MANAGEMENT RICHARD L. DAFT

Managing Ethics and Social Responsibility Managing Ethics and Social Responsibility CHAPTER 5

Learning Outcomes Define ethics and explain how ethical behavior relates to behavior governed by law and free choice. Explain the utilitarian, individualism, moral-rights, and justice approaches for evaluating ethical behavior. Describe the factors that shape a manager’s ethical decision making. Identify important stakeholders for an organization and discuss how managers balance the interests of various stakeholders. Explain the bottom-of –the pyramid concept and some of the innovative strategies companies are using. Explain the philosophy of sustainability and why organizations are embracing it. Define corporate social responsibility and how to evaluate it along economic, legal, ethical, and discretionary criteria. Discuss how ethical organizations are created through ethical leadership and organizational structures and systems. Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Will You Be A Courageous Manager? Managers exercise the strength of their moral beliefs and sense of justice Moral lapses and financial scandals has made ethical and courageous behavior an important trait for today’s managers Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Ethics The code of moral principles and values that govern the behaviors of a person or group with respect to what is right or wrong. Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Managerial Ethics Ethics can be difficult to define Ethics can be difficult to define Ethical issues are exceedingly complex Managers face a variety of difficult situations Ethics fall between law and free choice Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Ethical Dilemmas: What Would You Do? An ethical dilemma arises in a situation concerning right or wrong when values are in conflict Managers and employees are the moral agents who must make ethical choices Decisions about advertising, operations, and Internet usage are all dilemmas YOU might face Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Criteria for Ethical Decision Making Utilitarian approach – moral behaviors should produce the greatest good for the greatest number Individualism approach – acts are moral when they promote the individual’s best long-term interests Moral Rights Approach – moral decisions are those that best maintains the rights of those affected Justice Approach – decisions must be based on standards of equity, fairness, and impartiality Disruptive Approach – different treatment of people should not be based on arbitrary characteristics Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Defining Justice Disruptive Justice – different treatment of people should not be based on arbitrary characteristics. Compensatory Justice – individuals should be compensated for the cost of their injuries by the party responsible. Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Manager Ethical Choices An important personal trait that mangers poses is their stage of moral development Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Globalization and Ethics Globalization makes ethical issues more complex Bribes are common practice in many countries Transparency International ranks countries based on Bribe Payers Index Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

What is Corporate Responsibility? Corporate Social Responsibility (CSR) is the obligation of organization management to make decisions and take actions that will enhance the welfare and interests of society as well as the organization Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Organizational Stakeholders Stakeholders are any group within or outside the organization that has a stake in the organization’s performance. Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

The Bottom of the Pyramid (BOP) Sometimes called base of the pyramid Alleviate poverty and social ills while making profits Selling to the world’s poorest people 4 Billion people make up the lowest level of the world’s economic pyramid These people have traditionally been underserved Companies can make money while addressing global poverty, environmental destruction, social decay and political instability Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

The Ethic of Sustainability Sustainable Development Economic Development that generates wealth Meets the needs of current generation Saving the environment for future generations Managers are weaving sustainability into strategic decisions Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Evaluating Corporate Responsibility Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

Managing Company Ethics and Social Responsibility Code of Ethics – formal statement of the organization’s values regarding ethics and social issues Ethical Structures – systems, positions and programs to implement ethical behavior Whistle-Blowing – employee disclosure of illegal, immoral, or illegitimate practices Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

The Ethical Organization Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.

The Business Case for Ethics and Social Responsibility Paying attention to ethics and social responsibility is as important as profits and costs Ethical and social actions impact financial performance Companies are beginning to measure nonfinancial factors that create value Customers pay attention to a company’s ethics and social responsibility Copyright ©2010 by South-Western, a division of Cengage Learning.  All rights reserved.