Ch 8, Instructor’s Manual, Business & Society, Carroll 10e
Chapter 8
Managerial and Organizational Ethics
LEARNING OUTCOMES
After studying this chapter, you should be able to:
1. Identify and explain the different levels at which business ethics may be addressed.
3. In terms of managing organizational ethics, identify the factors affecting an organization’s
ethical culture and provide examples of these factors at work.
5. Identify and explain concepts from “behavioral ethics” that affect ethical decision-making
and behavior in organizations.
6. Explain the cascading effect of moral decisions, moral managers, and moral organizations.
TEACHING SUGGESTIONS
INTRODUCTION – Chapter 8 has two primary purposes, the first of which is to explore some
of the various ways to make judgments about ethical dilemmas. The authors present two
approaches to making moral judgments, the principles approach and the ethical tests approach.
The second purpose is to discuss ways in which managers can improve the moral culture and
behavior of their organizations.
KEY TALKING POINTS – This chapter gets into what many philosophers consider the heart of
ethics—how to make judgments about ethical dilemmas and come to justifiable decisions about
them. As students will quickly note, there is a bewildering collection of ways to make moral
judgments. The authors introduce and discuss eight different principles and seven different
Most people rely on their instincts to make moral judgments, as pointed out in the text. The
students in your class will be no different, and so they will likely become somewhat frustrated
trying to learn all of these different approaches. One way to help overcome this frustration and
simultaneously help cement the concepts in their minds is to provide a number of ethical
dilemmas for them to debate in class discussions (moral philosophy textbooks typically have a
Ch 8, Instructor’s Manual, Business & Society, Carroll 10e
ethical tests matrix as this device enables students to visualize the differences in the various
principles and tests. A sample matrix is included at the end of this chapter. Instructors also may
A particular strength of this chapter is the authors’ emphasis on the ethical climates within
organizations, and the profound influence they have on individuals’ moral judgments. Although
the textbook cannot do full justice to this idea (due to space limitations), there is strong evidence
Even Lawrence Kohlberg, the pioneer of the cognitive moral development field, recognized the
influence of group forces over the individual’s ethical decision making, stating, “Individual
moral action usually takes place in a social or group context and that . . . context usually has a
Using the Ethical Decision-Making Process illustrated in Figure 8-8, instructors can demonstrate
how the ethical principles and tests introduced in this chapter are utilized by organizations
through the conduct of top management and corporate codes of conduct. Students should revisit
PEDAGOGICAL DEVICES – In this chapter, instructors may utilize a combination of:
Cases: 5-Engineered Billing
6-The Waiter Rule: What Makes for a Good CEO?
7-Using Ex-Cons to Teach Business Ethics
8-To Hire or Not to Hire
9-You Punch Mine, I’ll Punch Yours (2)
10-Phantom Expenses
11-Family Business
Ch 8, Instructor’s Manual, Business & Society, Carroll 10e
13-Location, Location, Location
17-Chiquita – An Excruciating Dilemma
23-McDonald’s Coffee Spill
24-The Betaseron Decision (A)
28-Safety, What Safety
29-Felony Franks (2)- Home of the Misdemeanor Wiener
31-Moral Dilemma – Head vs. Heart
32-Walmart Labor Practices
33-Case of the Fired Waitress
35-Looksism at A&F
38-A Candy Confession
39-To Take or Not to Take
Ethics in Practice Cases:
More Sales, Lower Ethics?
Fired for Cheating on Employer Tests
The New Ethics Code—Sign or Resign
Sometimes Ethics Hotlines Don’t Work
Spotlight on Sustainability:
The Keys to Successful Transparency
Power Point slides:
LECTURE OUTLINE
I. ETHICS ISSUES ARISE AT DIFFERENT LEVELS
A. Personal Level
B. Managerial and Organizational Levels
C. Industry or Profession Level
D. Societal and Global Levels
II. MANAGERIAL ETHICS AND ETHICAL PRINCIPLES
A. Principles Approach to Ethics
1. What is an Ethics Principle?
2. Types of Ethical Principles or Theories
3. Principle of Utilitarianism
5. Principle of Rights
7. Ethical Due Process
9. Ethics of Care
10. Virtue Ethics
11. Servant Leadership
12. The Golden Rule
B. Ethical Tests Approach to Decision Making
1. Test of Common Sense
3. Test of Making Something Public (Disclosure Rule)
5. Test of Purified Idea
7. Gag Test
8. Use Several Tests in Combination
III. MANAGING ORGANIZATIONAL ETHICS
A. Factors Affecting the Organization’s Moral Climate
1. Pressures Exerted on Employees by Superiors
B. Improving the Organization’s Ethical Culture
1. Compliance versus Ethics Orientation
IV. BEST PRACTICES FOR IMPROVING AN ORGANIZATION’S ETHICS
A. Top Management Leadership (Moral Management)
1. Weak Ethical Leadership
3. Two Pillars of Leadership
B. Effective Communication of Ethical Messages
C. Ethics and Compliance Programs and Officers
1. Ethics and Compliance Officers
D. Setting Realistic Objectives
E. Ethical Decision-Making Processes
1. An Ethics Screen
3. Ethics Quick Test
F. Codes of Ethics or Conduct
1. Metaphors for Perceiving Codes
G. Disciplining Violators of Ethics Standards
H. Ethics “Hotlines” and Whistle-Blowing Mechanisms
I. Business Ethics Training
(a) Business Roundtable Institute for Corporate Ethics
J. Ethics Audits and Risk Assessments
K. Corporate Transparency
L. Board of Director Leadership and Oversight
V. BEHAVIORAL ETHICS—TOWARD A DEEPER UNDERSTANDING
VI. MORAL DECISIONS, MANAGERS, AND ORGANIZATIONS
VII. SUMMARY
Ch 8, Instructor’s Manual, Business & Society, Carroll 10e
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
Students should recognize that their answers to these discussion questions should be well
reasoned and supported with evidence. Although some answers will be more correct than others,
students should be aware that simplistic answers to complex questions, problems, or issues such
as these will never be “good” answers.
1. Question: From your personal experience, give two examples of ethical dilemmas you
have experienced as a member of an organization.
Answer: Students will have many different answers to this question. They may range from
decisions related to underreporting time spent at work, to taking company property (pens,
2. Question: Using the examples you provided for question 1, identify one or more of the
guides to personal decision making or ethical tests you think would have helped you
resolve your dilemmas. Describe how it would have helped.
Answer: In the first example I could have used any one of the guides presented in this
to the management of the law firm where the practice was taking place.
3. Question: Which is most important in ethics principles – consequences or duty? Discuss.
Answer: Obviously, students will have different answers to this question. After all,
philosophers have been debating this very question for hundreds of years with no
4. Question: Assume that you are in your first managerial position. Identify five ways in
which you might provide ethical leadership. Rank them in terms of importance, and be
prepared to explain your ranking.
Answer: Because ethical leadership is built upon management that embodies the
characteristics of a moral manager and a moral person, I would focus on these aspects of
5. Question: What do you think about codes of conduct? Give three reasons why an
organization ought to have a code of conduct and three reasons why an organization
should not have a code of conduct. On balance, how do you assess the value of codes of
conduct?
Answer: Codes of conduct, if embedded in the culture of a company, can provide effective
guidance to employees. Collins and Porras, in Built to Last, talk about the effects of “cult–
like cultures.” These cultures provide ideological control (assuring that employees look at
6. Question: An ongoing debate concerns whether business ethics can and should be taught
in business schools. Do you think ethics can be taught in B-school? Substantiate your point
with reasons. Can top managers and board members be taught business ethics?
Answer: In my opinion, this question does not address the critical issue. Business ethics
can be taught. The subject matter is no more difficult to grasp than any other academic
7. Question: Identify and prioritize the best practices for improving the organization’s
ethical climate. What are the strengths and weaknesses of each?
Answer: The single most important factor in establishing a strong ethical climate is the
commitment and behavior of senior managers. These are the people in the organization
8. Question: Which three of the concepts under the field of behavioral ethics appear to be the
most powerful? Explain why and give examples.
Answer: Students will undoubtedly have different answers for the top three concepts, and
will likely rank them differently. Perhaps the concept with the most impact would be
Ch 8, Instructor’s Manual, Business & Society, Carroll 10e
GROUP ACTIVITY
Divide students into groups of four to five students. Instruct them to read the following scenario:
“Alex Smith is preparing a sales presentation for his company, Phones4Kids, which
manufactures and sells cell phones that are specifically designed for children. Phones4Kids
employs several hundred workers in Mooray, Missouri, a small town with only two other large
employers in addition to Phones4Kids. Alex hopes to sell specialty phones for boys and girls
aged 6-10 to a retailer in Hooptown, Missouri. This sale would represent approximately 25% of
the projected revenue for the current year for Phones4Kids. The phones are not specifically
designed for internet access; however, about eight percent of the time the phones can pick up a
wireless internet connection and the user can access the internet. There is a 48% chance that once
a child connects to the internet using one of these specialty phones, he or she could access a
pornographic site. Derrick Vance, Alex’s boss, has promised Alex a commission in addition to
his regular salary if he makes the sale to the retailer. However, if he tells the retailer about the
potential to access pornography via the cell phone, the retailer may buy the phones from a
competitor that sells phones without internet access. Alex has reviewed the corporate policy for
Phones4Kids and can find no specific guidance on how to handle this situation. However, the
policy does indicate that sales representatives are to be honest and fair in their dealings with
customers.”
Each group should determine how Alex should handle this situation in a written memo.
Specifically, the group should use the ethical decision-making process to reach a resolution to
the hypothetical. The group’s ethics screen should include an analysis of several ethical
principles and tests.
Instructors may want to have students use the following additional ethical decision-making
process, which builds on the process provided by the text but incorporates an economic and legal
analysis of proposed courses of action:
Step 1: State the Problem / Analyze the Problem
Step 2: Identify All Courses of Action that You Could Take
Step 3: Evaluate Each Course of Action
D. Would the proposed course of action meet the firm’s economic responsibilities?
E. Would the proposed course of action meet the firm’s legal responsibilities?
F. Would the proposed course of action meet the firm’s ethical responsibilities?
2. Note the ethical principles / tests required by the code of conduct.
Step 4: Evaluate New Alternative (Repeat Step 3)
Step 5: Implement Chosen Course of Action
INDIVIDUAL ASSIGNMENT
Distribute the following instructions to each student:
Describe an ethical dilemma that you faced in the workplace. Analyze how you would resolve