Organizational Justice, Ethics, and Corporate Social Responsibility Chapter Two Organizational Justice, Ethics, and Corporate Social Responsibility

© Copyright Prentice-Hall 2004 Three Good Reasons Why You Should Care About . . . Justice, Ethics, CSR Treating employees unfairly can adversely affect many different types of work attitudes and behaviors The public is growing increasingly intolerant of unethical corporate behavior, but managers can take steps to promote ethical behavior in organizations Consumers and investors tend to support socially responsible companies, enhancing their financial performance © Copyright Prentice-Hall 2004 2

Organizational Justice The study of people’s perceptions of fairness in organizations Distributive Justice: The form of organizational justice that focuses on people’s beliefs that they have received fair amounts of valued work-related outcomes Procedural Justice: People’s perceptions of the fairness of the procedures used to determine the outcomes they receive Interpersonal Justice: People’s perceptions of the fairness of the manner in which they are treated by other people Informational Justice: People’s perceptions of the fairness of the information used as the basis for making a decision © Copyright Prentice-Hall 2004

Forms of Organizational Justice © Copyright Prentice-Hall 2004

Procedural Justice and Outcomes © Copyright Prentice-Hall 2004

Promoting Organizational Justice Pay workers what they deserve Offer workers a voice Openly follow fair procedures Explain decisions thoroughly in a manner demonstrating dignity and respect Train workers to be fair © Copyright Prentice-Hall 2004

The Fair Process Effect © Copyright Prentice-Hall 2004

Moral Values versus Ethics © Copyright Prentice-Hall 2004

© Copyright Prentice-Hall 2004 Why Ethics Matters Good ethics is good business Improved financial performance Reduced operating costs Enhanced corporate reputation Increased ability to attract and retain employees Legal regulations False Claims Act (1986) Foreign Corrupt Practices Act (revised 1988) Federal Sentencing Guidelines for Organizations (1991) Sarbanes-Oxley Act (2002) Federal Prosecution of Business Organizations (2003) © Copyright Prentice-Hall 2004

Reasons for Unethical Behavior Individual differences in cognitive moral development Situational determinants of unethical behavior Some managerial values undermine integrity Bottom line mentality: This line of thinking supports financial success as the only value to be considered Exploitative mentality: This view encourages “using” people in a way that promotes stereotypes and undermines empathy and compassion Madison Avenue mentality: This perspective suggests that anything is right if the public can be made to see it as right Organizations sometimes encourage behavior that violates ethical standards Workers emulate the unethical behavior of their superiors © Copyright Prentice-Hall 2004

Kohlberg’s Theory of Moral Development © Copyright Prentice-Hall 2004

Ethical Norms and Counternorms © Copyright Prentice-Hall 2004

Corporate Ethics Programs Formal, systematic mechanisms designed to promote ethics by creating organizational cultures that both make people sensitive to potentially unethical behaviors and discourage them from engaging in them Components A code of ethics Ethics training Ethics audits An ethics committee An ethics officer A mechanism for communicating ethical standards © Copyright Prentice-Hall 2004 12

Ethics Program Effectiveness © Copyright Prentice-Hall 2004

Corporate Social Responsibility Business decision making linked to ethical values, compliance with legal requirements, and respect for individuals, the community at large, and the environment © Copyright Prentice-Hall 2004

Most Socially Responsible Firms © Copyright Prentice-Hall 2004

© Copyright Prentice-Hall 2004 The Virtuous Circle © Copyright Prentice-Hall 2004