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MANAGING SOCIAL

RESPONSIBILITY
AND ETHICS

6
Copyright ©
Copyright
© 2014
2016 Pearson
Pearson Education,
Education, Ltd
Ltd.

6-1

LEARNING OBJECTIVES
Discuss what it means to be socially responsible and what
factors influence that decision.
2. Explain green management and how organizations can go
green.
1.

Discuss the factors that lead to ethical and unethical
behavior.
• Develop your skill at creating trust in work groups.
4. Describe management’s role in encouraging ethical
behavior.
 Know how to make good decisions about ethical dilemmas.
5. Discuss current social responsibility and ethics issues.
3.

Copyright ©
Copyright
© 2014
2016 Pearson
Pearson Education,
Education, Ltd
Ltd.

6-2

FROM OBLIGATION TO RESPONSIVENESS
TO RESPONSIBILITY
Social Obligation – the obligation of a
business to meet its economic and legal
responsibilities and nothing more.
• Classical view – the view that management’s
only social responsibility is to maximize
profits.

Copyright ©
Copyright
© 2014
2016 Pearson
Pearson Education,
Education, Ltd
Ltd.

6-3

) • Socioeconomic view – the view that management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare. 6-4 . Copyright © Copyright © 2014 2016 Pearson Pearson Education.FROM OBLIGATION TO RESPONSIVENESS TO RESPONSIBILITY (CONT. Education. • Social responsiveness – when a firm engages in social actions in response to some popular social need. Ltd Ltd.

) • Social responsibility – a business’s intention. to do the right things and act in ways that are good for society. 6-5 . beyond its legal and economic obligations.FROM OBLIGATION TO RESPONSIVENESS TO RESPONSIBILITY (CONT. Ltd Ltd. Education. Copyright © Copyright © 2014 2016 Pearson Pearson Education.

and environmental track records. price fixing. gambling.SHOULD ORGANIZATIONS BE SOCIALLY INVOLVED?  Social Screening – applying social criteria (screens) to investment decisions. tobacco. Education. nuclear power weapons. fraud. Ltd Ltd. • SRI funds usually will not invest in companies involved in liquor. Copyright © Copyright © 2014 2016 Pearson Pearson Education. 6-6 . or in companies that have poor product safety. employee relations.

Ltd Ltd. Education.EXHIBIT 6-1 ARGUMENTS FOR AND AGAINST SOCIAL RESPONSIBILITY Copyright © Copyright © 2014 2016 Pearson Pearson Education. 6-7 .

GREEN MANAGEMENT AND SUSTAINABILITY • Green Management – managers consider the impact of their organization on the natural environment. 6-8 . Copyright © Copyright © 2014 2016 Pearson Pearson Education. Ltd Ltd. Education.

and regulations willingly and without legal challenge. • Market Approach – firms respond to the preferences of their customers for environmentally friendly products. 6-9 . Education. Ltd Ltd. rules. • Copyright © Copyright © 2014 2016 Pearson Pearson Education.HOW ORGANIZATIONS GO GREEN Legal (or Light Green) Approach – firms simply do what is legally required by obeying laws.

• Activist Approach – firms look for ways to respect and preserve the environment and be actively socially responsible.HOW ORGANIZATIONS GO GREEN (CONT. • Copyright © Copyright © 2014 2016 Pearson Pearson Education. and the community. 6-10 .) Stakeholder Approach – firms work to meet the environmental demands of multiple stakeholders—employees. Ltd Ltd. Education. suppliers.

Education. Ltd Ltd.EXHIBIT 6-2 GREEN APPROACHES Copyright © Copyright © 2014 2016 Pearson Pearson Education. 6-11 .

values. and beliefs that define right and wrong behavior. 6-12 . Education. Copyright © Copyright © 2014 2016 Pearson Pearson Education.MANAGERS AND ETHICAL BEHAVIOR  Ethics – principles. • Many decisions managers make require them to consider both the process and who’s affected by the result. Ltd Ltd.

6-13 . Ltd Ltd.EXHIBIT 6-3 FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR Copyright © Copyright © 2014 2016 Pearson Pearson Education. Education.

6-14 . Copyright © Copyright © 2014 2016 Pearson Pearson Education. ethical decisions rely on living up to the expectations of others. individuals define moral values apart from the authority of the groups or society in general. Education. – Conventional level.FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR  Stage of Moral Development – Preconvention level – a person’s choice between right or wrong is based on personal consequences. Ltd Ltd. – Principled level.

6-15 . Ltd Ltd. Education.EXHIBIT 6-4 STAGES OF MORAL DEVELOPMENT Copyright © Copyright © 2014 2016 Pearson Pearson Education.

Education. Copyright © Copyright © 2014 2016 Pearson Pearson Education.)  Individual Characteristics – Values – basic convictions about what is right and wrong.FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR (CONT. Ltd Ltd. – Locus of Control – a personality attribute that measures the degree to which people believe they control their own fate. – Ego Strength – a personality measure of the strength of a person’s convictions. 6-16 .

– Values-based management – the organization’s values guide employees in the way they do their jobs. Ltd Ltd. Education. These values reflect what the organization stands for and what it believes in as well as create an environment that influences employee behavior ethically or unethically.)  Organization’s Culture – Organization’s culture consists of the shared organizational values. 6-17 .FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR (CONT. Copyright © Copyright © 2014 2016 Pearson Pearson Education.

6-18 . Ltd Ltd. Education.FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR (CONT.)  Issue Intensity – six characteristics determine issue intensity or how important an ethical issue is to an individual: – – – – – – Greatness of harm Consensus of wrong Probability of harm Immediacy of consequences Proximity to victim(s) Concentration of effect Copyright © Copyright © 2014 2016 Pearson Pearson Education.

Education.EXHIBIT 6-5 ISSUE INTENSITY Copyright © Copyright © 2014 2016 Pearson Pearson Education. 6-19 . Ltd Ltd.

Copyright © Copyright © 2014 2016 Pearson Pearson Education. • Foreign Corrupt Practices Act – It is illegal to corrupt a foreign official. yet “token” payments to officials are permissible when doing so is an accepted practice in that country. Education. 6-20 . Ltd Ltd.ETHICS IN AN INTERNATIONAL CONTEXT • Ethical standards are not universal – Social and cultural differences determine acceptable behaviors.

6-21 . Education. Ltd Ltd.EXHIBIT 6-6 THE TEN PRINCIPLES OF THE UNITED NATIONS GLOBAL COMPACT Copyright © Copyright © 2014 2016 Pearson Pearson Education.

ego strength. personal values. Ltd Ltd. 6-22 .ENCOURAGING ETHICAL BEHAVIOR • Employee Selection – an opportunity to learn about an individual’s level of moral development. • Code of ethics – a formal statement of an organization’s primary values and the ethical rules it expects its employees to follow. and locus of control. Copyright © Copyright © 2014 2016 Pearson Pearson Education. Education.

6-23 . Education. Ltd Ltd.EXHIBIT 6-7 CODES OF ETHICS Copyright © Copyright © 2014 2016 Pearson Pearson Education.

Ltd Ltd.EXHIBIT 6-7 CODES OF ETHICS (CONT.) Copyright © Copyright © 2014 2016 Pearson Pearson Education. Education. 6-24 .

Ltd Ltd.EXHIBIT 6-8 A PROCESS FOR ADDRESSING ETHICAL DILEMMAS Copyright © Copyright © 2014 2016 Pearson Pearson Education. Education. 6-25 .

– what they do is far more important than what they say. Ltd Ltd. Education.ENCOURAGING ETHICAL BEHAVIOR (CONT. – they’re role models in terms of both words and actions. 6-26 . Copyright © Copyright © 2014 2016 Pearson Pearson Education.)  Leadership – doing business ethically requires a commitment from top managers because: – they’re the ones who uphold the shared values and set the cultural tone.

Ltd Ltd.ENCOURAGING ETHICAL BEHAVIOR (CONT. Education. – If performance appraisals focus only on economic goals.)  JobGoals and Performance Appraisal – Unrealistic goals provide stress which may pressure ethical employees to do whatever is necessary to meet those goals. – To encourage ethical behavior. 6-27 . both ends and means should be evaluated. ends will begin to justify means. Copyright © Copyright © 2014 2016 Pearson Pearson Education.

Copyright © Copyright © 2014 2016 Pearson Pearson Education. Education.) • Ethics Training – seminars. 6-28 . Ltd Ltd.ENCOURAGING ETHICAL BEHAVIOR (CONT. and similar ethics training programs to encourage ethical behavior. • Protective Mechanisms – allow employees who face ethical dilemmas to do what’s right without fear of reprimand. workshops. • Independent Social Audits – evaluate decisions and management practices in terms of the organization’s code of ethics.

Copyright © Copyright © 2014 2016 Pearson Pearson Education. Ltd Ltd. 6-29 . – Another showed that 26 percent of college and university business majors admitted to “serious cheating” on exams and 54 percent admitted to cheating on written assignments.000 employees: 45 percent admitted falling asleep at work and 22 percent said they spread a rumor about a coworker. Education.SOCIAL RESPONSIBILITY AND ETHICS ISSUES IN TODAY’S WORLD  Managing Ethical Lapses and Social Irresponsibility – One survey reported that among 5.

SOCIAL RESPONSIBILITY AND ETHICS ISSUES IN TODAY’S WORLD (CONT. • Protection of Employees Who Raise Ethical Issues: – Whistle-Blower – individuals who raise ethical concerns or issues to others Copyright © Copyright © 2014 2016 Pearson Pearson Education. Education. 6-30 . Ltd Ltd.)  Ethical Leadership – managers must provide ethical leadership. What managers do has a strong influence on employees’ decisions whether to behave ethically.

6-31 . Education.EXHIBIT 6-9 BEING AN ETHICAL LEADER Copyright © Copyright © 2014 2016 Pearson Pearson Education. Ltd Ltd.

innovative. 6-32 . • Employee Volunteering Efforts – a popular way for businesses to be involved in promoting social change. Copyright © Copyright © 2014 2016 Pearson Pearson Education.SOCIAL RESPONSIBILITY AND ETHICS ISSUES IN TODAY’S WORLD (CONT.)  Social Entrepreneur – an individual or organization who seeks out opportunities to improve society by using practical. Education. • Corporate Philanthropy – can be an effective way for companies to address societal problems. and sustainable approaches. Ltd Ltd.

1 • Discuss what it means to be socially responsible and what factors influence that decision. – Social responsiveness – when a firm engages in social actions in response to some popular social need. – Copyright © Copyright © 2014 2016 Pearson Pearson Education. Social obligation – a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities. Education. Ltd Ltd. 6-33 .REVIEW LEARNING OBJECTIVE 6.

Ltd Ltd. Education.2 • Explain green management and how organizations can go green. 6-34 . – Different approaches • Light green • Market approach • Stakeholder approach • Activist or dark green approach Copyright © Copyright © 2014 2016 Pearson Pearson Education.REVIEW LEARNING OBJECTIVE 6.

– Factors that affect ethical and unethical behavior include • an individual’s level of moral development • individual characteristics • structural variables • organizational culture • issue intensity Copyright © Copyright © 2014 2016 Pearson Pearson Education. Ltd Ltd. Education.3 • Discuss the factors that lead to ethical and unethical behavior.REVIEW LEARNING OBJECTIVE 6. 6-35 .

Education. – Other ways include employee selection. Copyright © Copyright © 2014 2016 Pearson Pearson Education. a code of ethics.4 • Describe management’s role in encouraging ethical behavior. Ltd Ltd. using means and ends for goals and performance appraisal and ethics training. – The behavior of managers is the single most important influence on an individual’s decision to act ethically or unethically.REVIEW LEARNING OBJECTIVE 6. 6-36 .

Copyright © Copyright © 2014 2016 Pearson Pearson Education. and use the reward system appropriately. Ltd Ltd. stress important shared values. 6-37 . Education. – Ethical leaders also are honest.REVIEW LEARNING OBJECTIVE 6. share their values.5 • Discuss current social responsibility and ethics issues. – Managers can protect whistle-blowers (employees who raise ethical issues or concerns) by encouraging them to come forward.