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Organizational Ethics
Third Edition
2
To my colleagues.
3
Organizational Ethics
A Practical Approach
Third Edition
Craig E. Johnson
George Fox University
4
FOR INFORMATION:
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Copyright © 2016 by Sage Publications, Inc.
All rights reserved. No part of this book may be reproduced or utilized in
any form or by any means, electronic or mechanical, including
photocopying, recording, or by any information storage and retrieval
system, without permission in writing from the publisher.
5
Printed in the United States of America.
ISBN 978-1-4833-4440-9
This book is printed on acid-free paper.
Acquisitions Editor: Maggie Stanley
Editorial Assistant: Nicole Mangona
Production Editor: Bennie Clark Allen
Copy Editor: Lynn Weber
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Proofreader: Susan Schon
Indexer: Maria Sosnowski
Cover Designer: Rose Storey
6
Brief Contents
List of Case Studies, Self-Assessments, and Ethics in Action
Acknowledgments
Introduction
Part I. Laying an Ethical Foundation
Chapter 1 Ethical Perspectives
Part II Practicing Individual Ethics in the Organization
Chapter 2 Components of Personal Ethical Development
Chapter 3 Ethical Decision Making and Action
Part III. Practicing Interpersonal Ethics in the Organization
Chapter 4 Ethical Interpersonal Communication
Chapter 5 Exercising Ethical Influence
Chapter 6 Ethical Conflict Management and Negotiation
Part IV. Practicing Group, Leadership and Followership Ethics
Chapter 7 Improving Group Ethical Performance
Chapter 8 Leadership Ethics
Chapter 9 Followership Ethics
Part V. Practicing Ethics in Organizational Systems
Chapter 10 Building an Ethical Organization
Chapter 11 Managing Ethical Hot Spots in the Organization
Chapter 12 Promoting Organizational Citizenship
Chapter 13 Ethics in a Global Society
Notes
References
Index
About the Author
7
Contents
List of Case Studies, Self-Assessments, and Ethics in Action
Acknowledgments
Introduction
Part I. Laying an Ethical Foundation
1. Ethical Perspectives
Chapter Preview
Utilitarianism: Do the Greatest Good for the Greatest
Number
Evaluation
Kant’s Categorical Imperative: Do What’s Right Despite
the Consequences
Evaluation
Rawls’s Justice as Fairness: Balancing Freedom and
Equality
Evaluation
Aristotelian Ethics: Live Well
Evaluation
Confucianism: Building Healthy Relationships
Evaluation
Altruism: Concern for Others
The Ethic of Care
Evaluation
Chapter Takeaways
Application Projects
Part II. Practicing Individual Ethics in the Organization
2. Components of Personal Ethical Development
Chapter Preview
Component 1: Realistic Self-Appraisal
Component 2: Discovering Vocation
Discovering Your Personal Gifts
Barriers to Obeying Our Callings
Component 3: Identifying Personal Values
Component 4: Developing Character
Positive Psychology and Virtues
Direct Approaches to Character Development
Indirect Approaches to Character Development
Component 5: Creating a Moral Identity
8
Component 6: Drawing Upon Spiritual Resources
Caring for the Soul
The Stages of Spiritual Development
Dealing With the Dangers of Organizational
Spirituality
Chapter Takeaways
Application Projects
3. Ethical Decision Making and Action
Chapter Preview
Once More With Feeling: Emotion in Moral Decision
Making
Components of Ethical Behavior
Component 1: Moral Sensitivity (Recognition)
Component 2: Moral Judgment
Component 3: Moral Motivation
Component 4: Moral Character
Decision-Making Formats
Kidder’s Ethical Checkpoints
The Lonergan/Baird Method
The Moral Compass
The Foursquare Protocol
The Five “I” Format
Chapter Takeaways
Application Projects
Part III. Practicing Interpersonal Ethics in the Organization
4. Ethical Interpersonal Communication
Chapter Preview
Dialogue: An Ethical Framework for Interpersonal
Communication
Ethical Communication Competencies
Mindfulness
Effective Listening
Confirmation
Emotional Intelligence
Trust Building
Moral Argument
Chapter Takeaways
Application Projects
5. Exercising Ethical Influence
Chapter Preview
Questions of Power
9
Question 1: Are Some Forms of Power More Ethical
Than Others?
Question 2: Is It Possible to Have Too Much Power?
Question 3: Should I Play Politics?
Question 4: What Factors Contribute to
Empowerment?
Question 5: How Do I Overcome Barriers to
Empowerment?
Ethical Issues in Influence
Proactive Tactics
Impression Management
Deception
Emotional Labor
Communication of Expectations
Chapter Takeaways
Application Projects
6. Ethical Conflict Management and Negotiation
Chapter Preview
Conflict in Organizational Life
Becoming an Ethical Conflict Manager
Step 1: Recognize the Differences Between Functional
and Dysfunctional Conflicts
Step 2: Manage Your Emotions
Step 3: Identify Your Personal Conflict Style
Step 4: Develop Conflict Guidelines
Step 5: Employ Collaborative Conflict Management
Tactics
Step 6: Be Prepared to Apologize
Resolving Conflict Through Ethical Negotiation
Ethical Issues in Negotiation
Adopt an Integrative Approach to Negotiation
Combating Aggression and Sexual Harassment
Types of Aggression
Sources of Aggression
Resisting and Reducing Aggression
Preventing Sexual Harassment
Chapter Takeaways
Application Projects
Part IV. Practicing Group, Leadership, and Followership Ethics
7. Improving Group Ethical Performance
Chapter Preview
10
Acting as a Morally Responsible Team Member
Adopting a Cooperative Orientation
Doing Your Fair Share (Not Loafing)
Displaying Openness and Supportiveness
Being Willing to Stand Alone
Responding to Ethical Danger Signs
Groupthink
Mismanaged Agreement
Escalating Commitment
Excessive Control
Moral Exclusion
Chapter Takeaways
Application Projects
8. Leadership Ethics
Chapter Preview
The Ethical Challenges of Leadership
The Challenge of Power
The Challenge of Privilege
The Challenge of Responsibility
The Challenge of Information Management
The Challenge of Consistency
The Challenge of Loyalty
The Shadow Side of Leadership
Bad Leadership
Toxic Leadership
Destructive Leadership
Selfish Leadership
Normative Leadership Theories
Transformational Leadership
Servant Leadership
Authentic Leadership
Benevolent Paternalistic Leadership
Chapter Takeaways
Application Projects
9. Followership Ethics
Chapter Preview
The Growing Power of Followers
The Ethical Challenges of Followership
The Challenge of Obligation
The Challenge of Obedience
The Challenge of Cynicism
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The Challenge of Dissent
The Challenge of Bad News
Meeting the Moral Demands of Followership: Principles
and Strategies
Overcoming Unhealthy Motivations
Servant (Exemplary) Followership
Engaged Followership
Courageous Followership
Authentic Followership
Managing Up/Leading Up
Whistle-Blowing
Chapter Takeaways
Application Projects
Part V. Practicing Ethics in Organizational Systems
10. Building an Ethical Organization
Chapter Preview
Making Ethics Matter
Components of Ethical Culture
Formal Elements
Informal Elements
Cultural Change Efforts
Ethical Drivers
Chapter Takeaways
Application Projects
11. Managing Ethical Hot Spots in the Organization
Chapter Preview
Ethical Marketing
Ethical Issues in Marketing
Ethical Principles and Strategies
Ethical Finance and Accounting
Ethical Issues in Finance and Accounting
Ethical Principles and Strategies
Ethical Human Resource Management
Ethical Issues in Human Resource Management
Ethical Principles and Strategies
Chapter Takeaways
Application Projects
12. Promoting Organizational Citizenship
Chapter Preview
The Organization as Citizen
Components of Organizational Citizenship
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Corporate Social Responsibility
Sustainability
The Stages of Corporate Citizenship
Promoting Organizational Citizenship
Adopting a Stewardship Mindset
Measuring Social Performance
Chapter Takeaways
Application Projects
13. Ethics in a Global Society
Chapter Preview
The Dangers of Globalization and the Challenges of Ethical
Diversity
Developing Cross-Cultural Ethical Competence
Coming to Grips With Ethnocentrism
Becoming a World Citizen
Understanding Ethical Diversity
Finding Moral Common Ground
Resolving Ethical Cross-Cultural Conflicts
Chapter Takeaways
Application Projects
Notes
References
Index
About the Author
13
List of Case Studies, Self-Assessments, and
Ethics in Action
Case Studies
Case Study 0.1 Federal Employees Behaving Badly xxix
Case Study 1.1 Free Tilly? 6
Case Study 1.2 Is This Any Way to Run a Prison? 28
Case Study 1.3 The (Accused) Terrorist as Rock Star 30
Case Study 2.1 Character Development at West Point 48
Case Study 2.2 Superheroes in the Elementary Classroom 62
Case Study 2.3 A Different Kind of Pope 63
Case Study 3.1 Managerial Decision 84
Case Study 3.2 Scenarios for Analysis 99
Case Study 4.1 Taking Credit When Credit’s Not Due 123
Case Study 4.2 Everyone’s Favorite Professor 128
Case Study 4.3 The Stem Cell Account 130
Case Study 5.1 To Pad or Not to Pad? 148
Case Study 5.2 Taking Charge at the Assisted Living Facility 161
Case Study 5.3 Flying the Unfriendly Skies 162
Case Study 6.1 Saying No to Trader Joe’s 178
Case Study 6.2 Bullies in the Locker Room 194
Case Study 6.3 Declaring War on Sexual Assault in the Military 197
Case Study 7.1 The HealthCare.gov Rescue Squad 202
Case Study 7.2 Groupthink in the Sweat Lodge 226
Case Study 7.3 To Loan or Not to Loan? 228
Case Study 8.1 CEO Compensation: The Sky’s the Limit 232
Case Study 8.2 Failing to Serve Those Who Served 256
Case Study 8.3 Leading in the Darkness and the Light 258
Case Study 9.1 Helping Harvard Medical School Make the Grade 269
Case Study 9.2 GM’s Deadly Ignition Switch 290
Case Study 9.3 Blowing the Whistle on the NSA 292
Case Study 10.1 Cyberloafing 305
Case Study 10.2 Leaving Goldman Sachs 329
Case Study 10.3 Costco’s Fish Story 331
Case Study 11.1 Accounting/Finance Ethics Scenarios 350
Case Study 11.2 Marketing High Energy 361
Case Study 11.3 Boeing Plays Hard Ball 363
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Case Study 12.1 Girl Scout Barbie 377
Case Study 12.2 The Public Benefit Corporation 390
Case Study 12.3 The Greening (or Greenwashing) of Walmart 391
Case Study 13.1 The Right to Be Forgotten 398
Case Study 13.2 The High Cost of Cheap Clothes 419
Case Study 13.3 Scenarios for Analysis 421
Self-Assessments
Self-Assessment 0.1 Attitudes Toward Business (and Organizational)
Ethics xxiv
Self-Assessment 1.1 Subjective Happiness Scale (SHS) 16
Self-Assessment 1.2 Organizational Citizenship Behavior Scale 22
Self-Assessment 2.1 Brief Calling Scale (BCS) 38
Self-Assessment 2.2 Preferred Roles 41
Self-Assessment 3.1 Moral Sensitivity Scenarios 72
Self-Assessment 3.2 Key Self-Knowledge Questions 88
Self-Assessment 4.1 Mindful Attention Awareness Scale (MAAS)
110
Self-Assessment 4.2 Listening Styles Profile 114
Self-Assessment 5.1 Personal Power Profile 135
Self-Assessment 5.2 Authenticity at Work Scale 155
Self-Assessment 6.1 Conflict Style Inventory 170
Self-Assessment 6.2 Negative Acts Questionnaire 183
Self-Assessment 7.1 Class Project Social Loafing Scale 207
Self-Assessment 7.2 Group Diagnostic Survey 218
Self-Assessment 8.1 Servant Leadership Questionnaire 249
Self-Assessment 8.2 Benevolent Paternalism Scale 253
Self-Assessment 9.1 The Upward Dissent Scale 267
Self-Assessment 9.2 Followership Styles 274
Self-Assessment 10.1 Ethics Audit Questions 319
Self-Assessment 10.2 Socialization Scale 325
Self-Assessment 11.1 Skepticism Scale 347
Self-Assessment 11.2 The Organizational Justice Scale 357
Self-Assessment 12.1 The Four Stages of Issue Maturity Scale 373
Self-Assessment 12.2 Covenantal Relationship Questionnaire 385
Self-Assessment 13.1 Individualism/Collectivism Scale 402
Self-Assessment 13.2 Moral Foundations Questionnaire 408
15
Ethics in Action
Ethics in Action 0.1 Ethical Competencies xxvi
Ethics in Action 1.1 Facebook Etiquette 19
Ethics in Action 2.1 Character Strengths 45
Ethics in Action 2.2 Workplace Spirituality: Definitional Threads 57
Ethics in Action 3.1 Stages of Moral Development 74
Ethics in Action 3.2 Rational Remedies for Cognitive Biases 81
Ethics in Action 4.1 Listening Skills 113
Ethics in Action 4.2 Emotional Analysis Questions 120
Ethics in Action 4.3 Building Blocks of Organizational Trust 122
Ethics in Action 5.1 Impression Management Tactics 146
Ethics in Action 6.1 Responding to Dirty Tricks 176
Ethics in Action 6.2 Dealing With the Dangers (and Opportunities) of
Office Romances 190
Ethics in Action 7.1 Intergroup Cooperation 205
Ethics in Action 7.2 Social Loafing in Virtual Teams 210
Ethics in Action 7.3 Symptoms of Moral Exclusion 223
Ethics in Action 8.1 Self-Sacrificial Leadership 246
Ethics in Action 9.1 Leading Up at Every Level of the Organization:
Tempered Radicals 285
Ethics in Action 9.2 The Whistle-Blower Checklist 287
Ethics in Action 10.1 Characteristics of Ethically Decoupled and
Ethically Transformed Organizations 298
Ethics in Action 10.2 Sample Mission Statements 301
Ethics in Action 11.1 Ethical Issues in Marketing 334
Ethics in Action 11.2 The Geometry of Financial Fraud 342
Ethics in Action 11.3 The Certified Financial Analyst Ethical
Standards 349
Ethics in Action 12.1 Organizational Stakeholders 369
Ethics in Action 12.2 CERES Principles 380
Ethics in Action 13.1 United Nations Global Compact: The Ten
Principles 412
16
Acknowledgments
Writing this text would have been impossible without assistance at every
stage of the project. Rob Bohall and other reference librarians helped me
gather information. Students enrolled in my undergraduate and graduate
business ethics classes were the first to try out cases, self-assessments, and
other chapter material. Colleagues in the College of Business answered my
questions on topics ranging from accounting and economics to marketing
and corporate social responsibility. Colleagues around the university have
given me a greater appreciation of what it means to live in an ethical
community. Special thanks to Corwyn Beals, who provided extensive
feedback on Chapter 1. Rebecca Jensen provided editing assistance, and
Kristina Findley assisted with the auxiliary resources.
Several reviewers offered helpful critiques on the third edition of this text.
These reviewers are Dale Kalika, Arizona State University; Joseph K.
Fitzgerald, IBAT College Dublin; John Osoinach, University of Delaware;
Michael A. Guerra, Lincoln University; Michelle D. Evans, Florida
Atlantic University; Linda G. Olson, University of Denver; Billie
Sandberg, Portland State University; Elizabeth Langevin, University of
Phoenix; Michael Santucci, Eastern Oregon University; and Rae Casey,
George Fox University. I have incorporated their insights whenever
possible into this revision. The editorial and production staff at Sage
skillfully guided me through the final publication stages.
I am grateful to all the individuals and groups named above. Thanks, too,
to my wife, Mary, who is all too aware of the demands that writing makes
on my time but supports my efforts nonetheless.
Finally, I want to acknowledge the ethics scholars whose research and
analysis provide the foundation of this book. Their continuing efforts make
me optimistic about continued progress in the study and practice of
organizational ethics.
17
Introduction
Making the Case for Studying Organizational
Ethics
Source: The New Yorker Collection, Item# 8480168.
Evidence for the importance of organizational ethics is all around us.
Scarcely a day goes by without revelations of a new organizational
scandal. We read and hear about ethical failures in every sector of society
—business, education, social service, environmental, entertainment,
military, medicine, religious, government. Here is just a small sample of
the prominent organizations accused of immoral behavior:
JPMorgan Chase: hiding massive trading losses
Bank of America, Citigroup, UBS: mortgage fraud
National Football League: player misconduct, including DUIs,
domestic violence, and murder; disregard for player safety
News Corporation: hacking into private voice mail accounts, bribery
of British public officials
Google: privacy violations, leaking user information
Kids Wish Network: wasting donor funds
Trump University: deceptive advertising; overcharging for courses
National Security Administration (NSA): illegal surveillance of U.S.
citizens
Harvard Medical School: conflicts of interest involving faculty
18
members employed by drug companies
SAC Capital hedge fund: insider trading
Walgreen’s: deceptive pricing
New England Drug Compounding: shipping tainted medications
The Catholic Church: money laundering in the Vatican bank; clergy
sexual abuse in North America, Europe, and South America
U.S. Army: sexual assaults, lavish spending by high-ranking officers
Major League Baseball and professional cycling: drug doping
Paula Dean Enterprises: racism, sexual harassment
Veterans Affairs medical system: falsifying wait times for patient
care
Massey Energy: safety violations leading to a West Virginia mine
explosion
U.S. Congress: sexual misconduct
Atlanta School System: falsifying student test scores
Internal Revenue Service: targeting political groups for additional
scrutiny
We all pay a high price for unethical organizational behavior. Offending
organizations suffer damaged reputations; declining revenues, earnings,
donations, and stock prices; downsizing and bankruptcy; increased
regulation; and civil lawsuits and criminal charges. Their members may
lose their jobs, see their retirement savings shrink, and end up doing jail
time. Outsiders who have a stake or interest in the fallen organization also
suffer. For example, patients taking drugs with undesirable side effects
face a higher risk of death; neighbors near a polluting manufacturing plant
have to live with environmental damage; investors victimized by fraud see
their net worth decline; and needy citizens must do without important
services when taxpayer funds are wasted. In addition, society as a whole
suffers because trust in many of our basic institutions is lost. According to
the 2014 Edelman Trust Barometer, trust levels in the U.S. declined 10%
in one year, due primarily to a decline in trust in government. Fifty-eight
percent of Americans said they trusted business while only 43% trusted
government. The nation’s composite-trust score, which is made up of its
business, government, nonprofit, and media ratings, was 48%, well below
the global composite score of 54%.1
Preventing significant harm is one reason why organizational ethics is
worthy of your time and attention; the fact that you will constantly be
faced with ethical choices is another. As a member of an organization, you
will make ethical decisions on nearly a daily basis. Some are obvious, like
19
whether or not to clock in for a coworker or to lie to customers. Yet even
routine decisions involving hiring, accounting, planning, manufacturing,
and advertising have an ethical dimension. Take the case of a supermarket
produce buyer deciding which fruits and vegetables to sell in her local
stores, for example. She must weigh several ethical considerations when
making these determinations. For example, should she stock only organic
products? Should she use suppliers who treat their workers poorly? Should
local growers be given priority over distant producers even if the cost is
higher? Is price or quality a more important consideration? Should she use
her bargaining power to take advantage of growers or negotiate
agreements that benefit all parties?
Not only will you continually make ethical choices, but those decisions
can also determine your success or failure in your career. Technical skills
alone are not enough to guarantee you a productive future. For instance,
accountants at the now defunct Arthur Andersen accounting …
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