1. John R. Schermerhorn, Jr. Daniel G. Bachrach Management 13th edition
Chapter 3 Ethics and Social Responsibility

2. Planning Ahead — Key Takeaways
Define ethics and describe the foundations of ethical behavior.
Discuss ethical dilemmas and issues in the workplace.
Describe approaches to maintaining high ethical standards.
Discuss social responsibility and corporate governance.
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3. Chapter 3 Outline Ethics Ethics in the workplace
Laws and values as influences on ethical behavior
Alternative views of ethics
Cultural issues in ethical behavior
Ethics in the workplace
Ethical dilemmas
Influences on ethical decision making
Rationalizations for unethical behavior
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4. Chapter 3 Outline Maintaining High Ethical Standards
Moral management
Ethics training
Codes of ethical conduct
Whistleblower protection
Social Responsibility
Social responsibility, sustainability, and the triple bottom line
Perspectives on corporate social responsibility
Evaluating corporate social performance
Corporate governance
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5. Ethics Ethics Ethical behavior Moral code of 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.
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6. Ethics Laws and values as influences on ethical behavior:
Legal behavior is not necessarily ethical behavior.
Personal values help determine individual ethical behavior.
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7. Ethics Laws and values as influences on ethical behavior:
Values - underlying beliefs and attitudes that help influence individual behavior
Terminal values - preferences about desired ends
Instrumental values – preferences regarding the means to desired ends
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8. Figure 3.1: Four views of ethical behavior
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9. Ethics Four alternative ethical views Utilitarian Individualism
Delivers the greatest good to the most people
Individualism
Advances long-term self-interests
Moral rights
Respects and protects the fundamental rights of all people
Justice
Fair and impartial treatment of people according to legal rules and standards
Procedural justice – policies and rules fairly applied
Distributive justice – fair distribution of outcomes
Interactional justice – people treated with dignity and respect
Commutative justice – fairness to all involved
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10. Ethics Cultural issues in ethical behavior: Cultural relativism
Ethical behavior is always determined by cultural context.
Moral absolutism
Behavior unacceptable in one’s home environment should not be acceptable anywhere else.
Ethical imperialism
Imposing one’s ethical standards on others.
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11. Figure 3.2 The extremes of cultural relativism and ethical imperialism in international business ethics.
Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review, vol. 74 (September–October 1996), pp. 48–62.
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12. Ethics in the Workplace
Ethical dilemmas
occur when choices, although having potential for personal and/or organizational benefit, may be considered unethical.
Ethical dilemmas common examples include:
Discrimination
Sexual harassment
Conflicts of interest
Product safety
Use of organizational resources
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13. Checklist for ethical dilemmas
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14. Ethics in the Workplace
Influences on Ethical Decision Making
Ethical framework
Provides personal rules or strategies for ethical decision making
Includes personal values
Honesty
Courage
Fairness
Integrity
Self-respect
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15. Figure 3.3 Kohlberg’s levels of individual moral development
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16. Situational Context and Ethics Intensity
Ethics intensity or issue intensity
the extent to which situations are perceived to pose important ethics challenges
Organization Setting
The work and social settings of organizations have a strong influence on the ethics of members
External Environment, Government Regulation, and Industry Norms
Laws reflect social values and define appropriate behavior; regulations help governments monitor these behaviors and keep them within acceptable limits
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17. Ethics in the Workplace
External environment
Government laws and regulations
(Sarbanes/Oxley Act of 2002)
Societal norms and values
Competitive climate in an industry
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18. Ethics in the Workplace
Rationalizations for unethical behavior
People often rationalize ethical transgressions with after-the-fact justifications:
Behavior is not really illegal.
Behavior is really in everyone’s best interests.
Nobody will ever find out.
The organization will “protect” you.
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19. Maintaining High Ethical Standards
Moral Management
Managers behave in one of three ways
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20. Maintaining High Ethical Standards
Ethics training:
Structured programs that help participants to understand ethical aspects of decision making.
Helps people incorporate high ethical standards into daily life.
Codes of Ethical Conduct
Formal statement of an organization’s values and ethical principles that set expectations for behavior.
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21. Maintaining High Ethical Standards
Areas often covered by codes of ethics:
Organizational citizenship
Illegal or improper acts
Customer/coworkers relationships
Bribes and kickbacks
Political contributions
Honesty of books or records
Confidentiality of corporate information
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22. Maintaining High Ethical Standards
Whistleblowers
Expose misdeeds of others to:
Preserve ethical standards
Protect against wasteful, harmful, or illegal acts
Laws protecting whistleblowers vary
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23. Maintaining High Ethical Standards
Barriers to whistleblowing include:
Strict chain of command
Strong work group identities
Ambiguous priorities
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24. Social Responsibility
Stakeholder Management
Stakeholders: persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.
Stakeholder power: the capacity of the stakeholder to positively or negatively affect the operations of the organization.
Demand legitimacy: the validity and legitimacy of a stakeholder’s interest in the organization.
Issue urgency: the extent to which a stakeholder’s concerns need immediate attention.
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25. Figure 3.4: The Many Stakeholders of Organizations
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26. Social Responsibility
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.
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27. Social Responsibility
Stewardship
Taking personal responsibility to always respect and protect the interests of society at large
Sustainability:
acting in ways that support a high quality of life for present and future generations
Alternative energy
Recycling
Waste avoidance
Triple bottom line
evaluates organizational performance on economic, social, and environmental criteria
3 P’s of organizational performance – profit, people, and planet
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28. Social Responsibility
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.
Shared value view
Approaches business decisions with the understanding that economic and social progress are interconnected
Virtuous circle-socially responsible behavior improves financial performance which leads to more responsible behavior
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29. Social Responsibility
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
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30. Four strategies of corporate social responsibility—from obstructionist to proactive behavior.
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31. Social Responsibility
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.
How government influences organizations:
Businesses required by law to have boards of directors that are elected by stockholders
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32. Figure 3.6: Ethics Self-governance in Leadership and the Managerial Role
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