Ethics

Ethics
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© 2012 PearsonEducation
2014 Pearson Education, 5-1
Inc. Publishing as Prentice Hall
Managers and Ethical Behavior
• Ethics - principles, values, and beliefs that

define right and wrong behavior.
• Many decisions managers make require
them to consider both the process and
who’s affected by the result
To better understand the ethical issues
involved in such decisions, let’s look at the
factors that determine whether a person
acts ethically or unethically.
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© 2012
2014 Pearson Education,
Pearson Education 5-2
Factors That Determine Ethical
and Unethical Behavior
• Stage of Moral Development
Research divides moral development into three
levels, each having two stages. At each
successive stage, an individual’s moral
judgment becomes less dependent on outside
influences and more internalized.
– Preconvention level - a person’s choice between
right or wrong is based on personal consequences
from outside sources, such as physical punishment,
reward, or exchange of favors.
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Factors That Determine Ethical
and Unethical Behavior
• Stage of Moral Development
– Conventional level, ethical decisions rely on
living up to the expectations of others.
– Principled level, individuals define moral

values apart from the authority of the groups
society in general
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Factors That Determine Ethical and
Unethical Behavior (cont.)
1. Individual characteristics: two individual

characteristics—values and personality—
play a role in determining whether a person
behaves ethically. Two personality variables
have been found to influence an individual’s
actions according to his or her beliefs about
what is right or wrong: ego strength and
locus of control
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– Values - basic convictions about what is right

and wrong. Our values develop from a young
age based on what we see and hear from
parents, teachers, friends, and others.
– Ego Strength - a personality measure of the
strength of a person’s convictions. People
with high ego strength are likely to resist
impulses to act unethically and instead follow
their convictions.
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– Locus of Control - a personality attribute that

measures the degree to which people believe
they control their own fate.
– People with an internal locus of control
believe they control their own destinies.
They’re more likely to take responsibility for
consequences and rely on their own internal
standards of right and wrong to guide their
behavior
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2. Organization’s Culture
Organization’s culture consists of the shared
organizational values. These values reflect what
the organization stands for and what it believes in
as well as create an environment that influences
employee behavior ethically or unethically.
Employees in such a culture are encouraged to be
aggressive and innovative, are aware that unethical
practices will be discovered, and feel free to openly
challenge expectations they consider to be unrealistic or
personally undesirable.
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. For instance, Timberland is an example of a company

using values-based management. With a simple statement,
“Make It Better,” employees at Timberland know what’s
expected and valued; that is, they find ways to “make it
better”—whether it’s creating quality products for
customers, performing community service activities,
designing employee training programs, or figuring out ways
to make the company’s packaging more environmentally
friendly
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Encouraging Ethical Behavior
• Employee Selection - an opportunity to learn
about an individual’s level of moral development,
personal values, ego strength, and locus of
control
• Code of ethics - a formal statement of an
organization’s primary values and the ethical
rules it expects its employees to follow.
Research shows that 97 percent of
organizations with more than 10,000 employees
have a written code of ethics. Even in smaller
organizations, nearly 93 percent have one.
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Encouraging Ethical Behavior (cont.)
• Leadership - doing business ethically requires a

commitment from top managers because
– they’re the ones who uphold the shared values and
set the cultural tone
– they’re role models in terms of both words and
actions
– what they do is far more important than what they say
The choices of whom and what are rewarded with pay

increases and promotions send a strong signal to
employees.
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• Job Goals and Performance Appraisal

– Unrealistic goals provide stress which may
pressure ethical employees to do whatever is
necessary to meet those goals.
– If performance appraisals focus only on
economic goals, ends will begin to justify
means. (trying to gain profit by any mean)
– To encourage ethical behavior, both ends and
means should be evaluated
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• Job Goals and Performance Appraisal

For example, a manager’s annual review of
employees might include a point-by-point
evaluation of how their decisions measured up
against the company’s code of ethics as well as
how well goals were met.
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• Ethics Training - seminars, workshops, and

similar ethics training programs to encourage
ethical behavior
• Independent Social Audits - evaluate decisions
and management practices in terms of the
organization’s code of ethics.
• The fear of being caught can be an important deterrent
to unethical behavior. Independent social audits,
increase that likelihood. Such audits can be regular
evaluations or they can occur randomly with no prior
announcement.
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• Protective Mechanisms – allow employees

who face ethical dilemmas to do what’s
right without fear of reprimand
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Ethics

• Ethics - principles, values, and beliefs that

– Principled level, individuals define moral

1. Individual characteristics: two individual

– Values - basic convictions about what is right

– Locus of Control - a personality attribute that

. For instance, Timberland is an example of a company

• Leadership - doing business ethically requires a

The choices of whom and what are rewarded with pay

• Job Goals and Performance Appraisal

• Job Goals and Performance Appraisal

• Ethics Training - seminars, workshops, and

• Protective Mechanisms – allow employees

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