Deck 14: Building Positive Employee Relations

Question 1

Explain how you would ensure fairness in disciplining, discussing particularly the prerequisites to disciplining, disciplining guidelines, and the discipline without punishment approach.

Answer 1

We can ensure the fariness of discipline in the organization by implementing the following prerequisites in the organization:
There are three prerequisites for ensuring the discipline. They are as folows:
1. Rules and regulations
2. Progressive penalties
3. Appeals process
The disciplining guideline:
1. The management must fairly and adequately findout the matter before the administrating discipline.
2. Applying the rules, orders, penalities without any discrimination.
3. Should be according to the process of rights " protect the employees".
4. The employee misconduct should be proved substantially.
The discipline without punishment approach:
The main basic aim of discipline without punishment is by doing so, the employee will come to know the acceptance of rules.
1. By an oral warning.
2. Paid decision making leave
3. Giving 6 weeks of time of written reminder.
4. 1 paid dismissal

Question 2

Enron, Ethics, and Organizational Culture
For many people, a company called Enron Corp. still ranks as one of history's classic examples of ethics run amok. During the 1990s and early 2000s, Enron was in the business of wholesaling natural gas and electricity. Enron made its money as the intermediary (wholesaler) between suppliers and customers. Without getting into all the details, the nature of Enron's business-and the fact that Enron didn't actually own the assets-meant that its profit statements and balance sheets listing the firm's assets and liabilities were unusually difficult to understand.
It turned out that the lack of accounting transparency enabled the company's managers to make Enron's financial performance look much better than it actually was. Outside experts began questioning Enron's financial statements in 2001. In fairly short order, Enron collapsed, and courts convicted several of its top executives of things like manipulating Enron's reported assets and profitability. Many investors (including former Enron employees) lost all or most of their investments in Enron. In Enron's case this breakdown is perhaps more perplexing than usual. As one writer said,
Enron had all the elements usually found in comprehensive ethics and compliance programs: a code of ethics, a reporting system, as well as a training video on vision and values led by [the company's top executives].
Experts subsequently put forth many explanations for how a company that was apparently so ethical outwardly could actually have been making so many bad ethical decisions without other managers (and the board of directors) noticing. The explanations ranged from a "deliberate concealment of information by officers," to more psychological explanations (such as employees not wanting to contradict their bosses) and the "surprising role of irrationality in decision-making."
But perhaps the most persuasive explanation of how an apparently ethical company could go so wrong concerns organizational culture. The reasoning here is that it's not the rules but what employees feel they should do that determines ethical behavior. For example (speaking in general, not specifically about Enron), the executive director of the Ethics Officer Association put it this way:
[W]e're a legalistic society, and we've created a lot of laws. We assume that if you just knew what those laws meant that you would behave properly. Well, guess what? You can't write enough laws to tell us what to do at all times every day of the week in every part of the world. We've got to develop the critical thinking and critical reasoning skills of our people because most of the ethical issues that we deal with are in the ethical gray areas.
This case and chapter had something to say about how organizational culture influences ethical behavior. What role do you think culture played at Enron? Give five specific examples of things Enron's CEO could have done to create a healthy ethical culture.

Answer 2

Enron played and organized an unethical organizational culture. The following are the five specific examples of things Enron's CEO could have done to create a healthy ethical culture:
(a) The CEO of the company should see that the company should not follow questionable accounting methods by presenting improper financial statements.
(b) The ex-CFO of Enron partnered with two companies that he either owned or was running, creating conflict of interest policies.
(c) The CEO of the company should not have force the employees to behave the boundaries of the ethical policy. This encourages the employees to judge what the ethical situations were. Enron's CEO should restrict their employees to stay within their own ethical boundaries.
(d) The CEO's ethical behavior of non-resigning during the financial troubles, unethical practices, and deception of the organization.
(e) The CEO should ensure that the stakeholders of the organization should have received all the elements of code of ethics that includes respect, integrity, communication and excellence.

Question 3

Why is it important in our litigious society to manage electronic monitoring properly?

Answer 3

It is said that monitoring employee can make or break the business. Keeping a watch over employees is a good idea to ensure they are working efficiently and not wasting time on social networking sites and shopping online. But as it is said that excessive of anything is bad, same is the case with watching employee's work every moment is not only unethical but also morally not right.
In our litigious society it is extremely important to electronically monitor people so that if any untoward situation occurs it could be rectified properly.
Let us discuss some situations wherein electronic monitoring could help in solving the problem and case :
• In shopping malls, if any person takes along the clothes without paying a bill for the same, he could be monitored with the CCTV camera and could be caught red handed.
• In public places or in corporate office, if any miscreant is making bad comments and unwanted touches at a female, it could be monitored in a camera and could be used as evidence against the culprit.
• The employees could be electronically monitored to ensure they are not wasting their office time in chatting online or hanging around uselessly at the office premise.
• During festivals or big occasions like elections, electronic monitoring over the events and individual is must so that any misconduct or bad behavior comes to the knowledge of the concerned people.
• In big hotels, CCTV cameras are must to keep an eye on the safety of the guests and to watch the actions of the employees in the hotel.
• During examinations, keeping an eye on the students with the help of electronic monitoring is a good way to protect cheating and copying.
• On roads, the individuals who are crossing the red light could be given a notice with the help of CCTV cameras.
• Children can be kept under an eye by their working parents with the use of CCTV cameras.
• Theft and other crimes could be solved and rectified by having surveillance at the places of importance.
Thus, in our litigious society, electronic monitoring is extremely important.

Question 4

Carter Cleaning Company
Guaranteeing Fair Treatment
Being in the laundry and cleaning business, the Carters feel strongly about not allowing employees to smoke, eat, or drink in their stores. Jennifer was therefore surprised to walk into a store and find two employees eating lunch at the front counter. There was a large pizza in its box, and the two of them were sipping colas and eating slices of pizza and submarine sandwiches off paper plates. Not only did it look messy, but there were grease and soda spills on the counter and the store smelled from onions and pepperoni, even with the exhaust fan pulling air out through the roof. In addition to being a turnoff to customers, the mess on the counter meant that a customer's order might actually become soiled in the store.
Although this was a serious matter, Jennifer didn't feel that what the counter people were doing was grounds for dismissal (partly because the store manager had apparently condoned their actions). It seemed to her that the matter called for more than just a warning but less than dismissal.
What would you do if you were Jennifer, and why?

Question 5

Provide two examples of behaviors that would probably be unethical but legal, and three that would probably be illegal but ethical.

Question 6

Carter Cleaning Company
Guaranteeing Fair Treatment
Being in the laundry and cleaning business, the Carters feel strongly about not allowing employees to smoke, eat, or drink in their stores. Jennifer was therefore surprised to walk into a store and find two employees eating lunch at the front counter. There was a large pizza in its box, and the two of them were sipping colas and eating slices of pizza and submarine sandwiches off paper plates. Not only did it look messy, but there were grease and soda spills on the counter and the store smelled from onions and pepperoni, even with the exhaust fan pulling air out through the roof. In addition to being a turnoff to customers, the mess on the counter meant that a customer's order might actually become soiled in the store.
Although this was a serious matter, Jennifer didn't feel that what the counter people were doing was grounds for dismissal (partly because the store manager had apparently condoned their actions). It seemed to her that the matter called for more than just a warning but less than dismissal.
Should a disciplinary system be established at Carter Cleaning Centers?

Question 7

List 10 things your college or university does to encourage ethical behavior by students and/or faculty.

Question 8

Carter Cleaning Company
Guaranteeing Fair Treatment
Being in the laundry and cleaning business, the Carters feel strongly about not allowing employees to smoke, eat, or drink in their stores. Jennifer was therefore surprised to walk into a store and find two employees eating lunch at the front counter. There was a large pizza in its box, and the two of them were sipping colas and eating slices of pizza and submarine sandwiches off paper plates. Not only did it look messy, but there were grease and soda spills on the counter and the store smelled from onions and pepperoni, even with the exhaust fan pulling air out through the roof. In addition to being a turnoff to customers, the mess on the counter meant that a customer's order might actually become soiled in the store.
Although this was a serious matter, Jennifer didn't feel that what the counter people were doing was grounds for dismissal (partly because the store manager had apparently condoned their actions). It seemed to her that the matter called for more than just a warning but less than dismissal.
If so, what should it cover? How would you suggest it deal with a situation such as the one with the errant counter people?

Question 9

You need to select a nanny for your or a relative's child, and want someone ethical. What would you do to help ensure you ended up hiring someone ethical?

Question 10

Carter Cleaning Company
Guaranteeing Fair Treatment
Being in the laundry and cleaning business, the Carters feel strongly about not allowing employees to smoke, eat, or drink in their stores. Jennifer was therefore surprised to walk into a store and find two employees eating lunch at the front counter. There was a large pizza in its box, and the two of them were sipping colas and eating slices of pizza and submarine sandwiches off paper plates. Not only did it look messy, but there were grease and soda spills on the counter and the store smelled from onions and pepperoni, even with the exhaust fan pulling air out through the roof. In addition to being a turnoff to customers, the mess on the counter meant that a customer's order might actually become soiled in the store.
Although this was a serious matter, Jennifer didn't feel that what the counter people were doing was grounds for dismissal (partly because the store manager had apparently condoned their actions). It seemed to her that the matter called for more than just a warning but less than dismissal.
How would you deal with the store manager?

Question 11

You believe your coworker is being bullied. How would you verify this and what would you do about it if it is true?

Question 12

IMPROVING PERFORMANCE at The Hotel Paris
The Hotel Paris's New Ethics, Justice, and Fair Treatment Process
The Hotel Paris's competitive strategy is "To use superior guest service to differentiate the Hotel Paris properties, and to thereby increase the length of stay and return rate of guests, and thus boost revenues and profitability." HR manager Lisa Cruz must now formulate functional policies and activities that support this competitive strategy, by eliciting the required employee behaviors and competencies.
As the head of HR for the Hotel Paris, Lisa Cruz was especially concerned about her company maintaining the highest ethical standards. Her concerns were twofold. First, there are, in any single hotel each day, at least a dozen people (including housekeepers, front-desk clerks, security guards, and so on) with easy access to guests' rooms, and to their personal belongings. Guests-many younger, and many unwary-are continually walking the halls unprotected. So, in a service company like this, there is simply no margin for ethical errors.
But she was concerned about ethics for a second reason. She knew that employees do not like being treated unfairly, and that unfairness in any form could manifest itself in low morale and in diminished performance. She wondered if her employees' low morale and engagement- as measured by her firm's attitude surveys-stemmed, in part, from what they perceived as unjust treatment. Lisa therefore turned to the task of assessing and redesigning the Hotel Paris's ethics, justice, and fair treatment practices.
When she sat with the CFO to discuss her proposal for the Hotel Paris's fairness, justice, and ethics system, Lisa came armed with some research. In 2003, the Journal of Applied Psychology published a study that showed how improving the level of interpersonal and procedural justice in a service company can lead to improved employee attitudes and performance and thus to improved hotel performance. And the study was done in a hotel chain.
In this study, the researchers collected employee survey data from a hotel chain's 111 different hotels in the United States and Canada. The employee services department of this hotel chain obtained completed surveys from 8,832 of the hotel's employees. The researchers also obtained data on employee turnover as well as on the employees' commitment, employees' intentions to remain with the organization, and guest satisfaction.
Clearly, having fair and just procedures in place effected these hotels' employee morale and behavior, and thus company performance-they could even measure the links. For example, procedural justice and interpersonal justice were related to increased levels of employees' satisfaction with supervision. Procedural justice and satisfaction with supervision were both related to improved employee commitment. And employee commitment was related to intention to remain with the hotel, and therefore to reducing employee turnover. Furthermore, procedural and interpersonal justice led to improved employee satisfaction with supervision and commitment, and thus to improved employee discretionary service behaviors, and ultimately to higher guest service satisfaction.
For Lisa and the CFO, these results provided a concrete and measurable rationale for moving ahead with improving the Hotel Paris's fairness, justice, and ethics practices. The researchers' results supported, in a measurably defensible way, the idea that spending the money required to improve procedural and interpersonal justice would likely improve employee attitudes and behaviors (employee commitment, discretionary service behavior, and employee turnover), and, thereby, improve guest satisfaction and company performance. The results even suggested by "how much" improving morale and justice might boost guest satisfaction.
Lisa and her HR team took a number of steps to institute new ethics, justice, and fair treatment practices at the Hotel Paris. Working with the company's general counsel, they produced and presented to the CEO a new Hotel Paris code of ethics, as well as a more complete set of ethical guidelines. These now appear on the Hotel Paris's careers website link, and are part of each new employee's orientation packet. They contracted with a vendor to provide a customized, Web-based ethics training program, and made it clear that the first employees to participate in it were the company's top executives.
Lisa and her team then proceeded methodically through the company's entire HR process, starting with recruitment and selection. The selection process now includes an honesty test. New guidelines ensure an open and fair performance appraisal process. The team completely revamped the hotel's disciplinary process. They instituted a new appeals process that included appeals to each hotel's manager, and then to Lisa Cruz, and finally to a top management executive appeals committee. They instituted a new discipline without punishment system. They instituted new guidelines outlining grounds for dismissal. The new procedure requires that someone from HR approve any dismissal before it is final, and be present when any employee who's been with the firm for more than a year is dismissed.
After 6 months of operating under the new system, several changes are evident. Surveys Lisa took before the new program, and now, indicate a significant upward movement in the employees' perceptions of "consistent and equitable treatment of all employees." Grievances are down by 80%, 95% of employees are able to quote the ethics code, employee morale and commitment are up, and, in general, employee service type behaviors (such as greeting guests in a friendly manner) have increased, too. Lisa and the CFO are pleased with the new system, and are optimistic it will also help to improve customer service satisfaction.
What do you think of the adequacy and effectiveness of the steps Lisa has taken so far?

Question 13

Define employee relations and discuss at least four methods for managing it.

Question 14

IMPROVING PERFORMANCE at The Hotel Paris
The Hotel Paris's New Ethics, Justice, and Fair Treatment Process
The Hotel Paris's competitive strategy is "To use superior guest service to differentiate the Hotel Paris properties, and to thereby increase the length of stay and return rate of guests, and thus boost revenues and profitability." HR manager Lisa Cruz must now formulate functional policies and activities that support this competitive strategy, by eliciting the required employee behaviors and competencies.
As the head of HR for the Hotel Paris, Lisa Cruz was especially concerned about her company maintaining the highest ethical standards. Her concerns were twofold. First, there are, in any single hotel each day, at least a dozen people (including housekeepers, front-desk clerks, security guards, and so on) with easy access to guests' rooms, and to their personal belongings. Guests-many younger, and many unwary-are continually walking the halls unprotected. So, in a service company like this, there is simply no margin for ethical errors.
But she was concerned about ethics for a second reason. She knew that employees do not like being treated unfairly, and that unfairness in any form could manifest itself in low morale and in diminished performance. She wondered if her employees' low morale and engagement- as measured by her firm's attitude surveys-stemmed, in part, from what they perceived as unjust treatment. Lisa therefore turned to the task of assessing and redesigning the Hotel Paris's ethics, justice, and fair treatment practices.
When she sat with the CFO to discuss her proposal for the Hotel Paris's fairness, justice, and ethics system, Lisa came armed with some research. In 2003, the Journal of Applied Psychology published a study that showed how improving the level of interpersonal and procedural justice in a service company can lead to improved employee attitudes and performance and thus to improved hotel performance. And the study was done in a hotel chain.
In this study, the researchers collected employee survey data from a hotel chain's 111 different hotels in the United States and Canada. The employee services department of this hotel chain obtained completed surveys from 8,832 of the hotel's employees. The researchers also obtained data on employee turnover as well as on the employees' commitment, employees' intentions to remain with the organization, and guest satisfaction.
Clearly, having fair and just procedures in place effected these hotels' employee morale and behavior, and thus company performance-they could even measure the links. For example, procedural justice and interpersonal justice were related to increased levels of employees' satisfaction with supervision. Procedural justice and satisfaction with supervision were both related to improved employee commitment. And employee commitment was related to intention to remain with the hotel, and therefore to reducing employee turnover. Furthermore, procedural and interpersonal justice led to improved employee satisfaction with supervision and commitment, and thus to improved employee discretionary service behaviors, and ultimately to higher guest service satisfaction.
For Lisa and the CFO, these results provided a concrete and measurable rationale for moving ahead with improving the Hotel Paris's fairness, justice, and ethics practices. The researchers' results supported, in a measurably defensible way, the idea that spending the money required to improve procedural and interpersonal justice would likely improve employee attitudes and behaviors (employee commitment, discretionary service behavior, and employee turnover), and, thereby, improve guest satisfaction and company performance. The results even suggested by "how much" improving morale and justice might boost guest satisfaction.
Lisa and her HR team took a number of steps to institute new ethics, justice, and fair treatment practices at the Hotel Paris. Working with the company's general counsel, they produced and presented to the CEO a new Hotel Paris code of ethics, as well as a more complete set of ethical guidelines. These now appear on the Hotel Paris's careers website link, and are part of each new employee's orientation packet. They contracted with a vendor to provide a customized, Web-based ethics training program, and made it clear that the first employees to participate in it were the company's top executives.
Lisa and her team then proceeded methodically through the company's entire HR process, starting with recruitment and selection. The selection process now includes an honesty test. New guidelines ensure an open and fair performance appraisal process. The team completely revamped the hotel's disciplinary process. They instituted a new appeals process that included appeals to each hotel's manager, and then to Lisa Cruz, and finally to a top management executive appeals committee. They instituted a new discipline without punishment system. They instituted new guidelines outlining grounds for dismissal. The new procedure requires that someone from HR approve any dismissal before it is final, and be present when any employee who's been with the firm for more than a year is dismissed.
After 6 months of operating under the new system, several changes are evident. Surveys Lisa took before the new program, and now, indicate a significant upward movement in the employees' perceptions of "consistent and equitable treatment of all employees." Grievances are down by 80%, 95% of employees are able to quote the ethics code, employee morale and commitment are up, and, in general, employee service type behaviors (such as greeting guests in a friendly manner) have increased, too. Lisa and the CFO are pleased with the new system, and are optimistic it will also help to improve customer service satisfaction.
List three more specific steps Hotel Paris should take with respect to each individual human research function (selection, training, and so on) to improve the level of ethics in the company.

Question 15

Working individually or in groups, interview managers or administrators at your employer or college in order to determine the extent to which the employer or college endeavors to build two-way communication, and the specific types of programs used. Do the managers think they are effective? What do the employees (or faculty members) think of the programs in use at the employer or college?

Question 16

IMPROVING PERFORMANCE at The Hotel Paris
The Hotel Paris's New Ethics, Justice, and Fair Treatment Process
The Hotel Paris's competitive strategy is "To use superior guest service to differentiate the Hotel Paris properties, and to thereby increase the length of stay and return rate of guests, and thus boost revenues and profitability." HR manager Lisa Cruz must now formulate functional policies and activities that support this competitive strategy, by eliciting the required employee behaviors and competencies.
As the head of HR for the Hotel Paris, Lisa Cruz was especially concerned about her company maintaining the highest ethical standards. Her concerns were twofold. First, there are, in any single hotel each day, at least a dozen people (including housekeepers, front-desk clerks, security guards, and so on) with easy access to guests' rooms, and to their personal belongings. Guests-many younger, and many unwary-are continually walking the halls unprotected. So, in a service company like this, there is simply no margin for ethical errors.
But she was concerned about ethics for a second reason. She knew that employees do not like being treated unfairly, and that unfairness in any form could manifest itself in low morale and in diminished performance. She wondered if her employees' low morale and engagement- as measured by her firm's attitude surveys-stemmed, in part, from what they perceived as unjust treatment. Lisa therefore turned to the task of assessing and redesigning the Hotel Paris's ethics, justice, and fair treatment practices.
When she sat with the CFO to discuss her proposal for the Hotel Paris's fairness, justice, and ethics system, Lisa came armed with some research. In 2003, the Journal of Applied Psychology published a study that showed how improving the level of interpersonal and procedural justice in a service company can lead to improved employee attitudes and performance and thus to improved hotel performance. And the study was done in a hotel chain.
In this study, the researchers collected employee survey data from a hotel chain's 111 different hotels in the United States and Canada. The employee services department of this hotel chain obtained completed surveys from 8,832 of the hotel's employees. The researchers also obtained data on employee turnover as well as on the employees' commitment, employees' intentions to remain with the organization, and guest satisfaction.
Clearly, having fair and just procedures in place effected these hotels' employee morale and behavior, and thus company performance-they could even measure the links. For example, procedural justice and interpersonal justice were related to increased levels of employees' satisfaction with supervision. Procedural justice and satisfaction with supervision were both related to improved employee commitment. And employee commitment was related to intention to remain with the hotel, and therefore to reducing employee turnover. Furthermore, procedural and interpersonal justice led to improved employee satisfaction with supervision and commitment, and thus to improved employee discretionary service behaviors, and ultimately to higher guest service satisfaction.
For Lisa and the CFO, these results provided a concrete and measurable rationale for moving ahead with improving the Hotel Paris's fairness, justice, and ethics practices. The researchers' results supported, in a measurably defensible way, the idea that spending the money required to improve procedural and interpersonal justice would likely improve employee attitudes and behaviors (employee commitment, discretionary service behavior, and employee turnover), and, thereby, improve guest satisfaction and company performance. The results even suggested by "how much" improving morale and justice might boost guest satisfaction.
Lisa and her HR team took a number of steps to institute new ethics, justice, and fair treatment practices at the Hotel Paris. Working with the company's general counsel, they produced and presented to the CEO a new Hotel Paris code of ethics, as well as a more complete set of ethical guidelines. These now appear on the Hotel Paris's careers website link, and are part of each new employee's orientation packet. They contracted with a vendor to provide a customized, Web-based ethics training program, and made it clear that the first employees to participate in it were the company's top executives.
Lisa and her team then proceeded methodically through the company's entire HR process, starting with recruitment and selection. The selection process now includes an honesty test. New guidelines ensure an open and fair performance appraisal process. The team completely revamped the hotel's disciplinary process. They instituted a new appeals process that included appeals to each hotel's manager, and then to Lisa Cruz, and finally to a top management executive appeals committee. They instituted a new discipline without punishment system. They instituted new guidelines outlining grounds for dismissal. The new procedure requires that someone from HR approve any dismissal before it is final, and be present when any employee who's been with the firm for more than a year is dismissed.
After 6 months of operating under the new system, several changes are evident. Surveys Lisa took before the new program, and now, indicate a significant upward movement in the employees' perceptions of "consistent and equitable treatment of all employees." Grievances are down by 80%, 95% of employees are able to quote the ethics code, employee morale and commitment are up, and, in general, employee service type behaviors (such as greeting guests in a friendly manner) have increased, too. Lisa and the CFO are pleased with the new system, and are optimistic it will also help to improve customer service satisfaction.
Based on what you learned in this chapter, write a short (less than one page) explanation Lisa can use to sell to top management the need to further improve the hotel chain's fairness and justice processes.

Question 17

Working individually or in groups, obtain copies of the student handbook for your college and determine to what extent there is a formal process through which students can air grievances. Based on your contacts with other students, has it been an effective grievance process? Why or why not?

Question 18

What techniques would you use as alternatives to traditional discipline? Why do you think alternatives like these are important, given industry's need today for highly committed employees?

Question 19

Working individually or in groups, determine the nature of the academic discipline process in your college. Do you think it is effective? Based on what you read in this chapter, would you recommend any modifications?

Question 20

Using several "Best Companies to Work For" as examples, explain what you would do to improve employee relations in an organization.

Question 21

Appendices A and B at the end of this book (pages 612-629) list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management, and Workforce Planning). In groups of several students, do four things:
(1) review Appendix A and/or B;
(2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists;
(3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam and/or the SHRM exam; and,
(4) if time permits, have someone from your team post your team's questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Question 22

MyManagementLab only-comprehensive writing assignment for this chapter.

Question 23

In a research study at Ohio State University, a professor found that even honest people, left to their own devices, would steal from their employers. 133 In this study, the researchers gave financial services workers the opportunity to steal a small amount of money after participating in an after-work project for which the pay was inadequate. Would the employees steal to make up for the underpayment? In most cases, yes. Employees who scored low on an honesty test stole whether or not their office had an ethics program that said stealing from the company was illegal. Employees who scored high on the honesty test also stole, but only if their office did not have such an employee ethics program-the "honest" people didn't steal if there was an ethics policy.
Individually or in groups, answer these questions: Do you think findings like these are generalizable? In other words, would they apply across the board to employees in other types of companies and situations? If your answer is yes, what do you think this implies about the need for and wisdom of having an ethics program?

Question 24

Based on what you read in this chapter, including all relevant guidelines, what would your decision be if you were the arbitrator? Why?

Question 25

Do you think that after their experience in this arbitration the parties involved will be more or less inclined to settle grievances by themselves without resorting to arbitration?

Question 26

Enron, Ethics, and Organizational Culture
For many people, a company called Enron Corp. still ranks as one of history's classic examples of ethics run amok. During the 1990s and early 2000s, Enron was in the business of wholesaling natural gas and electricity. Enron made its money as the intermediary (wholesaler) between suppliers and customers. Without getting into all the details, the nature of Enron's business-and the fact that Enron didn't actually own the assets-meant that its profit statements and balance sheets listing the firm's assets and liabilities were unusually difficult to understand.
It turned out that the lack of accounting transparency enabled the company's managers to make Enron's financial performance look much better than it actually was. Outside experts began questioning Enron's financial statements in 2001. In fairly short order, Enron collapsed, and courts convicted several of its top executives of things like manipulating Enron's reported assets and profitability. Many investors (including former Enron employees) lost all or most of their investments in Enron. In Enron's case this breakdown is perhaps more perplexing than usual. As one writer said,
Enron had all the elements usually found in comprehensive ethics and compliance programs: a code of ethics, a reporting system, as well as a training video on vision and values led by [the company's top executives].
Experts subsequently put forth many explanations for how a company that was apparently so ethical outwardly could actually have been making so many bad ethical decisions without other managers (and the board of directors) noticing. The explanations ranged from a "deliberate concealment of information by officers," to more psychological explanations (such as employees not wanting to contradict their bosses) and the "surprising role of irrationality in decision-making."
But perhaps the most persuasive explanation of how an apparently ethical company could go so wrong concerns organizational culture. The reasoning here is that it's not the rules but what employees feel they should do that determines ethical behavior. For example (speaking in general, not specifically about Enron), the executive director of the Ethics Officer Association put it this way:
[W]e're a legalistic society, and we've created a lot of laws. We assume that if you just knew what those laws meant that you would behave properly. Well, guess what? You can't write enough laws to tell us what to do at all times every day of the week in every part of the world. We've got to develop the critical thinking and critical reasoning skills of our people because most of the ethical issues that we deal with are in the ethical gray areas.
Based on what you read in this chapter, summarize in one page or less how you would explain Enron's ethical meltdown.

Question 27

Enron, Ethics, and Organizational Culture
For many people, a company called Enron Corp. still ranks as one of history's classic examples of ethics run amok. During the 1990s and early 2000s, Enron was in the business of wholesaling natural gas and electricity. Enron made its money as the intermediary (wholesaler) between suppliers and customers. Without getting into all the details, the nature of Enron's business-and the fact that Enron didn't actually own the assets-meant that its profit statements and balance sheets listing the firm's assets and liabilities were unusually difficult to understand.
It turned out that the lack of accounting transparency enabled the company's managers to make Enron's financial performance look much better than it actually was. Outside experts began questioning Enron's financial statements in 2001. In fairly short order, Enron collapsed, and courts convicted several of its top executives of things like manipulating Enron's reported assets and profitability. Many investors (including former Enron employees) lost all or most of their investments in Enron. In Enron's case this breakdown is perhaps more perplexing than usual. As one writer said,
Enron had all the elements usually found in comprehensive ethics and compliance programs: a code of ethics, a reporting system, as well as a training video on vision and values led by [the company's top executives].
Experts subsequently put forth many explanations for how a company that was apparently so ethical outwardly could actually have been making so many bad ethical decisions without other managers (and the board of directors) noticing. The explanations ranged from a "deliberate concealment of information by officers," to more psychological explanations (such as employees not wanting to contradict their bosses) and the "surprising role of irrationality in decision-making."
But perhaps the most persuasive explanation of how an apparently ethical company could go so wrong concerns organizational culture. The reasoning here is that it's not the rules but what employees feel they should do that determines ethical behavior. For example (speaking in general, not specifically about Enron), the executive director of the Ethics Officer Association put it this way:
[W]e're a legalistic society, and we've created a lot of laws. We assume that if you just knew what those laws meant that you would behave properly. Well, guess what? You can't write enough laws to tell us what to do at all times every day of the week in every part of the world. We've got to develop the critical thinking and critical reasoning skills of our people because most of the ethical issues that we deal with are in the ethical gray areas.
It is said that when one securities analyst tried to confront Enron's CEO about the firm's unusual accounting statements, the CEO publicly used vulgar language to describe the analyst, and that Enron employees subsequently thought doing so was humorous. If true, what does that say about Enron's ethical culture?