Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-1
CHAPTER 10
Making It Stick: Doing What’s Right in a
Competitive Market
Table of Contents
Chapter Summary 10-2
Learning Outcomes 10-2
Frontline Focus: You Scratch My Back Questions 10-2
Learning Outcome 1 10-3
Learning Outcome 2 10-6
Learning Outcome 3 10-6
Learning Outcome 4 10-6
Life Skills 10-7
Progress ✓Questions 10-7
Ethical Dilemma 10-11
Frontline Focus: You Scratch My Back – Adam Makes a Decision Questions 10-13
Key Terms 10-13
Review Questions 10-14
Review Exercises 10-15
Internet Exercises 10-16
Team Exercises 10-19
Thinking Critically 10-20
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-2
Chapter Summary
This chapter begins by explaining how a tough market environment can be difficult for a
company to hold on to the promise of running an ethical business. Next, the chapter states how a
company can sustain such promises by establishing a code of ethics and by hiring an ethics
officer who is willing to monitor the employees in an organization. The chapter also argues that
employees need to have extensive training and the company’s code of ethics needs to be updated,
due to the ever changing environment. After the code of ethics has been set, it is time to reward
employees who have demonstrated exceptional ethical behavior. Employees who are not up to
par with the ethics program must go through additional training. Finally, the chapter presents
reactive and proactive policies and suggests that organizations become transparent in all their
communications with their stakeholders.
Learning Outcomes
After studying this chapter, the student should be able to:
1. Develop the key components of an ethics policy.
2. Analyze the ramifications of becoming a transparent organization.
3. Understand the difference between reactive and proactive ethical policies.
4. Discuss the challenges of commitment to organizational integrity.
Extended Chapter Outline
Frontline Focus
You Scratch My Back Questions
1. The four key points of a code of ethics are outlined in the “Making It Stick – Key
Components of an Ethics Policy” section. If we assume that Adam’s company has such a
code, what guidance could Adam find in those four key points?
2. Do you think Zachary is willing to provide those “marketing funds” to win the business
away from Adam, or is Dr. Green just bluffing?
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
how far he can push Adam.
3. What should Adam do now?
Learning Outcome 1: Develop the Key Components on an Ethics Policy.
• Ask any CEO to describe the market she is working in, and she will probably describe the
same set of characteristics:
o Demanding customers who want new and better products and services at lower
prices.
o Impatient stockholders who want the stock price to rise each and every quarter.
o Aggressive vendors who want to sell more of everything.
o Demanding federal, state, and local officials who want to burden the business with
more rules and regulations while encouraging it to hire more people and pay more
taxes.
o Demanding creditors who want their loan payments on time.
o Aggressive competitors who want to steal the business’s customers from it.
• When people operate a business in such a tough environment, holding on to the promise to
run an ethical business and to do “the right thing” for all the stakeholders can be very
challenging.
o It’s easy to see why so many executives, after the unethical behavior of their
companies has been exposed, point to the ruthless competition of the business world
as their excuse for not doing the right thing.
• Sustainable ethics is ethical behavior that persists long after the latest public scandal or
the latest management buzzword.
• Making ethical behavior sustainable requires the involvement of every member of the
organization in committing to a formal structure to support an ongoing process of
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-4
can do several things:
o It can capture what the organization understands ethical behavior to mean—the
o It can document punishments for violations of those policies.
• If an organization is involved in creating a code of ethics from scratch, it could consider
the following advice from the Institute of Business Ethics:
o Find a champion.
o Get endorsement from the chairman and the board.
o Find out what bothers people.
• Writing the code is the easy part. Getting the commitment to ethical performance down on
paper and specifying the standards of behavior the organization will accept and the
punishments it will enforce is a good starting point.
o However, the code can only be a guide—it cannot cover every possible event.
• An extensive training program to support the published code of ethics is important.
o Since the code can’t capture every possible example, each department of the
organization should take the code and apply it to examples that could arise in its area.
of the organization both internally and externally.
o The role is usually developed as a separate department with the responsibility of
enforcing the code of ethics and providing support to any employees who witness
unethical behavior.
o This person can be:
➢ Promoted from within the organization (selecting a familiar face who can be
o Oversight of hotline/guideline/internal reporting
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-5
o Preparation and delivery of internal presentations
o Organizationwide communications
o Senior management and/or board briefings/communications
o Training design
o Assessing/reviewing vulnerabilities
o Assessing/reviewing success/failure of initiatives
o Overseeing investigations of wrongdoing
o Training delivery
o International program implementation
o Conducting investigations of wrongdoing
• With standards of behavior specified in the code of ethics, along with the punishment
served for failing to follow those standards, the ethics program can become harsh.
o So the threats of punishment must be balanced with promised rewards for successful
o The organization should offer concrete examples that the organization is committed
to winning the trust (and the business) of the customers by building a reputation they
can count on. For example:
➢ Offer a no-questions-asked refund policy like Lands’ End.
➢ Offer a 110-percent price match guarantee like Home Depot.
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-6
➢ Share the success stories with all of the stakeholders, not just the employees.
➢ Invite the stakeholders to the Ethics Day celebration.
Learning Outcome 2: Analyze the Ramifications of Becoming a Transparent Organization.
• Reactive ethical policies are policies that result when organizations are driven by events
and/or fear of future events.
• Proactive ethical policies are policies that result when the company develops a clear sense
of what it stands for as an ethical organization.
o One characteristic that is common to such organizations is a commitment to
organizational transparency.
• Transparency is a characteristic of an organization that maintains open and honest
communications with all stakeholders.
• Microsoft’s 2006 white paper, “The New World of Work: Transparent Organizations,”
➢ A requirement that is being enforced on markets and companies through
regulation.
➢ An enabler of better relationships with partners and customers.
Learning Outcome 3: Understand the Difference between Reactive and Proactive Ethical
Policies.
• Reactive ethical policies are policies that result when organizations are driven by events
and/or fear of future events.
Learning Outcome 4: Discuss the Challenges of a Commitment to Organizational Integrity.
• Recognizing the concept of business ethics allows people to categorize behavior as
unethical, but when one is looking to manage the reputation and policies of an
organization, the commitment to doing the right thing becomes more about organizational
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-7
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
o Organizational integrity is a characteristic of publicly committing to the highest
professional standards and sticking to that commitment.
Life Skills
A Lone Voice
For an organization to operate ethically, senior executives must commit to developing a culture
that supports ethical principles beyond minimal compliance to federal legislation. Ultimately,
however, ethical conduct comes down to the actions of individual employees each and every day.
“Doing the right thing” becomes an individual interpretation based on personal ethics and a
series of guidelines from a company code of ethics. Can you make that work? What if you work
with colleagues who don’t share that perspective? If they operate from the perspective that it’s a
“dog-eat-dog world” with “‘victory at all costs,” you may find yourself as the lone voice in
trying to do the right thing. How will you handle that?
Progress Check Questions
1. List six characteristics of a tough market.
The following are the six characteristics of a tough market:
• Demanding customers who want new and better products and services at lower prices.
2. List four key items in a code of ethics.
The following are the four key items in a code of ethics:
• It can capture what the organization understands ethical behavior to mean—the values
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-8
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Students’ answers may vary. The following are some examples of unethical behavior by a
customer:
• Swapping a used piece of goods with a brand new item
• Telling the cashier you gave him a $20 when you really gave him a $10 and you want
the rest of your change back
• Wearing a new piece of clothing keeping the tags on it knowing you will return it after
you have worn it
4. Provide three examples of unethical behavior by a supplier.
5. When hiring an ethics officer, is it better to promote someone from within the company or
hire someone from outside? Explain your answer.
Students’ answers may vary. Some of the students may say that an ethics officer should be
6. List six key responsibilities of an ethics officer.
Students’ answers will vary. Their answers could include some of the following points:
• Oversight of hotline/guideline/internal reporting
• Preparation and delivery of internal presentations
Chapter 10 - Making It Stick: Doing What’s Right in a Competitive Market
10-9
• Preparation and delivery of external presentations
7. Give three examples of celebrating ethical behavior.
Students’ answers will vary. Their answers could include some of the following points:
8. If you publicly celebrate ethical behavior, should you also publish punishment for unethical
behavior? Why or why not?
9. List six examples of commitments that companies can make to win the trust of their
shareholders.
Students’ answers will vary. Their answers could include some of the following points:
• Offer a no-questions-asked refund policy like Lands’ End.
10-10
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
10. Provide four of your own examples.
Students’ answers may vary. Some examples include the following:
11. Why would a code of ethics need to be updated?
12. Find out when your company’s code of ethics was last updated.
13. What is a reactive ethical policy?
14. What is a proactive ethical policy?
15. Why would a company want to be transparent?
