1. Ethics and Social Responsibility
Exploring Management
Chapter 3
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Ethics and
Social Responsibility

2. Chapter 3
“How do you excuse betraying thousands,” said Bernard Madoff when sentenced to 150 years in jail for a multi-billion dollar financial fraud.
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3. Chapter 3
Character Doesn’t Stay Home When We Go to Work…. Let’s discuss James Cameron’s AVATAR
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4. Learning Objectives Chapter 3
How do ethics and ethical behavior play out in the workplace? (3.1)
How can we maintain high standards of ethical conduct? (3.2)
What should we know about the social responsibilities of organizations? (3.3)
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5. EITHICS IN THE WORKPLACE 3.1 Takeaway – answers to come
Ethical behavior is values driven.
What is considered ethical varies among moral reasoning approaches.
What is considered ethical can vary across cultures.
Ethical dilemmas arise as tests of personal ethics and values.
People have tendencies to rationalize unethical behaviors.
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6. ethics in the workplace 3.1 Ethical Behavior
A code of moral principles that sets standards of good or bad, or right or wrong, in our conduct.
Ethical Behavior
That which is “right” or “good” in the context of governing moral code.
Ethical behavior is value driven
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7. ethics in the workplace 3.1 Values Driven
Broad beliefs about what is appropriate behavior
Terminal Values
Preferences about desired end states
Instrumental Values
Preferences regarding the means to desired ends
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8. Misuse of company property Giving preferential treatment
Facts to consider 3.1 The Most Common Unethical Acts by Managers include:
Verbal
Sexual
Racial harassment
Misuse of company property
Giving preferential treatment
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9. ethics in the workplace 3.1 Moral Reasoning
Moral Reasoning (Figure 3.1)
Reasons for various ethical practices
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10. ethics in the workplace 3.1 Moral Reasoning
Utilitarian View
Which action delivers the most good to the largest amount of people?
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11. ethics in the workplace 3.1 Moral Reasoning
Individualism View
Which action is in our best interest in the long-term?
Can be quite different from the best choice for the short term
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12. ethics in the workplace 3.1 Moral Reasoning
Justice View
Procedural Justice
Rules are applied fairly
Distributive Justice
People are treated the same regardless of personal characteristics
Interactional Justice
People are treated with dignity and respect
Commutative Justice
Transactions are fair and everyone has access to the same information
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13. ethics in the workplace 3.1 Moral Reasoning
Moral Rights View
Fundamental rights of all people are respected
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14. ethics in the workplace 3.1 Moral Reasoning
Excerpt From Universal Declaration of Human Rights
United Nations
Article 1—All human beings are born free and equal in dignity and right
Article 18—Everyone has the right to freedom of thought, conscience, and religion
Article 19—Everyone has the right to freedom of opinion and expression
Article 23—Everyone has the right to work, to free choice of employment, to just and favorable conditions of work
Article 26—Everyone has the right to education
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15. ethics in the workplace 3
ethics in the workplace 3.1 What is considered ethical can vary across culture.
Situation:
A 12-year-old boy is working in a garment factory in Bangladesh. He is the sole income earner for his family. He often works 12-hour days and was once burned quite badly by a hot iron. One day he is told he can’t work. His employer was given an ultimatum by the firm’s major American customer – “No child workers if you want to keep our contracts.” The boy says, “I don’t understand. I could do my job very well. My family needs the money.”
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16. ethics in the workplace 3.1 Ethics and Culture
Cultural Relativism (Figure 3.2)
Suggest that there is no one right way to behave; cultural context determines ethical behavior
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Ethical Imperialism is an attempt to impose one’s ethical standards on other cultures.

17. ethics in the workplace 3.1 Ethical Dilemma
A situation that, although offering potential benefits, is unethical.
One of the most common ethical dilemmas occurs when a company’s culture conflicts with an employee’s personal ethics.
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18. Discrimination Sexual Harassment Conflict of interest
ethics in the workplace 3.1 Common Examples of Unethical Behavior at Work
Table 3.1
Discrimination Sexual Harassment
Conflict of interest
Customer confidence
Organizational resources
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19. ethics in the workplace 3.1 Ethics and Work
The Wall Street Journal reports:
• 36% of workers calling in sick are lying.
• 35% keep quiet about co-worker misconduct.
• 12% of job resumes contain falsehoods.
• Managers are more likely than other workers to report wrongdoing.
• Managers with 0–3 years experience feel most pressure to violate personal ethics.
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20. ethics in the workplace 3.1 Rationalizing Unethical Behavior
Four reasons:
1. “What I’m doing is not really illegal.”
2. “My behavior is in everyone’s best interests.”
3. “Nobody will ever know about it.”
4. “The organization will stand behind me.”
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21. ethics in the workplace 3.1 Study Guide for 3.1
Rapid Review:
Ethical behavior is that which is accepted as “good” or “right” as opposed to “bad” or “wrong.”
The utilitarian, individualism, moral rights, and justice views offer different approaches to moral reasoning; each takes a different perspective of when and how a behavior becomes ethical.
Cultural relativism argues that no culture is ethically superior to any other; moral absolutism believes there are clear rights and wrongs that apply universally, no matter where in the world one might be.
An ethical dilemma occurs when one must decide whether to pursue a course of action that, although offering the potential for personal or organizational gain, may be unethical.
Ethical dilemmas faced by managers often involve conflicts with superiors, customers, and subordinates over requests that involve some form of dishonesty.
Common rationalizations for unethical behavior include believing the behavior is not illegal, is in everyone’s best interests, will never be noticed, or will be supported by the organization.
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22. ethics in the workplace 3.1 Study Guide for 3.1
Questions for Discussion:
For a manager, is any one of the moral reasoning approaches better than the others?
Will a belief in cultural relativism create inevitable ethics problems for international business executives?
Are ethical dilemmas always problems, or can they be opportunities?
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.

23. ethics in the workplace 3.1 Be Sure You Can… for 3.1
differentiate between legal behavior and ethical behavior
differentiate between terminal and instrumental values and give examples of each
list and explain four approaches to moral reasoning
illustrate distributive, procedural, interactive, and commutative justice in organizations
explain the positions of cultural relativism and moral absolutism in international business ethics
illustrate the types of ethical dilemmas common in the workplace
explain how bad management can cause ethical dilemmas
list four common rationalizations for unethical behavior
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24. MAINTAINING HIGH STANDARDS 3.2 Takeaway – answers to come
Personal character and moral development influence ethical conduct.
Managers as positive role models can inspire ethical conduct.
Training in ethical decision making may improve ethical conduct.
Protection of whistleblowers may encourage ethical conduct.
Formal codes of ethics set standards for ethical conduct
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25. maintaining high standards 3.2 Influence on Moral Development
Ethical Frameworks
Personal rules and strategies for making ethical decisions
Lawrence Kohlberg
Three levels of moral development (figure 3.3)
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26. maintaining high standards 3.2 Management Influence
Management Behavior
In order to have a positive impact on ethical conduct throughout an organization, those at the top must walk the talk. (figure 3.4)
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27. maintaining high standards 3.2 Ethics Training
Seeks to help people understand the ethical aspects of decision making and to incorporate high ethical standards into their daily behavior.
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28. maintaining high standards 3.2 Ethics Training
Spotlight questions highlight the risk of public exposure of one’s actions:
How would I feel if my family found out about my decision?
How would I feel if my decision was in the local newspaper or posted on the Internet?
What would the person I know who has the strongest character and best ethical judgment say about my decision?
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29. Maintaining High standards 3.2 Ethical Dilemma
Tips & Checklist for dealing with ethical dilemmas
Step 1
Recognize the ethical dilemma.
Step 2
Get the facts.
Step 3
Identify your options.
Step 4
Test each option: Is it legal? Is it right? Is it beneficial?
Step 5
Decide which option to follow.
Step 6
Ask the “Spotlight Questions”: To double check your decision.
“How would I feel if my family found out about my decision?”
“How would I feel if the local newspaper printed my decision?”
Step 7
Take action
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30. maintaining high standards 3.2 Whistleblowing
Whistleblowers
Persons who expose organizational misdeeds in order to preserve ethical standards and protect against wasteful, harmful, or illegal acts.
Many whistleblowers were / are fired for their actions.
State and federal laws now offer some protection.
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31. maintaining high standards 3.2 Whistleblowing
Organizational barriers to whistleblowing
Strict chain of command
Strong work group identities
Ambiguous priorities
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32. Maintaining high standards 3.2 Codes of Ethics
Formal codes of ethics set standards for ethical conduct.
Discrimination
Forced labor
Working conditions
Freedom of association
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33. Maintaining high standards 3.2 Study Guide for 3.2
Rapid Review:
Ethical behavior is influenced by an individual’s character and represented by core values and beliefs.
Kohlberg describes three levels of moral development—preconventional, conventional, and postconventional—with each of us moving step-by-step through the levels as we grow ethically over time.
Ethics training can help people better understand how to make decisions when dealing with ethical dilemmas at work.
Whistleblowers who expose the unethical acts of others have incomplete protection from the law and can face organizational penalties.
All managers are responsible for acting as ethical role models for others.
Immoral managers choose to behave unethically; amoral managers fail to consider ethics; moral managers make ethics a personal goal.
Formal codes of conduct spell out the basic ethical expectations of employers regarding the behavior of employees and other contractors.
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.

34. Maintaining high standards 3.2 Study Guide for 3.2
Questions for Discussion:
Is it right for organizations to require ethics training of employees?
Should whistleblowers have complete protection under the law?
Should all managers be evaluated on how well they serve as ethical role models?
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.

35. Maintaining high standards 3.2 Be Sure You Can… for 3.2
explain how ethical behavior is influenced by personal factors
list and explain Kohlberg’s three levels of moral development
explain the term “whistleblower”
list three organizational barriers to whistleblowing
compare and contrast ethics training, ethics role models, and codes of conduct for their influence on ethics in the workplace
state the spotlight questions for double-checking the ethics of a decision
describe differences between the inclinations of amoral, immoral, and moral managers when facing difficult decisions
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36. SOCIAL RESPONSIBILITY 3.3 Takeaway-answers to come
Social responsibility is an organization’s obligation to best serve society
Scholars argue cases for and against corporate social responsibility
Social responsibility audits measure the social performance of organizations
Sustainability is an important social responsibility goal
Social business and social entrepreneurs point the way in social responsibility
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37. SOCIAL RESPONSIBILITY 3.3 Social Responsibility is Serving Society
Stakeholders are people and institutions most directly affected by an organization’s performance. (figure 3.5)
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38. SOCIAL RESPONSIBILITY 3.3 Social Responsibility is Serving Society
Corporate Social Responsibility
The obligation of an organization to serve its own interest and those of its stakeholders
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39. SOCIAL RESPONSIBILITY 3.3 Social Responsibility is Serving Society
Triple Bottom Line—how well an organization performs when measured not only on financial criteria, but also on social and environmental ones.
Is the decision economically sound?
Is the decision socially responsible?
Is the decision environmentally sound?
Three Ps
Profit, People, Planet
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40. SOCIAL RESPONSIBILITY 3.3 Role Models
Gary Hirshberg goes for triple bottom line at Stonyfield Farm (economically, socially & environmentally responsible)
No. 1 maker of organic yogurt - “Business is the most powerful force in the world.”
Mission – “Offer a pure and healthy product that tastes good and earn a profit without harming the environment.”
Going green is not just the right thing to do but a great way to build a successful business.
What’s the lesson here?
Can this only be done when starting from scratch?
Can an existing firm be turned in this direction?
What does it take to lead organizations with a commitment to ethics & social responsibility?
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41. SOCIAL RESPONSIBILITY 3.3 Corporate Social Responsibility
Socioeconomic View
Responsibility increases long-run profits
Improves public image
Helps avoid government regulation
Businesses have resources and ethical obligations to act responsibly
Classical View
Reduces business profits and creates higher business costs
Dilutes business purpose
Gives too much social power to business
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42. SOCIAL RESPONSIBILITY 3.3 Social Responsibility
Virtuous Circle
Socially responsible actions lead to improved financial performance.
Organization is more likely to engage in socially responsible acts in the future.
Example: car manufacturers who produce fuel-efficient and hybrid cars may see improved financial performance and introduce more fuel efficient models.
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43. SOCIAL RESPONSIBILITY 3.3 Measuring Social Responsibility
Social responsibility audit (figure 3.6)
Determines the organization’s performance in various areas of social responsibility
Ranges from compliance to conviction
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44. SOCIAL RESPONSIBILITY 3.3 Sustainability
concerns doing business in such a way that respects future generations and their right to the world's natural resources
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45. SOCIAL RESPONSIBILITY 3.3 Sustainability
Sustainable business
Organization operates in a way that meets the needs of the customer and protects natural environment
Sustainable development
uses natural resources in such a way that today's needs are met, yet they are preserved for future generations
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46. SOCIAL RESPONSIBILITY 3.3 Sustainability
Environmental Capital or Natural Capital is the storehouse of natural resources - that we use to sustain life and produce goods and services for society.
Land
Water
Minerals
Atmosphere
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47. SOCIAL RESPONSIBILITY 3.3 Sustainability
ISO14001
Global quality standard that certifies organizational environmental objectives for minimal environmental impact.
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48. SOCIAL RESPONSIBILITY 3.3 Sustainability
The notion of sustainability and the pursuit of sustainable development goals can be made much broader than a focus on the natural environment alone. Scholar Jeffrey Pfeffer offers a strong case in favor of giving management attention not only to issues of ecological and environmental sustainability—traditional green management themes—but also to social and human sustainability.
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.

49. SOCIAL RESPONSIBILITY 3.3 Sustainability
Social business
Business model that addresses social problems such as hunger, illiteracy, poverty
Social entrepreneurs
Create businesses that help to solve social problems
Examples: Grameen Bank, Tom’s Shoes
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50. Social responsibility 3.3 Study Guide for 3.3
Rapid Review:
Corporate social responsibility is an obligation of the organization to act in ways that serve both its own interests and the interests of its stakeholders.
In assessing organizational performance today, the concept of the triple bottom line evaluates how well organizations are doing on economic, social, and environmental performance criteria.
Criteria for evaluating corporate social performance include how well it meets economic, legal, ethical, and discretionary responsibilities.
The argument against corporate social responsibility says that businesses should focus on making profits; the argument for corporate social responsibility says that businesses should use their resources to serve broader social concerns.
The concept of sustainable development refers to making use of environmental resources to support societal needs today while also preserving and protecting the environment for use by future generations.
Social businesses and social entrepreneurs pursue business models that help to directly address important social problems.
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.

51. Social responsibility 3.3 Study Guide for 3.3
Questions for Discussion:
Choose an organization in your community. What questions would you ask to complete an audit of its social responsibility practices?
Is the logic of the virtuous circle a convincing argument in favor of corporate social responsibility?
Should government play a stronger role in making sure organizations commit to sustainable development?
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.

52. Social responsibility 3.3 Be Sure You Can… for 3.3
explain the concept of social responsibility
summarize arguments for and against corporate social responsibility
illustrate how the virtuous circle of corporate social responsibility might work
explain the notion of social business
Schermerhorn, Exploring Management, Fourth Edition, © John Wiley & Sons, Inc. All rights reserved.