Managing to be Ethical: Debunking Five Business Ethics Myths

Linda Klebe TrevinoMichael E. Brown

Presented By

Robert Wood

AUTHORS

Linda Klebe TriviñoProfessor of Organizational Behavior The Smeal College of Business Administration , Penn StateEmail: ltrevino@psu.edu 411

Ph.D. in Management, 1987, Texas A & M University M.L.S., 1972, Rutgers University B.A., French language and literature, Douglass College, Rutgers University, 1971

55 articles written, 4 books and numerous other publications.

Michael E. BrownAssociate Professor of ManagementPenn State E-mail: meb239@psu.edu

Myth 1It’s Easy to be Ethical

Ethical Decisions are Not Easy!• Consequentialist

How actions impact society? Good and Bad• Deontological

Looks at such principles as Justice and Rights• Virtue Ethics

The Moral actor’s own integrity is analyzed

Child Labor in Developing NationsGlobalization- Development in countries that have natural resources we want When employees “get back” at a the company they feel has wronged them

The Right Answer?In many real life situations the “right” or

“ethical” answer may not always be the easiest or best.

Moral Awareness

Many times, People do not think what they are facing is a moral dilemma.

This recognition of a moral issue starts when we realize the ethical nature of the problem

Moral Awareness

Ethical Recognition

Ethical Sensitivity

T.M. Jones- 2 dimensions of moral awareness

1. Magnitude of Consequence Does it really hurt anyone else?

2. Social Consensus • People generally agree its Ethically Problematic

At this point in the game it is all about wording.

Lawrence Kohlberg’s Theory of Cognitive Development

2. Moral JudgmentIs it Justifiable?

3. Moral MotivationIntention behind the act.

4. Moral CharacterGetting the Job Done. No matter what the obstacles

Pressures of the Workplace

A boss that wants results Going above the bosses head Telling colleagues the way they do business is unethical

“snitches get stitches” or at least no one talks to them.

“The reasons for their ostracism are not fully known, but they may have to do with humans’ social nature and the importance of social group maintenance.”

Myth 2Unethical Behavior in Business is Simply the

Result of “Bad Apples”

• Most people are a product of their surroundings.• The unethical behavior is condoned and

supported in the context it occurs– Direct Reinforcement– Benign Neglect

Myth 3Ethics Can be Managed Through Formal Ethics Codes and Programs

1991- U.S. Sentencing Commission created guidelines for organizations convicted of Federal Crimes

1. Written standards of conduct 2. Ethics Trainings3. Ethics advice 4. Systems for anonymous reporting

The most important factor is the perceived view of management as ethical.

Myth 4Ethical Leadership is Mostly about

Leader Integrity

Leaders have to be perceived as Ethical.1.Moral Person2.Moral Manager

Executive Ethical Leadership Reputation Matrix

WeakWeak StrongStrong

StrongStrong

WeakWeak

Moral PersonMoral Person

MoralMoralManageManage

rrHypocritical LeaderHypocritical Leader Ethical LeaderEthical Leader

Unethical LeaderUnethical Leader

Ethically neutral (silent) leaderEthically neutral (silent) leader

??

Myth 5People are Less Ethical Than They Used to be

The Talmud has sections on how to do business.

New technology makes cheating sometimes easier and look different than traditional methods.

Alan Greenspan“It is not that humans have become any more greedy than in generations past. It is the avenues to express greed have grown enormously.”

What Executives Can Do: Guidelines for Effective Ethics Management

1. Understand the Existing Ethical Culture2. Communicate the Importance of Ethical

Standards3. Focus on Reward System4. Promote Ethical Leadership Throughout

the Firm

References• Treviño, L., Hartman, L., & Brown, M. (2000). Moral person and moral manager: how executives develop a reputation for

ethical leadership. California Management Review, 42(4), 128-142. • Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct

development and testing. Organizational Behavior And Human Decision Processes, 97(2), 117-134. doi:10.1016/j.obhdp.2005.03.002

• Levine, C., Kohlberg, L., & Hewer, A. (1985). The current formulation of Kohlberg's theory and a response to critics. Human Development (0018716X), 2894-100.

• Rubin, R. S., Dierdorff, E. C., & Brown, M. E. (2010). Do Ethical Leaders Get Ahead? Exploring Ethical Leadership and Promotability. Business Ethics Quarterly, 20(2), 215-236.