Social Responsibility & Business Ethics

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An insight on social responsibility & business ethics.

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Social Responsibility & Business Ethics

  1. 1. Management’s Social and Ethical Responsibilities Chapter 3 Ready Notes For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page.
  2. 2. Chapter Objectives <ul><li>Define corporate social responsibility and summarize the arguments for and against it. </li></ul><ul><li>Identify and describe the four social responsibility strategies. </li></ul><ul><li>Explain the role of enlightened self-interest in social responsibility. </li></ul><ul><li>Summarize the three practical lessons from business ethics research. </li></ul><ul><li>Identify and describe at least four of the ten general ethical principles. </li></ul><ul><li>Discuss what management can do to improve business ethics </li></ul>
  3. 3. Social Responsibility: Definition and Debate <ul><li>Corporate Social Responsibility </li></ul><ul><ul><li>The idea that business has social obligations above and beyond making a profit. </li></ul></ul><ul><ul><li>Business has an obligation to constituent groups in society other than stockholders and beyond that prescribed by law. </li></ul></ul>
  4. 4. Social Responsibility: Definition and Debate (cont’d) <ul><li>What Does Social Responsibility Involve? </li></ul><ul><ul><li>Voluntary action </li></ul></ul><ul><ul><ul><li>Action before lawsuits or other actions that are taken to force a firm to take action on a matter. </li></ul></ul></ul><ul><ul><li>An emphasis on means, not ends </li></ul></ul><ul><ul><ul><li>How the decision to act was reached, not the decision itself. </li></ul></ul></ul>
  5. 5. Figure 3.2 A Continuum of Social Responsibility Strategies
  6. 6. Social Responsibility Strategies <ul><li>Reactive Strategy </li></ul><ul><ul><li>Denying responsibility while striving to maintain the status quo by resisting change. </li></ul></ul><ul><li>Defensive Strategy </li></ul><ul><ul><li>Resisting additional social responsibilities with legal and public relations tactics. </li></ul></ul>
  7. 7. Social Responsibility Strategies (cont’d) <ul><li>Accommodation Strategy </li></ul><ul><ul><li>Assuming social responsibility only in response to pressure from interest groups or the government. </li></ul></ul><ul><li>Proactive Strategy </li></ul><ul><ul><li>Taking the initiative in formulating and putting in place new programs that serve as role models for industry. </li></ul></ul>
  8. 8. Who Benefits from Corporate Social Responsibility? <ul><li>Altruism </li></ul><ul><ul><li>The unselfish devotion to the interests of others. </li></ul></ul><ul><li>Research Findings </li></ul><ul><ul><li>There is a positive correlation between industry leadership on a socially responsible issue (pollution control) and profitability. </li></ul></ul><ul><ul><li>Corporate social responsibility is a competitive advantage in recruiting talented people. </li></ul></ul>
  9. 9. Who Benefits from Corporate Social Responsibility? (cont’d) <ul><li>Enlightened Self-Interest </li></ul><ul><ul><li>A business ultimately helps itself by helping solve social problems. </li></ul></ul><ul><li>An Array of Benefits for the Organization </li></ul><ul><ul><li>Tax-free incentives to employees. </li></ul></ul><ul><ul><li>Retention of talented employees. </li></ul></ul><ul><ul><li>Help in recruiting the talented and socially conscious. </li></ul></ul><ul><ul><li>Help in swaying public opinion. </li></ul></ul><ul><ul><li>Improved community living standards. </li></ul></ul><ul><ul><li>…Others. </li></ul></ul>
  10. 10. The Ethical Dimension of Management <ul><li>Ethics </li></ul><ul><ul><li>The study of moral obligation involving the distinction between right and wrong. </li></ul></ul><ul><li>Business Ethics </li></ul><ul><ul><li>The study of the complex business practices and behaviors that give rise to ethical issues in organizations. </li></ul></ul>
  11. 11. Practical Lessons from Business Ethics Research: Ethical Hot Spots <ul><li>Balancing work and family </li></ul><ul><li>Poor internal communications </li></ul><ul><li>Poor leadership </li></ul><ul><li>Work hours, work load </li></ul><ul><li>Lack of management support </li></ul><ul><li>Need to meet sales, budget, or profit goals </li></ul><ul><li>Little or no recognition of achievements </li></ul><ul><li>Company politics </li></ul><ul><li>Personal financial worries </li></ul><ul><li>Insufficient resources </li></ul>
  12. 12. Practical Lessons from Business Ethics Research (cont’d) <ul><li>Pressure from Above </li></ul><ul><ul><li>The problem of superiors pressuring subordinates is widespread. </li></ul></ul><ul><li>Responding to Pressure from Above </li></ul><ul><ul><li>Consciously avoid putting undue pressure on subordinates. </li></ul></ul><ul><ul><li>Be prepared to deal with excessive organization pressure. </li></ul></ul>
  13. 13. Practical Lessons from Business Ethics Research (cont’d) <ul><li>Ambiguous Situations </li></ul><ul><ul><li>Situations where there are no clear-cut ethical guidelines. </li></ul></ul><ul><ul><li>Ethical codes can help satisfy employees’ need for formal guidelines. </li></ul></ul><ul><li>A Call to Action </li></ul><ul><ul><li>The deliberate and conscious actions of a manager to do the right thing is an ethical and personal matter. </li></ul></ul>
  14. 14. General Ethical Principles <ul><li>Self-Interests </li></ul><ul><li>Personal virtues </li></ul><ul><li>Religious injunctions </li></ul><ul><li>Government requirements </li></ul><ul><li>Utilitarian benefits </li></ul><ul><li>Universal rules </li></ul><ul><li>Individual rights </li></ul><ul><li>Economic efficiency </li></ul><ul><li>Distributive justice </li></ul><ul><li>Contributive justice </li></ul>
  15. 15. Encouraging Ethical Conduct <ul><li>Ethics Training </li></ul><ul><ul><li>Amoral managers: managers who are neither moral or immoral, but ethically lazy. </li></ul></ul><ul><ul><li>Key features of effective ethics training programs </li></ul></ul><ul><ul><ul><li>Top management support. </li></ul></ul></ul><ul><ul><ul><li>Open discussion. </li></ul></ul></ul><ul><ul><ul><li>A clear focus on ethical issues. </li></ul></ul></ul><ul><ul><ul><li>Integration of ethics into the organization. </li></ul></ul></ul><ul><ul><ul><li>A mechanism for anonymously reporting ethical violations. </li></ul></ul></ul><ul><ul><ul><li>Reward ethical conduct. </li></ul></ul></ul>
  16. 16. Encouraging Ethical Conduct (cont’d) <ul><li>Whistle-Blowing </li></ul><ul><ul><li>The reporting of perceived unethical matters. </li></ul></ul><ul><ul><li>Reducing the fear of retaliation against whistleblowers </li></ul></ul><ul><ul><ul><li>Anonymous hotlines and web sites </li></ul></ul></ul><ul><ul><ul><li>Personal, confidential guidance </li></ul></ul></ul><ul><li>Ethical Advocate </li></ul><ul><ul><li>An ethics specialist who plays a role of critical questioner in top-management’s decision-making. </li></ul></ul><ul><ul><li>Serves as the Board of directors’ social conscience. </li></ul></ul><ul><ul><li>Helps prevent groupthink and blind conformity </li></ul></ul>
  17. 17. Encouraging Ethical Conduct (cont’d) <ul><li>Code of Ethics </li></ul><ul><ul><li>Published statement of moral expectations for employee conduct </li></ul></ul><ul><ul><li>Requirements for an effective ethics code </li></ul></ul><ul><ul><ul><li>Must describe specific practices as unethical (e.g., kickbacks, payoffs, gifts, falsification of records, and misleading product claims). </li></ul></ul></ul><ul><ul><ul><li>Must be firmly supported and fairly enforced by top management. </li></ul></ul></ul>

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