W3_ch03_Ethics and Social Responsibility.pptx
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- 1. Exploring Management John Schermerhorn, Jr. and Daniel G. Bachrach Sixth Edition Chapter 3 Ethics and Social Responsibility
- 2. "So if hearing that the CEO of Apple is gay can help someone struggling to come to terms with who he or she is, or bring comfort to anyone who feels alone, or inspire people to insist on their equality, then it's worth the trade-off with my own privacy.“ Tim Cook, CEO Apple, Inc. Copyright ©2018 John Wiley & Sons, Inc. 2
- 3. Your Chapter 3 Takeaways • Understand how ethics and ethical behavior play out in the workplace. (3.1) • Know how to maintain high standards of ethical conduct. (3.2) • Identify when organizations are and are not acting in socially responsible ways. (3.3) Copyright ©2018 John Wiley & Sons, Inc. 3
- 4. •Ethical behavior is values driven. •Views differ on what constitutes moral behavior •What is considered ethical can vary across cultures. •Ethical dilemmas arise as tests of personal ethics and values. •People have tendencies to rationalize unethical behaviors. Copyright ©2018 John Wiley & Sons, Inc. Takeaway 3.1 – answers to come 4
- 5. ETHICS IN THE WORKPLACE 3.1 Ethical Behavior Ethics • A code of moral principles that sets standards of good or bad, or right or wrong, in our conduct. Ethical Behavior • That which is “right” or “good” in the context of governing moral code. • Ethical behavior is value driven Copyright ©2018 John Wiley & Sons, Inc. 5
- 6. ETHICS IN THE WORKPLACE 3.1 Values Driven Values • Broad beliefs about what is appropriate behavior Terminal Values • Preferences about desired end states Instrumental Values • Preferences regarding the means to desired ends Copyright ©2018 John Wiley & Sons, Inc. 6
- 7. ETHICS IN THE WORKPLACE 3.1 The Most Common Unethical Acts by Managers include: • Verbal • Sexual • Racial harassment • Misuse of company property • Giving preferential treatment Copyright ©2018 John Wiley & Sons, Inc. 7
- 8. ETHICS IN THE WORKPLACE 3.1 Views on Moral Behavior Differ Moral Reasoning • Reasons for various ethical practices Copyright ©2018 John Wiley & Sons, Inc. Figure 3.1 How Do Alternative Moral Reasoning Approaches View Ethical Behavior? 8
- 9. ETHICS IN THE WORKPLACE 3.1 Moral Reasoning Utilitarian View • Which action delivers the most good to the largest amount of people? Copyright ©2018 John Wiley & Sons, Inc. 9
- 10. ETHICS IN THE WORKPLACE 3.1 Moral Reasoning Individualism View • Which action is in our best interest in the long-term? • Can be quite different from the best choice for the short term Copyright ©2018 John Wiley & Sons, Inc. 10
- 11. ETHICS IN THE WORKPLACE 3.1 Moral Reasoning Justice View Procedural Justice • Rules are applied fairly Distributive Justice • People are treated the same regardless of personal characteristics Interactional Justice • People are treated with dignity and respect Commutative Justice • Transactions are fair and everyone has access to the same information Copyright ©2018 John Wiley & Sons, Inc. 11
- 12. ETHICS IN THE WORKPLACE 3.1 Moral Reasoning Moral Rights View • Fundamental rights of all people are respected Copyright ©2018 John Wiley & Sons, Inc. 112
- 13. ETHICS IN THE WORKPLACE 3.1 Moral Reasoning Excerpt From Universal Declaration of Human Rights United Nations •Article 1—All human beings are born free and equal in dignity and right •Article 18—Everyone has the right to freedom of thought, conscience, and religion •Article 19—Everyone has the right to freedom of opinion and expression •Article 22—Everyone has the right to work, to free choice of employment, to just and favorable conditions of work •Article 26—Everyone has the right to education Copyright ©2018 John Wiley & Sons, Inc. 13
- 14. ETHICS IN THE WORKPLACE 3.1 Ethics Varies Across Cultures Situation: • A 12-year-old boy is working in a garment factory in Bangladesh. He is the sole income earner for his family. He often works 12-hour days and was once burned quite badly by a hot iron. One day he is told he can’t work. His employer was given an ultimatum by the firm’s major American customer – “No child workers if you want to keep our contracts.” The boy says, “I don’t understand. I could do my job very well. My family needs the money.” Copyright ©2018 John Wiley & Sons, Inc. 14
- 15. ETHICS IN THE WORKPLACE 3.1 Cultural Relativism and Moral Absolutism • Cultural relativism justifies a decision if it conforms to local values, laws, and practices • Moral absolutism justifies a decision only if it conforms to the ways of the home country. Copyright ©2018 John Wiley & Sons, Inc. Figure 3.2 How Do Cultural Relativism and Moral Absolutism Influence International Business Ethics? 15
- 16. ETHICS IN THE WORKPLACE 3.1 Ethical Dilemma • A situation that, although offering potential benefits, is unethical. • One of the most common ethical dilemmas occurs when a company’s culture conflicts with an employee’s personal ethics. Copyright ©2018 John Wiley & Sons, Inc. 16
- 17. ETHICS IN THE WORKPLACE 3.1 Common Examples of Unethical Behavior at Work Copyright ©2018 John Wiley & Sons, Inc. 17
- 18. ETHICS IN THE WORKPLACE 3.1 Rationalizing Unethical Behavior Four reasons: Copyright ©2018 John Wiley & Sons, Inc. People Have a Tendency to Rationalize Unethical Behavior 1. “What I’m doing is not really illegal.” 2. “My behavior is in everyone’s best interests.” 3. “Nobody will ever know about it.” 4. “The Organization will stand behind me.” 18
- 19. ETHICS IN THE WORKPLACE 3.1 Study Guide for Takeaway 3.1 Rapid Review: •Ethical behavior is that which is accepted as “good” or “right” as opposed to “bad” or “wrong.” •The utilitarian, individualism, moral rights, and justice views offer different approaches to moral reasoning; each takes a different perspective of when and how a behavior becomes ethical. •Cultural relativism argues that no culture is ethically superior to any other; moral absolutism believes there are clear rights and wrongs that apply universally, no matter where in the world one might be. •An ethical dilemma occurs when one must decide whether to pursue a course of action that, although offering the potential for personal or organizational gain, may be unethical. •Ethical dilemmas faced by managers often involve conflicts with superiors, customers, and subordinates over requests that involve some form of dishonesty. •Common rationalizations for unethical behavior include believing the behavior is not illegal, is in everyone’s best interests, will never be noticed, or will be supported by the organization. Copyright ©2018 John Wiley & Sons, Inc. 19
- 20. ETHICS IN THE WORKPLACE 3.1 Study Guide for Takeaway 3.1 Questions for Discussion: 1. For a manager, is any one of the moral reasoning approaches better than the others? 2. Will a belief in cultural relativism create inevitable ethics problems for international business executives? 3. Are ethical dilemmas always problems, or can they be opportunities? Copyright ©2018 John Wiley & Sons, Inc. 200
- 21. ETHICS IN THE WORKPLACE 3.1 Be Sure You Can… for Takeaway 3.1 •differentiate between legal behavior and ethical behavior •differentiate between terminal and instrumental values and give examples of each •list and explain four approaches to moral reasoning •illustrate distributive, procedural, interactive, and commutative justice in organizations •explain the positions of cultural relativism and moral absolutism in international business ethics •illustrate the types of ethical dilemmas common in the workplace •explain how bad management can cause ethical dilemmas •list four common rationalizations for unethical behavior Copyright ©2018 John Wiley & Sons, Inc. 211
- 22. MAINTAINING HIGH STANDARDS 3.2 Takeaway 3.2 – answers to come • Personal character and moral development influence ethical conduct. • Managers as positive role models can inspire ethical conduct. • Training in ethical decision making may improve ethical conduct. • Protection of whistleblowers may encourage ethical conduct. • Formal codes of ethics set standards for ethical conduct Copyright ©2018 John Wiley & Sons, Inc. 222
- 23. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Influence on Moral Development Ethical Frameworks • Personal rules and strategies for making ethical decisions Lawrence Kohlberg • Three levels of moral development Copyright ©2018 John Wiley & Sons, Inc. Figure 3.3 What are the Stages in Kohlberg’s Three Levels of Moral Development? 23
- 24. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Management Influence Management Behavior • In order to have a positive impact on ethical conduct throughout an organization, those at the top must walk the talk. • An Immoral managers chooses to behave unethically. • An Amoral manager fails to consider ethics • A Moral manager makes ethical behavior a personal goal. Copyright ©2018 John Wiley & Sons, Inc. 24
- 25. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Ethics Training Ethics Training • Seeks to help people understand the ethical aspects of decision making and to incorporate high ethical standards into their daily behavior. • Training helps employees understand the corporate culture and expectations regarding ethical behavior. Copyright ©2018 John Wiley & Sons, Inc. 25
- 26. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Ethical Dilemma Copyright ©2018 John Wiley & Sons, Inc. TIPS TO REMEMBER Checklist for Dealing with Ethical Dilemmas Step 1. Recognize the ethical dilemma Step 2. Get the facts Step 3. Identify your options Step 4. Test each option by asking: Is it legal? Is it right? Is it beneficial? Step 5. Decide which option to follow. Step 6. Double-check your decision by asking three spotlight questions. “How would I feel if my family found out about my decision?” “How would I feel if my decision was reported in the local newspaper or posted on the Internet?” “What would the person I know who has the strongest character and best ethical judgment say about my decision?” Step 7. Take action. 266
- 27. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Whistleblowing Whistleblowers • Persons who expose organizational misdeeds in order to preserve ethical standards and protect against wasteful, harmful, or illegal acts. • Many whistleblowers were / are fired for their actions. • State and federal laws now offer some protection. Copyright ©2018 John Wiley & Sons, Inc. 27
- 28. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Whistleblowing Organizational barriers to whistleblowing • Strict chain of command • Strong work group identities • Ambiguous priorities Copyright ©2018 John Wiley & Sons, Inc. 28
- 29. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Codes of Ethics Formal codes of ethics set standards for ethical conduct • Discrimination • Forced labor • Working conditions • Freedom of association Copyright ©2018 John Wiley & Sons, Inc. 299
- 30. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Study Guide for Takeaway 3.2 Rapid Review: • Ethical behavior is influenced by an individual’s character and represented by core values and beliefs. • Kohlberg describes three levels of moral development—preconventional, conventional, and postconventional—with each of us moving step-by-step through the levels as we grow ethically over time. • Ethics training can help people better understand how to make decisions when dealing with ethical dilemmas at work. • Whistleblowers who expose the unethical acts of others have incomplete protection from the law and can face organizational penalties. • All managers are responsible for acting as ethical role models for others. • Immoral managers choose to behave unethically; amoral managers fail to consider ethics; moral managers make ethics a personal goal. • Formal codes of conduct spell out the basic ethical expectations of employers regarding the behavior of employees and other contractors. Copyright ©2018 John Wiley & Sons, Inc. 30
- 31. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Study Guide for Takeaway 3.2 Questions for Discussion: 1. Is it right for organizations to require ethics training of employees? 2. Should whistleblowers have complete protection under the law? 3. Should all managers be evaluated on how well they serve as ethical role models? Copyright ©2018 John Wiley & Sons, Inc. 31
- 32. MAINTAINING HIGH STANDARDS OF ETHICAL CONDUCT 3.2 Be Sure You Can… for Takeaway 3.2 •explain how ethical behavior is influenced by personal factors •list and explain Kohlberg’s three levels of moral development •explain the term “whistleblower” •list three organizational barriers to whistleblowing •compare and contrast ethics training, ethics role models, and codes of conduct for their influence on ethics in the workplace •state the spotlight questions for double-checking the ethics of a decision •describe differences between the inclinations of amoral, immoral, and moral managers when facing difficult decisions Copyright ©2018 John Wiley & Sons, Inc. 332
- 33. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Takeaway 3.3 answers to come • Social responsibility is an organization’s obligation to best serve society. • Perspectives differ on the importance of corporate social responsibility. • Shared value integrates corporate social responsibility into business strategy. • Social businesses and social entrepreneurs are driven by social responsibility. • Social responsibility audits measure the social performance of organizations. • Sustainability is an important social responsibility goal. Copyright ©2018 John Wiley & Sons, Inc. 33
- 34. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Social Responsibility is Serving Society Stakeholders are people and institutions most directly affected by an organization’s performance. Copyright ©2018 John Wiley & Sons, Inc. Figure 3.4 Who are the Stakeholders of Organizations? 34
- 35. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Corporate Social Responsibility • It is the obligation of the organization to act in ways that serve both its own interests and the interests of its stakeholders, representing society at large. • Often called “CSR.” Copyright ©2018 John Wiley & Sons, Inc. 35
- 36. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Social Responsibility is Serving Society Triple Bottom Line—how well an organization performs when measured not only on financial criteria, but also on social and environmental ones. • Is the decision economically sound? • Is the decision socially responsible? • Is the decision environmentally sound? Three Ps • Profit, People, Planet Copyright ©2018 John Wiley & Sons, Inc. 36
- 37. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Views on Corporate Social Responsibility Copyright ©2018 John Wiley & Sons, Inc. Socioeconomic View Classical View Responsibility increases long-run profits Reduces business profits and creates higher business costs Improves public image Dilutes business purpose Businesses have resources and ethical obligations to act responsibly Gives too much social power to business 37 • Creating Shared Value: • “The purpose of a corporation must be redefined as creating shared value, not just profit.”
- 38. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Social Responsibility Virtuous Circle • Socially responsible actions lead to improved financial performance. • Organization is more likely to engage in socially responsible acts in the future. • Example: car manufacturers who produce fuel- efficient and hybrid cars may see improved financial performance and introduce more fuel efficient models. Copyright ©2018 John Wiley & Sons, Inc. 38
- 39. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Social Business and Social Entrepreneurs Social business • Business model that addresses social problems such as hunger, illiteracy, and poverty Social entrepreneurs • Create businesses that help to solve pressing social problems • Examples: Grameen Bank, Tom’s Shoes, This Bar Saves Lives Copyright ©2018 John Wiley & Sons, Inc. 39
- 40. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Measuring Social Responsibility Social responsibility audit • Determines the organization’s performance in various areas of social responsibility • Ranges from compliance to conviction Copyright ©2018 John Wiley & Sons, Inc. 40
- 41. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Sustainability Sustainability • concerns doing business in such a way that respects future generations and their right to the world's natural resources • Organization operates in a way that meets the needs of the customer and protects natural environment Sustainable development • uses natural resources in such a way that today's needs are met, yet they are preserved for future generations Copyright ©2018 John Wiley & Sons, Inc. 41
- 42. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Sustainability • Environmental Capital or Natural Capital is the storehouse of natural resources - that we use to sustain life and produce goods and services for society. • Land, Water, Minerals, Atmosphere • Much broader than a focus on the natural environment alone. • Scholar Jeffrey Pfeffer offers a strong case in favor of giving management attention not only to issues of ecological and environmental sustainability—but also to social and human sustainability. Copyright ©2018 John Wiley & Sons, Inc. 42
- 43. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 ISO14001 • Global quality standard that certifies organizational environmental objectives for minimal environmental impact. • Requires certified organizations to set environmental objectives and targets • Requires certified organizations to account for the environmental impact of their activities, products, or services Copyright ©2018 John Wiley & Sons, Inc. 43
- 44. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Study Guide for Takeaway 3.3 Rapid Review: •Corporate social responsibility is an obligation of the organization to act in ways that serve both its own interests and the interests of its stakeholders. •In assessing organizational performance today, the concept of the triple bottom line evaluates how well organizations are doing on economic, social, and environmental performance criteria. •Criteria for evaluating corporate social performance include how well it meets economic, legal, ethical, and discretionary responsibilities. •The argument against corporate social responsibility says that businesses should focus on making profits; the argument for corporate social responsibility says that businesses should use their resources to serve broader social concerns. •The concept of sustainable development refers to making use of environmental resources to support societal needs today while also preserving and protecting the environment for use by future generations. •Social businesses and social entrepreneurs pursue business models that help to directly address important social problems. Copyright ©2018 John Wiley & Sons, Inc. 44
- 45. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Study Guide for Takeaway 3.3 Questions for Discussion: 1. Choose an organization in your community. What questions would you ask to complete an audit of its social responsibility practices? 2. Is the logic of the virtuous circle a convincing argument in favor of corporate social responsibility? 3. Should government play a stronger role in making sure organizations commit to sustainable development? Copyright ©2018 John Wiley & Sons, Inc. 45
- 46. SOCIAL RESPONSIBILITIES OF ORGANIZATIONS 3.3 Be Sure You Can… for Takeaway 3.3 • explain the concept of social responsibility • summarize arguments for and against corporate social responsibility • illustrate how the virtuous circle of corporate social responsibility might work • explain the notion of social business Copyright ©2018 John Wiley & Sons, Inc. 46
- 47. Copyright Copyright © 2018 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein. 47 Copyright ©2018 John Wiley & Sons, Inc.
Editor's Notes
- Recent history in the way of unethical behavior in major corporations and government agencies has made this topic a hot issue.
- Your Chapter 3 Takeaways
- Takeaway 3.1 – answers to come
- Because ethical behavior is value driven, it is a complex subject. What is ethical to one person may not be ethical to another. Ethics is defined as the code of moral principles that sets standards of good or bad, or right or wrong, in our conduct. Personal ethics are guides for behavior, helping people make moral choices among alternative courses of action. Most typically, we use the term ethical behavior to describe what we accept as “good” and “right” as opposed to “bad” or “wrong.”
- Ethical issues and problems arise when people do something that violates their, or someone else’s values—underlying beliefs and judgments of what is right or wrong. The psychologist Milton Rokeach distinguishes between “terminal” and “instrumental” values. Many ethical problems arise at work when people are asked to do something that violates their personal beliefs. For some, if the act is legal, they proceed with confidence and consider their behavior ethical. For others, the ethical test goes beyond legality and extends to personal values– underlying beliefs and judgments regarding what is right or desirable and that influence individual attitudes and behaviors. In the future, let’s discuss the meaning between Value, Terminal Values and Instrumental Values.
- Other findings include: 91% of workers are more likely to behave ethically when they have work–life balance; but, 30% say they suffer from poor work–life balance. Top reasons for unethical behavior are lack of personal integrity (80%) and lack of job satisfaction (60%). Most workers consider it unacceptable to steal from an employer, cheat on expense reports, take credit for another’s accomplishments, or lie on time sheets. Most workers consider it acceptable to ask a work colleague for a personal favor, take sick days when not ill, or use company technology for personal affairs.
- Figure 3.1 summarizes four different philosophical views of ethical behavior—utilitarian, individualism, justice, and moral rights. Each represents an alternative approach to moral reasoning and may conclude differently about whether a given behavior is ethical. The individualism view focuses on long-term advancement of self-interests. A behavior is ethical under the justice view of moral reasoning when people are treated impartially and fairly, and according to legal rules and standards. A business owner decides to cut 30% of a small firm’s workforce to keep the business profitable and save the remaining jobs, rather than lose them all. This decision is considered ethical in the utilitarian view because it delivers the greatest good to the greatest number of people. The moral rights view considers behavior to be ethical when it respects and protects the fundamental rights of people. Based on the teachings of John Locke and Thomas Jefferson, this view believes all people have rights to life, liberty, and fair treatment under the law.
- Utilitarian view weighs the cost and benefits of actions taken. The course of action that creates the most benefit for the most people is the right choice. A business owner decides to cut 30% of a small firm’s workforce to keep the business profitable and save the remaining jobs, rather than lose them all. This decision is considered ethical in the utilitarian view because it delivers the greatest good to the greatest number of people. Founded in the work of 19th-century philosopher John Stuart Mill, the results-oriented utilitarian view tries to assess the moral implications of our actions in terms of their consequences. Business executives, for example, might use profits, efficiency, and other performance criteria to judge when and if a decision is best for the most people. But, we also have to be careful. Utilitarian thinking relies on assessment of future outcomes that can be difficult to predict and measure accurately. What is the economic value of a human life, for example, when deciding how rigid safety regulations need to be on an off shore drilling rig or in an underground coal mine? Is it even appropriate to try to put an economic value on the potential loss of human life?
- Individualism view looks at the personal benefits in the long run. The individualism view focuses on long-term advancement of self-interests. The notion is that people become self-regulating, and ethics are maintained as people strive for individual advantage over time. Suppose that you are considering cheating on your next test. With further thought, you realize any short-term gain might lead to a long-term loss if you are caught and expelled from school. Thus, defense of your self-interest causes you to reject the original inclination to cheat on the exam. Not everyone, as you might expect, believes we can rely on individualism to ensure that decisions result in ethical behavior. People vary in their capacity for self-regulation, especially when faced with difficult choices and situations that put honesty and integrity to stiff tests. And, a common complaint about individualism in business is that decisions are too often driven by a pecuniary ethic fueled by greed and resulting in misbehavior.
- The justice view of moral reasoning considers a behavior ethical when people are treated impartially and fairly, according to legal rules and standards. Procedural justice involves the fair administration of policies and rules. For example, does a sexual harassment charge levied against a senior executive receive the same full hearing as one made against a first-level supervisor? Distributive justice involves the allocation of out-comes without respect to individual characteristics, such as those based on ethnicity, race, gender, or age. For example, does a woman with the same qualifications and experience as a man receive the same consideration for hiring or promotion? Interactional justice focuses on treating everyone with dignity and respect. For example, does a bank loan officer take the time to fully explain to an applicant why he or she was turned down for a loan? Commutative justice focuses on the fairness of exchanges or transactions. An exchange is considered fair if all parties enter into it freely, have access to relevant and available information, and obtain some type of benefit from the transaction.
- The moral rights view considers behavior to be ethical when it respects and protects the fundamental rights of people. Based on the teachings of John Locke and Thomas Jefferson, this view believes all people have rights to life, liberty, and fair treatment under the law. In organizations, this translates into protecting the rights of employees to privacy, due process, free speech, free consent, health and safety, and freedom of conscience.
- The United Nations seeks to uphold the Moral Rights View globally.
- After reading the situation aloud, ask yourself: Should this child be allowed to work?
- To make matters more complex, culture places a significant role in determining ethical behavior. What is accepted in one country may be unethical or even illegal in another. In other words, ethical standards are absolute and should apply universally across cultures and national boundaries. The international business world is one of the most challenging settings in respect to ethical decision making. This figure identifies two diametrically opposed extremes. Cultural relativism justifies a decision if it conforms to local values, laws, and practices. Moral absolutism justifies a decision only if it conforms to the ways of the home country. Business ethicist Thomas Donaldson finds fault with both cultural relativism and moral absolutism. He argues instead that fundamental human rights and ethical standards can be preserved while values and traditional of a local culture are respected. Cultural relativism contrasts with the alternative of moral absolutism. This is a universalist ethical position suggesting that if a behavior or practice is not okay in one’s home environment, it is not acceptable practice anywhere else.
- If you find yourself in this situation, find another employer. An ethical dilemma is a situation requiring a decision about a course of action that, although offering potential benefits, may be considered unethical. As a further complication, there may be no clear consensus on what is “right” and “wrong.” In these circumstances, one’s personal values are often the best indicators that something isn’t right. An engineering manager speaking from experience sums it up this way: “I define an unethical situation as one in which I have to do something I don’t feel good about.”
- The items listed in Table 3.1 are common examples of unethical behavior at work.
- Rationalizing does not make a wrong deed right. There are four reasons (and many more) than people use to rationalize unethical behavior.
- Rapid Review Study Guide for Takeaway 3.1
- Questions for Discussion for Study Guide Takeaway 3.1
- Be Sure You Can... For Takeaway 3.1
- Takeaway 3.2 – answers to come
- People start with a pretty simple “what’s in it for me?” self-centered thought process when confronted with choices. Kohlberg suggests that we move from that selfish view to one that tries to follow rules and act like everyone else and finally learn to choose actions based on personal principles as influenced by the society in which we live. At the preconventional level of moral development, the individual focuses on self-interests, avoiding harm and making deals for gain. At the conventional level, attention becomes more social centered, and the individual tries to be consistent and meet obligations to peers. At the postconventional level of moral development, principle-centered behavior results in the individual living up to societal expectations and personal principles.
- Management behavior is the most important determination of employee behavior. Managers at all levels in all organizations have a lot of power to shape policies and set a moral tone. Some of this power works through the attention given to policies that set high ethics standards—and to their enforcement. Another and significantly larger part of this power works through personal examples managers set as ethics role models. To have a positive impact, a manager must walk the ethics talk. An example is to set realistic and achievable performance goals rather than impossible ones. A Fortune survey reported that 34% of its respondents believed a company president can help to create an ethical climate by setting reasonable goals “so that subordinates are not pressured into unethical actions.”
- Training can help employees understand the corporate culture and expectations regarding ethical behavior but what employees see is more important. It would be nice if everyone had access through their employers to ethics training that helps them understand and deal with ethical aspects of decision making. Although not all will have this opportunity, more and more are getting it, including college students. Most business schools, for example, now offer required and elective courses on ethics or integrate ethics throughout a curriculum
- Ethical dilemmas become more likely when others around you are behaving in an unethical manner. Here’s a checklist for dealing with ethical dilemmas.
- Whistleblowers face a very difficult situation. Many are fired or their careers are stalled. A whistleblower is someone who exposed organizational misdeeds to preserve ethical standards and protect against wasteful, harmful, or illegal acts. Whistleblowers take significant career risks when they expose wrongdoing in organizations. Although federal and state laws offer whistleblowers some defense against “retaliatory discharge,” the protection is still inadequate overall. Laws vary from state to state, and the federal laws mainly protect government workers. And even with legal protection, the very nature of organizations as power structures create barriers to discourage the practice.
- Whistleblowers face a very difficult situation. Many are fired or their careers are stalled. A strict chain of command can make it difficult to bypass the boss if he or she is the one doing something wrong. Strong work-group identities can discourage whistleblowing and encourage loyalty and self-censorship. And, working with unclear goals and rules can sometimes make it hard to distinguish right from wrong.
- Discrimination -“Factories shall employ workers on the basis of their ability to do the job, not on the basis of their personal characteristics or beliefs.” Forced Labor – “Factories shall not use any prison, indentured or forced labor.” Working Conditions – “Factories must treat all workers with respect and dignity and provide them with a safe and healthy environment.” Freedom of association – “Factories must not interfere with workers who wish to lawfully and peacefully associate, - organize or bargain collectively.”
- Rapid Review
- Questions for discussion for Takeaway 3. 2
- Be sure you can... For Takeaway 3.2
- There are many opinions on the obligation of organizations to serve society. This section looks at several opinions on what is the best way for organizations to fulfill their social responsibility obligations.
- As you can see, organizations interact and affect many different groups. The larger the organization, the greater the effect. Stakeholders are the individuals, groups, and other organizations that have a direct interest in how well an organization performs. A basic list of stakeholders for any organization would begin with the employees and contractors who work for the organization, customers and clients who consume the goods and services, suppliers of needed resources, owners who invest capital, regulators in the form of government agencies, and special-interest groups such as community members and activists.
- Corporate social responsibility takes a broad view of who the stakeholder groups are. The way organizations behave in relationship with their many stakeholders is a good indicator of their underlying ethical character. When we talk about the “good” and the “bad” in business and societal relationships, corporate social responsibility is at issue. Often called CSR, it is defined as an obligation of the organization to act in ways that serve both its own interests and the interests of its stakeholders, representing society at large.
- Corporate social responsibility is a long standing point of discussion and debate. The three criteria of the Triple Bottom Line frequently conflict. Some call the Triple Bottom Line the Three Ps of organizational performance. Example: “Offer a pure and healthy product that tastes good and earn a profit without harming the environment.”
- The classical view of CSR holds that management’s only responsibility in running a business is to maximize profits and shareholder value. It puts the focus on the single bottom line of financial performance. In other words: “The business of business is business.” This narrow stakeholder perspective is represented in the views of the late Milton Friedman, a respected economist and Nobel Laureate. He says, “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of Creating Shared Value: social responsibility other than to make as much money for their stockholders as possible.” The classical view of CSR is that business should focus on the pursuit of profits. The arguments against corporate social responsibility include fears that its pursuit will reduce business profits, raise business costs, dilute business purpose, and give business too much social power. Yet events such as the huge BP oil spill in the Gulf of Mexico seem to argue otherwise. The public was outraged about the oil spill. Demands were quickly made for stronger government oversight and control over corporate practices such as deep-water oil drilling that might put our natural world at risk. The socioeconomic view of CSR holds that management of any organization should be concerned for the broader social welfare, not just corporate profits. This broad stakeholder perspective puts the focus on the expanded triple bottom line of not just financial performance, such as shareholder returns, but also social and environmental performance. It is supported by Paul Samuelson, another distinguished economist and also a Nobel Laureate. Shared Value: Executives can and should make business decisions with full understanding that economic gains and social progress are fundamentally interconnected. In other words, businesses can make profits while striving to do good and overcome social ills such as pollution, poverty, illiteracy, and disease.
- The best-case scenario is a virtuous circle, where corporate social responsibility leads to improved financial performance that leads to more socially responsible actions in the future. Frequently doing the “right thing” is recognized by consumers and investors. Those in favor of corporate social responsibility argue that it will boost long-run profits, improve public image, and help businesses avoid more government regulation. Researchers are describing the worst-case scenario of CSR as no adverse impact on the financial bottom line.
- Social businesses are profit driven. But instead of the profits being returned to investors or owners, they are used to pay off initial start-up costs and then reinvested to expand the social business to serve more clients and customers. These businesses are developed by social entrepreneurs, people who take business risk with the goal of finding novel ways to solve pressing social problems at home and abroad. Social entrepreneurs are like business entrepreneurs with one big difference: They are driven by a social mission, not financial gain.54 They pursue original thinking and innovations to help solve social problems and make lives better for people who are disadvantaged. A social business with a business model that directly addresses a social problem—using microcredit lending to help fight poverty. And in the expanding domain of social businesses and social entrepreneurship, Mohammed Yunus’s microfinance ideas and examples have set inspirational benchmarks.
- A social responsibility audit can be used at regular intervals to report on and systematically assess an organization’s performance in various areas of CSR. As shown in the small figure, an audit of corporate social performance might cover the organization’s performance on four criteria for evaluating socially responsible practices: economic, legal, ethical, and discretionary responsibility. An organization is meeting its economic responsibility when it earns a profit through the provision of goods and services desired by customers. Legal responsibility is fulfilled when an organization operates within the law and according to the requirements of various external regulations. An organization meets its ethical responsibility when its actions voluntarily conform not only to legal expectations but also to the broader values and moral expectations of society. The highest level of social performance comes through the satisfaction of discretionary responsibility. At this level, the organization moves beyond basic economic, legal, and ethical expectations to provide leadership in advancing the well-being of individuals, communities, and society as a whole.
- Sustainability involves respecting the right of future generations to the resources we enjoy today. Disasters like the BP oil spill in the Gulf of Mexico and the nuclear power plant disaster in Fukushima, Japan, make the link between organizations and our natural environment a front-page issue. But these and other cases should cause you to wonder more generally about business practices that may pose risks, present and future, to humankind and the natural environment. The issues should prompt you to be concerned about the extent to which we are abusing versus protecting, and consuming versus conserving, the world’s resources. Think about the issues of our day—things like resource scarcity, climate change, carbon footprints, and alternative energy. Think about popular terms and slogans—ones like renew, recycle, conserve, and preserve. They all reflect the importance of sustainability as a priority of the times, affecting all of us and all institutions of our society. You can think of it as a goal, one that addresses the rights of both present and future generations as stakeholders of the world’s natural resources—everything from the air that we breathe to the precious metals that give life to our many electronic devices.
- Sustainable practices include clean energy. Environmental Capital or Natural Capital is the storehouse of natural resources - that we use to sustain life and produce goods and services for society. Land, Water, Minerals, Atmosphere The notion of sustainability and the pursuit of sustainable development goals can be made much broader than a focus on the natural environment alone. Scholar Jeffrey Pfeffer offers a strong case in favor of giving management attention to social and human sustainability in addition to traditional green management themes.
- ISO 14001 allows organizations a standard for sustainability. The importance of environmental capital is reflected in ISO 14001, a global quality standard that requires certified organizations to set environmental objectives and targets; account for the environmental impact of their activities, products, or services; and continuously improve environmental performance. At PepsiCo, for example, CEO Indra Nooyi has said that her firm’s “real profit” should be assessed as Revenue less Cost of Goods Sold less Costs to Society. “All corporations operate with a license from society,” says Nooyi. “It’s critically important that we take that responsibility very, very seriously; we have to make sure that what corporations do doesn’t add costs to society.
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