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Ferrell7e Student Ch05

The document discusses ethical decision-making processes and the influence of individual and organizational factors on ethics in business. It emphasizes the importance of corporate culture, ethical climate, and leadership in shaping ethical behavior within organizations. Key characteristics of strong ethical leaders are also outlined, highlighting their role in promoting an ethical culture.

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rafayxool98
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11 views13 pages

Ferrell7e Student Ch05

The document discusses ethical decision-making processes and the influence of individual and organizational factors on ethics in business. It emphasizes the importance of corporate culture, ethical climate, and leadership in shaping ethical behavior within organizations. Key characteristics of strong ethical leaders are also outlined, highlighting their role in promoting an ethical culture.

Uploaded by

rafayxool98
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Business Ethics

Ethical Decision Making


and Cases, Seventh
Edition
O.C. Ferrell
University of New Mexico
John Fraedrich
University of Wyoming
Linda Ferrell .
University of New Mexico

Copyright © Houghton Mifflin Company 5-1


Chapter 5
Ethical Decision
Making and Ethical
Leadership

Copyright © Houghton Mifflin Company 5-2


The Ethical Decision
Making Process

• The first step is to recognize than an


ethical issue requires a choice
among several actions that various
stakeholders inside or outside the
firm will ultimately evaluate as right
or wrong.

Copyright © Houghton Mifflin Company 5-3


Ethical Issue Intensity

• This is defined as the perceived


relevance or importance of an ethical
issue to the individual, work group,
and/or organization.
• Positive or negative incentives can
affect the perceived importance of an
ethical issue.
• Employees need education regarding
potential problem areas.
Copyright © Houghton Mifflin Company 5-4
Individual Factors

• How people resolve ethical issues


in their daily lives is often based
on values and principles learned
through family socialization.
• Individual factors include:
– Gender
– Education
– Work experience
– Nationality
– Age

Copyright © Houghton Mifflin Company 5-5


Organizational Factors

• Corporate culture: a set of values,


beliefs, goals, norms and ways to
solve problems that members
(employees) of an organization
share.
• Some corporate cultures support
and reward unethical behavior.
• Ethical climate is a component of
corporate culture.

Copyright © Houghton Mifflin Company 5-6


Ethical Climate

• Defined as the character or decision


processes used to determine whether
actions are ethical or unethical
• Consists of corporate codes of ethics,
top management actions, ethical
policies, coworker influence, and the
opportunity for unethical behavior

Copyright © Houghton Mifflin Company 5-7


Significant Others

• The work group, which includes


people such as peers, managers,
and subordinates
• Have more influence on daily
decisions
than any other factor

Copyright © Houghton Mifflin Company 5-8


Opportunity

• Relates to permitting ethical or


unethical behavior
• Rewards and punishment play a key
role
• Can be eliminated by establishing
formal codes, policies, and
rules that are
enforced

Copyright © Houghton Mifflin Company 5-9


The Role of Leadership in
Corporate Culture

• Leadership is the ability or


authority to guide and direct others
toward achievement of a goal
• Leaders are key to influencing an
organization’s corporate culture
and ethical posture

Copyright © Houghton Mifflin Company 5-10


Leadership

• The most successful leaders do


not rely on one style of
leadership but alternate their
technique based on the
characteristics of the situation.

Copyright © Houghton Mifflin Company 5-11


Types of Leaders

• Transactional
• Transformational
• Transformational ethical
– Best suited for organizations that
have higher levels of ethical
commitment among employees
and strong stakeholder support for
an ethical culture

Copyright © Houghton Mifflin Company 5-12


Habits of Strong Ethical
Leaders
1. Ethical leaders have a strong personal character.
2. Ethical leaders have a passion to do right.
3. Ethical leaders are proactive.
4. Ethical leaders consider stakeholders’ interests.
5. Ethical leaders are role models for the
organization’s values.
6. Ethical leaders are transparent and actively
involved in organizational decision-making.
7. Ethical leaders are competent managers who
take a holistic view of the firm’s ethical culture.

Copyright © Houghton Mifflin Company 5-13

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