BUSINESS ETHICS
DENIS COLLINSEDGEWOOD COLLEGE
WILEYJohn Wiley & Sons, Inc.
TABLE OF CONTENTS
Part One: Background 1
CHAPTER 1Unethical Behaviors in Organizations and Human Nature
Daily Occurrence of Ethical Dilemmas 5
Unethical Behaviors at Work 6
Extent 6
Managers as Victims 7
Profession and Industry Issues 8
Operation Areas 10
Costs Associated with Unethical Behaviors 10
Legal Costs 1 1
Employee Theft 1 2
Monitoring Costs 1 3
Reputation Costs 1 3
Abusive Treatment Costs 1 3
Recruitment and Turnover Costs 14
Competitive Advantages of Ethical Organizations 14
Tips and Techniques 16
Best Practice in Use 1 7
Let's Build a Building 1 8
Human Nature 1 8
Born with Prior Knowledge of Right and Wrong 19
Born Good 19
Born with Inherited Sin 19
Born Morally Neutral 20
Cognitive Development 20
Stages of Moral Development 21
Lies and Cheating 24
Why Do Good People Behave Unethically? 26
Unintended Unethical Behaviors 27
Choosing Between Competing Values 27
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Intentional Unethical Behaviors 28
Failure to Report Unethical Behaviors 30
Summary 31
KeyWords 31
Chapter Questions 31
In the Real World: Enron 31
Ancillary Materials 32
Notes 33
CHAPTER 2An Historical Perspective on Business Ethics 39
Economic Growth and Business Ethics in Precapitalist America 41
Christopher Columbus's Arrival 41
Roanoke and Jamestown Settlements 42
Plymouth Settlement 42
Buildup to the Revolutionary War 43
Freedom, Rights, and the Ethics of Capitalism 44
Adam Smith's Capitalism 45
Smith on Labor Issues 46
Economic Growth under Capitalism 4 7
The Industrial Revolution 47
New Laws: Antitrust, Charters, and Liabilities 48
Labor Issues 49
Slavery 4 9
Strikes and Labor Unions 50
Let's Build a Building 52
• Wages and Compensation 53
Best Practice in Use 56
Further Expansion of Stakeholder Rights 57
Federal Sentencing Guidelines 58
B Corporation 60
The Optimal Ethics Systems Model 62
Tips and Techniques 63
Summary 64
KeyWords 65
Chapter Questions 65
In the Real World: Enron 65
Ancillary Materials 66
Notes 66
Part Two: Getting Everyone on Board 71
CHAPTER 3Hiring Ethical People 73
Importance of an Ethics Screen 74
The Six-Step Ethics Job Screen Process 75
Step 1: Ethics Screen Notice 76
Best Practice in Use 76
Step 2: Legal Ground Rules 77
Title VII of the Civil Rights Act 78
Disparate Impacts 78
Affirmative Action 79
Other Legal Issues 80
Step 3: Behavioral Information 81
Resumes 81
Reference Checks 82
Tips and Techniques 83
Background Checks 84
Integrity Tests 85
Let's Build a Building 86
Step 4 : Personality Traits and Related Characteristics 87
Conscientiousness 88
Organizational Citizenship Behavjor 89
Social Dominance Orientation and Bullying 91
Mental Disability Tests 92
Step 5: Interview Questions 93
Previous Ethical Dilemmas 93
Visual Lie Detection 94
Realistic Job Previews 94
Step 6: Post-Interview Tests 94
Drug Testing 95
Polygraphs 95
Summary 98
KeyWords 98
Chapter Questions 99
In the Real World: Enron 99
Ancillary Materials 99
Notes 100
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XXII
CHAPTER 4Codes of Ethics and Codes of Conduct 105
Difference between a Code of Ethics and a Code of Conduct 107
Purpose and Importance of Codes 107
Demonstrate Managerial Concern for Ethics 108
Convey a Particular Set of Values and Obligations 109
Meet Legal Requirements and Industry Trends 1 10
Positive Impact on Employee Behaviors 1 1 1
Code of Ethics Content 1 1 1
International Codes 1 1 2
Creating a Code of Ethics 1 15
Let's Build a Building 1 17
Connecting Code of Ethics to Strategic Planning 1 17
Code of Conduct Content 1 20
Tips and Techniques 1 21
Code of Conduct Relevancy 1 21
Business Gratuities 1 22
Email 122
Best Practice in Use 123
Implementing an Effective Code Communication Strategy 1 24
Annual Code of Ethics Assessment 1 25
Summary 128
Key Words 1 29
Chapter Questions 1 29
In the Real World: Enron 129
Ancillary Materials 1 30
Notes 1 31
CHAPTER 5Ethical Decision Making 135
Ethical Behavior Model 1 36
Individual Characteristics (A) 1 39
Ethical Beliefs and Sensitivities (B) 140
Ethical Intuitions (C) 140
Theory of Planned Behavior (D) 142
Issue's Moral Intensity (E) 143
Organization Characteristics (F) 144
Ethical Intentions (G) 144
Rational Ethical Decision Making (H) 145
Rotary International's Four-Way Test 146
Raytheon's Ethics Quick Test 146
Best Practice in Use 147
A Systematic Rational Ethical Decision-Making Framework 147
The Six Ethical Theories 149
Let's Build a Building 150
Reaching a Moral Conclusion 1 58
Persuading Others 161
Tips and Techniques 162
Ten "Ethical Hazard Approaching" Signs 163
Summary 164
Key Words 164
Chapter Questions 164
In the Real World: Enron 164
Ancillary Materials 165
Notes 166
CHAPTER 6Ethics Training 169
Building Trust and an Ethical Culture 170
Extent of Ethics Training 171
Who to Train 1 72
Web-Based Ethics Training 172
The Workshop Facilitator 173
Framing the Training Workshop 174
Ethics Training Options 175
Ethical Culture Assessment 176
Code of Conduct Analysis 178
Code of Conduct Content 1 78
Applying the Code of Conduct to Specific Situations 179
Best Practice in Use 179
Outcome of Code of Conduct Violations 1 80
Typical Behaviors Experienced 1 80
Let's Build a Building 1 81
Apply the Systematic Rational Ethical Decision-Making Framework 1 82
Tips and Techniques 1 82
Create Business Ethics Scenarios for Discussion 1 84xxiii
Fraud and Theft Exploration 1 85
Level of Moral Development Analysis 1 87
Ethics Personality Measures 1 87
Benchmark to an Ideal Employee 1 89
Work as a Calling 192
Assessing the Ethics Training Workshops 192
Summary 193
Key Words 194
Chapter Questions 194
In the Real World: Enron 194
Ancillary Materials 195
Notes 196
CHAPTER 7Respecting Employee Diversity 201
Four Dimensions of Diversity 202
Permanent Dimension 203
Evolving Dimension 204
Personality Dimension 204
Organizational Dimension 204
History of Ethnic and Religious Diversity and Discrimination 205
Population Diversity Growth 205
Discriminatory Employmept Practices 206
Illegal (Undocumented) Immigrants 206
Self-Categorization 207
Workplace Discrimination 207
Gender Discrimination Issues 208
Race and Ethnicity Discrimination Issues 21 1
Religious Discrimination Issues 21 2
Age Discrimination Issues 212
Disability Discrimination Issues 21 3
Sexual Orientation Discrimination Issues 214
Harassment 215
Dating, Sexual Harassment, and Hostile Work Environment 215
Let's Build a Building 216
Retaliation for Discrimination Claim 217
Competitive Advantages of Diversity Management 217
Best Operational Practices for Managing Diversity 21 8
Best Practice in Use 219xxiv
Implementing a Diversity Initiative 220
Diversity Training 221
Diversity Discussion Guidelines 222
Tips and Techniques 223
Diversity Training Exercises 223
Who Are You? 224
Dominant Group and Subordinate Group Awareness 224
The Dominant Group's Status 225
Implicit Attitude Test (IAT) 226
Experiences Being Prejudged 227
Individual Uniqueness and Commonalities 227
Sexual Harassment 227
Communication Style 228
Summary 230
KeyWords 230
Chapter Questions 230
Ancillary Materials 230
In the Real World: Enron 231
Notes 232
Part Three: Daily Internal Operations
CHAPTER 8Ethics Reporting Systems 239
237
Employee Silence on Ethical Misconduct 240
Extent of Employee Silence 241
Reasons for Employee Silence 242
Ethically Approachable Managers 245
Ethics & Compliance Officer 247
ECO Duties and Skills 247
Tips and Techniques 248
Managing an Internal Reporting System 249
Ombudsperson 250
Best Practice in Use 251
Chaplains 251
Let's Build a Building 252
Assist Lines 252
Types of Inquiries 253
Effective Assist Lines 253
How an Assist Line Works 254 XXV
Whistle-blowing 255
When to Blow the Whistle 255
The False Claims Act 256
Reporting Tax Fraud 258
Whistle-blower Protection Laws 258
Sarbanes-Oxley Act of 2002 (SOX) 259
Negative Outcomes for Whistle-blowers 260
. Summary 260
KeyWords 261
Chapter Questions 261
-In the Real World: Enron 261
Ancillary Materials 262
. Notes 263
CHAPTER 9Managers as Ethical Leaders and Role Models 267
Managers as Ethical Role Models 269
Role Modeling 269
Stage of Moral Development and Ethical Role Models 270
Personal Integrity 271
Managerial Power and Leadership Styles 272
Exercise of Power 272
Authoritarian Leadership-Style 272
Participatory Leadership Style 273
Ethical Leadership 274
Ethical Leadership Survey 275
Tips and Techniques 276
Virtue Ethics Survey 276
Servant Leadership 278
Best Practice in Use 279
Employee Feedback 279
A Great Place to Work 280
Let's Build a Building 281
Organization and Work Goals 282
Holistic Organizational Goals 282
Stretch Goals 282
Goal Setting 283
Stress Management 284
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Employee Performance Appraisals 285
Unethical Behaviors 286
Living Up to the Code of Ethics Performance Appraisals 287
Ideal Employee Attitudes and Behaviors Performance Appraisals 288
Collection and Evaluation Issues 289
Performance Appraisal Feedback 290
Disciplining Work Rule Violations 291
Major Infractions 291
Minor Infractions 292
Forgiveness 293
Summary 294
Key Words 294
Chapter Questions 294
In the Real World: Enron 295
Ancillary Materials 295
Notes 296
CHAPTER 1 0Engaging and Empowering Ethical Employees 301
Extent of Employee Engagement 303
Engaging Employees 304
Human Needs 304
Job Satisfaction 306 /
Organizational Justice 307
Unethical Bullies 308
Meaningful Work 309
Measuring Employee Engagement 310
Employee Empowerment 31 2
Best Practice in Use 31 2
Who to Empower? 31 2
Measuring a Manager's Empowerment Behaviors 314
Let's Build a Building 316
Empowering Through Teams 316
Empowering Effective Teams 316
Open Book Management 319
Tips and Techniques 320
Appreciative Inquiry 320
Daily Performance Reflections 322
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Empowering Through Group-Based Financial Incentives 322
Scanlon-Type Gainsharing Plans 322
Profit Sharing 324
Stock Option and Stock Purchase Plans 324
Employee Stock Option Plans (ESOPs) 325
Cooperatives 326
Summary 327
KeyWords 327
Chapter Questions 327
In the Real World: Enron 327
Ancillary Materials 328
Notes 329
Part Four: Being a Good Citizen 333
CHAPTER 1 1Environmental Management 335
Environmental Trends and Climate Change 337
Environmental Trends 337
Climate Change 338
Climate Change Impacts 339
Environmental Organizations 340
Government and Market Responses 341
Government Regulation 341
International Agreements 342
Cap and Trade and Climate Exchanges 343
Other Efforts 344
Competitive Advantages of Being Eco-Friendly 345
Going Green Examples 346
Walmart 346
Green Business Parks 347
Going Green Actions 348
Tips and Techniques 349
Let's Build a Building 351
Managing the Environmental Change Process 352
Green Mission Statement 354
Green Suppliers 355
Best Practice in Use 356
Environmental Management System (EMS) 357
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Environmental Risk Assessment 358
The Natural Step (TNS) Framework and Cost Reductions 359
Product Packaging and Design 361
Green Buildings 361
Environmental Performance Indicators and Sustainability Reporting 363
Carbon Offsets and Green Philanthropy 364
Summary 364
KeyWords 365
Chapter Questions 365
In the Real World: Enron 365
Ancillary Materials 366
Notes 367
CHAPTER 1 2Community Outreach and Respect 373
Extent of Social Responsibilities 374
Work-Life Balance 376
Business Case for Community Involvement 377
International Corporate Citizenship 379
Double Standards Problem 379
United Nations Global Compact Principles 380
Managing Stakeholders 382
Interpenetrating Systems Model 382
Multiple Stakeholder Demands 384
Stakeholder Dialogues 385
Philanthropy and Volunteerism 387
Let's Build a Building 388
What to Give 388
Giving Money 389
Giving Products or Services 389
Tips and Techniques 390
Giving Skills 390
Giving Job Opportunities 391
Social Entrepreneurship 392
To Whom to Give 392
Reactive Giving 393
Outsource Giving 393
Strategic Philanthropy 394
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Community Involvement Management Process 398
Community Involvement as Employee Training 399
Best Practice in Use 400
Networking 401
Community Reputation Assessment 402
Social Performance Reporting 403
Summary 404
•KeyWords 404
Chapter Questions 404
In the Real World: Enron 405
Ancillary Materials 405
Notes 406
Index 1-1