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Managing Business EthicsChapter 5

Treviño & Nelson – 5th Edition

++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

++Influence of Culture on Individuals

Ethical Ethical AwarenessAwareness

Ethical JudgmentEthical Judgment Ethical ActionEthical Action

Ethical CultureEthical Culture

Individual DifferencesIndividual Differences

++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

++Culture

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

++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?Alignment?

++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

++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

++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

++ Executive Ethical Leadership Reputation Matrix

Hypocritical leader Ethical leader

Unethical leader

Strong

Weak

Moral Manager

Weak StrongMoral Person

Ethically neutral Ethically neutral leaderleader

++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

++Informal Cultural Systems

Role Models and Heroes

Norms: “The Way We Do Things Around Here”

Rituals

Myths and Stories

Language

++Ethical Climates

Fairness

Benevolence

Self-Interest

Principles

++Ethical Culture Change

From ethical to unethical

From unethical to ethical

++Ethical Culture Change

Long-term view

Systems view

Diagnose/Audit

Intervene

Evaluate