Ethics and Social Responsibility (MANAGEMENT)

Management11e John Schermerhorn

Chapter 3

Ethics and Social Responsibility

Planning Ahead —Chapter 3 Study Questions

1.What is ethical behavior?

2.How do ethical dilemmas complicate the workplace?

3.How can high ethical standards be maintained?

4.What is social responsibility and governance?

Study Question 1: What is ethical behavior?

Ethics

                Code of moral principles.

                Set standards of “good” or “bad” or “right” or “wrong” in one’s conduct.

Ethical behavior

                What is accepted as good and right in the context of the governing moral code.

Study Question 1: What is ethical behavior?

Law, values, and ethical behavior:

                Legal behavior is not necessarily ethical behavior.

                Personal values help determine individual ethical behavior.

Study Question 1: What is ethical behavior?

Law, values, and ethical behavior:

                Values -underlying beliefs and attitudes that help determine individual behavior

                Terminal values -preferences about desired ends

                Instrumental values –preferences regarding the means to desired ends

Study Question 1: What is ethical behavior?

Alternative ethical views

Utilitarian

Delivers the greatest good to the most people

Individualism

Advances long-term self-interests

Moral rights

Maintains fundamental rights of all human beings

Study Question 1: What is ethical behavior?

                Justice view of ethics

                fair and impartial treatment of people according to legal rules and standards

                Procedural justice –policies and rules fairly applied

                Distributive justice –equal treatment for all people

                Interactional justice –people treated with dignity and respect

                Commutative justice –fairness to all involved

Study Question 1: What is ethical behavior?

Cultural issues in ethical behavior:

-Cultural relativism

Ethical behavior is always determined by cultural context.

-Universalism

Behavior unacceptable in one’s home environment should not be acceptable anywhere else.

Ethical imperialism.

 Imposing one’s ethical standards on others.

The extremes of cultural relativism and ethical imperialism in international business ethics.

Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.

Study Question 1: What is ethical behavior?

Sources of information on ethical behavior:

                Institute for Global Ethics at www.globalethics.org and on Facebook at http://www.facebook.com/pages/Rockland-ME/Institute-for-Global-Ethics/51585783748?ref=ts

                Ethics Resource Center at www.ethics.org

Study Question 2: How do ethical dilemmas complicate the workplace?

An ethical dilemma

occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.

Study Question 2: How do ethical dilemmas complicate the workplace?

Ethical dilemmas include:

-DiscriminationSexual harassment

-Conflicts of interest

-Product

-Safety

-Organizational resources

-Checklist for ethical dilemmas

Step 1Recognize the ethical dilemma. Step 2Get the facts. Step 3Identify your options. Step 4Test each option: Is it legal? Is it right? Is it beneficial? Step 5Decide which option to follow. Step 6Ask the Spotlight Questions: To double check your decision. •“How would I feel if my family found out about my decision?” •“How would I feel if my decision was printed in the local paper or posted online?” Step 7Take action

Study Question 2: How do ethical dilemmas complicate the workplace?

-Influences on Ethical Decision Making

-Ethical framework

-Provides personal rules or strategies for ethical decision making

Includes personal values :

                                                -Honesty

                                                -Fairness

                                                -Integrity

                                                -Self-respect

Kohlberg’s stages of individual moral development

Study Question 2: How do ethical dilemmas complicate the workplace?

Situational Context and Ethics Intensity

                Will the situation pose an important ethic challenge?

                                §Magnitude of  the situation

                                §Risk of immediate harm

                                §Proximity and concentration of harm

                                §Social consensus

Study Question 2: How do ethical dilemmas complicate the workplace?

Organizational Culture Influence

                §What is considered ethical behavior within the organizational context?

                                §What are the expectations of management?

                                §What are the expectations of co-workers?

                                §Is there a code of ethics?

Study Question 2: How do ethical dilemmas complicate the workplace?

External environment

Government laws and regulationsSocietal norms and valuesCompetitive climate in an industry

Study Question 2: How do ethical dilemmas complicate the workplace?

Ethical behavior can be rationalized by convincing yourself that:

Behavior is not really illegal.Behavior is really in everyone’s best interests.Nobody will ever find out.The organization will “protect” you.

Study Question 3: How can high ethical standards be maintained?

Ethics training:

Structured programs that help participants to understand ethical aspects of decision making.

Helps people incorporate high ethical standards into daily life.

Helps people deal with ethical issues under pressure.

Study Question 3: How can high ethical standards be maintained?

Codes of Ethical Conduct

Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas

Study Question 3: How can high ethical standards be maintained?

Moral Management

Managers behave in one of three ways

•Chooses to behave unethicallyimmoral manager•Disregards ethics of actions, intentionally or unintentionallyamoral manger•Considers ethical behavior as a personal goalmoral manager

How can high ethical standards be maintained?

Study Question 3: How can high ethical standards be maintained?

Areas often covered by codes of ethics:

Bribes and kickbacksPolitical contributionsHonesty of books or recordsCustomer/supplier relationshipsConfidentiality of corporate information

Study Question 3: How can high ethical standards be maintained?

Whistleblowers

Expose misdeeds of others to:

Preserve ethical standards

Protect against wasteful, harmful, or illegal acts

Laws protecting whistleblowers vary

Study Question 3: How can high ethical standards be maintained?

Barriers to whistleblowing include:

                -Strict chain of command

                -Strong work group identities

                -Ambiguous priorities

Study Question 3: How can high ethical standards be maintained?

Organizational methods for overcoming whistleblowing barriers:

                -Ethics staff units who serve as ethics advocates

                -Moral quality circles

Study Question 3: How can high ethical standards be maintained?

Social entrepreneurship:

-a unique form of entrepreneurship that seeks novel ways to solve pressing social problems at home and abroad

-Housing and job training for homeless

-Bringing technology to poor families

-Improving literacy among disadvantaged youth

-Offering small loans to start minority-owned businesses

Study Question 4: What is social responsibility and corporate governance?

Corporate social responsibility and governance:

-Looks at ethical issues on the organization level.

-Obligates organizations to act in ways that serve both its own interests and the interests of society at large.

Study Question 4: What is social responsibility and corporate governance?

-Stakeholder Management

-Stakeholders

-persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.

Study Question 4: What is social responsibility and corporate governance?

§Typical organizational stakeholders

OrganizationEmployeesCustomersSuppliersOwnersCompetitorsRegulatorsInterest groups

Study Question 4: What is social responsibility and corporate governance?

§Perspectives on social responsibility:

                §Classical view

                §Management’s only responsibility is to maximize profits.

                §Socioeconomic view

                §Management must be concerned for the broader social welfare, not just profits.

Study Question 4: What is social responsibility and governance?

Arguments against social responsibility:•Reduced business profits •Higher business costs •Dilution of business purpose •Too much social power for business •Lack of public accountabilityArguments in favor of social responsibility:•Adds long-run profits •Improved public image •Avoids more government regulation •Businesses have resources and ethical obligation

Criteria for evaluating corporate social performance.

Study Question 4: What is social responsibility and corporate governance?

§Strategies for pursuing social responsibility:

Obstructionist •meets economic responsibilities.Defensive•meets economic and legal responsibilities.Accommodative•meets economic, legal, and ethical responsibilities.Proactive•meets economic, legal, ethical, and discretionary responsibilities.

Four strategies of corporate social responsibility—from obstructionist to proactive behavior.

Study Question 4: What is social responsibility and governance?

Corporate governance:

-The oversight of the top management of an organization by a board of directors.

-Corporate governance involves:

-Hiring, firing, and compensating the CEO.

-Assessing strategy.

-Verifying financial records.

Study Question 4: What is social responsibility and governance?

How government influences organizations:

                -Common areas of government regulation of business affairs:

                -Occupational safety and health

                -Fair labor practices

                -Consumer protection

                -Environmental protection

Chapter 3 Case

Patagonia: Turning a profit without losing your soul

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