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Trust, Justice,
and Ethics

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Class Agenda

  • Trust defined
  • Types of trust
  • Using justice to gauge trust
  • Using ethics to gauge trust
  • How important is trust?
  • Best practices

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Here’s the integrative model that reminds students of where they are, where they’ve been, and where they’re going.

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Trust Defined

  • The willingness to be vulnerable to an authority based on positive expectations about the authority’s actions and intentions
  • Trust = willing to be vulnerable
  • Risk = actually becoming vulnerable

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Trust Drivers

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Disposition-Based Trust

  • Trust Propensity
  • A general expectation that the words, promises, and statements of individuals and groups can be relied upon
  • Which is more damaging in organizational life: being too trusting or being too suspicious?

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Cognition-Based Trust

  • Trustworthiness
  • The characteristics of a trustee that inspire trust
  • Ability
  • Benevolence
  • Integrity
  • Which are most important with subordinates? With supervisors?

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Affect-Based Trust

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Justice

  • Trustworthiness can sometimes be difficult to judge, especially early in work relationships
  • Justice-relevant acts can serve as behavioral evidence of trustworthiness
  • Distributive justice
  • Procedural justice
  • Interpersonal justice
  • Informational justice

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Distributive and Procedural Justice

Try This! Take some decision making procedure that a number of students will be familiar with. It could be the procedure used to elect U.S. Presidents, the procedure used to crown a college football champion, the procedure used to decide which students are eligible for tickets to university sporting events--anything with which most students would be familiar. Then ask the students to analyze the fairness of the procedure using the procedural justice rules in Table 7-2. How is the process fair, or how is the process unfair?

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Distributive and Procedural Justice

A good example to use for this slide is grades on an exam. If students feel they got the grade they deserved (the green High Distributive Justice line), then they don’t stop and consider how fair the grading process was. If, however, they don’t feel they got the grade they deserved (the red Low Distributive Justice line), then they carefully attend to how accurate the grading was, how unbiased it was, and whether certain choices can be appealed. In those circumstances, Procedural Justice becomes a strong driver of reaction levels.

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Interpersonal & Informational Justice

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Interpersonal & Informational Justice

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Ethics

  • The degree to which the behaviors of an authority are in accordance with generally accepted moral norms
  • Unethical behavior
  • “Merely ethical” behavior
  • “Especially ethical” behavior

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Ethics

  • Exercise
  • Read the scenario on the next four slides
  • Come up with three ideas for reducing theft in this grocery store

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The Four Component Model

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Ethics

  • Can companies benefit from having better moral awareness and moral judgment, even if their costs rise as a result? How?

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Beginning with Chapter 4, the previous slide will always be followed up with the concluding and integrating figure of the chapter. It essentially provides an answer to the very same question.

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How Important is Trust?


Beginning with Chapter 4, each set of slides will also include this diagram that summarizes the importance of that chapter’s topic, relative to Job Performance and Organizational Commitment. Over time, students will get a feel for which topics have a stronger or weaker relationships with Job Performance and Organizational Commitment. They also get a feel for when things are more related to one than the other, and vice versa.

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Application

  • Corporate Social Responsibility
  • Legal component
  • Ethical component
  • Social component

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Best Practices: Nike

In 1998, brand evoked slave wages, forced overtime, abuse

Now posts names and locations of all 700 factories on the Web

Pays auditors to inspect plants and provide letter grades

Now limiting last-minute design adjustments that strain the system

Helps to convert factories to more modern technologies

Working to make shoes more environmentally sustainable

All of these bullets about Nike are described in the Bonus Case in the Instructor’s manual.

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INDIVIDUAL OUTCOMES

MECHANISMS INDIVIDUAL

INDIVIDUAL CHARACTERISTICS

GROUP MECHANISMS

ORGANIZATIONAL MECHANISMS

Organizational Culture

Organizational Structure

Teams: Processes &

Communication

Motivation

Teams: Characteristics &

Diversity Learning & Decision Making

Ability

Personality & Cultural Values

Stress

Leadership: Power &

Negotiation

Job Satisfaction

Leadership: Styles & Behaviors

Job Performance

Trust, Justice, & Ethics

Organizational Commitment

chapter Trust, Justice, and Ethics 7

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202 C H A P T E R 7 Trust, Justice, and Ethics

W H Y A R E S O M E A U T H O R I T I E S M O R E T R U S T E D T H A N O T H E R S ?

Think about a particular boss or instructor—someone you’ve spent a significant amount of time around. Do you trust that person? Would you be willing to let that person have significant influ- ence over your professional or educational future? For example, would you be willing to let that person serve as a reference for you or write you a letter of recommendation, even though you’d have no way of monitoring what he or she said about you? When you think about the level of trust you feel for that particular authority, what exactly makes you feel that way? This question speaks to the factors that drive trust—the factors that help inspire a willingness to be vulnerable.

T R U S T As shown in Figure 7-1 , trust is rooted in three different kinds of factors. Sometimes trust is disposition-based, meaning that your personality traits include a general propensity to trust oth- ers. Sometimes trust is cognition-based, meaning that it’s rooted in a rational assessment of the authority’s trustworthiness. 15 Sometimes trust is affect-based, meaning that it depends on feelings toward the authority that go beyond any rational assessment. 16 The sections that follow describe each of these trust forms in more detail.

7.2 In what three sources can trust be rooted?

Trust

Ability

Benevolence

Integrity

Trust Propensity

Feelings toward Trustee

Disposition-Based Trust

Cognition-Based Trust

Affect-Based Trust

Trustworthiness

FIGURE 7-1 Factors That Influence Trust Levels

Sources: Adapted from R.C. Mayer, J.H. Davis, and F.D. Schoorman, “An Integrative Model of Organizational Trust,” Academy of Management Review 20 (1995), pp. 709–34; and D.J. McAllister, “Affect- and Cognition-Based Trust as Foundations for Interpersonal Cooperation in Organizations,” Academy of Management Journal 38 (1995), pp. 24–59.

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206 C H A P T E R 7 Trust, Justice, and Ethics

in its sauce, use better cheese, and add a special glaze to its crust. The end result is a better-tasting pizza (in our humble opinion, anyway!), an increase in sales, 37 and the sense that Domino’s man- agement “tells it how it is.”

Questions about integrity extend beyond senior management, however. For example, stud- ies suggest that rank-and-file employees lie more frequently when communicating by e-mail because there are no “shifty eyes” or nervous ticks to give them away. Indeed, one study showed that people were more likely to lie via e-mail than when writing letters using pen and paper. 38

Why would those contexts differ, when neither is face-to-face? It may be that e-mail feels more fleeting than paper, and that the ability to delete what you write—even if you ultimately don’t— makes you choose words more casually. Regardless, the lies can begin even before employees are hired, as one survey of managers by CareerBuilder.com revealed that 49 percent had caught an applicant lying on a résumé. 39 Among the more colorful “exaggerations” were claims of mem- bership in Mensa, listing a degree from a fictitious university, and pretending to be a Kennedy. For more discussion of lying and trustworthiness, see our OB on Screen feature.

AFFECT-BASED TRUST. Although ability, benevolence, and integrity provide three good rea- sons to trust an authority, the third form of trust isn’t actually rooted in reason. Affect-based trust is more emotional than rational. With affect-based trust, we trust because we have feelings for the person in question; we really like them and have a fondness for them. Those feelings are what prompt us to accept vulnerability to another person. Put simply, we trust them because we like them. Some of that trust can even be chemical, as research shows that something as common as a hug can stimulate a hormone called oxytocin—sometimes called the “cuddle chemical”—that causes your brain to be more trusting. 40

Affect-based trust acts as a supplement to the types of trust discussed previously. 41 Figure 7-3 describes how the various forms of trust can build on one another over time. In new relation- ships, trust depends solely on our own trust propensity. In most relationships, that propensity eventually gets supplemented by knowledge about ability, benevolence, or integrity, at which point cognition-based trust develops. In a select few of those relationships, an emotional bond develops, and our feelings for the trustee further increase our willingness to accept vulnerability. These relationships are characterized by a mutual investment of time and energy, a sense of deep attachment, and the realization that both parties would feel a sense of loss if the relationship were dissolved. 42

Time

Disposition- Based Trust

Cognition- Based Trust

Affect- Based Trust

New Relationships

Most Relationships

Few Relationships

FIGURE 7-3 Types of Trust Over Time

Sources: Adapted from R.J. Lewicki and B.B. Bunker, “Developing and Maintaining Trust in Work Relationships,” in Trust in Organizations: Frontiers of Theory and Research, eds. R.M. Kramer and T.R. Tyler (Thousand Oaks, CA: Sage, 1996), pp. 114–39; and R.C. Mayer, J.H. Davis, and F.D. Schoorman, “An Integrative Model of Organizational Trust,” Academy of Management Review 20 (1995), pp. 709–34.

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208 C H A P T E R 7 Trust, Justice, and Ethics

of an authority’s decision making along four dimensions: distributive justice, procedural justice, interpersonal justice, and informational justice.

DISTRIBUTIVE JUSTICE. Distributive justice reflects the perceived fairness of decision- making outcomes. 44 Employees gauge distributive justice by asking whether decision outcomes, such as pay, rewards, evaluations, promotions, and work assignments, are allocated using proper norms. In most business situations, the proper norm is equity, with more outcomes allocated to those who contribute more inputs (see Chapter 6 on Motivation for more discussion of such issues). The equity norm is typically judged to be the fairest choice in situations in which the goal is to maximize the productivity of individual employees. 45

However, other allocation norms become appropriate in situations in which other goals are critical. In team-based work, building harmony and solidarity in work groups can become just as important as individual productivity. In such cases, an equality norm may be judged fairer, such that all team members receive the same amount of relevant rewards. 46 The equality norm is typi- cally used in student project groups, in which all group members receive exactly the same grade on a project, regardless of their individual productivity levels. In cases in which the welfare of a particular employee is the critical concern, a need norm may be judged fairer. For example, some organizations protect new employees from committee assignments and other extra activities, so that they can get their careers off to a productive start.

PROCEDURAL JUSTICE. In addition to judging the fairness of a decision outcome, employ- ees may consider the process that led to that outcome. Procedural justice reflects the perceived fairness of decision-making processes. 47 Procedural justice is fostered when authorities adhere to

7.4 What dimensions can be used to describe the fairness of an authority’s decision making?

TABLE 7-2 The Four Dimensions of Justice

DISTRIBUTIVE JUSTICE RULES DESCRIPTION

Equity vs. equality vs. need Are rewards allocated according to the proper norm?

PROCEDURAL JUSTICE RULES

Voice Correctability Consistency Bias Suppression Representativeness Accuracy

Do employees get to provide input into procedures? Do procedures build in mechanisms for appeals? Are procedures consistent across people and time? Are procedures neutral and unbiased? Do procedures consider the needs of all groups? Are procedures based on accurate information?

INTERPERSONAL JUSTICE RULES

Respect Propriety

Do authorities treat employees with sincerity? Do authorities refrain from improper remarks?

INFORMATIONAL JUSTICE RULES

Justification Truthfulness

Do authorities explain procedures thoroughly? Are those explanations honest?

Sources: J.S. Adams, “Inequity in Social Exchange,” in Advances in Experimental Social Psychology, Vol. 2, ed. L. Berkowitz (New York: Academic Press, 1965), pp. 267–99; R.J. Bies and J.F. Moag, “Interactional Justice: Commu- nication Criteria of Fairness,” in Research on Negotiations in Organizations, Vol. 1, eds. R.J. Lewicki, B.H. Sheppard, and M.H. Bazerman (Greenwich, CT: JAI Press, 1986), pp. 43–55; G.S. Leventhal, “The Distribution of Rewards and Resources in Groups and Organizations,” in Advances in Experimental Social Psychology, Vol. 9, eds. L. Berkowitz and W. Walster (New York: Academic Press, 1976), pp. 91–131; G.S. Leventhal, “What Should Be Done with Equity Theory? New Approaches to the Study of Fairness in Social Relationships,” in Social Exchange: Advances in Theory and Research, eds. K. Gergen, M. Greenberg, and R. Willis (New York: Plenum Press, 1980), pp. 27–55; and J. Thibaut and L. Walker, Procedural Justice: A Psychological Analysis (Hillsdale, NJ: Erlbaum, 1975).

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210 C H A P T E R 7 Trust, Justice, and Ethics

high. However, when outcomes are bad, procedural justice becomes enormously important, as illustrated by the red line in the figure. Research shows that negative or unexpected events trigger a thorough examination of process issues, making adherence to rules like consistency, bias sup- pression, and accuracy much more vital. 60 It’s a good bet that Apple studied Consumer Reports ’ procedures thoroughly when the company refused to recommend its iPhone, due to concerns about antenna strength. 61

In fact, research shows that procedural justice tends to be a stronger driver of reactions to authorities than distributive justice. For example, a meta-analysis of 183 studies showed that procedural justice was a stronger predictor of satisfaction with supervision, overall job satisfac- tion, and organizational commitment than distributive justice. 62 Why does the decision-making process sometimes matter more than the decision-making outcome? Likely because employees understand that outcomes come and go—some may be in your favor while others may be a bit disappointing. Procedures, however, are longer lasting and stay in place until the organization redesigns them or a new authority arrives to revise them.

INTERPERSONAL JUSTICE. In addition to judging the fairness of decision outcomes and pro- cesses, employees might consider how authorities treat them as the procedures are implemented. Interpersonal justice reflects the perceived fairness of the treatment received by employees from authorities. 63 Interpersonal justice is fostered when authorities adhere to two particular rules. The respect rule pertains to whether authorities treat employees in a dignified and sin- cere manner, and the propriety rule reflects whether authorities refrain from making improper or offensive remarks. From this perspective, interpersonal injustice occurs when authorities are rude or disrespectful to employees, or when they refer to them with inappropriate labels. 64

When taken to the extremes, interpersonally unjust actions create abusive supervision, defined as the sustained display of hostile verbal and nonverbal behaviors, excluding physical contact. 65 A national study suggests that approximately 15 percent of employees are victims of abusive behaviors, ranging from angry outbursts to public ridiculing to being used as scapegoats for negative events. 66 Estimates also indicate that such actions cost U.S. businesses around $24 billion annually due to absenteeism, health care costs, and lost productivity. 67 Employees who are abused by their supervisors report more anxiety, burnout, and strain, as well as less satisfac- tion with their lives in general. 68 They are also more likely to strike back at their supervisors with counterproductive behaviors—a response that may even spill over to their coworkers and the larger organization. 69

Low High Procedural Justice

R e ac

ti o

n s

to A

u th

o ri

ty

High Distributive Justice

Low Distributive Justice

FIGURE 7-4 Combined Effects of Distributive and Procedural Justice

Source: Adapted from J. Brockner and B.M. Wiesenfeld, “An Integrative Framework for Explaining Reactions to Decisions: Interactive Effects of Outcomes and Procedures,” Psychological Bulletin 120 (1996), pp. 189–208.

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208 C H A P T E R 7 Trust, Justice, and Ethics

of an authority’s decision making along four dimensions: distributive justice, procedural justice, interpersonal justice, and informational justice.

DISTRIBUTIVE JUSTICE. Distributive justice reflects the perceived fairness of decision- making outcomes. 44 Employees gauge distributive justice by asking whether decision outcomes, such as pay, rewards, evaluations, promotions, and work assignments, are allocated using proper norms. In most business situations, the proper norm is equity, with more outcomes allocated to those who contribute more inputs (see Chapter 6 on Motivation for more discussion of such issues). The equity norm is typically judged to be the fairest choice in situations in which the goal is to maximize the productivity of individual employees. 45

However, other allocation norms become appropriate in situations in which other goals are critical. In team-based work, building harmony and solidarity in work groups can become just as important as individual productivity. In such cases, an equality norm may be judged fairer, such that all team members receive the same amount of relevant rewards. 46 The equality norm is typi- cally used in student project groups, in which all group members receive exactly the same grade on a project, regardless of their individual productivity levels. In cases in which the welfare of a particular employee is the critical concern, a need norm may be judged fairer. For example, some organizations protect new employees from committee assignments and other extra activities, so that they can get their careers off to a productive start.

PROCEDURAL JUSTICE. In addition to judging the fairness of a decision outcome, employ- ees may consider the process that led to that outcome. Procedural justice reflects the perceived fairness of decision-making processes. 47 Procedural justice is fostered when authorities adhere to

7.4 What dimensions can be used to describe the fairness of an authority’s decision making?

TABLE 7-2 The Four Dimensions of Justice

DISTRIBUTIVE JUSTICE RULES DESCRIPTION

Equity vs. equality vs. need Are rewards allocated according to the proper norm?

PROCEDURAL JUSTICE RULES

Voice Correctability Consistency Bias Suppression Representativeness Accuracy

Do employees get to provide input into procedures? Do procedures build in mechanisms for appeals? Are procedures consistent across people and time? Are procedures neutral and unbiased? Do procedures consider the needs of all groups? Are procedures based on accurate information?

INTERPERSONAL JUSTICE RULES

Respect Propriety

Do authorities treat employees with sincerity? Do authorities refrain from improper remarks?

INFORMATIONAL JUSTICE RULES

Justification Truthfulness

Do authorities explain procedures thoroughly? Are those explanations honest?

Sources: J.S. Adams, “Inequity in Social Exchange,” in Advances in Experimental Social Psychology, Vol. 2, ed. L. Berkowitz (New York: Academic Press, 1965), pp. 267–99; R.J. Bies and J.F. Moag, “Interactional Justice: Commu- nication Criteria of Fairness,” in Research on Negotiations in Organizations, Vol. 1, eds. R.J. Lewicki, B.H. Sheppard, and M.H. Bazerman (Greenwich, CT: JAI Press, 1986), pp. 43–55; G.S. Leventhal, “The Distribution of Rewards and Resources in Groups and Organizations,” in Advances in Experimental Social Psychology, Vol. 9, eds. L. Berkowitz and W. Walster (New York: Academic Press, 1976), pp. 91–131; G.S. Leventhal, “What Should Be Done with Equity Theory? New Approaches to the Study of Fairness in Social Relationships,” in Social Exchange: Advances in Theory and Research, eds. K. Gergen, M. Greenberg, and R. Willis (New York: Plenum Press, 1980), pp. 27–55; and J. Thibaut and L. Walker, Procedural Justice: A Psychological Analysis (Hillsdale, NJ: Erlbaum, 1975).

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212 C H A P T E R 7 Trust, Justice, and Ethics

a poor evaluation, or a missed promotion. Ironically, that defense mechanism is typically coun- terproductive, because research suggests that honest and adequate explanations are actually a powerful strategy for reducing retaliation responses against the organization. 78 In fact, low levels of informational justice can come back to haunt the organization if a wrongful termination claim is actually filed. How? Because the organization typically needs to provide performance evalu- ations for the terminated employee over the past few years, to show that the employee was fired for poor performance. 79 If managers refrained from offering candid and honest explanations on those evaluations, then the organization can’t offer anything to justify the termination.

One study provides a particularly effective demonstration of the power of informational jus- tice (and interpersonal justice). The study occurred in three plants of a Midwestern manufac- turing company that specialized in small mechanical parts for the aerospace and automotive industries. 80 The company had recently lost two of its largest contracts and was forced to cut wages by 15 percent in two of the three plants. The company was planning to offer a short, impersonal explanation for the pay cut to both of the affected plants. However, as part of a research study, the company was convinced to offer a longer, more sincere explanation at one of the plants. Theft levels were then tracked before, during, and after the 10-week pay cut using the company’s standard accounting formulas for inventory “shrinkage.”

The results of the study are shown in Figure 7-5 . In the plant without the pay cut, no change in theft levels occurred over the 10-week period. In the plant with the short, impersonal expla- nation, theft rose dramatically during the pay cut, likely as a means of retaliating for perceived inequity, before falling to previous levels once the cut had passed. Importantly, in the plant with the long, sincere explanation, the rise in theft was much less significant during the pay cut, with theft levels again falling back to normal levels once the cut had ended. Clearly, the higher levels of informational and interpersonal justice were worth it from a cost-savings perspective. The dif- ference in theft across the two plants is remarkable, given that the long, sincere explanation was only a few minutes longer than the short, impersonal explanation. What’s a few extra minutes if it can save a few thousand dollars?

SUMMARY. Taken together, distributive, procedural, interpersonal, and informational justice can be used to describe how fairly employees are treated by authorities. When an authority

Before 2.0

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

AfterDuring

Time Period Relative to Pay Cut

A ve

ra g

e %

R at

e o

f E

m p

lo ye

e T

h e ft

Long, Sincere Explanation for Pay Cut Short, Impersonal Explanation for Pay Cut No Pay Cut

FIGURE 7-5 The Effects of Justice on Theft During a Pay Cut

Source: Adapted from J. Greenberg, “Employee Theft as a Reaction to Underpayment Inequity: The Hidden Cost of Paycuts,” Journal of Applied Psychol- ogy 75 (1990), pp. 561–68.

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214 C H A P T E R 7 Trust, Justice, and Ethics

Situational Factors (Good vs. Bad Barrels)

Individual Factors (Good vs. Bad Apples)

Ethical Behavior

Moral Intent

Moral Judgment

Moral Awareness

FIGURE 7-6 The Four-Component Model of Ethical Decision Making

Source: Adapted from J.R. Rest, Moral Development: Advances in Research and Theory (New York: Praeger, 1986).

come equipped with “red flags” that mark them as morally sensitive. 95 Sometimes authorities act unethically simply because they don’t perceive that moral issues are relevant in a given situation, so the ethical merits of certain actions are never debated. For example, let’s say you own a clothing retailer that specializes in fashion-forward styles at low prices. You know that Diane von Furst- enberg’s styles are hot this year, and your buying team just discovered a vendor that makes cheap knockoffs of those styles. Do you buy clothes from that vendor and hang them on your racks?

Is there an ethical issue at play here? On the one hand, you might be tempted to say that imita- tion is the way that fashion trends spread—that the “gurus of style” expect their products to be copied. Besides, a skirt is a skirt, and knockoffs are part of the game in a lot of businesses. On the other hand, Diane von Furstenberg’s styles are her intellectual property, and the people that work for her label put a great deal of time, effort, and talent into their clothes. It turns out this scenario has played out with Forever 21, the Los Angeles–based specialty retailer. 98 Beginning in 2004, over 50 labels have sued Forever 21 for copying their clothes, including Diane von Furst- enberg, Anna Sui, and Anthropologie. “Their design is swathed in mystery,” notes one expert on copyright law. “But it probably looks a bit like a crime scene, with the chalk outline of the gar- ments they’re copying.” 99 Such charges are difficult to prove because U.S. copyright law protects original prints and graphics, not actual designs. Forever 21 wound up settling those lawsuits, noting that the company ultimately has to trust the integrity of its clothing vendors. Indeed, one executive notes that she chooses from among 400 items a day, spending only about 90 seconds to review a piece.

Moral awareness depends in part on characteristics of the issue itself, as some issues have more built-in ethical salience than others. A concept called moral intensity captures the degree to which an issue has ethical urgency. 100 As described in Table 7-3 , moral intensity is driven by two general concerns, both of which have more specific facets. 101 First and foremost, a particular issue is high in moral intensity if the potential for harm is perceived to be high. An act that could injure 1,000 people is more morally intense than an act that could injure 10 people, and an act that could result in death is more morally intense than an act that could result in illness. 102 Sec- ond, a particular issue is high in moral intensity if there is social pressure surrounding it. An act that violates a clear social norm is more morally intense than an act that seems similar to what everyone else is doing. In the case of Forever 21, moral intensity might seem low because selling cheap knockoffs benefits its customers, and interactions with customers are much more common and salient than interactions with designers.

7.5 What is the four-compo- nent model of ethical decision making?

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221C H A P T E R 7 Trust, Justice, and Ethics

The figure reveals that trust does affect job performance. Why? One reason is that trust is mod- erately correlated with task performance. A study of employees in eight plants of a tool manu- facturing company sheds some light on why trust benefits task performance. 123 The study gave employees survey measures of their trust in two different authorities: their plant’s manager and the company’s top management team. Both trust measures were significant predictors of employ- ees’ ability to focus, which reflects the degree to which employees can devote their attention to work, as opposed to “covering their backside,” “playing politics,” and “keeping an eye on the boss.” The ability to focus is clearly vital to task performance in many jobs, particularly when job duties become more complex.

Trust

Ability

Benevolence

Integrity

Trust Propensity

Feelings toward Trustee

Trustworthiness

Distributive Justice

Procedural Justice

Interpersonal Justice

Informational Justice

Justice

Moral Awareness

Moral Judgment

Moral Intent

Ethical Behavior

Ethics

FIGURE 7-7 Why Are Some Authorities More Trusted Than Others?

7.6 How does trust affect job performance and organi- zational commitment?

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222 C H A P T E R 7 Trust, Justice, and Ethics

Trust also influences citizenship behavior and counterproductive behavior. Why? One reason is that the willingness to accept vulnerability changes the nature of the employee–employer rela- tionship. Employees who don’t trust their authorities have economic exchange relationships that are based on narrowly defined, quid pro quo obligations that are specified in advance and have an explicit repayment schedule. 124 Economic exchanges are impersonal and resemble contractual agreements, such that employees agree to fulfill the duties in their job description in exchange for financial compensation. As trust increases, social exchange relationships develop that are based on vaguely defined obligations that are open-ended and long term in their repayment schedule. 125 Social exchanges are characterized by mutual investment, such that employees agree to go above and beyond their duties in exchange for fair and proper treatment by authorities. In social exchange contexts, employees are willing to engage in beneficial behaviors because they trust that those efforts will eventually be rewarded (see Chapter 3 on Organizational Commit- ment for more discussion of such issues).

Figure 7-8 also reveals that trust affects organizational commitment. Why? One reason is that trusting an authority increases the likelihood that an emotional bond will develop, 126 par- ticularly if that trust is rooted in positive feelings for the authority. Trusting an authority also makes it more likely that a sense of obligation will develop, because employees feel more confident that the authority deserves that obligation. When negative events occur, employ- ees who trust the authority are willing to accept the vulnerability that comes with continued employment, 127 remaining confident in their belief that the situation will eventually improve. For more discussion of the importance of trust in the workplace, see our OB at the Bookstore feature.

Trust has a moderate positive effect on Performance. Employees who are willing to be vulnerable to authorities tend to have higher levels of Task Performance. They are also more likely to engage in Citizenship Behavior and less likely to engage in Counterproductive Behavior.

Trust has a strong positive effect on Commitment. Employees who are willing to be vulnerable to authorities tend to have higher levels of Affective Commitment and higher levels of Normative Commitment. Trust has no effect on Continuance Commitment.

Job Performance Trust

Organizational CommitmentTrust

Represents a strong correlation (around .50 in magnitude).

Represents a moderate correlation (around .30 in magnitude).

Represents a weak correlation (around .10 in magnitude).

FIGURE 7-8 Effects of Trust on Performance and Commitment

Sources: K.T. Dirks and D.L. Ferrin, “Trust in Leadership: Meta-Analytic Findings and Implications for Research and Practice,” Journal of Applied Psychology 87 (2002), pp. 611–28; and J.A. Colquitt, B.A. Scott, and J.A. LePine, “Trust, Trustworthiness, and Trust Propensity: A Meta-Analytic Test of their Unique Relationships with Risk Taking and Job Performance,” Journal of Applied Psychology 92 (2007), pp. 909–27.

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