of interest in accounting when conducting an audit of the company that is paying you

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