Chapter 4 Managerial Ethics   and CorporateSocial Responsibility
New Manager’s Questions• If an action is legal, then it is also ethical.1          2             3                        ...
New Manager’s Questions• It’s wrong to be a snitch or a tattler, even if  it is about telling on your company when it  is ...
New Manager’s Questions• It’s not the manager’s job to solve  problems in the outside world.1          2          3       ...
A Few Stats • 79% of respondents in the U.S. believe   questionable business practices are   widespread • Fewer than 1/3 s...
Managerial Ethics • Ethics - code of moral principles and values   that govern the behaviors of right or wrong • Standards...
Three Domains of Human Action                (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or ...
Domains of Human Action• Codified law  – Values & standards are written into the legal    systems  – Enforceable in the co...
Domains of Human Action• Free Choice  – Opposite end of scale  – Pertains to behavior about which the law has no    say  –...
Domains of Human Action• Ethics  – No specific laws  – Standards of conduct based on shared principles    & values about m...
Ethical Dilemmas • Ethics is always about making decisions • Some issues are difficult to resolve • Ethical dilemma   – Ar...
Ethical Dilemmas You are the moral agent, what would you do?  Your company requires a terrorist watch list    that screens...
Ethical Dilemmas You are the moral agent, what would you do?  As a sales manager for a major pharmaceuticals  company, you...
Ethical Dilemmas You are the moral agent, what would you do?  Your company is hoping to build a new overseas   manufacturi...
Ethical Dilemmas You are the moral agent, what would you do?      You have been collaborating with a fellow       manager ...
Study of Human Morality--#1 A runaway trolley is heading down the tracks toward 5 unsuspecting people. You’re standing nea...
Study of Human Morality--#2 What if the worker is standing on a bridge over the tracks and you have to push him off the br...
Results 97% of respondents said they could throw the switch (which would almost certainly lead to the death of the worker)...
Criteria for Ethical Decision Making • Most ethical dilemmas involve a conflict   between the needs of the part and the   ...
Criteria for Ethical Decision Making • Utilitarian Approach – moral behavior   produces the greatest good for the greatest...
Criteria for Ethical Decision Making • Individualism Approach – acts are moral if   they promote the individual’s long-ter...
Criteria for Ethical Decision Making • Moral-Rights Approach – humans have   fundamental rights and liberties that cannot ...
Six Moral Rights (Moral Rights Approach)     The right of free consent.     The right to privacy.     The right of free...
Criteria for Ethical Decision Making • Justice Approach – moral decisions must be   based on standards of equity, fairness...
A Manager’s Ethical Choices  Individuals bring their own personality and   traits to organizations  Personal needs, fami...
Three Levels of Personal Moral Development                   (c)2011 Cengage Learning. All Rights Reserved. May not be sca...
Transparency International Bribe Index                 (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, ...
What is Corporate Responsibility? • Distinguishing right from wrong; doing right • Good corporate citizenship • Make choic...
Major Stakeholders Relevant to MonsantoCompany                  (c)2011 Cengage Learning. All Rights Reserved. May not be ...
The Bottom of the Pyramid• Corporations can alleviate poverty and  social ills while making profits• BOP is twofold, profi...
The Ethic of Sustainability    Sustainability – economic development  that generates wealth and meets the needs   of curre...
Evaluating Corporate Social Performance                   (c)2011 Cengage Learning. All Rights Reserved. May not be scanne...
Managing Company Ethics andSocial Responsibility   Code of Ethics – a formal statement of the    company’s values regardin...
Managing Company Ethics andSocial Responsibility   Ethical Structures – systems, positions and     programs a company can ...
Managing Company Ethics andSocial Responsibility   Whistle-blowing – employee disclosure of   illegal, immoral, or illegit...
Building an Ethical Organization                  (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copie...
The Business Case for Ethics and SocialResponsibility      • Ethics and social responsibility is        an important busin...
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BM_Chapter 4 -revised

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  • An ethical situation arises when the actions of a person or organization may harm or benefit others
  • Normative ethics uses several approaches to describe values for guiding ethical decision making We’ll look at 4 of them
  • Cited as the bases for the recent trend among companies to monitor employee use of the internet and police personal habits such as alcohol & tobacco consumption because such behavior affects the entire workplace
  • Individualism ultimately leads to behavior toward others that fits stands of behavior people want toward themselves
  • The great majority of managers operate at level 2, meaning their ethical thought and behavior is greatly influenced by their superiors, colleagues, and other significant people in the organization 20% of American adults reach the level 3 stage
  • Bribes are still considered a normal part of doing business in many foreign countries…this chart rates the top 30 Emerging export powers rant the worst, India showing the greatest propensity for bribery & China which has become the world’s 4 th largest exporter almost as bad
  • 4 billion people who make up the lowest level of the world’s economic pyramid as defined by per capita income These people earn less than $1500 (US) a year…1/4 of them earning less than $1 a day
  • Organizations can find innovative ways to create wealth at the same time they are preserving natural resources
  • Economic – responsibility to produce goods & services that society wants and to maximize profits for its owners and shareholders—profit-maximizing view—advocated by Nobel Prize-winning economist Milton Friedman—sole mission to increase its profits as long as it stays within the rules of the game Legal—what society deems as important with respect to appropriate corporate behavior—expected to fulfill their economic goals within the framework of legal requirements imposed by local town councils, state legislatures & federal regulatory agencies Ethical—behaviors that are not necessarily codified into law and may not serve the corporation’s direct economic interests—act with equity, fairness & impartiality Discretionary—purely voluntarily and is guided by a company’s desire to make social contributions not madated by economics, law or ethics—no payback to company—not expected
  • 2 types of code of ethics: principle based statements & policy-based statements
  • There’s now a triple bottom line—economic, social & environmental performance One concern is will good citizenship hurt performance 70% of global CEOs believe corporate social responsibility is vital to their companies’ profitability People prefer to work for companies that demonstrate a high level of ethics & social responsibility Although the right thing might not always be profitable in the short run, many managers believe it can provide a competitive advantage by developing a level of trust that money can’t buy
  • BM_Chapter 4 -revised

    1. 1. Chapter 4 Managerial Ethics and CorporateSocial Responsibility
    2. 2. New Manager’s Questions• If an action is legal, then it is also ethical.1 2 3 4 5Mostly yes Mostly no (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    3. 3. New Manager’s Questions• It’s wrong to be a snitch or a tattler, even if it is about telling on your company when it is doing something illegal or immoral.1 2 3 4 5Mostly yes Mostly no (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    4. 4. New Manager’s Questions• It’s not the manager’s job to solve problems in the outside world.1 2 3 4 5Mostly yes Mostly no (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    5. 5. A Few Stats • 79% of respondents in the U.S. believe questionable business practices are widespread • Fewer than 1/3 said they think most chief executive officers (CEOs) are honest (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    6. 6. 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 (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    7. 7. Three Domains of Human Action (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    8. 8. Domains of Human Action• Codified law – Values & standards are written into the legal systems – Enforceable in the courts – Lawmakers set rules that people & corporations must follow in a certain way • Obtaining licenses for cars or paying corporate taxes (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    9. 9. Domains of Human Action• Free Choice – Opposite end of scale – Pertains to behavior about which the law has no say – Individual or organization enjoys complete freedom • Eat lunch • Choose music to listen to (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    10. 10. Domains of Human Action• Ethics – No specific laws – Standards of conduct based on shared principles & values about moral conduct that guide an individual or company (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    11. 11. Ethical Dilemmas • Ethics is always about making decisions • Some issues are difficult to resolve • Ethical dilemma – Arises in a situation concerning right or wrong when values are in conflict – Right & wrong cannot be clearly identified (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    12. 12. 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. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    13. 13. Ethical Dilemmas You are the moral agent, what would you do? As a sales manager for a major pharmaceuticals company, you’ve been asked to promote a new drug that costs $2500 per dose. You’ve read the reports saying the drug is only 1% more effective than an alternate drug that costs less than $625 per dose. The VP of sales wants you to aggressively promote the $2500 per does drug. He reminds you that if you don’t do so, lives could be lost that might have been saved with that 1% increase in drug effectiveness. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    14. 14. Ethical Dilemmas You are the moral agent, what would you do? Your company is hoping to build a new overseas manufacturing plant. You could save about $5 million by not installing standard pollution- control equipment that is required in the U.S. The plant will employ many local workers in a poor country where jobs are scarce. Your research shows that pollutants from the factory could potentially damage the local fishing industry. Yet building the factory with the pollution-control equipment will likely make the plant too expensive to build. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    15. 15. Ethical Dilemmas You are the moral agent, what would you do? You have been collaborating with a fellow manager on an important project. One afternoon, you walk into his office a bit earlier than schedules & see sexually explicit images on his computer monitor. The company has a zero- tolerance sexual-harassment policy as well as strict guidelines regarding personal use of the Internet. However, your colleague was in his own office and not bothering anyone else. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    16. 16. Study of Human Morality--#1 A runaway trolley is heading down the tracks toward 5 unsuspecting people. You’re standing near a switch that will divert the trolley onto a siding, but there is a single worker on the siding who cannot be warned in time to escape and will almost certainly be killed. Would you throw the switch? (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    17. 17. Study of Human Morality--#2 What if the worker is standing on a bridge over the tracks and you have to push him off the bridge to stop the trolley with his body in order to save the 5 unsuspecting people? (Assume his body is large enough to stop the trolley & yours is not.) Would you push the man, even though he would almost certainly be killed? (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    18. 18. Results 97% of respondents said they could throw the switch (which would almost certainly lead to the death of the worker) 42% said they could actually push the man to his death (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    19. 19. Criteria for Ethical Decision Making • Most ethical dilemmas involve a conflict between the needs of the part and the needs of the whole – Individual vs. the organization – Organization vs. society as a whole • Normative strategy – Based on norms & values to guide decision making (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    20. 20. Criteria for Ethical Decision Making • Utilitarian Approach – moral behavior produces the greatest good for the greatest number. • Adopted by 19th-century philosophers Jeremy Bentham & John Stuart Mill • Select the option that benefits the greatest # of people (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    21. 21. Criteria for Ethical Decision Making • Individualism Approach – acts are moral if they promote the individual’s long-term interest. • Produce a greater ratio of good to bad for the individual compared with other alternative is the right one to perform • Leads to honesty & integrity because that works best in the long run (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    22. 22. Criteria for Ethical Decision Making • Moral-Rights Approach – humans have fundamental rights and liberties that cannot be taken by an individuals decision. • Best maintains the rights of those affected by it (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    23. 23. Six Moral Rights (Moral Rights Approach)  The right of free consent.  The right to privacy.  The right of freedom of conscience.  The right of free speech.  The right to due process.  The right to life and safety. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    24. 24. Criteria for Ethical Decision Making • Justice Approach – moral decisions must be based on standards of equity, fairness and impartiality. • 3 types of justice are concern to managers • Distributive – requires that different treatment of people not be based on arbitrary characteristics • Procedural – requires that rules be administered fairly • Compensatory – individuals should be compensated for the cost of their injuries by the party responsible (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    25. 25. 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 like ego, confidence and independence (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    26. 26. Three Levels of Personal Moral Development (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    27. 27. Transparency International Bribe Index (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    28. 28. What is Corporate Responsibility? • Distinguishing right from wrong; doing right • Good corporate citizenship • Make choices that contribute to society and stakeholders • Stakeholders – any group within or outside the organization that has a stake (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    29. 29. Major Stakeholders Relevant to MonsantoCompany (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    30. 30. The Bottom of the Pyramid• Corporations can alleviate poverty and social ills while making profits• BOP is twofold, profit and address poverty• Serving and engaging customers at lowest level of economy• Profitable Responsibility is essential for sustainability (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    31. 31. The Ethic of Sustainability Sustainability – economic development that generates wealth and meets the needs of current population while preserving the environment for the needs of future generations. (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    32. 32. Evaluating Corporate Social Performance (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    33. 33. Managing Company Ethics andSocial Responsibility Code of Ethics – a formal statement of the company’s values regarding ethics and social issues. •2 types of code of ethics •Principle based – affect corporate culture; define fundamental values & contain general language •Policy based – outline procedures to be used in specific situations (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    34. 34. Managing Company Ethics andSocial Responsibility Ethical Structures – systems, positions and programs a company can undertake to implement ethical behavior. •Ethics committee – group of executives appointed to oversee company ethics •Chief ethics officer – company executive who oversees all aspects of ethics & legal compliance •Ethics training – helps employees deal with ethical questions & translate the values stated in a code of ethics into everyday behavior (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    35. 35. Managing Company Ethics andSocial Responsibility Whistle-blowing – employee disclosure of illegal, immoral, or illegitimate practices. •2002 Sarbanes-Oxley Act provides some safety for whistle-blowers (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    36. 36. Building an Ethical Organization (c)2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
    37. 37. The Business Case for Ethics and SocialResponsibility • Ethics and social responsibility is an important business issue • Stakeholders are pushing more initiatives and issues • The connection between ethics and financial performance has been widely debated (c)2011 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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