understanding business ethics 2 nd edition © 2014 sage publications, inc. chapter 7 decision making...

Understanding Business Ethics 2nd Edition © 2014 SAGE Publications, Inc.Understanding Business Ethics 2nd Edition © 2014 SAGE Publications, Inc.

Chapter 7Decision Making and Human Resource Issues

Understanding Business EthicsStanwick and Stanwick

2nd Edition

Understanding Business Ethics 2nd Edition © 2014 SAGE Publications, Inc.

The Triangle Shirtwaist Factory Fire: How Tragedy Can Create Change

• The Triangle Shirtwaist Factory– Women worked 14 hours a day, six days per week for

$2 a day or less.– On October 4, 1909, the workers went on strike for

better working conditions, including shorter hours, more pay, and the ability to take breaks during the day.

– The workers went back to work after the owners agreed to concessions related to pay and work hours

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• The Triangle Shirtwaist Factory– On March 25, 2011, someone accidentally dropped a

lit cigarette that caught fire on the eighth floor of the building.

• The factory floor was on the ninth floor and the owners offices were on the tenth floor

– The owners were able to escape the fire, but in the end a total of 146 people died during the fire due to the building not having sufficient adequate fire escape systems that would have saved the lives of many of the workers.

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• The Triangle Shirtwaist Factory– This fire became the “final straw” in the belief that

business owners can regulate themselves for the good of the workers.

– It created a fundamental shift in the government’s role in protecting the rights and safety of the workers.

– The federal government used this focus of worker reform to pass the National Labor Relations Act, also called the Wagner Act, in 1935 protecting the rights of workers and also allowing them to organize into unions.

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Ethical Decision Making

• Kohlberg’s Six Stages of Moral Development– Stage One – Obedience and Punishment Orientation

• In this stage, the individual makes moral decisions based on the consequences and repercussions of their actions.

– Stage Two – Instrumental Purpose and Exchange• In this stage, the individual interprets the rules to

determine whether they are beneficial to the individual.

– Stage Three – Interpersonal Accord, Conformity, Mutual Expectations

• In this stage, interpersonal relations and mutual respect impact the decision making process of the individual.

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Ethical Decision Making

• Kohlberg’s Six Stages of Moral Development– Stage Four – Social Accord and System Maintenance

• In this stage, decisions are made based on the obligations and duties that have been accepted by the individual.

– Stage Five – Social Contract and Individual Rights

• In this stage, the belief is that since individuals may have a different set of values it is important to view rules relative to the group which must accept them.

– Stage Six – Universal Ethical Principles

• In this stage, the individual is governed by his or her own chosen ethical principles.

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The Role of Emotions in Moral Decision Making

• Decision makers use heuristics or rules of thumb in order to help facilitate the decision making process.– Moral luck also has a role in moral decision

making.• Three categories of moral luck

– Resultant luck– Circumstantial luck– Constitutive luck

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Rationalizing Unethical Behaviors

• Ethics is about being and doing the right thing, not just presenting the right idea.– The Institute of Business Ethics has identified

three simple ethical tests to use for a business decision:

• Transparency• Effect• Fairness

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Rationalizing Unethical Behaviors

• Ethical Tests to use for a business decision:– Transparency – refers to deciding if one accepts having

others know what one has decided– Effect- refers to determining who the decision affects or

impacts– Fairness – refers to determining if the decision would be

considered fair by those affected by it• Discretionary actions (those you cannot change) and

nondiscretionary actions (laws and regulations, public and employee safety, truthfulness of records and statements)

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Texas Instruments Ethics Test

1. Is the action legal?2. Does it comply with our values?3. If you do it, will you feel bad?4. How will it look in the newspaper?5. If you know it’s wrong, don’t do it.6. If you’re not sure, ask.7. Keep asking until you get an answer.

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Interactionist Model of Ethical of Ethical Decision Making

• Linda Trevino identifies the critical individual variables as the following:– Ego strength – the strength of conviction or self-

regulation by the individual.– Field dependence – refers to the ability of using

external information to help resolve an ambiguous situation.

– Locus of control – refers to the individual’s perception of how much control he or she has over any activity or event.

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Ethical Decision Making and Moral Intensity

• Thomas Jones argues that the level of moral intensity impacts the ethical decision making process.– Moral intensity refers to the extent in the severity of

the moral issues.• There are a number of components of moral

intensity.

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• Components of moral intensity– Magnitude of consequences – relates to the

aggregate of the harm or benefit done to the victims or beneficiaries based on the moral decision made by the manager.

– Social consensus – refers to the degree in which society would agree that the act is either good or evil.

– Probability of effect – refers to the decision maker’s perception of the probability of the act will take place and the probability that harm or benefit will impact the stakeholders of the firm.

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• Components of moral intensity– Temporal Immediacy – refers to the amount of time

that will take place between when the decision is being made and the consequences of the action.

– Proximity – the feeling of closeness or nearness the decision maker has with the individuals impacted by the moral dilemma.

– Concentration of effect – occurs when a relatively small number of people with a large stake in the action of the firm are impacted by the decision.

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The Role of Power and Influence in Ethical Decisions

• Managing Power– To use power in an ethical manner, two standards

must be met.• The first concerns power being exercised to

benefit others who have granted the decision maker the power with the expectation that the decision maker will serve others.

• The second standard is that the power conforms to both the legal and accepted cultural standards of what is considered to be ethical behavior.

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The Role of Power and Influence in Ethical Decisions

• Influence– Can be defined as the ability to change the viewpoint

of another person based on verbal and nonverbal actions.

– Can be used ethically if the adjustment of the viewpoint of another person results in both parties achieving a beneficial result.

– An unethical use of influence can occur when manipulation is used to alter the viewpoint of another person.

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Machiavellianism Approach to Decision Making

• Niccolo Machiavelli published his book, The Prince, in 1532.– Describes how a prince is able to obtain and

maintain his power– Described the perfect leader as one who was

able to manipulate, was bold in his actions, and was stealthy when he needed to be.

– “It is better to be feared than to be loved.”

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Human Resource Issues

• Ethical Climate, Employee Commitment, and Job Satisfaction– Ethical climate – a strong ethical climate positively

reinforces the positive aspects of the employee’s job.

– Employee commitment – based on the ability of employees to be committed to the goals and values of the firm which result in remaining loyal to the firm

– Job satisfaction – the level in which the employee is pleased with the achievement and appraisal of his or her job performance.

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• The Role of Workplace Diversity– Task-related diversity – based on having employees

with different educational and or professional backgrounds.

– Traits and value-diversity – relates to diversity in personalities, values, or their vision of the future course of the firm.

– Demographic diversity – relates to having employees with different genders, different ages, different ethnic backgrounds, and different belief systems.

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Human Resource Issues• Ethical Climate and Organizational Misbehavior

– Organizational misbehavior or misconduct – any behavior by an employee or group of employees that defies and/or violates the organizational norms, values, or standards of proper conduct.

• Classified into three different types– Type S – misbehavior that benefits oneself

– Type O – misbehavior that is intended to benefit the organization

– Type D – misbehavior which is intended to inflict damage to the organization

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• Four categories of deviant or misbehavior– Production deviance – include such actions as

pretending to be sick to miss work and using firm equipment for personal use.

– Political deviance – includes actions such as acting in an uncivilized manner and accusing and blaming the wrong people when mistakes are made.

– Property deviance – includes actions such as stealing money or material items from the firm and accepting bribes and/or kickbacks.

– Personal aggression – includes actions such as physical and verbal aggression and a boss refusing to provide resources when promised.

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Sexual Harassment and Sexual Discrimination

• Sexual harassment will make an ethical climate toxic and unworkable.– The principle law that makes sexual harassment a

criminal activity is Title VII of the Civil Rights Act of 1964.

– The EEOC defines two types of sexual harassment• Quid Pro Quo- an arrangement between the harasser and

the victim where the victim will provide a sexual favor in return for a job favor such as a promotion or bonus.

• Hostile Work Environment – within a hostile work environment, the victim will either report the environment or attempt to move to a different firm which does not have a hostile work environment.

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Questions for Thought1. Describe the similarities and

differences between the two studies conducted at Yale and Stanford.

2. Sexual harassment is a critical area for misbehavior in companies. Can a company eliminate sexual harassment? Why, or why not?

3. Diversity is an important issue in all organizations. What is the importance of addressing diversity and how can diversity be achieved?

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understanding business ethics 2 nd edition © 2014 sage publications, inc. chapter 7 decision making...

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