PowerPoint Presentation to Accompany Management, 9/e John R. Schermerhorn, Jr. Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc. Chapter 2: Management Ethics and Social Responsibility

Management 9/e - Chapter 22 Planning Ahead — Chapter 2 Study Questions  What is ethical behavior?  How do ethical dilemmas complicate the workplace?  How can high ethical standards be maintained?  What is social responsibility and governance?

Management 9/e - Chapter 23  Ethics Code of moral principles. Set standards of “good” or “bad” or “right” or “wrong” in one’s conduct.  Ethical behavior What is accepted as good and right in the context of the governing moral code. Study Question 1: What is ethical behavior?

Management 9/e - Chapter 24  Law, values, and ethical behavior: Legal behavior is not necessarily ethical behavior. Personal values help determine individual ethical behavior.  Terminal values  Instrumental values Study Question 1: What is ethical behavior?

Management 9/e - Chapter 25 Study Question 1: What is ethical behavior?  Utilitarian view of ethics — greatest good to the greatest number of people.  Individualism view of ethics — primary commitment is to one’s long-term self- interests.  Moral-rights view of ethics — respects and protects the fundamental rights of all people.  Justice view of ethics — fair and impartial treatment of people according to legal rules and standards. Procedural justice Distributive justice Interactional justice

Management 9/e - Chapter 26  Cultural issues in ethical behavior: Cultural relativism  Ethical behavior is always determined by cultural context. Cultural universalism  Behavior unacceptable in one’s home environment should not be acceptable anywhere else.  Considered by some to be ethical imperialism Study Question 1: What is ethical behavior?

Management 9/e - Chapter 27  An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.  Ethical dilemmas include: Discrimination Sexual harassment Conflicts of interest Customer confidence Organizational resources Study Question 2: How do ethical dilemmas complicate the workplace?

Management 9/e - Chapter 28 Study Question 2: How do ethical dilemmas complicate the workplace?  Ethical behavior can be rationalized by convincing yourself that: Behavior is not really illegal. Behavior is really in everyone’s best interests. Nobody will ever find out. The organization will “protect” you.

Management 9/e - Chapter 29  Factors influencing ethical behavior include: The person  Family influences, religious values, personal standards, and personal needs. The organization  Supervisory behavior, peer group norms and behavior, and policy statements and written rules. The environment  Government laws and regulations, societal norms and values, and competitive climate in an industry. Study Question 2: How do ethical dilemmas complicate the workplace?

Management 9/e - Chapter 210 Figure 2.3 Factors influencing ethical managerial behavior—the person, organization, and environment.

Management 9/e - Chapter 211  Ethics training: Structured programs that help participants to understand ethical aspects of decision making. Helps people incorporate high ethical standards into daily life. Helps people deal with ethical issues under pressure. Study Question 3: How can high ethical standards be maintained?

Management 9/e - Chapter 212  Whistleblowers Expose misdeeds of others to:  Preserve ethical standards  Protect against wasteful, harmful, or illegal acts Laws protecting whistleblowers vary Study Question 3: How can high ethical standards be maintained?

Management 9/e - Chapter 213 Study Question 3: How can high ethical standards be maintained?  Barriers to whistleblowing include: Strict chain of command Strong work group identities Ambiguous priorities  Organizational methods for overcoming whistleblowing barriers: Ethics staff units who serve as ethics advocates Moral quality circles

Management 9/e - Chapter 214 Study Question 3: How can high ethical standards be maintained?  Ethical role models: Top managers serve as ethical role models. All managers can influence the ethical behavior of people who work for and with them. Excessive pressure can foster unethical behavior. Managers should be realistic in setting performance goals for others.

Management 9/e - Chapter 215  Codes of ethics: Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.  Areas often covered by codes of ethics: Bribes and kickbacks Political contributions Honesty of books or records Customer/supplier relationships Confidentiality of corporate information Study Question 3: How can high ethical standards be maintained?

Management 9/e - Chapter 216  Checklist for dealing with ethical dilemmas: Recognize the ethical dilemma Get the facts Identify your options Test each option: Is it legal? Is it right? Is it beneficial? Decide which option to follow Double-check decision by asking “spotlight” questions:  “How would I feel if my family found out about my decision?”  “How would I feel about this if my decision were in the local news?” Take action Study Question 3: How can high ethical standards be maintained?

Management 9/e - Chapter 217  Moral Management How managers act and communicate as role models  Immoral manager  Amoral manager  Moral manager Ethics mindfulness  Enriched ethical awareness that affects behavior Study Question 3: How can high ethical standards be maintained?

Management 9/e - Chapter 218 Figure 2.4 How can high ethical standards be maintained?

Management 9/e - Chapter 219 Study Question 4: What is social responsibility and governance?  Corporate social responsibility and governance: Looks at ethical issues on the organization level. Obligates organizations to act in ways that serve both its own interests and the interests of society at large.

Management 9/e - Chapter 220 Study Question 4: What is social responsibility and governance?  Organizational stakeholders Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.  Typical organizational stakeholders Employees Customers Suppliers Owners Competitors Regulators Interest groups

Management 9/e - Chapter 221 Figure 2.5 Multiple stakeholders in the environment of an organization.

Management 9/e - Chapter 222 Study Question 4: What is social responsibility and governance?  Perspectives on social responsibility: Classical view—  Management’s only responsibility is to maximize profits. Socioeconomic view—  Management must be concerned for the broader social welfare, not just profits.

Management 9/e - Chapter 223 Study Question 4: What is social responsibility and governance?  Arguments against social responsibility: Reduced business profits Higher business costs Dilution of business purpose Too much social power for business Lack of public accountability  Arguments in favor of social responsibility: Adds long-run profits Improved public image Avoids more government regulation Businesses have resources and ethical obligation

Management 9/e - Chapter 224 Study Question 4: What is social responsibility and governance?  Criteria for evaluating corporate social performance: Is the organization’s …  Economic responsibility met?  Legal responsibility met?  Ethical responsibility met?  Discretionary responsibility met?

Management 9/e - Chapter 225 Figure 2.6 Criteria for evaluating corporate social performance.

Management 9/e - Chapter 226 Study Question 4: What is social responsibility and governance?  Leadership beliefs that guide socially responsible practices: People Communities Natural environment Long term Reputation

Management 9/e - Chapter 227 Study Question 4: What is social responsibility and governance?  Corporate governance: The oversight of the top management of an organization by a board of directors.  Corporate governance involves: Hiring, firing, and compensating the CEO. Assessing strategy. Verifying financial records.