WELCOME TO

Organizational Behavior
Class

Reni Rosari
RENI ROSARI
MM UGM

2008The McGraw-Hill Companies, Inc. All rights reserved.

PEOPLE IS THE ONE MOST IMPORTANT

INGREDIENT OF ORGANIZATIONS

How people behave on the job is, in fact,closely associated with

innovations in technology and profitability.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Kebutuhan Inovasi Manajemen

Pada awal sejarah teori manajemen (mulai dari Frederick Taylor,
Henry L.Gantt, Frank Gilbert dan yang lainnya) menunjukkan
bahwa berbagai macam konsep, pendekatan, metode dan
teknik manajemen yang dikembangkan adalah untuk
memecahkan berbagai masalah spesifik yang dihadapi
manajemen pada saat itu, yaitu bagaimana melakukan suatu
pekerjaan secara lebih efisien.
Dalam perkembangannya, adanya perubahan teknologi secara
dramatik, terutama teknologi digital dan internet, globalisasi, dan
penurunan daya prediksi model-model perencanaan strategik,
memunculkan kebutuhan berbagai pendekatan manajemen
baru..
Sumber keunggulan kompetitif menjadi bukan lagi pada
produktivitas dan efisiensi, perilaku disiplin dan kepatuhan,
tetapi lebih penting pada inovasi, imaginasi dan passion atau
komitmen.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Manajemen yang seperti apa?

Manajemen yang mampu menciptakan
organisasi yang lebih adaptif, inovatif dan
menjadi tempat kerja yang menimbulkan
gairah (meningkatkan komitmen, perilaku
prososial atau kewargaan organisasional,
dan emotional attachment).

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Jack Welch
(CEO of General Electric)

The talents of our people are greatly underestimated

and their skill are underutilized.
Our biggest task is to fundamentally redesign our
relationship with our employees.
The objective is to build a place where people have
freedom to be creative, where they feel a sense of
accomplishment a place that brings out the best in
everybody.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Percy Barnevick
(CEO of Asia Brown Boveri)

There is a tremendous unused potential in our people.

Our organizations ensure they only use 5 to 10 percent
of their abilities at work.
Outside of work they engage the other 90 to 95 percent
to run their households, lead a Boy Scout troop, or
build a summer home.
We have to learn how to recognize and employ that
untapped ability that each individual brings to work
everyday.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Value of Management

"The success of an
organization is
dependent upon the
competence of senior
management and the
morale*) of the
workforce, ~ David Sirota,
founder Sirota Research.
*) morale an employees attitude toward his or
her job, employer, and colleagues
Source: Study Sees Link Between Morale and Stock Price, HR Executive Online, March 6, 2006

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

e.g. Michelle Peluso (TRAVELOCITY)

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

e.g. Michelle Peluso (TRAVELOCITY)

Travelocity is an online travel agency. It was created in 1996.
As one of the pioneers of web-based disintermediation,
Travelocity.com was the first website that allowed consumers
themselves not only to access Sabre's fare and schedule
information, but also to reserve, book, and purchase tickets without
the help of a travel agent or broker. In addition to airfares, the site
also permits consumers to book hotel rooms, rental cars, cruises
and packaged vacations.
Under Pelusos leadership, Travelocity has developed and
launched a merchant hotel business, dynamic packaging
functionality, and a private-label (ASP) distribution network, the
Travelocity Partner Network.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Michelle Peluso (President and Chief Executive Officer

Travelocity)
She trusts, empowers, and listens to her companys
people

At a 5,000 person global organization, I simply cant

know everyone personally. But I can apply my dads
techniques in a scaled-up way tat lets me know as
many people as possible, that encourages managers
to do the same, and that makes our employees
generally feel that this is a place where someones
looking out for them.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Her fathers example provided a profound lesson:

If you treat your employees as unique individuals,
theyll be loyal to you and theyll perform and your
business will perform, too.

People arent your greatest asset

theyre your only asset
PEOPLE-CENTERED ORGANIZATION
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

PEOPLE-CENTERED ORGANIZATION
(Jeffrey Pfeffer - Stanford University)

Companies that stress continuous improvement

and being way better than the competition
but also make people feel comfortable.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

PEOPLE ARE YOUR MOST IMPORTANT ASSEST

OR
THE RIGHT-HAPPY PEOPLE ARERENI
YOUR
MOST IMPORTANT ASSETS
ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

Seven people-centered practices

Based on research evidence from companies (both in US and Germany)
shows the following seven people-centered practices to be strongly
associated with much higher profits and significantly lower employee
turnover:
1.
2.
3.
4.
5.
6.
7.

Job security (to eliminate fear of layoffs)

Careful hiring (emphasizing a good fit with the company culture)
Power to the people (via decentralization and self managed teams)
Generous pay for performance
Lots of training
Less emphasis on status (to build a we feeling)
Trust building (through the sharing of critical information)

Importantly, these factors are a package deal, meaning they need to be

installed in a coordinated and systematic manner not in bits and
pieces
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

According to Pfeffer:
only 12% of todays organizations have the
systematic approaches and persistence to qualify as
true people centered organizations, thus giving them a
competitive advantage.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

James McNerney (CEO of aircraft maker Boeing)

I start with peoples growth, my own growth included.
I dont start with the companys strategy or products. I
start with peoples growth because I believe that if the
people who are running and participating in a
company grow, then companys growth will in many
respects take care of itself.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Gary Kelly (CEO of Southwest Airlines)

Weve never had a layoff. Weve never had a pay cut.
And were going to strive mightily, especially this year
(2009), to avoid them once again. I worry about that
everyday. And I dont worry about much, but I worry
about that.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

A recent study of 318 companies led to this

conclusion:
Three-fourths of 4,172 workers who have kept their
jobs say their productivity has dropped since their
organizations let people go

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

People-Centered Examples
Yvon Chouinard, Pentagonia Inc.
Trust, empower, and listen to the employees
Herb Kelleher, Southwest Airlines
Respect people for who they are, not for what their titles are.
Clayton Christensen, Harvard Business School
You can learn from anyone.
George Zimmer, Mens Wearhouse
Happy employees attract loyal customers.
Every 5 years full time employees receive a three-week paid
sabbatical on top of their regular vacations
Jim Sinegal, Costco
Good starting pay, 94% health care costs
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

You came first for the

coffee, but you came back
for our people
~ Starbucks

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Your Experience
Do you feel that you have worked in a peoplecentered workplace?
A=Yes, B=No

If yes, what people-centered characteristics did the

workplace have?
If no, what were the workplace characteristics that did
not make it people-centered?

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

A key fact:
No matter how good a companys product may be, there can be
no company without people
From the founder to the loyal employees, its all about people.
People problems can bring an organization down very rapidly.

PEOPLE are a critical element in the effective functioning

indeed, the basic existence of organizations

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Each of us needs to accept the challenge to do better,

whatever our role (s) in society
employer/entrepreneur, employee, manager,
stockholder, student, teacher, voter, elected official,
social/political activist.
Toward that end, the mission of this course is
to help increase the number of people centered and
ethically managed organizations around the world to
improve the general quality of life
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

WELCOME TO THE WORLD OF OB

RENI ROSARI
MM UGM

2008The McGraw-Hill Companies, Inc. All rights reserved.

Organizational Behavior:
The Quest for People-Centered
Organizations and Ethical Conduct

RENI ROSARI
MM UGM

2008The McGraw-Hill Companies, Inc. All rights reserved.

Ch. 1 Learning Objectives

1.
2.
3.
4.
5.
6.
7.
8.
9.

Define the term organizational behavior and contrast

McGregor's Theory X and Y assumptions about employees
Identify the four principles of total quality management
Define the term e-business and specify OB-related issues raised
by e-leadership
Contrast human and social capital and explain why we need to
build both
Define management and identify managerial skills of effective
managers
Characterize 21st century managers
Describe Carrolls global corporate social responsibility pyramid,
and give an overview of the model of individual ethical behavior
Identify four of the seven general ethical principles, and explain
how to improve an organizations ethical climate
Describe the sources of organizational behavior research
evidence
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

What is Organizational Behavior?

An interdisciplinary field dedicated to better
understanding and managing people at work
mempelajari sisi manusia dari manajemen
Management: process of working with and through
others to achieve organizational objectives efficiently
and ethically

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

MANAGEMENT
getting things done with other people and God

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Why Study Organizational Behavior?

To interact more effectively with others in
organizations
You will learn more about yourself, how to interact
effectively with others, and how to thrive (not just
survive) in organizations.
Edward E. Lawler III created the virtuous career
spiral how OB related skills point you toward
career success increased skills and performance
can lead to better jobs and higher rewards.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

Im a finance major, why do I need to know this?

soft People skills complement technical skills
OB is a horizontal discipline cutting across virtually
every job category, business function, and professional
specialty.
Anyone who plans to make a living in a large or small,
public or private, organization needs to study OB.

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

WHAT IS THE FIELD OF OB ALL ABOUT?

OB Applies the Scientific Method to Practical Managerial
Problem
Pengetahuan PO berdasarkan pada ilmu perilaku (behavioral
science)
bidang ilmu seperti psikologi dan sosiologi yang menggali
pengetahuan tentang perilaku manusia dan masyarakat melalui
penggunaan metode ilmiah
PO menggali dan mengembangan pengetahuan dasar dengan
menggunakan pendekatan empiris, dan berdasar pada penelitian
(riset)
a theory research practice strategy

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

Learning About OB Through A

Combination of Theory, Research, and Practice

Theory

Most complete
information for
better
understanding
and managing
organizational
behavior

Research

Practice

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Learning about OB
Three Approaches:
Theory ideas about what happens and why
Research testing theoretical ideas
Practice learning from what has and has not
worked
All three provide valuable information for
understanding and managing organizational
behavior
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Five Sources of OB Research Insights

Laboratory study
Manipulation and measurement of variables in contrived
situations

Field study
Examination of variables in real-life settings

Sample survey
Questionnaire responses from a sample of people

Case Studies
In-depth analysis of single individual, group, or organization

Meta-analysis
Pools the results of many studies through statistical
procedure
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Test Your Knowledge

Information from which of the following is
LEAST likely to be generalizable to other
settings.
A. Meta-analysis
B. Sample surveys
C. Case-study

Why?
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

WHAT IS THE FIELD OF OB ALL ABOUT?

OB Focuses on Three Levels of Analysis Individuals, Groups, and
Organizations
Untuk memahami secara menyeluruh perilaku di dalam organisasi,
kita harus mempertimbangkan tiga tingkat analisis: proses yang terjadi
di dalam individu, kelompok, dan organisasi
Poses Individual unit analisis adalah individual orang (misal,
sikap yang terkait dengan kerja)
Proses Kelompok unit analisis adalah kelompok (misal, team
kerja)
Proses Organisasi unit analisis adalah organisasi (misal, desain
organisasional)
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Three Perspectives on Effectiveness

Individual
effectiveness

the task
performance of
specific
employees or
member of the
organization

Group
effectiveness

the sum of the

contribution of all
its members
more than the sum
of individual
contribution
(synergy)

Organizational
effectiveness

consist of
individuals and
group
effectiveness
more than the
sum of individual
and group
effectiveness

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Three Perspectives on Effectiveness

Causes Effectiveness
Group
effectiveness

Organizational
effectiveness

Causes

Causes

Causes

Ability

Cohesiveness

Environment

Skill

Leadership

Technology

Knowledge

Structure

Attitude

Status

Strategic
choices

Motivation

Roles

Stress

Norms

Individual
effectiveness

Structure
Processes
Culture

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Nature of Managerial Work

Managements contribution to effectiveness
Management
performs the
functions of:
Planning
Organizing
Leading

To coordinate the
behavior of:
Individuals
Groups
Organizations

Controlling

To attain:
Individual
effectiveness
Group
effectiveness
Organizational
effectiveness

Feedback
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The Contingency Approaches to Management

Using management tools and techniques in a
situationally appropriate manner; avoiding the one
best-way mentality

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21st Century Managers

After conducting a Galup Organization survey of
80,000 managers and doing follow up studies of the
top performers, Marcus Buckingham came up to this
conclusion:
Ive found that while there are as many styles of
management as there are managers, there is one
quality that sets truly great managers apart from the
rest: They discover what is unique about each person
and then capitalize on it. Average managers play
checkers, while great managers play chess.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

21st Century Managers (cont.)

The difference?
In checkers, all the pieces are uniform and move in the
same way, they are interchangeable. You need to plan and
coordinate their movements, certainly, but they all move at
the same pace, on parallel paths.
In chess, each type of piece moves in a different way, and
you cant play if you dont know how each piece moves.
More important, you wont win if you dont think carefully
about how you move the pieces.
Great managers know and value the unique abilities and
even the eccentricities of their employees, and they
learn how best to integrate them into a coordinated
plan of attack
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Evolution of 21st-Century Managers

Primary Role

Past Managers

Future Managers

Cultural Orientation

Monocultural,
monolingual

Multicultural, multilingual

Source of influence

Formal authority

Technical
knowledge and
interpersonal skill

View of people

Potential problem

Primary resource;
human capital

Decision-making
style

Limited input for

individual decisions

Broad-based input
for joint decisions

Ethical
considerations

Afterthought

Forethought

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Skills Exhibited by an Effective Manager

(based on research over 20 years by Clark Wilson and others)

1.
2.
3.
4.

Clarifies goals and objectives for everyone involved

Encourages participation, upward communication, and suggestion
Plans and organizes for orderly work flow
Has technical and administrative expertise to answer organization-related
questions.

5.
6.
7.

Facilitates work through team building, training, coaching, and support

Provides feedback honestly and constructively
Keeps things moving by relying on schedules, deadlines, and helpful
reminders

8.

Controls details without being overbearing

9. Applies reasonable pressure for goal accomplishment
10. Empowers and delegates key duties to others while maintaining goal clarity
and commitment

11. Recognizes good performance with reward and positive reinforcement

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Wilson managerial skills research yield four useful lessons:

1. Dealing effectively with people is what management is all
about.
2. Managers with high skills mastery tend to have better subunit
performance and employee morale than managers with low
skills mastery
3. Effective female and male managers do not have significantly
different skills profiles
4. At all career stages, derailed managers (those who failed to
achieve their potential) tended to be the ones who
overestimated their skill mastery (rated themselves higher than
their employees did).
This prompted the following conclusion from the researcher: "when
selecting individuals for promotion to managerial positions,
those who are arrogant, aloof, insensitive, and defensive
should be avoided.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

WHAT IS THE FIELD OF OB ALL ABOUT?

OB is Multidisciplinary in nature
Beberapa induk disiplin ilmu yang sangat penting adalah psikologi,
sosiologi, anthropologi, ilmu politik, ekonomi, ilmu manajemen
DISIPLIN ILMU

TOPIK OB YANG RELEVAN

Psikologi

Persepsi dan pembelajaran; kepribadian; emosi dan stress;

sikap; motivasi; pengambilan keputusan; kreativitas

Sosiologi

Dinamika kelompok; sosialisasi; komunikasi

Antropologi

Budaya organisasi; kepemimpinan

Ilmu Politik

Konflik antar personal; kekuasaan organisasional

Ekonomi

Pengambilan keputusan, negosiasi, kekuasaan organisasional

Ilmu manajemen

Teknologi, kualitas dan perubahan organisasional

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

WHAT IS THE FIELD OF OB ALL ABOUT?

OB Seeks to Improve Organizational Effectiveness and the
Quality of Life at Work
OB scientists are interested in learning exactly what
conditions will lead people to behave most positively that
is, what makes work both productive for organization and
enjoyable for the people working in them
Theory X vs Theory Y:
the traditional, Theory X orientation toward people is far
more negativistic than the more contemporary, Theory Y
approach, which is widely accepted today.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Theory X

Theory Y

(traditional approach)

(modern approach)

Ketidakpercayaan

Pada dasarnya
malas

Rendah
(tidak berminat)

Bekerja ketika
dipaksa

Orientasi
terhadap orang

Penerimaan,
mendorong
sumberdaya manusia
lebih baik

Asumsi terhadap
orang

Butuh untuk
berprestasi dan
bertanggungjawab

Minat dalam
bekerja

Kondisi dimana orang

akan bekerja keras

Tinggi
(sangat berminat)

Bekerja ketika dilatih

dan dihargai secara
tepat

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

TERAPAN

TEORETIKAL

PERILAKU ORGANISASIONAL
DAN BIDANG TERKAIT
TEORI ORGANISASI
(Organization Theory)

PERILAKU
ORGANISASIONAL
(Organizational Behavior)

PENGEMBANGAN
ORGANISASI
(Organization
Development)

MANAJEMEN
SUMBERDAYA
MANUSIA
(Human
Resource Management)

Sumber: Luthans (1995:15)

MAKRO

MIKRO
TINGKAT
ANALISIS
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A Historical Perspective of OB
The Human Relations Movement
The Quality Movement
The E-Business Revolution
The Age of Human and Social Capital
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Human Relations Movement

Inspired by legalization of union-management collective
bargaining in the US (1935), management began looking for
new ways of handling employees
Hawthorne Studies

Supportive management
Mayo and Follett

Pull dont push telling managers to motivate job

performance instead of merely demanding it.
McGregors Theory Y
Theory Y MGregors modern and positive assumption about
employees being responsible and creative
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McGregors Theory Y
Theory X
Most people dislike
work and want to
avoid it
People require close
direction
People want to avoid
responsibility and
have little ambition

Theory Y
Work is a natural activity
People can be selfdirected if they are
committed to the objective
Rewards help
commitment
Most employees accept
and seek responsibility
Employees have
imagination, ingenuity and
creativity
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New Assumptions about Human Nature

Human relationist believed in the axiom, A satisfied
employee is a hardworking employee.
Subsequent research shows the satisfaction
performance linkage to be more complex than
originally thought.

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The Quality Movement

Total Quality Management (TQM)
An organizational culture dedicated to training,
continuous improvement, and customer satisfaction

Employee-driven, customer-focused
Basic Principles

Do it right the first time to eliminate costly rework

Listen to and learn from customers and employees
Make continuous improvement an everyday matter
Build teamwork, trust, and mutual respect
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The Quality Movement (cont.)

The Deming Legacy Quality good management
How employees should be treated. Regarding the human side of
quality improvement, Deming called for the following:
Formal training in statistical process control techniques and
teamwork
Helpful leadership, rather than order giving and punishment
Elimination of fear so employees will feel free to ask questions
Emphasis on continuous process improvements rather than on
numerical quotas
Teamwork
Elimination of barriers to good workmanship
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One of the Demings most enduring lessons: 85-15 rule

Specifically, when things go wrong, there is roughly an
85% chance the system (including management,
machinery, and rules) is at fault. Only about 15% of the
time is the individual employee at fault.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Quality Movement (cont.)

People is the key factor in organizational success
TQM providing a practical context for managing
people
When people are managed according to TQM
principles, more of them are likely to get the
employment opportunities and high-quality good and
services they demand

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The Internet and E-Business Revolution

E-Business running the entire business via
the internet
Implications for organizational behavior and
leaders?
More and faster communication with others
More potential for damage by unethical
leaders
Enables the existence of networks that go
across traditional organizational boundaries
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The Internet and E-Business Revolution

Making wise hiring and job assignment decisions,
nurturing productive relationship, and building trust are
more important than ever in the age of e-leadership.

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Age of Human and Social Capital

Knowledge workers, those who add value by using
their brains rater than the sweat off their backs, are
more important than ever in todays global economy.
A team of human resource management authors
recently offered this perspective:
Were living in a time when new economic paradigm
characterized by speed, innovation, short cycle times,
quality, and customer satisfaction is highlighting the
importance of intangible assets, such as brand
recognition, knowledge, innovation, and particularly
human capital.
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The Age of Human and Social Capital

Human Capital the
productive potential of an
individuals knowledge and
actions

Social Capital productive

potential resulting from
strong relationships,
goodwill, trust, and
cooperative effort

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The Strategic Importance and Dimensions of Human and Social Capital

Strategic assumption: People, individually and
collectively are the key to organizational success
Social capital
Individual human capital

Shared vision/goals

intelligence./abilities/knowledge

Shared values

Visions/dreams/aspiration

Trust

Technical and social skills

Mutual respects/goodwill

Confidence/self esteem

Friendship/support groups

Initiative/entrepreneurship

Mentoring/positive role modeling

Adaptability/flexibility
Readiness to learn
Creativity
Enthusiasm
Motivation/commitment
Persistence
Ethical standards/courage
Honesty
Emotional maturity

Participation/empowerment

Organizational
learning
(shared
knowledge)

Connections/sources
Networks/affiliations
Cooperation/collaboration
Teamwork
Camaraderie
Assertive (rather than aggressive) communication
Functional (rather than dysfunctional0 conflict
Win-win negotiations

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The Ethics Challenge

The highly publicized criminal acts of executives and
corporate officers around the world.
A nationalwide survey of 581 human resource
professionals revealed that 62% of the respondents
occasionally observed unethical behavior at their
companies.
Experts estimates the US companies loose about
$600 million a year from unethical and criminal
behavior.
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Why Does Ethical Behavior Matter in

Organization?
because behaving ethically is the right thing to do.
Robert D. Hass (former chairman of Levi Strauss & Co.):
A companys values what it stands for, what its people believe in
are crucial to its competitive success.

1. Over the long run, being ethical is profitable

2. Being ethical satisfies many of todays legal
regulations

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Evidence suggested that profitability is enhanced by a

reputation for honesty and corporate citizenship.
Ethics can also impact the quality of people who apply
to work in an organization.
A recent online survey of 1,020 individuals indicates
that 83% rated a companys record of business ethics
as very important when deciding to accept a job over.
Only 2% rated it as unimportant.

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

Ethics
Study of moral issues and choices
It is considered with right vs wrong, good vs bad, and
the many shades of gray in supposedly black-andwhite issues.
Managers are challenged to have more imagination
and the courage to do the right thing to make the world
a better place.

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

Moral Values Versus Ethics

Moral Values

Ethics

Decision

Behavior

(fundamental
beliefs about
what is good or
bad, right or
wrong)

(standards of
conduct in
keeping with
ones moral
values)

(plan for
behaving in an
ethical fashion)

(action taken
following from the
decision made)
e.g. I do not steal

e.g. it is wrong to
harm another
person

e.g. I should not

steal

e.g. I decide not

to steal money
even though I
need the money

Religious
background,
beliefs, training
Level of
cognitive moral
development

Clearly
articulated
ethical
standards

Organizational and group norms

Training in
recognizing and
applying ethical
standards

Work attitudes and motives

Culture of the organization

Observations of leaders behavior
External stressors

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

Moral Values Versus Ethics

Moral values (moral): peoples fundamental beliefs regarding
what is right or wrong, good or bad
Ethics: standards of conduct that guide peoples decisions and
behavior
Moral values (which reside within an individual) provide the basis
for ethics (which are standards of behavior that an be regulated
by organizations). Ethical standards influence both decisions and
behavior in the workplace, which also are affected by a host of
other variables identifies throughout this course.

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

 Internal Organizational
Influences
Ethical codes
Organizational culture
Organizational size
Structure
Perceived pressure for
results
Corporate strategy
External Organizational
Influences

Political/legal
Industry culture
National culture
Environment

Ro
Ex l e
pe
ct
at
io
ns

A Model of Ethical Behavior in the

Workplace

Individual
Personality
Values
Moral principles
History of
reinforcement
Gender

Ethical
behavior

Neutralizing/enhancing factors
TMTeam characteristics

Age
Length of Service
Military service
Homogeneity/heterogeneity

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Test Your Knowledge

True (A) or False (B)?
1. The longer a TMT member works for an organization
the more immune they are to internal or external
pressures.
2. TMTs with military experience are more likely to
succumb to pressures when making ethical
decisions.
3. The more heterogeneous the TMT the less likely
influencers will lead to unethical behavior.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

For Discussion: Your Opinion

Which statement best represents
your opinion?
A.Companies primary goal should
be to maximize profits
B.Companies have an obligation to
the societies in which they
operate, even if profits suffer
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Beyond Ethics: Corporate Social

Responsibility
Corporate Social Responsibility (CSR):
business practices that adhere to ethical values that
comply with legal requirements, that demonstrate
respect for individuals, and that promote the
betterment of the community at large and the
environment
CSR involves operating a business in a manner that
meets or exceeds the ethical, legal, and public
expectations that society has of business.
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Carrolls Global Corporate Social Responsibility Pyramid

Source: Carroll, A. B. Managing Ethically with Global Stakeholders: A present and future challenge, Academy of Management
RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.
Executive, May 2004, p. 116.

Carrolls Global Corporate Social Responsibility

Pyramid
This model is very timely because it effectively triangulates
three major trends: (1) economic globalization, (2)
expanding CSR expectation, and (3) the call for improved
business ethics.
Make a profit consistent with expectations for international
business
Obey the law of host countries as well as international law
Be ethical in its practices, taking host country and global
standards into consideration
Be a good corporate citizen, especially as defined by the
host countrys expectation
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The extremes of cultural relativism and ethical imperialism

Cultural relativism
No cultures ethics are superior.
The values and practices of the
local setting determine what is
right and wrong
When in Rome, do as the Romans do

Ethical imperialism
Certain absolute thrust apply
everywhere. Universal values
transcend cultures in determining
what is right or wrong
Dont do anything you wouldnt do at home

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Thomas Donaldsons suggestions (business ethicist) on how

corporations can respect the core or universal values
How multinationals can respect universal values
Respect for Human Dignity
Create a culture valuing employees, customers, and suppliers
Keep a safe workplace
Produce safe products and services
Respect for Basic Rights
Protect rights of employees, customers, and communities
Avoid any threats to safety, health, education, living standards
Be Good Citizens
Support social institutions, economic, and educational systems
Work with governments and institutions to protect environment
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

General Moral Principles

Dignity of human life
Autonomy
Honesty
Loyalty
Fairness
Humaneness
The common good

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Virtuous Circle

Virtuous circle
the tendency for companies that are successful financially to
invest in social causes because they can afford to do so (i.e. the
do good by doing well) and for socially responsible companies
to perform well financially (i.e. they do well by doing good)
The Virtuous Circle
It has been suggested that socially responsible companies
perform well financially because they are supported by customers
and investors. As a result, they become wealthier, making it
easier for them to become even more philantropic.

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.

The Virtuous Circle

Doing well by doing good
Being socially
responsible helps
companies make money

The Virtuous Circle

Rich companies can

afford to be more
socially responsible

Doing good by doing well

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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Improving On-the-Job Ethics

Behave ethically
yourself
Screen potential
employees
Develop a Meaningful
Code of Ethics
What constitutes a
meaningful code of
ethics?
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Improving On-the-Job Ethics

Provide ethics training
Reinforce ethical
behavior
Create positions, units,
and other structural
mechanisms to deal
with ethics
Eliminate need for
whistle-blowing
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2008 The McGraw-Hill Companies, Inc. All rights reserved.

Roadmap for This Course

RENI ROSARI
2008 The McGraw-Hill Companies, Inc. All rights reserved.