Chapter 3
Social responsibility and
ethics in management
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Lecture outline
• Organisational social responsibility
• Organisational social responsiveness
• Being an ethical manager
• Managing an ethical organisation
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Managerial ethics
Ethics
•
Standards of behaviour and moral
judgment differentiating right from wrong
Managerial ethics
•
Standards of conduct and moral
judgment managers use in their business
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Organisational social
responsibility
‘The obligation of an organisation to
seek actions protecting and
improving society’s welfare along with
its own interests.’
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Organisational social
responsibility
Major viewpoints:
• Invisible hand
• Hand of government
• Hand of management
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Organisational social
responsibility
Invisible hand argument
• A view holding that the entire social responsibility
of a corporation can be summed up as ‘make
profits and obey the law’.
• Corporate responsibility is guided by the ‘invisible
hand’ of free market forces.
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Organisational social
responsibility
Hand-of-government argument
• A view holding that the interests of society are
best served by having the law and political
process guide the corporation’s activities.
• Law and political process controls corporation
regarding employee well-being, customer
protection and community issues (e.g.
environment).
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Organisational social
responsibility
Hand-of-management argument
Incorporates:
• Anti-freeloader argument
• Capacity argument
• Enlightened self-interest argument
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Organisational social
responsibility
Hand-of-management argument
• A view stating that corporations and their
managers are expected to act in ways that protect
and improve society’s welfare as well as make
profit.
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Organisational social
responsibility
Anti-freeloader argument
• Holds that since businesses benefit from a better
society, they should bear part of the costs by
actively working to bring about solutions to social
problems.
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Organisational social
responsibility
Capacity argument
• States that the private sector, because of its
considerable economic resources, must make up
for government cutbacks in social programs.
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Organisational social
responsibility
Enlightened self-interest argument
• Holds that businesses exist at society’s pleasure
and that, for their own legitimacy and survival,
businesses should meet the public’s expectations
regarding social responsibility.
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Social responsibilities of
management
Economic and legal
– Responsibility to make a profit and obey the
law
– (Recognised by invisible hand, hand of
government, hand of management)
Ethical and discretionary
– Ethical behaviour expected by society
(recognised by hand of management)
– Difficult to determine, identify
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Social stakeholders
•
•
•
•
•
•
Shareholders
Employees
Customers
Local community
Society
International community
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Social stakeholders
Employees
Shareholders
THE
ORGANISATION
Customers
International
community
Local community
Society (regional & national)
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Social stakeholders
Diversity as competitive advantage:
• Attracting workers is costly; diversity may help
attract and retain workers.
• A workforce that reflects the customer base may
give insight into customer wants, needs and
preferences
• Innovations are more likely where diversity exists.
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Does social responsibility
pay?
• Evidence is mixed
• Strategically beneficial
• Likely, profit  socially responsible
management
• Shareholders are sensitive to the extent
that it affects profit
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Organisational social
responsiveness
‘A term referring to the development of
organisational decision processes where
managers anticipate, respond to and
manage areas of social responsibility.’
Two aspects:
• Monitoring social demands and expectations
• Internal social response mechanisms
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Monitoring social
demands and
expectations
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•
•
•
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Social forecasting
Opinion surveys
Social audits
Issues management
Social scanning
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Internal social response
mechanisms
•
•
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Individual executives
Temporary task forces
Permanent committees
Permanent departments
Combination approaches
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Being an ethical manager
The difficulties and concerns with
business ethics raise three important
issues about being a manager:
• Types of managerial ethics
• Ethical guidelines for managers
• Ethical career issues
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Types of managerial
ethics
• Immoral management
– Lacks ethical principles; concern for profit
only
• Amoral management
– Ignores, or is oblivious to, ethical issues
• Moral management
– Conscious attention to ethical standards and
issues
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Ethical guidelines for
managers
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Obey the law.
Tell the truth.
Show respect for people.
Stick to the Golden Rule.
Above all, do no harm.
Participation, not paternalism.
Responsibility requires action.
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Ethical career issues
• Assessing values and protecting yourself
– Seek advice and support from trusted sources.
– Take action to change what you see as not being ethical.
– Take actions to protect yourself.
• Anticipating ethical conflicts
– Pre-employment checks: Is this an ethical company?
– Is the industry marked by patterns of unethical
behaviour?
– Avoid ethical compromises.
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Managing an ethical
organisation
Situational factors influencing ethical
behaviour:
• External factors
- Competitiveness; high/low opportunities for success;
dependency on other organisations
• Internal factors
- Push for high performance; labour unrest; delegation;
quests for innovation
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Mechanisms for ethical
management
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Increasing awareness of diversity
Top management commitment
Codes of ethics
Ethics committees
Ethics audits
Ethics hotlines
Ethics training
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Lecture summary
• Organisational social responsibility
– Major perspectives: invisible hand; hands of
government and management
– Social responsibilities of managers
– Social stakeholders: shareholders, employees,
customers, local and international community,
society
– Does social responsibility pay? Mixed evidence
© 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim
Focus 1e by Bartol et al.
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Lecture summary
• Organisational social responsiveness
– Monitoring social demands and expectations:
forecasting, opinion surveys, social audits,
issues management, social scanning, internal
social response mechanisms
© 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim
Focus 1e by Bartol et al.
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Lecture summary
• Being an ethical manager
– Types of managerial ethics: immoral, amoral,
moral
– Ethical guidelines for managers
– Ethical career issues: assessing and
anticipating ethical conflicts
• Managing an ethical organisation
– Situational factors influencing ethical
behaviour: external and internal
– Mechanisms for ethical behaviour
© 2006 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management Foundations: A Pacific Rim
Focus 1e by Bartol et al.
3–29