The Ethical and Social Environment Mgmt 371 Chapter Four The Ethical and Social Environment Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©

Individual Ethics In Organizations An individual’s values and personal beliefs regarding what is right and wrong or good and bad. Ethical Behavior “Eye of the beholder” or behavior that conforms to generally accepted social norms. Examples of Unethical Behavior “Borrowing” office supplies for personal use, “Surfing the Net” on company time. Filing falsified or inflated business expense reports. Pretextual terminations

Values Values – a personal conviction about lifelong goals or objectives. Our basis for right or wrong [ethics]

Types of Values Terminal Values -a personal conviction about lifelong goals or objectives. Core moral beliefs. Freedom (independence, free choice) Religious convictions Sense of accomplishment (purposeful life) Instrumental Values -a mode of conduct an individual seeks to follow. Ambitiousness (hard-working, aspiring) Independent (self-reliant, self-sufficient) Trustworthy (honest, dependable)

Types of Values Together, terminal values and instrumental values form the individual’s value system, the guiding principles of the individual’s life. A manager’s conduct in an organization is not only affected by his/her value system but organizational norms as well.

Professional Ethics Professional ethics – standards that govern how members of a given profession are to make decisions. Medical ethics. Legal ethics (an oxymoron). Business ethics Professional Ethics provide a basis for decision-making when situations are ambiguous.

Managerial Ethics

Ethics in Organizations Individual Values Organizational Values Managerial Values + =

Applying Ethical Judgments Model for deciding whether or not a particular action or decision is ethical Gather relevant factual information. Determine the most appropriate moral values. Make a judgment. Ethical Norms Affecting Actions Utility Rights Justice Caring

Threats to Ethical Decision Making Moral relativism - morality is relative to some personal, social, or cultural standard. No standard is better than another. Argument made in many universities. The following are often used to justify questionable behavior: Naïve relativism Role relativism Social group relativism Cultural relativism

Threats to Ethical Decision Making Naïve relativism - moral decisions are deeply personal, hence individual should be allowed to act on the basis of their own individual moral values. “Who are you to judge.” Role relativism - social roles carry with them certain obligations to the role only. One must set aside personal beliefs and do what their role in the organization requires them to do.

Threats to Ethical Decision Making Social group relativism - morality determined merely by following the norms of ones peer group. What’s accepted by the group is moral. “Everyone does it.” “Don’t be a sucker, everyone cheats.”

Threats to Ethical Decision Making Cultural relativism - morality is relative particular culture, society, or community. If another cultural believes that a certain behavior is permissible, what right do you have to criticize them. Businesses must be “all things to all people.” “Don’t be a cultural imperialist.” “The only thing necessary for evil to triumph is for good men to do nothing.” Edmund Burke

Social Responsibility and Organizations Organizational Stakeholders People and organizations directly affected by the behaviors of an organization and that have a stake in its performance. Social Responsibility The set of obligations to behave responsibly. Areas of Social Responsibility Stakeholders The natural environment The general social welfare

Organizational Stakeholders

Arguments for Social Responsibility Business creates problems and therefore should help solve them. Corporations as citizens in our society have responsibilities. Business possesses the resources to solve social problems. Business is a partner in our society along with government and the general population.

Arguments Against Social Responsibility Business lack the expertise for social problems. The purpose of business is to generate profit for owners. The business of business is business – Calvin Coolidge. Society enjoys social spillover benefits. Involvement in social program gives business too much power. Potential conflicts of interest are created.

Approaches to Social Responsibility

Approaches to Social Responsibility Obstructionist Stance Do as little as possible Deny or avoid accepting responsibilities for their action. Stonewall and delay through legal actions Defensive Stance Do only what is legally required and nothing more.

Approaches to Social Responsibility Accommodative Stance Meet legal and ethical obligations and go beyond that in selected cases. Contributions to charities They respond to requests and do not active seek charitable opportunities. Proactive Stance Organization views itself as a citizen and proactively seeks opportunities to contribute to society.

How Business and the Government Influence Each Other

Government and SR How government influences organizations to shape socially responsible practices. Enacts EPA laws & regulations. Enacts consumer protection legislation. Enacts employee protection legislation. Regulates security and exchange. Administers the tax codes.

Government and SR How business organizations influence the government. Personal contacts & networks. Lobbying. Political action committees (PAC). Favors and influence tactics.

Managing Social Responsibility: Formal Organizational Dimensions Legal Compliance Extent to which the organization conforms to local, state, federal, and international laws. Remember that there is right, there is wrong and there is the law. Ethical Compliance Extent to which members of the organization follow basic ethical/legal standards of behavior.

Managing Social Responsibility: Formal Organizational Dimensions Philanthropic Giving Awarding of funds or gifts to charities and other social programs.

Managing Social Responsibility: Informal Organizational Dimensions Organization Leadership and Culture Leadership practices and the culture of the organization can help define the social responsibility stance an organization and its members will adopt. Whistle Blowing The organizational response to the disclosure by an employee of illegal or unethical conduct on the part of others within the organization is indicative of the organization’s stance on social responsibility.

Evaluating Social Responsibility Concept of Control Evaluating responses to questionable legal or ethical conduct Initiate an immediate follow-up response to events? Seek punishment for those involved? Engage in delay or cover-up tactics?

Evaluating Social Responsibility Concept of Control Corporate Social Audit - Formal analysis of the effectiveness of social performance conducted by a task force of high-level managers from within the firm. Based on clearly defined social goals. Measures resources allocated to each social goal. Determines how well social goals were achieved. Makes recommendations.

Closing Thought If we do not have moral leaders in our organizations, we will not have ethical decisions. The great moral fallacy of our time, that the collective virtue may be pursued without reference to personal behavior. Malcolm Muggeridge