CHAPTER THREE Ethics and Social Responsibility CHAPTER ONE CHAPTER THREE Ethics and Social Responsibility Effective Management 2nd Edition Chuck Williams Prepared by Deborah Baker Texas Christian University

Ethics and the Nature of Management Jobs CHAPTER ONE Ethics and the Nature of Management Jobs Ethics: the set of moral principles or values that define right and wrong. Managers can encourage ethical behaviors by… using resources for company handling information confidentially not influencing others to engage in unethical behavior not creating policies that reward employees for unethical behavior setting reasonable goals 1

U.S. Sentencing Commission Guidelines CHAPTER ONE U.S. Sentencing Commission Guidelines Companies can be prosecuted and punished even if management didn’t know about the unethical behavior Who, What, and Why Determining Punishment 2

Compliance Program Steps CHAPTER ONE Compliance Program Steps 1. Establish standards and procedures to meet the company’s business needs. 7. After violations occur, find appropriate ways to improve the compliance program. 6. Enforce compliance standards by fairly and consistently disciplining violators. 5. Use company publications and training to inform employees about the company’s compliance standards and procedures. 3. Don’t delegate decision-making authority to employees who are likely to act illegally or unethically. 4. Use auditing, monitoring, and other methods to encourage employees to report violations. 2. Put upper-level managers in charge of the compliance program. 2.2 Adapted from Exhibit 3.1

Influences on Ethical Decision Making CHAPTER ONE Influences on Ethical Decision Making Ethical Answers Depend on… Ethical Intensity of Decision Moral Development of Manager Ethical Principles Used More 3

Practical Steps to Ethical Decision Making CHAPTER ONE Practical Steps to Ethical Decision Making Select and hire ethical employees Establish a Code of Ethics Train employees to make ethical decisions Create an ethical climate More 4

A Basic Model of Ethical Decision Making CHAPTER ONE A Basic Model of Ethical Decision Making 1. Identify the problem 2. Identify the constituents 3. Diagnose the situation 4. Analyze your options 5. Make your choice 6. Act 4.3 Adapted from Exhibit 3.3

To Whom Are Organizations Socially Responsible? CHAPTER ONE To Whom Are Organizations Socially Responsible? Shareholder Model Maximize Profits Stakeholder Model Satisfy Interests of Multiple Stakeholders More 5

Organization’s Social Responsibilities CHAPTER ONE Organization’s Social Responsibilities Ethical Legal Economic Discretionary Social responsibilities Don’t violate principles of right and wrong Obey the Law Make a Profit 6

Responses to Demands for Social Responsibility CHAPTER ONE Responses to Demands for Social Responsibility Strategies Reactive Defensive Accommodative Proactive More 7

Responses to Demands for Social Responsibility CHAPTER ONE Responses to Demands for Social Responsibility Reactive Defensive Accommo- dative Proactive Fight all the way Do only what is required Be progressive Lead the industry Public Relations Approach Legal Approach Problem Solving Withdrawal Bargaining DO NOTHING DO MUCH 7 Adapted from Exhibit 3.6

Social Responsibility and Economic Performance CHAPTER ONE Social Responsibility and Economic Performance Can cost a company Realities of Social Responsibility Sometimes it does pay Does not guarantee profitability 8 Adapted from Exhibit 3.6