Compare and contrast the different kinds of ethical dilemmas contained in Chapter 5 of the Trevino text, including the Texaco case study, the Tap Pharmaceutical case study, and the Synthes case study.
Write a paragraph that responds to the following questions:
· Are there patterns you see in the different types of dilemmas?
· What are the similarities and differences you see in the dilemmas?
· Do the differences matter when resolving them? If so, describe the approaches these differences require you to take.
· What does this information tell you?

~L- _

Ethical Decision-
Making Framework

After reading this chapter, you will be able to:

• Apply several sets of ethics questions to business issues

• Use a systematic ethics decision-making framework to

arrive at moral conclusions

• Understand the five most important ethical theories

• Persuade others by speaking in their ethical language

• Facilitate a negotiation between competing ethical


• Recognize warning signs that an unethical decision is


Codes of Conduct cannot cover every business situation that might

arise. Employees need to know how to independently derive a moral

answer to business issues. Several frameworks are available to help

employees understand the ethical basis of their decisions and actions.


Ethical Decision-Making Framework

This chapter summarizes two common ethical decision-making

frameworks and then offers a systemic six-question ethics decision-

making framework grounded in moral philosophy. A process for per-

suading people who approach a decision from a different ethical per-

spective and warning signs that an unethical situation is arising are

also provided. The material in this chapter can also be used as the

basis of an ethics workshop.

Rotary International’s Four-Way Test

How do you know if the decision you are about to make is ethical? A

simple framework for analyzing the ethical dimension of a decision is

Rotary International’s Four-Way Test. More than 1.2 million busi-

ness, professional, and community leaders are members ofRotary In-

ternational, and there are more than 32,000 Rotary clubs around the

world. In 1943, the Rotary adopted the following Code of Ethics,

referred to as The Four-Way Test: 1

Of the things we think, say, or do:

1. Is it the TRUTH?

2. Is it FAIR to all concerned?


4. Will it be BENEFICIAL to all concerned?

Raytheon’s Ethics Quick Test

Raytheon provides its employees with an Ethics Quick Test, consist-

ing of the following questions to consider when facing an ethical

dilemma: 2


The Ethics Decision-Making Framework

• Is the action legal?

• Is it right?

• Who will be affected?

• Does it fit Raytheon’s values?

• How will I feel afterwards?

• How would it look in the newspaper?

• Will it reflect poorly on the company?

The Ethics Decision-Making Framework

The Rotary’s Four-Way Test and Raytheon’s Ethics Quick Test are

very helpful lists of questions, yet not philosophically systematic.

The moral philosophy literature provides a more systematic ap-

proach for deriving moral conclusions. Ethical reasoning is just like

any other managerial problem-solving process. When confronting a

problem, managers typically list the available options and determine

which alternative makes the most sense. The same decision-making

process can be applied to ethical reasoning.

Strong consensus, though not absolute agreement, exists among

philosophers that some ethical rea


Managing Business Ethics
Chapter 5

Treviño & Nelson – 8th Edition



Chapter 5 Overview
Organizational Ethics as Culture
Ethical Culture: A Multisystem Framework
Ethical Leadership
Other Formal Cultural Systems
Informal Cultural Systems
Organizational Climates: Fairness, Benevolence, Self-Interest, Principles
Developing and Changing Ethical Culture
A Cultural Approach to Changing Organizational Ethics
The Ethics of Managing Organizational Ethics


Influence of Culture on Individuals
Ethical Awareness
Ethical Judgment
Ethical Action
Ethical Culture
Individual Differences



Organizational Culture
Expresses shared assumptions, values and beliefs and is the social glue that holds the organization together. It’s “how we do things around here.”
Strong – assumptions, values, beliefs widely shared
Weak – subgroup norms more influential


A body of learned beliefs, traditions, and guides for behavior shared among members of a society or a group


Ethical Culture:
A Multisystem Approach
Formal Systems
Informal Systems
Executive Leadership
Selection System
Performance Management
Authority Structure
Decision Processes
Role Models/Heroes
Ethical/ Unethical Behavior


Alignment and Misalignment
With alignment, all systems are “pushing” employees in the same direction – either ethical or unethical
With misalignment, employees get mixed messages about expectations


Executive Leaders Create Culture
Leaders Maintain or Change Organizational Culture
Ethical Leadership and Ethical Culture
Ethical Leadership
Unethical Leadership
Hypocritical Leadership
Ethically Neutral or “Silent” Leadership


Executive Ethical Leadership Rests on Two Pillars
Moral Person
Tells followers how leader behaves
Concern for people
Personal morality
Values based

Moral Manager
Tells followers how they should behave and holds them accountable
Role modeling
Takes visible ethical action
Hold people accountable for ethical conduct
Sends an “ethics and values” message


Executive Ethical Leadership
Reputation Matrix

Ethically silent leader?

Hypocritical leader
Ethical leader
Unethical leader

Moral Manager
Moral Person


Other Formal Cultural Systems
Selection Systems
Values and Mission Statements
Policies and Codes
Orientation and Training Programs
Performance Management Systems
Organizational Authority Structure to Support Responsibility
Decision-Making Processes


Informal Cultural Systems
Role Models and Heroes
Norms: “The Way We Do Things Around Here”
Myths and Stories


Ethical Climates



Ethical Culture Change
From ethical to unethical

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