Slides of Business & society

2.  Business: Any organization that is engaged in making a product or
providing a service for a profit. In other words, an organization or
economic system where goods and services are exchanged for one
another or for money. Every business requires some form of investment
and enough customers to whom its output can be sold on a consistent
basis in order to make a profit.
 Businesses can be privately owned, not-for-profit or state-owned. An
example of a corporate business is PepsiCo, while a Red Mud Coffee a
catering/coffee house is a private enterprise.
Society: Human beings and the social structures they collectively
create the society. Furthermore, a society is a group of people involved
in persistent social interaction, or a large social grouping sharing the
same geographical or social territory, typically subject to the same
political authority and dominant cultural expectations. Societies are
characterized by patterns of relationships (social relations) between
individuals who share a distinctive culture and institutions; a given
society may be described as the sum total of such relationships among its
constituent members
 Business and society are highly interdependent

3.  The role of business in society is on the Boardroom agenda. Either the CEO and the
Board manage the role their business plays, or others will manage it for them. At
stake is corporate reputation, innovation, competitiveness and growth.
 Most business leaders now take it for granted that companies have obligations to
communities and private-sector interests beyond simply providing jobs and
delivering goods or services. Laws regarding environmental and social issues, for the
most part, are placing heightened demands on corporations to honor widely held
social values, such as enforcing fairness in the workplace and controlling the
degradation of natural resources.
 Moreover, at the dawn of the 21st century many in society expect businesses not
only to comply with such regulations, but also to exceed the letter of the law,
uphold high standards of ethics in all dealings, and invest a portion of their profits
in socially constructive ventures or philanthropy—behaviors that some have termed
"corporate citizenship.”
 The relation between the two entities cannot be neglected. Each strongly
dependent with the other and defining the overall condition of the business. There
is no silver bullet for avoiding society, every business needs to continuously invest in
its relationship with society and to account for its use of natural resources. CEO’s
and Boards need to explicitly manage corporate behavior and their company’s social
and environmental footprint in order to build public confidence and trust.

4.  General Systems Theory (GST)” from Biology to
explain this relationship; first introduced in
1940’s
 Theory posits that organisms cannot be understood in
isolation, even though they have clear boundaries;
they can only be understood in relationship to their
surroundings
 Adapted to management theory means that
business firms are embedded in a broader social
environment with which they constantly
interact
 Business and society together form an interactive
social system

5.  Two critical questions:
 What is the purpose of the modern corporation?
 To whom, or what, should the firm be responsible?
 Traditional view: “Ownership Theory of the
Firm”
 Firm is the property of its owners
 Purpose is to maximize returns to shareholders
 Shareholders’ interests are paramount and take
precedence over all others


6.  Contrasting view: “Stakeholder Theory of
the Firm”
 Argues the corporation serves a broader purpose,
to create value for society
 Must make profit for owners to survive, however,
creates other kinds of value too
 Corporations have multiple obligations, all
“stakeholder” groups must be taken into
account

7.  A stakeholder refers to persons or groups
that affect, or are affected by, an
organization’s decisions, policies, and
operations
 A stake is an interest in–or claim on–a
business enterprise
 Businesses are embedded in networks that
involve many groups with such a stake

8.  Term stakeholder is NOT the same
as stockholder
 Words sound similar BUT are not the same
 Stockholders are one of several kinds
of stakeholders

9.  Stakeholder groups can be divided into two
categories:
 Market stakeholders
 Nonmarket stakeholders
 Market stakeholders are those that engage in
economic transactions with the company as it
carries out its primary purpose of providing
society with goods and services
 Sometimes referred to as primary stakeholders
 Nonmarket stakeholders are people or groups
who—although they do not engage in direct
economic exchange with the firm—are affected
by or can affect its actions
 Sometimes called secondary stakeholders

10.  An area of study that deals with ideas about
what is good and bad behavior.
 A branch of philosophy dealing with what is
morally right or wrong
 A belief that something is very important

11.  A code of ethics is a set of principles that
guide the organization in its programs,
policies and decisions for the business.
 The ethical philosophy an organization uses
to conduct business can affect the
reputation, productivity and bottom line of
the business.

12.  The ethics that leaders in an organization use
to manage employees may have an effect on
the morale and loyalty of workers.
 The code of ethics leaders use determines
discipline procedures and the acceptable
behavior for all workers in an organization.
 When leaders have high ethical standards, it
encourages workers in the organization to
meet that same level.

13.  Ethical behavior among workers in an
organization ensures that employees
complete work with honesty and integrity.
 Employees who use ethics to guide their
behavior adhere to employee policies and
rules while striving to meet the goals of the
organization.
 Ethical employees also meet standards for
quality in their work, which can enhance the
company’s reputation for quality products
and service.

14.  Leaders and employees adhering to a code of
ethics create an ethical organizational
culture.
 The leaders of a business may create an
ethical culture by exhibiting the type of
behavior they'd like to see in employees.
 The organization can reinforce ethical
behavior by rewarding employees who
exhibit the values and integrity that
coincides with the company code of ethics
and disciplining those who make the wrong
choices.

15.  A positive and healthy corporate culture
improves the morale among workers in the
organization, which may increase
productivity and employee retention; this, in
turn, has financial benefits for the
organization.
 Higher levels of productivity improve the
efficiency in the company, while increasing
employee retention reduces the cost of
replacing employees.

16.  Honor
 Integrity
 Respect
 Customer Focus
 Result-Oriented
 Risk Taking
 Passion
 Persistence

17.  You're the boss in a predominantly male
environment. The presence of a new female
employee stirs up conflict because your
company has not had a chance to conduct
sensitivity training. Some of your male
employees make inappropriate remarks to
your new employee. She complains to you; in
response, you sanction those responsible for
the conduct. You also wonder if it would be
wise to move your new female employee to
another position where she would be less
likely to draw attention.

18.  The concept of diversity encompasses
acceptance and respect.
 It means understanding that each individual
is unique,
and recognizing our individual differences.
 It is the exploration of these differences in a
safe, positive, and nurturing environment.
 It is about understanding each other and
moving beyond simple tolerance to
embracing and celebrating the rich
dimensions of diversity contained within
each individual.

19.  More women are working than ever before
 The workforce will continue to get older
 Ethnic and racial diversity is increasing
 More diversity yet to been.

20.  The service economy
 Interactions between people are key
 Customer base is more diverse
 Similarities between people ease process
 Globalization of business
 Doing business with people from around world
 The changing labor market
 Company mergers and buy-outs

21.  Gender Diversity
 Age Diversity
 Cultural Diversity
 Sexual Orientation
 Family Situations
 Physical and Psychological Disabilities
 Political Views
 Personal Idiosyncrasies

22.  More women in workforce today than ever
 Better educated than ever
 Most “nonstandard” workers (those who do
not hold regular, full-time jobs) are women
 55% of workers paid by temporary agencies are
women
 70% of part-time workers are women
 Stereotypes still remain
 Glass ceiling, etc.

23.  Availability Challenge
 In past employers could control diversity
 More people than jobs
 Qualified employees have become scarce
 Employers must become more flexible
 Realize “Different does not mean deficient”
 Fairness challenge
 In past, typically viewed as equal treatment
 Equal Employment Opportunity
 Now employers must embrace new diversity
 Essentially focus on “differences”

24.  Synergy challenge
 More and more group-based work
 Diversity can create positive and negative conflict
 Can facilitate creative problem-solving
 Can close down communication
 Can derail group processes
 Group leaders must minimize destructive conflict and
maximize diversity of input

25.  Articulate a clear diversity mission, set
objectives, and hold managers accountable.
 Spread a wide net in recruitment to find the
most diverse possible pool of qualified
candidates.
 Identify promising women and minorities and
provide them with mentors and other kinds of
support.
 Set up diversity councils to monitor the
company’s goals and progress toward them.

26.  Providing managers with training
 How to recruit/hire diverse employees
 How to orient/integrate new employees
 Providing all employees with training
 Realizing the differences that exist
 Learning how differences affect working environment
 How to maximize productivity without ignoring
employee differences

27. Close your eyes and imagine that everyone in
the room is the same. Exactly the same! Same
hair, eye color, height, weight, gender, race,
language. Everyone dresses the same and
sounds the same.
Now open your eyes, look to your left and your
right.
What do you see?