SURIGAO DEL SUR STATE UNIVERSITY

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ORGANIZATION AND MANAGEMENT - PA 205

“Social Responsibility and Managerial Ethics”
WRITTEN REPORT
Prepared by:
ZENDEL L. MENDEZ-FERNANDEZ

INTRODUCTION:

Managers today are usually quite sensitive to issues of social responsibility and ethical
behavior because of pressures from the public, interest groups, legal and governmental concerns,
and media coverage. It is less clear where to draw the line between socially responsible behavior
and the corporation’s other concerns, or between the conflicting expectations of ethical behavior
among different countries.

This report on social responsibility and ethics is set externally to international managers
and thus in a sense outside their realm of control, is the expectation of appropriate behavior. This
behavior is measured both in terms of social responsibility of the organization as such, as well as
ethical behavior of individual managers.

WHAT is Social Responsibility?

 An ethical theory that an entity, be it an organization or individual, has an obligation to act
to benefit society at large.
 Social responsibility is management's obligation to make choices and take actions that
contributes to the well-being and interests of society as well as the organization

TWO OPPOSING VIEWS ON SOCIAL REPONSIBILITY:

1. The Classical View
- Hold the management’s only social responsibility is to maximize profits
- is the view that management’s only social responsibility is to maximize profits

a. Economist and Nobel laureate Milton Friedman is the most outspoken advocate

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of this view.
b. Friedman argues that managers’ primary responsibility is to operate the
business in the best interests of the stockholders—the true owners of the
organization
2. The Socioeconomic View
- The Management’s social responsibility goes beyond making profits to include
protecting and improving society’s welfare.

- is the view that management’s social responsibility goes beyond the making of
profits to include protecting and improving society’s welfare.
a. This view purports that corporations are not independent entities responsible
only to stockholders.
b. According to the socioeconomic view, modern organizations are no longer
solely economic institutions; society now expects businesses to become
involved in social, political, and legal issues.

Comparing the Two Views. Classicists maintain that the organization’s only legitimate concern is
its stockholders. A four-stage model of the progression of an organization’ social responsibility.
Social responsibility may progress from the stance of obeying all laws and regulations while caring
for stockholders’ interest to the point of demonstrating responsibility to society as a whole which
characterizes the highest socioeconomic commitment.

Supporting and opposing arguments can be found in regard to an organization’s social

responsibility. From Obligations to Responsiveness to Responsibility. Social obligation occurs
when a firm engages in social actions because of its obligation to meet certain economic and legal
responsibilities. Social responsiveness is seen when a firm engages in social actions in response to
some popular social need. Social responsibility is a business’s intention, beyond its legal and
economic obligations, to do the right things and act in ways that are good for society.

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SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE

How do socially responsible activities affect a company’s economic performance?

A. A majority of studies have found a positive relationship between social involvement

and economic performance, but some caution in this regard is necessary because of
methodological questions associated with the measurement of social responsibility
and economic performance.
B. Another way to address this issue is to evaluate socially conscious mutual stock
funds.
1. These mutual funds provide a way for individual investors to support
socially responsible companies.
2. These funds typically use social screening—applying social criteria
(screens) to investment decisions.
3. Morningstar reports that 37 percent of the social funds it follows earned
four- or five-star ratings, compared to only 32 percent of all mutual funds.
C. The conclusion is that there is little evidence to say that a company’s socially
responsible actions will hurt an organization’s long-term economic performance.

THE GREENING OF MANAGEMENT

A number of highly visible ecological problems and environmental disasters (e.g., Exxon Valdez
oil spill, mercury poisoning in Japan, Three Mile Island, Chernobyl) brought about a new spirit of
environmentalism. Recognizing the close link between an organization’s decisions and activities
and its impact on the natural environment is called the greening of management.
A. Global Environmental Problems. Many issues—including: natural resource
depletion, global warming, pollution, accidents, and toxic waste—challenge
business today.
B. How Organizations Go Green. Approaches include the legal (or light green)
approach, the market approach, and the stakeholder approach.

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C. Evaluating the Greening of Management. As organizations become “greener,”

they are reporting their commitment to being green in several ways, including
fulfillment of guidelines issued by the Global Reporting Initiative (GRI); meeting
ISO 14001 standards; and inclusion on the list of the 100 Most Sustainable
Corporations in the World.

VALUES-BASED MANAGEMENT

Values-based management is an approach to managing in which managers are guided by the

organization’s shared values in their management practices.

A. Purposes of Shared Values

1. They act as guideposts for managerial decisions and actions.
2. Shared values serve to shape employee behavior and to communicate what
the organization expects of its members.
3. Shared corporate values can influence an organization’s marketing efforts.
4. Shared values are a way to build team spirit in organizations.
B. The Bottom Line on Shared Corporate Values
1. A survey on corporate values by the AMA showed that managers at a
number of organizations have made a commitment to a set of core values
and are holding employees accountable to these values.
2. Sixty-four percent of the respondents said that their corporate values were
linked to performance evaluations and compensation.
3. An organization’s values are revealed in the decisions and actions of
employees.

In a survey of global corporations, more than 89 percent of the companies surveyed reported that
they had a written corporate values statement.

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4 BASIC APPROACHES OF SOCIAL RESPONSIBILITY:

1. OBSTRUCTIVE
- A company that takes an obstructive stance toward social
responsibility attempts to defend its economic priorities by blocking
any attempts to point out the company's lack of social responsibility
- avoids social responsibility. Obstructionist managers engage in unethical and
illegal behaviour, and try to hide their behaviour from organizational
stakeholders and society at large.
2. DEFENSIVE
- In most cases, companies that take a defensive stance towards social
responsibility are not particularly responsible. These companies may
consider themselves neutral, and they make profits a more important
motive than performing actions in a socially responsible way.
- minimal socially responsible position. These organizations have a commitment
to ethical behaviour, making sure that employees behave legally and no harm
is done to others. The claims and interests of shareholders come first with this
approach, and little attention is paid to other stakeholders
3. ACCOMMODATING
- An accommodating stance signifies that a company believes social
responsibility is important -- and perhaps as important as making a
profit. These companies satisfy all legal requirements and attempt to
meet ethical standards.
- going beyond legal requirements, choosing to support social responsibility in a
balanced fashion. Accommodative managers try to balance the interests of
shareholders with those of other stakeholders by making choices that appear
reasonable to all members of society.
4. PROACTIVE
- Like an accommodating company, a proactive company makes so cial
responsibility a priority, even if doing so cuts into their profits. Instead

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of reacting to criticism, a proactive company attempts to remain ahead

of the curve when it comes to social responsibility.
- finds out about and meets the needs of different stakeholder groups. Promotes
the interests of stockholders, shareholders, and stakeholders, using
organizational resources to do so. These managers feel a responsibility to
society as a whole.

The defensive approach is consistent with the classical view, while the accommodative and
proactive approaches are consistent with the socio-economic view.

WHAT is Ethics?
 is the symbols of moral principles and values that direct the behaviour of a person or
group with respect to what is right or wrong
 sets standards as to what is good or bad in conduct and decision making. Ethics deals
with inner values that are a part of business culture and forms decisions concerning
social responsibility with respect to the external environment.
 ethics are concerned with human action. It can be considered as philosophy,
philosophical thinking about morality, moral problems and moral judgements

4 VIEWS of Ethics:
1. Utilitarian View of Ethics
- define that ethical decision are made on the basis of their outcome. A
utilitarian approach to morality explains that no moral act or rule is
intrinsically right or wrong. Rather, the rightness or wrongness of an act or
rule is solely a matter of the overall non-moral good such as pleasure,
happiness, health, knowledge, or satisfaction of individual desire, produced in
the consequences of doing that act or following that rule.

2. Rights View of Ethics

- respects and protects individual liberties and privilege. This theory of ethics
denotes that there are certain fundamental civil, political and economic rights

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that merit protection or respect because they pertain to the dignity of the human
person. Each person has a basic right to be respected and treated as a free and
equal rational person capable of making his or her own decisions.

3. Theory of Justice
- reveals that managers impose and enforce rules fairly and impartially. Central
to this effort is an account of the circumstances of justice, inspired by David
Hume, and a fair choice situation for parties facing such circumstances, similar
to some of Immanuel Kant's views. Principles of justice are sought to guide the
conduct of the parties.

4. Integrative Social Contracts Theory

- A newer approach that purposes that decision should be based on empirical
(what is) and normative (what should be) factors. The benefits a and drawbacks
are determined by manager’s decision on what is right and wrong. This is
because the decision of the managers are determined solely on what he or she
thinks is right or wrong for the company although it brings a disadvantage for
their workers and others.

FACTORS THAT AFFECT EMOLOYEE ETHICS

1. Leadership

Managers and leaders play an important role in influencing the behaviour of individuals
at workplace. It is the responsibility of leaders to set a direction for team members. In majority of
the cases, it has been observed that employees do not feel like going to work when they have
strict bosses. You need to stand by your team always. Guide them and help them in their day to
day operations and help them acquire new skills and upgrade their knowledge. Make them feel
important. As a leader, you need to be a strong source of inspiration for your subordinates. If you
do not reach office on time, how can you expect your team members to adhere to the rules and
regulations of organization?

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2. Work Culture

Employees need to feel comfortable at workplace for them to stay positive and happy. Rules and
regulations should be same for everyone. Employees ought to be encouraged to respect their
reporting bosses and follow the code of ethics. Do not have complicated reporting systems.
Transparency at all levels is essential. You must know what your team member is up to and vice-
a-versa. Job security is one of the most crucial factors affecting employee behaviour. Stand by
your team at the times of crisis. Do not throw them out during bad times. Believe me, they will
never leave you.

3. Job Responsibilities

Employees should be asked to do what best they can perform. Do not overburden employees.
Encourage them to upgrade their skills from time to time.

4. Effective Communication

Managers need to communicate effectively with team members. The moment, employees feel
left out, they lose interest in work. They need to have a say in organization’s major decisions. Let
them express their views and come out with their problems. Grievances need to be addressed
immediately.

5. Family and Personal Life

Trust me, if you fight with your family members or relatives in the morning, you feel restless the
whole day. It has been observed that individuals with a troubled background or problematic
family life tend to behave irrationally at workplace. Employees who have strained relationships
with family members like to sit till late at work and spoil the entire work culture. Individuals
from very poor families also have a habit of stealing office stationery and taking things to home.
Conflicts in personal life lead to stress and irrational behaviour. Also, individuals should try not
to bring their personal problems to work. Try to keep your personal and professional life
separate.

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6. Relationship at Work

It is necessary to have friends at the workplace. You need people around to talk to, discuss and
share experiences. It is really not possible to work in isolation. Not allowing employees to
interact with fellow workers leads to frustration and stress at workplace. Avoid arguing with
team members.

ETHICS IN AN INTERNATIONAL CONTEXT:

Are ethical standards universal? Hardly! Social and cultural differences between countries
are environmental factors that play an influential role in determining ethical and unethical
behavior.
- Ethical standards are not universal. Social and cultural differences determine
acceptable behaviors.
- Foreign Corrupt Practices Act.It makes illegal to corrupt a foreign official yet
“token “payments to officials are permissible when doing is accepted practice
in the country.
- The Global Compact

IMPROVING ETHICAL BEHAVIOR

Organizations can take a number of actions to cultivate ethical behavior among
members. In this section of the text, eight suggestions are explored:

1. The selection process for bringing new employees into organizations should be
viewed as an opportunity to learn about an individual’s level of moral
development, personal values, ego strength, and locus of control.

2. A code of ethics is a formal statement of an organization’s primary values and

the ethical rules it expects employees to follow. In addition, decision rules can
be developed to guide managers in handling ethical dilemmas in decision
making.

3. Top management’s leadership and commitment to ethical behavior is extremely

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important since the cultural tone for an organization is established by its top
managers.

4. Employees’ job goals should be tangible and realistic, because clear and
realistic goals reduce ambiguity and motivate rather than punish. Job goals are
usually a key issue in the performance appraisal process.

5. If an organization wants employees to uphold high ethical standards, this

dimension must be included in the appraisal process. Performance appraisals
should include this dimension, rather than focusing solely on economic
outcomes.

6. Ethics training should be used to help teach ethical problem solving and to
present simulations of ethical situations that could arise. At the least, ethics
training should increase awareness of ethical issues.

7. Independent social audits evaluate decisions and management practices in

terms of the organization’s code of ethics and can be used to deter unethical
behavior.

8. Organizations can provide formal protective mechanisms so that employees

with ethical dilemmas can do what is right without fear of reprisal.

SOCIAL RESPONSIBILITY AND ETHICS ISSUES IN TODAY’S WORLD

Three current challenges managers face in being socially responsible and ethical leaders
are examined in this section:
(1) ethical lapses and social irresponsibility;
(2) social entrepreneurship; and
(3) social impact management.
A. Managing Ethical Lapses and Social Irresponsibility. A recent survey shows that
workplace pressures are leading more and more employees to act unethically or

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illegally on the job.

1. Ethical Leadership. Above all, managers must set an ethical example by
modeling appropriate behavior and rewarding employees who act ethically.
2. Protecting Employees Who Raise Ethical Issues. Managers must assure
employees who raise ethical concerns that they will not encounter personal
or career risks. These individuals are called whistleblowers.
B. Social Entrepreneurship. A social entrepreneur is an individual or organization
who seeks out opportunities to improve society by using practical, innovative, and
sustainable approaches.
C. Social impact management. Managers are increasingly expected to act
responsibly in the way they conduct business. Managers using a social impact
management approach examine the social impacts of their decisions and actions.
When they consider how their actions in planning, organizing, leading and
controlling will work in light of the social context within which business operates,
managers become more aware of whether they are leading in a responsible manner.

REFERENCES:
1. What Are the Four Basic Approaches to Social Responsibility by Breann
Kanobi
https://classroom.synonym.com/what-are-the-four-basic-approaches-to-social-
responsibility-12083190.html
2. https://classroom.synonym.com/what-are-the-four-basic-approaches-to-social-
responsibility-12083190.html
3. https://www.google.com/search?client=safari&rls=en&q=APPROACHES+OF+SOCIAL
+RESPONSIBILITY&ie=UTF-8&oe=UTF-8
4. https://www.druckerchallenge.org/uploads/pics/kidusmehalu.pdf
5. https://www.slideshare.net/ghyj/social-responsibility-and-managerial-ethics-chapter-5
6. https://www.civilserviceindia.com/subject/Management/notes/social-responsibility-and-
managerial-ethics.html

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