Managing Business Ethics: Straight Talk about How to Do It Right, Fifth Edition PDF
Preview Managing Business Ethics: Straight Talk about How to Do It Right, Fifth Edition
E1FTOC 07/09/2010 Page4 E1FFIRS 07/09/2010 Page1 MANAGING BUSINESS ETHICS Straight Talk About How To Do It Right FifthEdition LINDA KLEBE TREVIN˜ O DistinguishedProfessorofOrganizationalBehaviorandEthics SmealCollegeofBusiness ThePennsylvaniaStateUniversity KATHERINE A. NELSON Lecturer FoxSchoolofBusiness TempleUniversity JOHNWILEY&SONS,INC. E1FFIRS 07/09/2010 Page2 VP&PUBLISHER GeorgeHoffman EXECUTIVEEDITOR LiseJohnson ASSISTANTEDITOR SarahVernon EDITORIALASSISTANT ChelseaTheis MARKETINGMANAGER KarolinaZarychta MEDIAEDITOR AllisonMorris PRODUCTIONMANAGER JanisSoo ASSISTANTPRODUCTIONEDITOR YeeLynSong COVERDESIGNER RDCPublishingGroupSdnBhd COVERPHOTOCREDIT PhotoprovidedcourtesyofGregKuhnen Thisbookwassetin10/12TimesRomanbyThomsonDigital,andprintedandboundbyCourierWestford. ThecoverwasprintedbyCourierWestford. 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Evaluationcopiesareprovidedtoqualifiedacademicsandprofessionalsforreviewpurposesonly,foruse intheircoursesduringthenextacademicyear.Thesecopiesarelicensedandmaynotbesoldortransferred toathirdparty.Uponcompletionofthereviewperiod,pleasereturntheevaluationcopytoWiley.Return instructionsandafreeofchargereturnshippinglabelareavailableatwww.wiley.com/go/returnlabel. OutsideoftheUnitedStates,pleasecontactyourlocalrepresentative. LibraryofCongressCataloging-in-PublicationData Trevin˜o,LindaKlebe. Managingbusinessethics:straighttalkabouthowtodoitright/LindaKlebeTrevin˜o,Katherine A.Nelson.–5thed. p. cm. Includesindex. ISBN978-0-470-34394-4(pbk.) 1. Businessethics. 2. Businessethics–Casestudies. I. Nelson,KatherineA. II. Title. HF5387.T7342010 174.4–dc22 0 2010020659 PrintedintheUnitedStatesofAmerica 10 9 8 7 6 5 4 3 2 1 E1FTOC 07/09/2010 Page3 BRIEF CONTENTS SECTIONI INTRODUCTION CHAPTER1 INTRODUCINGSTRAIGHTTALKABOUTMANAGING BUSINESSETHICS:WHEREWE’REGOINGANDWHY 2 SECTIONII ETHICSANDTHEINDIVIDUAL CHAPTER2 DECIDINGWHAT’SRIGHT: APRESCRIPTIVEAPPROACH 38 CHAPTER3 DECIDINGWHAT’SRIGHT: APSYCHOLOGICALAPPROACH 71 CHAPTER4 ADDRESSINGINDIVIDUALS’ COMMONETHICALPROBLEMS 111 SECTIONIII MANAGINGETHICSINTHEORGANIZATION CHAPTER5 ETHICSASORGANIZATIONALCULTURE 150 CHAPTER6 MANAGINGETHICSANDLEGALCOMPLIANCE 207 CHAPTER7 MANAGINGFORETHICALCONDUCT 255 CHAPTER8 ETHICALPROBLEMSOFMANAGERS 292 SECTIONIV ORGANIZATIONALETHICSANDSOCIALRESPONSIBILITY CHAPTER9 CORPORATESOCIALRESPONSIBILITY 322 CHAPTER10 ETHICALPROBLEMSOFORGANIZATIONS 354 CHAPTER11 MANAGINGFORETHICSANDSOCIALRESPONSIBILITY INAGLOBALBUSINESSENVIRONMENT 399 INDEX 449 iii E1FTOC 07/09/2010 Page4 E1FTOC1 07/09/2010 Page5 CONTENTS PREFACE XIII SECTIONI INTRODUCTION CHAPTER1 INTRODUCINGSTRAIGHTTALKABOUTMANAGING BUSINESSETHICS:WHEREWE’REGOINGANDWHY 2 Introduction 2 TheFinancialDisasterof2008 4 BorrowingWasCheap 4 RealEstateBecametheInvestmentofChoice 5 MortgageOriginatorsPeddled‘‘LiarLoans’’ 5 BanksSecuritizedthePoisonandSpreadItAround 6 ThoseWhoWereSupposedtoProtectUsDidn’t 7 MovingBeyondCynicism 9 CanBusinessEthicsBeTaught 13 Aren’tBadApplestheCauseofEthicalProblemsinOrganizations? 13 Shouldn’tEmployeesAlreadyKnowtheDifferencebetweenRightandWrong? 15 Aren’tAdults’EthicsFullyFormedandUnchangeable? 16 ThisBookisaboutManagingEthicsinBusiness 19 EthicsandtheLaw 20 WhyBeEthical?WhyBother?WhoCares? 21 IndividualsCareaboutEthics:TheMotivationtobeEthical 21 EmployeesCareaboutEthicsEmployeeAttractionandCommitment 23 ManagersCareaboutEthics 23 ExecutiveLeadersCareaboutEthics 24 IndustriesCareaboutEthics 26 SocietyCaresaboutEthics:BusinessandSocialResponsibility 27 TheImportanceofTrust 27 TheImportanceofValues 29 HowtheBookisStructured 30 Conclusion 32 DiscussionQuestions 32 v E1FTOC1 07/09/2010 Page6 vi CONTENTS Exercise:YourCynicismQuotient 33 Notes 34 SECTIONII ETHICS AND THE INDIVIDUAL CHAPTER2 DECIDINGWHAT’SRIGHT: APRESCRIPTIVEAPPROACH 38 Introduction 38 EthicalDilemmas 38 PrescriptiveApproachestoEthicalDecisionMakinginBusiness 39 FocusonConsequences(ConsequentialistTheories) 40 FocusonDuties,Obligations,andPrinciples(DeontologicalTheories) 42 FocusonIntegrity(VirtueEthics) 46 EightStepstoSoundEthicalDecisionMakinginBusiness 52 StepOne:GathertheFacts 52 StepTwo:DefinetheEthicalIssues 52 StepThree:IdentifytheAffectedParties(theStakeholders) 53 StepFour:IdentifytheConsequences 54 StepFive:IdentifytheObligations 56 StepSix:ConsiderYourCharacterandIntegrity 56 StepSeven:ThinkCreativelyaboutPotentialActions 57 StepEight:CheckYourGut 58 PracticalPreventiveMedicine 58 DoingYourHomework 58 WhenYou’reAskedtoMakeaSnapDecision 59 Conclusion 61 DiscussionQuestions 62 Exercise:ClarifyingYourValues 63 Case:PintoFires 64 Notes 69 CHAPTER3 DECIDINGWHAT’SRIGHT: APSYCHOLOGICALAPPROACH 71 Introduction 71 EthicalAwarenessandEthicalJudgment 71 IndividualDifferences,EthicalJudgment,andEthicalBehavior 75 EthicalDecision-MakingStyle 76 CognitiveMoralDevelopment 77 LocusofControl 84 Machiavellianism 85 E1FTOC1 07/09/2010 Page7 CONTENTS vii MoralDisengagement 86 FacilitatorsofandBarrierstoGoodEthicalJudgment 88 ThinkingaboutFactGathering 88 ThinkingaboutConsequences 89 ThinkingaboutIntegrity 91 ThinkingaboutYourGut 93 UnconsciousBiases 94 EmotionsinEthicalDecisionMaking 95 TowardEthicalAction 97 RevisitingthePintoFiresCase:ScriptProcessingandCost-BenefitAnalysis 102 Cost-BenefitAnalysis 103 Conclusion 105 Exercise:UnderstandingCognitiveMoralDevelopment 105 DiscussionQuestions 106 Notes 107 CHAPTER4 ADDRESSINGINDIVIDUALS’COMMON ETHICALPROBLEMS 111 Introduction 111 IdentifyingYourValues—andVoicingThem 112 PeopleIssues 114 Discrimination 115 Harassment,SexualandOtherwise 119 ConflictsofInterest 122 WhatIsIt? 123 HowWeCanThinkaboutThisIssue 125 WhyIsItanEthicalProblem? 126 Costs 126 CustomerConfidenceIssues 127 WhatIsIt? 127 HowWeCanThinkaboutThisIssue 131 WhyIsItanEthicalProblem? 131 Costs 131 UseofCorporateResources 132 WhatIsIt? 132 HowWeCanThinkaboutThisIssue 136 WhyIsItanEthicalProblem? 136 Costs 136 WhenAllElseFails:BlowingtheWhistle 137 WhenDoYouBlowtheWhistle? 139 HowtoBlowtheWhistle 140 Conclusion 145 DiscussionQuestions 145 Notes 147 E1FTOC1 07/09/2010 Page8 viii CONTENTS SECTIONIII MANAGING ETHICS IN THE ORGANIZATION CHAPTER5 ETHICSASORGANIZATIONALCULTURE 150 Introduction 150 OrganizationalEthicsasCulture 151 WhatIsCulture? 151 StrongversusWeakCultures 151 HowCultureInfluencesBehavior:SocializationandInternalization 152 EthicalCulture:AMultisystemFramework 153 AlignmentofEthicalCultureSystems 154 EthicalLeadership 156 ExecutiveLeadersCreateCulture 156 LeadersMaintainorChangeOrganizationalCulture 157 OtherFormalCulturalSystems 166 SelectionSystems 166 ValuesandMissionStatements 168 PoliciesandCodes 169 OrientationandTrainingPrograms 171 PerformanceManagementSystems 172 OrganizationalAuthorityStructure 175 Decision-MakingProcesses 178 InformalCulturalSystems 180 RoleModelsandHeroes 180 Norms:‘‘TheWayWeDoThingsaroundHere’’ 182 Rituals 182 MythsandStories 183 Language 185 OrganizationalClimates:Fairness,Benevolence,Self-Interest,Principles 187 DevelopingandChangingtheEthicalCulture 188 HowanEthicalCultureCanBecomeanUnethicalCulture 189 BecomingaMoreEthicalCulture 190 ACulturalApproachtoChangingOrganizationalEthics 192 AuditoftheEthicalCulture 193 ACulturalSystemsView 193 ALong-TermView 194 AssumptionsaboutPeople 194 Diagnosis:TheEthicalCultureAudit 194 EthicalCultureChangeIntervention 196 TheEthicsofManagingOrganizationalEthics 198 Conclusion 198 DiscussionQuestions 198
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