1. Managing Business Ethics
Chapter 5
Treviño & Nelson – 5th Edition

2. Chapter 5 Overview Organizational Ethics as Culture
Ethical Culture: A Multisystem Framework
Ethical Leadership
Other Formal Cultural Systems
Informal Cultural Systems
Organizational Climates: Fairness, Benevolence, Self-Interest, Principles
Developing and Changing Ethical Culture
A Cultural Approach to Changing Organizational Ethics
The Ethics of Managing Organizational Ethics

3. Influence of Culture on Individuals
Individual Differences
Ethical Awareness
Ethical Judgment
Ethical Action
Ethical Culture

4. Organizational Culture
Expresses shared assumptions, values and beliefs and is the social glue that holds the organization together. It’s “how we do things around here.”
Strong - assumptions, values, beliefs widely shared
Weak - subgroup norms more influential

5. Culture
A body of learned beliefs, traditions, and guides for behavior shared among members of a society or a group

6. Ethical Culture: A Multisystem Approach
Formal Systems
Informal Systems
Executive Leadership
Selection System
Policies/Codes
Orientation/Training
Performance Management
Authority Structure
Decision Processes
Role Models/Heroes
Norms
Rituals
Myths/Stories
Language
Ethical/ Unethical Behavior
Alignment?

7. Alignment and Misalignment
With alignment, all systems are “pushing” employees in the same direction – either ethical or unethical
With misalignment, employees get mixed messages about expectations

8. Leadership Executive Leaders Create Culture
Leaders Maintain or Change Organizational Culture
Ethical Leadership and Ethical Culture
Unethical Leadership
Hypocritical Leadership
Ethically Neutral or “Silent” Leadership

9. Executive Ethical Leadership Rests on Two Pillars
Moral Person
Tells followers how leader behaves
Traits
Honesty
Integrity,
Trust
Behaviors
Openness
Concern for people
Personal morality
Decision-making
Values based
Fair
Moral Manager
Tells followers how they should behave and holds them accountable
Role modeling
Takes visible ethical action
Rewards/Discipline
Hold people accountable for ethical conduct
Communicating
Sends an “ethics and values” message

10. Executive Ethical Leadership Reputation Matrix
Hypocritical leader
Ethical leader
Unethical leader
Strong
Weak
Moral Manager
Moral Person
Ethically neutral leader

11. Other Formal Cultural Systems
Selection Systems
Values and Mission Statements
Policies and Codes
Orientation and Training Programs
Performance Management Systems
Organizational Authority Structure
Decision-making Processes

12. Informal Cultural Systems
Role Models and Heroes
Norms: “The Way We Do Things Around Here”
Rituals
Myths and Stories
Language

13. Ethical Climates
Fairness
Benevolence
Self-Interest
Principles

14. Ethical Culture Change
From ethical to unethical
From unethical to ethical

15. Ethical Culture Change
Long-term view
Systems view
Diagnose/Audit
Intervene
Evaluate