GM Announces Salary Layoffs March 28, 2006 General Motors, pummeled by falling sales and billions in losses, is laying off 100’s of U.S. workers as part of a plan to bring N. American operations back to profitability. Dave Kepsel, an engineering manager who spent 26 years at GM, was among those laid off. “I don't have any hard feelings”. GM's severance is 1 month pay / year of service along with health benefits and outplacement assistance. Q: Would you rather keep your job where layoffs occurred unfairly or lose your job under a fair and open system?

JUSTICE, STAKEHOLDER THEORY, & CSR

Justice -What is “fair” according to the prevailing standards of society - Distributive Justice - Procedural Justice

Distributive Justice The proper distribution of social and economic benefits/burdens 1)To each an equal share (voting/) 2)To each according to individual need (sick time/income tax) 3)To each according to individual effort 4)To each according to social contribution (stock options) 5)To each according to merit (bonus/firing)

Procedural Justice Fair rules by which determination of distributions are made –Utilitarianism –Libertarianism –Rawl’s Theory of Justice

Utilitarianism (J. Mills, J. Bentham) Maximization of happiness (minus sadness) determines justice –Act Utilitarianism –Rule Utilitarianism

Libertarianism (R. Nozick) – Everyone has certain (Lockean) rights –These can not be taken away

Rawls Theory of Justice (J Rawls) Veil of ignorance - Rules should be made up as if no one knows what their lot will be Original position - Each member of society have equal right to all important benefits –Any advantage must go to those in the worst starting position

Highway 58 Spur Example Utilitarianism –Maximize total happiness  Build straight highway Libertarianism –Respect individual rights  Curve around unwilling property holders Rawls –All equal chance  Mobile home renter gets same say (at least) as wealthy landowner

The Stakeholder Concept mBus + Society = Interdependence, therefore Stakeholders mPrimary mStockholders, Employees, Customers, Suppliers, Creditors mSecondary m Communities, Gov’t, PAC’s, Media, Competitors

3 Types of Stakeholder Power mVoting power mStockholders mEconomic power mCustomers, suppliers  direct economic impact mPolitical power mLegislation, regulation, lawsuits

Corporate Social Responsibility Businesses accountable for actions & results –  should seek econ AND social results

4 Part Definition of CSR Economic –Make profit / sell desired goods Legal –Comply with the law of the land Ethical –Follow those practices that are considered fair Philanthropic –Improve QoL, contribute to community

Corporate Social Responsibility Pros & Cons Arguments for CSRArguments against CSR Balances corporate power with responsibility. Discourages government regulation. Promotes long-term profits for business. Responds to changing stakeholders’ demands. Corrects social problems caused by business. Lowers economic efficiency and profit. Imposes unequal costs among competitors/countries Imposes hidden costs passed on to stakeholders. Requires social skills business may lack. Places responsibility on business rather than individuals.

Social Auditing Coalition for Environmentally Responsible Economies – Donald Bren School of Environmental Science & Management (UCSB) – Institute for Social & Ethical Accountability –ISEA AA1000 International Organization for Standardization –ISO 14001

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