COMPETENCY-BASED MANAGEMENT 11 th Edition Chapter 3—Ethics and Social Responsibility Prepared by Argie Butler Texas A&M University John W. Slocum, Jr. Don Hellriegel Susan E. Jackson

Chapter 3: PowerPoint 3.1 CHAPTER 3—ETHICS AND SOCIAL RESPONSIBILITY LEARNING GOALS 1.State the importance of ethics for individual employees and organizations 2.Describe four influences that shape the ethical behavior and decisions of individuals and organizations 3.Explain stakeholder social responsibility and how it influences managers’ ethical decisions and behavior

Chapter 3: PowerPoint 3.2 Ethics The set of values, principles, and rules that define right and wrong conduct

Chapter 3: PowerPoint 3.3 LONG-TERM ORGANIZATIONAL EFFECTIVENESS  Stronger financial performance over the long run  Greater sales, brand image, and reputation  More employee loyalty and commitment  Less vulnerability to activist pressure and boycotts  Fewer or no fines, court-imposed remedies, and criminal charges

Chapter 3: PowerPoint 3.4 (Figure 3.1) Individual Influences Legal and Regulatory Influences Organizational Influences Cultural Influences Ethical Conduct  Individual  Organization

Chapter 3: PowerPoint 3.5 Cultural Influences  Culture The dominant pattern of living, thinking, and believing that is developed and transmitted by people, consciously or unconsciously, to subsequent generations  Culture Values Those consciously and subconsciously deeply held beliefs that specify general preferences and behaviors, and define what is right and wrong

Chapter 3: PowerPoint 3.6 Personal Values Honesty Integrity Trustworthiness Respect for Other People Self-respect Family Achievement Reliability Fairness Loyalty Core Values in North American Culture

Chapter 3: PowerPoint 3.7 Laws: Society’s values and standards that are enforceable in the courts Legality doesn’t always mean ethical At one time U.S. organizations could legally discriminate against women and minorities Legal and Regulatory Influences

Chapter 3: PowerPoint 3.8 Legal and Regulatory Influences  Examples of Lawful Reasons for Dismissing Employees  Incompetence in performance that does not respond to training or to accommodation  Gross or repeated insubordination  Civil rights violations such as engaging in harassment  Illegal behavior such as theft or physical violence  Repeated lateness or unexcused absences  Drug activity or drunkenness on the job

Chapter 3: PowerPoint Fostering and Ethical Organizational Culture Management’s Day-to-Day Behaviors and Decisions are Key Create Formal Ethics System Make It Acceptable to Talk About Ethics Communicate Ethical Expectations Include Ethical Conduct in Performance Evaluations Fostering an Ethical Culture

2. Importance of Code of Ethics Code of ethics states the principles that employees are expected to follow when acting on behalf of the organization By providing formal guideline for employees, an organization can state clear ethical and unethical conduct.

Chapter 3: PowerPoint 3.12 (Adapted from Table 3.2) Organizational Influences 3. Suggested Principles in a World-Class Code of Ethics  Reliability Principle: Honor commitments  Property Principle: Respect property and the rights of those who own it  Fiduciary Principle: Act as a fiduciary (representative) for the company and its investors  Transparency Principle: Conduct business in a truthful and open manner (continued)

Chapter 3: PowerPoint 3.13 (Adapted from Table 3.2)  Continued: Abbreviated Principles in a World Code of Ethics  Citizenship Principle: Act as responsible citizens of the community  Fairness Principle: Engage in free and fair competition, deal with all parties fairly and equitably DD ignity Principle: Respect the dignity of all people; protect the health, safety, privacy, and human rights of others  Responsiveness Principle: Engage with parties who may have legitimate claims and concerns relating to the company’s activities Source: Adapted from L. Paine, R. Deshpandé, J.D. Margolis, and K.E. Bettcher. Up to code: Does your company’s conduct meet world-class standards? Harvard Business Review, 2005, 82(2),

Chapter 3: PowerPoint 3.14 (Figure 3.2) Obedience & Punishment Instrumental Interpersonal Law & Order Social Contract Universal Principles ChildhoodThroughAdulthood  Kohlberg’s Stages of Moral Development

Chapter 3: PowerPoint 3.17 Individual Influences  Whistle-blowing Whistle-blowers: employees who report unethical or illegal actions by their employers to other people or organizations that are capable of taking corrective action Four questions to ask before whistle-blowing 1. Is this the only way? 4. Am I ready? 2. Do I have the evidence? 3. Why am I doing this? Key Questions

Chapter 3: PowerPoint 3.27 (Figure 3.5) The Organization Media Political Action Groups/ Activists Unions SuppliersEmployees Shareholders Nongovernmental Organizations Customers Primary Stakeholders Secondary Stakeholders Governments (Regulatory Agencies)

Chapter 3: PowerPoint 3.26 Stakeholder Social Responsibility  Managers and other employees have obligations to identifiable groups that are affected by or can affect the achievement of an organization’s goals  Enlightened self-interest  Sound investment  Inference avoidance  Rationale

Chapter 3: PowerPoint 3.28 (Adapted from Table 3.4) Examples of Types of Stakeholder Pressures  Employees  Shareholders  P ay and benefits  S afety and health RR ights at work/global labor standards  D emands for efficiency/profitability  V iability (sustainability) GG rowth of investment

Chapter 3: PowerPoint 3.29 (Adapted from Table 3.4) Examples of Types of Stakeholder Stakeholder Pressures (cont’d)  Customers  Suppliers  Meet commitments  Repeat business  Fair trade practices/ethical treatment  Competitive prices  Quality and safe products  Respect for customer’s privacy

Chapter 3: PowerPoint 3.30 Sustainable Development  Conducting business in a way that protects the natural environment while making economic progress, thus meeting the needs of the present generation without compromising the ability of future generations to meet their own needs

Chapter 3: PowerPoint 3.31 (Adapted from Table 3.5) Sustainable Development  A Few Components of Sustainable Development and Sustainability  Integrated solutions to environmental, social and economic needs  Using resources more efficiently and decoupling growth from environmental damage  Recognizing that decisions and actions taken locally have global impacts  Acting now to address sustainable development concerns, many of which will be global and long-term in nature  Win-win-win solutions possible, rather than trade-offs between social, environmental and economic issues