MGMT 202 1st EditionExam 1 Study GuideTYPES OF EMPLOYMENT SECTORS:Business, government, non-profitsTrends in recent ethical breaches in society:Ethics resource center data: A. observed misconduct higher in larger organizations – easier to get away with things; more anonymityB. differences in observed misconduct across sectors (29% non-profit, 31% business, 38% government) – government is highest because there is a strict code of conduct that can be reported againstModel for ethical decision-making:A. Who are the stakeholders involved? Think about someone other than yourself. Suppliers, distributors, environment, employees, shareholders, etc. We can’t be lazy or biased; this takes time, commitment, and critical thinking.B. Understand the financial considerations – a temporary loss can be good in the long run if you’re trying to gain market share. Tylenol case…C. Legal regulations – know the law; anticipate major changes that could be coming in the futureRemember, not everything that’s ethical is legalD. Ethical is foundation of the pyramid – am I ends-based or means-based? E.g., doing anything to get an A is being ends-based.History of Business Ethics:Before 1960:Agonizing phases of questioning the morality of capitalismPassage of the 1934 Securities Exchange ActThe role of religious leadersUnited Fruit scandal – company got involved with government and CIA in overturning a president in GuatemalaThe 1960’s (The Rise of Social Issues):Anti-business climate – acid rainThe 1962 Consumer’s Bill of Rights – 4 rights every consumer has – the right to be safe; the rightto be informed (where the product comes from, what its contents are); the right to choose (monopolistic holds are not good); the right to be heard Corvair scandal – government took action against GM – style was prioritized over safetyThe 1970’s (Ethics as an Emerging Field):The emergence of Corporate Social Responsibility (CSR) – Milton Friedman – maximize shareholder wealth; donate to charity if shareholders give assent Passage of the 1977 Foreign Corrupt Practices Act – illegal to bribe to secure access to foreign marketsFord Pinto scandal – exploded from slow rear-end collisions; 53 people died; unrealistic goals=compromise of safetyThe 1980’s (Consolidation): business ethics have finally arrived; social policy groups starting to formEstablishment of the 1986 Defense Industry InitiativeNeoliberalism – encourage free flow of moneyUnion Carbide scandal – established facility in India (former British colony); double set of rulesReagan and Bush – self-regulation over government regulation, resulted in neoliberalismPrivate enterprises are more efficientThe 1990’s (The Institutionalization of Ethics):The continuance of self-regulation and free tradePassage of the 1991 Federal Sentencing Guidelines for Organizations Act – compelled companies to provide ethical training to prevent ethical misconduct; essentially let companies off the hook if one of their employees went rogueXerox scandal – accelerating revenues for equipment sales (accounting scandal)The Twenty-First Century (A New Focus):The fall of the “Arthur Anderson” – caught shredding documents; company no longer exists; caused Sunbeam to come under scrutiny and fallThe loss of confidence in financial reporting and corporate ethicsImclone scandalPassage of the 2002 Sarbanes-Oxley Act:-creation of accounting oversight boards-greater transparency in financial reports-executives “sign-off” on firms financial reports-fines and jail time if executives misrepresent their financial position-requires executives to disclose stock sales immediately-prohibited firms from giving loans to executives…and much moreFallen CEO’s: Bernie Evers (“fines and jail time if executives misrepresent their financial position”), Martha Stewart/Sam Waxell (broke “requires executives to disclose stock sales immediately”)Goals: expectations of outcomesNorms: …of behaviorsBeliefs: …of thoughtsValues: Prioritization of goals, norms, and beliefsAmerican Culture: Six Liberal Traits – wherever you are in America, people will generally agree with these1. Individualism – advancement by individual efforts, not so much the mindset “what’s good for society is best”; we often tend to localize problems and blame an individual2. Capitalism – economic extension of individualism; freedom to own property; we’re a mixed economy3. Individual Rights – freedom of speech, religion, etc4. Rule of Law – laws can change; laws are fair and non-discriminating 5. Majority Rule and Minority Rights – not the case in every country6. Pro- and Anti-Government Sentiments – because of individual rights, we can feel how we want about government and express it; NGO=non-government organization – tons in America, illegal in ChinaRobert Jackall: The Bureaucratic EthicObservations:1. Image shaping – associating with the right people, who can help them advance their careers, instead of focusing on knowledge and experience; too much focus on who you know instead of what you know2. Team play – good employee is a team player3. Group think – being swayed by opinions of team members that are different from your own; safety in numbers/anonymity Findings:1. High conformity in bureaucratic org. 2. Employees unlikely to speak up – easily overruled3. Bad news not brought forward Joseph Badaracco and Allen Web: Managers in the “Trenches” – built on Jackall’s workObservations:1. Pressure from mid-level managers2. Futility of corporate codes of ethics3. Aloofness of executives with ethics – didn’t know or care what was going on in the backgroundFindings:1. Org. importance on “making the numbers”2. Expectation of team play3. No rewards for being ethicalAttributes of those most promotable in bureaucratic organizations according to Jackall, Badaracco, and Web (ends-based approach):1. Opportunistic of others’ misfortunes2. “Teflon” psyche – Teflon=non-stick coating on pans; people with “Teflon psyche” don’t take personal responsibility3. Willingness to do anything for the organization – put hours in, do dirty work; “useful idiots”4. “Survival of the Fittest” mentality – do anything and everything to get on top, including lying/cheatingWall Street Journal article – “Want to Be CEO? What’s Your BMI?”Why Do Ethical Disasters Happen? People, Organizations, Situations1. People are flawed-Individual