Chapter 3: Scrutinizing Ethical Issues

Chapter Summary

This chapter addresses many ethical dilemmas facing the manager, such as whistle-blowing, leaks, rumors, and gossip. While there is no guarantee that an organization or its employees will behave ethically, this chapter suggests a model of the “ethical organization.” An organization, striving for ethical behavior, will integrate individuals of personal integrity in an organizational culture of strong principles, governed by organizational policies that support the principles.  Many of the policy issues relate to how the organization manages information. Three critical issues that the organization must manage with regard to information include:

  1. What information should the organization gather?
  2. How should the organization gather the information?
  3. How should the organization use the information?



Case Study

Case 3.1:  Restoring Trust

The purpose of this case is to learn how to restore trust in the communication system.

The newly hired CEO of a major investment firm (800+ employees) was hired to clean up the scandalous mess left by the former CEO and CFO. The company board fired most of the senior managers in light of the scandal and reached a financial settlement with the U.S. Department of Justice. Many customers left the firm even though it appears that the “aortic bleeding” has been stopped. The new CEO, Dr. Margaret Hoppins, is a no-nonsense financial wizard with excellent people skills. She loves Rene Magritte paintings. She realizes that public trust and employee trust have been badly damaged. She also recognizes the challenges of communicating to employees working in five countries and dozens of different locations. In fact, the former executives only sent occasional e-mails and basically relied on the chain-of-command to “trickle down” messages. She has asked your team to come up with a communication strategy to “restore the trust.”

Your objectives: 

  1. Outline the strengths and weaknesses of the company’s position with regard to the trust issue.
  2. Develop a strategy that fits with Dr. Hoppins’ style.
  3. Suggest some sample tactics that could be used to implement the strategy.

Case 3.2:  Communicating During a Downsizing

The purpose of this case is to develop an action plan for communicating a difficult message in an ethical manner.


  1. You are the communication advisor to the head administrator of a major hospital in your local area.  She asked you to develop a procedure for informing employees and the community about an impending layoff of 200 employees on January 15.
  2. The administrator wants you to devise a plan that minimizes the amount of tension, friction and “down-time” in the workplace.  Moreover, she wants you to include provisions for coping with difficulties after the announcement of the layoff has been made.
  3. The hospital employs about 1,500 workers and the layoff was the last-resort measure to return the organization to profitability.  The people who will be laid off will be from a cross-section of the hospital and include both staff and management.
  4. The administrator has provided you a budget of $100,000 for any related expenses that may be incurred in meeting these communication objectives.

Your objectives:

  1. Describe your precise plan, both on a strategic and tactical level.
  2. Justify the strategic and tactical decisions you are proposing.
  3. Discuss how you will present your plan to the head administrator.

Video Resources

Apology Video

  • Which features of an effective apology does this clip illustrate?
  • Which features of an effective apology does this clip fail to illustrate?
  • How could this clip be used to train managers on the art of apology?


Secrecy Video

  • What benefits does Apple glean from its secrecy policy?
  • What costs does Apple incur from its secrecy policy?
  • How should an organization weigh the benefits and costs of secrecy on different issues?