hrmg100 week 8
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Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
HRMG100 - MANAGEMENT AND PEOPLE
WEEK 8
Corporate Social Responsibility and Managerial Ethics
2Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Definitions of social involvement
Social responsibility - obligation beyond that of law and economics for a firm to pursue
long- term goals that are good for society
Social obligation - obligation of business to meet economic and legal responsibilities
Social responsiveness - capacity of firm to adapt to changing societal conditions
3Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
What is social responsibility?
•The classical view: Management’s only social responsibility is to
maximise profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation)
Expending the firm’s resources on doing ‘social good’ unjustifiably increases costs that
lower profits to the owners and raises prices to consumers
Firms doing ‘social good’ can exert too much influence on governments and society
4Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
What is social responsibility? (2)
•The socioeconomic view:
Management’s social responsibility goes beyond making profits to include protecting and
improving society’s welfare
Corporations are not independent entities responsible only to stockholders
Firms have a moral responsibility to larger society to become involved in social, legal, and
political issues
“To do the right thing”
5Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Levels of social involvement
Social obligationsSocial obligations
Socialresponsiveness
Socialresponsibility
Figure 5.2
6Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Arguments for and against social responsibility
• FOR
• Public expectations
• Long-run profits
• Ethical obligation
• Public image
• Better environment
• Discouragement of further governmental regulation
• Balance of responsibility and power
• Stockholder interests
• Possession of resources
• Superiority of prevention over cure
•AGAINST
• Violation of profit maximisation
• Dilution of purpose
• Costs
• Too much power
• Lack of skills
• Lack of accountability
7Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Does social responsibility pay?
Studies appear to show a positive relationship between social involvement and the economic performance of firms but:
Difficulties in defining and measuring ‘social responsibility’ and ‘economic performance’ raise issues of validity and causation in the studies
Mutual funds using social screening in investment decisions slightly outperformed other mutual funds
A general conclusion from the research is that a firm’s social actions do not harm its long-term performance
8Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Stages of social responsibilitySOCIAL
RESPONSIBILITY
SOCIAL
RESPONSIBILITY
Stage 2Employees
Stage 2Employees
Stage 3Constituents
Stage 3Constituents
Stage 4Broader society
Stage 4Broader society
Stage 1Owners/
management
Stage 1Owners/
managementLesserLesser
GreaterGreater
9Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Social responsibility vs.
social responsiveness
Socialresponsibility
Socialresponsiveness
Majorconsideration Ethical Pragmatic
Focus Ends Means
Emphasis Obligations Responses
Decisionframework Long term
Medium andshort term
Table 5.2
10Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
The ‘greening’ of management
- the recognition of the close link between anorganisation’s decisionsand activities, and itsimpact on the natural environment
11Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Global issuesaffecting theenvironment
The “greening”of management
Natural ResourcesNatural Resources
Global WarmingGlobal Warming
Toxic WasteToxic Waste
Industrial AccidentsIndustrial Accidents
PollutionPollution
Global problems management must address in order to ‘go green’
12Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Organisational approachesto environmental issues
Low HighEnvironmental sensitivity
Legal approach(light green)
Market approach
Stakeholder approach
Activistapproach(dark green)
Figure 5.3
13Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Values-based management
Values-based management
An approach to managing in which managers establish and uphold an organisation’s shared values
The purposes of shared values
Serving as guideposts for managerial decisions
Shaping employee behavior
Influencing the direction of marketing efforts
Building team spirit
The bottom line on shared corporate values
An organisation’s values are reflected in the decisions and actions of its employees
14Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Purposes of shared values
SharedOrganisational
Values
Guide Managers’Decisions and Actions
InfluenceMarketing Efforts
Build Team Spirit
Shape Employee Behaviour
© Copyright 2003 Pearson Education Australia 14Figure 5.4
15Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
ETHICS
Basically what is “right” or “wrong”:
For a person For an organisation For a community For a nation For a situation
16Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
ETHICS (2)
Ethics are influenced by: Family Extended family Schools Workplaces Friends Society Local communities Religious institutions Governments
17Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Managerial ethics: four views
Utilitarian viewUtilitarian view
Rights viewRights view
Theory of justice view
Theory of justice view
Decisions are made solely on the basis of their outcomes or consequences.
Decisions are made solely on the basis of their outcomes or consequences.
Decisions are concerned with respecting and protecting individual liberties and privileges.
Decisions are concerned with respecting and protecting individual liberties and privileges.
Decision makers seek to impose and enforce rules fairly and impartially and do so by following legal rules and regulations.
Decision makers seek to impose and enforce rules fairly and impartially and do so by following legal rules and regulations.
Integrative social contracts view
Integrative social contracts view
Decisions should be made on the basis of empirical (what is) and normative (what should be) factors.
Decisions should be made on the basis of empirical (what is) and normative (what should be) factors.
18Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Stages of moral development
Figure 5.6
19Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Factors that affect ethical and unethical behaviour
Figure 5.5
20Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Individual characteristics that affect ethics
Values: represent basic convictions of what is right and
wrong
Personality variables: ego strength - strength of personal convictions locus of control - degree to which one believes in
control of one’s own fate
21Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
RewardSystemRewardSystem
CompetitivePressures
CompetitivePressures
AppraisalSystem
AppraisalSystem
TimePressures
TimePressures
Rules andRegulationsRules and
Regulations
Structural variables—may help minimise ambiguity and encourage ethical behaviour
Structural variables—may help minimise ambiguity and encourage ethical behaviour
CostConstraints
CostConstraints
Factors affecting managerial ethics
22Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
StrongStrongMore
influence More
influence
Risk Tolerance
Control Methods
Conflict Tolerance
Risk Tolerance
Control Methods
Conflict Tolerance
WeakWeakLess
influence Less
influence
Factors that affect managerial ethics
Content and strength of organisational culture:
23Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Factors that affect managerial ethics
Immediacyof
consequences
Proximityto
victim(s)
Consensusof wrong
Probabilityof
harm
Great-ness
ofharm
Concentrationof
effect
Issueintensity
24Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Improving ethical behaviour
Leadership
Code of ethics
Employee selection
Job goals
Independent social audits
Performance appraisal
Ethics training
Protection
Steps towards improvementSteps towards improvement
25Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Codes of ethics A formal statement of an organisation’s primary values and the ethical rules that it expects its employees to follow – for example: Be a dependable organisational citizen
Don’t do anything unlawful or improper that will harm the organisation
Be good to customers
Most professions and larger businesses have written (often on web-site) Codes of Ethics
Source: F.R. David, “An Empirical Study of Codes of Business Ethics: A Strategic Perspective.” paper presented at the 48th Annual Academy of Management Conference, Anaheim, California August 1988.
26Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Effective use of a code of ethics
Develop a code of ethics as a guide for handling ethical dilemmas in decision-making
Communicate the code regularly to all employees (and the general public)
Have all levels of management continually reaffirm the importance of the ethics code and the organisation’s commitment to the code
Publicly reprimand and consistently discipline, in a fair procedural way, those who break the code
27Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
How managers can improve ethical behaviour in an organisation
1. Hire individuals with high ethical standards
2. Establish codes of ethics and decision rules
3. Lead by example
4. Delineate job goals and performance appraisal mechanisms
5. Provide ongoing ethics training
6. Conduct independent social audits
7. Provide support for individuals facing ethical dilemmas
28Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
The value of ethics training
Training in ethical problem-solving can make a difference in ethical behaviours
Training in ethics increase employee awareness of ethical issues in business decisions
Ethics training clarifies and reinforces the organisation’s standards of conduct
Employees become more confident that they will have the organisation’s support
when taking unpopular but ethically correct stances
29Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Ethical leadership
Managers must provide a good role model by: Being ethical and honest at all times
Telling the truth; don’t hide or manipulate information
Admitting failure and not trying to cover it up
Communicating shared ethical values to employees through symbols, stories, and slogans
Rewarding employees who behave ethically and punish those who do not
Protecting employees (whistleblowers) who bring to light unethical behaviours or raise ethical issues
30Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Business practices and social issues
Social Impact Management The field of inquiry at the intersection of business
practice and wider societal concerns that reflects and respects the complex interdependency of those two realities
The question of how to go about increasing managers’ awareness within their decision-making processes of how society is impacted by the conduct and activities of their firms
31Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
Ethics in an international context
Ethical standards are not universal Social and cultural differences determine acceptable
behaviours
Foreign Corrupt Practices Act Makes it illegal to bribe a foreign official, yet “token”
payments to officials are permissible when doing so is an accepted practice in that country
32Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
How ethical are you?
“borrowing” - that your parents don’t know about?
“age” and entry to licensed clubs and premises?
Driving:
- speed limits?
- alcohol limits?
- talking on a mobile phone? using business equipment for personal use? starting time/ finishing time/ breaks?
33Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
How socially responsible are you?
Are you conserving water? Do you follow the current water
restrictions? Do you have a short shower? Do you recycle? Do you dispose of your bottles and junk
food containers responsibly? Do you buy tickets for public transport? Do you tag graffiti?
34Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
How socially responsible are you? (2)
Do you discriminate against: the aged? the physically challenged? overseas born people? single mothers? the unemployed? those who do not speak English well? sexual minorities?
35Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
How ethical are you?DO YOU
Download music illegally? Pirate CDs and DVDs? Copy software illegally? Engage in “Academic Dishonesty”
- fail to cite the sources of your information in essays and reports?
- copy other people’s assignments?
- ‘buy’ essays and assignments?
36Robbins, Bergman, Stagg, Coulter: Foundations of Management 2e © 2006 Pearson Education Australia
The global compactHuman Rights
Principle 1: Support and respect the protection of international human rights within their sphere of influence
Principle 2: Make sure business corporations are not complicit in human rights abuses
Labour Standards
Principle 3: Freedom of association and the effective recognition of the right to collective bargaining
Principle 4: The elimination of all forms of forced and compulsory labour
Principle 5: The effective abolition of child labour
Principle 6: The elimination of discrimination in respect of employment and occupation
Environment
Principle 7: Support a precautionary approach to environmental challenges
Principle 8: Undertake initiatives to promote greater environmental responsibility
Principle 9: Encourage the development and diffusion of environmentally friendly technologies
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