copyright © houghton mifflin company. all rights reserved.5-1 chapter 5 ethical decision making and...

Copyright © Houghton Mifflin Company. All rights reserved.

5-1

Chapter 5

Ethical Decision Making and Ethical Leadership


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Understanding the EthicalDecision-Making Process

The first step in ethical-decision making is to recognize that an ethical issue requires an individual or work group to choose among several actions that various stakeholders inside or outside the firm will ultimately evaluate as right or wrong.


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Framework for Understanding Ethical Decision-Making in Business


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Ethical Issue IntensityEthical issue intensity is the perceived relevance or importance of an ethical issue in the eyes of the individual, work group, and/or organization.– Reflects the ethical sensitivity of the individual or

work group and triggers the ethical decision processPositive or negative incentives can affect the perceived importance of an ethical issue.Employees need education regarding potential problem areas.


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Individual Factors

How people resolve ethical issues in their daily lives is often based on values and principles learned through family socialization.In the workplace, ethical issues involve honesty, conflicts of interest, discrimination, nepotism (favoritism), and theft.The individual’s stage of cognitive development can affect conduct.


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Individual Factors

Individual factors include:– Gender– Education– Work experience– Nationality– Age– Locus of control


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Organizational Factors

Corporate culture: a set of values, beliefs, goals, norms and ways to solve problems that members (employees) of an organization share – Some corporate cultures support and reward

unethical behavior. – Ethical climate is a component of corporate culture.


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Ethical Climate The character or decision processes used to determine whether actions are ethical or unethicalConsists of corporate codes of ethics, top management actions, ethical policies, coworker influence, and the opportunity for unethical behaviorThe perceived ethics of the immediate work group has been found to be a major factor influencing ethical behavior.


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Significant Others The work group, which includes people such as peers, managers, and subordinatesHelp on a daily basis with unfamiliar tasks and provide advice and information formally and informallyHave more influence on daily decisions than any other factor


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Obedience to Authority

An aspect of influence that significant others can exerciseHelps us explain why many employees resolve business issues by simply following the directives of a superior


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Opportunity

Relates to permitting ethical or unethical behaviorResults from rewards and punishment and it plays a key roleRelates to the employee’s immediate job context ,where they work? Whom they work with? Nature of work?

Unethical behavior can be eliminated by establishing formal codes, policies, and rules that are enforced


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Business Ethics Evaluations and Intentions

Ethical dilemmas involve problem-solving situations in which decision rules are often vague or in conflict.Critical thinking plays a key role for solving problems.A person’s intentions along with the final decision on what action to take is the last step in the ethical decision-making process.If intentions and behavior are not consistent with ethical judgments, the individual may feel guilt.Most businesspeople will make ethical mistakes.


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The Role of Leadership in Corporate Culture

Leadership is the ability or authority to guide and direct others toward achievement of a goal.Leaders are key to influencing an organization’s corporate culture and ethical posture.Leadership styles influence many aspects of organizational behavior, including employees’ acceptance of and adherence to organizational norms and values.


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The Role of Leadership in Developing an Ethics Plan


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Leadership Styles

Coercive leaders: demand obedient and focus on achievementAuthoritative leaders: The most effective styles.Affiliative leaders : Relies on friendshipDemocratic leaders: Relies on participation Pacesetting leaders: relies on standards and rules ,proceduresCoaching leaders: Developing skills, delegate responsibilities.


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Leadership

The most successful leaders do not rely on one style of leadership but alternate their technique based on the characteristics of the situation.


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Types of Leaders

Transactional leaders attempt to create employee satisfaction through negotiation, or bartering for desired behaviors or levels of performance.Transformational leaders strive to raise employees’ level of commitment and to foster trust and motivation.Transformational ethical leadership is best suited for organizations that have higher levels of ethical commitment among employees and strong stakeholder support for an ethical culture.


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Habits of Strong Ethical Leaders

1. Ethical leaders have a strong personal character.2. Ethical leaders have a passion to do right.3. Ethical leaders are proactive.4. Ethical leaders consider stakeholders’ interests.5. Ethical leaders are role models for the organization’s

values.6. Ethical leaders are transparent and actively involved

in organizational decision-making.7. Ethical leaders are competent managers who take a

holistic view of the firm’s ethical culture.

copyright © houghton mifflin company. all rights reserved.5-1 chapter 5 ethical decision making and...

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