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Ethical

Breakdown

Presented by :
Group 4, Section A

Introducti
on

Ill
Conceive
d Goals

Motivated
Health
Blindness

Consciousness

Indirect
Blindness

The
slippery
slope

Ethics Or The Lack Of It?


Subjective in nature
Individualistic or group level
May not be illegal always

Completely business based decisions


Skewed performance appraisal goals (Sales)
Inability to notice/accept wrong (Pinto)
Not aware of the consequences (2008)

Overvalui
ng
Outcome
s

Conclusio
n

Introducti
on

Ill
Conceive
d Goals

Motivated
Blindness

The
slippery
slope

Indirect
Blindness

FIVE Barriers to Ethical breakdowns


Conceived Goals
Motivated Blindness
Indirect Blindness
The slippery slope
Over valuing outcomes

Overvalui
ng
Outcome
s

Conclusio
n

Companies have poured time


and money into ethical
training and compliance
programs, but unethical
behaviour is nevertheless
widespread. Thats because
cognitive biases and
organizational systems blind
managers to unethical
behaviours, whether their own
or of that of others

Rewarding
employees for
narrow goals
may encourage
them to neglect
and take ends
justify means
path

At Sears the
$147 per hour
sales goal led
employees to
repair what was
not broken

President
Clinton and US
govt.
unknowingly
created the
housing bubble
while trying to
increase the
national home
ownership rate

The
slippery
slope

Indirect
Blindness

Leaders and
managers
setting goals
should take the
perspective of
those whose
behavior they
are trying to
influence and
think through
their potential
responses

Remedies

Concept

When managers
set goals and
incentives to
promote
desirable
behavior, but
encourage
negative one

Motivated
Blindness

Example

Introducti
on

Ill
Conceive
d Goals

Consider
alternate goals
that may be
more important
to reward

Overvalui
ng
Outcome
s

Conclusio
n

Introducti
on

Ill
Conceive
d Goals

Motivated
Blindness

Indirect
Blindness

The
slippery
slope

Overvalui
ng
Outcome
s

Conclusio
n

Motivated Blindness
Definition:-

People see what they want to see and easily


miss contradictory information when it is in
their best interest to stay ignorant

CASE OF FORD PINTO

2008-FINANCIAL CRISIS
-The independent credit rating agencies gave AAA rating to
collateralized mortgage security of low quality.
-This lead to severe foreclosures thus making thousands of
people homeless.
-The top credit rating agencies(Standard & Poors,Fitch and
Moody)got paid to rate the top financial institutes without
proper assessment to get access to new clients.

BARRY BONDS
-Became a star in 2007 by surpassing Hank Aaron of
hitting most number of home runs which was the most
coveted status in Major League Baseball.
-Management failed to investigate the rapid changes in
Bonds physical appearance and increased power.
-Increase in home runs resulted in swelled ballpark
attendance and profits.

Introducti
on

Ill
Conceive
d Goals

Motivated
Blindness

Indirect
Blindness

The
slippery
slope

Overvalui
ng
Outcome
s

Conclusio
n

Overvaluing Outcomes
Definition:

Rewarding unethical decisions because they


have good outcomes is a recipe for disaster over
the long term

Examples:
Story of a quick tempered Brothers:
- Two short tempered brothers- Jon and Matt, neither of whom has a

criminal record.
- A third person insults their family.

Case

Intention

Jon wants to kill


the third person.
He pulls out a gun
and shoots at him.

Matt wants only to


scare the third
person. He pulls
out a gun and
shoots at him.

Outcome

Jon misses and the


guy escapes.

Matt accidently
hits him and the
guy is dead.

Our Perception : Matt can expect a far more serious penalty


than Jon

Remedy:
Examine both good and bad decisions for their ethical
implications. Reward solid decision processes not just good