CSr Exam 2

Erin's flashcards

Culture

guide thinking/behavior and practices within a group

shared beliefs

expectations

meanings

influence

Organization’s culture

communal expectations, norms, beliefs, values guiding behavior

separation thesis

Connecting culture with ethics means that normal ethical standards should not mix with business decisions.

compliance based culture

Refers to developing positive behaviors and routines for personal and professional growth, emphasizing adherence to rules as the primary responsibility of ethics.

Valued-based cultures

A corporate culture based on values and principles, rather than mere compliance with laws, is the prevailing model for ethical behavior.

Table 4.1

The evolution of compliance based programs into values-based programs

Compliance-oriented goals

include meeting legal and regulatory requirements, minimizing risks of litigation and indictment, and improving accountability mechanisms.

More evolved and inclusive ethics programs entail

• maintaining brand and reputation

• recruiting and retaining desirable workers

• unifying a firm’s global operation

• creating a better working enviroment

• doing the right thing as well as doing things right

Leader acts ethically above any tother consideration

stakeholders are guided by that role model

transformative or transactional leader methods

Encourage teams to take initiative and solve their own problems while building a culture of collaboration and trust.

code of conduct

enhances reputation and guide internal decisions with communication of values for the organization (once mission is determined)

Mission statement (corporate credo)

Inspiring core tenets establish guidelines for future decisions and articulate fundamental principles that guide all decisions without hindrance.

Developing mission and code

Why does the firm exist? What are its purposes? It articulates a clear vision and identifies steps for a cultural shift between stakeholders and organizations. Must believe its possible and achievable.

Guidelines for writing Ethics Code (Ethics resource center)

- Clearly define the code’s objectives.

- Gather input from all organizational levels.

- Stay updated on relevant laws and regulations.

- Write simply and avoid jargon.

- Address real-life questions and situations.

- Offer additional resources for guidance.

- Ensure the code is user-friendly for effective use.

whistleblowing

An individual internally or externally within an organization reports organizational wrongdoing to the public or to others in position of authority.

cultural integration

communication or culture (habits, vocab, attitudes)

incentives

whistleblowing

internal reporting mechanisms (ombudsman, confidential or anonymous)

Cultural integration methods for successful reporting

•- Leaders should model reporting wrongdoing.

- Leaders must explain their decision-making processes.

- Running drills for crisis management improves preparedness.

- Allow time for reflection to promote responsible decision-making.

- Continuously communicate values and expectations to all stakeholders.

Assessing and monitoring the corporate culture

- Improved resource allocation.

- Assessment of program alignment with organizational growth.

- Accurate measurement and reporting of positive results.

- Appropriate compensation for ethical behavior.

- Effective communication of the "tone at the top."

detecting toxic culture

- A lack of values signals issues within the organization.

- Warning signs can emerge across various areas.

- Poor management and communication of financial matters indicate trouble.

measuring impact of efforts to change culture

- Assess changes in employee perceptions.

- Use external audits and hotline data.

- Collect and analyze employee feedback on culture.

Mandating and enforcing culture

The US Sentencing Commission set mandatory Federal Sentencing guidelines for organizations affecting both individual and organizational defendants.

USSC minimal requirements of org’l due diligence

- Standards and procedures

- Board and executive responsibility; proper resources and authority

- Board oversight necessary

- Assign high-level personnel

- Regular reports from specific individuals to high-level personnel

- Preclusion from authority for prior misconduct

- Communication and training

- Monitoring, evaluation, and reporting

- Consistent incentive and disciplinary structures

- Response and modification mechanisms

Sources of Culture

• Leadership of controlled environment

• Control activities, info, and communication

• Review, assessment, ongoing monitoring

In 2010, the USSC lowered the penalties for compliance violations if the organization met the following four criteria:

- Program leaders report directly to the governing authority.

- The offense was detected internally before outside discovery.

- The offense was promptly reported to authorities.

- No one involved in the program condoned the offense.

Current environment of ethical issues in the workplace

• Treat employees well for a return (harmony, productivity, and innovation)

• Treat employees well out of a sense of duty (law, code of conduct, moral principles)

Defining the employment relationship

- Ethical issues emerge when a relationship forms between employer and employee.

- Valid contracts involve both legal and ethical parameters.

- Both parties must understand the contract terms.

- Agreed-upon benefits should be received by both.

- This reflects "informed consent."

- How free and voluntary is the decision to accept a job offer?

Right of due process

Employees have the right to protection against the arbitrary use of authority. While employers have power over employees, it must be used justly. Bullying and emotional abuse, particularly in the service sector, negatively impact employees.

EAW (employment-at-will)

- EAW states that, unless specified by a contract, all employees are "at will."

- Employers can fire employees at any time and for any reason.

- Employees can also leave at any time and for any reason.

- Thus, the freedom is mutual.

Due process and Just cause

- EAW serves as a management tool for efficient decision-making aimed at the greater good.

- Justice necessitates that management tools not harm others.

- The right to terminate employment is theoretically mutual, but power imbalances exist.

- Courts and legislatures have created exceptions to EAW through:

- Civil rights laws

- Labor laws

- Constitutional protections for employees

Exceptions to the doctrine of EAW

Key exceptions to the doctrine of EAW include:

- Bad faith or retaliatory termination violating public policy.

- Breach of the implied covenant of good faith and fair dealing.

- Breach of implied contract terms, like those in employee handbooks.

- Violations of promissory estoppel due to reliance on employer promises.

- Statutory exceptions, such as those under WARN or FMLA.

Defining employment

- Common-law agency test evaluates an independent contractor's control over work performance.

- IRS 20-factor analysis assesses employee vs. independent contractor status through various criteria.

- Economic realities test examines if a worker is economically dependent on the business.

Just Cause

A standard requiring employers to have fair cause before disciplining or terminating an employee.

- Default position: Courts favor the employer unless an exception is proven.

- Burden of proof: Lies with the dismissed employee to demonstrate unjust/illegal firing.

- Due process/just cause: Shifts the burden of proof to the employer.

Due process and Just Cause

- Due process issues arise in employment contexts.

- Fair treatment involves promotions, salary, and benefits.

- Performance appraisals impact decisions, warranting due process rights.

- Ethical questions remain about the fairness of employment-at-will (EAW) for stakeholders.

- Due process protects against arbitrary use of authority.

- Decision-makers should justify their choices ethically.

Health and Saftey

- Health and safety are valuable as both means to an end and ends in themselves.

- They possess intrinsic value in addition to instrumental value.

- Lost wages from a workplace accident represent instrumental value.

- The intrinsic value of a life lost is irreplaceable by financial means.

- No workplace can be entirely free from risk.

- Viewing health and safety as unattainable ideals makes it unreasonable to claim that employees have a right to a healthy and safe workplace.

OSHA cost-benefit analysis

Analysis uses economic criteria in setting standards and is ethically problematic because it may prioritize financial considerations over human lives and well-being.

The policy that has emerged by consensus in the U.S. is if risks have been reduced to the lowest feasible level and employees are fully aware of them, then the duty is done.

Global Workforce and Challenges

A basic set of moral standards should be guaranteed to all workers, regardless of culture, economic development, or resources.

The Ethical Trade Initiative is a coalition of corporations, unions, and voluntary organizations focused on improving worker conditions. It proposes voluntary standards for countries and organizations to adopt.

The case of child labor

- Exploitative work harms children too young for the workplace.

- High child labor rates are linked to low literacy and high morbidity from diseases (HIV/AIDS, malaria).

- Child labor perpetuates poverty across generations.

- Children may start working as young as 3 years old.

- Many work full-time in unhealthy conditions, limiting their education.

- Some are forced into "underground" jobs outside manufacturing.

- Legalizing child labor may reduce the number of working children.

Discrimination

- Employers can make decisions as long as they do not violate the Constitution, precedent, or specific statutes.

- There is a global debate on employee rights regarding discrimination.

- Employers advocate for autonomy in managing workplaces.

- Employees express concerns about unfair treatment and loss of power.

Diversity

- Diversity in a corporate environment includes various cultures, languages, ethnicities, races, genders, abilities, and social classes.

- It emphasizes values such as respect, tolerance, inclusion, and acceptance.

- Diversity in the workplace includes individuals from various backgrounds, promoting innovation and collaboration.

Conflicts may arise due to:

- Tension and anxiety from diverse differences.

- Work-related stress and cultural challenges.

- Difficulty integrating diverse viewpoints into existing corporate culture.

- Prejudgments based on differing cultural standards.

Efforts of multiculturalism

• Acknowledging and promoting diversity in the workplace can serve to both educate and encourage diversity-related benefits.

• The cost of ignoring diversity is high, in terms of lost productivity, but also in terms of legal liability.

Affirmative Action

A policy or a program that tries to respond to instances of past discrimination by implementing proactive measures to ensure equal opportunity today.

Affirmative action arises in three ways.

1. Through legal requirements of Executive Order 11246 to ensure equal opportunity.

2. A court requirement of "judicial affirmative action" to remedy a finding of past discrimination.

3. Voluntary affirmative action plans.

Legal constraints on Affirmative Action programs

- Policies must respect the rights of the majority of employees and cannot block their advancement.

- No positions can be reserved for women or minorities, nor can any quotas be established.

- Policies should not change employees’ legitimate expectations.

- Affirmative action should be temporary, aimed at achieving a balanced workforce.

Opponents to Affirmative Action

- Argue it can lower morale and create resentment by penalizing current employees for historical injustices.

- In 2003, the Supreme Court considered a "reverse discrimination" case from two white women claiming the University of Michigan Law School admitted minorities with lower LSAT scores.

- GM supported the university's admission policy in a "friend of the court" brief, which the court upheld.

- The Supreme Court also upheld a Michigan amendment banning affirmative action in public university admissions.

The right to privacy

the legal and ethical sources of protection for privacy in personal data.

Defining privacy

There are two key understandings of privacy:

1. The right to be "left alone" within a personal zone of solitude.

2. The right to control information about oneself.

Privacy is significant as it sets boundaries between individuals and defines individuality. Many argue that the right to be "left alone" is too broad for the workplace, making control of personal information a more practical definition. Ultimately, the choice between limitation and control reflects one’s understanding of privacy.

Ethical sources of a right to privacy

- The right to privacy stems from an individual’s autonomy and involves reciprocal obligations.

- If individuals expect their autonomy to be respected, they must also respect others'.

- In the workplace:

- Employees should respect their employer's goals and property.

- Employers must respect employees' rights, including privacy.

- Ethical analysis differentiates between:

- Hypernorms: Fundamental values across cultures.

- Moral Free Space: Values that are not hypernorms.

- Individual privacy is central to many hypernorms.

- Privacy is essential for a civilized society.

- Failing to protect privacy can threaten personal freedom.

Legal analysis of privacy using property rights perspectives

- Legal analysis of privacy offers insights through a property rights lens.

- "Property" includes an individual's life and non-procreative derivatives.

- Property rights dictate control over tangible and intangible assets, including personal information.

- Assumption of unrestricted personal information rights stems from the rules defining individual activities and returns.

Legal sources of a right to privacy

- Privacy is legally protected by the constitution, statutes, and common law.

- The Fourth Amendment protects public-sector workplaces from unreasonable search and seizure.

- The Electronic Communications Privacy Act (ECPA) of 1986 prohibits unauthorized access to stored communications, mainly impacting third-party monitoring (not employers).

- State privacy statutes may have limited or unclear application in the private sector.

- Intrusion into seclusion occurs when someone intentionally invades another’s private affairs in an offensive manner.

- Recent court decisions on monitoring depend on employee notification about potential monitoring.

- Invasion of privacy claims often rely on the employee’s reasonable expectation of privacy.

- Actual notice reduces the expectation of privacy; companies can monitor despite prior promises not to.

- Legal sources of privacy encompass constitutional protections, statutes, and common law.

- Only Connecticut and Delaware require employers to notify workers of monitoring.

- As of 2019, 26 states (plus Guam) prohibit employers from accessing employees' social media passwords.

Legal status of employee monitoring

- Telephone: Monitoring allowed for quality control; notice may be required by state law. Must stop if call is personal.

- Email: Employers can monitor emails, even if they claim otherwise. Privacy in password-protected accounts may influence legal outcomes.

- VM: Legal stance similar to email monitoring, not fully settled.

- Internet use: Employers can track and review use on provided equipment.

Global applications of privacy

- The EU’s General Data Protection Regulation (GDPR) complicates privacy protection.

- Companies must obtain permission to collect or share personal data.

- Clear explanations of data usage are required.

- Consumers have the right to review and correct their data.

- Heavy fines are imposed for violations.

- Data transfers to countries without adequate privacy laws are restricted.

EU’s privacy sheild

- U.S. intelligence must follow new limits and oversight.

- New watchdog for intelligence-related complaints.

- Companies self-certify and renew compliance annually.

- Public privacy policies must comply with EU law.

- Resolve complaints within 45 days.

- Update privacy policies to explain service access.

- Stricter rules on sharing Europeans’ personal data.

Global applications of privacy

- Legal uncertainty surrounds information gathering in employment.

- Ethics may offer guidance in these challenging areas.

- Employee privacy is violated when:

- Employers interfere with personal decisions irrelevant to the employment contract.

- Personal information unrelated to the contract is collected, stored, or used without employee consent.

- Employers must prove the relevance of personal decisions and information in question, as consent is crucial.

Information, privacy, and technology

Tech Businesses must consider stakeholder perceptions for effective decisions.

Key moral requirements for technology:

- Truthfulness: Ensure information is accurate.

- Privacy: Respect individuals’ privacy rights.

- Safety: Protect against vulnerabilities (e.g., theft).

- Accountability: Anonymity necessitates personal responsibility.

Managing employees through monitoring

- Employee monitoring is common in workplaces, facilitated by low-cost technology.

- Nearly 80% of large companies monitor emails and internet usage (American Academy of Management survey).

- Employees accept that their emails may be accessed by employers.

- Internet monitoring practices are evolving with the rise of social media.

- Concerns include employee productivity and the mix of personal and work lives.

- Biotracking technology and monitoring badges can be intrusive.

- Ethical issues can arise due to a lack of understanding of the technology involved.

- This ignorance may impact autonomy, information control, and personal obligations.

- Knowledge gap between those who understand technology and those who do not creates vulnerability.

- Technology provides unprecedented access to information, sometimes without recipients' awareness.

- Constant connectivity to work leads to new expectations and potential conflicts.

- Blurs boundaries between personal and professional lives.

- 88% of employees use social media daily; 18% check accounts more than ten times.

- Increases impersonal interactions.

- Informal communication (emails and texts) often results in carelessness.

Why do firms monitor technology usage?

- Employers should manage workplaces to:

- Place workers in suitable positions.

- Ensure affirmative action compliance.

- Administer workplace benefits.

- Monitoring employees can:

- Improve productivity by deterring inappropriate technology use.

- Protect proprietary information and prevent theft.

- Safeguard equipment and bandwidth.

- Reduce legal liability.

Monitoring employees through drug testing

- Employees argue that drug use is only relevant if it impacts job performance.

- Legalization of marijuana has led to complex workplace issues.

- Courts in some states may side with employees testing positive under certain conditions.

- Key challenge: determining when drug use occurred.

- Employers can still prohibit marijuana use at work, even where it's legal.

- Testing can be based on behavioral warning signs related to performance.

- Regular testing occurs both pre-employment (63% of companies) and during employment.

- Drug testing limits the job pool and may negatively affect growth and productivity.

Other forms of Monitoring

- Employers have limits on collecting information through tests (e.g., polygraphs, medical tests).

- Medical information is protected by the Americans with Disabilities Act and HIPAA.

- HIPAA requires consent to use "protected health information."

- Employers use various methods to gather employee information, including:

- Polygraphs, drug tests, surveillance, background checks, psychological testing.

- Increasing use of electronic monitoring.

- Genetic Information Non-Discrimination Act (GINA) prohibits discrimination based on genetic information and includes family medical history.

- Exceptions under GINA allow employers to collect genetic information for:

- Family Medical Leave Act (FMLA) compliance.

- Monitoring biological effects of workplace toxins.

- Collected genetic information can only be released under certain circumstances.

- EEOC clarifying guidelines (2010) provide a “safe harbor” for employers inadvertently receiving genetic information during lawful medical inquiries.

Business reasons to limit monitoring

Monitoring may constrain effective performance since it can:

•Cause increased stress and negatively impact performance.

•Cause injuries such as carpal tunnel syndrome.

•Lead to unhappy, disgruntled workers.

Employees claim that monitoring is an inherent invasion of privacy that violates their fundamental human right to privacy.

Balancing interests in monitoring ethically and humanely (Hawthorne effect)

- Inform workers when they are being monitored.

- Employees can maintain proper behavior during calls, even without preparation.

- Productivity increases when workers feel observed.

- Balance respect for individual dignity with employee accountability.

- Align monitoring programs with the organization's mission and maintain transparency to affected employees.

Parameters for a monitoring policy

- Banned in private areas (e.g., restrooms).

- Lmited to the workplace.

- Employees can access monitoring data.

- All monitoring must be disclosed in advance; no secret monitoring.

- Monitoring must serve a legitimate business purpose.

- Employers may only collect job-related information.

- A disclosure agreement about monitoring is required.

- No discrimination against employees for off-duty activities.

Philosopher Willian Parent 6 questions to ask if actions are justifiable or an invasion of privacy or liberty

1. What is the purpose of seeking undocumented personal knowledge?

2. Is this purpose legitimate and significant?

3. Is the knowledge relevant to the justified purpose?

4. Is privacy invasion the only or least offensive way to obtain it?

5. What restrictions or procedures limit privacy-invading methods?

6. How will the acquired personal knowledge be protected?

Regulation of off work behaviors

At-will employers must follow state statutes.

- Most businesses can't discriminate against smokers, though some encourage quitting.

- One state and six cities ban weight discrimination.

- Almost half the states have laws against marital status discrimination.

- Twenty-one states and D.C. prohibit discrimination based on sexual orientation.

- Employer defenses for rules must:

- Be related to job activities.

- Be a bona fide occupational requirement.

- Prevent conflicts of interest.

- Monitoring employee online communication involves:

- Legal uncertainties.

- Ethical decision-making challenges.

- Ethical considerations:

- Is seeking prohibited information (e.g., religion) outside a job interview acceptable?

- Laws vary by location.

(AMA) American Marketing Association definition of marketing

"an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."

Marketing ethics

examines the responsibilities of launching a product, promoting it to buyers, and facilitating exchanges.

Elements of marketing that raise important ethical questions

Production

Price

Promotion

Place

Ethical issues in marketing: prima facie (2 parties freely agree to an exchange that is ethically legitimate)

- Market exchange is ethically legitimate because of:

- Respect for autonomy

- Mutual benefit

- Ethical judgment is conditional due to:

- The transaction must be truly voluntary

- Informed consent is required

- Benefits may not always materialize

- Other values might conflict

Ethical marketing framework

• There must be respect for autonomy and a mutual benefit.

• Prima facie (informed, voluntary consent, no fraud, deception, or coercion)

When considering ethical issues in marketing, keep these points in mind:

- Respect for autonomy: Ensure participants are treated as free agents, not just a means to sales.

- Real benefits: Assess whether transactions provide genuine benefits.

- Impact on values: Consider how practices may affect fairness, justice, health, and safety.

Consent should be voluntary and informed; vulnerable consumers need extra protection due to product complexity and potential impulsive buying.

Responsibility for products: Saftey and Liability

Responsibility can mean the reason something happens, and it also involves being accountable for it.

•Contract law addresses product safety through legal and ethical implications.

•Tort law serves as a second approach to product safety.

•Strict liability is a third doctrine focusing on responsibility when harm occurs without fault.

Two approaches of contractual standards for product safety

- Caveat Emptor:

Informed buyer consent legitimizes purchases; businesses must deliver agreed goods and avoid deception.

- Implied Warranty of Merchantability:

Ensures products are suitable, shifting proof burden to producers; businesses often use disclaimers or limited warranties.

Tort standards for product saftey: Negligence

Negligence is a tort law concept for holding producers accountable.

- Defined as unintentional failure to exercise reasonable care.

- Ranks below "reckless disregard" and intentional harm.

- Contract law:

Duties owed are only those explicitly promised.

- Tort law: General duties are owed to others, even without explicit agreements.

- Negligence: Central to tort law. Neglecting reasonable care or vigilance leads to injury, highlighting the ethical challenges of foreseeing consequences and failing to prevent harm.

Tort standards for product saftey: Strict product liability

Producers own compensation to consumers for any and all harms caused by their products.

The legal doctrine of strict liability holds manufacturers accountable in such cases, as it raises unique ethical questions.

Ethical debates on Product Liability

- U.S. calls for product liability reform are common but not universally supported.

- The European Union uses strict liability standards.

- Critics argue that liability standards impose significant costs on businesses.

- Strict product liability is often seen as especially unfair.

- Defenders claim it incentivizes safer products and allocates costs effectively.

Ethical debates on product liability: Incentive argument VS. Accountability argument

Incentive argument

This misunderstands strict liability.

- Offers incentive only if the person could have acted differently.

- This implies the harm was foreseeable and the failure to act is negligent.

- Holding businesses liable for unforeseeable harms doesn’t incentivize better consumer protection.

Accountability argument: focuses on situations where no one is at fault.

- The rationale has a serious flaw.

- It suggests businesses can best handle damages.

- Many businesses have gone bankrupt due to product liability claims.

- Costs are ultimately passed down to consumers.

Ethical issues in Advertising

The ethical defense of advertising includes:

- Providing true information that enhances market efficiency and consumer choice.

- Principle-based ethics oppose manipulation, while utilitarianism evaluates its consequences.

Guidelines suggest:

- Targeting predisposed consumers is ethical.

- Targeting easily influenced populations is questionable.

- Fear-based marketing is improper.

- Marketing research should understand customer psychology, recognizing some categories are more rational.

Marketing Ethics and Consumer Autonomy

- Defenders of advertising claim it provides important information to consumers, aiding economic efficiency.

- An ethical question arises about how advertising and marketing shape individuals and culture.

- Marketing directly and indirectly influences our identities and the people we become.

- The effects of marketing raise fundamental ethical concerns.

- Critics either deny marketing's influence or argue that it merely reflects cultural values.

Marketing Ethics and Consumer Autonomy: Galbraith

Galbraith argued that advertising creates consumer demand to match production, a concept he called the "dependence effect." This idea has three main implications:

1. Advertising reverses supply and demand, making demand dependent on supply.

2. It generates irrational consumer wants, distorting the economy.

3. It undermines consumer autonomy, suggesting that advertising manipulates consumers.

In essence, advertising compromises the independence of consumer choice.

Marketing Ethics and Consumer Autonomy: Can advertising undermine consumer autonomy and alter supply and demand?

- Some argue advertising controls behavior, but evidence suggests otherwise.

- Advertising may create desires that drive consumer actions, violating autonomy.

- After basic needs are met, why do people consume as they do?

- The ethical concern centers on how much marketing influences nonessential purchases.

Marketing to Vulnerable Populations: Consumer Vulnerability

- Consumer vulnerability occurs when individuals cannot make informed market decisions.

- Factors include lack of intellectual capacity, psychological ability, experience, or maturity.

- Children exemplify consumer vulnerability.

- General vulnerability refers to susceptibility to specific physical, psychological, or financial harm.

- Some marketing practices exploit vulnerable consumers, e.g., targeting the elderly with products like supplemental medical insurance and emergency devices by leveraging fears and anxieties.

Marketing to vulnerable populations: Stealth or Undercover marketing

• Stealth marketing involves hidden commercial activity without consumer awareness.

• It conceals its marketing intent and extends to online product reviews.

• Buzz marketing pays individuals to create discussions about a product.

• Experts find it effective due to reduced consumer vigilance.

• These tactics raise ethical concerns.

Supply Chain Responsibility: Doctrine of respondeat superior

The doctrine of respondeat superior holds an employer responsible for the actions of their employees when performing ordinary duties.