Meeting High Ethical Standards 4 Meeting High Ethical Standards Having integrity means more to us than simply the absence of deception. It means we are completely forthright in all our dealings. We say what needs to be said, not simply what people want to hear. —Scott Cook, founder of Intuit

Ethics in the Workplace Ethics refer to the principles by which people distinguish what is morally right. Some believe that profitability should be the overriding concern of business. Others believe that organizations and their employees have an obligation to behave ethically, even if doing so cuts into short-term economic advantages. 4-2 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Benefits of Ethical Behavior A reputation as an ethical vendor makes customers want to do business with you. Ethical behavior is part of a range of behaviors that ensure an organization’s long-term health and success. Some investors go out of their way to select companies with a good track record of ethical behavior. Ethical behavior can improve the organization’s relation with the community, which tends to attract customers and top-notch employees. Ethical behavior tends to reduce public pressure for government regulation. 4-3 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Costs of Ethical Behavior Organizations whose employees are unethical may lose respect, customers, and qualified employees. Unethical behavior can cause the downfall of a company. Unethical behavior can have personal consequences such as suspension, demotion, job loss, or jail time. 4-4 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Highlights of the National Business Ethics Survey 4-5 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Challenges to Ethical Behavior With greater responsibilities, supervisors and other managers in restructured or downsized organizations cannot monitor employee’s day-to-day behavior. Some employees are afraid of being ethical when doing so conflicts with other goals. Companies that single-mindedly focus on sales or profits can create an environment in which employees feel as if they have to bend the rules. Some organizations create a climate in which employees fear they need to be unethical to save the company’s future or to be treated as a team player. 4-6 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Top Five Sources of Pressure to Compromise Ethical Standards 4-7 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Differing Measure of Ethical Behavior Ethical standards can vary from culture to culture. If an organization does business in a country where corruption is expected, employees can have more difficulty meeting high standards. Gift giving in the workplace can have different meanings from one culture to another. 4-8 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Guidelines for Gift Giving in a Multinational Environment Avoid gifts and cards of a religious nature. Make it clear that you intend the gift as a gift and not a bribe. Be aware of food preferences. If you give liquor, consider the source. Consider the implications of luck in numbers. Know the meanings of everyday objects. Know how to give and receive. 4-9 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Important Dimensions of Ethical Behavior by Supervisors 4-10 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Ethical Behavior of Supervisors Loyalty Expected loyalty to the organization, managers, and subordinates can result in conflict and ethical dilemmas Fairness Employees expect to be treated evenhandedly Supervisors should avoid nepotism 4-11 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Ethical Behavior of Supervisors (continued) Honesty Give credit where credit is due Your dishonest behavior encourages employee dishonesty Be honest about what the organization can offer employees 4-12 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Making Ethical Decisions Involve others in the process Discussing the ethical implications can expose additional consequences and provide additional options Employees respond when supervisors and higher-level managers: Model ethical behavior Include ethical standards in performance discussions and rewards 4-13 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Supervising Unethical Employees When a supervisor suspects unethical behavior, he or she needs to take prompt action. The supervisor needs to be sure that unethical behavior is actually occurring. When analyzing unethical employee behavior, consider whether you have created a climate for ethical behavior in your department. 4-14 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Steps to Take When an Employee is Suspected of Unethical Behavior Gather and record evidence. Confront the employee with the evidence. Follow the organization’s disciplinary procedure. Look for and correct the conditions that led to the problem. 4-15 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

The Law and Whistle-Blowers Whistle-blowers are protected by federal laws, the laws of several states, and some recent court decisions. Examples: Federal laws protect employees who make complaints pertaining to violations of anti-discrimination laws, environmental laws, and occupational health and safety standards. The Sarbanes-Oxley act forbids employers from retaliating against an employee who reports possible accounting, auditing, or reporting misdeeds that deceive investors. Under a Civil War-era law, whistle-blowers who report on companies that are cheating the government can receive up to 30 percent of whatever money the company ultimately pays as a penalty for the fraud. 4-16 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Treatment of Whistle-Blowers Whistle-blowers often suffer from going public with their complaints. Today many organizations are protecting ethics-minded employees and themselves with hotlines that make it easier to report and resolve ethical disputes within the organization. Supervisors should: Discourage reports of wrongdoing when they are motivated by pettiness or retaliation. Investigate complaints quickly and report what will be done. 4-17 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Summary Ethics refers to the principles by which people distinguish what is morally right. Organizations should establish a code of ethics. Ethical behavior can ensure an organization’s long-term health and success. Unethical behavior can cause the downfall of an organization. Cultural differences can impact ethical issues in the workplace, particularly the interpretation of gifts that are given. 4-18 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Summary (continued) Supervisors should: Be aware of conflicts in their loyalty to the organization, their manager, and their subordinates. Treat others fairly. Avoid nepotism. Decline inappropriate gifts. Be honest. Promote ethical decision making. Take immediate action when unethical behavior is suspected. Correct conditions that contribute to unethical behavior. 4-19 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Summary (continued) Whistle-blowers are people who expose a violation of ethics or law. Whistle-blowers are protected from retaliation by federal and state laws as well as recent court decisions. Supervisors should quickly investigate complaints and report what will be done. 4-20 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.