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Managerial Ethics

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LEARNING OUTCOME

Define social responsibility and ethics


List at least six main arguments for at least four
main arguments againts businesses being socially
responsible.
Explain the importance of demonstrating social
responsibility in today business world

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Learning Objectives ( continued)

Describes the concern people have about


business ethics
Explain the relationship between social
responsibility and managerial ethics
Identify the seven factors that influence ethical
behaviour
Describe ways an organization can improve ethical
behaviour

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Societys Expectation from
Organizations and Manager

Managers regularly make decisions about issues


with a social dimension

In competitive environment, organizations


cannot afford to be seen as socially irresponsible

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Arguments Supporting Businesses
Being Socially Responsible

Public expectations
Long-run profits
Ethical obligation
Public image
Better environment
Balance of responsibility and power
Shareholder interests
Possession of resources
Superiority of prevention over cures
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Arguments Againts Businesses Being
Socially Responsible

Violation of profit maximization


Dilution of purpose
Costs
Too much power
Lack of skills
Lack of accountability
Lack of broad public support

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Demonstrating Social Responsibility

Social responsibility

Social obligation

Social responsiveness

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Relationship Between Social
Responsibility and Economic
Performance

Research studies show positive relationship

General public perception that companies who behave in


a socially responsible way have better business
performance

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Managers Becoming More Socially
Responsible
It is the collective behaviour and actions of
managers that make a company socially
responsible
Managers who make the right decisions are
described as being or behaving ethically

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
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Managerial Ethics
Ethics
- Rules and principles that define right and
wrong conduct
Three Views of Ethics
- Utilirian view ethical decisions are made on
the basis of their outcomes or consequences

(continued)

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
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Managerial Ethics (continued)
Three Views of Ethics (continued)
- Right view respects and protects individual
liberties and privileges
Theory of injustice view managers impose
and enforce rules fairly and impartially

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
11
Moral Development
Is a measure of an individuals independence
as his/her moral judgment becomes less and
less dependent on outside influences
Stages start with making a choice between
right and wrong based on personal
consequences

(continued)

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
12
Moral Development (continued)
As development evolves, moral judgment is
less dependent on outside factors
Individuals with highly-developed moral
development can make clear distinctions to
define moral principles separate from any
authority

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
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Values
Basic convictions about what is right and
wrong
Influence ethical behaviour
Values are developed in early years

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
14
Organizational Factors That Affect
Ethical And Unethical Behaviour

Organizational Culture

Ethical/Unethical
Moderators Behaviour

Structural
Variables

Robbins et al., Fundamentals of Management, 4th Canadia Edition


2005 Pearson Education Canada, Inc.
FOM 2.15
Determinants Of Issue Intensity (Exhibit 2.3)
How much agreement is there
How many people will that this action is wrong?
be harmed?ed? How likely is it that this
action will cause harm?
Consensus of
Greatness Wrong Probability of
of Harm Harm

Issue Intensity
Concentration Immediacy of
of Effect Proximity
Consequences
to Victims
How concentrated is the effect
of the action on the victims? Will harm be felt
How close are the potential
immediately?
victims?

Source : Management, Seventh Canadian Edition, by Stephen P. Robbins, Mary Coulter, and Robbin
Stuart-Kotze, page 113. Copyright 2003. Reprinted by permission of Pearson Education Canada Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson
Education Canada, Inc.
Businesses Improving Ethical
Behaviour
Strong emphasis on corporate governance
Companies refocusing efforts on business
ethics
New legislation to hold boards of directors
more accountable

Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson


Education Canada, Inc.
17
Managers Improving Ethical
Behaviour
Hire individuals with high ethical standards
Establish codes of ethics and decision rules
Lead by example

(continued)
Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson
Education Canada, Inc.
18
Managers Improving Ethical
Behaviour (continued)
Delineate job goals and performance review
mechanisms
Provide ethics training
Conduct social audits
Provide support to individuals facing ethical
dilemmas

Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson


Education Canada, Inc. 19
Code of Ethics
Formal statement of an organizations primary
values and ethical rules it expects employees to
follow
Usually written
Must state in detail acceptable behaviours and
actions

Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson


Education Canada, Inc. 20
Management Responsibility
Relating to Codes of Ethics
If possible, develop codes with active
involvement of everyone in the organization
All levels of management must support and
continually reaffirm the importance
Consistently discipline those who break the code
Set an example by behaviour and action

Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson


Education Canada, Inc. 21
Concluding Remarks
More and more organizations are appearing in
newspaper headlines about ethical conduct
Survey of employees shows workplace
pressures are leading to more people
considering acting unethically
Concerns about social responsibility are
growing

Robbins et al., Fundamentals of Management, 4th Canadian Edition 2005 Pearson


Education Canada, Inc. 22
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Format: LAWM483-