978-0470639948 Chapter 10 Solution Manual Part 4

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Collins Instructor’s Guide

CHAPTER QUESTION 6: WHAT ARE THE BENEFITS OF OFFERING PROFIT

SHARING AND STOCK OPTIONS, AND CREATING AN EMPLOYEE STOCK

OWERSHIP PLAN AND COOPERATIVES? DESCRIBE EACH OF THESE

TECHNIQUES FOR EMPOWERING EMPLOYEES.

oProfit sharing, where companies share profits with employees, is very ethical, motivating,

oStock options give an employee the right to purchase a specific number of company shares

oSome privately-held companies, whose stocks are not sold on the open market, offer

oUnder an employee stock purchase plan, employees request to have deductions taken out of

oEmployee Stock Option Plans (ESOPs) take stock options one step further in empowering

oProducer, consumer, and employee cooperatives are an alternative communal way to govern

a business and raise capital.

oEmployee cooperatives are organizations owned by the employees and democratically

governed—one vote per employee-owner. Employee cooperatives can be found in a

FOR DISCUSSION: Ask students if they were a CEO, would they limit profit sharing plans

to executives or make available to all employees. Discuss the pros and cons of both

possibilities.

CHAPTER 10 KEY WORDS

Abraham Maslow (p. 257): developmental psychologist who differentiated five categories of

hierarchical needs every individual has: physiological, safety, social, self-esteem, and

self-actualization.

Appreciative Inquiry (p. 271): team-based management technique that focuses on the strengths

of both the employee and the organization to achieve superior performance.

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Bullying (p. 261): a repeated verbal abuse or abusive conduct that is threatening, humiliating,

and intimidating, and interferes with work.

Cooperatives (p. 276): an alternative communal way where producers, consumers, or employees

jointly own a business.

David McClelland (p. 258): differentiated three types of human needs – affiliation,

achievement, and power – that can be rated on a high, moderate, low scale.

Employee engagement (p. 256): an emotional bond or attachment an employee has to the work

task, organization, and its members.

Empowerment (p. 264): giving employees decision-making authority, which can be further

solidified with an ownership stake in the organization.

ESOPs (p. 275): refers to an Employee Stock Option Plan where all full-time employees are

given the opportunity to have a significant equity stake in the company.

Frederick Herzberg (p. 259): differentiated job satisfaction factors or “motivation factors”

which include achievement, recognition, work itself (doing a complete job), responsibility,

advancement, and growth from job dissatisfaction factors or “hygiene factors” which include

company policies and administration, quality of supervision, relationship with boss, working

conditions, base wage or salary, and relationship with peers.

Meaningful work (p. 261): spending time at work to achieve something that is personally

desirable and engages an employee’s entire intellectual, physical, and emotional energies in the

work that needs to be done because it is what he or she feels destined to do.

Open Book Management (p. 270): technique whereby managers share relevant financial and

operational information with nonmanagement employees so that they can better understand the

organization’s financial situation and operational issues, and make better decisions.

Organizational justice (p. 260): fair treatment of employees in terms of decision-making

procedures, information conveyance, treating each other, and distribution of work outcomes.

Pinch theory (p. 269): conflict resolution technique where a person being treated unfairly

engages the person contributing to the conflict in developing a solution.

Scanlon-type gainsharing plans (p. 273): technique to empower employees by delegating

institutional responsibility and accounting in improving operations to employee teams that elicit,

evaluate, and implement continuous improvement suggestions and receive financial rewards for

surpassing historical standards.

Stock options (p. 275): an option given to employees that provides them the right to purchase a

specific number of company shares at a fixed price by a particular future date, typically 10 years.

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Team problem-solving process (p. 270): an eight-step process that accesses each team

member’s unique knowledge to generate solutions with the highest likelihood of achieving

superior performance.

CHAPTER 10 ANCILLARY MATERIALS

Websites to Explore

 “100 Best Companies to Work For” winners, Fortune, available at:

http://money.cnn.com/magazines/fortune/bestcompanies/.

Top Small Company Workplaces, available at:

http://www.winningworkplaces.org/topsmallbiz/index.php#2010.

Appreciative Inquiry, available at: http://appreciativeinquiry.case.edu/default.cfm.

The National Center for Employee Ownership, available at: http://www.nceo.org/.

U.S. Federation of Worker Cooperatives, available at: www.usworker.coop.

Workplace Bulling Institute, available at: http://www.workplacebullying.org/; Stop

Workplace Bullying, available at: http://bullyfreeworkplace.org/.

Best Place to Work Video

Whole Foods’ CEO John Mackey on “Conscious Capitalism,” available at:

http://www.youtube.com/watch?v=CYJl3DOMGM8&feature=related.

Business Ethics Issue Video

“College, Inc.,” Frontline, about for-profit universities; May 4, 2010, 55 minutes,

available at: http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?

utm_campaign=viewpage&utm_medium=grid&utm_source=grid.

TEDTalks Videos

Motivation and Your Internal Drives: Tony Robbins discusses the “invisible forces” that

motivate everyone’s actions; February 2006, 22 minutes, available at:

http://www.ted.com/talks/tony_robbins_asks_why_we_do_what_we_do.html.

Pursuing Your Dreams: At his Stanford University commencement speech, Steve Jobs,

CEO and co-founder of Apple and Pixar, urges us to pursue our dreams and see the

opportunities in life’s setbacks; June 2005, 15 minutes, available at:

http://www.ted.com/talks/steve_jobs_how_to_live_before_you_die.html.

Conversations with Charlie Rose

A conversation about President Obama’s speech on Wall Street marking one year since

the fall of Lehman Brothers and the global economic recovery plan; September 14,

2009, 60 minutes, available at: http://www.charlierose.com/view/interview/10604.

A conversation with author Jonathan Zittrain about his book The Future of the Internet

and How to Stop It; May 13, 2008, 31 minutes, available at:

http://www.charlierose.com/view/interview/9081.

CHAPTER 10 ETHICAL DILEMMA ANALYSIS

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Each chapter contains three real-life ethical dilemmas: (a) What would you do? (all scenarios

provided by my students), (b) Let’s Build a Building (all scenarios provided by a construction

consultant), and (c) In the Real Word: Enron (more in-depth explanations available in Denis

Collins (2006) Behaving Badly: Ethical Lessons from Enron).

Have students apply Exhibit 5.11 “Critical Thinking Decision-Making Process Table” to analyze

these ethical dilemmas (instructions below). By doing so, students develop a habit for analyzing

decisions that take into consideration ethical concerns.

Step 1: Write the decision options in the appropriate column below.

Step 2: Apply the seven “Applying Ethical Theories to Decision Making” questions to the

decision to obtain relevant ethical information.

Step 3: Insert the ethical strength and weakness revealed by each of the seven ethical questions in

the appropriate column below.

Step 4: Review the option strengths and insert in the options column what “value” supports the

option (i.e., honesty, loyalty, efficiency, respect, job security, profits, etc.)

Step 5: Given the strengths and weaknesses, choose a decision option, explain why that option

and value were chosen rather than the alternative options, and determine how to manage the

weaknesses associated with the option chosen.

NOTE ON ETHICAL DILEMMA ANALYSES AND AUTHOR RECOMMENDATION – The

“author” (me) is stating his best judgment. All the ethical dilemmas are difficult and involve

tradeoffs, some more so than others. As noted throughout the textbook, everyone has a different

moral intuition and those reasoning at the same level of moral development can disagree about

the right thing to do. In addition, everyone has a different level of risk comfort (my risk comfort

is rather high). The teacher can use my recommendation as grounds for student agreement or

disagreement.

CHAPTER 10 ANALYSIS FOR WHAT WOULD YOU DO?

1) Who are all the people affected by the action?

2) What option benefits me the most?

3) What option does my social group support?

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4) What option is legal?

5) What option is the greatest good for the greatest number of people affected?

Inform the Vice President (#2): The Vice President has the authority and responsibility for

6) What option is based on truthfulness and respect/integrity toward each stakeholder?

Inform the Vice President (#2): The Vice President needs to be made aware that Tom is not

7) What option would a virtuous person do?

Inform the Vice President (#2): Moral character is strengthened by contributing to

Option Option Strengths Based on

Application of Ethical Theories

Option Weaknesses Based on

Application of Ethical Theories

#2: Inform Vice

President

Loyalty to organization Upset boss

AUTHOR’S RECOMMENDATION: Option 2: Inform the Vice President – This is based on

utilitarianism, deontology, and virtue ethics. Your boss is undermining the Vice President’s

likelihood of product success. The Vice Presidents needs to be made aware of the status of her

product’s progress. Share your concerns with your boss in hopes that he can initiate a new

discussion in terms of product priorities. At the very least, the Vice President’s product idea must

be given the best opportunity to succeed.

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CHAPTER 10 ANALYSIS FOR LET’S BUILD A BUILDING

1) Who are all the people affected by the action?

2) What option benefits me the most?

3) What option does my social group support?

4) What option is legal?

5) What option is the greatest good for the greatest number of people affected?

6) What option is based on truthfulness and respect/integrity toward each stakeholder?

7) What option would a virtuous person do?

Option Option Strengths Based on

Application of Ethical Theories

Option Weaknesses Based on

Application of Ethical Theories

Minimal hassles

future donations

Holds general contractor

accountable

Option and Value

#1: Pay $70,000: Efficiency, economic interests

Chosen Because #1: Pay $70,000: Future donations likely to exceed this amount

How Will You

#1: Pay $70,000: Ensure that future donations are forthcoming

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AUTHOR’S RECOMMENDATION: Option 2: Refuse and lose future donations – This is based

on cultural relativism, deontology, and virtue ethics. The general contractor is committing a

fraud, one that most likely happened in the past and will happen in the future. Hold the general

contractor accountable for behaviors. Contact other general contractors for future contracts and

fundraising activities.

CHAPTER 10 ANALYSIS FOR IN THE REAL WORLD: ENRON

1) Who are all the people affected by the action?

2) What option benefits me the most?

3) What option does my social group support?

4) What option is legal?

Cancel the meeting with Lay and wait (#1): You are legally obligated to follow orders if they

5) What option is the greatest good for the greatest number of people affected?

Continue your own investigation and meet with Lay as scheduled (#2): You don’t trust that

6) What option is based on truthfulness and respect/integrity toward each stakeholder?

Continue your own investigation and meet with Lay as scheduled (#2), and confidentially

notify Arthur Andersen (#3): It is essential to investigate these concerns. Continue your

7) What option would a virtuous person do?

Continue your own investigation and meet with Lay as scheduled (#2), and confidentially

notify Arthur Andersen (#3): Moral character is strengthened by insisting on meeting with

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Option Option Strengths Based on

Application of Ethical Theories

Option Weaknesses Based on

Application of Ethical Theories

The CEO must be well-informed on

the matter

Option and Value

Chosen

#1: Cancel Lay meeting and wait to hear from lawyers: Loyalty to

chain-of-command

#2: Continue investigation and meet with Lay: Loyalty to profession,

Chosen Because #1: Cancel Lay meeting and wait to hear from lawyers: You’ve been

instructed to. You have informed all those you should.

#2: Continue investigation and meet with Lay: You want to make sure that

How Will You #1: Document your efforts in case things worsen.

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Manage Chosen

Option Weaknesses

#2: Inform Lay that you’ve been told by in-house lawyers to cancer your

meeting but didn’t agree with their direction; document everything

AUTHOR’S RECOMMENDATION: Option 2: Continue your own investigation and meet with

Lay as scheduled, and Option 3: Confidentially notify Arthur Andersen – This is based on

deontology and virtue ethics. Continue your investigation and meet with Ken Lay as planned.

The CEO must be fully informed on behalf of the shareholders. Also inform Arthur Andersen to

see if they can provide you with additional support. Document as much information as you can,

including your own performance reviews in case Fastow retaliates. If dissatisfied with the

reaction of Lay and Arthur Andersen then you must blow the whistle to the SEC or the Wall

Street Journal.

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