Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Lecture Notes
Chapter 11
Managing Ethical Hotspots in the Organization
Organizational Ethics: A Practical Approach (3rd ed.)
Ethical Hotspots
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•Definition: activities or functions that frequently put the group at risk
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•Essential to the operation of all organizations
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•The Three Hotspots
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•Marketing
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•Finance/Accounting
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•Human Resource Management
Ethical Issues in Marketing
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•Marketing = managing relationships with customers
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•“All aspects of creating a product or service and bringing it to
market where an exchange can take place”
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•Elements of Marketing
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Product: what is being marketed
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•Price: cost
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•Promotion: how products and services are marketed
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•Placement: where a product or service gets put in the
marketplace
Marketing: Ethical Principles and Strategies
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•Marketing Ethics Continuum
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•Caveat emptor (“buyer beware”)
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•Caveat venditor (“seller beware”)
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•Industry standard (general industry guidelines)
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•Ethics codes (formalizes industry standards)
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•Consumer sovereignty (shared seller and buyer responsibility)
Three criteria for consumer sovereignty:
capability of the consumer (don’t take advantage of vulnerable
audience)
adequacy of information (must have necessary information)
freedom of choice (option to purchase elsewhere)
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Marketing: Ethical Principles and Strategies
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•ABCS of Marketing
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•Applied—apply theories to problems
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•Above the law—go beyond legal requirements
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•Aspirational—aspire to the ethical best
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•Bene7cial—bring benefit over the long run
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•Beyond the bottom line—think beyond 7nancial results
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•Breaking new ground—use moral imagination
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•Compliance—comply with laws and codes
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•Consequences—weigh potential negative consequences
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•Contributions—make contributions to customers and society
Marketing: Ethical Principles and Strategies
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•American Marketing Association Statement of Ethics
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•Keys
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• Do no harm
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• Foster trust in the marketing system
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• Embrace ethical values
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• Honesty
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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• Responsibility
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• Fairness
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• Respect
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• Transparency
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• Citizenship
Marketing: Ethical Principles and Strategies
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•Marketing virtues: adopting a “kinder, gentler” approach
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•Foster positive relationships with consumers through these virtues:
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•Integrity
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•Authenticity
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•Trust
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•Respect
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•Reciprocal empathy and vulnerability
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•Dialogue
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•Manners
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•Forgiveness
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•Courage and patience
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•Gratitude and recognition
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Humility
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•Perspective
Ethical Issues in Finance
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•Finance = generation, allocation and management of monetary
resources
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•Common ethical issues:
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•Financial markets: issues of fairness
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•Financial services: dealing with conflict of interest
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•Financial management: 7duciary duties to employers
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•Financial professionals: maintaining integrity
Ethical Issues in Accounting
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•Accounting: tracks or accounts for organizational operations
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•Ethical issues associated accounting functions
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•Auditing: maintaining independence
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•Management accounting: pressure to present a false picture of
the financial situation
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Tax accounting: mistaking tax obligations
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•Consulting: loss of objectivity
Finance and Accounting: Ethical Principles and Strategies
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•Recognize the ethical foundations of accounting and 7nance
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•Numbers are NOT value neutral
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•Balance financial concerns against other values
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•Acknowledge the moral origins of these professions
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•Develop a broader perspective on the role of the organization in
society
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•Recognize the impact of economic choices
Finance and Accounting: Ethical Principles and Strategies
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•Adopt a Di>erent Set of Guiding Values
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•Don’t be stupid (ego centric)
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•Avoid the fallacy of omnipotence (thinking you are all powerful),
the fallacy of invulnerability (that you can’t fail) and the fallacy of
unrealistic optimism (overcon7dence)
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•Tell the truth through integrity, objectivity, transparency
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Find fraud and expose liars: practice professional skepticism
Finance and Accounting: Ethical Principles and Strategies
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•Follow Professional Principles
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•AICPA Code of Professional Conduct
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• Principle 1: Responsibilities—factor in ethical judgments
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• Principle II: Serve the public interest—a social purpose
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• Principle III: Integrity—be honest and candid
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• Principle IV: Objectivity and independence—stay free of
conflict of interest
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• Principle V: Due care—improve competence and strive for
excellence
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• Principles VI: Scope and nature of services—limit duties to
those set by professional standards
Ethical Issues in Human Resource Management (HR)
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•Human Resources = the human or people side of the organization
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•Acquiring, training, appraising and compensating employees;
addressing labor relations, health and safety and fairness concerns
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•Common Moral Hazards or Dangers of HR
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•Treating employees as commodities
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Exploitation of workers
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•defining people in economic terms
Human Resource Management: Ethical Principles and Strategies
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•Kantian Approach
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•Treat every worker with dignity
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•Allow employees signiticant voice
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•Provide meaningful work
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•Act Justly
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•Distributive justice—how resources and benefit are allocated
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•Procedural justice—how allocation decisions are made
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•Interactional justice—how employees are treated by those in
authority
Human Resource Management: Ethical Principles and Strategies
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•Society for Human Resource Management (SHRM) Code of Ethics
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•Professional Responsibility: add value
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•Professional Development: meet high competence standards
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Ethical Leadership: act as a role model of the highest ethical
standards
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•Fairness and justice: promote fairness to all employees
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•conflict of interest: protect interests of stakeholders
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•Use of information: protect rights of individuals when dealing
with information
Human Resource Management: Ethical Principles and Strategies
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•Three Ethical Standards for Dealing With Harm
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•Standard 1: Advance the Organization’s Objective
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• Make sure the harm is justi7ed and aligned with
organizational goals
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•Standard 2: Enhance the dignity of Those Harmed by the Action
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• Help those who are hurt by HR decisions
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•Standard 3: Sustain the Moral Sensibility of Those Executing
Morally Ambiguous Tasks
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• Recognize and deal with unpleasant realities