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PowerPoint Presentation

to Accompany
Management, 10/e
John R. Schermerhorn, Jr.

Chapter 4:
Ethics and Social Responsibility

Prepared by: Jim LoPresti


University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Planning Ahead — Chapter 4 Study Questions

 What is ethical behavior?


 How do ethical dilemmas complicate
the workplace?
 How can high ethical standards be
maintained?
 What is social responsibility and
governance?

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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.

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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.
 Values broad beliefs
Terminal values
Instrumental values

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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

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Study Question 1: What is ethical behavior?

 Utilitarian view of ethics


• greatest good to the greatest number of people.
 Individualism view of ethics
• primary commitment is to one’s long-term self-
interests.
 Moral-rights view of ethics
• respects and protects the fundamental rights of all
people.
 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

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Figure 4.1 Four views of ethical behavior.

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Study Question 1: What is ethical behavior?

 Cultural issues in ethical behavior:


 Cultural relativism
 Ethical behavior is always determined by
cultural context.
 Cultural universalism
 Behavior unacceptable in one’s home
environment should not be acceptable
anywhere else.
 Considered by some to be ethical
imperialism

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Figure 4.2 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.

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Study Question 1: What is ethical behavior?

How international businesses can respect core or universal


values:
Respect for human dignity
• Create culture that values employees, customers, and
suppliers.
• Keep a safe workplace.
• Produce safe products and services.
Respect for basic rights
• Protect rights of employees, customers, and communities.
• Avoid anything that threatening safety, health, education, and
living standards.
Be good citizens
• Support social institutions, including economic and educational
systems.
• Work with local government and institutions to protect
environment.
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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.
 Ethical dilemmas include:
 Discrimination
 Sexual harassment
 Conflicts of interest
 Customer confidence
 Organizational resources

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

 Factors influencing ethical behavior include:


 Situational context
 ethics intensity or issue intensity indicates the degree
to which a situation is recognized to pose ethical
challenges
 The person
 Family influences, religious values, personal standards,
and personal needs.
 ethical framework is a personal rule or strategy for making
ethical decisions
 Kohlberg’s stages of individual moral development
 pre-conventional stage
 conventional stage

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Figure 4.3 Kohlberg’s stages

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

 Factors influencing ethical behavior


 Internal environment and the organization
 Supervisory behavior, peer group norms and
behavior, and policy statements and written rules.
 External environment
 Government laws and regulations, societal norms
and values, and competitive climate in an industry.

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

 Checklist for dealing with ethical


dilemmas:
 Recognize the ethical dilemma
 Get the facts
 Identify your options
 Test each option: Is it legal? Is it right? Is it beneficial?
 Decide which option to follow
 Double-check decision by asking “spotlight” questions:
 “How would I feel if my family found out about my
decision?”
 “How would I feel about this if my decision were in the
local news?”
 Take action
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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.

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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

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

 Barriers to whistleblowing include:


 Strict chain of command
 Strong work group identities
 Ambiguous priorities

 Organizational methods for


overcoming whistleblowing barriers:
 Ethics staff units who serve as ethics
advocates
 Moral quality circles

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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.

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

 Codes of ethics:
 Formal statement of an organization’s values
and ethical principles regarding how to behave
in situations susceptible to the creation of
ethical dilemmas.
 Areas often covered by codes of
ethics:
 Bribes and kickbacks
 Political contributions
 Honesty of books or records
 Customer/supplier relationships
 Confidentiality of corporate information

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

 Ethical role models:


 Top managers serve as ethical role models.

 All managers can influence the ethical behavior


of people who work for and with them.
 Excessive pressure can foster unethical
behavior.
 Managers should be realistic in setting
performance goals for others.

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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

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Figure 4.4 How can high ethical standards be
maintained?

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

 Criteria for evaluating corporate social


performance:
 Social responsibility audit – assesses
organization’s accomplishments in areas of CSR
 Is the organization’s …
 Economic responsibility met?
 Legal responsibility met?
 Ethical responsibility met?
 Discretionary responsibility met?

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

 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.

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

 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.

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Study Question 4: What is social responsibility and
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.

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Study Question 4: What is social responsibility and
governance?

 Organizational stakeholders
 Those persons, groups, and other organizations directly
affected by the behavior of the organization and holding
a stake in its performance.
 Typical organizational stakeholders
 Employees
 Customers
 Suppliers
 Owners
 Competitors
 Regulators
 Interest groups

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Study Question 4: What is social responsibility and
governance?

 Arguments  Arguments in favor


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

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Figure 4.5 Criteria for evaluating corporate social
performance.

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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.

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Figure 4.6 Four strategies of corporate social
responsibility—from obstructionist to proactive
behavior.

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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

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Figure 4.7 Centrality of ethics and social responsibility
in leadership and the managerial role.

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