Overview of Ethics

1. DEFINITION AND OVERVIEW OF ETHICS

Ethics is about doing the right thing within a moral framework. In other words, it is the practical application of morality. What is ethical in a given situation is decided by applying the values that comprise the prevailing moral framework. The fundamen­tal question that arises in any ethical dilemma is this: If I be­lieve in a given standard of right and wrong, how should these beliefs guide my actions, behavior, attitude, and decisions? The ever-present challenge, of course, is not just determining what is right but also following through and doing what is right.

1.1. Human Factors That Contribute to Unethical Behavior

Breaches of ethical conduct are, unfortunately, common in to­day’s hectic, hypercompetitive global business environment.

The most common impediment to ethical conduct is simply human nature. Human beings tend to behave according to the principle of perceived personal interest. An unfortunate fact of life is that it will often appear that a person’s personal interests are best served—at least in the short run—by an unethical choice. Factors that contribute to this type of mis­guided perception include greed, impatience, ego, fear, expe­dience, ambition, and need.

Driven by greed, a CEO might decide to deliver a large lot of manufactured goods he knows are defective. Driven by impatience, a person might push her employees to perform a job in an unsafe manner that could lead to accidents and in­juries. Driven by ego, a person might claim credit for superior work that was actually performed by someone else. Driven by fear of retribution, a person who knows his boss is lying to stockholders might simply ignore the fact and look the other way. Driven by expedience, a person might cut corners

in ways that could lead to tragic results. Driven by misguided ambition, a person might lie on her resume, adding a degree she has not completed. Finally, driven by the need to pay the mounting hospital bills for his sick child, a person might use a company credit card for personal expenses.

In all of these cases, people made unethical choices based on misguided personal interest. Even though one might, understandably, feel sympathy for the individual who was struggling to pay mounting hospital bills, the choice he made to misuse a company credit card was still an unethical choice. Doing the wrong thing, even for the right reasons, is still wrong. Extenuating circumstances do not alter what is right or wrong, just as understanding why a person makes an unethical choice does not excuse her for doing so. This leads to an important point relating to human nature and ethics.

When deciding what is right and wrong in a given situ­ation, it is often necessary to separate the choice from the extenuating circumstances that impinge on making it. These extenuating circumstances can create what is known as a gray area around a given choice. By “gray,” the people involved in making the choice mean that what is right is neither black nor white. There is a gray area surrounding the decision that makes it difficult to see through the fog to find the right thing. There are cases when using the gray area argument is legitimate—for example, when doing what is right will help one person but hurt many. What is the right thing to do in such a case? Should the decision makers take a black-and- white approach or apply the principle of the greater good? This is a legitimate gray area in an ethical dilemma.

However, many times when decision makers say they are dealing with a gray area when facing an ethical dilemma, what is really happening is that they want to make a choice they know is unethical but for reasons of misguided personal interest are trying to find a way to justify it. In such cases, decision makers often use the extenuating circumstances as their justification. This is why it is so important to separate decisions concerning what is right and wrong from extenu­ating circumstances. The approach that is more likely to lead to an ethical choice is to decide what is right in a given situ­ation and do it. Then find other ethical ways to deal with the extenuating circumstances.

For example, in the case above of the individual who misused a company credit card, there were a variety of ethi­cal ways to deal with the extenuating circumstance (hospital bills for a sick child). He could have asked friends, family, colleagues, and charitable organizations for help. In every community, there are civic organizations that sponsor fund­raising events for just such situations. The individual in­volved was in a bind—of this there is no doubt—but he had options for dealing with his situation other than the unethi­cal choice he made.

1.2. Organizational Factors That Contribute to Unethical Behavior

Human nature, coupled with the competitive pressure of the global marketplace, can make adhering to ethical principles a daily challenge. Organizations can either help relieve the pressure, thereby making it less difficult for their personnel to behave ethically, or create an environment that increases the pressure, thereby almost guaranteeing unethical behav­ior. Organizational factors that can contribute to unethical behavior include the following:

• Failing to make ethics part of the organization’s core values. An important component of an organization’s strategic plan is a statement of core values. Failing to make high ethical expectations a core value in the strategic plan is tantamount to approving unethical behavior. Silence on ethics sends the wrong message from the top, and it is not sufficient to claim that “our organization takes ethical be­havior for granted, so we don’t need to make it part of our strategic plan”
• Failing to set a consistent positive example. Executives and managers in any organization set the tone for the organization. If management personnel expect ethi­cal behavior, they have to set a consistent example of it. Employees will follow the actions of management person­nel rather than their words. The words are important, but they must be consistently reinforced by ethical action, de­cisions, and behavior.
• Putting personnel in ethical “corners.” Management personnel who box employees in by forcing them into ethical corners that offer no room to maneuver will al­most surely produce unethical behavior. This can happen, for example, when the pressure to meet a deadline looms. A manager might say to his team, “I don’t care how you do it, but I want you to meet the deadline” This manager has just told his direct reports that even if they have to take unethical shortcuts, they are to meet the deadline.
• Failing to adopt, deploy, and enforce a corporate code of ethics. If ethical behavior is a core value for an orga- nization—as it must be—the organization should adopt, deploy, and enforce a corporate code of ethics that pro­vides specific guidance for personnel. Even a code of eth­ics cannot cover every ethical exigency that might arise, but it can provide guidance that is specific enough to be meaningful but generic enough to allow for the applica­tion of good judgment.
• Applying unrealistic pressure. As the globalization of competition continues, organizations are under increas­ing pressure to perform at ever higher levels. This is why continual improvement is a foundational aspect of quality management. Competition creates pressure by shorten­ing deadlines, demanding lower costs, expecting higher quality, and wanting better service. The pressure on the leaders of organizations that operate in a competitive en­vironment is intense. When this pressure is passed down throughout the organization in a realistic manner, there is no problem. But when poor planning on the part of management causes pressure to be applied unrealistically, employees are forced to take unethical shortcuts.
• Failing to reward ethical behavior. There is an adage that “No good deed goes unpunished” Here is just one example of what this adage can mean in the workplace.

An individual in an organization makes an ethical deci­sion that results in a short-term loss of profits but that is clearly the right thing to do. Rather than being rewarded, she is punished—not overtly but in subtle ways. For exam­ple, a quality manager discovers that his company has just shipped a box of defective parts to a customer. He quickly contacts the customer, recalls the defective parts, and re­places them with parts that meet all quality standards. This causes the manufacturing department’s monthly re­port to show a major increase in waste; hence, the com­pany suffers a temporary loss of profits. The company’s CEO responds by giving the quality manager a bad per­formance review. This CEO actually punished his quality manager for doing the right thing instead of rewarding him. By failing to reward ethical behavior, the CEO actu­ally encouraged unethical behavior—a fact that is sure to cost his company greater losses in the long run than the temporary losses incurred by doing the right thing.

1.3. Cost-Benefit Analysis and Ethics

Some argue that it costs too much to take the ethical high road in today’s hypercompetitive global business environ­ment. Those who make this argument mean that ethical be­havior can cause their organization to lose contracts by tying up so much energy and so many resources in “doing good” that it becomes impossible to compete. This is the short­term perspective that overlooks the long-term benefits of ethical business practices.

The benefit of avoiding harm is the long-term mainte­nance of a good reputation. Unethical behavior that results in government investigations, lawsuits, and media-driven scandals can bankrupt even the largest, most powerful organi­zations. Those that are able to survive the investigations, law­suits, and scandals often lose their reputation, a fact that causes their stock to plummet, their best employees to jump ship, and their customers to take their business elsewhere. How much is an organizations good reputation worth? Everything.

Affirmative benefits of ethical business practices in­clude higher employee morale, a positive reputation in the
marketplace, greater ability to attract and retain high-value personnel, higher ratings with creditors and investors, differentiation from the competition, and increased sales— especially to government organizations that insist on an ex­cellent record in the area of ethics.

The so-called costs of ethical business practices are al­most always short term in nature, while the benefits tend to be long term. This fact presents organizations with a major challenge. In order to enjoy the benefits of ethical business practices, they may have to occasionally make decisions that will cost them in the short run. However, making unethi­cal decisions to serve some misguided short-term goal often means there will be no long-term future for an organization.

1.4. Guidelines for Determining Ethical Behavior

There are some guidelines that can be used in sorting out ethical and unethical behavior. However, before presenting the guidelines, we must distinguish between the concepts of legal and ethical: They are not the same thing. Just because a choice made is legal does not necessarily mean it is ethical. A person’s behavior can be well within the prescribed limits of the law and still be unethical. Some tests for determining ethical behavior shown in Figure 4.1 assume the behavior in question is legal. By applying any one of these tests, a person should be able to see through the gray area surrounding an issue and determine the ethical route to take.

2. MANAGER’S ROLE IN ETHICS

By applying the information set forth so far in this chapter, managers can make ethical decisions. Unfortunately, decid­ing what is ethical is much easier than actually doing what is ethical. In this regard, trying to practice ethics is like trying to lose weight. It is not so much a matter of knowing you should exercise and cut down on eating as it is a matter of following through and actually doing it.

This fact defines the manager’s and the professional’s role with regard to ethics in an organization. Managers and professionals in organizations are responsible for following through and actually exemplifying ethical behavior. They are responsible for establishing high ethical standards, setting a consistently positive example of exceeding those standards, and acting immediately when they observe unethical behav­ior (Figure 4.3).

2.1. Best-Ratio Approach

The best-ratio approach is a pragmatic approach based on the belief that people are basically good, that in the right cir­cumstances they will behave ethically, and that under cer­tain conditions they can be driven to unethical behavior. Therefore, managers should do everything possible to create conditions that promote ethical behavior and try to maintain the best possible ratio of good choices to bad choices and ethical behavior to unethical behavior. When hard decisions must be made, managers should make the choice that will do the most good for the most people. This approach is some­times called situational ethics.

2.2. Black-and-White Approach

With the black-and-white approach, right is right, wrong is wrong, and conditions are irrelevant. The manager’s job is to make ethical decisions and carry them out. It is also to help employees behave ethically regardless of circumstances. When difficult decisions must be made, managers should make fair and impartial choices regardless of the outcome and do the right thing without concern for short-term circumstances.

2.3. Full-Potential Approach

With the full-potential approach, decisions made are based on how they will affect the ability of those involved to achieve their full potential. The underlying philosophy is that people are responsible for realizing their full potential within the confines of morality. Choices that can achieve this goal with­out infringing on the rights of others are considered ethical.

The values of the organization and the manager will de­termine which approach is used. Which one is best is a phil­osophical question that could be debated at length without being resolved and can be discussed only within the context of a values system.

3. ORGANIZATION’S ROLE IN ETHICS

Organizations have a corporate responsibility for promoting and encouraging ethical behavior among their personnel. The organization’s responsibilities are to: (1) create an ethical environment in which stakeholders know that they will be supported when making ethical choices and (2) ensure that all people in positions of authority in the organization set an example of living up to the highest ethical standards.

3.1. Creating an Ethical Environment

An organization creates an ethical environment by establish­ing policies and practices that ensure that all employees are treated ethically and then by enforcing those policies. Do employees have the right of due process? Do employees have access to an objective grievance procedure? Are appropriate health and safety measures in place to protect employees? Are employees protected from harassment based on race, gender, or other reasons? A company that establishes an en­vironment that promotes, expects, and rewards ethical be­havior can answer “yes” to all of these questions.

One effective way to create an ethical environment is to develop an ethics philosophy with specific guidelines for putting the philosophy into operation, to put it in writing, and to share it with all employees. What follows is a sample corporate ethics statement that could be used by any organization as a first step in creating an ethical environment.

At ABC Inc., all personnel are expected to uphold the highest ethical standards. As we interact with each other and with the customers, suppliers, and the general public, we will be guided by the following principles:

• We will be honest and tell the truth in all situations.
• We will fulfill all promises we make.
• We will be fair and impartial in dealing with others.
• We will be selfless in dealing with others, putting the team’s needs before our own.
• We will accept responsibility and accountability for our actions, decisions, and behavior.
• We will endeavor to earn and maintain the trust of each other, customers, suppliers, and the general public.
• We will refuse to rationalize unethical behavior.
• We will obey all applicable laws, regulations, and rules— federal, state, local, and organizational.

A statement such as this sets the tone for all personnel in an organization. It lets them know that upper management not only supports ethical behavior, but also expects it. This approach makes it less difficult for managers when they find themselves caught in the middle between the pressures of business and the maintenance of ethical behavior in their departments.

Beliefs such as those in the preceding sample ethics statement tell employees that they have obligations that ex­tend beyond the workplace and that how they perform their work can have an impact, negative or positive, on fellow em­ployees and on their organization, customers, and country. Key concepts set forth in these statements are honesty, in­tegrity, truth, and fairness. Managers who stress, promote, and model these concepts will make a major contribution to ethical behavior in the workplace.

Written philosophies and guidelines such as those developed by Wisconsin Public Service Corporation are the first step in creating an ethical environment in the work­place. Managers can play a key role in promoting ethical behavior on the job by encouraging upper management to develop written ethics philosophies, credos, or guidelines and then by modeling the behavior they encourage.

3.2. Setting an Example

Organizations that take the “Do as I say, not as I do” approach to ethics will not succeed. Employees must be able to trust their employers to conduct all external and internal dealings in an ethical manner. Companies that do not pay their bills on time, companies that pollute, companies that fail to live up to adver­tised quality standards or stand behind their guarantees, and companies that are not good neighbors in their communities fail to set a good ethical example. Such companies can expect employees to mimic their unethical behavior. Finally, in addi­tion to creating an ethical internal environment and handling external dealings in an ethical manner, organizations must support managers who make ethically correct decisions—not just when such decisions are profitable but in all cases.

4. HANDLING ETHICAL DILEMMAS

Every manager will eventually confront an ethical dilemma. When this happens, the manager’s response is very impor­tant. Figure 4.4 provides guidelines that managers can use in such situations.

5. ETHICS TRAINING AND CODES OF BUSINESS CONDUCT

Ethical behavior and the rationale for it can be taught. In fact, almost 40% of the organizations in the United States with 100 or more employees provide ethics training. A sur­vey by the Ethics Resource Center in Washington, DC, re­vealed that “28 percent of the 711 responding companies provide specific training on ethics.”¹

The Ethics Resource Center has identified the following as topics that are widely addressed in corporate-sponsored ethics training programs:²

• Drug and alcohol abuse
• Employee theft
• Conflicts of interest
• Quality control
• Misuse of proprietary information
• Abuse of expense accounts
• Plant closings and layoffs

• Misuse of company property
• Environmental pollution
• Methods of gathering competitors’ information
• Inaccuracy of books and records
• Receiving excessive gifts and entertainment
• False or misleading advertising
• Giving excessive gifts and entertainment
• Kickbacks
• Insider trading
• Relations with local communities
• Antitrust issues
• Bribery
• Political contributions and activities
• Improper relations with local government representatives
• Improper relations with federal government representatives
• Inaccurate time charging to government
• Improper relations with foreign government officials
• Making exaggerated advertising claims

Codes of Business Conduct

Ethics training should not take place in a vacuum, nor should it be nothing more than a list of “thou shalt nots” Rather, organizations should develop codes of business con­duct written from a positive perspective that encourage em­ployees to do the right thing. Figure 4.5 is an example of one organization’s code of business conduct.

Ethics training is becoming increasingly important as the pressures of succeeding in an intensely competitive global marketplace grow. Professionals operating in the hypercom­petitive environment that is today’s global marketplace will frequently face ethical dilemmas. This may be why such ethics-related problems as kickbacks, bribes, insider trading, tax evasion, fraud, environmental violations, sexual harass­ment, and discrimination seem to be so common in today’s workplace. As a result, when providing ethics training, it is so important to observe the following rules of thumb:

• Encourage two-way communication. “Broadcasting” to people about rules, regulations, and policies is ineffective as a training strategy. Rather, it is important to encourage open, frank, informed discussion and give participants
  ample opportunities to state their views, ask questions, and propose solutions.
• Make the training practical.People need to see how the training applies specifically to them. An effective ap­proach for ensuring that training is practical is to pres­ent real-life scenarios and ask participants to explain how they would handle each situation and why. It is also im­portant to ask how the organization could help them do the right thing in each case.

• Avoid dogmatic statements. People are typically turned off by dogma. Rather, it is better to present and discuss ethical principles and then allow participants to decide how they apply. The trainer’s role is to tactfully guide participants toward an ethical solution by helping them take their opinions to their logical conclusion. Rather than telling participants that an idea or opinion is wrong or right, it is better to lead them in such a way that they come to that conclusion themselves.

6. MODELS FOR MAKING ETHICAL DECISIONS

Ethics as a concept exists within a framework defined by organizational values. Just as the values of organizations can differ, so can the decision-making models used for de­termining the ethical course of action in a given situation. This section briefly describes several such models that can be used for making ethical decisions. The actual model cho­sen will depend on the values of the organization and of the larger community in which the organization does business.

In a total quality organization, all stakeholders— external and internal—have a say in establishing and judging the corporate values. Consequently, it is important to select a model that will withstand the scrutiny of all stakeholders. Having done so, an organization should stick with its model and apply it consistently. The most widely used models are as follows:

• Categorical imperative model. The categorical impera­tive model is also known as the black-and-white model. With this model, right is right, wrong is wrong, and there are no gray areas.
• Full-disclosure model. With this model, the func­tional criterion is a simple question: Could the organi­zation explain its actions to the satisfaction of a broad cross-section of stakeholders? Only when this question can be answered in the affirmative is an action considered ethical. This model has the advantage of applying the val­ues of stakeholders in deciding what is ethical.

• Doctrine of the mean model. In this model, the mean refers to the average or middle point between two ex­tremes. Translated for practical application, this model suggests that in any situation, a moderate middle-ground option is likely to be an ethical option. Said another way, this model suggests that moderation is ethical.
• Golden Rule model. This model is based on the Golden Rule: “Do unto others as you would have them do unto you” It is one of the most popular models in Western society. Like the full-disclosure model, it takes the view­points of stakeholders into account in deciding what is ethical.
• Market-ethic model. This model is based on the belief that any legal action that promotes profitability is ethi­cal. Proponents of this model profess that the purpose of a business is to make a profit. Consequently, what is ethical should be decided within a framework of profit and loss. They argue that in the long run the market will reject unethical corporate behavior, making it thereby unprofitable.
• Organizational ethic model. This model is based on loyalty to the organization. Its underlying premise is that the most ethical decision is the one that best serves the or­ganization’s interests. Unless an organization has adopted a set of guiding principles that ensure ethical behavior, the organizational ethic model is difficult to defend.
• Equal freedom model. The underlying principle of this model is that organizations have the freedom to behave as they wish unless their actions infringe on the rights of stakeholders. This is a more confining model than it might appear at first glance. For example, suppose an or­ganization decides to use a new chemical that improves product quality and costs substantially less than the one it will replace. Before making a decision, the organization learns that the community’s current water safety tech­nology may not be able to screen out the chemical. The worst-case scenario is that it could contaminate the local water supply. Applying the equal freedom model, adopt­ing the new chemical would be unethical because it might violate the rights of stakeholders (everyone who depends on the local water supply).
• Proportionality ethic model. This model is based on the assumption that the world is so complex that deci­sions are seldom clearly right or wrong. Consequently, the best an organization can do is to make sure that the good outweighs the bad when making decisions.
• Professional ethic model. This model is based on the principle of peer review. It states that a decision is ethical if it can be explained to the approval of a broad cross­section of professional peers. Professions that subscribe to this model typically adopt a professional code of ethics.

7. BELIEFS VERSUS BEHAVIOR: WHY THE DISPARITY?

Ethics in the workplace manifests itself through the ap­plication of such values as honesty, loyalty, fairness, caring, respect, tolerance, and duty. Most, but not all, people in the workplace subscribe to these values. Why, then, is there so often a gap between what people believe and what they do? In other words, if people believe in honesty, why are they some­times dishonest? If people believe in fairness, why are they sometimes unfair? These are questions that could be debated at length in a broad philosophical context. However, several reasons explain the disparity, at least on a practical level.

7.1. Self-Interest and Self-Protection

People are, by their very nature, self-interested and, as a re­sult, self-protective. The driving force behind such slogans as “Me First” and “Looking Out for Number One” is a self- centered attitude. Most people work against human nature to put someone else’s needs ahead of their own. Yet, this is precisely what one must do to deal ethically with fellow em­ployees and the public at large.

Being honest sometimes means putting yourself at a dis­advantage or having to admit something you would rather not. In such situations, the natural instinct for self-protection takes over and the inclination is to evade the truth. Consider the example of John.

John had some minor repair work to do on his truck but didn’t have a certain tool he needed. Consequently, at the end of his shift at Autoworld Inc., he borrowed the needed tool from the company’s tool locker. That night he completed the work on his truck, but the next morning he forgot about the tool and left it at home. By the time he remembered the tool, it was too late to go back home without missing the begin­ning of his shift. John drove on to work hoping that the tool wouldn’t be needed that day. If nobody needed it, the tool wouldn’t be missed and he could return it the next day.

Everything went well until midmorning when a job came in requiring the missing tool. When it wasn’t in its place in the tool locker, the shift supervisor began asking around to determine who was using it or who had used it last. Finally, when a thorough search of the shop failed to produce it, the supervisor asked if anyone had borrowed it.

John knew that Autoworld had a strict p olicy against j ust this sort of thing. He also knew that if he didn’t speak up, the last person to have used the tool would be required to pay for it. That was the rule. Unfortunately, if he did admit having borrowed the tool, he would be reprimanded and fined, even if he returned it. John did not want to see a colleague forced to pay for his mistake. But, on the other hand, he had already been reprimanded and fined once this month. He certainly didn’t want to go through that again. John faced a common dilemma: tell the truth and bear the consequences, or give in to his natural instinct for self-protection. Faced with such a dilemma, people will go one way or the other, depending on which factor—conscience or self-protection—has the stron­gest pull on them at the time.

It is not uncommon for self-interest or self-protection to win out under the pressure of the moment, only to have the conscience take over once there has been time for quiet re­flection. This is why stories abound about thieves who later return the money or successful people who make a large financial contribution to assuage their guilt over an earlier transgression.

7.2. Conflicting Values

People who believe in ethical values (honesty, loyalty, fair­ness, etc.) sometimes find themselves in situations where these values seem to conflict. For example, consider the dilemma faced by Mary Ann, a sales representative for Construction Products Inc. (CPI).

CPI is having a bad year and desperately needs every contract it can get. Mary Ann has an opportunity to win a contract to supply all the kitchen cabinets for a 56-house subdivision that is going to be built in the near future. But there is a problem: CPI cannot deliver the cabinets by the required date. Failure to deliver on time will throw off the customer’s entire production schedule. Mary Ann’s boss is pressuring her to agree to the delivery date, even though they both know that the deadline cannot be met. Mary Ann wants to give an honest reply with a more realistic delivery date, but she is in a quandary over what to do.

This morning her boss took her aside and said, “You are so worried about honesty that you’ve forgotten about loyalty. What about loyalty to this company and your friends who work here? If we don’t bring in some work soon, we are all going to be out looking for jobs!”

Honesty versus loyalty—what does one do when ethical values seem to conflict? People obviously choose one over the other based on their interpretation of the situation, the facts as they know them, and contributing personal influ­ences. However, rather than asking what to do when ethical values seem to conflict, it might be better to ask whether the values do in fact truly conflict.

What kind of loyalty would require one to be dishonest, unfair, or disrespectful? Although ethical values sometimes appear to be in conflict, a closer look will usually reveal a different story. For example, the loyalty issue in Mary Ann’s case was false loyalty. True loyalty would rarely, if ever, re­quire dishonesty.

7.3. Tangible or Intangible, Immediate or Deferred

People frequently make decisions that run counter to their beliefs because the benefits of ethical decisions are often in­tangible or deferred. Put another way, the consequences of unethical behavior are often intangible or deferred, while the perceived benefits are usually both tangible and immediate.

Take the case of Mary Ann previously described. If she is willing to deceive the contractor by submitting a false delivery date, there will be a direct benefit that is both im­mediate and tangible. Her company will win a badly needed contract, and she will be the author of the victory. The downside is that at some point in the future the company will lose the trust and, as a likely result, the future business of the contractor she deceived. The benefit in this situation is immediate; the downside is deferred.

7.4. Making Ethics Tangible and Immediate

Because the benefits of ethical behavior can be perceived as being intangible and deferred, people will sometimes choose the unethical option—even people who believe in ethical values. The challenge to the management is to help employ­ees see that the benefits of ethical behavior are tangible and that even when deferred they still accrue.

Periodic focus groups conducted by an outside facili­tator in which employees discuss ethics-related issues can be an effective way to make ethics tangible. During these meetings, employees discuss very specific situations that in­clude ethical dilemmas. The facilitator asks questions, such as “What would you do in this situation? Why? What is the right thing to do? What would keep you from doing the right thing? What are the consequences of choosing an unethical option?” Group members discuss the issue and respond to the facilitator’s questions. The facilitator’s job is to guide the discussion toward the tangible and immediate consequences of unethical behavior, or, put another way, the tangible and immediate benefits of ethical behavior.

Sometime during the meeting, the facilitator will ask the following types of questions and lead participants through discussion and debate:

• How does the management reward ethical behavior?
• How does the management unknowingly promote un­ethical behavior?
• Does the management unknowingly reward unethical behavior?

Discussing these questions will sometimes reveal that the management expects ethical behavior but does not reward it or, worse yet, unknowingly rewards unethical behavior. For example, is ethical behavior a part of the performance evaluation process? Does the management publish ethics guidelines and reward employees who follow them? Is the management’s commitment to ethical values real or just lip service? For example, in the earlier case of Mary Ann, would the upper management have supported the supervisor or Mary Ann?

8. ETHICAL DILEMMAS: CASES

This section contains ethical dilemmas that are representative of those faced by managers every day in the world of business. While studying these dilemmas, the reader is encouraged to consider the various factors such as pressure from superiors or peers, personal interest, ambition, financial need, job secu­rity, and others that tend to promote unethical behavior on the part of the people who are normally honest and trustworthy. While reading these cases, ask yourself, “What would I do in the same situation if I were facing the same pressures?”

Let’s consider some examples. Certain models of sport utility vehicles manufactured by Ford begin to show a pat­tern of high-speed accidents. The similarity in these acci­dents leads investigators to suspect tire defects. Ford quickly points to its supplier, Firestone. Firestone defends itself and points back at Ford. Union Carbide establishes a process­ing plant in Bhopal, India, where the laws protecting the safety of employees and the environment are less rigid than those in the United States. The processes at Union Carbide’s Bhopal plant involve the use of extremely toxic chemicals and gases. When various emergency protection systems ei­ther are not working or fail, more than 40 tons of lethal gas are released into the atmosphere, killing more than 3,000 people.

Most of the discussion surrounding the Ford-Firestone and Union Carbide cases focused on litigation and who would eventually be held responsible for financial damages. However, very little attention was paid to the ethical ques­tions involved. Did these multinational corporations behave in ways that were fair to all stakeholders? Should companies locate plants in developing nations to take advantage of less restrictive safety and environmental protection laws than those in the United States? Should the company that actually sells the product to the consumer pass along responsibility to its supplier or accept responsibility itself?

The Ford-Firestone and Union Carbide cases received a great deal of media attention worldwide. However, these “big name” cases represent just a few of the thousands of similar situations that arise in the corporate world every year. From small “mom-and-pop” operations to large multinationals, dealing with ethical dilemmas is an everyday part of doing business. In order to succeed in the long term, managers must know how to deal with these dilemmas, and they must understand that just knowing what is right is not enough. Most people who commit ethical violations know what is morally correct.

Typically, people intuitively know the difference be­tween right and wrong. Since this is the case, why, then, do basically “good” people still sometimes behave un­ethically? This is a valid question and one that has been debated and discussed by philosophers for thousands of years. After all, if we know what is right, will we not do what is right? The answer to this question, unfortunately, is “not always.” Even people who have a strong sense of right and wrong can be pressured to behave unethically. This is because an individual’s sense of right and wrong can sometimes be overpowered by a stronger sense of am­bition, need, fear of the consequences of making the ethi­cal choice, peer pressure, pressure from superiors, and nu­merous other human factors.

8.1. Case 1: “I Need This Promotion”

Janice Carlson had always seen herself as an ethical person. She took pride in always telling the truth, even when doing so was uncomfortable. She also insisted that those she su­pervised at Comstock Engineering Company (CEC) do the same. Carlson frequently admonished her employees to be “straight” with her. She was fond of saying, “I can accept mis­takes. They happen. I can even overlook an occasional bad day. But I will not put up with lying.” Close friends knew that Carlson’s distaste for lying grew out of an unhappy marriage she had endured for years with a husband who lied to her as a matter of course. When she could take her husband’s dis­honesty no more, Carlson had filed for divorce.

Her commitment to honesty is why Carlson now feels, as she quietly admits to herself, “lower than a snake in the grass.” What makes things even worse is that this is a day on which Carlson should be overjoyed. After 15 years of loyal and effective service to CEC, several of which were spent as the only female engineer in the company, Carlson has just been promoted to director of the civil engineering depart­ment. Her promotion means a substantial salary increase, and Carlson needs it. Her daughter has just started college at a private institution. It is an excellent school, but the tuition rate is sky high, and her ex-husband, true to form, has re­fused to help. Why, then, on this day of all days does Carlson feel so bad? The answer is simple: She got the promotion be­cause she lied.

The process for selecting CEC’s new director of civil engineering had been difficult. The competition had been especially tough. One of Carlson’s long time colleagues and friends had also been a leading candidate. Since Carlson and her friend were equally qualified and equally experienced, the ultimate selection had come down to solving a complex engineering problem developed by the outgoing director, who was retiring.

A couple of days before the candidates were scheduled to take the promotion test, Carlson had gone to the direc­tor’s office to return a file she had borrowed. The problem she would have to solve on the promotion test was on the director’s desk. The director was out of the office for the day. Carlson saw the problem and knew immediately what it was. She started to turn away but felt herself drawn to it. Almost without realizing what she was doing, Carlson leaned over the director’s desk and looked at the solution. It was a really tough problem.

When the two candidates had completed the test, Carlson’s friend and colleague asked how she had done. “I think I solved it” was her response. “Not me,” said her friend. “That was the trickiest engineering problem I’ve ever seen. I’ve heard that the director had this really complicated prob­lem that no one has ever been able to solve, except him, of course. I don’t suppose you had ever seen this problem before, had you?” Janice Carlson could not look her friend in the eye when she said, “No. I’ve heard about it, too. But that was the first time I had ever seen it. I guess I just got lucky.” Her friend had smiled and held out his hand, say­ing, “Anyway, congratulations. It looks like you get the promotion.”

Carlson is a person who prides herself on honesty, but in this case, her personal interest overcame her commitment to the truth. On the one hand, she needs the promotion in order to help pay her daughter’s college costs. On the other hand, the way she received it was dishonest. Put yourself in Carlson’s shoes. What would you have done?

8.2. Case 2: To Pay or Not to Pay?

John Hingas didn’t know what to do, but he did know that he would have to make a recommendation, and soon. He had been the leading marketing representative for Government Products Inc. (GPI) for years. In fact, he was practically a leg­end in the company. That’s why GPI’s president had given him the current assignment to “break into the Mexican market.” GPI produces various office products ranging from desks and chairs to filing cabinets and shelves. The company’s major cus­tomers are local, state, and federal government organizations.

With the passage of the North American Free Trade Agreement (NAFTA), GPI’s executives had decided to ex­pand into Mexico. Unfortunately, they were getting nowhere. After nine months of concerted effort, GPI had nothing to show for its attempts to gain a foothold in Mexican markets except a stack of invoices for airline tickets, motel rooms, and restaurants. Finally, GPI’s executives decided to send in the “A Team” That is when John Hingas received the call. While meeting with GPI’s executive management team, Hingas quickly showed why he had always been so effective. After analyzing the company’s marketing plan for Mexico, Hingas told the executives, “I have just one question. How many of the marketing representatives we send to Mexico actually speak Spanish?” There was an embarrassed silence before Hingas said, “Why don’t we step back from the Mexico ini­tiative for a while and give me a chance to look into it? I’ll then come back with recommendations.”

“How long do you need?” asked the company’s CEO.

“Six months,” said Hingas.

“Why so long?”

“Because before I go down to Mexico to look into things, I need to learn to speak the language”

Eight months and many trips to Mexico later, Hingas knew exactly what would be necessary to succeed in the Mexican markets. By learning to speak Spanish and by get­ting to know a number of key contact people, Hingas had learned precisely what GPI would have to do in order to compete in its targeted market in Mexico. In a word, the an­swer was “bribery.” GPI could make the best products in the world at the most reasonable prices, but unless its marketing representatives became adept at playing the bribery game, the company would never sell one piece of furniture to a government organization in Mexico. GPI’s competitors had already figured this out and were using it to their advantage.

Hingas knew GPI could “play the game” as well as or even better than its competitors, but should it? On the one hand, bribery is simply a way of life, a part of the culture in the markets GPI is trying to reach. The hard truth is clear to Hingas: no bribes, no contracts. However, with just a few well-placed bribes, GPI could increase its annual sales by more than 15% in less than two years. On the other hand, GPI enjoys a well-deserved reputation for integrity with its customers, and nobody in the company wants to damage that reputation. Hingas has a recommendation to make, and he will have to make it soon. Put yourself in his place. What would you recommend?

8.3. Case 3: The Product Is Inferior, but the Profits Are Good

The executive management team of Athletic Footwear Inc. (AFI) faces both a threat and an opportunity. The threat is that unless it can find a buyer for a large production run of soccer shoes, the company is going to lose a lot of money. The opportunity is that the vice president of marketing has found a buyer. The problem is that although this batch of shoes is the company’s best-selling, most popular model, the shoes are defective.

Several months earlier, AFI’s management team had de­cided to save on production costs by using a different glue provided by a new supplier. The glue came highly recom­mended, and it was much less expensive than that previously used. Consequently, AFI’s management team had jumped at the opportunity to save money without first running in­house tests on the glue. Much to their dismay, the new glue turned out to be inferior to that normally used when secur­ing the sole of the shoe. Now, the company is stuck with a warehouse full of defective shoes.

Normally, the company would simply write off the de­fective shoes and absorb the loss. However, the company has just gone through a year-long battle to stave off a hostile takeover. As a result, its coffers are practically empty and its debt has nearly doubled. Nobody seated around the table in the executive conference room is in a mood to just absorb the potential loss they face. Legal action against the supplier has already been ruled out for fear of permanently damag­ing the company’s image and credibility. Nobody wants the company’s regular customers to know that a defective batch of shoes was produced. Management doesn’t want customers thinking, “If AFI produces one large batch of defective shoes, maybe it will produce another”

The potential buyer is a distributor that has retail outlets throughout South America. This company is even willing to pay more than the market price for the shoes in order to be the first distributor in South America to carry the AFI brand. No sport in South America is more favored than soccer, and the AFI soccer shoe is very popular in the United States, Canada, and Europe. The shoe has a reputation for being comfortable and durable. It lasts a long time in even the most demand­ing conditions. But the defective batch in question won’t; in fact, based on initial trial runs, the soles will probably begin to separate after less than 20 hours of use. What should AFI’s executives do? Should they sell the shoes, knowing they are defective, or destroy them and find a way to take a loss they really don’t need at this point in the company’s history? If you were an AFI executive, what would you suggest?

8.4. Case 4: Should He Keep Accurate Records or Fudge on the Facts

In an attempt to improve quality, the shop superintendent at FWM Inc. has instructed all work cell supervisors to keep re­cords of waste, scrap, and rework items. These records will be reviewed periodically at irregular intervals to identify which work cells are performing best and to make adjustments as necessary. The superintendent has stressed that the records will be used for making continual improvements to machin­ing processes and to the performance of individual machin­ists. But John Simpson, supervisor of Work Cells B and C, is concerned. He was passed over for a promotion that last time he was eligible because his work cells were at the bot­tom of the company’s performance ratings.

John Simpson is a new father of a child suffering from a rare and debilitating disease that requires the baby to have constant medical attention. Most of the medical costs are covered by FWM’s health insurance policy. Consequently, Simpson needs to keep his job badly. He cannot risk los­ing his job and, in turn, his health insurance because his work cells fail to measure up to company quality standards. Simpson’s problem is complicated by the fact that his Work Cells B and C have the least experienced machinists in the company. He knows how competitive the machining busi­ness has become. FWM needs the absolute best work from its machinists—no waste, no scrap, and no rework—so the pressure to perform is intense.

Simpson is considering doctoring his waste, scrap, and rework records to make things look better. He knows this is only a temporary tactic. The truth will eventually come out. But he hopes before that happens he will be able to improve the performance of his machining teams to acceptable, com­petitive levels. What do you think Simpson should do? If you were a friend, what advice would you give Simpson?

8.5. Case 5: Questionable Political Contributions

ABC Inc. is a defense contractor that renovates and retrofits military aircraft. The company has been in business for more than 50 years and has an excellent performance record. ABC has kept airplanes modernized for the Navy and Air Force for all this time and is well respected in government contract­ing circles. Usually maintaining a steady flow of government contracts is not a problem. But recently, with ongoing budget cuts to the military the work has slowed down and getting new contracts has become an intensely competitive challenge.

Sharon Beckford is ABC’s chief contracting officer. She is the principal interface between the government and ABC. One of the reasons Beckford has been so effective at bring­ing in new contracts over the years is her friendship with and family connection to Congressman Mack Jones, chairman of the Military Appropriations Committee. A word or nod from Jones to one of the military chiefs of staff is all it takes to ensure that ABC gets a new contract whenever one becomes available. But a problem has arisen that could threaten ABC’s future: Congressman Jones has strong opposition in the upcoming Congressional elections and his continuance in Congress is anything but a sure bet. If Jones loses, ABC will also lose.

Congressman Jones’ reelection is of paramount impor­tance to Beckford and her company, a fact that has presented Beckford with an ethical dilemma. The other political party has targeted Jones’ seat and, as a result, is pouring money into trying to elect his opponent. Jones badly needs more cam­paign contributions to buy television and radio ads, but his campaign fund is quickly running out. He has asked all of his closest supporters—including Sharon Beckford—to raise more money for him and to do it fast. The problem is that she and ABC Inc. have already given all the law allows. Jones wants Beckford to twist the arms of ABC’s employees to con­tribute to a special fund she will collect and pass on to him as if the money came from legitimate individual donations without any coercion. Although this is commonly done, it is of ques­tionable legality and is at the very least unethical. Beckford does not want to see ABC forced to lay off good employees— especially during a time of high unemployment—but she is reluctant to bend federal election laws. What do you think Beckford should do? How would you handle this situation?

Source: Goetsch David L., Davis Stanley B. (2016), Quality Management for organizational excellence introduction to total Quality, Pearson; 8th edition.