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BOH4M Ms. Schirk

CHAPTER 3: ETHICS AND CORPORATE SOCIAL

RESPONSIBILITY

Management - Chapter 2 2

PLANNING AHEAD — CHAPTER 3 STUDY QUESTIONS

Ø What is ethical behavior? Ø How do ethical dilemmas complicate the workplace? Ø How can high ethical standards be maintained? Ø What is corporate social responsibility? Ø How do organizations and governments work together

in society?

STUDY QUESTION 1: WHAT IS ETHICAL BEHAVIOUR?

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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 Q.1: WHAT IS ETHICAL BEHAVIOUR?

¡ Law, values, and ethical behavior:

§ Legal behavior is not necessarily ethical behavior.

§ Personal values help determine individual ethical behavior.

§ Terminal values (end means)

§ Instrumental values (ways to achieve terminal values)


§ Utilitarian view of ethics — greatest good for 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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§  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.



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¡ 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.


¡ How international businesses can respect core or universal values (continued): § Be good citizens § Support social institutions, including economic and

educational systems. § Work with local government and institutions to

protect environment.


STUDY QUESTION 2: HOW DO ETHICAL DILEMMAS COMPLICATE 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.

§ Ethical dilemmas include: § Discrimination § Sexual harassment § Conflicts of interest § Customer confidence § Organizational resources

STUDY Q.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.


§  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.


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§ Factors influencing ethical behavior:


STUDY QUESTION 3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?

¡ Checklist for dealing with ethical dilemmas § Step 1. Recognize the ethical dilemma § Step 2: Get the facts § Step 3. Identify your options § Step 4. Test each option: Is it legal? Is it right? Is it

beneficial?

STUDY Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?

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¡ Checklist for dealing with ethical dilemmas § Step 5. Decide which option to follow § Step 6. Double-check decision by asking the

“spotlight” questions: “How would I feel if my family found out about my decision?” “How would I feel about this if my decision were printed in the local newspaper?”

§ Step 7. Take action.


¡ 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.


¡ Whistleblowers: § Expose misdeeds of others to: § Preserve ethical standards § Protect against wasteful, harmful, or illegal acts

¡ Laws protecting whistleblowers vary.


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¡ 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


¡ 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.


¡ 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


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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.

STUDY Q.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.


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¡ Typical organizational stakeholders § Employees § Customers § Suppliers § Owners § Competitors § Regulators § Interest groups



¡ 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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¡ 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.


¡ 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


§ 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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§ Strategies for pursuing social responsibility: § Obstructionist — meets economic responsibilities. § Defensive — meets economic and legal

responsibilities. § Accommodative — meets economic, legal, and

ethical responsibilities. § Proactive — meets economic, legal, ethical, and

discretionary responsibilities.



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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 (e.g. Occupational

Health and Safety Act passed in 1973) § Fair labor practices (e.g. Employment Equity Act

passed in 1985 and adapted in 1995) § Consumer protection (e.g. Hazardous Products

Act passed in 1985) § Environmental protection (e.g. Environmental

Pollution Act passed in 1999)

STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?

§ How organizations influence governments: § Personal contacts and networks (get to know

people in government and gain their support) § Public relations campaigns (communicate positive

images of their businesses) § Lobbying (expressing opinions and preferences to

public officials in order to persuade or pressure) § Political action committees (collect money for

donation to political campaigns) § (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.


§ 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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