Chapter 5

Managing Ethics and Social Responsibility

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 Managerial Ethics
 Ethics – code of moral principles and values that
govern the behaviors of right or wrong
 Standards about good/bad
 Ethical issues can be complex
 People in organizations have divergent views about
right/wrong

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 5.1 Three Domains of
Human Action

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 Ethical Management Today
 Ethical lapses during the last decade have been
pervasive
 Corporations and people have become associated
with greed, deceit, irresponsibility, and lack of moral
conscience
 Managers carry a big responsibility for setting an
ethical climate
 Ethical crises have brought ethical management to
the forefront
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 Ethical Management Today
 Ethical managers
Display honesty and integrity

Communicate and enforce ethical standards through

their behavior

Are fair in their decisions and the distribution of rewards

Show kindness and concern for others

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 5.2 Four Types of Ethical Manager
Behavior

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 The Business Case for Ethics and
Social Responsibility
 Ethics and social responsibility are important
business issues
 The connection between ethics and financial
performance has been widely debated
 Customers would switch brands to do business with
a company that is ethical and socially responsible

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 Ethical Dilemmas

You are the moral agent–what would you do?

Your company requires a terrorist watch list that screens
all new customers and takes approximately 24 hours
from the time an order is placed. You can close a
lucrative deal with a potential long-term customer
overnight, even though that means the required watch
list screening will have to be done after the fact.
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 Criteria for Ethical
Decision Making
 Utilitarian approach – moral behavior produces the
greatest good for the greatest number
 Individualism approach – acts are moral if they
promote the individual’s long-term interest
 Moral-rights approach – humans have fundamental
rights and liberties that cannot be taken away by an
individual’s decision

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 Criteria for Ethical
Decision Making (cont’d)
 Justice approach – moral decisions must be based
on standards of equity, fairness, and impartiality
Distributive justice
Procedural justice
Compensatory justice
 Practical approach – bases decisions on prevailing
standards, society, and all stakeholders

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 A Manager’s Ethical Choices
 Individuals bring their own personality and traits to
organizations
 Personal needs, family influence, and religious
background shape individuals
 Personality characteristics such as ego, confidence,
and independence may enable managers to make
ethical choices

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 5.3 Three Levels of Personal
Moral Development

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 What Is Corporate Social
Responsibility (CSR)?
 Distinguishing right from wrong; doing right
 Good corporate citizenship
 Make choices that contribute to society and
stakeholders
 Stakeholders – any group within or outside
 Stakeholder mapping identifies needs, importance
and power of stakeholders
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 5.4 Major Stakeholders Relevant to
Gap Inc.

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 The Green Movement
 Going GREEN is a new business imperative
Change in social attitudes
New governmental policies
Climate change
 Information technology immediately spreads the
negative decisions of corporations
 More organizations are embracing sustainability

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 The Ethic of Sustainability

Sustainability – economic development that

generates wealth and meets the needs of current
generation while preserving the environment for
the needs of future generations

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 Evaluating Corporate Social
Responsibility
 Legal Responsibility
appropriate business behavior

 Discretionary Responsibility
voluntary contributions to society

 Organizational Virtuousness
a positive human impact, moral goodness

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 5.5 Criteria of Corporate
Social Performance

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 5.6 Building an Ethical
Organization

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 Managing Company Ethics and
Social Responsibility
 Code of ethics – a formal statement of the
company’s values regarding ethics and social
issues
 Ethical structures – systems, positions, and
programs like ethics training
 Whistle-blowing – employee disclosure of illegal,
immoral, or illegitimate practices

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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