Engineering Ethics Management by Courtland L. Bovee John V. Thill Marian Burk Wood George P. Dovel

Social Responsibility During this century, managerial decisions have increasingly come under scrutiny as academics, social activists,and managers debate the ideal relationship between the organization and society. Two key issues are:  Determining what the organization’s responsibility should be for activities that affect society, both positive & negative.  Determining how much responsibility an organization should bear for alleviating or solving social problems.

These two issues form the core of a concept known as social responsibility, which argues that every organization has obligations to society that go beyond pursuing its own goals; orgs should act in a manner that benefits society as well. Social responsibility can be examined at four levels: 1.Economic Responsibility; 2. Legal Responsibility;

3.Ethical Responsibility; & 4.Discretionary Responsibility; 1.Economic Responsibility: To provide products that people want and to sell them at a profit for the company. 2.Legal Responsibility: To pursue its activities within the bounds of all laws and regulations. However laws & regulations can not cover all the possible actions that an organization can take.

3.Ethical Responsibility: Mgrs choose a course of action from among two or more alternatives, all of which are legal. The question then is no longer “what is legal” but “what is right.” Determining what is right and acting accordingly represent the ethical responsibility of the organization. 4.Discretionary Responsibility: These are purely voluntary and left to individual judgment & choice.

These responsibilities are not required by law or even expected of the organization in an ethical sense. The four categories are not mutually exclusive: any organization may have a combination of economic, legal, ethical and discretionary motives behind it.

Stakeholders Map The Organization Owners Competitors Employees Local Community Unions Suppliers Government Customers Lenders Special Interest Groups

Stakeholders Map A variety of groups can affect or be affected by an organization’s decisions and actions. Mgrs must keep the interests of their various stakeholders in mind as they go about the daily business of running the organization. Stakeholders are interested in social responsibility but they are also interested in organizational performance. In fact stakeholders who invest in a company might be expected to set as their top priority the max return on their investment. But when a nationwide study asked people who owned at least 100 shares of stock listed on the New York Stock Exchange to rank

their preference, the top two items were : 1.Cleaning up plants and ending environmental pollution. 2. Making safer products. Higher dividends which was income to stakeholders ranked third. However research seeking a definite link between social responsibility & company performance has not proved conclusively that socially responsible organizations / businesses are more profitable.

The Continuum of Social Responsibility Social Opposition: The organization demonstrates little commitment to social needs. Orgs exhibiting this pattern of behavior, called social opposition, must be pressured into meeting ethical and legal standards. Social Obligation: The organization meets ethical & legal standards voluntarily. Orgs do only what is absolutely necessary and nothing else. These orgs merely conform to legal constraints and ethical standards.

Social Responsiveness: Orgs may demonstrate a great commitment to social & ethical issues. These orgs choose to respond to society’s needs by assuming obligations beyond their legal & economic responsibilities. Social Contribution: Organization’s efforts to anticipate ethical issues that may affect the org to take preventive action to avoid adverse affect on society and to regularly and actively search for ways to contribute to society.

Management & Ethics The concept of social responsibility is generally applied to the organizations but the orgs can not take decisions; only individuals within the org can do that. Top mgrs make decisions that affect the organization’s policies and determine how lower mgrs should react to social issues; lower level mgrs confront decisions that involve applying org’s policy to their day to day circumstances.

Because the decisions that lead to undertake any social action is made by the mgrs, it is their sense of right or wrong that ultimately determines the extent of any organization’s social responsibility & responsiveness. Thus organizational responsibility can be seen as rooted in managerial ethics. Ethics : The study of decision making within the framework of a system of moral standards.

Ethical behavior refers to individual conduct that is considered “right” or “good "in the context of a governing moral code. It conforms not only to the law but also to a broader set of moral principles expected by all or by a segment of the society. In contrast. Unethical behavior covers any individual conduct that is “wrong” or “bad "within the moral code. It may or may not be illegal but it falls short of the broader set of moral principles expected by society.

Ethical Dilemma: An unresolved ethical question in which each of the conflicting sides has an arguable case to make. Whether or not tobacco companies should be allowed to advertise. Allowing to do so encourages unhealthy behavior but not allowing to do so would violate their freedom of speech and hamper their ability to do business. This is an example of ethical dilemma.

Ethical Lapse: A situation that occurs when a manager makes an unethical decision or engages in unethical behavior. Decision by some managers at Salomon Brothers to buy more US Treasury notes than the government normally allows is an ethical lapse.

International Perspective on Ethics Ethics standards vary from country to country, nation to nation and from organization to organization. For instance if a sales person gives potential buyer a gift, such a move would be seen by most USA businesses as a bribe. However in some countries giving business related gifts is not only accepted but it is expected.

Ethical Standards & Ethics Ethical Standards are the guidelines of moral conduct in a given profession or group. One way to maintain the organization’s ethical standards is in the employment process. Some firms administer honesty tests to applicants. Others conduct background investigations, with the applicant’s permission. Still others require all potential employees to read & sign a statement obligating them to act according to the organization's values & ethical standards.

Probably the most visible sign of an organization’s ethical philosophy is its code of ethics, a formal statement of the organization’s values, ethical principles, and specific ethical rules. Ethical codes should not be too vague or too detailed for practical use. Codes full of generalizations offer insufficient guidance for day to day behavior. However detailing specific rules to cover every conceivable situation will only substitute rules for good judgment.

To be effective, the code must clearly state basic principles and expectations, must realistically focus on potential ethical dilemmas that employee may encounter, must be communicated to all employees and must be enforced. Ideally the code of ethics should be drawn up with the cooperation and participation of a cross section of the managers and employees.

Ethical Training Ethical culture yields a strategic advantage but creating such a culture requires more than simply publishing a code of conduct. For this organizations must go for ethical trainings. The goal of ethical training is to avoid illegal or unethical behavior that could have adverse consequences such as monetary or criminal penalties, loss of contracts, and negative public opinion.

This training also provides awareness of ethical aspects of decisions and to help employees to avoid the rationalizations that are often used to legitimize unethical behavior. The training programs also draw attention to potential ethical issues, not only to avoid possible law suits but also to facilitate compliance.