1.

Overview of Organizational Ethics as Culture

 Ethical Culture: A Multisystem Framework: Understanding how various systems within an

organization contribute to the overall ethical culture.
 Ethical Leadership: The role leaders play in shaping and maintaining ethical standards.
 Formal and Informal Cultural Systems: Different mechanisms that contribute to ethical behavior
within an organization.
 Organizational Climates: Different types of ethical climates, including fairness, benevolence, self-
interest, and principles.
 Developing and Changing Ethical Culture: Strategies for evolving an organization's ethical culture.
 Managing Organizational Ethics: Practical considerations for managing ethics within an organization.

2. Influence of Culture on Individuals

 Ethical Awareness, Judgment, and Action: How culture influences an individual's ability to
recognize, judge, and act on ethical issues.
 Ethical Culture and Individual Differences: The interplay between organizational culture and
personal ethics.

3. Organizational Culture

 Shared Assumptions, Values, and Beliefs: Culture as the social glue that holds an organization
together.
 Strong vs. Weak Cultures: Strong cultures have widely shared values, while weak cultures are more
influenced by subgroups.

4. Ethical Culture: A Multisystem Approach

 Formal Systems: Include executive leadership, selection systems, policies/codes, orientation/training,

performance management, authority structure, and decision processes.
 Informal Systems: Include role models/heroes, norms, rituals, myths/stories, and language.

5. Alignment and Misalignment

 Alignment: When all systems support the same ethical direction.

 Misalignment: When mixed messages about expectations lead to ethical ambiguity.

6. Situational Ethics

 Contextualism: Ethical decisions depend on the context rather than universal rules.
 Flexible Guidelines: Emphasizes the need for flexible, situation-specific ethical guidelines.

7. Leadership and Ethical Culture

 Executive Leaders Create Culture: Leaders play a crucial role in establishing and maintaining the
culture.
 Types of Ethical Leadership: Includes ethical leadership, unethical leadership, hypocritical
leadership, and ethically neutral leadership.
 Executive Ethical Leadership: Involves being both a moral person and a moral manager.

8. Other Formal Cultural Systems

 Selection Systems, Values and Mission Statements, Policies and Codes: Key elements that
formalize the organization's ethical standards.
  Orientation and Training Programs, Performance Management Systems: Mechanisms for instilling
and maintaining ethical behavior.
 Organizational Authority Structure, Decision-making Processes: How authority and decision-
making impact ethical behavior.

9. Informal Cultural Systems

 Role Models and Heroes: Individuals who exemplify the organization's ethical standards.
 Norms, Rituals, Myths and Stories, Language: Cultural elements that informally reinforce ethical
behavior.

10. Ethical Climates

 Fairness, Benevolence, Self-Interest, Principles: Different types of ethical climates that can exist
within an organization.

11. Ethical Culture Change

 From Ethical to Unethical and Vice Versa: Understanding the processes involved in changing an
organization's ethical culture.
 Long-term View, Systems View, Diagnose/Audit, Intervene, Evaluate: Steps to effectively change
an ethical culture.

Chapter 6 Overview: Structuring Ethics

1. Introduction

 Importance of Structuring Ethics: Establishes a framework for ethical behavior within organizations.

2. Structuring Ethics Management

 Corporate Ethics Office: Centralizes ethical oversight.

 Ethics Officers: Can be insiders or outsiders; responsible for managing the ethics program.
 Ethics Infrastructure: Includes systems, processes, and structures to support ethical behavior.
 Corporate Ethics Committee: Provides oversight and governance of the ethics program.

3. U.S. Sentencing Guidelines

 Established in 1991: For companies being sentenced or reaching settlements.

 Applicability: Apply to all companies, triggered by the actions of any employee.
 Penalties: Can include fines and even the "death penalty" (liquidation of the company).
 Compliance Requirements: Companies must self-report wrongdoing, cooperate with investigations,
and have an effective compliance program.

4. Communicating Ethics

 Principles: Importance of clear, consistent communication about ethical standards.

 Evaluating Ethics Communication: Assessing current practices and identifying areas for
improvement.
 Communication Channels: Includes mission or values statements, policy manuals, codes of conduct,
and formal reporting systems.
 Ethics Training Programs: Essential for new recruits and ongoing employee education.

5. Compliance vs. Values-Based Approaches

  Compliance-Based: Rooted in laws and regulations, often reactive with limited senior management
involvement.
 Values-Based: Driven by organizational culture and values, proactive with senior management
commitment.

6. Ethical Behavior and Sanctions

 Model of Ethical Behavior: Includes principles like honesty, integrity, promise-keeping, loyalty,
fairness, concern for others, respect for others, law-abiding, commitment to excellence, leadership,
reputation, and morale, accountability.
 Unethical Behaviors: Include corruption, undue influence, arbitrariness, sexual harassment,
favoritism, and partiality.
 Sanctions: Range from reprimands to expulsion for unethical behavior.

7. Influencing and Encouraging Ethical Behavior

 Influencing Employees: Actions that develop trust, consistency, truthfulness, integrity, and respect.
 Encouraging Ethical Behavior: Communicating the code of ethics, role modeling by managers,
disciplinary actions for unethical behavior, and rewards for ethical behavior.

8. Recommendations for Ethical Management

 Regular Ethics Audits: To add value and ensure adherence to ethical standards.
 Education and Protection: Regular ethics education and protection for employees reporting unethical
behavior.
 Role Modeling by Management: Managers should model ethical behavior and reward adherence to
ethical standards.

9. Ethical Leadership and Executive Compensation

 Ethical Leadership: Essential for establishing and maintaining an ethical culture.

 Executive Compensation: Should be fair and aligned with performance, raising ethical questions
about excessive pay.

Key Takeaways

 Ethics Management: A structured approach is crucial for fostering ethical behavior in organizations.
 Communication and Training: Clear, consistent communication and ongoing training are essential for
promoting ethics.
 Leadership's Role: Leadership at all levels must model ethical behavior and hold others accountable.
 Balanced Compensation: Executive compensation should be fair and reflect the company’s overall
performance and values.

Chapter 8 Overview: Employee Engagement

1. Introduction

 Employee Engagement: Defined as discretionary effort that employees bring to their work, spanning a
continuum from "engaged" to "actively disengaged."

2. Engagement Continuum

 Engaged: Passionate, enthusiastic, connected to the company, drive innovation, go the extra mile.
 Not Engaged: Checked out, sleepwalking, put in time but not energy or passion.
 Actively Disengaged: Negative drag on culture, may sabotage company initiatives, no loyalty.
3. Cost of Disengaged Employees

 In the United States:

o 16% actively disengaged, costing $13,000 per year per employee in lost productivity.
o Total lost productivity estimated at nearly $300 billion annually.

4. Benefits of Engaged Employees

 Positive Outcomes:
o 50% lower turnover and absenteeism.
o 56% higher customer loyalty.
o 27% higher profits, generating $3,800 more in profits per employee.
o 46% fewer accidents.
o $27,000 more in sales and $18,600 more in market value per employee.

5. Drivers of Engagement

 Line of Sight: Understanding company's strategic direction and how individual efforts contribute.
 Involvement: Active participation and having ideas heard.
 Information Sharing: Access to necessary information, fostering an open culture.
 Rewards & Recognition: Clear goals and values, ensuring ethical behavior is rewarded.

6. Managing the Basics

 Key Areas: Hiring, work assignments, performance evaluation, discipline, terminations.

 Ethical Problems: Ensuring fairness, transparency, and consistency in these areas to avoid ethical
issues.

7. Ethical Leadership

 Definition: Influencing activities towards goal achievement in a socially responsible way.

 Importance: Critical for fostering trust and ethical behavior within the organization.
 Models: Interpersonal trust model, social power model, utilitarianism, deontology, virtue ethics.

8. Managing a Diverse Workforce

 Diversity: Recognizing and valuing differences among employees.

 Harassment: Addressing and preventing inappropriate behavior.
 Family and Personal Issues: Balancing work with personal responsibilities.
 Ethical Problems: Ensuring fair treatment and accommodations for all employees.

9. Individual Strategies for Dealing with Diversity

 Understanding: Clarifying the nature and meaning of diversity.

 Empathy: Understanding the perspectives of others.
 Tolerance: Accepting cultural differences.
 Communication: Ensuring two-way communication.

10. Toward the Multicultural Organization

 Characteristics: Pluralism, full structural integration, absence of prejudice, and low levels of intergroup
conflict.
 Manager's Role: Establish clear standards, communicate expectations, and act as role models.
11. Managing Up and Across

 Honesty: Maintaining integrity in interactions with superiors and peers.

 Standards: Ensuring standards apply equally in all directions within the organization.

Chapter 9 Overview: Corporate Social Responsibility (CSR)

1. Introduction

 Corporate Social Responsibility (CSR): Goes beyond economic and legal obligations to act ethically
and contribute positively to society.

2. Evolution of CSR

 1950s-1970s: Early definitions focused on social elements.

 1970s-1980s: Development of models and conceptual frameworks.
 1980s onwards: Increased focus on the financial impacts and competitive advantages of CSR.

3. Definitions of CSR

 World Business Council for Sustainable Development (1999): Commitment to ethical behavior and
economic development while improving quality of life for employees, their families, and the broader
community.
 World Bank (2008): Contribution to sustainable economic development.
 Kotler & Lee (2005): Improving community well-being through discretionary business practices and
contributions.
 Carroll (1979): Encompassing economic, legal, ethical, and discretionary expectations from society.

4. Models of CSR

 Carroll's Pyramid (1979): Four areas of corporate social performance: economic, legal, ethical, and
philanthropic.
 Dahlsrud’s Dimensions (2008): Environmental, social, economic, stakeholder, and voluntariness
dimensions.

5. The Business Case for CSR

 Value Creation: Shift from risk management to creating value (Zadek, 2004).
 Long-term Gains: Short-term costs may lead to long-term benefits (Davis, 1960).
 Benefits: Reduced emissions, efficient supply chains, employee retention, customer loyalty, and cost
savings.

6. CSR in Large Corporations vs. Small Businesses

 Large Corporations: Standardized and formalized CSR policies, often developed at board level.
 Small Businesses: More informal and organic approaches to CSR.
 Challenges: One-size-fits-all approaches do not work due to differences in structure and resources.

7. Why Corporate Social Responsibility?

 Pragmatic: Maintain legitimacy, protect reputation, and ensure viability.

 Ethical: Responsibility to behave ethically and contribute to the greater good.
 Strategic: Creating shared value and differentiating from competitors; societal prosperity leads to
business prosperity.
8. Stakeholder Perspective

 Stakeholders: Owners, organization, employees, suppliers, government, financial institutions,

competitors, customers, community, interest groups, and media.

9. Types of Corporate Social Responsibility

 Economic Responsibilities: Generating profits.

 Legal Responsibilities: Complying with laws and regulations.
 Ethical Responsibilities: Doing what is right beyond legal obligations.
 Philanthropic Responsibilities: Contributing to the community and improving quality of life.

10. Triple Bottom Line

 Components: Economic, social, and environmental sustainability.

11. Case Study: Merck and River Blindness

 Economic Responsibility: Assessing costs and benefits of investments.

 Legal Responsibility: Complying with legal obligations.
 Ethical Responsibility: Considering stakeholder impacts and ethical values.
 Philanthropic Responsibility: Considering the role of philanthropy in business.

12. Executive Decision-Making

 Values and Ethics: Organizational values should guide CSR decisions.

 Employee Values: Considering the values of employees.
 Ethical Leadership: Organizations can set ethical standards and lead by example.

Key Takeaways

 CSR: Extends beyond profit-making to include ethical and philanthropic responsibilities.

 Evolution: CSR has evolved from a focus on social elements to include economic and environmental
considerations.
 Business Case: Demonstrates that CSR can create long-term value and competitive advantages.
 Stakeholders: Effective CSR involves considering the needs and impacts on various stakeholders.
 Triple Bottom Line: Balances economic, social, and environmental goals.
 Decision-Making: Ethical leadership and organizational values are crucial in guiding CSR initiatives.