Business Ethics Rutgers Midterm 2 (Chapters 4,6,7)

corporate culture model

Ethical Decision making model emphasizes the individual responsibility for the decisions made

Culture shapes members of the org but it is also shaped by the people who make up the org.

Geert Hofstede's Six Dimensions

1. Power Distance Index

2. Individualism vs Collectivism

3. Uncertainty Avoidance

4. Time and Order Orientation

5. Masculinity vs Femininity

6. Indulgent vs. Restrained

Power Distance Index (PDI)

The distance between individuals at different levels of a hierarchy (more equal = low power distance)

Individualism vs. Collectivism

The degree to which peopleprefer to act individually or in groups.

Uncertainty Avoidance

The extent to which people arecomfortable with uncertainty, ambiguity, change, and risks.

Time and Order Orientation

A high long-term orientation (LTO)is comfortable with commitments, traditions, rewards.

A low LTO indicates that change may occur more rapidly.

Masculinity vs. Femininity (Hofstede)

Low masculinity indicates greater equality, stronger relationships, service, and solidarity while high masculinity suggests assertiveness and competition.

Indulgent vs. Restrained

The extent which people try to control their desires and impulses.

Supporters and Critics of Hofstede

Supporters:

He validated his country scores across over 400 measures.

His results have been replicated many times

Critics:

His divisions are based on generalizations, stereotypes.

National cultures do not explain all differences.

His work focused in a single period of time and place.

His perspective is biased by his Western views.

Only a limited number of countries were included

What is Corporate Culture?

Just as there are national cultures, businesses also have unspoken, yet influential standards and expectations.

The stability a culture provides can be a benefit at one time and a barrier to success at another time.

Some corporate cultures are defined from the top-down, others are developed by the employees themselves

Components of Corporate Culture

Tempo of Work

Orgs approach to humor

Methods of Problem Solving

Competitive Environment

Incentives

Individual Autonomy

Hierarchal structure

Compliance-based Culture (traditional approached)

Obedience to laws and regulations is the prevailing model for ethical behavior

Values-based culture (progressive approach)

Conformity to a statement of values and principles rather than simple obedience to laws and regulations is the prevailing model for ethical behavior.

A values-based culture relies on?

It relies on the personal integrity of its workforce wen rules don't apply.

Values-based Culture Goals

Maintaining brand and reputation

Recruiting and retaining desirable workers

Unifying a firm's global operation

Creating a better working environment

Doing the right thing as well as doing things right

Compliance-Based Culture Goals

Legal requirements

Minimizing risks of litigation and indictment

Improving accountability mechanisms

Ethical Leadership

Stakeholders are guided by the "tone at the top"; there must be a consistent tone throughout the firm

Senior leaders are more likely than lower-level employees to break the rules and the majority of misconduct is attribute to managers

Not every ________ leader is an _________ leader

effective; ethical

Effective Leader vs Ethical Leader

KEY DIFFERENCE:

The means used to motivate others and achieve one's goals

Transactional Leadership

leaders rely on rewards and punishment to achieve optimal job performance from their subordinates.

Transformative Leadership

leadership approach that causes change in individuals and social systems.

Minimal goals of sustainability

productivity

efficiency

profitability

Culture is built and maintained through:

leadership, integration, assessment, and monitoring

How do ethical leaders communicate their values?

Through a Code of Conduct

Mission Statement

a statement of the organization's purpose - what it wants to accomplish in the larger environment (A CREED)

Benefit of Monitoring Corporate Culture

Allows the discovery of silent vulnerabilities which could pose later challenges

How to detect a toxic culture?

Lack of values within org.

If the manner in which a firm manages and communicates its financial environment is disastrous

Sources of Corporate Ethical Culture

Leadership

Control Activities and information

Review, assess, monitor

Mandating Culture

The United States Sentencing Commission (USSC) prescribed mandatory Federal Sentencing Guidelines for Organization (1987)

Strived to use the guidelines to create both a legal and an ethical corporate environment.

USSC strived to use the guidelines to ___________

create both a legal and an ethical corporate environment

USSC minimal requirements

Standards and procedures.

Responsibility of board and other execs

Monitoring, evaluation, and reporting processes

Incentive and disciplinary structures

Response and modification systems.

Placing employees at core of strategies produces __________

high long-term returns to shareholders than their industry peers

Ethical in workplace relationships

Treat employees well for a return

The return is harmony, productivity, and innovation

Managers have an impat in the emotions of their workers as do rewards, compensation, and composition of teams

Treat employees well out of a sense of duty

This approach emphasizes the rights and duties of all employees

Issues with Workplace Relationships

Ethical issues are bound to rise once a relationship is between an employer and an employee

To work for another person raises issues of power, obligation, responsibility, fair treatment, and expectations.

Due Process

fair treatment through the normal judicial system, especially as a citizen's entitlement.

Due process in the workplace

1) that employees are entitled to know the nature of their alleged misconduct or performance deficiencies

2) that employees should be given a reasonable opportunity to respond to those allegations before any ...

Employment at Will

A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise.

Benefit of Employment at Will (EAW)

Gives managers the ability to make efficient decisions that should contribute to the greater overall good

Exceptions to Employment at Will

violation of public policy, implied contract,

implied covenant of good faitf and fair dealing

violation of the doctrine of promissory estoppel

Just Cause Termination

A standard for terminations or discipline that requires the employer to have sufficient and fair cause before reaching a decisions against an employee

Downsizing

A planned reduction in the number of employees needed in a firm in order to reduce costs and make the business more efficient

Ethics in downsizing

Decision for downsizing should be made by a representative group to consider all stakeholder interest and earn the trust of those who will be impacted.

Notice of an intent to downsize should be given as soon as the downsizing is going to happen.

IDENTIFY THE STAKEHOLDERS AND DEFINE THE IMPACT OF DOWNSIZING ON EACH

Instrumental values vs Intrinsic Values within Health & Safety

For example, if a person dies in a workplace accident:

Instrumental Value:

The employee's lost wages

Intrinsic Value:

The value of their life

Calculating Acceptable Level of Risk

Prob of harm for any work activity has to = or < probability of harm for similar more common activities

Free Market Approach to Health & Safety

Workers demanding higher health and safety standards would settle for lower wages

CHALLENGES:

Labor markets are not perfectly competitive and free

Occupational Safety and Health Administration (OSHA)

Agency of the Fed Government that publishes and enforces safety and health regulation for businesses

Economists views on sweatshops

They argue that the maintenance of sweatshops is supported by economic theory because they create additional opportunity for expansion domestically.

How many children are classified as child laborers?

152 million

Acts regarding discrimination in the workplace

Title VII of the Civil Rights Act of 1964 makes it unlawful to discriminate in hiring, discharge, promotion, referral, and other facets of employment , on the basis of race, color, religion, sex, or national origin

LGBTQ employees are protected from being fired because of their sexual orientation

Covert Racial Discrimination

• Based on one's name

Researchers found that people with Chinese, Indian, or Pakistani sounding names were 28% less likely to get an interview than candidates with precisely the same qualifications but with English- sounding names.

Covert Gender Discrimination

Women and men are both gender stereotyped, but women suffer from different expectations

Diversity within the workplace

Tension and anxiety may emerge when bringing people together with diverse differences

Efforts at multiculturalism

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

Affirmative Action

A policy designed to redress past discrimination against women and minority groups through measures to improve their economic and educational opportunities

Affirmative Action Plan

list of races, implication of two or more races, or indivudals who do not wish to self-identify

The Right to Privacy

Privacy is the right to be "left alone" within a personal zone of solitude.

The right to control information about oneself.

Establishes boundary between individuals and defines one's individuality

privacy rights

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

Ethical Sources of a Right to Privacy

The right is restricted by a boundary of reciprocal obligation.

When an individual expects respect for their personal autonomy,

Reciprocal obligation in the workplace

An employee has an obligation to respect the goals and property of the employer

The employer has a reciprocal obligation to respect the rights of the employee including the right to privacy.

Hypernorms

values that are fundamental across culture and theory

Hypernorms examples

Freedom of Speech, Right of Personal Freedom, Right of Physical Movement and Informed Consent

PRIVACY IS CONSIDERED A FUNDAMENTAL HUMAN RIGHT

property rights

The boundaries defining actions that individuals can take in relation to other individuals regarding personal information.

Moral Free Space

An environment where hypernorms do not govern ethical decision-making and where culture and other influences, as long as not in conflict with hypernorms, can influence decision-making; a decision that does not conflict a hypernorm rests within moral free space.

Privacy can be legally protected in three ways:

By the constitution

By statutes

By the common law

Fourth Amendment Protections

Protection from unreasonable searches and seizures.

Requirement that no warrant for a search or an arrest be issued without probable cause.

Electronic Communications Privacy Act (ECPA)

Prohibits unauthorized access of stored communications

ECPA impact electric monitoring only by third parties and NOT by employers when:

Consent from employee has been granted or the employer provided the service being monitored (computer, email system)

Intrusion into Seclusion

This legal violation occurs when someone intentionally intrudes on the private affairs of another when the intrusion would be "highly offensive to a reasonable person."

reasonable expectation of privacy

standard developed for determining whether a government intrusion of a person or property constitutes a search because it interferes with individual interests that are normally protected from government intrusion

Legal status of employee monitoring

Telephone Calls

Permitted in connection with quality control

Notice to the parties on the call is often required by state law, but federal law allows employers to monitor work calls without notice

EMPLOYERS CANNOT MONITOR PERSONAL CALLS

Emails and Voicemails

Under most circumstances, employees may monitor employee emails

Internet and Social Media Use

Where the employer has provided the equipment and/or access to the internet, they may track, block, or review internet/social media use

European Union's General Data Protection Regulation (GDPR)

Provides that personal information cannot be collected or shared by companies without individuals' permission.

Information about who is using the data and for what purpose it is being collected must be provided in a clear, easily understandable manner.

Consumers have the right to review the data and correcting accuracies.

GDPR includes heavy regulatory powers by imposing heavy fines for those companies that break these regulations.

Under the GDPR, the European Union does not allow the transfer of data on its citizens outside of the country unless the country is deemed to have adequate data privacy laws.

EU Privacy Protection

US has to adhere to the limits and oversight mechanisms when using European's data

Privacy Shield Ombudsperson

Under Secretary Economic Growth, Energy, and the Environment

Ombudsperson

A watchdog to handle complaints about intelligence-related matters transmitted from the EU to the US

Privacy Shield must be renewed _________

yearly

(EU Privacy Shield) Companies have to resolve complains within ________ days of being filed

45

ADPPA (American Data Privacy and Protection Act)

A bi-partisan effort has passed the House Energy & Commerce Committee, but still needs to be presented to the House and then to the Senate.

Collects, processes, or transfers covered data and is subject to the jurisdiction of the Federal Trade Commission (FTC)

ADPPA rights

Transparency

Ownership and Control

Consent and Object

Civil Rights and Algorithms

Targeted Advertisements

Moral Requirements of information through technology

Truthfulness and Accuracy

Respect for privacy

Respect for property and safety rights

Accountability

Monitoring Employees through Technology

one of the most prevalent forms of information gathering in the workplace

Technology is

an effective, low cost monitoring option

Ethical Issues when managing information through technology

People might not completely understand the technology involved, so they don't understand the ethical implications of their decisions

Why do firms monitor technology usage?

To place workers in appropriate positions

To ensure compliance with affirmative action requirements

To administrate workplace benefit

To meet regulatory requirements

Monitoring offers employers a method to protect resources such as:

Restricted info and guards against theft

Equipment and Bandwidth

Legal Liability

Monitoring Employees through Drug Testing

The employer would be held responsible for legal violations that its employees commit and hence, their interest in controlling every aspect increases.

EMPLOYERS MAY TEST WORKERS TO DETERMINE IMPAIRMENT

Genetic Information Nondiscrimination Act (GINA)

U.S act that prohibits discrimination against individuals on the basis of their genetic information in both employment and health insurance.

GINA exceptions

An employer can collect genetic information to:

Comply with the Family Medical Leave Act (FMLA)

Monitor the biological effects of toxins in the workplace

Hawthorne effect

A change in a employees behavior caused simply by the awareness of being monitored can make them more productive

Regulation of off work acts can be done if:

Its reasonably related to the employment activites on an employee

Is a set in stone rule for the specific employee position

Is necessary to avoid a conflict of interest or the appearance of conflict of interest

Privacy under USA Patriot Act

Expands authority to intercept wire, oral, and electronic communications related to terrorism, computer fraud, and abuse offenses.

Provides roving surveillance authority under the Foreign Intelligence Surveillance Act (F I S A) of 1978 to track individuals.

Allows nationwide seizure of voice-mail messages pursuant to warrants.

Broadens the types of records that law enforcement may obtain from electronic service providers.

Permits emergency disclosure of electronic communications to protect life and limb.

Provides nationwide service of search warrants for electronic evidence