978-0470639948 Chapter 9 Solution Manual Part 4

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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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