Copyright © Houghton Mifflin Company. All rights reserved. 5-1 Chapter 5 Management’s Social and Ethical Responsibilities

Copyright © Houghton Mifflin Company. All rights reserved. 5-2 Chapter Outline Social Responsibility: Definition and Perspectives u What Does Social Responsibility Involve? u What Is the Role of Business in Society? u Arguments For and Against Corporate Social Responsibility

Copyright © Houghton Mifflin Company. All rights reserved. 5-3 Chapter Outline (continued) Toward Greater Social Responsibility u Social Responsibility Strategies u Who Benefits from Corporate Social Responsibility? u The Future of Corporate Social Responsibility

Copyright © Houghton Mifflin Company. All rights reserved. 5-4 Chapter Outline (continued) The Ethical Dimension of Management u Practical Lessons from Business Ethics Research u Personal Values as Ethical Anchors u General Ethical Principles

Copyright © Houghton Mifflin Company. All rights reserved. 5-5 Chapter Outline (continued) Encouraging Ethical Conduct u Ethics Training u Ethical Advocates u Codes of Ethics u Whistle-blowing

Copyright © Houghton Mifflin Company. All rights reserved. 5-6 WHAT DOES CORPORATE SOCIAL RESPONSIBILITY INVOLVE? Corporate social responsibility: “the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract.” u Voluntary action u An emphasis on means, not ends

Copyright © Houghton Mifflin Company. All rights reserved. 5-7 Source: Nancy C. Roberts and Paula J. King, “The Stakeholder Audit Goes Public.” Reprinted from Organizational Dynamics, Winter © 1989, American Management Association International. Reprinted by permission of American Management Association International, New York, NY. All rights reserved. Figure 5.1 A Sample Stakeholder Audit for an Automobile Company

Copyright © Houghton Mifflin Company. All rights reserved. 5-8 Figure 5.2 A Continuum of Social Responsibility Strategies

Copyright © Houghton Mifflin Company. All rights reserved. 5-9 WHAT DOES CORPORATE SOCIAL RESPONSIBILITY INVOLVE? (continued) For Discussion: 1.Why is “voluntary action” a key to corporate social responsibility?

Copyright © Houghton Mifflin Company. All rights reserved WHAT DOES CORPORATE SOCIAL RESPONSIBILITY INVOLVE? (continued) For Discussion: 2.Could an “emphasis on means rather than ends” encourage well-meaning but socially irresponsible actions? (For example, some college organizations sponsor social events on behalf of needy groups, such as disabled children, who actually get very little if any benefit after program expenses have been paid.)

Copyright © Houghton Mifflin Company. All rights reserved Source: Data from Mark N. Vamos and Christopher Power, “A Kinder, Gentler Generation of Executives?” Business Week (April 23, 1990): Figure 5.3 Present and Future Executives Support the Concept of Corporate Social Responsibility

Copyright © Houghton Mifflin Company. All rights reserved ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY Arguments for: 1.Business is unavoidably involved in social issues. 2.Business has the resources to tackle today’s complex societal problems. 3.A better society means a better environment for doing business. 4.Corporate social action will prevent government intervention.

Copyright © Houghton Mifflin Company. All rights reserved ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY (continued) Arguments against: 1.Profit maximization ensures the efficient use of society’s resources. 2.As an economic institution, business lacks the ability to pursue social goals. 3.Business already has enough power. 4.Because managers are not elected, they are not directly accountable to the people.

Copyright © Houghton Mifflin Company. All rights reserved ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY (continued) For Discussion: Which set of arguments do you find most convincing? Why?

Copyright © Houghton Mifflin Company. All rights reserved Enlightened self-interest: realization that business ultimately helps itself by helping to solve societal problems. ENLIGHTENED SELF-INTEREST

Copyright © Houghton Mifflin Company. All rights reserved ENLIGHTENED SELF-INTEREST (continued) For Discussion: 1.Do you personally endorse the concept of enlightened self-interest? Why or why not? 2.Is the reality of short-term costs versus long- term benefits a fatal flaw for the concept of enlightened self-interest in the business world?

Copyright © Houghton Mifflin Company. All rights reserved THE ETHICAL DIMENSION OF MANAGEMENT Ethics: The study of moral obligation involving the distinction between right and wrong.

Copyright © Houghton Mifflin Company. All rights reserved ETHICS SURVEY Instructions: Based on your personal work experience, rank (from 1 = most common to 10 = least common) the following ten ethical hot spots said to be associated with unethical and illegal conduct in the workplace. Rank 1. Balancing work and family_____ 2. Poor internal communications_____ 3. Poor leadership_____ 4. Work hours, work load_____ 5. Lack of management support_____

Copyright © Houghton Mifflin Company. All rights reserved ETHICS SURVEY (continued) Rank 6. Need to meet sales, budget or profit goals_____ 7. Little or no recognition of achievements_____ 8. Company politics_____ 9. Personal financial worries_____ 10. Insufficient resources_____

Copyright © Houghton Mifflin Company. All rights reserved ETHICS SURVEY (continued) For Discussion: 1.What do the results of this survey tell you about the future of ethics in the workplace? 2.What can management do to improve the climate for ethical conduct?

Copyright © Houghton Mifflin Company. All rights reserved PERSONAL VALUES AS ETHICAL ANCHORS Instrumental value: an enduring belief that a certain way of behaving is appropriate in all situations (e.g., ambitious, courageous, loving). Terminal value: an enduring belief that a certain end-state of existence is worth striving for and attaining (e.g., an exciting life, freedom, social recognition).

Copyright © Houghton Mifflin Company. All rights reserved PERSONAL VALUES AS ETHICAL ANCHORS (continued) Discussion: of value conflict based on your value profile in Table 5.2: u Intrapersonal value conflict: Will your top three instrumental values help you achieve your top three terminal values, or is there a fundamental and frustrating conflict?

Copyright © Houghton Mifflin Company. All rights reserved PERSONAL VALUES AS ETHICAL ANCHORS (continued) u Individual-organizational value conflict: Do your top-ranked values clash with those promoted by your organization’s culture? u Intercultural value conflict: How well do differing values explain conflict and misunderstanding between racial, gender, ethnic, religious, and cultural groups in today’s world?

Copyright © Houghton Mifflin Company. All rights reserved GENERAL ETHICAL PRINCIPLES 1. Self-interests 2. Personal virtues 3. Religious injunctions 4. Government requirements 5. Utilitarian benefits

Copyright © Houghton Mifflin Company. All rights reserved GENERAL ETHICAL PRINCIPLES (continued) 6. Universal rules 7. Individual rights 8. Economic efficiency 9. Distributive justice 10. Contributive liberty

Copyright © Houghton Mifflin Company. All rights reserved GENERAL ETHICAL PRINCIPLES (continued) For Discussion: 1.Which of these ethical principles drives most of your behavior? 2.How situational are your ethical principles? Do you switch from one ethical principle to another as dictated by convenience? 3.Is “situational ethics” a problem for managers? Explain.

Copyright © Houghton Mifflin Company. All rights reserved HOW TO MAKE AN ORGANIZATIONAL CODE OF ETHICS EFFECTIVE 1.Refer to specific practices such as kickbacks, payoffs, receiving gifts, and falsifying records. 2.Top management must firmly support the code by communicating it broadly and role modeling appropriate behavior. 3.The code must be equitably enforced with stiff penalties for noncompliance.

Copyright © Houghton Mifflin Company. All rights reserved HOW TO MAKE AN ORGANIZATIONAL CODE OF ETHICS EFFECTIVE (continued) For Discussion: What would you say to a manager who declares corporate codes of ethics a waste of time?