Socializing Retail Employees in Ethical Values: The Effectiveness of the Formal versus Informal Methods

Abstract

The purpose of this study was to test the effectiveness of an informal socialization process for reported employee attitudes towards unethical behavior within a large retail organization. This study compares the reported ethical attitudes of full-time employees (N = 203) who were socialized using an informal approach, to the reported ethical attitudes of their managers (N = 274) who were socialized using a formal approach. The results indicate that the informal approach to ethical socialization was not as effective as the formal approach to ethical socialization. Employees were more accepting of unethical behavior than were their managers. Implications are discussed and recommendations for ethical socialization techniques are provided.

Appendix

• 1. A number of high-ranking executives of several electrical companies were convicted and sentenced to jail for conspiring to fix the prices of heavy electrical equipment. Their defense counsel argued that they sought to rationalize a chaotic pricing situation. What is your evaluation of the action of these executives?

• 2. Saxon is a sales representative of Ajax Tool Company. Saxon has been instructed by Maynard, Vice President of Sales, to adopt a sales policy Saxon considers unethical. Maynard and Saxon have discussed the policy at length and it is apparent Maynard thinks the policy is quite ethical. Maynard orders Saxon to follow the policy, and Saxon reluctantly does so. What is your opinion of Saxon’s actions?

• 3. Stone, a member of the Board of Directors of Scott Electronic Corp., has just learned that the company is about to announce a 2-for-1 stock split and an increase in the dividends. Stone personally is on the brink of bankruptcy. A quick gain of a few thousand dollars can save Stone from economic and social ruin. Stone decides to take advantage of this information and purchases stocks now to sell back in a few days for a profit. What is your opinion of Stone’s actions?

• 4. Chuckwell sells used cars for an Auto Company. Although Chuckwell feels that the cars sold are reasonably priced, in the sales talk Chuckwell is forced to match the extravagant claims and tactics of competitors. The company engages in such practices as setting back the speedometers, hiding major defects, and putting pressure on prospects to close a deal on their first visit. Chuckwell knows that the company could not survive without such practices. Although, Chuckwell disagrees with such practices, nevertheless, Chuckwell follows these practices. What is your opinion of Chuckwell’s actions?

• 5. The Reed Engineering Firm faces a very competitive situation in bidding for a large contract to construct a new store for a large discount chain. Inasmuch as the firm is seriously in need of the work, Pennings, a partner in the firm, suggests that Reed submit a bid, which will certainly be low, and then make its profit on the use of inferior materials. Pennings is certain this can be done without arousing the suspicion of building inspectors. Pennings argues that any firm, which is awarded the contract will have to do that since the bidding will be so competitive. Reed, senior partner, agrees, stating that it is not an infrequent practice anyway. What is your opinion of Penning’s actions?

• 6. BeeBee is a sales person for Sweet Soap Company. With commissions, BeeBee’s salary is $36,000 per year. BeeBee usually supplements this to the extent of about $1,800 per year by charging certain unauthorized personal expenses against the expense account. BeeBee feels that this is a common practice in the company; and if everybody is doing it, BeeBee should do it also. What is your opinion of BeeBee’s actions?

• 7. Shaw, Treasurer of Lloyd Enterprises, is about to retire and contemplates recommending one of two assistants for promotion to treasurer. Shaw is sure that the recommendation will be accepted, but also knows that the assistant not recommended will find his/her promotion opportunities seriously limited. One of the assistants, Musta, seems most qualified for the new assignment, but the other assistant, Perwiz, is related to the president of Lloyd’s biggest customer. Though Shaw hates to do it, Shaw recommends Perwiz for the job because the relationship with the customer will help Lloyd’s. What is your opinion of Shaw’s actions?

• 8. Kraft, editor of the Daily News is troubled. Kraft has just received a visit from Cramer, a public relations executive with the Aztec Department Store. Aztec is a big advertiser in the Daily News, and its continued purchase of advertising space is very important to the paper. Recently, Aztec sold a large quantity of appliances, which proved to be defective, and refused to exchange the merchandise for better quality products. The Daily News at the present time is running a series on local business firms. Cramer wants to be sure that a story on the Aztec will contain no mention of this unfortunate occurrence. Kraft is troubled; but in order not to offend this important advertiser, Kraft agrees not to mention the sale of defective appliances. What is your opinion of Kraft’s actions?

• 9. Schall, a Public Accountant, has been called in to audit the books of the Lakewood Trucking Company in anticipation of a public sale of stock. In the course of the audit, Schall discovered an item that is puzzling: a $20,000 advertising expense paid to a Chicago Advertising Company. This was a one-payment expense 3 years ago, and no further business has been done with the Chicago firm. When questioned by Schall, Wallen, President of the Trucking Company, readily admitted this money was used as a bribe to pay a union official. “It was a question of paying up or going out of business,” Wallen explained. However, due to an employee empowerment program, Wallen sees no possibility of this situation recurring and asks Schall not to mention this in the Auditor’s Report. Since the firm seems well managed, Schall agrees to ignore this. What is your opinion of Schall’s actions?

• 10. Piser, President of Piser Fashions Co., has heard rumors that a competitor, Sunset Fashion, is coming out with a new line of spring styles, which in all likelihood will sweep the market. Piser cannot afford to wait until the new styles come out and hires Bishop, plant supervisor of Sunset. Although Bishop is not a designer, in the capacity of plant supervisor Bishop has become thoroughly familiar with the new Sunset line. It is understood that Bishop will reveal the full details of the new Sunset styles to the new employer, Piser Fashions Co.. What is your opinion of Piser’s action?

• 11. Sarwar is a sales person for Fare and Shear, stockbrokers. Sarwar has been instructed to recommend to customers Electric Power Co. Bonds, because the brokerage firm is carrying a heavy inventory of these bonds. Sarwar does not feel the bonds are a good investment under present circumstances; and is reluctant to recommend them. However, after some thought, Sarwar decides to follow the company directive and recommend the bonds. What is your opinion of Sarwar’s actions?