Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall2-1 Managing Behavior In Organizations Sixth Edition Jerald Greenberg

Organizational Justice, Ethics, and Corporate Social Responsibility Chapter Two

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-3 Learning Objectives IDENTIFY the different forms of organizational justice DESCRIBE the relationships between perceived managerial controls and the form of justice monitoring that occurs EXPLAIN what is meant by ethical behavior and why organizations should be concerned about ethics DESCRIBE the individual and situational factors responsible for unethical behavior in organizations and methods for minimizing such behavior COMPARE ethical relativism and ethical imperialism as orientations to ethics in the international arena EXPLAIN what is meant by corporate social responsibility and the nature of the relationship between responsible behavior and financial profitability

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-4 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-4 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Three Good Reasons Why You Should Care About... Justice, Ethics, CSR 1.Treating employees unfairly adversely affects work attitudes and behaviors. 2.The public is growing increasingly intolerant of unethical corporate behavior, but managers can take steps to promote ethical behavior in organizations. 3.Consumers and investors tend to support socially responsible companies, enhancing the companies’ financial performance.

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-5 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-5 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Organizational Justice Organizational justice - the study of people’s perceptions of fairness in organizations

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-6 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-6 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Forms of Organizational Justice 1.Distributive justice - the form of organizational justice that focuses on people’s beliefs that they have received fair amounts of valued work-related outcomes 2.Procedural justice - people’s perceptions of the fairness of the procedures used to determine the outcomes they receive  Fair process effect 3.Interactional justice consists of  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 © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-7 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-7 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Assessing Fairness… Fairness monitoring - the practice of gathering and processing information in an effort to figure out how fairly people are treated in their organizations

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-8 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-8 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Assessing Fairness…  Managerial controls - the processes that managers use to communicate and monitor the performance of their subordinates to ensure that they are behaving as expected  Market controls  Bureaucratic controls  Clan controls

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall2-9Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall2-9Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 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 © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-10 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-10 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Ethical Behavior in Organizations Surveys show that today, managers are more likely to keep their promises less likely to engage in misconduct less likely to feel pressure to be unethical believe that more attention is paid to practicing honesty and respect for others

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-11 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-11 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Ethical Behavior in Organizations Different orientations: The prescriptive orientation - approach favored by philosophers What is ethical? The descriptive orientation - approach favored by social scientists How do people try to be ethical? How do people respond to unethical behavior?

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-12 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-12 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Prescriptive Approach to Ethics Utilitarianism - an action is considered ethical to the extent that it maximizes happiness among stakeholders Natural rights approach - all people are entitled to rights for life, liberty, and property

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-13 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-13 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Descriptive Approach to Ethics Moral values - people’s fundamental beliefs about what is right or wrong, good, or bad Ethics - standards of conduct that guide people’s decisions and behavior

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-14 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-14 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Why Ethics Matters Good ethics is good business Improved financial performance Reduced operating costs Enhanced corporate reputation Increased ability to attract and retain employees

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-15 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-15 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Why Ethics Matters Legal regulations Federal Sentencing Guidelines for Organizations - provides guidelines for federal judges to follow when imposing penalties on organizations Sarbanes-Oxley Act - holds senior company officials personally accountable for their companies’ accounting practices and reports

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-16 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-16 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Reasons for Unethical Behavior Individual differences in cognitive moral development Situational determinants of unethical behavior Some managerial values undermine integrity. Bottom line mentality - financial success is the only value to be considered Exploitative mentality - use people in a way that promotes stereotypes and undermines empathy and compassion Madison Avenue mentality - anything is right if the public can be made to see it as right Organizations may encourage behavior that violates ethical standards. Stonewalling Counternorms Workers emulate the unethical behavior of their superiors.

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-17 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-17 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Kohlberg’s Theory of Moral Development Level One: Preconventional Level: What’s right is whatever avoids getting punished Level Two: Conventional Level: What’s right is whatever fulfills obligations to society Level Three: Postconventional Level: What’s right is determined by universal moral principle (e.g. human rights)

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-18 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-18 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Ethical Norms and Counternorms Ethical Norms vs. Organizational Countermorms Be open and honest vs. Be secretive deceitful Follow the rules at all costs vs. Do whatever it takes to get the job done Be cost-effective vs. Use it or lose it Take Responsibility vs. Pass the buck Be a team player vs. Take credit for your own actions: grandstand

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-19 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-19 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Corporate Ethics Programs Corporate ethics program - 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 © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-20 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-20 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Conducting an Ethics Audit A thorough ethics audit can reveal a great deal about a company’s commitment to ethics and the extent to which its efforts to foster ethical behavior are effective. However, to recognize these benefits, it is crucial to conduct an ethics audit in an appropriate manner. The following guidelines will help. 1.Ensure that top executives, such as the CEO, are committed to the ethics audit and appoint a committee to guide it. 2. Create a diverse team of employees to write questions regarding the company’s ethical performance. These should focus on existing practices (e.g. codes of ethics) as well as prevailing norms about company practices (e.g. billing clients for services not actually performed). 3. Carefully analyze official documents, such as ethical mission statements and codes of ethics, to see how clear and thorough they are. 4. Ask people questions about why they think various unethical behaviors have occurred. 5. Compare your company’s ethical practices to those of other companies in the same industry. 6. Write a formal report summarizing these findings and present it to all concerned parties.

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-21 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-21 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Ethics in the International Arena  Two approaches: –Ethical relativism - adopt the ethics of whatever country in which one does business –Ethical imperialism - do everywhere what is considered right at home

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-22 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-22 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Guiding Principles of Global Ethics  Show respect for core human values  Demonstrate sensitivity to local traditions  Recognize that context matters when distinguishing between right and wrong

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-23 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-23 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Corporate Social Responsibility  Organizations have four fundamental responsibilities known as the pyramid of corporate social responsibility. 1.Economic 2.Legal 3.Ethical 4.Philanthropic

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-24 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Corporate Social Responsibility Philanthropic Responsibilities- Contributing to and helping society at large Ethical Responsibilities- Doing what is right and good for everyone Legal Responsibilities- Following the laws of society Financial Responsibilities- Making a profit for stockholders

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-25 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-25 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Corporate Social Responsibility  Corporate social responsibility - business practices that adhere to ethical values that comply with legal requirements, demonstrate respect for individuals, and promote the betterment of the community at large and the environment

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-26 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-26 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall Corporate Social Responsibility  Forms of corporate social responsibility:  Helping the community by making charitable contributions  Promoting environmental sustainability  Socially responsible investing  Promoting the welfare of employees

Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-27 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall 2-27 Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall The Virtuous Circle Companies make money because they are highly socially responsible (i.e. they do well by doing good) ↓ Companies can afford to be very socially responsible because they have made a lot of money (i.e. they do good by doing well)

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