Instructor Resource
Neck, Organizational Behavior
SAGE Publications, 2017.
Ethical Dilemma
Chapter 1: Why Organizational Behavior Matters
NASA and the Challenger Mission
NASA, the National Aeronautics and Space Administration, has an organizational culture and structure that strives for success. Because the organization puts so much emphasis on results, this culture was also the reason for a major ethical dilemma.
In 1986, NASA was building the space shuttle Challenger and putting enormous pressure on the project team to complete it. When engineers noticed small problems in the O-rings (seals that had been designed to separate sections of the rocket booster) as they built the shuttle, they didn’t say anything at first because they felt to raise questions would not accord with the behavior the organization expected of them. In fact, evidence suggests that NASA managers were indeed aware of these design problems—specifically that these O-rings were susceptible to failure at low temperatures—but failed to take action.
Critical Thinking Questions:
- If you were the manager, what would you do?
- Would you report the mistakes and fear that the project would fail?
- Or would you continue on, figuring small problems couldn’t possibly affect the shuttle that much?
SOURCE: Based on Lassiter, David. Leadership: Facing Moral and Ethical Dilemmas, 1–4 (Executive Associates, 2004).
Chapter 2: Diversity and Individual Differences
A Lack of Representation at Google
Diversity in the workplace is an important issue that no organization should overlook. However, even the most forward-thinking companies can struggle with this issue.
Google is one of the most well-known companies in the world, and it faces challenges with diversity. In an official company blog on May 28, 2014, Getting to Work on Diversity at Google, Laszlo Bock, the senior vice president, People Operations, shared information about Google’s workforce composition. The numbers disclosed show that 70 percent are men, 30 percent are women, 61 percent are white, 30 percent are Asian, 4 percent are two or more races, 3 percent are Hispanic, and 2 percent are Black/African American. Additionally, according to reporting at PBS NewsHour, employees working in Google’s tech jobs are less diverse than this overall company data.
In the blog, Laszlo Bock wrote: We’ve always been reluctant to publish numbers about the diversity of our workforce at Google. We now realize we were wrong, and that it’s time to be candid about the issues. Put simply, Google is not where we want to be when it comes to diversity, and it’s hard to address these kinds of challenges if you’re not prepared to discuss them openly, and with the facts.
He goes on to explain the reasons why Google and other similar companies find it difficult to recruit, hire, and retain women and minorities, citing data regarding the lower rates of computer science degrees conferred by different groups.
Critical Thinking Questions:
- If you were top management at Google, what would you do?
- Does Google have an ethical obligation to publish this data?
- What would you do to address the diversify issues at Google?
SOURCES: McGregor, Jena, “Google Admits It Has a Diversity Problem.” Washington Post, May 29, 2014. Bock, Laszlo.Getting to Work on Diversity at Google. Blog, May 28, 2014.
Chapter 3: Emotions, Attitudes, and Stress
Job Stress Creates Problems for Apple
The attitudes that fill a company build the organization’s behavior. How employees feel and the emotions they have toward their work greatly affect their effectiveness and productivity. When a company goes too far to produce results, making its employees too stressed can create an ethical dilemma.
When Tim Cook, CEO of Apple, took over for Steve Jobs, he had to face an ethical dilemma with their supplier Foxconn in China. In 2012, 150 of Foxconn’s employees had threatened suicide because they were overworked and put under extreme pressure. Apple was ignoring the emotional state of Foxconn employees in favor of having a great relationship with a supplier who was doing a good job for Apple.
Critical Thinking Questions:
- If you were the manager, what would you do?
- Would you try to fix the stress level in the Foxconn factory?
- Or would you try to let Foxconn fix the issue themselves and not overstep your boundaries?
SOURCE: Based on Hinks, Paul. “Apple’s New Leader Faces Ethical Dilemmas at Foxconn.” Leaders We Deserve (January 2012): 1–2.
Chapter 4: Perceptions and Learning
Responding to Perceived Unethical Behavior
Learning an organization’s procedures is the first step when entering a new company, and learning the organization’s behavioral norms is the next. All companies have certain guidelines they want employees to follow in order to keep a positive perception.
Chalace Lowry, an employee of Walmart, was trained to report any sign of unethical behavior. Lowry saw her boss, Williams, copying papers related to the company’s stock and found out a couple days later that Walmart was planning a stock buyback. She didn’t know the exact details, but she told upper management about what she had seen. Walmart told Lowry she had mistaken what she saw for insider trading, and that Williams had done nothing wrong. Lowry met with an HR employee shortly after the incident and was given less than great ratings on performance, including a comment about poor teamwork skills. Given this rating came shortly after her report, Lowry felt confused. She was doing what she had learned to do regarding unethical behavior.
Critical Thinking Questions:
- If you were the employee, what would you do?
- Would you report an unethical incident at the risk a poor review, or would you keep it to yourself and stay in the company’s good graces?
SOURCE: Gogoi, Pallavi. Wal-mart’s Latest Ethics Controversy. Bloomberg Company. June 13, 2007, pp 1–3.
Chapter 5: Motivation: Concepts and Theoretical Perspectives
Employee Inequity at the Waterfront Grill
The types of motivation a company uses to engage its employees is a vital part of its organizational behavior. Employees use motivation to deliver results, increase their job performance, and move up in the company. However, sometimes this motivation can be driven by unethical means or given by a boss’s unethical practices. Why are some employees rewarded more than others? An employee might have a strong internal motivation to get some specific reward, or the boss might reward a favorite employee more generously than others.
Ryan Kahn, a career coach, says that one of his clients thought another was receiving preferential treatment because he was not getting the same opportunities as the other. His client thought the other person was being favored and receiving more attention from management.
Critical Thinking Questions:
If you were the manager what would you do?
Source: Smith, Jacquelyn. How to Deal With Favoritism in the Office. Forbes. Oct 26 2012. Pages 1-2.
Chapter 6Motivation: Practices and Applications
Taking Tips (or Not) at Charles Schwab & Company
Unethical behavior surrounds organizations every day. Employees in the financial sector are even more at risk than are employees in other industries, dealing with stocks and bonds and the temptation of using “tips” that can give them an unfair advantage in their business and personal lives. These tempting unethical decisions can be avoided if the organization supports a strong ethical stance.
At Charles Schwab & Company, Inc., a financial firm, employees have had the chance to make unethical decisions every day because of the competitive nature of their industry. Other stock brokerage firms, such as Refco and FINRA, ignore ethics in the effort to gain more sales from clients by making unsuitable transactions, which are transactions made to boost commissions that may not be in the best interests of their clients. These unethical choices are difficult to detect at times and are even supported by their company because they do not have specific ethical guidelines. Charles Schwab & Company employees have had numerous chances to call customers and ask for tips in order to increase sales, especially during the recession and the years following.
Critical Thinking Questions:
- If you were the manager, what would you do?
- Would you forgo some ethical behavior to increase sales?
- Or would you maintain the company’s integrity, no matter the money involved?
SOURCE: Kinni, Theodore. “An Ethical Dilemma.”Selling Power (2013): 1.
Chapter 7:Teams
The Ford Pinto
Many businesses desire to be outstanding examples of ethical behavior and practices. Ford, for example, is currently regarded as one of the most ethical companies in the world. Between the huge emissions cutbacks produced by vehicles and factories, as well as fair labor practices, Ford is viewed as one of the few truly ethical companies. However, this wasn’t always the case. Rewind to the early 1970s and Ford was a profit-maximizing company facing fierce competition for its market share in small automobiles. In its haste to create a cheap and easy-to-produce car, Ford rushed its team of engineers and production workers to produce the Ford Pinto.
The team of engineers realized the car has some mechanical issues, but the production team had the car line set up and ready for shipping. Both teams had little contact with each other and were focused on the specific goals the company gave them. Ford needed to get these cars produced and sold in order to keep up with their competitors.
Critical Thinking Questions:
- If you were the manager, what would you do?
- Would you call off the production and take more time to develop the car, which would lead to losses?
- Or would you move along with the process and produce the cars?
SOURCE: Ethical Breakdowns.” Harvard Business Review. April 1, 2011.
Chapter 8: Decision Making and Ethics
PepsiCo in Burma
Every business has a certain policy, or set of guidelines, that it uses when confronted with difficult decision making. For instance, in the 1990s PepsiCo focused on its triple bottom line (profit, people, planet). The issue with a guideline such as this is that these three areas can become mutually exclusive at times and lead to areas of “gray” decision making.
In the early 1990s PepsiCo had the opportunity to invest in a bottling facility in Burma, now Myanmar. This facility would allow the company to ship its products into Asian markets more quickly and easily and, by lowering production costs, would lead to a spike in profit. Soliciting foreign investments could boost the country’s economy and potentially stabilize the region. However, the region had just come under the control of a military junta that was said to be oppressing the people.
Critical Thinking Questions:
- If you were the manager, what would you do?
- Would you look to expand into Burma in the hopes that your involvement could help to improve the area?
- Or would you fear that your financial investment in the country could make further oppression possible?
SOURCE: Velasquez, M. Business Ethics, 163−167 (Upper Saddle River, NJ: Prentice Hall, 2002).
Chapter 9: Creativity and Innovation
TJ Maxx Price Comparisons
If you have ever shopped at discount department store TJ Maxx, you may have seen price tags and signs that include a “compare at” price to show the difference between the supposed retail value of the item and the lower amount you’d pay buying the item at their store. You probably assumed these price comparisons were accurate and based in fact, and were delighted by the savings you were getting. Unfortunately, this may not have been the case: in 2015, two customers filed a class action lawsuit against the company for deceptive pricing strategies after discovering that these “compare at” prices were simply made up. Though customers were paying the true advertised prices for TJ Maxx items, suddenly the savings didn’t seem so great.
Critical Thinking Questions:
- If you were the manager, what would you do?
- Would you continue to include misleading “compare at” prices to make your products seem more desirable, or would you remove the prices for more transparency?
SOURCE: Northrup, Laura. “Customers File Class Action over Allegedly Misleading TJ Maxx Price Tags.”Consumerist. July 22, 2014.
Chapter 10: Conflict and Negotiation
Donald Sterling and the NBA
The National Basketball Association (NBA) playoffs are usually a very exciting time for basketball players and fans alike. However, in spring 2014, Donald Sterling, then-owner of the Los Angeles Clippers, was caught on tape making racist remarks about African American fans attending his games. In reaction, offended and angered players and coaches briefly threatened to boycott the playoffs unless NBA Commissioner Adam Silver and other NBA owners forced Sterling to sell his team and get out of the league. Protests against Sterling continued throughout the playoffs, garnering support from other teams and prompting an official NBA investigation into the incident.
Critical Thinking Questions:
- If you were the commissioner, what would you do?
- Would you force the owner to sell, or would you let him stay?
SOURCE: NBA Staff. “Donald Sterling Timeline.”NBA. August 12, 2014.
Chapter 11: Leadership Perspectives
Traditional Leadership at Walmart
Every organization has their ideas about leadership. Take Walmart, for example: the largest retailer in the world is run by a traditional leadership style.
Following the 2008 recession, Walmart’s profits and revenues slowly started declining. To make matters worse, Amazon began to claim a larger market share in virtually every market. In 2014, Doug McMillon was brought on as CEO to solve the loss of profits in the past 5 quarters. The preceding CEO made an attempt to cut costs and wages, even going as far to as firing many workers and making the ones who were left behind take on their work.
Critical Thinking Questions:
- If you were the manager or CEO, what would you do?
- Would you continue to harm your workforce as those before you?
- Are there other ways that you can cut costs?
- Or is cutting costs not the right path?
Chapter 12: Influence, Power, Politics
Abusing Power at the DC Lottery
Many people are familiar with lottery companies and systems. This type of organization is profitable from the sale of lottery tickets. Whether or not they operate ethically is often debated.
In the wake of allegations about manipulations made to the 2009 DC Lottery contract, Buddy Roogow, the executive director of the DC Lottery, came under scrutiny in 2012 for unethical behavior. Often these sorts of issues arise from the improper use of power and implementation of politics. In this case, former secretary of the Lottery contractor Emmanuel Bailey, a good friend of Roogrow’s, was appointed as chief of marketing even though he was unqualified for the job and was paid much more than employees who had been there longer than he had. Bailey’s appointment resulted in the firing of numerous other employees as well.
Critical Thinking Questions:
- If you were the manager who witnessed this, what would you do?
- Would you report or address the grievances, even though you could be fired for being a whistleblower?
- How might this abuse of power have been prevented?
SOURCE: Anderson, Jeffrey. “D.C. Lottery Boss Is Accused of ‘Unethical Behavior.’” Washington Times. November 18, 2012.
Chapter 13: Effective Communication
Recalls at Toyota
Every organization has their way of dealing with adversity. Take for instance GM which delayed a recall of the Chevy Cobalt from 2005 to 2013 due to the cost it would incur from repairing faulty vehicles. Admitting to the recall would have damaged their reputation in the market, but delaying it caused even more damage, and even deaths. Toyota is now in a similar situation, and they have a choice: follow in the same path as GM to preserve their reputation and finances, or take responsibility for their mistakes and accept the consequences.
Critical Thinking Questions:
- If you were the Manager what would you do?
- Would you report the recall and risk the damage to your finances and reputation, or cover it up in the hopes that the issue wouldn’t manifest?
Sources: Healey, J. (2015). GM victims' fund closes with 51 deaths -- so far. USA TODAY. Retrieved 30 July 2015, from Stansberry, Glen. "10 Business Leaders You Should Strive To Emulate." Business Insider. Business Insider, Inc, 25 Feb. 2010. Web. 07 Mar. 2015.
Chapter 14: Organizational Culture
A Troubling Company Culture at American Apparel
A company’s culture plays a large role in how the organization is run and how leaders manage their employees. The culture can make a company extremely successful, but it can also guide a company to make unethical decisions.