MGT300 Exam 4

  1. US Sentencing Commission Guidelines
    companies can be prosecuted and punished even if management didn't know about the unethical behavior

    EXAMPLES: A male supervisor is sexually harassing female cowork-ers. A sales representative offers a $10,000 kickback to persuade an indecisive customer to do business with his company. A company president secretly meets with the CEO of her biggest competitor, and they agree not to compete in markets where the other has already established customers. Each of these behaviors is clearly unethical (and, in these cases, also illegal)

    Nearly all businesses are covered by the U.S. Sentencing Commission's guidelines. This includes nonprofits, partnerships, labor unions, unincorporated organizations and associations, incorporated organizations, and even pension funds, trusts, and joint stock companies. If your organization can be characterized as a business (remember, nonprofits count, too), then it is subject to the guidelines

    The guidelines cover offenses defined by federal laws such as invasion of privacy, price fixing, fraud, customs violations, antitrust violations, civil rights violations, theft, money laundering, conflicts of interest, embezzlement, dealing in stolen goods, copyright infringements, extortion, and more. But it's not enough merely to stay within the law. The purpose of the guidelines is not just to punish companies after they or their employees break the law, but rather to encourage companies to take proactive steps that will discourage or prevent white-collar crime before it happens. The guidelines also give companies an incentive to cooperate with and disclose illegal activities to federal authorities

    Essentially, the law uses a carrot-and-stick approach. The stick is the threat of heavy fines that can total millions of dollars. The carrot is a greatly reduced fine, but only if the company has started an effective compliance program (discussed below) to encourage ethical behavior before the illegal activity occurs
  2. Ethical Intensity
    the degree of concern people have about an ethical issue

    EXAMPLE: The manager who has to decide whether to deny or extend full benefits to Joan Addessi and her family is going to treat that decision much more seriously than the decision of how to deal with an assistant who has been taking paper home for personal use

    • 6 factors must be taken into account when determining EI:
    • magnitude of consequences- total harm or benefit derived from ethical decision
    • social consensus- agreement on whether behavior is bad or good
    • probability of effect- chance that something will happen that results in harm to others
    • temporal immediacy- time between an act and the consequences the act produces
    • proximity of effect- social, psychological, cultural, or physical distance of a decision maker from those affected by his/her decisions
    • concentration of effect- how much an act affect the average person

    Studies indicate that managers are much more likely to view decisions as ethical issues when the magnitude of consequences (total harm) is high and there is a social consensus (agreement) that a behavior or action is bad
  3. Steps in the ethical decision-making process
    • 1. Identify the problem. What makes it an ethical problem? Think in terms of rights, obligations, fairness, relationships, and integrity. How would you define the problem if you stood on the other side of the fence?
    • 2. Identify the constituents. Who has been hurt? Who could be hurt? Who could be helped? Are they willing players, or are they victims? Can you negotiate with them?
    • 3. Diagnose the situation. How did it happen in the first place? What could have prevented it? Is it going to get worse or better? Can the damage now be undone?
    • 4. Analyze your options. Imagine the range of possibilities. Limit yourself to the two or three most manageable. What are the likely outcomes of each? What are the likely costs? Look to the company mission statement or code of ethics for guidance.
    • 5. Make your choice. What is your intention in making this decision? How does it compare with the probable results? Can you discuss the problem with the affected parties before you act? Could you disclose without qualm your decision to your boss, the CEO, the board of directors, your family, or society as a whole?
    • 6. Act. Do what you have to do. Don't be afraid to admit errors. Be as bold in confronting a problem as you were in causing it.
  4. Integrity Tests
    Overt integrity tests estimate job applicants' honesty by asking them directly what they think or feel about theft or about punishment of unethical be-haviors

    Personality-based integrity tests indirectly estimate job applicants' honesty by measuring psychological traits such as dependability and conscientiousness
  5. Whistleblowers
    reporting others' ethics violations

    difficult step for most people to take

    Potential whistleblowers often fear that they, and not the ethics violators, will be punished

    The factor that does the most to discourage whistleblowers from reporting problems is lack of company action on their complaints
  6. Economic responsibility
    making a profit by producing a product or service valued by society

    has been a business's most basic social responsibility

    Organizations that don't meet their financial and economic expectations come under tremendous pressure
  7. Social Responsibility
    a business's obligation to pursue policies, make decisions, and take actions that benefit society

    Unfortunately, because there are strong disagreements over to whom and for what in society organizations are responsible, it can be difficult for managers to know what is or will be perceived as socially responsible corporate behavior
  8. Legal Responsibilty
    a company's social responsibility to obey society's laws and regulations as it tries to meet its economic responsibilities

    if the stock price rises to $15 a share, you can exercise your option by paying the company $1,000 (100 shares at $10 a share). But because the stock is selling for $15, you can sell your 100 shares for $1,500 and make $500. But what if you could go back in time to, say, January 1 when the stock was selling for $5? You'd make $1,000 instead of $500. It would be unethical and illegal, however, to “backdate” your option to when the stock sold for a lower price. Doing so would illegally increase the value of your option
  9. Discretionary Responsibility
    pertain to the social roles that businesses play in society beyond their economic, legal, and ethical responsibilities

    After a massive earthquake in Haiti killed 220,000 people and destroyed the homes of 1.9 million more, companies came to aid by partnering with and supporting humanitarian agencies. UPS, TNT, a Dutch express parcel company, and Agility, a global sourcing and supply chain company, combined their efforts to deliver 2,000 metric tons of food and 15,000 metric tons of supplies per day

    Carrying out discretionary responsibilities such as these is voluntary. Companies are not considered unethical if they don't perform them. Today, however, corporate stakeholders expect companies to do much more than in the past to meet their discretionary responsibilities.
  10. Shareholder model
    According to the late Nobel Prize–winning economist Milton Friedman, the only social responsibility that organizations have is to satisfy their owners, that is, company shareholders

    holds that the only social responsibility that businesses have is to maximize profits. By maximizing profit, the firm maximizes shareholder wealth and satisfaction. More specifically, as profits rise, the company stock owned by shareholders generally increases in value

    Friedman argued that it is socially irresponsible for companies to divert time, money, and attention from maximizing profits to social causes and charitable organizations. The first problem, he believed, is that organizations cannot act effectively as moral agents for all company shareholders. The second major problem, Friedman said, is that the time, money, and attention diverted to social causes undermine market efficiency
  11. Primary Stakeholders
    groups on which the organization depends for its long-term survival; they include shareholders, employees, customers, suppliers, governments, and local communities

    When managers are struggling to balance the needs of different stakeholders, the stakeholder model suggests that the needs of primary stakeholders take precedence over the needs of secondary stakeholders

    CEOs typically give somewhat higher priority to shareholders, employees, and customers than to suppliers, governments, and local communities, no matter what stage of the life cycle a company is in

    Addressing the concerns of primary stakeholders is important because if a stakeholder group becomes dissatisfied and terminates its relationship with the company, the company could be seriously harmed or go out of business
  12. Organizational Structure
    the vertical and horizontal configuration of departments, authority, and jobs within a company.

    Organizational structure is concerned with questions such as “Who reports to whom?” and “Who does what?” and “Where is the work done?”

    EXAMPLE: Sony Corporation of America is headed by Chairman and CEO Howard Stringer, who is based in New York City. But Sony has a number of divisions to handle different sectors of the company's business, each headed by its own president or CEO. PlayStations are developed and managed in Foster City, California, by Sony Computer Entertainment, which is part of the Consumer Products and Services Group, etc.
  13. Organizational Process
    the collection of activities that transform inputs into outputs that customers value.

    Organizational process asks “How do things get done?”

    EXAMPLE: Microsoft uses basic internal and external processes to write computer software. The process starts when Microsoft gets feedback from customers through Internet newsgroups, email, phone calls, or letters. This information helps Microsoft understand customers' needs and problems and identify important software issues and needed changes and functions. Microsoft then rewrites the software, testing it internally at the company and then externally through its beta testing process, in which customers who volunteer or are selected by Microsoft give the company extensive feedback. The feedback is then used to make improvements to the software. Indeed, Microsoft's advertising campaign for the kickoff of Windows 7, which was developed through extensive beta testing, was “I'm a PC, and Windows 7 was my idea.” The beta testing process may take as long as a year and involve thousands of knowledgeable people. After final corrections are made to the software, the company distributes and sells it to customers. They start the process again by giving Microsoft more feedback.
  14. Departmentalization
    a method of subdividing work and workers into separate organizational units that take responsibility for completing particular tasks.

    EXAMPLE: Bayer, a Germany-based company, has separate departments or divisions for health care, crop science, material science, and services
  15. Functional Departmentalization
    organizes work and workers into separate units responsible for particular business functions or areas of expertise.

    A common functional structure might have individuals organized into accounting, sales, marketing, production, and human resources departments

    Advantages: allows work to be done by highly qualified specialists, lowers costs by reducing duplication, with everyone in the same department having similar work experience or training communication and coordination are less problematic for departmental managers

    Disadvantages: cross-department coordination can be difficult

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  16. Customer Departmentalization
    organizes work and workers into separate units responsible for particular kinds of customers.

    EXAMPLE: Swisscom AG, Switzerland's leading telecommunications provider, is organized into departments by type of customer: residential customers (fixed line and voice, mobile and voice, broadband Internet, and digital TV); small-and medium-sized businesses (fixed line and voice, mobile line and voice, Internet and data services, and maintenance and operation of IT infrastructure); larger corporations (fixed line, voice and data, mobile line, voice and data, Internet and data services, and maintenance and operation of IT infrastructure); and network and IT customers (corporate communications, business development, finance and controlling, risk and quality management, human resources, IT outsourcing)

    advantages: focuses the organization on customer needs rather than on products or business functions, allows companies to specialize and adapt their products and services to customers needs and problems

    disadvantage: leads to duplication of resources, emphasis on meeting customers' needs may lead workers to make decisions that please customers but hurt the business

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  17. Complex matrix
    MATRIX: a hybrid structure in which two or more forms of departmentalization are used together. The most common matrix combines the product and functional forms of departmentalization

    specialized matrix managers and departments are added to the organizational structure.

    In a complex matrix, managers from different parts of the matrix might report to the same matrix manager, who helps them sort out conflicts and problems

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  18. Staff function
    such as accounting, human resources, or legal services, does not contribute directly to creating or selling the company's products, but instead supports line activities.

    EXAMPLE: marketing managers might consult with the legal staff to make sure the wording of a particular advertisement is legal
  19. Unity of command
    one of the key assumptions underlying chain of command

    means that workers should report to just one boss

    means that only one person can be in charge at a time

    Matrix organizations, in which employees have two bosses (or two headquarters, as in the Unilever example discussed in the box on the facing page), automatically violate this principle. This is one of the primary reasons that matrix organizations are difficult to manage.

    Unity of command serves an important purpose: to prevent the confusion that might arise when an employee receives conflicting commands from two different bosses
  20. Staff authority
    is the right to advise but not command others who are not subordinates in the chain of command.

    EXAMPLE: a manager in human resources at Sony might advise the manager in charge of Sony's Home Entertainment Business Group on a hiring decision but cannot order him or her to hire a certain applicant
  21. Centralization of Authority
    is the location of most authority at the upper levels of the organization

    managers make most decisions, even the relatively small ones. That's why the customer-service representative you called couldn't make a decision without first asking the manager
  22. Job specialization
    occurs when a job is composed of a small part of a larger task or process.

    Specialized jobs are characterized by simple, easy-to-learn steps, low variety, and high repetition

    EXAMPLE: McDonald's drive-through window job 

    One of the clear disadvantages of specialized jobs is that, being so easy to learn, they quickly become boring.

    This, in turn, can lead to low job satisfaction and high absenteeism and employee turnover, all of which are very costly to organizations
  23. Job design
    the number, kind, and variety of tasks that individual workers perform in doing their jobs
  24. Job enlargement
    way to counter the disadvantages of specialization is to enlarge the job

    increases the number of different tasks that a worker performs within one particular job.

    Instead of being assigned just one task, workers with enlarged jobs are given several tasks to perform.

    EXAMPLE: an enlarged “mirror attacher” job might include attaching the mirror, checking to see that the mirror's power adjustment controls work, and then cleaning the mirror's surface.

    Though job enlargement increases variety, many workers report feeling more stress when their jobs are enlarged.

    Consequently, many workers view enlarged jobs as simply more work, especially if they are not given additional time to complete the additional tasks
  25. Job rotation
    attempts to overcome the disadvantages of job specialization by periodically moving workers from one specialized job to another to give them more variety and the opportunity to use different skills.

    EXAMPLE: an office receptionist who does nothing but answer phones could be systematically rotated to a different job, such as typing, filing, or data entry, every day or two. Likewise, the “mirror attacher” in an automobile plant might attach mirrors in the first half of the work shift and then install bumpers during the second half.

    Because employees simply switch from one specialized job to another, job rotation allows companies to retain the economic benefits of specialized work.

    At the same time, the greater variety of tasks makes the work less boring and more satisfying for workers.
  26. Autonomy
    is the degree to which a job gives workers the discretion, freedom, and independence to decide how and when to accomplish the work
  27. Task significance
    is the degree to which a job is perceived to have a substantial impact on others inside or outside the organization
  28. Empowerment
    When workers are given the proper information and resources and are allowed to make good decisions, they experience strong feelings of empowerment. 

    Empowerment  is a feeling of intrinsic motivation, in which workers perceive their work to have meaning and perceive themselves to be competent, having an impact, and capable of self-determination.

    Work has meaning when it is consistent with personal standards and beliefs.

    Workers feel competent when they believe they can perform an activity with skill.

    The belief that they are having an impact comes from a feeling that they can affect work outcomes.

    A feeling of self-determination arises from workers' belief that they have the autonomy to choose how best to do their work.

    Empowerment can lead to changes in organizational processes because meaning, competence, impact, and self-determination produce empowered employees who take active rather than passive roles in their work.

    EXAMPLE: SWA "treat others how you'd like to be treated"; pilot held plane for man trying to fly to see 2 yo grandson about to be taken off life support
  29. Sequential Interdependence

    work must be performed in succession as one group's or job's outputs become the inputs for the next group or job

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  30. Intrinsic Motivation
    central concern of job characteristics model (JCM)

    motivation that comes from the job itself rather than from outside rewards such as a raise or praise from the boss.

    If workers feel that performing the job well is itself rewarding, then the job has internal motivation.

    EXAMPLE: Statements such as “I get a nice sense of accomplishment” or “I feel good about myself and what I'm producing”
  31. Virtual Organization
    is part of a network in which many companies share skills, costs, capabilities, markets, and customers with each other.

    a virtual organization in which the parts of a virtual company consist of product design, purchasing, manufacturing, advertising, and information technology.

    Unlike modular organizations, in which the outside organizations are tightly linked to one central company, virtual organizations work with some companies in the network alliance, but not with all

    Another difference is that the working relationships between modular organizations and outside companies tend to be more stable and longer lasting than the shorter, often temporary relationships found among the virtual companies in a network alliance.

    The composition of a virtual organization is always changing.

    The combination of network partners that a virtual corporation has at any one time depends on the expertise needed to solve a particular problem or provide a specific product or service
  32. Closure
    Once we have initial information about a person, event, or process, closure is the tendency to fill in the gaps where information is missing, that is, to assume that what we don't know is consistent with what we already do know.

    If employees are told that budgets must be cut by 10 percent, they may automatically assume that 10 percent of employees will lose their jobs, too, even if that isn't the case.

    Not surprisingly, when closure occurs, people sometimes fill in the gaps with inaccurate information, which can create problems for organizations
Card Set
MGT300 Exam 4
Chapter 4, 9, 15