CHAPTER 4

Ethical Issues in Management Communication

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Objectives

After reading this chapter, you will be able to:

1. define the theories of moral problems in business;
2. explain how moral philosophy develops;
3. differentiate between personal ethics and societal ethics;
4. identify ethical issues in lieu of codes of ethics;
5. determine appropriate situations for whistleblowing;
6. explain the guidelines for ethical behavior.

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Introduction

If people are to work together successfully, they must agree to share common customs and standards of conduct. If they cannot agree on the tenets of ethical conduct, there will be no consensus on the organization’s behaviors. Many would defend the right of a sovereign society to govern itself. Therefore, the tenets of ethical conduct a society chooses for itself will inevitably spillover into the business environments. Bad choices by society are bad for business.

Unethical decisions are made all the time: Why does this happen? People steal, not only for themselves but also for their company. Power, greed, and misplaced values are the major causes of unethical decisions in business. The 2008 U.S. financial crisis was due in large part to the unethical decisions made by Fannie Mae leaders Franklin Raines, CEO and Chairman, and Tim Howard, CFO. They told banks to make loans to unqualified people. They manipulated the earnings to trigger bonuses for themselves. The profit motive drove them to make bad decisions. When people in an organization learn that their leaders are dishonest, the credibility of those leaders is destroyed.

Ethical issues that are very important for managerial communication effectiveness today include social responsibility, dealing with conflict of interest, payoffs, financial results, product safety, liability, whistleblowing, organizational politics, training and development, ambivalence, bribery, and quid pro quo.

Moral Problems Common to Business

Philosophers over several centuries developed theories to explain how people respond to the ethical problems that societies face.

Consequentialism

Consequentialism results when the profit motive or the success of the business supersedes the duty to do what is right for society. In fact, this theory could explain the ethical breaches of many businesses. A recipe for trouble can occur when the results are considered to be more important than duty to society, to not cause harm, or to obey the federal and state laws that protect consumers and the public. If there is an opportunity for impropriety, then the choice made requires the person to act according to an established code.

Decision Theory

Codes of ethics are justified by decision theory that applies when there is limited information to make a rational choice or to achieve an outcome that is optimal. These codes provide guidelines for acceptable actions. Some professionals refer to decision theory as the “sniff test.” The code should be applied to ethical situations to be sure that it is functional. If there is a code of ethics, all employees should have a copy and should be given instructions on its use. Top management must also use the code, if it is to be effective at lower levels in the organization. The code should also include guidelines concerning punishments for violations.

Deontology

Deontology refers to judging the morality of an action on that action’s adherence to rules. Managers must effectively communicate ethical standards in order for employees to incorporate those values into the organizational culture. However, deontology is concerned with a person feeling more concern for doing his or her duty than worrying about any potential harm his or her actions will cause to others. Managers are an essential corporate tool for communicating ethical values. Fraud and misconduct often occur when duty to a company becomes more important than the consequences to society.

Teleology

Teleology is the notion that the universe has a purpose and that purpose is often prescribed by a divine being. Many people believe that there is one God, the Supreme Being, whose will provides the purpose to human existence. According to Bell and others (2011) the strongest predictions of ethical behavior are the family (upbringing), friends, and beliefs that are generally stronger than the company’s values and beliefs.

Truett Cathy’s personal ethics shaped the moral code of Chick-fil-A, a company he founded in 1946, when he decided not to operate the first restaurant he opened in Hapeville, Georgia, on Sundays. Cathy had a firm belief that employees should be able to worship, be with family and friends, and get some rest on Sunday. Today thousands of Chick-fil-A restaurants currently operate in the United States, and each of them forgoes hundreds of thousands of dollars in revenues by closing their doors on Sundays. At Chick-fil-A, adhering to the founder’s personal ethics, is more important than making money on Sundays. Recently, Business Insider’s Kate Taylor (2018) reported that Gen Zers have a passion for Chick-fil-A. It is no wonder that the average annual per restaurant sales is $4.4 million, compared to KFC’s $1.1 million per restaurant sales for the same period. Chick-Fil-A continues to be closed on Sundays, yet its revenues for all stores in 2017 was $9 billion, up from $8 billion in 2016. Chick-Fil-A is evidence that teleological beliefs can be integrated into the modern capital structure as intense competition against fast-food chains owned and operated by conglomerates. Window into Practical Reality 4.1 presents a sobering example of persistent challenges to teleological ethics that played out in the Supreme Court of the United States (SCOTUS) when Hobby Lobby sued the federal government.

Utilitarianism

Utilitarianism theory supports making decisions based on the greatest amount of pleasure and the least amount of pain for the greatest number of people; in other words, actions should improve the human experience in mass. Many of the moral problems to which utilitarianism is applied are broadly societal, rather than applications to businesses as regulatory mandates.

The United States has historically been a society of competing ethical beliefs. In the absence of agreements or consensus on what behavior ought to be acceptable in society, historically its citizens have had violent conflicts that have sometimes lasted for decades. Examples of contested societal ethics are legalized slavery, alcohol prohibition, voter I.D. laws, prohibition against women’s voting, and Jim Crow (separate but equal) laws. For every proponent of these types of laws, there was an unrelenting opponent whose belief in the unrighteousness of such laws was intractable.

Society has imposed many of its societal values through laws and regulations on business operations and activities. In the United States, federal, state, county, and city governments regulate the societal ethics that are imposed on businesses, including equal protection and affirmative action laws. Some states imposed antimiscegenation laws until the Supreme Court struck them down in 1967 as described in the Window into Practical Reality 4.2.

Equal protection laws are essential in helping to root out racism, sexism, and ageism in the workplace, so that all U.S. citizens will have a better opportunity to prosper and advance in their careers. The need for such laws is a testament to the fact that personal values of hate and discrimination spillover into the workplace. They also reflect a utilitarian intention in regulating all U.S. businesses to ensure certain types of moral conduct in the workplace.

A recent study of MBA students by Zaremba (2000) found that the students’ value systems varied widely. When the students discussed these differences, many were shocked to learn that people they were working with had such different values from their own. The majority of the students believed that if a statement was not prefaced with the qualifying statement “this is the truth,” the receiver of the message was obligated to discover if the statement was in fact true.

Figure 4.1 illustrates moral problems and some hypothetical examples of why consequentialism, decision theory, deontology, teleology, and utilitarianism present moral challenges to business. Managers encounter a broad range of decisions daily, where their choices can be detrimental to thousands, if not millions, of people.

The Central Issues of Moral Philosophy

The Greek word philosophy literally means the love of wisdom. Arguably, Socrates was sincere in his pursuit of wisdom. To Socrates, the question was not so much “What is?” but “What ought to be?” Socrates stated that “the unexamined life is not worth living.” Egoism is the ability to determine and do what is best for yourself; altruism is the ability to understand how your actions will affect others.

There are three main branches of Western philosophy: epistemology—a view that humans can know about the world in which they exist, thus, people pursue answers to questions concerning phenomenon that can be tested and verified or refuted; metaphysics—a view that knowledge can be gained from abstraction (including religious beliefs); and ethics—a view of right and wrong conduct affecting others’ welfare.

As one of three main branches of Western philosophy, ethics has been examined for many centuries. Unalienable right bestowed by God for individuals are guaranteed by the Constitution of the United States. These rights include equal protection under the laws for free speech and a free press, a right to remain silent, and freedom of religion. Rights such as these are the basis of U.S. citizens societal ethics of these tenets are a culmination of centuries of Western philosophy. Societies, however, have embraced ethics differently.

When Socrates was alive, the Greeks worshiped many gods. Socrates routinely asked troubling questions concerning this belief system like: “What happens when two gods of equal strength and power disagree?” When people’s common beliefs cannot resolve their ethical dilemmas, people become frustrated and feel threatened. Socrates asked the Athenians so many poignant questions that his challenging ideas led to a saucer of hemlock that sent him to his grave. Values and beliefs are profound for individuals. Ordinary people, in situations where they feel a need to reflect consciously on decisions they honestly cannot determine immediately to be right or wrong, are in fact searching for wisdom.

Moral philosophy is the outcome of a process through which individuals reflect consciously on the precepts that govern their ordinary habits of moral choice. Reflection is required when precepts about what is right and wrong can no longer enable the person to automatically resolve ethical dilemmas. With old values believed to be insufficient to aid in resolving the moral problem, a conscious reflection on those values is required of the individual. It is through this process of conscious reflection that an individual is elevated to a higher level of ethics called moral philosophy. Theologians, philosophers, and academicians alike have struggled for centuries to understand and explain these types of moral decisions. Ethical decision making is predicated on the values and beliefs that influence the philosophy supporting an individual’s or culture’s moral code. Therefore, values and ethics are both personal and societal.

The base of ethical judgments is the sense of right or wrong. A judgment based on what is easiest, best, or most effective in achieving an objective is based on practical ethics. Subjective judgments are measured by degrees rather than by absolutes of what is ethical or unethical in a society (Lewicki, Saunders, and Minton 2007). Business morality consists of doing one’s duty, despite concern for the probable outcomes of such choices. Individuals may at times perceive that their duty to their company is more important than the common good for society.

Employees usually learn more about a particular company’s ethical values from fellow employees rather than from their supervisors. This reality indicates that managers should be more proactive in having discussions about ethical issues with employees. Employees can also learn company ethical values through training and orientation programs as well as from handbooks. The best ethical codes are the ones that employees intuitively act upon, making it important that values are interwoven throughout the organization’s culture. Adding many cultures to the mix makes understanding ethics even more complex. The constraints when dealing with an ethical dilemma include international and domestic laws, internal or industry codes of ethics, the interest of the stakeholders, and personal values.

Many global business managers rely on hypernorms today, which are the transnational norms forming across cultures. The hypernorm would say that bribery is wrong, although there are countries where bribery is practiced. Proponents of globalization generally would like to have all employees follow the same values and beliefs around the globe; though this is not always possible, due to varying cultural and societal values and beliefs. Examples of current hypernorms are global standard accounting practices, international regulations for the movement of goods, and international safety standards.

Four approaches for working with ethics internationally include the foreign-country approach, empire approach, interconnection approach, and global approach. In the foreign-country approach, the organization conforms to the ethics of the host country. In the empire approach, home-based ethics are applied in the host situation. The interconnection approach considers the needs of both groups that are interacting. The global approach looks at what is good for the world, rather than the local ethical customs (Donaldson and Dunfee 1999).

Each of these methods has its challenges. With the foreign-country approach, the company has no oversight or restraints on the host country’s ethics; while the empire approach, does not take into account the cultural and personal values of those in the host country. Trying to balance multiple interests is challenging at best, when applying the interconnection or global approaches, though the rewards are great when efforts are successful.

Personal and Societal Ethics

There are distinctions between definitions of the terms personal values, personal ethics, societal values, and societal ethics, although they are interdependent. Personal values are the individual’s trusted, closely held beliefs; personal ethics refers to an individual’s philosophy that serves as a moral code of conduct. On the other hand, societal values are the trusted and closely held beliefs imposed on the individual by the society in which he or she lives. Societal ethics is the totality of individual philosophies that culminate in a systematic moral code of conduct agreed on by members of a society.

Ethics in business includes the rules, standards, principles, or codes that give the members of a firm a moral compass for determining the correct behavior in specific situations. The degree of accountability affects people’s ethical behaviors. The stronger a personal relationship is, the more unlikely unethical behavior will be. Workers solve ethical dilemmas based on their culture, their individual beliefs (based on the ethical choices), the work situation, and the relationships they have with other workers. Role systems theory has shown that firm accountability expectations and the consequences of noncompliance are important keys regarding the choices employees will make.

Our ethical beliefs follow us to the workplace. Because of immigration from all over the world, there are probably more ethical differences between individuals in the United States than anywhere else in the world. Originally, immigration was mainly from Europe and Africa, but now it has a broader base. Additionally, globalization of organizations involves the consideration of different ethical belief standards around the world. It is not enough to speak the same language. We also need to understand what the others believe, if we are to trust them to carry out the goals of the firm.

Conflicting values between workers are not unusual. Some workers will believe they are to simply obey authority no matter what the consequences might be. Other workers will believe they should question orders if something does not appear to be correct. When company and personal values clash, individuals will ask themselves who they owe loyalty to first—themselves or the company. For many people, the conflict with their loyalty to family and family beliefs may also be problematic. For others, societal concerns may be more important than company goals. A good example of personal ethics vis-a-vis societal ethics is presented in Window into Practical Reality 4.3.

When faced with conflicting personal and work values, an employee can either do nothing, quit, work to change the system, or blow the whistle. Part of the choice will depend on how the person sees the situation. Is it partially wrong or completely wrong? Is it a direct lie or a lie to buy time? Is it illegal or just wrong? Is it unsafe? Ethics can be thought of as a continuum from white to black, where many situations are in shades of gray. Some individuals see everything as one extreme or the other—either white or black. Most people see things as shades of gray based upon their ethical belief structure. Therefore, as a manager, it is important that your ethical and moral perceptions are in sync with those of your workers. The more the two agree, the easier it will be for you to work together. Rules that govern the conduct of ordinary people in any society, including organizations that exist within that society, can make ethical decision making even more complex. If your ethics are questionable, wrong ethical decisions may be made such as paying yourself a bonus when the company is losing money. Sometimes it is good for people to disagree so that hard questions are asked and answered.

Codes of Ethics

Situations involving questionable business ethics have been frequently in the news in recent years. The negative news and the aftermath of the situations have been devastating to many individuals, from a loss of retirement funds in U.S. companies to a loss of loved pets from contaminated pet food from China.

As we mature, we learn ethics and morals from those around us; ethics is very personal, cultural, and situational. Many professional organizations have attempted to govern the ethical conduct of their members, including these:

• American Bar Association Model Rules of Professional Conduct
• American Institute of Certified Public Accountants Code of Ethics (AICPA Code of Professional Conduct)
• American Nurses Association Code of Ethics
• National Commission for Health Education Credentialing, Inc. Code of Ethics
• National Society of Professional Engineers (NSPE Code of Ethics for Engineers)

The ethical codes of these organizations are believed to make it easier for their members to gauge what is and what is not acceptable conduct within the respective professions. For example, the code of conduct for judges requires them to recuse themselves from cases in which a conflict of interest could raise questions of reasonable doubt or impropriety. Many of these codes of conduct provide strict consequences for members who violate the codes, such as a certified public accountant (CPA) losing their license for insider trading. Often companies have formal ethical statements, which make it easier for an employee to determine how he or she will handle ethical situations and dilemmas. But in our global world, the problem of whose ethics or which ethical principles should be adopted is not an easy question to answer. Nevertheless, companies are in a serious position of figuring out how to respond to the perceived unethical atmosphere of business.

A research study found that 76 percent of workers had observed violations of the law or company policies during the prior 12 months. While nearly two-thirds of those surveyed did not feel that their company would discipline guilty employees, they also did not think that management even knew of the types of unethical behaviors that were occurring. In many cases, managers do not have enough information to make perfect decisions. Nevertheless, reporting wrongdoing is often predicated on urgency and devotion to doing what is perceived to be the right thing to do.

Appropriate Time for Whistleblowing

Whistleblowing has become more common in corporations and government in recent years. But how does an individual decide how and when to blow the whistle?

Ethical Dilemmas

Ethical dilemmas at work happen when people are asked to accept or do things which they know are illegal, immoral, or simply wrong. Lehman and Dufrene (2015, p. 10) list seven main reasons for illegal and unethical behavior which can stem from common causes:

• Excessive emphasis on profits
• Misplaced corporate loyalty
• Obsession with personal advancement
• Expectation of not getting caught
• Unethical tone set by top management
• Uncertainty about whether an action is wrong
• Unwillingness to take a stand for what is right.

Understanding the seven common causes of illegal and unethical behavior helps people in organizations develop a sensitivity to the signals of escalating pressure that can compromise an individual’s values (Lehman and Dufrene 2015). It is always important for you to consider the position of others when communicating decisions that affect their work and personal life. Put yourself in their shoes and ask what you would want to know in their situation. Professional ethics is an evolving process of determining for ourselves what we believe to be right and wrong conduct, which includes values that combine to form our personal ethics. In some cases, whistleblowers are willing to end their careers (and in some cases their lives), to seek justice and punish wrongdoers for the greater good of society. Frequently, whistleblowing is the only option, when the individual is confronted with seeking justice against a large organization.

A good example of a whistleblowing dilemma is the situation in which top banks skipped the due diligence part of the home purchase and sales they financed. When sued by angry homeowners, banks produced fake documents created by document mills. Lynn Szymoniak, a fraud attorney foreclosed on by a big bank, who was also featured on the television show 60 Minutes, won an $18 million share of a $95 million settlement after she blew the whistle on “robo-signing” fraud perpetuated by some of America’s largest banks. Banks that lost crucial original assignment of mortgage documents hired teenagers to fraudulently create thousands of them. These documents were entered into court records as authentic, in some cases two years after the fact. Szymoniak researched 10,000 such documents and uncovered broad scale fraud perpetuated by the big banks (60 Minutes Overtime Staff 2012). Other forms of misconduct that might trigger whistleblowing include situations in which you witness bribes changing hands or kickbacks.

Kickbacks and Bribery

Decision theory is applicable to situations in which managers take or give kickbacks when they fear losing a deal, or when they believe that the practice is culturally necessary and acceptable. Managers may also engage in kickbacks and bribery when there is no real fear of getting caught.

Organizations like Baxter and General Motors (GM) have policies that forbid employees from taking gifts or gratuities from suppliers. Some companies require vendors to sign pledges that they will not engage in bribes or kickbacks to employees. Employees learn about these ethical expectations through training programs, coaching, reading manuals, company communications, and ethical codes, watching other employees and managers, and meeting with managers.

To make ethical codes work, a firm must have them written down and tailored to fit the industry that the firm is a part of. Codes must be communicated internally and externally, promoted, and updated regularly. Management from the top down must live the code and ensure that the code is enforced.

Bribery refers to the act of influencing others by giving them something. In Mexico, bribes are known as mordida; in Southeast Asia, kum-shaw; and in the Middle East, baksheesh. The Foreign Corrupt Practices Act of 1977 requires U.S. companies to account for and report international transactions accurately and prohibits bribes. The Act states that companies found guilty of paying bribes to foreign officials can be fined up to $1 million, and individual employees may be fined up to $10,000. While considered unethical in the United States, bribery is considered an unofficial part of doing business in many countries.

People Who Blow the Whistle

Whistleblowing generally involves an individual with unique knowledge of unethical actions, who uses public communication to let others know what is happening. A whistleblower can be someone who is an insider to the organization or someone who is an outsider to the firm such as suppliers, vendors, or professionals in the field. Whistleblowers have saved lives, prevented injuries and disease, and stopped corruption that would otherwise threaten the public. Whistleblowing is a personal act of conscientious, and the whistleblower often puts himself or herself at personal risk. Retaliation is not unusual, which is why most whistleblowers first try to rectify the problem internally before going public. Whistleblowers need credibility to deflect some of the retaliation and accusations that others may make against them.

Whistleblowing is part of our democratic value system that promotes free dissemination of information, which allows individuals to make informed decisions. Window into Practical Reality 4.4 illustrates whistleblowing by an outsider (Johns on et al. 2004).

So, what influences a person to become a whistleblower? Whistleblowing happens when a member of an organization feels that the organization is not acting in an ethical way. An ethical dilemma exists in that the employee’s ethical code and the firm’s ethical code do not match. Generally, the whistleblower has a higher than average education, professional and social status, a group affiliation that encourages a whistleblowing mindset, and a culture with strong norms. Utilitarianism and strong moral beliefs compel the individual to tell authorities about the wrongdoings. The whistleblowing phenomenon has been increasing since the 1960s. Figure 4.2 illustrates the communicative act involved in whistleblowing.

Whistleblowers often have a conflict between being loyal to the firm and doing what is best for the stakeholders of the firm. An employee may simply leave the firm and find another job; however, some choose to be a whistleblower while still employed by the firm. Culture influences the likelihood that whistleblowing will occur. For example, in Japan where people are more loyal to the firm and culturally are collectivistic, you will see less whistleblowing than in the United States, which is individualistic, and where employees are more transient between companies.

Other conflicts the whistleblower must deal with are his or her ethical obligations to the profession, family, livelihood, and colleagues, as well as obligation to the public and one’s personal moral obligations. It is clear that whistleblowing is a utilitarian act with potentially severe consequences for the whistleblower. For this reason, whistleblowers often anonymously leak information to the media or regulatory authorities. For example, a whistleblower at WorldCom leaked e-mails to the press and federal officials, as described in the Window into Practical Reality 4.5.

Another example of a publicized whistleblower is Edward Snowden, who blew the whistle on the National Security Agency (NSA) spying on e-mails and phone calls. Had he stayed in the United States after blowing the whistle, he probably would be in jail. However, he chose to leave the country with sensitive data and is now considered a traitor by some. Others are thankful that he brought out the fact that the U.S. government was in fact gathering information without legal jurisdiction to do so from the courts. No matter which side you are on in this case, it illustrates the complexities that a whistleblower must consider before speaking out.

Ethical Guidelines

When considering guidelines for making ethical judgments, a person begins with his or her personal values and beliefs. If the individual has been a member of a society for an extended period of time, the values of the society, which are generally in the form of laws, will provide the second set of guidelines. If the organization has a written code of ethics, that will serve as the third set of guidelines to consider when making ethical decisions.

Problems happen when these sets of guidelines are in conflict or when different interpretations exist. For instance, what do you do if you are in another country and need to run electrical service to operate a manufacturing plant, but the local person wants a bribe to do so and the local culture says this is okay? The U.S. government says it is wrong to pay a bribe, but you know that if your company does not do so, it will be months before the plant will actually be running. Some firms have been known to hire a local consultant and let the consultant pay the bribe so that they are not directly knowledgeable about the situation. In your own country, what is right and wrong is much clearer than in another country where values and beliefs can be very different from your own. When you are in another country, you are caught in the dilemma of whether to follow their values, beliefs, and laws rather than your own which may be quite different.

Analyzing an ethical dilemma can be done by identifying the legal implications of the situation, finding and applying an appropriate code of ethics to the situation, implementing an ethical solution, and then communicating that solution both internally and externally if necessary. The model shown in Figure 4.3 illustrates how people’s ethical codes interact to determine behavior. Managers with Machiavellian personalities are people who believe manipulating others purely for political or personal gain is acceptable conduct in business. Therefore, the model shows that Machiavellianism refers to managers who are willing to do whatever is necessary to achieve their goals. These managers have no compunction in wrongdoing because they feel such behavior is perfectly acceptable.

According to Kohlberg, a leading moral development theorist, employees with higher levels of cognitive moral development will make ethical decisions more often than those with lower levels of cognitive moral development (Kohlberg 1969). Individuals with a propensity toward higher hostility and aggression will have more unethical intentions than individuals with lower hostility and aggression (Beu, Buckley, and Harvey 2003). Locus of control is the employee’s sense of how much control he or she has over events or outcomes they can attain. When an employee desires to control the situation, he or she has an internal locus of control and will be less satisfied with a directive or dictatorial leader. These employees behave more ethically than employees with external locus of control, people who feel less control over events and need to be told what to do (Trevino and Youngblood 1990). Employees with high Machiavellianism tend to engage in more unethical behavior than those with a low score. Employee who live their religious faith will make moral choices based on their teleology.

Sometimes individuals’ ethical values differ from those of their own culture, the company that employs them, or their managers’ values. For example, a woman professional from the Middle East with an infant daughter might elect to immigrate to the United States because her home country prohibits women from voting, attending school, and driving cars. Many times, such ethical dilemmas stem from cultural meanings that the individual does not share with the macroculture. When this happens, the individual may choose to compartmentalize his or her life using the corporate ethics at work, but using his or her cultural ethics at home and in the corresponding cultural community. The person could adopt the values of the host culture or completely deny the host-culture values.

Research has shown that many employees believe that ethics is deteriorating due to worrying about the bottom line first, and with superiors who are only concerned with positive financial results. These expectations can lead employees to cut corners on quality control, cover up negative issues, misuse sick days, deceive customers, steal, and pressure others into inappropriate actions. Other actions that employees may consider which could benefit them personally include cheating on expense accounts, discriminating against coworkers, paying or accepting kickbacks, fixing prices, and other types of fraud. In business, as in many other actions in life, people are confronted with moral problems that their habitual responses cannot resolve easily, thus, they must reflect consciously on what they believe to be the right and wrong responses to such dilemmas.

While deliberate dishonesty hurts relationships, many times milder expressions of dishonesty will be forgiven. Telling your spouse of 40 years that he or she still looks as good as the day you got married may be good medicine for the marriage. Unfortunately, little white lies can become big problems and lead to major consequences. Managerial communications reflect ethical ideals within the firm. When managers create job descriptions and then use those job descriptions to evaluate employees, they are setting the requirements for the position. If they chose to deviate from the job description to assess performance, the employees will probably feel they have not been treated fairly.

Mission statements are constructed to let stakeholders know the firm’s mission. If the mission is aligned with the values of the organization, it can be useful for guiding the behavior of management and employees. Mission statements are useless; however, when they are disregarded or not understood. How a manager describes organizational or departmental achievements is important. Is credit given to the person or team that made it happen, or does the manager take credit for the achievement? Taking credit for another’s work should never happen, as a manager will get credit by giving credit to his or her worker’s accomplishments. After all, the manager hired the people and coached them. Employees respond better to a manager who is concerned about them as individuals.

As important as sharing success, is the ability to accept responsibility for problems that develop and find solutions. For instance, when companies reduce employee benefits, the way the change is explained and how employees view the financial management of the firm have a lot to do with how well the changes are accepted. Marketing has the responsibility of selling what the firm offers, and public relations is charged with building goodwill for the organization and protecting its image. How marketing persuades customers through advertising has an ethical dimension. The classic phrase “let the buyer beware” came about because of organizations that were not always ethical in the way they chose to produce and sell their products. The term “if it is too good to be true, it probably is,” is another way of saying “buyer beware.” While many companies are responsible in their product offerings and sales tactics, some are not. Investors with Stanford Financial who were getting better returns on their investments than they could get anywhere else should have asked more questions. As it is, many lost all they had invested at Stanford. The Federal Bureau of Investigation reported in an article on its website, “Former Executives of Stanford Financial Group Entities Sentenced to 20 Years in Prison for Roles in Fraud Scheme.” The report shows clearly the high costs of financial fraud, with one former executive receiving a sentence of 110 years in prison (U.S. Department of Justice 2013).

Strategic ambiguity exists when someone is purposefully vague to derive personal or organizational benefit. Not everyone believes that organizations should always have open communication. Those individuals would argue that strategically ambiguous communication is required in certain situations. However, strategic ambiguity complicates communication:

• It allows the source to both reveal and conceal, and to save face if necessary.
• It allows policy interpretation that could do more harm than good, and then the interpretations could be denied.
• Statements that are strategically ambiguous can mean different things at different points in time. (Eisenberg and Goodall 2001)

Unified diversity is giving different meanings to the same message. People will tend to interpret the message to fit their situation. While everyone would not interpret it the same, they would all embrace the message. For example, President Obama’s campaign slogan for “Change” was interpreted differently among voters as the particular change that they wanted individually. Ambiguity can foster organizational change and creativity by leaving workers room to expand beyond direct commands. Preserving privilege and deniability happen when things go wrong and the people in authority claim that people did not understand what was said. This allows them to deny the workers’ interpretation, protect their own position, and deny personal culpability (Eisenberg and Goodall 2001).

Summary

Business ethics has been in the forefront of business professionals’ minds recently due to the number of unethical business situations that have become public. Personal ethics and the ethics of the culture are at times divergent, and ethical values vary considerably from one culture to the other. The current rift in American culture seems to be based on extreme positions of values and beliefs coming from both the far left and far right of the cultural spectrum. Five theories applicable to understanding ethical dilemmas faced by business people are consequentialism, decision theory, deontology, teleology, and utilitarianism.

Personal ethics are never exactly the same for all employees. Disagreements between secular values and religious values lead to conflicts of personal ethics and societal ethics that might not ever be resolved. Clearly stated organizational standards can help companies alleviate some of the bad ethical choices that employees could make. Training employees on the ethical standards of the organization and modeling ethical behavior from the top down are important elements of an ethical organization. Globalization involves consideration of different ethical perspectives. Unethical actions may be exposed by a whistleblower who is not able to get people inside the company to listen and change the problematic behavior.