Business ethics quiz 2

Culture

A shared pattern of beliefs, expectations, and meanings that influences and guides the thinking and behaviors of the members of a particular group

Culture shapes

Not only the members of the organization, it is also shaped by the people who make up the organization

Geert Hofstede NATIONAL CULTURES Six dimensions

• Power distance index

• Individualism versus collectivism 

• Uncertainty Avoidance 

• Time and Order Orientation

• Masculinity versus femininity

• Indulgent versus restrained

Power distance index

• The distance between individuals at different levels of a hierarchy

• (more equal = low power distance).

Individualism versus collectivism

The degree to which people prefer to act individually or in groups.

Uncertainty Avoidance

The extent to which people are comfortable 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 versus femininity

• Low masculinity indicates greater equality, stronger relationships, service, and solidarity 

• High masculinity suggests assertiveness and competition.

Indulgent versus restrained

the extent to which people try to control their desires and impulses

What people say about Hofstedes Culture dimensions

• Supporters say he validated his score across 400 countries and his results have been replicated many times

• Critics say his divisions are based on generalizations, stereotypes. National cultures do not explain everything. He is focused on an exact time and biased to western views. Using only a limit amount of countries

Corporate Culture

• Businesses with unspoken, yet influential standards and expectations

• Culture changes but is hard to change

• If you join a culture with values that make you unconformtable there will be conflicts

A firm's culture can?

• Offer direction and stability during challenging times

• Or it can prevent a firm from responding to challenges in creative and timely ways

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

Characteristics of Specific corporate cultures

• Tempo of work.

• The organization’s approach to humor.

• Methods of problem solving.

• The competitive environment.

• Incentives.

• Individual autonomy.

• Hierarchical structure

The cultivation of  ____, is greatly shaped by the ____ in which one lives

habits ; culture

Intentionally or not, businesses provide an ____ in which habits are formed and ___, or vices, are created

Environment ; Virtue

A strong ethical culture can?

• deter stakeholder damage and improve bottom-line sustainability

• If ignored, the culture could destroy long-term sustainability in both financial performance and employee retention

Sustaining Ethical Cultures

• Responsibility for creating and sustaining ethical corporate culture rests on BUSINESS LEADERS

• While true that individuals can shape an organization, it is equally true that organizations shape individuals.

• The person you become, your attitudes, values, expectations, mindset, and habits, will be significantly determined by the culture of the organization in which you work

Value based cultures

• A corporate culture in which conformity to a statement of values and principles rather than simple obedience to laws and regulations is the prevailing model for ethical behavior 

• When the law provides an incomplete answer for ethical decision making, the business culture is the likely determining factor

• Reinforces a set of values rather than rules

Compliance based culture

• Emphasizes adherence to rules as the primary responsibility of ethics

• Only as strong and precise as the rules

Compliance oriented goals

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

Value based 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

Corporate leadership

• Has a responsibility to steward corporate culture and set the tone

• Stakeholders are guided by the tone at the top, must be a consistent tone throughout the firm

• If leaders act unethical stakeholders assume this behavior is acceptable, if a leader acts ethically stakeholders are guided buy that role model

Ethics officers

• Introduced in the 1990s

• Bridge the gap between what is legal and what is right

• Draft and update the companies bible of its values and rules

Leaders should be _____ as people-oriented, as well as engaging in  _____ ethical action in order to be seen as an ethical leader to make change

perceived ; visible

Differences between the effective and ethical leader

• Not every effective leader is an ethical leader

• A key difference is the means used to motivate others and achieve goals

• Ethical models are central to becoming an ethical leader

Mission Statement

• establish the specific goals of an organization in terms of the culture that they wish to achieve. 

• or corporate credo articulates the fundamental principles that should guide all decisions, without abridgment.

Code of conduct

• Or statement of values presents a guideline for behavior and decision-making within the organization.  

• The code has the potential to both enhance reputation and provide guidance for internal decision making, thus creating a built-in risk management system

Developing the mission and code

• Articulation of a clear vision

• The mission should be inspiring

• Establishing the core tenets that lay down the law for all future decisions

Sarbanes Oxley

• Clearer and transparent accounting record

• Enron fraud

Cultural integration

• Communication of culture must be incorporated into the firm’s vocabulary, habits, and attitudes to become an essential element in the corporate life, decision making, and determination of success

• Incentives in the right places to encourage ethical decision making and evaluated during workers review

Whistle blowing

• A practice in which an individual within an organization reports organizational wrongdoing to the public or to others in position of authority

• Internally and externally

Internal reporting

• Must allow confidentiality if not anonymity

• Strive to protect the rights of the accused party

• Company norms and culture can encourage internal reporting

Monitoring corporate culture

• How to better allocate resources.

• Determine whether a program is keeping pace with organizational growth.

• Whether all of the program’s positive results are being accurately measured and reported and the firm’s compensation structure is adequately rewarding ethical behavior.

• Whether the “tone at the top” is being shared effectively

How to detect a toxic culture?

• A clear sign is a lack of values for the organization.

• Warning signs can occur in the various component areas of the organization.

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

How to measure the impact of efforts to change a culture?

• Determine if employee perceptions have changed.

• External audits provide information, as does hotline data.

• Any employee feedback should be gathered and analyzed for input regarding the culture.

United States Sentencing Commission (USSC)

an independent agency in the U.S. judiciary, that regulates sentencing policy in the federal court system.

Federal Sentencing guidelines for organizations (FSGO)

• Listed 43 "offense levels" based on the severity of the offense.

• Each offender is categorized based on the extent and recency of past misconduct.

• Uses sentencing grid to determine the offender’s sentence guideline range.

• Creates both a legal and an ethical corporate environment.

Due Diligence

identify specific acts of an organization that can preventing crime and the minimal requirements for an effective compliance and ethics program

USSC minimal requirements

• Standards and procedures.

• Responsibility of board and other executives; adequate resources and authority.

  • Board oversight is required.

  • High-level personnel must be assigned.

  • Specific individuals shall report periodically to the high-level personnel.

• Preclusion from authority: prior misconduct.

• Communication and training.

• iMonitoring, evaluation, and reporting processes.

• Incentive and disciplinary structures.

  • Should be enforced consistently.

• Response and modification mechanisms.

Lowered penalties in 2010 for compliance violations

• Those responsible for the programs must have direct reporting obligations to the governing authority.

• The program detected the offense before outside discovery.

• The offense was promptly reported to governmental authorities.

• No person responsible for the program condoned the offense

Foreign Corrupt Practices Act (1977)

• No matter what country you are doing business in, you must adhere to American ethical standards

• Should not engage in business dealings that are corrupt by American standards

• Difficult to compete in other countries

Adrian Cadbury

• Business has to take account of its responsibilities to society in coming to its decisions, but society has to accept its responsibilities for setting the standards against which those decisions are made.

Corporate Social Responsibility

• Ethical responsibilities that a business has to the society in which it operates

• the extent to which businesses and the managers who run them have ethical responsibilities beyond producing goods and services within the law

Mitt Romney

“Coporations are people”

Ethical Responsibilities

Those things that we ought, or should, do, even if sometimes we would rather not

Three Levels of ethical responsibility

• Do not cause harm to others.

  • A duty or an obligation.

  • Enforced by legal punishment.

• Prevent harm.

  • Good Samaritan.

  • Use renewable energy

• Ethical responsibilities to do good.

  • Volunteering.

  • Sponsoring a charity event.

Do not cause harm

• Strongest sense

• Even when not prohibited by law, ethics demand we do not cause avoidable harm

Tort law:

​​Laws covering acts or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability.

Models of CSR:

• The narrow economic model of CSR 

• The stakeholder model

• The integrative model of CSR

The narrow economic model of CSR

• directs managers to maximize profit and shareholder wealth within legal limits.

• No social responsibilities beyond the economic ends it was created for

• Free to contribute for good reputation, tax benefits, and philanthropy

The stakeholder model

• Neither a business nor the employees are exempt from ordinary ethical responsibilities.

• Businesses exist within a web of social and ethical relationships and create value for a range of stakeholders

Norman Bowie

• Business has an ethical duty to respect human rights

• Moral minimum we expect of everyone

• Obligation to cause no harm overrides other ethical considerations

• If managers comply with moral minimum, they should maximize profits

Stakeholder theory

• Recognizes that every business decision affects a wide variety of people, benefiting some and imposing costs on others

• Balance ethical interests of all

• Consider consequences of decisions

• Prioritize competing and conflicting responsibilities

The integrative model of CSR

• says that part of the managerial responsibility to shareholders is to serve the social good

• Social ends as the very core of their mission

Benefit corporations

• profit is not incompatible with doing good, and therefore that one can do good profitably

• Ben & Jerry’s

Sustainibility

a firm’s financial goals must be balanced against, and may be overridden by, environmental considerations

Managerial capitalism

• businesses’ sole social responsibility is to fulfill the economic functions they were designed to serve

• Maximize profits, legally

Friedman

managers fulfill their ethical responsibility by increasing shareholder wealth and pursuing profit

A corporate sustainability report

provides all stakeholders with financial and other information regarding a firm’s economic, environmental, and social performance

Why should a business engage in socially responsible activities

• CSR can impact a firm’s reputation within a community

• If a firm develops a bad reputation, it can create significant barriers to business success.

Two perspectives of ethics in the workplace

• Treat employees well for a return

Treat employees well out of a sense of duty.

Treat employees well for a return

• The return is harmony, productivity, and innovation.

• Effective firms share common practices, all of which involve treating employees in humane and respectful ways.

• Managers have an impact on 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.

  • And treating them well simply because it is "the right thing to do".

• A sense of duty might stem from the law, professional codes of conduct, corporate codes of conduct, or moral principles.

Due process

• The right to be protected against the arbitrary use of authority

• Acknowledges an employer’s authority over employees

  • Basic fairness

Employment at will

• In the absence of a particular contractual or other legal obligation that specifies the length or conditions of employment, all employees are employed "at will

• May fire at any time for any reason

• Workers may leave at any time, freedom is theoretically mutual

Just cause

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

Downsizing

• Saves money

• The reduction of human resources at an organization through terminations, retirements, corporate divestments, or other means

• Causes: Poor recommendations of the firm by former employees, Bad attitudes from remaining workers, An increase in errors or dangerous behavior by employees, A decline in customer service by surviving employees

• Should consider all stakeholder interests

Sweatshops

• Employees have a fundamental right to a safe and healthy workplace

• employees lack even the most basic health and safety protections

Health and safety

• "goods" that are valued as a means for attaining an end and also as ends in themselves.

• Intrinsic value: is the end itself and valuable and irreplaceable

Instrumental value: helps you get something else, means to end

Acceptable risk approach to health and safety

• If risk of harm from work is equal to  harm in common activities, than the activity is safe

• Does not take into consideration employee sentiment, not the same.

Health and safety as market controlled

• If you take more risk you get higher wages and more healthy conditions is lower wages

• Compensation threat when employers were responsible for harm

Challenges with Free market approach to health and safety

• Labor markets are not perfectly competitive and free

• Employees do not possess the information needed

• Increased wages are not substitutes for health and safety

• Ignores questions of social justice and public polic

Occupational Safety and Health Administration

• Agency of the federal government that publishes and enforces safety and health regulations for U.S. businesses.

• Safest feasible standards allowing tradeoffs between health and economics

Cost-benefit Analysis

A strategy that weighs financial costs against potential benefits, often leading to decisions that prioritize savings over comprehensive health and safety measures

Cost effective strategy

A strategy that maximizes workplace health and safety within available resources , ensuring effective protections without unnecessary expense

Distributive justice

The fair allocation of resources, opportunities, and benefits within a society

Distributive injustice

resources and opportunities are distributed unfairly, leading to inequality or harm. This could mean wealth being concentrated among a few while others struggle

Ethical Trade Initiative

A group of corporations that establish global baselines, for minimum ethical standards of employment

Child labor

Exploitative work that involves some harm to a child who is not of an age to justify his or her presence in the workplace

Diversity

presence of differing cultures, languages, ethnicities, races, affinity orientations, genders, religious sects, abilities, social classes, ages, and national origins of the individuals in a firm

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.

• Reverse discrimination