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Managing Business Ethics

Managing Business Ethics. Chapter 5 Treviño & Nelson – 5 th Edition. Chapter 5 Overview . Organizational Ethics as Culture Ethical Culture: A Multisystem Framework Ethical Leadership Other Formal Cultural Systems Informal Cultural Systems

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Managing Business Ethics

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  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. 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 Executive Ethical Leadership Rests on Two Pillars

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

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