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Collins Instructor’s Guide
CHAPTER 9 KEY WORDS
360-degree performance evaluations (p. 246): a holistic employee performance measure based
on information collected from people hierarchically above, below, and the same level as the
employee being evaluated.
Authoritarian (p. 231): a type of leadership style that refers to demanding blind submission to
someone in authority.
Balanced Scorecard (p. 240): measures organizational performance based on (1) financial
performance, (2) customer performance, (3) internal business process performance, and (4)
employee learning and growth.
Employee performance appraisal (p. 242): technique for evaluating employee performance
factors that are directly or indirectly related to achieving organizational and employee goals.
Ethical leadership (p. 233): the demonstration of normatively appropriate conduct through
personal actions and interpersonal relations, and the promotion of such conduct to followers
through two-way communication, reinforcement, and decision-making.
Forgiveness (p. 249): refers to a gift freely given in the face of moral wrong to the wrongdoer
from the victim without denying the wrong itself.
Management-By-Objectives (p. 241): goal-setting technique in which managers and their
subordinates jointly determine work unit and individual goals in alignment with organizational
goals.
Power (p. 231): refers to the ability to act, create an effect, or wield force.
Servant leadership (p. 236): leadership style that achieves organizational results by humbly
caring for and serving the needs of superiors, colleagues, and subordinates.
SMART goals (241): goals that are specific, measurable, aligned, reachable, and time-bound.
Stretch goal (p. 240): goals that challenge employees to perform slightly beyond peak
performance.
Theory X (p. 232): management philosophy that assumes people are lazy, dislike work, avoid
responsibilities, and do as little as possible unless induced by monetary incentives to provide
their best effort.
Theory Y (p. 232): a management philosophy that assume people usually enjoy mental and
physical activities, are self-directed, desire challenging and interesting work, and welcome
additional work-related responsibilities.
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Triple Bottom Line (p. 240): measures organizational performance based on (1) ecological
performance, (2) social performance, and (3) financial performance.
CHAPTER 9 ANCILLARY MATERIALS
Websites to Explore
Theory X and Theory Y survey, available at:
http://www.businessballs.com/mcgregor.htm.
Great Place to Work Institute, available at: www.greatplacetowork.com.
The American Institute of Stress, available at: www.stress.org.
International Forgiveness Institute, available at: www.forgiveness-institute.org.
Best Place to Work Video
CBS News 60 Minutes on Aaron Feuerstein, available at:
http://www.youtube.com/watch?v=9YcWLXBXaD8.
Business Ethics Issue Video
“The Storm,” Frontline, about government response to Hurricane Katrina; November 22,
2005, 55 minutes, available at: http://www.pbs.org/wgbh/pages/frontline/storm/view/?
utm_campaign=viewpage&utm_medium=grid&utm_source=grid.
TEDTalks Videos
Inspirational Leadership: Simon Sinek discusses a powerful model for inspirational
leadership starting with a golden circle and the question "Why?" using Apple, Martin
Luther King, and the Wright brothers as examples; September 2009, 18 minutes,
available at:
http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html.
Leadership: Richard Branson describes the ups and the downs of his career, from his
multibillionaire success to his multiple near-death experiences; March 2007, 30 minutes,
available at: http://www.ted.com/talks/richard_branson_s_life_at_30_000_feet.html.
Conversations with Charlie Rose
A conversation with Michael Lewis, author of 'The Big Short', about the 2008-2010
financial crisis; March 16, 2010, 60 minutes, available at:
http://www.charlierose.com/view/interview/10911.
A conversation with Lloyd Blankfein, Chief Executive Officer and Chairman of
Goldman Sachs; April 30, 2010, 60 minutes, available at:
http://www.charlierose.com/view/interview/10989.
CHAPTER 9 ETHICAL DILEMMA ANALYSIS
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
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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 9 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?
Mixed. Employees in the five regions are dissatisfied and will remain dissatisfied if contract
6) What option is based on truthfulness and respect/integrity toward each stakeholder?
Neither. Maintaining contract respects salespeople with new product who are earning the
7) What option would a virtuous person do?
Neither. Two prominent virtues are in conflict in this case. The virtue of fairness recommends
Option Option Strengths Based on
Application of Ethical Theories
Option Weaknesses Based on
Application of Ethical Theories
Option and Value
#1: Honor original contract: Promise keeping; revenue maximization
Chosen Because #1: Honor original contract: Enhances revenue
How Will You
#1: Find an additional perk for salespeople without new product for
AUTHOR’S RECOMMENDATION: Option 1: Honor original contract – This is based on
egoism, social group relativism, and cultural relativism. The company wants a successful new
product launch and this can be best achieved under the current agreed upon incentive contract.
Salespeople without the new product will be earning income similar to the previous year, so they
are not losing income. They are simply not increasing income as much as those in the two
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regions with the new product. Meet with the employees in the other five sales regions and find
some additional perk that would be reasonable until the new product is launched in their regions.
CHAPTER 9 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?
Trust payment will happen, have title company do subcontract payments directly (#1):
4) What option is legal?
5) What option is the greatest good for the greatest number of people affected?
Trust payment will happen, have title company do subcontract payments directly (#1):
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
subcontract
payments directly
and effort
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Option and Value
#1: Trust payment will happen, have title company do subcontract
Chosen Because #1: Trust payment will happen, have title company do subcontract
How Will You
Manage Chosen
#1: Work with title bank to ensure all subcontractors are paid for previous
work
AUTHOR’S RECOMMENDATION: Option 1: Trust payment will happen, have title company
do subcontract payments directly: Project will be completed on time – This is based on egoism,
social group relativism and utilitarianism. A sixth month delay is very problematic. The case may
be delayed in litigation even longer. It takes time to contract a new general contractor and
existing subcontractors need the work now, not in six months. They may have other future
contractual obligations. From this point forward have the Title Bank pay subcontractors and
work with title bank to ensure all subcontractors are paid for previous work.
CHAPTER 9 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?
5) What option is the greatest good for the greatest number of people affected?
Replace Bass (#2): It is not worth losing a $50 million account that profits many Andersen
6) What option is based on truthfulness and respect/integrity toward each stakeholder?
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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
Provides a second expert opinion
Chosen Because #1: Defend Bass: Must stand up for employees and bully clients
How Will You
Manage Chosen
#1: Inform Causey that he must respond to Bass’s legitimate concerns and
if let go the firm is obligated to share its concerns with Enron’s Board and
AUTHOR RECOMMENDATION: Option 1: Defend Bass – This is based on social group
relativism, deontology, and virtue ethics. Accounting partners must defend their colleagues
against a manipulative, bullying client, even if $50 million is at risk. Replacing Bass with
another expert sets a bad precedent where partners will feel as though they are expendable if a
client gets upset. Defend Bass in a manner that will not result in losing the Enron account. Firing
the external auditors over this matter will likely result in negative publicity for Enron and a
potential stock sell-off. Bass also needs to learn how to more professionally deal with Enron
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