ORGANIZATIONAL

ETHICSETHICS

Topic Outcomes

At the end of this chapter, students should be

able to:

�Explain the ethical issues in various

2

�Explain the ethical issues in various

components of organization.

Organizational Culture & Ethical

Climate

� Organizational culture can be defined asvalues, beliefs, and norms shared by allemployees of that organization.

� In most organizations, a moral atmosphere canbe detected – people can feel and pick subtlebe detected – people can feel and pick subtlehints and clues that tell them what behavior isapproved and what is forbidden.

� The unspoken understanding amongemployees of what is and is not acceptablebehaviour is called ethical climate.

Business Ethics Across Organizational

Functions

Supply Chain Management

Operation DistributionSales &

MarketingService

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Product R&D, Technology, and System Development

Human Resource Management

Accounting and General Administration

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Ethics in R&D

• R&D carries responsibility for company’s growth –

without new product to sell, organization can lose

customers.

• R&D incorporate customers feedback from market

research – however, this tie with responsibility to research – however, this tie with responsibility to

produce product of the highest quality, safety, and

reliability i.e. defective product not only put

customer at risk, they also generate negative press

coverage & very expensive lawsuit.

• Discussion: Is Proton being ethical when producing

car of quality what people claims as “tin sardin”

quality?

Ethics in Manufacturing

• Manufacturer faces with question of “do you want it

built fast, or do you want it to be built right?”.

• From an organization perspective, you want both,

especially if you know your biggest competitor also

racing to put a new product on the market, and if racing to put a new product on the market, and if

they get there before you do, your sales projection

will not be met.

• Questions: You want to build product with precise

design specifications, but what if there is supply

problem? Do you wait and hold up delivery, or do

you go with an alternative (and less reliable)

supplier?

Ethics in Marketing

• Relations with customers tend to generate many

ethical problems. The marketing processes i.e.

advertising, pricing, public relations, and sales – are

potential problem areas.

• Discussion:• Discussion:

1) What role does marketing play in the perception

that coffee brewed at Starbuck is superior than

coffee brewed at home?

2) What role does McDonald play in promoting

McDonald HappyMeal for kids when almost all of

its products categorized as unhealthy?

Ethics in Human Resource

• HR is an important function in an organization.

• The HR processes are also pruned towards unethical

business conduct.

• Discussion:

1) Interview held for pre-chosen candidates.1) Interview held for pre-chosen candidates.

2) Monitoring staff using CCTV.

3) Taking disciplinary action to staff for the statement

from facebook. Can employer monitor staff posting

through facebook and take disciplinary action against

the staff based from his posting?

Ethics in IT

• IT is one of the fastest growing areas in business

ethics.

• Ethical challenges such as invasions of privacy; the

collection, storage, and access of personal and collection, storage, and access of personal and

business information especially through e-commerce

transactions; confidentiality of electronic mail

communication – are some of ethical issues in IT.

• Issue: Selling of customers personal details to

marketing company.

Building Ethical Safeguard into

Company

How to control unethical issues or conduct in

organization or promote ethical behaviour:

1) Top Management Commitment and Involvement

2) Ethics Policies or Codes2) Ethics Policies or Codes

3) Ethics Officers, or Compliance Officer

4) Ethics Audit

5) Whistle Blowing Policies

6) Corporate Ethics Awards

Building Ethical Safeguard into

Company

How to control unethical issues or conduct in

organization or promote ethical behaviour:

1) Top Management Commitment and Involvement

2) Ethics Policies or Codes2) Ethics Policies or Codes

3) Ethics Officers, or Compliance Officer

4) Ethics Audit

5) Whistle Blowing Policies

6) Corporate Ethics Awards

Conflict of Interest

“A situation where one relationship or obligation places

you in direct conflict with an existing relationship or

obligation”

Discussions:

1) How to overcome the issues of conflict of interest?

2) In a case where your personal interest conflict to

organizational interest, which interest should comes

first?

Self-check Exercise

Instruction

1) Watch the video.

2) Identify what kind of ethical issues exist in the video

and discuss to your classmates.

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