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MGT420 Ch03

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MGT420 Ch03 MGT420 Ch03 Presentation Transcript

  • © 2007 Thomson/South-Western. All rights reserved.© 2007 Thomson/South-Western. All rights reserved. PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook The University of West AlabamaThe University of West Alabama SocialSocial ResponsibilityResponsibility and Ethicsand Ethics ChapterChapter 33 Part 1 Meeting the Challenges of the 21st CenturyPart 1 Meeting the Challenges of the 21st Century
  • © 2007 Thomson/South- Western. All rights reserved. 3–2 1.1. Discuss the stakeholder view of the firm and theDiscuss the stakeholder view of the firm and the impact of the globalization of business on socialimpact of the globalization of business on social responsibility and ethics.responsibility and ethics. 2.2. Describe the concept of corporate socialDescribe the concept of corporate social responsibility and the primary premises on which itresponsibility and the primary premises on which it is based.is based. 3.3. Distinguish between the four perspectives ofDistinguish between the four perspectives of corporate social responsibility.corporate social responsibility. 4.4. Identify and evaluate approaches for responding toIdentify and evaluate approaches for responding to social issues.social issues. LEARNING OBJECTIVESLEARNING OBJECTIVES When you have finished studying this chapter, youWhen you have finished studying this chapter, you should be able to:should be able to:
  • © 2007 Thomson/South- Western. All rights reserved. 3–3 5.5. Explain what values are, how they form the basis ofExplain what values are, how they form the basis of an individual’s ethical behavior, and how they mayan individual’s ethical behavior, and how they may vary in a global business environment.vary in a global business environment. 6.6. Describe how advances in information technologyDescribe how advances in information technology have created new ethical challenges.have created new ethical challenges. 7.7. Identify and discuss the differences in the utility,Identify and discuss the differences in the utility, human rights, and justice approaches to ethicalhuman rights, and justice approaches to ethical dilemmas.dilemmas. 8.8. Explain the methods used by organizations toExplain the methods used by organizations to encourage ethical organizational behavior.encourage ethical organizational behavior. LEARNING OBJECTIVESLEARNING OBJECTIVES (cont’d)(cont’d) When you have finished studying this chapter, youWhen you have finished studying this chapter, you should be able to:should be able to:
  • © 2007 Thomson/South- Western. All rights reserved. 3–4 9.9. Describe the different approaches used in ethicsDescribe the different approaches used in ethics training programs.training programs. 10.10. Discuss what is meant by whistle-blowing inDiscuss what is meant by whistle-blowing in monitoring ethical behavior.monitoring ethical behavior. LEARNING OBJECTIVESLEARNING OBJECTIVES (cont’d)(cont’d) When you have finished studying this chapter, youWhen you have finished studying this chapter, you should be able to:should be able to:
  • © 2007 Thomson/South- Western. All rights reserved. 3–5 Organizational Stakeholders in aOrganizational Stakeholders in a Global EnvironmentGlobal Environment • StakeholdersStakeholders  All those who are affected by or can affect theAll those who are affected by or can affect the activities of the firm.activities of the firm. • Primary StakeholdersPrimary Stakeholders  Those who have a formal, official, or contractualThose who have a formal, official, or contractual relationship with the organization.relationship with the organization. • Secondary StakeholdersSecondary Stakeholders  Other societal groups who are affected by theOther societal groups who are affected by the activities of the firm.activities of the firm.
  • © 2007 Thomson/South- Western. All rights reserved. 3–6 Figure 3.1Figure 3.1 The Stakeholder View of the FirmThe Stakeholder View of the Firm Source: Business & Society: Ethics and Stakeholder Management, 3rd edition, by A. B. Carroll. © 1996. Reprinted with permission of South-Western, a division of Thomson Learning. Fax 800-730-2215.
  • © 2007 Thomson/South- Western. All rights reserved. 3–7 Stakeholder PerspectiveStakeholder Perspective • Social ResponsibilitySocial Responsibility  Relates to the obligation of business to society.Relates to the obligation of business to society. • EthicsEthics  Ethical issues are most relevant at an individual level,Ethical issues are most relevant at an individual level, for ethics are maintained by people.for ethics are maintained by people. • Corporate Social ResponsibilityCorporate Social Responsibility  The interaction between business and the socialThe interaction between business and the social environment in which it exists.environment in which it exists.
  • © 2007 Thomson/South- Western. All rights reserved. 3–8 The Social Responsibility DebateThe Social Responsibility Debate • What does social responsibility mean?What does social responsibility mean?  Does it mean the corporation’s actions must not harmDoes it mean the corporation’s actions must not harm society or does it mean a corporation’s actions shouldsociety or does it mean a corporation’s actions should benefit society?benefit society? • Social contractSocial contract  An implied set of rights and obligations that areAn implied set of rights and obligations that are inherent in social policy and assumed by business.inherent in social policy and assumed by business. • Moral agentMoral agent  The obligation of a business to act honorably and toThe obligation of a business to act honorably and to reflect and enforce values that are consistent withreflect and enforce values that are consistent with those of society.those of society.
  • © 2007 Thomson/South- Western. All rights reserved. 3–9 Table 3.Table 3.11 Four Perspectives of Social ResponsibilityFour Perspectives of Social Responsibility Source: A. Carroll and A Bucholtz, Business & Society: Ethics and Stakeholder Management, 6th ed. (Mason, OH: Thomson South-Western, 2006), 38. Type of Societal Responsibility Expectation Explanations Economic Required by society Be profitable. Make sound strategic decisions. Provide adequate and attractive returns on investment. Legal Required by society Obey all laws and regulations. Fulfill all contractual obligations. Honor warranties and guarantees. Ethical Expected by society Avoid questionable practices Respond to spirit as well as letter of law. Assume law is floor of behavior and operate above minimum required. Do what is right, fair, and just. Philanthropic Desired/expected Be a good corporate citizen. by society Give back. Improve quality of life overall.
  • © 2007 Thomson/South- Western. All rights reserved. 3–10 Perspectives on Social ResponsibilityPerspectives on Social Responsibility • Economic ResponsibilityEconomic Responsibility  The only responsibility of business is to make a profitThe only responsibility of business is to make a profit within the “rules of the game.” (Milton Friedman)within the “rules of the game.” (Milton Friedman)  Organizations cannot be moral agents.Organizations cannot be moral agents.  Only individuals can serve as moral agents.Only individuals can serve as moral agents. • Public Responsibility PerspectivePublic Responsibility Perspective  Businesses should act in a way that is consistent withBusinesses should act in a way that is consistent with society’s view of responsible behavior, as well as withsociety’s view of responsible behavior, as well as with established laws and policies.established laws and policies.
  • © 2007 Thomson/South- Western. All rights reserved. 3–11 Perspectives on Social ResponsibilityPerspectives on Social Responsibility (cont’d)(cont’d) • Social ResponsivenessSocial Responsiveness  Business should proactively seek to contribute toBusiness should proactively seek to contribute to society in a positive way.society in a positive way.  Organizations should develop an internal environmentOrganizations should develop an internal environment that encourages and supports ethical behavior at anthat encourages and supports ethical behavior at an individual level.individual level.
  • © 2007 Thomson/South- Western. All rights reserved. 3–12 Figure 3.Figure 3.22 The Four Faces of Social ResponsibilityThe Four Faces of Social Responsibility Source: D. R. Dalton and R. A. Cosier, “The Four Faces of Social Responsibility.” Printed with permission from Business Horizons (May/June 1982): 19–27. Copyright © 1982 by the Trustees of Indiana University, Kelley School of Business. Legal/Responsible Illegal/Irresponsible
  • © 2007 Thomson/South- Western. All rights reserved. 3–13 Social Responsibility StrategiesSocial Responsibility Strategies • A continuum of possible strategies based on theA continuum of possible strategies based on the organization’s tendency to be sociallyorganization’s tendency to be socially responsible or responsive.responsible or responsive. Do NothingDo Nothing Do MuchDo MuchDo NothingDo Nothing Do MuchDo Much ReactionReaction DefenseDefense AccommodationAccommodation ProactionProaction
  • © 2007 Thomson/South- Western. All rights reserved. 3–14 Social Responsibility StrategiesSocial Responsibility Strategies (cont’d)(cont’d) • ReactionReaction  An approach to corporate social responsibility thatAn approach to corporate social responsibility that includes an organization denying responsibility for itsincludes an organization denying responsibility for its actions.actions. • DefenseDefense  Organizations that pursue a defense strategy respondOrganizations that pursue a defense strategy respond to social challenges only when it is necessary toto social challenges only when it is necessary to defend their current position.defend their current position.
  • © 2007 Thomson/South- Western. All rights reserved. 3–15 Social Responsibility StrategiesSocial Responsibility Strategies (cont’d)(cont’d) • AccommodationAccommodation  An approach to corporate social responsibility thatAn approach to corporate social responsibility that adapts to public policy in doing more than theadapts to public policy in doing more than the minimum required.minimum required. • ProactionProaction  An approach to corporate social responsibility thatAn approach to corporate social responsibility that includes behaviors that improve society.includes behaviors that improve society.  Organizations that assume a proaction strategyOrganizations that assume a proaction strategy subscribe to the notion of social responsiveness.subscribe to the notion of social responsiveness.
  • © 2007 Thomson/South- Western. All rights reserved. 3–16 Table 3.Table 3.44 The Ten Commandments of Corporate Social ResponsibilityThe Ten Commandments of Corporate Social Responsibility I. Take corrective action before it is required. Compliance with self-imposed standards is almost always preferable to compliance with standards that are imposed by outside constituencies. II. Work with affected constituents to resolve mutual problems. III. Work to establish industry-wide standards and self-regulation. IV. Publicly admit your mistakes. Few things are worse for a company’s image than being caught trying to cover up socially irresponsible behavior. V. Get involved in appropriate social programs. VI. Help correct environmental problems. VII. Monitor the changing social environment. VIII. Establish and enforce a corporate code of conduct. IX. Take needed public stands on social issues. X. Strive to make profits on an ongoing basis. An organization cannot provide jobs and employ workers if it is not in a position to make consistent profits. Source: L. Alexander and W. Mathews, “The Ten Commandments of Corporate Social Responsibility,” Business and Society Review 50 (1984): 62–66.
  • © 2007 Thomson/South- Western. All rights reserved. 3–17 EthicsEthics • EthicsEthics  The established customs, morals, and fundamentalThe established customs, morals, and fundamental human relationships that exist throughout the world.human relationships that exist throughout the world. • Ethical BehaviorEthical Behavior  Behavior that is morally accepted as good or right asBehavior that is morally accepted as good or right as opposed to bad or wrong such as:opposed to bad or wrong such as:  Corruption (for example, bribery and improperCorruption (for example, bribery and improper payments)payments)  Inadequate labor conditionsInadequate labor conditions  Environmental responsibilityEnvironmental responsibility
  • © 2007 Thomson/South- Western. All rights reserved. 3–18 Foundations of EthicsFoundations of Ethics • ValuesValues  the relatively permanent, deeply held preferences ofthe relatively permanent, deeply held preferences of individuals or groups.individuals or groups. • Instrumental ValuesInstrumental Values  The standards of conduct or methods (means) forThe standards of conduct or methods (means) for attaining an end.attaining an end. • Terminal ValuesTerminal Values  Goals (ends) that an individual will ultimately achieve.Goals (ends) that an individual will ultimately achieve.
  • © 2007 Thomson/South- Western. All rights reserved. 3–19 Business Ethics DefinedBusiness Ethics Defined • The application of the general ethical rules toThe application of the general ethical rules to business behavior.business behavior.  If a society deems dishonesty to be unethical andIf a society deems dishonesty to be unethical and immoral, then anyone in business who is dishonestimmoral, then anyone in business who is dishonest with employees, customers, creditors, stockholders,with employees, customers, creditors, stockholders, or competition is acting unethically and immorally.or competition is acting unethically and immorally.
  • © 2007 Thomson/South- Western. All rights reserved. 3–20 Ethics And Information TechnologyEthics And Information Technology • Employee PerspectiveEmployee Perspective  Concerns about organizations andConcerns about organizations and government agencies gaining greater accessgovernment agencies gaining greater access to private information about individuals.to private information about individuals. • Organizational PerspectiveOrganizational Perspective  Concerns over unethical acts by employeesConcerns over unethical acts by employees as a result of access to information technologyas a result of access to information technology in the workplace.in the workplace. • Societal PerspectiveSocietal Perspective  Concerns raised in regard to businesses providingConcerns raised in regard to businesses providing customer information to other organizations.customer information to other organizations.
  • © 2007 Thomson/South- Western. All rights reserved. 3–21 Ethical DilemmaEthical Dilemma • A situation in which a person must decideA situation in which a person must decide whether or not to do something that, althoughwhether or not to do something that, although beneficial to oneself or the organization, may bebeneficial to oneself or the organization, may be considered unethical and perhaps illegal.considered unethical and perhaps illegal. • Examples of Ethical DilemmasExamples of Ethical Dilemmas  Should I conduct personal business on companyShould I conduct personal business on company time?time?  Should we spend more on pollution control?Should we spend more on pollution control?  Is it O.K. to give a friend a special rate?Is it O.K. to give a friend a special rate?  If I find out that my boss took a bribe, should I tellIf I find out that my boss took a bribe, should I tell someone?someone?
  • © 2007 Thomson/South- Western. All rights reserved. 3–22 Guidelines for Deciding Ethical DilemmasGuidelines for Deciding Ethical Dilemmas • Utility ApproachUtility Approach  Decisions are based on an evaluation of the overallDecisions are based on an evaluation of the overall amount of good that will result.amount of good that will result. • Human Rights ApproachHuman Rights Approach  Decisions are made in light of the moral entitlementsDecisions are made in light of the moral entitlements of human beings.of human beings. • Justice ApproachJustice Approach  Decisions are based on an equitable, fair, andDecisions are based on an equitable, fair, and impartial distribution of benefits and costs amongimpartial distribution of benefits and costs among individuals and groups.individuals and groups.
  • © 2007 Thomson/South- Western. All rights reserved. 3–23 Table 3.Table 3.55 Developing Employee Awareness of EthicsDeveloping Employee Awareness of Ethics 1. Enable the ethical component of a decision to be recognized. 2. Legitimize the consideration of ethics as part of decision making. 3. Avoid variability in decision making caused by lack of awareness of rules or norms. 4. Avoid ambivalence in decision making caused by an organizational reward system that psychologically pulls a person in opposite directions. 5. Avoid ambivalence in decision making caused by confusion as to who is responsible for misdeeds, particularly when the employee has received an order from a superior. 6. Provide decision-making frameworks for analyzing ethical choices and helping employees to apply such frameworks. Source: S. J. Harrington, “What Corporate America Is Teaching about Ethics,” Academy of Management Executives 5 (1991): 21–29.
  • © 2007 Thomson/South- Western. All rights reserved. 3–24 Fostering Improved Business EthicsFostering Improved Business Ethics (cont’d)(cont’d) • Code of EthicsCode of Ethics  Describes the general value system, ethicalDescribes the general value system, ethical principles, and specific ethical rules that a companyprinciples, and specific ethical rules that a company tries to apply.tries to apply. • Ethics Training ProgramsEthics Training Programs  Training designed to help managers clarify theirTraining designed to help managers clarify their ethical framework and practice self-discipline whenethical framework and practice self-discipline when making decisions in difficult circumstances.making decisions in difficult circumstances. • WhistleblowingWhistleblowing  Whistleblower:Whistleblower: someone who exposes organizationalsomeone who exposes organizational misconduct or wrongdoing to the public.misconduct or wrongdoing to the public.
  • © 2007 Thomson/South- Western. All rights reserved. 3–25 Table 3.Table 3.66 Subjects Addressed by Most Codes of EthicsSubjects Addressed by Most Codes of Ethics • Bribery/improper paymentsBribery/improper payments • Conflict of interestConflict of interest • Security of proprietarySecurity of proprietary informationinformation • Receiving giftsReceiving gifts • Discrimination/equalDiscrimination/equal opportunityopportunity • Giving giftsGiving gifts • EnvironmentEnvironment • Sexual harassmentSexual harassment • AntitrustAntitrust • Workplace safetyWorkplace safety • Political activitiesPolitical activities • Community relationsCommunity relations • Confidentiality of personalConfidentiality of personal informationinformation • Human rightsHuman rights • Employee privacyEmployee privacy • Whistle-blowingWhistle-blowing • Substance abuseSubstance abuse • NepotismNepotism • Child laborChild labor Source: R. Berenbeim, “Global Corporate Ethics Problems,” Conference Board Research Report, 121243-99-RR, 1999.
  • © 2007 Thomson/South- Western. All rights reserved. 3–26 Table 3.Table 3.88 A Model Whistle-Blower PolicyA Model Whistle-Blower Policy • Publicize a reporting policy that encourages reporting of valid complaints of wrongdoing. • Establish a reporting procedure allows anonymous complaints (required by Sarbanes–Oxley, at least for financial wrongdoing) or complaints to someone outside of the chain of command. • Investigate the situation immediately. • Go public. Publicize the outcomes of investigations. This shows employees and other stakeholders that complaints are taken seriously. Sources: N. Swartz, “Whistleblower Complaints Growing,” Information Management Journal 38, no. 3 (May/June 2005): 8; T. Mohr and D. Slovin, “Making Tough Calls Easy,” Security Management 49, no. 3 (March 2005): 51– 56; L. Driscoll, “A Better Way to Handle Whistle-Blowers: Let Them Speak,” BusinessWeek, 27 July 1992, 36.
  • © 2007 Thomson/South- Western. All rights reserved. 3–27 Implications for LeadersImplications for Leaders • Explore ways in which the organization can be moreExplore ways in which the organization can be more socially responsive.socially responsive. • Recognize the effect of the organization’s actions on itsRecognize the effect of the organization’s actions on its stakeholders.stakeholders. • Create an environment in which employees commit toCreate an environment in which employees commit to behaving in socially responsive and ethical ways.behaving in socially responsive and ethical ways. • Make sure that a code of ethics is put in place andMake sure that a code of ethics is put in place and followed.followed. • Ensure that whistle blowing and ethical concernsEnsure that whistle blowing and ethical concerns procedures are established for internal problem solving.procedures are established for internal problem solving.
  • © 2007 Thomson/South- Western. All rights reserved. 3–28 Implications for LeadersImplications for Leaders (cont’d)(cont’d) • Involve line and staff employees in the identification ofInvolve line and staff employees in the identification of ethical issues to help them gain understanding andethical issues to help them gain understanding and resolve issues.resolve issues. • Determine the link between departments and issuesDetermine the link between departments and issues affecting the company and make them known toaffecting the company and make them known to employees in the departments.employees in the departments. • Integrate ethical decision making into the performanceIntegrate ethical decision making into the performance appraisal process.appraisal process. • Publicize, in employee communications and elsewhere,Publicize, in employee communications and elsewhere, executive priorities and efforts related to ethical issues.executive priorities and efforts related to ethical issues.
  • © 2007 Thomson/South- Western. All rights reserved. 3–29 Table 3.Table 3.77 A Manager’s Guide for Developing a Strong Ethics PolicyA Manager’s Guide for Developing a Strong Ethics Policy 1. Develop a written policy on ethics and communicate it regularly to your employees. 2. Make sure that all employees understand the policies and procedures in place for determining ethical behavior. 3. Establish fair and consistent rules for disciplining violators. 4. Develop and continually monitor audit systems to prevent and detect violations of the law or corporate policy. 5. Create a safe environment where employees can report suspected violations anonymously without fear of retribution. 6. Allow those accused of violating ethics policies the opportunity to explain or defend their behavior.
  • © 2007 Thomson/South- Western. All rights reserved. 3–30 Fostering Improved Business EthicsFostering Improved Business Ethics • To foster improved business ethics in anTo foster improved business ethics in an organization, action must be directed at fiveorganization, action must be directed at five levels:levels:  InternationalInternational  SocietalSocietal  OrganizationalOrganizational  IndividualIndividual  AssociationAssociation