Managing Ethics and Social Responsibility Chapter 5 Managing Ethics and Social Responsibility

Managerial Ethics Ethics - code of moral principles and values that govern the behaviors of right or wrong Standards about good/bad Ethical issues can be complex People in organizations have divergent views about right/wrong

5.1 Three Domains of Human Action Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

Ethical Management Today Ethical scandals during the last decade have been pervasive Corporations and people have become associated with greed, deceit, irresponsibility, and lack of moral conscience Managers carry a big responsibility for setting an ethical climate Ethical crises have brought ethical management to the forefront

5.2 Examples of Unethical and Illegal Organizational Behavior Enron (2001), Arthur Anderson Sarbanes-Oxley 2002 (SOX) Company must be compliant with SOX

Criteria for Ethical Decision Making Utilitarian Approach – moral behavior produces the greatest good for the greatest number. Individualism Approach – acts are moral if they promote the individual’s long-term interest Moral-Rights Approach – humans have fundamental rights and liberties that cannot be taken away by an individual's decision

Justice Approach – moral decisions must be based on standards of equity, fairness, and impartiality Virtue Ethics Approach– moral behavior stems from personal virtues Practical Approach– bases decisions on prevailing standards, society, and all stakeholders

A Manager’s Ethical Choices Individuals bring their own personality and traits to organizations Personal needs, family influence, and religious background shape individuals Personality characteristics like ego, confidence, and independence

5.3 Three Levels of Personal Moral Development Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

What is Corporate Social Responsibility (CSR)? Distinguishing right from wrong; doing right Good corporate citizenship Make choices that contribute to society and stakeholders Stakeholders – any group within or outside the organization who are interested in the affairs of organization.

Managing Company Ethics and Social Responsibility Code of Ethics – a formal statement of the company’s values regarding ethics and social issues Ethical Structures – systems, positions, and programs like ethics training Whistle-blowing – employee disclosure of illegal, immoral, or illegitimate practices inside the company.

5.6 Building an Ethical Organization Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.