Unethical behavior by companies risks losing public trust and threatens business integrity. Companies need strong ethical practices and policies to offset declining ethics. Factors like personality, moral development, and situational influences can contribute to unethical behavior. Companies should establish codes of ethics with clear values and principles, and top management must support ethics. Corporate social responsibility involves operating in a sustainable way that benefits all stakeholders in society.

1. Chapter 13:
Organizational
Ethics,
Sustainability,
and Social
Responsibility

2. Ethical Organizations
• Unethical behavior by companies risks
loss of public trust and threatens
integrity of business.
• Ethical business practices need to be
reinforced on a global scale to offset
continuing decline in business ethics.
2Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

3. Ethical Organizations
• Ethics
– Application of values and principles to
make right choice(s)
• Trust
– Core of ethical business practices
3Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

4. Contributing Factors to
Unethical Behavior
• Personality Traits and Attitudes
– Such as integrity, honesty, sincerity
• Moral Development
– Ability to distinguish right from wrong
• Preconventional level
• Conventional level
• Postconventional level
4Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

5. Contributing Factors
to Unethical Behavior
• The Situation
– Unethical behavior is often found in
organizations with no formal ethics policies
or when unethical behavior goes
unpunished.
• Justification of Unethical Behavior
– People respond to incentives and can be
manipulated to behave ethically or
unethically, depending on incentive.
5Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

6. Ethical Approaches
• Golden Rule
• Four-Way Test
• Stakeholders’ Approach to Ethics
• Discernment and Advice
– Research indicates that making decisions
without using ethical guides leads to less
ethical choices.
– Research shows companies having trust of
employees experience lower turnover, higher
revenue, profitability, and shareholder returns.
6Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

7. Codes of Ethics
• Values
• Principles
• Management Support
– If senior managers pay no attention to code of
ethics, subordinate managers and employees
will follow suit.
• Personal Responsibility
• Compliance
– Identify applicable laws or industry regulations
that must be adhered to as part of a code of
ethics.
7Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

8. Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.
Exhibit 13-1: Berkshire
Hathaway Code of Business
Conduct and Ethics30
8

9. Creating and Maintaining
Ethical Organizations
• Authority
– The right to give orders, enforce obedience, make
decisions, and commit resources toward
completing organizational goals
• Responsibility
– The obligation to answer for something/someone
– The duty to carry out an assignment to a
satisfactory conclusion
• Accountability
– Lies and cover-ups, not the initial unethical
behavior, usually escalate problems to
unmanageable proportions.
9Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

10. Managers Face Ethical
Questions on a Daily Basis
• Bribery
– Payments made to encourage favorable
decisions that may benefit a person or an
organization while causing harm to other
organizations or stakeholders
• Corrupt Payments to Government
Officials
– Payments made to allow companies to
avoid regulatory scrutiny by government
agencies
10Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

11. Managers Face Ethical
Questions on a Daily Basis
• Employment and Personal Issues
– Managerial decisions that determine who
to hire or fire; decisions affect productivity,
absenteeism, and turnover
• Marketing Practices
– Dishonest and predatory marketing
practices can devastate a company’s
image in the marketplace.
11Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

12. Managers Face Ethical
Questions on a Daily Basis
• Impact on Economy and Environment
– Disregard for health and safety in use and
abuse of hazardous materials has
damaging effects on a company’s
reputation.
• Employee and Customer Privacy
– Technological ability to gather and
maintain sensitive business and customer
data creates an obligation to use data only
for legitimate purposes.
12Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

13. Corporate Social
Responsibility (CSR)
• CSR is belief that organizations have a
duty to all societal stakeholders to
operate in a manner that takes each of
their needs into consideration.
• Social responsibility goes beyond legal
and economic obligations to make
sound decisions by acting in ways that
benefit society.
13Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

14. Corporate Social
Responsibility (CSR)
• Companies should strive to improve
quality of life without destroying
environment.
• Companies should compete fairly with
competitors and work with suppliers in
a cooperative manner while abiding by
laws and regulations imposed by
government.
14Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

15. Stakeholders and CSR
• Corporate compliance laws at state and
federal levels dictate adherence to
ethical standards.
• Laws protecting older workers
• Female executives and the “glass
ceiling”
• LGBT employees
• Diversity management
15Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

16. Increasing Diversity
• The birthrate of Caucasian children is now
less than 50% of the total birthrate.
• In 10 states, white children are a minority,
and in 23 states, minorities now make up
more than 40% of the child population.
• One in 12 children (8%) born in America
are offspring of illegal immigrants, and
those children are U.S. citizens.
16Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

17. Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.
Exhibit 13-2: Levels of CSR
17

18. Sustainability
• Sustainability is the state of physical
and psychological wellness in the
workforce; refers to meeting needs
without compromising the corporation’s
ability to meet future needs.
• Sustainability Training
– Organizations with sustainability programs
tend to gain trust of customers and
surrounding communities.
18Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

19. Sustainability
• HR and Organizational Sustainability
– Green companies act to minimize damage
to environment.
– Nearly all of the world’s top 150
companies have a sustainability officer
who serves at rank of vice president or
higher.
19Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

20. The Sustainable 21st Century
Organization
• Benefits of Sustainability
– 6% of companies indicate sustainability
initiatives are necessary to remain
competitive in world markets.
• Sustainability-Based Benefits
– Reward workers for taking public
transportation and reducing carbon
footprints to support sustainability
movement
20Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

21. Exhibit 13-3: Resources for Corporate
Sustainability (see p. 343)
• World Business Council for Sustainable
Development (WBCSD)
• International Organization for Standardization (ISO)
• International Institute for Sustainable Development
(IISD)
• United Nations Global Compact
• International Organization for Sustainable
Development (IOSD)
• World Economic Forum (WEF)
• National Association of Environmental Managers
(NAEM)
• Corporate Social Responsibility Newswire (CSRwire)
21Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

22. Trends and Issues in HRM
• Sustainability-Based Benefits
– A number of companies are looking at
options for providing benefits to their
employees that assist with improving
environmental stability and sustainability
over the long term.
• Does Diversity Training Work?
– Organizations must create a cultural
change in order for diversity training to be
successful.
22Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.