Richard L. Daft - Management. 9th ed., 2010
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PART 2 THE ENVIRONMENT OF MANAGEMENT150
Should We Go Beyond the Law?
Nathan Rosillo stared out his of ce window at the
lazy curves and lush, green, ower-lined banks of the
Dutch Valley River. He’d grown up near here, and he
envisioned the day his children would enjoy the river
as he had as a child. But now his own company might
make that a risky proposition.
Nathan is a key product developer at Chem-Tech
Corporation, an industry leader. Despite its competi-
tive position, Chem-Tech experienced several quarters
of dismal nancial performance. Nathan and his team
developed a new lubricant product that the company
sees as the turning point in its declining fortunes. Top
executives are thrilled that they can produce the new
product at a signi cant cost savings because of recent
changes in environmental regulations. Regulatory agen-
cies loosened requirements on reducing and recycling
wastes, which means Chem-Tech can now release waste
directly into the Dutch Valley River.
Nathan is as eager as anyone to see Chem-Tech sur-
vive this economic downturn, but he doesn’t think this
route is the way to do it. He expressed his opposition
regarding the waste dumping to both the plant man-
ager and his direct supervisor, Martin Feldman. Martin
has always supported Nathan, but this time was differ-
ent. The plant manager, too, turned a deaf ear. “We’re
meeting government standards,” he’d said. “It’s up to
them to protect the water. It’s up to us to make a pro t
and stay in business.”
Frustrated and confused, Nathan turned away
from the window, his prime of ce view mocking his
inability to protect the river he loved. He knew the
manufacturing vice president was visiting the plant
next week. Maybe if he talked with her, she would
agree that the decision to dump waste materials in the
river was ethically and socially irresponsible. But if
she didn’t, he would be skating on thin ice. His super-
visor had already accused him of not being a team
player. Maybe he should just be a passive bystander—
after all, the company isn’t breaking any laws.
What Would You Do?
1. Talk to the manufacturing vice president and
emphasize the r
esponsibility Chem-Tech has as an
industry leader to set an example. Present her with
a recommendation that Chem-Tech participate in
voluntary pollution reduction as a marketing tool,
positioning itself as the environmentally friendly
choice.
2. Mind your own business and just do your job. The
company isn’t breaking any laws, and if ChemTech’s
economic situation doesn’t improve, a lot of people
will be thrown out of work.
3. Call the local environmental advocacy group and
get them to stage a protest of the company.
SOURCE: Adapted from Janet Q. Evans, “What Do You Do: What If
Polluting Is Legal?” Business Ethics (Fall 2002): 20.
ch5
MANAGEMENT IN PRACTICE: ETHICAL DILEMMA
Empress Luxury Lines
From what computer technician Kevin Pfeiffer just
told him, it looked to Antonio Melendez as if top
management at Empress Luxury Lines nally found a
way to fund the computer system upgrade he’d been
requesting ever since he’d taken the job two years ago.
It all began innocently enough, Kevin said. When he
reported to the luxury cruise line’s corporate headquar-
ters, his supervisor Phil Bailey informed him that the
computer system had been hit by a power surge during
the erce thunderstorms that rolled through southern
Florida the night before. “Check out the damage, and
report directly back to me,” Phil instructed.
When Kevin delivered what he thought would
be good news—the damaged underground wires
and computer circuits could be repaired to the tune
of about $15,000—he couldn’t understand why
Phil looked so de ated. “Go out to the reception
area. I’ve got to call Roger,” Phil snapped, referring
to Empress’s CFO—and Antonio’s boss. In a few
minutes, Phil called Kevin back into the of ce and
instructed him to dig up nearly all the underground
wire and cable and then haul it all off before the insur-
ance adjustor appeared. If Kevin carried out Phil’s
orders, he knew the costs would balloon astronomi-
cally to about a half-million dollars, a tidy sum that
would go a long way toward covering the costs of a
computer system upgrade, as Phil pointed out.
Kevin took a deep breath and refused, even
though as a new hire he was still on probation. When
Antonio congratulated Kevin on his integrity, the
technician shook his head. “Didn’t really matter,” he
said. “On my way back to my cubicle, Matt passed me
on his way to do the deed.”
ch5
CASE FOR CRITICAL ANALYSIS
CHAPTER 5 MANAGING ETHICS AND SOCIAL RESPONSIBILITY 151
Environment
2
Antonio could guess at the motivation behind the
scam. During the 1990s, Empress increased its eet of
ships in response to the healthy demand for its luxury
cruises during the stock market bubble. But the bub-
ble burst, the nation was traumatized by September
11, and some of the vacationers who did venture onto
cruises were felled by an outbreak of the Norwalk
virus. Bookings fell off precipitously. To top it all off,
the 2005 hurricanes hit, forcing Empress to write piles
of refund checks for their Caribbean and Gulf cruises
while coping with steep increases in fuel costs. Seri-
ously sagging earnings explained why Antonio’s
requests for that system upgrade went unheeded.
He could also guess at the likely consequences
if he chose to do the right thing. Since taking the
job, he’d heard rumors that Empress successfully
defrauded insurance companies before he arrived.
He dismissed them at the time, but now he wasn’t
so sure. No con dential mechanism was in place for
employees to report wrong-doing internally, and
no protections were available for whistle-blowers.
Shaken, Antonio wasn’t feeling at all con dent that,
even if he bypassed the CFO, he would nd upper-
level management all that eager to thwart the scheme.
He had a hunch that the person most likely to be
penalized was the whistle-blower.
“I debated about just calling the insurance com-
pany,” Kevin said, “but I decided to come to you
rst.” So what should Antonio do? Should he advise
Kevin to go ahead and report Empress to the insur-
ance company? Or should he treat Kevin’s commu-
nication as con dential and deal with the situation
himself, in effect putting only his own job in jeop-
ardy? And really, considering the high degree of per-
sonal risk and the low probability that the problem
would actually be addressed, should he just sweep
the problem under the rug?
Questions
1. When determining what his obligations are to his
subordinate, Kevin Pfeiffer, what decision would
Antonio Melendez most likely reach if he applied
the utilitarian approach to decision making? What
conclusions would probably result if he employed
the individualism approach?
2. Put yourself in Antonio’s position and decide real-
istically what you would do. Is your response at a
preconventional, conventional, or postconventional
level of moral development? How do you feel
about your response?
3. If Antonio or Kevin were red because they
reported Empress’s fraud, would they be justi ed
in removing all traces of their employment at the
cruise line from their resumes so they don’t have to
explain to a prospective employer why they were
red? Why or why not?
SOURCES: Based on Don Soeken, “On Witnessing a Fraud,” Business
Ethics (Summer 2004): 14; Amy Tao, “Have Cruise Lines Weathered
the Storm?” BusinessWeek Online (September 11, 2003), http://www.
businessweek.com/bwdaily/dnfl ash/sep2003/nf20030911_6693_db014.
htm; and Joan Dubinsky, “A Word to the Whistle-Blower,” Workforce
(July 2002): 28.
ch5
ON THE JOB VIDEO CASE
City of Greensburg, Kansas:
Ethics and Social Responsibility
May 4, 2007, started out like any day for the 1,500
residents of Greensburg, Kansas. Weather forecasters
predicted afternoon storms, but few residents paid
much attention. Folks in this rural community had
seen their share of storms and knew the drill.
By 6 p.m., the National Weather Service issued
a tornado warning for Kiowa County. Still, torna-
does are hit or miss. Around 9:20 p.m., storm sirens
sounded, and residents took cover in bathrooms and
basements. When they emerged from their shelters,
their lives would be changed forever.
“My town is gone,” announced the city adminis-
trator, Steve Hewitt, in the rst press conference on
May 5. “I believe 95 percent of the homes are gone.
Downtown buildings are gone, my home is gone, and
we’ve got to nd a way to make this work and get
this town back on its feet.” Even with 700 homes to
rebuild, the residents were prepared to start with a
clean slate. Although the tornado was devastating, the
town viewed it as a blessing in disguise. Both Hewitt
and Mayor Lonnie McCollum rallied the people and
vowed to rebuild a green town.
Although both Hewitt and McCollum believed
Greensburg should be rebuilt in a socially respon-
sible way, using sustainable practices, designs, and
materials, they faced some ethical dilemmas. Hewitt
frequently explained his broader view of the stake-
holders affected by their choices, “We’re making
100-year decisions that will affect our children and
our children’s children.” Although Hewitt wouldn’t
describe it that way, he and McCollum took a
PART 2 THE ENVIRONMENT OF MANAGEMENT152
The Emperor’s Club
William Hundert (Kevin Kline), a professor at the
exclusive Saint Benedict’s Academy for Boys, believes
in teaching his students about living a principled life.
He also wants them to learn his beloved classical liter-
ature. A new student, Sedgewick Bell (Emile Hirsch),
challenges Hundert’s principled ways. Bell’s behavior
during the seventy-third annual Mr. Julius Caesar
Contest causes Hundert to suspect that Bell leads a
less-than-principled life, a suspicion con rmed years
later during a reenactment of the competition.
Ethics and Ethical Behavior
Mr. Hundert is the honored guest of his former stu-
dent Sedgewick Bell ( Joel Gretsch) at Bell’s estate.
Depaak Mehta (Rahul Khanna), Bell, and Louis
Masoudi (Patrick Dempsey) compete in a reenact-
ment of the Julius Caesar competition. Bell wins the
ch5
BIZ FLIX VIDEO CASE
utilitarian approach to these big decisions. For them,
reducing Greensburg’s impact on the environment felt
like the right or ethical thing to do, especially when
considering the well-being of future generations.
Living in Federal Emergency Management Agency
(FEMA) trailers, some residents struggled to embrace
a long-term view. They knew it would take longer
to build green because of the education, research,
and fund-raising required. Many felt impatient and
had trouble thinking beyond their immediate needs
as individuals. Greensburg upped the ante, and the
costs of rebuilding, when the city council approved
an ordinance declaring all municipal buildings would
be built to the highest Leadership in Energy and Envi-
ronmental Design (LEED) green building rating for
sustainability: LEED-Platinum.
LEED is a third-party certi cation program. It has
become the nationally accepted benchmark for the
design, construction, and operation of green build-
ings. LEED gives building owners the tools they need
to have a measurable and immediate impact on their
buildings’ performance. LEED promotes a whole-
building approach to sustainability by recognizing
performance in ve key areas of human and environ-
mental health: materials selection, sustainable site
development, energy ef ciency, water savings, and
indoor environmental quality.
In Hewitt’s mind, Greensburg had an economic
responsibility to construct buildings that achieved
maximum energy ef ciency. So even if it cost more
initially to build LEED-Platinum facilities, the town’s
energy costs as well as its operating costs would be
signi cantly lower in the future.
While Hewitt worked hard to manage and raise
funds for Greensburg’s reconstruction projects,
others were doing their part to help. Husband and
wife team Daniel Wallach, executive director, and
Catherine Hart, coordinator of educational services,
worked together to launch Greensburg GreenTown,
a 501(c)(3) not-for-pro t organization, designed to
provide Greensburg with the information, support,
and resources it needed to rebuild the town as a green
community.
One of Wallach’s favorite projects was BTI
Greensburg, the local John Deere dealership. With
Wallach’s encouragement, owners Mike and Kelly
Estes decided to build a state-of-the art green facility.
By using radiant heat, passive cooling, solar and wind
power, and recycling their used oil, BTI Greensburg
reduced its utility costs by hundreds of dollars every
month. With the corporate support of John Deere, BTI
Greensburg became the agship green shop for John
Deere dealerships around the world. As the biggest
business in Greensburg, BTI is a major stakeholder.
When Mike Estes publicly states, repeatedly, that
rebuilding green “is the right thing to do,” people listen.
Discussion Questions
1. What are the potential consequences of
rebuilding Greensburg without concern for
green practices?
2. Besides lowering energy costs, how else might
Greensburg bene t from becoming a green
town?
3. At what stage of moral development are
Hewitt and McCollum: preconventional,
conventional, or postconventional? Please
explain.
CHAPTER 5 MANAGING ETHICS AND SOCIAL RESPONSIBILITY 153
Environment
2
This example comes from Susan 1.
Pulliam, “Crossing the Line; At
Center of Fraud, WorldCom Offi cial
Sees Life Unravel,” The Wall Street
Journal, March 24, 2005; and S.
Pulliam, “Over the Line: A Staffer
Ordered to Commit Fraud Balked,
Then Caved,” The Wall Street Jour-
nal, June 23, 2003.
Bethany McLean, “Why Enron Went 2.
Bust,” Fortune (December 24, 2001):
58–68; survey results reported in
Patricia Wallington, “Honestly?!”
CIO (March 15, 2003): 41–42.
Mike Esterl, “Executive Derision: In 3.
Germany, Scandals Tarnish Busi-
ness Elite,” The Wall Street Journal,
March 4, 2008.
Gordon F. Shea,4. Practical Ethics
(New York: American Management
Association, 1988); and Linda K.
Treviño, “Ethical Decision Making in
Organizations; A Person-Situation
Interactionist Model,” Academy
of Management Review 11 (1986):
601–617.
Thomas M. Jones, “Ethical Decision 5.
Making by Individuals in Organiza-
tions: An Issue-Contingent Model,”
Academy of Management Review
16(1991): 366–395.
Shelby D. Hunt and Jared M. Hansen, 6.
“Understanding Ethical Diversity
in Organizations,” Organizational
Dynamics 36, no 2 (2007): 202–216.
John R. Emshwiller and Alexei 7.
Barrionuevo, “U.S. Prosecutors File
Indictment Against Skilling,” The Wall
Street Journal, February 20, 2004.
See Clinton W. McLemore,8. Street-
Smart Ethics: Succeeding in Business
Without Selling Your Soul (Louisville,
KY: Westminster John Knox Press,
2003), for a cogent discussion of
some ethical and legal issues associ-
ated with Enron’s collapse.
Rushworth M. Kidder, “The Three 9.
Great Domains of Human Action,”
Christian Science Monitor, January
30, 1990.
Linda K. Treviño and Katherine A. 10.
Nelson, Managing Business Ethics:
Straight Talk About How to Do It
Right (New York: John Wiley &
Sons, Inc. 1995), p. 4.
Jones, “Ethical Decision Making by 11.
Individuals in Organizations.”
Based on a question from a General 12.
Electric employee ethics guide,
reported in Kathryn Kranhold, “U.S.
Firms Raise Ethics Focus,” The Wall
Street Journal, November 28, 2005.
Based on information in Constance 13.
E. Bagley, “The Ethical Leader’s
Decision Tree,” Harvard Business
Review (February 2003): 18–19.
Based on information in Vadim 14.
Liberman, “Scoring on the Job,”
Across the Board (November–
December 2003): 46–50.
From Jeffrey Kluger, “What Makes 15.
Us Moral? Time (December 3, 2007):
54–60.
“The Morality Quiz,” at http://www16.
.time.com/morality (accessed
February 19, 2008).
This discussion is based on Gerald 17.
F. Cavanagh, Dennis J. Moberg, and
Manuel Velasquez, “The Ethics of
Organizational Politics,” Academy
of Management Review 6 (1981):
363–374; Justin G. Longenecker,
Joseph A. McKinney, and Carlos
W. Moore, “Egoism and Indepen-
dence: Entrepreneurial Ethics,”
Organizational Dynamics
(Winter
1988): 64–72; Car
olyn Wiley, “The
ABCs of Business Ethics: Defi ni-
tions, Philosophies, and Implemen-
tation,” IM (February 1995): 22–27;
and Mark Mallinger, “Decisive
Decision Making: An Exercise Us-
ing Ethical Frameworks,” Journal
of Management Education (August
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Michael J. McCarthy, “Now the Boss 18.
Knows Where You’re Clicking,” and
“Virtual Morality: A New Workplace
Quandary,” The Wall Street Journal,
October 21, 1999; and Jeffrey L.
Seglin, “Who’s Snooping on You?”
Business 2.0 (August 8, 2000):
202–203.
John Kekes, “Self-Direction: The 19.
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Tad Tulega,20. Beyond the Bottom Line
(New York: Penguin Books, 1987).
L. Kohlberg, “Moral Stages and 21.
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Developmental Approach,” in Moral
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Lickona (New York: Holt, Rinehart
& Winston, 1976), pp. 31–83; L.
Kohlberg, “Stage and Sequence: The
Cognitive-Developmental Approach
to Socialization,” in Handbook of
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ed. D. A. Goslin (Chicago: Rand Mc-
Nally, 1969); Linda K. Treviño, Gary
ch5
ENDNOTES
competition, but Hundert notices that Bell is wearing
an earpiece. Earlier in the lm, Hundert had sus-
pected that young Bell wore an earpiece during the
competition, but Headmaster Woodbridge (Edward
Herrmann) urged him to ignore his suspicion.
This scene appears at the end of the lm. It is an
edited version of the competition reenactment. Bell
announced his candidacy for the U.S. Senate just
before he spoke with Hundert in the bathroom. In his
announcement, he carefully described his commit-
ment to speci c values he would pursue if elected.
What to Watch for and Ask Yourself
▪ Does William Hundert describe a speci c type
of life that one should lead? If so, what are its
elements?
▪ Does Sedgewick Bell lead that type of life? Is he
committed to any speci c view or theory of ethics?
▪ What consequences or effects do you predict for
Sedgewick Bell because of the way he chooses to
live his life?
PART 2 THE ENVIRONMENT OF MANAGEMENT154
R. Weaver, and Scott J
. Reynolds,
“Behavioral Ethics in Organizations:
A Review, Journal of Management
32, no 6 (December 2006): 951–990;
and Jill W. Graham, “Leadership,
Moral Development, and Citizen-
ship Behavior,” Business Ethics
Quarterly 5, no. 1 (January 1995):
43–54.
See Thomas Donaldson and Thomas 22.
W. Dunfee, “When Ethics Travel: The
Promise and Peril of Global Busi-
ness Ethics,” California Management
Review 41, No. 4 (Summer 1999):
45–63.
Transparency International, “The BPI 23.
2006—The Ranking,” www
.transparency.org/policy_research/
surveys_indices/bpi/bpi_2006
(accessed February 18, 2007).
24. Eugene W. Szwajkowski, “The
Myths and Realities of Research
on Organizational Misconduct,”
in Research in Corporate Social
Performance and Policy, ed. James
E. Post (Greenwich, CT: JAI Press,
1986), 9:103–122; and Keith Davis,
William C. Frederick, and Robert
L. Blostrom, Business and Society:
Concepts and Policy Issues (New
York: McGraw-Hill, 1979).
Douglas S. Sherwin, “The Ethi-25.
cal Roots of the Business Sys-
tem,” Harvard Business Review
61 (November–December 1983):
183–192.
Nancy C. Roberts and Paula J. 26.
King, “The Stakeholder Audit Goes
Public,” Organizational Dynam-
ics (Winter 1989): 63–79; Thomas
Donaldson and Lee E. Preston, “The
Stakeholder Theory of the Corpora-
tion: Concepts, Evidence, and Impli-
cations,” Academy of Management
Review 20, no. 1 (1995): 65–91; and
Jeffrey S. Harrison and Caron H.
St. John, “Managing and Partner-
ing with External Stakeholders,”
Academy of Management Executive
10, no. 2 (1996): 46–60.
Clay Chandler, “The Great Wal-Mart 27.
of China,” Fortune (July 25, 2005):
104–116; and Charles Fishman, “The
Wal-Mart You Don’t Know—Why
Low Prices Have a High Cost,” Fast
Company (December 2003): 68–80.
David Wheeler, Barry Colbert, and 28.
R. Edward Freeman, “Focusing on
Value: Reconciling Corporate Social
Responsibility, Sustainability, and a
Stakeholder Approach in a Net-
worked World,” Journal of General
Management 28, no. 3 (Spring 2003):
1–28; James E. Post, Lee E. Pres-
ton, and Sybille Sachs, “Managing
the Extended Enterprise: The New
Stakeholder View,” California Man-
agement Review 45, no. 1 (Fall 2002):
6–28; and Peter Fritsch and Timothy
Mapes, “Seed Money; In Indonesia,
A Tangle of Bribes Creates Trouble
for Monsanto,” The Wall Street Jour-
nal, April 5, 2005.
Max B. E. Clarkson, “A Stakeholder 29.
Framework for Analyzing and
Evaluating Corporate Social Perfor-
mance,” Academy of Management
Review 20, no. 1 (1995): 92–117.
C. K. Prahalad and S. L. Hart, “The 30.
Fortune at the Bottom of the Pyra-
mid,” Strategy + Business
26 (2006): 54–67.
Rob Walker, “Cleaning Up,” 31. New
York Times Magazine (June 10,
2007): 20.
Ibid.32.
This defi nition is based on Marc 33.
J. Epstein and Marie-Josée Roy,
“Improving Sustainability Perfor-
mance: Specifying, Implementing
and Measuring Key Principles,”
Journal of General Management 29,
no. 1 (Autumn 2003): 15–31, World
Commission on Economic Develop-
ment, Our Common Future (Oxford:
Oxford University Press, 1987): and
Marc Gunther, “Tree Huggers, Soy
Lovers, and Profi ts,” Fortune (June
23, 2003): 98–104.
Cornelia Dean, “Executive on a 34.
Mission: Saving the Planet,” The
New York Times, May 22, 2007.
John Carey, “Hugging the Tree 35.
Huggers,” BusinessWeek (March 12,
2007): 66–68.
Reported in Kate O’Sullivan, 36.
“Virtue Rewarded,” CFO (October
2006): 47–52.
Carey, “Hugging the Tree Huggers.”37.
Mark Borden, Jeff Chu, Charles 38.
Fishman, Michael A. Prospero, and
Danielle Sacks, “50 Ways to Green
Your Business,” Fast Company
(November, 2007).
Mark S. Schwartz and Archie B. 39.
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Conceptual Model of Corporate
Performance,” Academy of Manage-
ment Review 4 (1979): 497–505. For
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evaluating corporate social perfor-
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by Reorienting the Corporate Social
Performance Model,” Academy
of Management Review 20, no. 1
(1995): 43–64.
Milton Friedman,40. Capitalism and
Freedom (Chicago: University of
Chicago Press, 1962), p. 133; and
Milton Friedman and Rose Friedman,
Free to Choose (New York: Harcourt
Brace Jovanovich, 1979).
Eugene W. Szwajkowski, “Organiza-41.
tional Illegality: Theoretical Integra-
tion and Illustrative Application,”
Academy of Management Review 10
(1985): 558–567.
Reported in Ronald W. Clement, 42.
“Just How Unethical is American
Business?” Business Horizons 49
(2006): 313–327.
David J. Fritzsche and Helmut 43.
Becker, “Linking Management
Behavior to Ethical Philosophy—An
Empirical Investigation,” Academy
of Management Journal 27 (1984):
165–175.
John Hechinger, “Financial-Aid 44.
Directors Received Payments from
Preferred Lender; Student Loan
Xpress Puts Three Managers on
Leave Amid Multiple Inquiries,” The
Wall Street Journal, April 10, 2007;
and Kathy Chu, “3 University Finan-
cial Aid Chiefs Suspended,” USA
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O’Sullivan, “Virtue Rewarded.” 45.
Katie Hafner and Claudi H. 46.
Deutsch, “When Good Will Is Also
Good Business,” The New York
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Saul W. Gellerman, “Managing 47.
Ethics from the Top Down,” Sloan
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Michael E. Brown and Linda K. 48.
Treviño, “Ethical Leadership: A
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595–616; Gary R. Weaver, Linda
Klebe Treviño, and Bradley Agle,
“‘Somebody I Look Up To’: Ethical
Role Models in Organizations,”
Organizational Dynamics 34, no. 4
(2005): 313–330; and L. K. Treviño,
G. R. Weaver, David G. Gibson,
and Barbara Ley Toffl er, “Managing
CHAPTER 5 MANAGING ETHICS AND SOCIAL RESPONSIBILITY 155
Environment
2
Ethics and Legal Compliance: What
Works and What Hurts?” California
Management Review 41, no. 2
(Winter 1999): 131–151.
Ibid.49.
Treviño et al., “Managing Ethics and 50.
Legal Compliance.”
Carolyn Wiley, “The ABC’s of Busi-51.
ness Ethics: Defi nitions, Philoso-
phies, and Implementation,” IM
(January–February 1995): 22–27;
Joseph L. Badaracco and Allen P.
Webb, “Business Ethics: A View from
the Trenches,” California Manage-
ment Review 37, no. 2 (Winter
1995): 8–28; and Ronald B. Morgan,
“Self- and Co-Worker Perceptions
of Ethics and Their Relationships
to Leadership and Salary,” Academy
of Management Journal 36, no. 1
(February 1993): 200–214.
Journal Communications—Code of 52.
Ethics, from Codes of Ethics Online,
The Center for the Study of Ethics
in the Professions, Illinois Institute
of Technology, www.iit.edu/
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Cheryl Rosen, “A Measure of Suc-53.
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Alan Yuspeh, “Do the Right Thing,” 54.
CIO (August 1, 2000): 56–58.
Reported in Rosen, “A Measure of 55.
Success? Ethics after Enron.”
Beverly Geber, “The Right and 56.
Wrong of Ethics Offi ces,” Training
(October 1995): 102–118.
Kranhold, “U.S. Firms Raise Ethics 57.
Focus” and “Our Actions: GE 2005
Citizenship Report,” General Electric
Company, 2005.
Amy Zipkin, “Getting Religion on 58.
Corporate Ethics,” The New York
Times, October 18, 2000.
Marcia Parmarlee Miceli and Janet 59.
P. Near, “The Relationship among
Beliefs, Organizational Positions,
and Whistle-Blowing Status: A
Discriminant Analysis,” Academy
of Management Journal 27 (1984):
687–705.
Eugene Garaventa, “60. An Enemy of the
People by Henrik Ibsen: The Politics
of Whistle-Blowing,” Journal of Man-
agement Inquiry 3, no. 4 (December
1994): 369–374; Marcia P. Miceli
and Janet P. Near, “Whistleblow-
ing: Reaping the Benefi ts,” Academy
of Management Executive 8, no. 3
(1994): 65–74.
Reported in Rosen, “A Measure of 61.
Success? Ethics after Enron.”
Jayne O’Donnell, “Blowing the 62.
Whistle Can Lead to Harsh Aftermath,
Despite Law,” USA Today, July 31,
2005, www.usatoday.com.
Homer H. Johnson, “Does It Pay to 63.
Be Good? Social Responsibility and
Financial Performance,” Business
Horizons (November–December
2003): 34–40; Jennifer J. Griffi n and
John F. Mahon, “The Corporate
Social Performance and Corporate
Financial Performance Debate:
Twenty-Five Years of Incomparable
Research,” Business and Society
36, no. 1 (March 1997): 5–31;
Bernadette M. Ruf, Krishnamurty
Muralidar, Robert M. Brown, Jay J.
Janney, and Karen Paul, “An Empiri-
cal Investigation of the Relation-
ship between Change in Corporate
Social Performance and Financial
Performance: A Stakeholder Theory
Perspective,” Journal of Business
Ethics 32, no. 2 (July 2001): 143;
Philip L. Cochran and Robert A.
Wood, “Corporate Social Respon-
sibility and Financial Performance,”
Academy of Management Journal 27
(1984): 42–56.
Paul C. Godfrey, “The Relationship 64.
Between Corporate Philanthropy
and Shareholder Wealth: A Risk
Management Perspective,” Acad-
emy of Management Review 30, no.
4 (2005): 777–798; Oliver Falck
and Stephan Heblich, “Corporate
Social Responsibility: Doing Well
by Doing Good,” Business Horizons
50 (2007): 247–254; J. A. Pearce II
and J. P. Doh, “The High Impact of
Collaborative Social Initiatives”;
Curtis C. Verschoor and Elizabeth A.
Murphy, “The Financial Performance
of Large U.S. Firms and Those with
Global Prominence: How Do the
Best Corporate Citizens Rate?”
Business and Society Review 107,
no. 3 (Fall 2002): 371–381; Johnson,
“Does It Pay to Be Good?”; Dale
Kurschner, “5 Ways Ethical Busi-
ness Creates Fatter Profi ts,” Business
Ethics (March–April 1996): 20–23.
Also see studies reported in Lori
Ioannou, “Corporate America’s So-
cial Conscience,” Fortune (May 26,
2003): S1–S10.
Verschoor and Murphy, “The Fi-65.
nancial Performance of Large U.S.
Firms.”
Phred Dvorak, “Finding the Best 66.
Measure of ‘Corporate Citizen-
ship,’” The Wall Street Journal,
July 2, 2007.
Jean B. McGuire, Alison Sundgren, 67.
and Thomas Schneeweis, “Corpo-
rate Social Responsibility and Firm
Financial Performance,” Academy
of Management Journal 31 (1988):
854–872; and Falck and Heblich,
Corporate Social Responsibility:
Doing Well by Doing Good.”
Vogel, “Is There a Market for Virtue?”68.
Daniel W. Greening and Daniel B. 69.
Turban, “Corporate Social Perfor-
mance as a Competitive Advantage
in Attracting a Quality Workforce,”
Business and Society 39, no. 3
(September 2000): 254; and
O’Sullivan, “Virtue Rewarded.”
“The Socially Correct Corporate 70.
Business,” in Leslie Holstrom and
Simon Brady, “The Changing Face of
Global Business,” Fortune (July 24,
2000): S1–S38.
156
ContinuingCasept2
General Motors
Part Two: The Environment of
Management
The Volt: GM’s Ultimate Green
Machine
Imagine that you are one of millions of Americans
whose commute to school or work is less than 40 miles
round trip. Each morning, you hop in a sleek com-
pact and drive off to your destination. At night, you
park safely in the garage and plug your vehicle into a
standard household electric socket for bedtime. After
repeating this pattern for months, you never use a drop
of gas or emit an ounce of emissions. Moreover, charg-
ing your vehicle costs you just 80 cents each day and
consumes less energy annually than your own home
refrigerator.
If you are one of the thousands of excited consum-
ers lining up to purchase the 2010 Chevy Volt, this sce-
nario is not fantasy—it’s your future. In fact, it’s the
future that General Motors (GM) envisions for each one
of America’s more than 200 million licensed drivers.
In a move to reinvent the automobile for the needs
of the twenty- rst century, GM unveiled its rst elec-
tric car during the company’s historic 2008 centennial
celebration. The Volt, with its emissions-free driv-
ing and 2010 delivery date, promises to become the
ultimate green machine for eco-minded consumers
everywhere.
While the cost of operating the aerodynamic
electric compact is roughly equivalent to the price
of a cup of coffee, the driving experience is price-
less. The electric drive unit delivers 150 horsepower,
0-to-60 acceleration in nine seconds, and top speeds
of 100 miles per hour. Drivers who make longer trips
than the battery’s 40-mile range get an automatic
recharge from Volt’s gas-powered generator. And
although it runs on batteries, the Volt is no golf cart.
The environmentally friendly four-door vehicle fea-
tures a sporty-yet-sophisticated stance, aerodynamic
design, closed front grille, and more. The futuristic
cockpit takes cues from the latest in design trends—
the metallic-white center control console could pass
for a next-generation iPod.
How did GM go from being the world’s largest
manufacturer of gas-guzzling Hummers and Esca-
lades to an electric-car company producing what one
observer has called a “Viper for tree huggers”? The
dramatic shift is related to multiple threats in the orga-
nization’s external environment.
First, there’s oil: Wildly uctuating gas prices—
such as the $5-per-gallon spike in 2008—have caused
drivers to moderate driving habits and stay away
from dealerships. Then, there’s government regula-
tion: The Democrat-controlled U.S. Congress over-
whelmingly passed the Energy Independence and
Security Act of 2007, which in addition to banning
the use of ordinary incandescent light bulbs, raised
corporate average fuel economy (CAFE) standards on
automakers to a eetwide average of 35 mpg. Next,
there’s the philosophy of sustainability: Many lead-
ers in business and government see environmental
“clean” technology as a way of striking a balance
between today’s economic development needs and
those of future generations. Another pressure comes
from lobbyists: Powerful voices sounding the alarm
on impending global catastrophe have demanded that
manufacturers put the brakes on industry to save the
planet. Finally, there’s the competition: “Green” is an
important buzzword in business today, and vehicles
like Toyota Prius and the Tesla Roadster that leave a
small carbon footprint are putting pressure on GM to
get out in front.
Whatever the economic, political, and social forces
driving big changes at GM, leadership is determined
to create a new culture of innovation and change.
Whether it’s the emissions-free promise of the Volt,
the gravity-defying fuel ef ciency of the Chevy
Tahoe Hybrid, or the next-generation thinking of the
hydrogen-powered Cadillac Provoq, the presence of
exciting alternative-fuel vehicles sends a message to
stakeholders that the future of the automobile is still
in Detroit.
Questions
1. What management strategies might be most
ef
fective in helping GM adapt to uncertainty and
change in its external environment?
2. What obstacles does GM face as it attempts to
bring its corporate culture into alignment with the
needs and challenges of the twenty- rst century?
3. As GM continues its attempts to demonstrate
good corporate citizenship, what complex issues
and obstacles may frustrate its efforts?
SOURCES: Peter Fairley, “The New CAFE Standards—Fuel Standards
Will Likely Be Achievable But Won’t Encourage Innovation,” Technol-
ogy Review, January 15, 2008, http://www.technologyreview.com/
energy/20067 (accessed October 11, 2008); Anita Lienert, “Aerody-
namic Chevrolet Volt Electrifi es GM’s 100th-Anniversary Celebra-
tion,” Inside Line, September 16, 2008, http://www.edmunds.com/
157
Environment
2
insideline (accessed October 11, 2008); Robert Snell, “GM Enters Its
Second Century by Finally Taking Wraps off Volt,” The Detroit News,
September 17, 2008, http://www.detnews.com (accessed October 11,
2008); U.S. Department of Transportation, “Distribution of Licensed
Drivers—2006,” Federal Highway Administration, Highway Statistics
2006 Table DL-20, http://www.fhwa.dot.gov/policy/ohim/hs06/htm/
dl20.htm; David Welch, “GM Charges Up the Electric Chevy Volt—GM
Introduces the Chevy Volt, a Sleek Electric Car Capable of 40 mpg on a
Single Charge,” BusinessWeek, September, 17, 2008, http://www
.businessweek.com/lifestyle/content/sep2008/bw20080916_356100
.htm (accessed October 11, 2008).
chapter6pt3
Learning Outcomes
Chapter Outline
© GET T Y IMAGES/DIGITAL VISION
After studying this chapter, you should be able to:
1. Defi
ne goals and plans and explain the relationship between them.
2. Explain the concept of organizational mission and how it infl uences
goal
setting and planning.
3. Describe the types of goals an organization should have and how
manager
s use strategy maps to align goals.
4. Defi
ne the characteristics of effective goals.
5. Describe the four essential steps in the management by objectives
(MBO) pr
ocess.
6. Explain the difference between single-use plans and standing plans.
7. Describe and explain the importance of contingency planning, scenario
building, and crisis planning in today’s environment.
8. Summarize the guidelines for high-performance planning in a fast-
changing envir
onment.
Does Goal Setting Fit Your Management
Style?
Ov
erview of Goals and Plans
Levels of Goals and Plans
Pur
poses of Goals and Plans
The Organizational Planning Process
New Manager Self-Test: Your Approach
to Studying
Goals in Organizations
Organizational Mission
Goals and Plans
Aligning Goals with Str
ategy Maps
Operational Planning
Criteria for Effective Goals
Management by Objectives
Single-Use and St
anding Plans
Planning for a Turbulent Environment
Contingency Planning
Building Scenarios
Crisis Planning
Planning for High Performance
Traditional Approaches to Planning
High-P
erformance Approaches to Planning
159
Managerial Planning and
Goal Setting
Controlling
6
Planning
3
Environment
2
4
Organizing
5
Leading
Introduction
1
DOES GOAL SET TING FIT YOUR MANAGEMENT STYLE?
Are you a good planner? Do you set goals and identify
ways to accomplish them? This questionnaire will help
you understand how your work habits fi t with making
plans and setting goals. Answer the following questions
as they apply to your work or study habits. Please indicate
whether each item is Mostly True or Mostly False for you.
Mostly
True
Mostly
False
1. I have clear, specifi c goals in
several areas of my life.
2. I have a defi nite outcome in life I
want to achieve.
3. I prefer general to specifi c goals.
4. I work better without specifi c
deadlines.
5. I set aside time each day or week
to plan my work.
6. I am clear about the measures
that indicate when I have achieved
a goal.
7. I work better when I set more
challenging goals for myself.
8. I help other people clarify and
defi ne their goals.
SCORING AND INTERPRETATION: Give yourself one
point for each item you marked as Mostly True except
items 3 and 4. For items 3 and 4 give yourself one point
for each one you marked Mostly False. A score of 5 or
higher suggests a positive level of goal-setting behavior
and good preparation for a new manager role in an orga-
nization. If you scored 4 or less you might want to evalu-
ate and begin to change your goal-setting behavior. An
important part of a new manager’s job is setting goals,
measuring results, and reviewing progress for the depart-
ment and subordinates.
These questions indicate the extent to which you have
already adopted the disciplined use of goals in your life
and work. But if you scored low, don’t despair. Goal set-
ting can be learned. Most organizations have goal setting
and review systems that new managers use. Not everyone
thrives under a disciplined goal-setting system, but as a
new manager, setting goals and assessing results are tools
that will enhance your impact. Research indicates that
setting clear, specifi c, and challenging goals in key areas
will produce better performance.
One of the primary responsibilities of managers is to decide where the organization
should go in the future and how to get it there. In some organizations, typically small
ones, planning is informal. In others, managers follow a well-de ned planning frame-
work. The company establishes a basic mission and periodically develops formal
goals and plans for carrying it out. Large organizations such as Royal Dutch/Shell,
IBM, and United Way undertake a comprehensive planning exercise each year—
reviewing their missions, goals, and plans to meet environmental changes or the expec-
tations of important stakeholders such as the community, owners, or customers.
Of the four management functions—planning, organizing, leading, and controlling—
described in Chapter 1, planning is considered the most fundamental. Everything else
stems from planning. Yet planning also is the most controversial management func-
tion. How do managers plan for the future in a constantly changing environment? The
economic, political, and social turmoil of recent years has sparked a renewed inter-
est in organizational planning, particularly planning for unexpected problems and
events. Yet planning cannot read an uncertain future. Planning cannot tame a turbu-
lent environment. A statement by General Colin Powell, former U.S. Secretary of State,
offers a warning for managers: “No battle plan survives contact with the enemy.”
1
Does that mean it’s useless to make plans? Of course not. No plan can be perfect, but
without plans and goals, organizations and employees ounder. However, good man-
agers understand that plans should grow and change to meet new conditions.
In this chapter, we explore the process of planning and consider how managers
develop effective plans. Special attention is given to goal setting, for that is where
planning starts. Then, we discuss the various types of plans that managers use to help