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C H A P T E R T W O
Organizational Justice,
Ethics, and Corporate
Social Responsibility 2
Lecture Outline
Organizational Justice: Fairness Matters
Forms of Organizational Justice
When Do People Assess Fairness?
Neurological Responses to
Injustice
Suggestions for Promoting
Organizational Justice
Ethical Behavior in Organizations
What Do We Mean by Ethics?
Why Should Companies Care
About Ethical Behavior?
Why Do Some People Behave
Unethically?
Corporate Ethics Programs
Ethics in the International Arena
The E,ectiveness of Corporate
Ethics Programs
Beyond Ethics: Corporate Social
Responsibility
The Nature and Forms of
Corporate Social Responsibility
Pro-tability and Social
Responsibility: The Virtuous
Circle
The concept of organizational justice is introduced in
this chapter. The forms of organizational justice
(distributive justice, procedural justice, interpersonal
justice, and informational justice) are explained. The
relationships among the forms of organizational justice
and tips for promoting justice in the workplace are
discussed in detail. Suggestions for promoting
organizational justice include: paying workers what
they deserve, o,ering workers a voice, the importance
of following fair procedures, and explaining decisions in
ways that demonstrate dignity and respect. Ethical
behavior in organizations is examined by highlighting
crises that have gained the public’s attention in recent
years. Ethics are explained, in part, through the
concept of moral values. A question is raised as to why
companies should care about ethical behavior. The
bene-ts for companies that practice good ethics
include improved -nancial performance, reduced
operating costs, enhanced corporate reputations, and
an increased ability to attract and retain employees.
The legal regulations that provide minimum acceptable
standard that companies must adhere to are explored
citing contemporary acts such as Sarbanes-Oxley and
the Federal Prosecution of Business Organizations
(2003). The discussion shifts to individual di,erences
using cognitive moral development as the theoretical
framework. The components of corporate ethics
programs are described including the importance of
ethics training and ethics audits. The chapter
concludes with a discussion of corporate social
responsibility and the virtuous circle of -nancial
performance.
©2013 Pearson Education, Inc. publishing as Prentice Hall 6
ANNOTATED OUTLINE
1. ORGANIZATION JUSTICE: FAIRNESS MATTERS
Organizational justice is the study of people’s perceptions of fairness in
organizations.
A. Forms of organizational justice and their e,ects
1. Distributive justice is the form of organizational justice that focuses
on people’s beliefs that they have received fair amounts of valued
work-related outcomes (e.g. pay, recognition, etc.).
2. Procedural justice refers to people’s perceptions of the fairness of
the procedures used to determine the outcomes they receive.
a. Formal performance appraisals
b. Classroom
c. Courtroom
d. Professional football
1. Fair process e&ect ― people will better accept
outcomes when they have had some input into
determining them than when they are not involved.
2. Interactional justice refers to people’s perceptions of
fairness in terms of the outcomes and the procedures
used to determine those outcomes and also the way the
outcomes are explained.
a. Informational justice refers to people’s
perception of the fairness of the information used
as a basis for making a decision.
b. Interpersonal justice refers to people’s
perceptions of the fairness of the manner in
which they are treated by other people.
Self-Assessment Exercise Assessing Organizational Justice Where You
Work
Students should consider the following upon completion of the exercise.
1. With respect to what particular type of fairness did you score highest? What speci-c
experiences contributed to this assessment?
2. With respect to what particular type of fairness did you score lowest? What speci-c
experiences contributed to this assessment?
3. What kinds of problems resulted from any violations of any type of organizational
justice you may have experienced? What could have been done to avoid these
violations?
B. When do people assess fairness?
1. Fairness monitoring – the practice of gathering and processing
2. Managerial controls – the processes that managers use to
a. Market controls – the extent to which management
©2013 Pearson Education, Inc. publishing as Prentice Hall 7
b. Bureaucratic controls – the extent to which standards of
c. Clan controls – the extent to which things get done by
C. Neurological responses to injustice
1. Victims of procedural justice respond di,erently than victims of
D. Suggestions for promoting organizational justice
1. Pay workers what they deserve
2. ETHICAL BEHAVIOR IN ORGANIZATIONS
Growing intolerance of unethical behavior has inspired business leaders to
become more ethical.
A. What do we mean by ethics?
1. Prescriptive approaches of philosophers
a. Utilitarianism – an action is considered ethical to the extent
2. The descriptive approach of social scientists
a. Moral values ― people’s fundamental beliefs regarding what
B. Why should companies care about ethical behavior?
1. Good ethics is good business: -nancial bene-ts
a. Improved -nancial performance
2. Legal regulations
a. False Claims Act (1986)
©2013 Pearson Education, Inc. publishing as Prentice Hall 8
4. WHY DO SOME PEOPLE BEHAVE UNETHICALLY — AT LEAST SOMETIMES — AND WHAT
CAN BE
DONE ABOUT IT?
1. Individual factors (the person) and situational factors (external forces
people confront in the workplace) determine unethical behavior.
a. Individual di,erences in cognitive moral development
1. Cognitive moral development ― refers to di,erences
2. Kohlberg’s theory of cognitive moral development
3. Three levels of moral development:
b. Conventional level of moral reasoning ―
c. Postconventional level ― people judge right
and wrong on complex philosophical principles of
D. Situational determinants of unethical behavior
1. Some managerial values undermine integrity
a. Bottom line mentality ― only the -nancial success is
2. Organizations sometimes encourage behavior that violates ethical
standards
a. Stonewalling – willingly hiding relevant information.
E. Ethics in the international arena
1. Ethical relativism and ethical imperialism
a. Ethical relativism – adopting the ethics of whatever country in
b. Ethical imperialism – there is only a single set of rules
2. Guiding principles of global ethics
a. Show respect for core human values
Winning
Practices
Exelon Excels at Managing Ethics
Use Winning Practices Case for class discussion on encouraging ethical behavior.
©2013 Pearson Education, Inc. publishing as Prentice Hall 9
4. BEYOND ETHICS: CORPORATE SOCIAL RESPONSIBILITY
Pyramid of corporate social responsibility ― economic responsibilities,
A. The nature and forms of corporate social responsibility
1. Corporate social responsibility - business decision making linked to
a. Environmental sustainability
B. Pro-tability and social responsibility: the virtuous circle
1. Is there a correlation between -nancial performance and social
2. Virtuous circle ― companies that are socially responsible tend to
a. Socially responsible companies are also philanthropic
You Be the Consultant Suggested Answers
1. What form of justice appears to have been violated by the new pay policy? Explain
your answer.
Student answers will vary. Key points are presented in bullet form.
This could be the result of either distributive, procedural, or informational
2. In this case, the new pay policy was implemented without rst discussing it with
store managers. Do you think that the theft rate might have been lower had this
been done? What else could be done to reduce the growing theft rate?
Perhaps. Students might argue that if the policy had been discussed and
3. The company’s code of ethics expressly prohibits theft, but other than being handed
a copy along with other company documents and forms upon being hired, hardly
anyone pays attention to it. What do you think could be done, if anything, to enhance
the e'ectiveness of the code of ethics as a weapon for combating the theft problem?
Student answers will vary widely. An emphasis on ethics training may have
©2013 Pearson Education, Inc. publishing as Prentice Hall 10
©2013 Pearson Education, Inc. publishing as Prentice Hall 11
