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JOHN R. SCHERMERHORN, JR.
MANAGEMENT
12th Edition
Chapter 3
Ethics and Social
Responsibility
©2013 John Wiley & Sons, Inc. All rights reserved.
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Here 3 Study Questions
Planning
Ahead
— Chapter
1. What is ethical behavior?
2. How do ethical dilemmas complicate the
workplace?
3. How can high ethical standards be maintained?
4. What is social responsibility and governance?
©2013 John Wiley & Sons, Inc. All rights reserved.
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Chapter
3 Learning
1. What is ethical behavior?
1.
2.
3.
Laws and values as determinants of ethical behavior
Alternative views of ethics
Cultural issues in ethical behavior
2. Ethics in the workplace
1.
2.
3.
Ethical dilemmas at work
Influences on ethical decision making
Rationalizations for unethical behavior
©2013 John Wiley & Sons, Inc. All rights reserved.
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Chapter
3 Learning
3. Maintaining High Ethical Standards
1.
2.
3.
4.
Ethics training
Codes of ethical conduct
Moral management
Whistleblower protection
4. Social Responsibility
1.
2.
3.
4.
Stakeholder management
Perspectives on corporate social responsibility
Evaluating corporate social performance
Corporate governance
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
What
Is Ethical Behavior?
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• Ethics
– Moral code of principles.
– Set standards of “good” or “bad” or “right” or
“wrong” in one’s conduct.
• Ethical behavior
– What is accepted as good and right in the context
of the governing moral code.
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
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.
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
What
Is Ethical Behavior?
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• Law, values, and ethical behavior:
– Values - underlying beliefs and attitudes that help
determine individual behavior
• Terminal values - preferences about desired ends
• Instrumental values – preferences regarding the
means to desired ends
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Figure 3.1: Four views of ethical behavior
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Takeaway
1:Text
What
Is Ethical Behavior?
• Four alternative ethical views
– Utilitarian
• Delivers the greatest good to the most people
– Individualism
• Advances long-term self-interests
– Moral rights
• Maintains fundamental rights of all human beings
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
What
Is Ethical Behavior?
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– Justice view of ethics
• Fair and impartial treatment of people according to
legal rules and standards
– Procedural justice – policies and rules fairly applied
– Distributive justice – equal treatment for all people
– Interactional justice – people treated with dignity and
respect
– Commutative justice – fairness to all involved
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
What
Is Ethical Behavior?
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• Cultural issues in ethical behavior:
– Cultural relativism
• Ethical behavior is always determined by cultural
context.
– Moral absolutism
• Behavior unacceptable in one’s home environment
should not be acceptable anywhere else.
– Ethical imperialism
• Imposing one’s ethical standards on others.
Management 12e/
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The extremes of cultural relativism and ethical
imperialism in international business ethics.
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Takeaway
2: Ethics
in the Workplace
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• An ethical dilemma
– occurs when choices, although having potential
for personal and/or organizational benefit, may
be considered unethical.
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
2: Ethics
in the Workplace
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• Ethical dilemmas include:
Discrimination
Sexual harassment
Conflicts of interest
Product Safety
Organizational resources
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Checklist
for Here
ethical dilemmas
Step 1 Recognize the ethical dilemma.
Step 2 Get the facts and identify your options.
Step 3 Test each option: Is it legal? Is it right? Is it beneficial?
Step 4 Decide which option to follow.
Step 5 Ask the Spotlight Questions: To double check your decision.
• “How would I feel if my family found out about my decision?”
• “How would I feel if my decision was printed in the local paper or posted online?”
Step 6 Take action
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
2: Ethics
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Herein the Workplace
• Influences on Ethical Decision Making
– Ethical framework
• Provides personal rules or strategies for ethical
decision making
• Includes personal values
–
–
–
–
Honesty
Fairness
Integrity
Self-respect
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Kohlberg’s
of individual
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Here moral development
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Takeaway
2: Ethics
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Herein the Workplace
• Situational Context and Ethics Intensity
– Will the situation pose an important ethic
challenge?
•
•
•
•
Magnitude of the situation
Risk of immediate harm
Proximity and concentration of harm
Social consensus
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Takeaway
2: Ethics
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Herein the Workplace
• Organizational Culture
– What is considered ethical behavior within the
organizational context?
• What are the expectations of management?
• What are the expectations of co-workers?
• Is there a code of ethics?
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
2: Ethics
in the Workplace
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• External environment
Government laws
and regulations
(Sarbanes/Oxley
Act of 2002)
Competitive
climate in an
industry
Societal norms
and values
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
2: Ethics
in the Workplace
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• 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.
©2013 John Wiley & Sons, Inc. All rights reserved.
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3: Maintaining
High Ethical Standards
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•Moral Management
Managers behave in one of three
ways
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3: Maintaining
High Ethical Standards
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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.
©2013 John Wiley & Sons, Inc. All rights reserved.
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3: Maintaining
High Ethical Standards
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• Codes of Ethical Conduct
– Formal statement of an organization’s values and
ethical principles regarding how to behave in
situations susceptible to the creation of ethical
dilemmas
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3: Maintaining
High Ethical Standards
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• Areas often covered by codes of ethics:
Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information
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3: Maintaining
High Ethical Standards
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• Whistleblowers
– Expose misdeeds of others to:
• Preserve ethical standards
• Protect against wasteful, harmful, or illegal acts
– Laws protecting whistleblowers vary
©2013 John Wiley & Sons, Inc. All rights reserved.
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3: Maintaining
High Ethical Standards
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• Barriers to whistleblowing include:
– Strict chain of command
– Strong work group identities
– Ambiguous priorities
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Here Responsibility
Takeaway
4: Social
• Sustainability:
– acting in ways that support a high quality of life
for present and future generations
• Alternative energy
• Recycling
• Waste avoidance
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
4: Social
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HereResponsibility
• Corporate social responsibility and
governance:
– 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.
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
4: Social
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HereResponsibility
• Stewardship
– Taking personal responsibility to always respect
and protect the interests of society at large
– Triple bottom line
– 3 P’s of organizational performance – profit,
people, and planet
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
4: Social
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HereResponsibility
• Stakeholder Management
– Stakeholders: persons, groups, and other organizations directly
affected by the behavior of the organization and holding a
stake in its performance.
– Stakeholder power: the capacity of the stakeholder to
positively or negatively affect the operations of the
organization.
– Demand legitimacy: the validity and legitimacy of a
stakeholder’s interest in the organization.
– Issue urgency: the extent to which a stakeholder’s concerns
need immediate attention.
©2013 John Wiley & Sons, Inc. All rights reserved.
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Figure 3.4: The Many Stakeholders of
Organizations
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Here Responsibility
Takeaway
4: Social
• Perspectives on 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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Here Responsibility
Takeaway
4: Social
• Perspectives on social responsibility:
– Shared value view
• Approaches business decisions with the understanding
that economic and social progress are interconnected
• Virtuous circle-socially responsible behavior improves
financial performance which leads to more
responsible behavior
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
4: Social
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HereResponsibility
Arguments against social
responsibility:
Arguments in favor of
social responsibility:
• Reduced business
profits
• Higher business costs
• Dilution of business
purpose
• Too much social power
for business
• Lack of public
accountability
• Adds long-run profits
• Improved public image
• Avoids more
government regulation
• Businesses have
resources and ethical
obligation
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Four strategies of corporate social responsibility—
from obstructionist to proactive behavior.
©2013 John Wiley & Sons, Inc. All rights reserved.
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Takeaway
4: Social
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HereResponsibility
• Corporate governance:
– The oversight of the top management of an
organization by a board of directors.
• Corporate governance involves:
– Hiring, firing, and compensating the CEO.
– Assessing strategy.
– Verifying financial records.
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Takeaway
4: Social
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HereResponsibility
• How government influences organizations:
– Businesses required by law to have boards of
directors that are elected by stockholders
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Figure 3.6: Ethics Self-governance in Leadership
and the Managerial Role
©2013 John Wiley & Sons, Inc. All rights reserved.
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