Managing Ethics & Social Responsibility

1. Managing
Ethics and
Social
Responsibility
By: Shanika Wijenayake

2. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
What is
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

3. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Headlines from more corporate scandals
since 2015:
• In 2015, Volkswagen admitted cheating the United
States emissions tests for diesel engines.
• In 2016, then Wells-Fargo CEO John Stumpf was fired for
a scandal that included the creation of 1.5 million fake
deposit accounts and more than 500,000 fake credit
cards, all in customers’ names and without their
permission. This was just the beginning of more scandals
to be uncovered at one of the Top 5 largest banks in the
United States.
• In 2019, Facebook agrees to pay $5 billion to settle with
the US Federal Trade Commission over privacy and data
concerns.

4. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Three Domains of Human Action

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Ethical Management Today
• 55% of survey respondents think that cheating in business is more
common than 10 years ago
• More businesses are being associated with greed, deceit, and
irresponsibility
• Managers are responsible for setting an ethical climate and act as
models
• Executive compensation has become a hot issue related to ethical
management

7. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Examples of
Unethical and
Illegal
Organizational
Behavior

8. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Ethical
Dilemmas:
What
Would You
Do?
Your company requires a
terrorist watch list that screen all
new customers and take
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

9. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Criteria
for
Ethical
Decision
Making
Utilitarian Approach – moral behavior
produces the greatest good for the greatest
number
Individualism Approach – acts are moral if
they promote the individual’s long-term
interest
Moral-Rights Approach – humans have
fundamental rights and liberties that cannot
be taken by an individual's decision
Justice Approach – moral decisions must be
based on standards of equity, fairness and
impartiality

10. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Virtue Ethics
and
Practical
Approaches
Virtue ethics approach says
that moral behavior stems
from personal virtues
Practical approach –
decisions based on prevailing
standards of the profession,
larger society and
stakeholder interests

11. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Manager
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

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Three Levels of Personal Moral Development

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What is Corporate Social Responsibility?
Distinguishing right from wrong; doing right
Good corporate citizenship
Make choices that contribute to society as well as the
organization
Organizational Stakeholders – any group that has a stake in
the organization’s performance

14. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

15. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
The Green
Movement
• “Going Green” has become a new business
imperative
• General Electric EcoImagination and
Walmart’s zero waste initiative are
examples
• Corporations are embracing sustainability
and sustainable development

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Sustainability
Sustainability – economic development that generates wealth and
meets the needs of current population while preserving the
environment for the needs of future generations

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Evaluating Corporate Social Responsibility

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Managing Company Ethics and Social
Responsibility
Code of Ethics – a formal statement of the company’s values
regarding ethics and social issues
Ethical Structures – systems, positions and programs like ethics
training
Whistle-blowing – employee disclosure of illegal, immoral, or
illegitimate practices

19. Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.
Building an Ethical Organization

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The Business Case for Ethics and Social
Responsibility
• 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
• What do you THINK?