Managing Social Responsibilities

1. Asif Jamal
Visiting Lecturer
University Of Sindh, Mirpurkhas campus
MANAGING SOCIAL
RESPONSIBILITIES AND
ETHICS

2. Social responsibilities is a
business obligation to pursue
policies, make decisions and
take actions that benefit
society
INTRODUCTION

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 Ethics
 Code of moral principles.
 Set standards of “good” and “bad” as opposed to “right” and “wrong.”
 Ethical behavior
 What is accepted as good and right in the context of the governing moral
code.
STUDY QUESTION 1: WHAT IS
ETHICAL BEHAVIOR?

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 Law, values, and ethical behavior:
 Legal behavior is not necessarily ethical behavior.
 Personal values help determine individual ethical behavior.
 Terminal values
 Instrumental values
STUDY QUESTION 1: WHAT IS
ETHICAL BEHAVIOR?

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STUDY QUESTION 1: WHAT IS
ETHICAL BEHAVIOR?
Utilitarian view of ethics — greatest good to the
greatest number of people.
Individualism view of ethics — primary
commitment is to one’s long-term self-interests.
Moral-rights view of ethics — respects and
protects the fundamental rights of all people.
Justice view of ethics — fair and impartial
treatment of people according to legal rules and
standards.

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FIGURE 3.1 FOUR VIEWS OF ETHICAL
BEHAVIOR.

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 Cultural issues in ethical behavior:
 Cultural relativism
 Ethical behavior is always determined by cultural context.
 Cultural universalism
 Behavior that is unacceptable in one’s home environment should not be
acceptable anywhere else.
STUDY QUESTION 1: WHAT IS
ETHICAL BEHAVIOR?

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FIGURE 3.2 THE EXTREMES OF CULTURAL
RELATIVISM AND ETHICAL IMPERIALISM IN
INTERNATIONAL BUSINESS ETHICS.
Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,”
Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.

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STUDY QUESTION 1: WHAT IS
ETHICAL BEHAVIOR?
How international businesses can respect core or universal values:
Respect for human dignity
• Create culture that values employees, customers, and suppliers.
• Keep a safe workplace.
• Produce safe products and services.
Respect for basic rights
• Protect rights of employees, customers, and communities.
• Avoid anything that threatening safety, health, education, and
living standards.
Be good citizens
• Support social institutions, including economic and educational
systems.
• Work with local government and institutions to protect
environment.

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An ethical dilemma occurs when choices,
although having potential for personal and/or
organizational benefit, may be considered
unethical.
Ethical dilemmas include:
 Discrimination
 Sexual harassment
 Conflicts of interest
 Customer confidence
 Organizational resources
STUDY QUESTION 2: HOW DO
ETHICAL DILEMMAS COMPLICATE
THE WORKPLACE?

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STUDY QUESTION 2: HOW DO
ETHICAL DILEMMAS COMPLICATE
THE WORKPLACE?
Ethical behavior can be rationalized by
convincing yourself that:
Behavior is not really illegal.
Behavior is really in everyone’s best interests.
Nobody will ever find out.
The organization will “protect” you.

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Factors influencing ethical behavior include:
 The person
 Family influences, religious values, personal standards, and
personal needs.
 The organization
 Supervisory behavior, peer group norms and behavior, and
policy statements and written rules.
 The environment
 Government laws and regulations, societal norms and values,
and competitive climate in an industry.
STUDY QUESTION 2: HOW DO
ETHICAL DILEMMAS COMPLICATE
THE WORKPLACE?

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FACTORS INFLUENCING ETHICAL MANAGERIAL
BEHAVIOR—THE PERSON, ORGANIZATION, AND
ENVIRONMENT.

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Ethics training:
Structured programs that help participants
to understand ethical aspects of decision
making.
Helps people incorporate high ethical
standards into daily life.
Helps people deal with ethical issues under
pressure.
HOW CAN HIGH ETHICAL STANDARDS
BE MAINTAINED?

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Whistleblowers
Expose misdeeds of others to:
 Preserve ethical standards
 Protect against wasteful, harmful, or illegal acts
Laws protecting whistleblowers vary
STUDY QUESTION 3: HOW CAN HIGH
ETHICAL STANDARDS BE
MAINTAINED?

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STUDY QUESTION 3: HOW CAN HIGH
ETHICAL STANDARDS BE
MAINTAINED?
 Barriers to whistleblowing include:
 Strict chain of command
 Strong work group identities
 Ambiguous priorities
 Organizational methods for overcoming whistleblowing barriers:
 Ethics staff units who serve as ethics advocates
 Moral quality circles

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STUDY QUESTION 3: HOW CAN HIGH
ETHICAL STANDARDS BE
MAINTAINED?
Ethical role models:
 Top managers serve as ethical role models.
 All managers can influence the ethical behavior of
people who work for and with them.
 Excessive pressure can foster unethical behavior.
 Managers should be realistic in setting performance
goals for others.

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 Codes of ethics:
Formal statement of an organization’s values and ethical
principles regarding how to behave in situations
susceptible to the creation of ethical dilemmas.
Areas often covered by codes of ethics:
Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information
STUDY QUESTION 3: HOW CAN HIGH
ETHICAL STANDARDS BE
MAINTAINED?

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STUDY QUESTION 4: WHAT IS
CORPORATE SOCIAL
RESPONSIBILITY?
 Corporate social responsibility:
 Looks at ethical issues on the organization level.
 Obligates organizations to act in ways that serve both its own interests
and the interests of society at large.

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STUDY QUESTION 4: WHAT IS
CORPORATE SOCIAL
RESPONSIBILITY?
Organizational stakeholders
 Those persons, groups, and other organizations directly
affected by the behavior of the organization and holding a
stake in its performance.
Typical organizational stakeholders
 Employees
 Customers
 Suppliers
 Owners
 Competitors
 Regulators
 Interest groups

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FIGURE 3.4 MULTIPLE
STAKEHOLDERS IN THE
ENVIRONMENT OF AN
ORGANIZATION.

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STUDY QUESTION 4: WHAT IS
CORPORATE SOCIAL
RESPONSIBILITY?
Beliefs that guide socially responsible
business practices:
 People do their best with a balance of work and
family life.
 Organizations perform best in healthy communities.
 Organizations gain by respecting the natural
environment.
 Organizations must be managed and led for long-
term success.
 Organizations must protect their reputations.

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STUDY QUESTION 4: WHAT IS
CORPORATE SOCIAL
RESPONSIBILITY?
Perspectives on corporate social responsibility:
 Classical view—
 Management’s only responsibility is to maximize profits.
 Socioeconomic view—
 Management must be concerned for the broader social welfare,
not just profits.

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STUDY QUESTION 4: WHAT IS
CORPORATE SOCIAL
RESPONSIBILITY?
Arguments against
social responsibility:
Reduced business
profits
Higher business costs
Dilution of business
purpose
Too much social power
for business
Lack of public
accountability
Arguments in favor
of social
responsibility:
Adds long-run profits
Improved public image
Avoids more
government regulation
Businesses have
resources and ethical
obligation

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STUDY QUESTION 4: WHAT IS
CORPORATE SOCIAL
RESPONSIBILITY?
 Criteria for evaluating corporate social performance:
 Is the organization’s …
 Economic responsibility met?
 Legal responsibility met?
 Ethical responsibility met?
 Discretionary responsibility met?

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FIGURE 3.5 CRITERIA FOR
EVALUATING CORPORATE SOCIAL
PERFORMANCE.

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FIGURE 3.6 FOUR STRATEGIES OF
CORPORATE SOCIAL RESPONSIBILITY—FROM
OBSTRUCTIONIST TO PROACTIVE BEHAVIOR.

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STUDY QUESTION 5: HOW DO
ORGANIZATIONS AND GOVERNMENTS
WORK TOGETHER IN SOCIETY?
 How government influences organizations:
 Common areas of government regulation of business affairs:
 Occupational safety and health
 Fair labor practices
 Consumer protection
 Environmental protection

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STUDY QUESTION 5: HOW DO
ORGANIZATIONS AND GOVERNMENTS
WORK TOGETHER IN SOCIETY?
How organizations influence governments:
Personal contacts and networks
Public relations campaigns
Lobbying
Political action committees
Sometimes by illegal acts, such as bribery or illegal
financial contributions to political campaigns

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FIGURE 3.7 CENTRALITY OF ETHICS AND
SOCIAL RESPONSIBILITY IN LEADERSHIP
AND THE MANAGERIAL ROLE.

31. THE 10 COMMANDMENTS OF CORPORATE
SOCIAL RESPONSIBILITY
1. Take corrective action before it is required.
2. Work with affected constituents to resolve mutual
problems.
3. Work to establish industry-wide standards and self-
regulation.
4. Publicly admit your mistakes.
5. Get involved in appropriate social programs.
6. Help correct environmental problems.
7. Monitor the changing social environment.
8. Establish and enforce a corporate code of conduct.
9. Take needed public stands on social issues.
10.Strive to make profits on an ongoing basis.

32. SOURCES OF ETHICS
religion
Legal system
BUSINESS
ETHICS
culture

33. MANAGING ETHICS
Ethical
behaviors
Code of ethics
Top
management
Ethics
committees
Ethics audit
Training
programs
Ethics hotline

34. SOCIAL AUDIT
 is an identification and examination of the
activities of the firm in order to assess, evaluate,
measure and report their impact on the immediate
social environment
 It helps to determine the areas where the firm
could be vulnerable to public criticism.
 Organizations can inform the public regarding
their activities for society.
 The true picture of corporate accountability can be
given to the society.