BUSINESS & SOCIETY Ethics and Stakeholder Management Chapter 6 BUSINESS & SOCIETY Ethics and Stakeholder Management Carroll & Buchholtz 6e BUSINESS’S ETHICS FUNDAMENTALS Prepared by Deborah Baker Texas Christian University Chapter 6- Business and Society: Ethics and Stakeholder Management, 6e • Carroll & Buchholtz Copyright ©2006 by South-Western, a division of Thomson Learning.  All rights reserved

2000 National Business Ethics Survey Findings 1 in 8 employees feel pressure to act unethically 2/3 attribute this pressure to internal sources 1 in 3 employees observes misconduct at work Misconduct observed most: lying, withholding information, abusive behavior toward employees, misreporting time worked, & discrimination 1 in 3 employees fears retaliation for reporting unethical behavior Employees say that their organizations’ concern for ethics is a reason they continue to work there. Chapter 6-

Ethics Moral conduct Business Ethics Set of moral principles or values used to determine right vs. wrong behavior Moral conduct Right vs. wrong behavior Business Ethics Right vs wrong in a business context Chapter 6-

Conventional Approach to Business Ethics (Ch 6) -Involves a comparison of a decision or practice to prevailing societal norms Decision or Practice Prevailing Norms of Society (acceptability) Chapter 6-

Sources of Ethical Norms in Society Fellow Workers Family Friends The Law Regions of Country Profession Employer Society at Large Local Community Religious Beliefs The Individual Conscience Chapter 6-

Problems? How do we know if a source is reliable? How do we handle conflicting messages? What happens if we go to another “society”? “When in Rome, do as the Romans do.” Chapter 6-

Ethics & the Law Overlap Law reflects society’s values Ethics often represents a standard that exceeds the legal minimum If you break the law, are you behaving unethically? If you behave unethically, are you breaking the law? Ethics Law Overlap Chapter 6-

How We Make Ethical Judgments ? (to decide what is right or wrong) Observation of behavior or act that has been committed Prevailing norms of acceptability We must take into account the values & perceptions of the observer compare with Chapter 6-

Ethical Relativism When we pick & choose norms to follow based on what we are doing at the time & we justify our actions (maximizes our freedom of choice) We agree on general principles but disagree on actual practices (depending on what situation we’re in) It’s wrong- we need to be aware of it One problem with the conventional approach Chapter 6-

Ethics, Economics, and Law (page 180) Chapter 6-

Management’s Ethics Immoral Management Moral Management Active opposition to what is ethical Moral Management High standards of ethical behavior Amoral Management Intentional: does not consider ethics Unintentional: careless Chapter 6-

Immoral Managers Strategy: exploitation (profit @ any cost) Intentionally do wrong (know right from wrong) Self-centered & self-absorbed; greedy Care only about self or profits Actively oppose what is right, fair, or just No concern for SH Laws are obstacles to overcome An ethics course probably would not help them! Strategy: exploitation (profit @ any cost) Chapter 6-

Moral Managers Strategy: integrity Conform to high level of ethical behavior Conform to high level of personal & professional standards Ethical leadership Goal is to succeed, but only within Area 1 of Venn Diagram Operate above legal mandates (law is minimum) Possess an acute “moral sense” & moral maturity Strategy: integrity Chapter 6-

Amoral Managers Intentionally Amoral Managers: Don’t think ethics & business should “mix” Different rules apply in the business world Unintentionally Amoral Managers: Don’t think about ethics when making decisions, too self-absorbed Lack ethical perception or awareness (afterthought) Well-intentioned, but morally careless, insensitive or unconscious Strategy: compliance Chapter 6-

Ethics in Practice p. 189 Ethical? Legal? Profitable? What would you do? Chapter 6-

Making Moral Management Real It’s senior management’s responsibility to create an ethical organizational climate! How do they do this? Recognize that amoral management exists. Chapter 6-

Cognitive Moral Judgment Chapter 6-

Why Managers Behave Ethically Most of Us Many of Us Very Few Of Us 1. To avoid some punishment 2. To receive some reward 3. To be responsive to family, friends, or superiors 4. To be a good citizen 5. To do what is right, pursue some ideal Chapter 6-

External Sources of a Manager’s Values How can we be so ethically diverse? Philosophical values Cultural values Legal values Religious values Professional values Society’s Values Chapter 6-

Internal Sources of a Manager’s Values Socialization teaches norms which influence behavior Respect for authority Loyalty to bosses & organization Conformity Performance counts Bottom line results count (above all else) -In our society, these norms represent survival & success!! -Is this a setup for unethical behavior? Chapter 6-