Transcript unethical behaviors in organizations and human nature

Chapter One
UNETHICAL BEHAVIORS
IN ORGANIZATIONS AND
HUMAN NATURE
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Copyright © 2012 John Wiley & Sons
 Explain the competitive advantages of
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Learning Objectives
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creating and maintaining an ethical
organization
Appreciate that unethical behaviors occur
in all organizational operations
Identify common types of unethical
behaviors
Understand that unethical behaviors can
be very costly to organizations
Describe different theories of human
nature and the stages of moral
development
Discuss why good people occasionally
behave unethically
Daily Occurrence of Ethical Dilemmas
Ethics is the set of principles a person uses to
determine whether an action is good or bad.
People experience a multitude of ethical
dilemmas on a daily basis. Almost every
decision and action a person makes impacts
other people.
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Daily Occurrence of Ethical Dilemmas
Examples of Ethical Dilemmas:
 Should you arrive at work early, on time, or late?
 Should you submit adequate work that meets a deadline or submit
the highest quality work possible and miss the deadline?
 Should you inform your boss about your colleague's questionable
work habits?
 Should the organization incur additional costs for environmental
protection technologies not required by law?
 Should you leave work at the designated time or cancel after
work plans and stay late to finish a project?
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Unethical Behaviors at Work
Ethics Resource Center 2009 Survey on types of ethical misconduct
respondents observed most within the previous 12 months (top 5):
 Company resource abuse
 Abusive or intimidating behavior toward employees
 Lying to employees
 Email or internet abuse
 Conflicts of interest
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Unethical Behaviors at Work
These ethical misconducts were observed in both large firms
and small firms, and in all sectors examined, including:
 Government agencies (29% reported ethical misconducts)
 Nonprofit organizations (26%)
 Publicly traded for-profit firms (25%)
 Privately held for-profit firms (25%)
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Unethical Behaviors at Work
E V E RY P R OF E S S I ON A N D I N D U S T RY
EXPERIENCES ETHICAL PROBLEMS
Government Agencies
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Costs Associated with Unethical Behaviors
 Managers often
underestimate the
costs associated with
unethical behaviors
 The most direct cost
is lost business
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Other costs associated with
unethical behavior:
 Legal costs
 Theft
 Recruitment and turnover
 Monitoring
 Reputation
 Abusive treatment
Costs Associated with Unethical Behaviors
Legal Costs
 Lawsuits are one of the most easily quantifiable costs
associated with unethical behaviors
 The Equal Employment Opportunity Commission
maintains an annual database of charges filed and
resolved under various antidiscrimination laws
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Costs Associated with Unethical Behaviors
Employee Theft
 Employees can steal money, products, or time
 The biggest source of retail theft is employees, not
customers
 Theft can occur at all levels of an organization
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Costs Associated with Unethical Behaviors
Monitoring Costs
 Organizations incur monitoring costs when they employ
unethical individuals
 Once an employee has lied, he or she needs to be more
closely monitored
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Costs Associated with Unethical Behaviors
Reputation Costs
 An organization’s reputation is one of its most important
assets
 Reputation management accounts for 63% of an
organization’s market value
 Continuous negative publicity creates substantial barriers
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Costs Associated with Unethical Behaviors
Abusive Treatment Costs
 Abusive supervision affects approximately 13% of U.S.
workers
 Costs in terms of absenteeism, health care, and lost
productivity have been estimated to be $23.8 billion
annually
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Costs Associated with Unethical Behaviors
Recruitment and Turnover
 Unethical organizations cannot be trusted
 Unethical organizations incur greater costs recruiting
employees, customers, suppliers, and investors
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Ethical organizations, compared to unethical
organizations, are more likely to:
Competitive
Advantages of
Ethical
Organizations
1. Attract and retain high-quality employees
2. Attract and retain high-quality customers
3. Attract and retain high-quality suppliers
4. Attract and retain high-quality investors
5. Earn good will with community members
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Competitive Advantages of Ethical Organizations
 If you were a job applicant, would you rather work for an
ethical or an unethical organization?
 If you were a customer, would you rather purchase
products or services from an ethical or unethical
organization?
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Human Nature
 Are employees, customers, and suppliers inherently
selfish or altruistic?
 Can they be trusted or do they have to be carefully
monitored?
 From a managerial perspective, what are the most
important features of our moral imperfection?
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Human Nature
Are we:
 Born Good?
 Born with Inherited Sin?
 Born Morally Neutral?
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Cognitive Development
 Children are born into a particular family, neighborhood,
and culture that influence their moral judgment
 Parents are a child’s most direct role model and shape the
child’s environmental experiences
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Kohlberg’s Stages of Moral Development
Level 1 - Pre-conventional
 Obedience & punishment orientation
 Instrumental Orientation
Level 2 - Conventional
 ‘Good Boy’-’Nice Girl’ Orientation
 ‘Law-and-Order’ Orientation
Level 3 - Post-Conventional
 Social contract Orientation
 Universal Ethical Principles
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Kohlberg’s Stages of Moral Development
 Preconventional Level
 individual is not perceived as being part of a broad community with
rules and regulations
 Conventional Level
 societal roles and agreements matter a great deal to the individual
 Postconventional Level
 individual delves into the principles that govern societal roles and
order
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Lies and Cheating
 Managers need honest information from other employees
and stakeholders to achieve optimal organizational
performance
 Children lie and deceive others as soon as they can
formulate alternative strategies
 Lying and cheating continue through high school
 Cheating patterns continue in college
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Lies and Cheating
Exhibit 1.3: The Day Americans Told the Truth
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Why Do Good People Behave Unethically?
 Unintended Unethical Behaviors
 Choosing Between Competing Values
 Intentional Unethical Behaviors
 Failure to Report Unethical Behaviors
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