The document discusses managing ethics and social responsibility in organizations. It defines ethics and explains how managers face complex ethical issues and dilemmas. It also discusses approaches to ethical decision making and how managers must balance the interests of various stakeholders. The document outlines concepts like corporate social responsibility and the bottom of the pyramid, describing strategies companies use to address social issues and alleviate poverty while being profitable. It emphasizes that ethics and sustainability should be integrated into all levels of organizational management and decision making.

1. MANAGEMENT
RICHARD L. DAFT

2. Managing Ethics and
Social Responsibility
CHAPTER 5

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Learning Outcomes
• Define ethics and explain how ethical behavior relates to behavior governed by
law and free choice.
• Explain the utilitarian, individualism, moral-rights, and justice approaches
for evaluating ethical behavior.
• Describe the factors that shape a manager’s ethical decision making.
• Identify important stakeholders for an organization and discuss how managers
balance the interests of various stakeholders.
• Explain the bottom-of –the pyramid concept and some of the innovative
strategies companies are using.
• Explain the philosophy of sustainability and why organizations are embracing it.
• Define corporate social responsibility and how to evaluate it along economic,
legal, ethical, and discretionary criteria.
• Discuss how ethical organizations are created through ethical leadership and
organizational structures and systems.

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Will You Be A
Courageous Manager?
• Managers exercise the strength of their
moral beliefs and sense of justice
• Moral lapses and financial scandals has
made ethical and courageous behavior an
important trait for today’s managers

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Ethics
The code of moral principles and
values that govern the behaviors of
a person or group with respect to
what is right or wrong.

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Managerial Ethics
• Ethics can be difficult to define
• Ethical issues are exceedingly complex
• Managers face a variety of difficult
situations
• Ethics fall between law and free choice

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Ethical Dilemmas: What
Would You Do?
• An ethical dilemma arises in a situation
concerning right or wrong when values
are in conflict
• Managers and employees are the moral
agents who must make ethical choices
• Decisions about advertising, operations,
and Internet usage are all dilemmas YOU
might face

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Criteria for Ethical
Decision Making
• Utilitarian approach – moral behaviors should produce the
greatest good for the greatest number
• Individualism approach – acts are moral when they
promote the individual’s best long-term interests
• Moral Rights Approach – moral decisions are those that
best maintains the rights of those affected
• Justice Approach – decisions must be based on standards
of equity, fairness, and impartiality
• Disruptive Approach – different treatment of people should
not be based on arbitrary characteristics

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Defining Justice
Disruptive Justice – different treatment of
people should not be based on arbitrary
characteristics.
Compensatory Justice – individuals
should be compensated for the cost of
their injuries by the party responsible.

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Manager Ethical Choices
An important personal trait that managers poses is their
stage of moral development

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Globalization and Ethics
• Globalization makes ethical issues more complex
• Bribes are common practice in many countries
• Transparency International ranks countries based on Bribe
Payers Index

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What is Corporate
Responsibility?
Corporate Social
Responsibility (CSR) is the
obligation of organization
management to make
decisions and take actions
that will enhance the
welfare and interests of
society as well as the
organization

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Organizational Stakeholders
Stakeholders are any group within or outside the organization
that has a stake in the organization’s performance.

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The Bottom of
the Pyramid (BOP)
• Sometimes called base of the pyramid
• Alleviate poverty and social ills while making profits
• Selling to the world’s poorest people
• 4 Billion people make up the lowest level of the
world’s economic pyramid
• These people have traditionally been underserved
• Companies can make money while addressing
global poverty, environmental destruction, social
decay and political instability

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The Ethic of Sustainability
• Sustainable Development
– Economic Development that generates wealth
– Meets the needs of current generation
– Saving the environment for future generations
• Managers are weaving sustainability into
strategic decisions

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Evaluating Corporate
Responsibility

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Managing Company Ethics
and Social Responsibility
Code of Ethics – formal statement of the
organization’s values regarding ethics and
social issues
Ethical Structures – systems, positions
and programs to implement ethical behavior
Whistle-Blowing – employee disclosure of
illegal, immoral, or illegitimate practices

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The Ethical Organization

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The Business Case for Ethics
and Social Responsibility
• Paying attention to ethics and social
responsibility is as important as profits
and costs
• Ethical and social actions impact
financial performance
• Companies are beginning to measure
nonfinancial factors that create value
• Customers pay attention to a company’s
ethics and social responsibility