1. Copyright © 2002 by South-Western 3–1 Chapter 3 Social ResponsibilitySocial Responsibility EthicsEthics DiversityDiversity Sexual HarassmentSexual Harassment

2. Copyright © 2002 by South-Western 3–2 The Nature of Social Responsibility Social responsibilitySocial responsibility  An organization’s obligation to engage in activities that protect and contribute to the welfare of society. The law and social responsibilityThe law and social responsibility Social Responsibility illegal and irresponsible illegal and responsible legal and irresponsible legal and responsible

3. Copyright © 2002 by South-Western 3–3 An Historical Perspective Principle of charityPrinciple of charity  Suggests that those who have plenty should give to those who do not. Principle of stewardshipPrinciple of stewardship  Suggests that organizations have an obligation to see that the public’s interests are served by corporate action and the ways in which profits are spent.

4. Copyright © 2002 by South-Western 3–4 Historical Phases of Social Responsibility Social Responsibility 1900’s1930’s1960’s Phase One: Profit-Maximizing Management Business’s primary responsibility to society is to underwrite the country’s economic growth and to oversee the accumulation of wealth. Phase One: Profit-Maximizing Management Business’s primary responsibility to society is to underwrite the country’s economic growth and to oversee the accumulation of wealth. Phase Two: Trusteeship Management Corporate managers need to maintain an equitable balance among the competing interests of all groups with a stake in the organization. Phase Two: Trusteeship Management Corporate managers need to maintain an equitable balance among the competing interests of all groups with a stake in the organization. Phase Three: Quality-of-Life Management Managers have to do more than achieve economic goals, but they should manage the quality-of-life by helping develop solutions for society’s ills. Phase Three: Quality-of-Life Management Managers have to do more than achieve economic goals, but they should manage the quality-of-life by helping develop solutions for society’s ills.

5. Copyright © 2002 by South-Western 3–5 Organizational Stakeholders Employees Society at Large Allies Competitors Regulatory Agencies and Influence Groups: Governments Unions Professional Associations Interest Groups Customers Suppliers of: Capital Raw Materials Human Resources Information Organization FIGURE 3–2

6. Copyright © 2002 by South-Western 3–6 Minnesota Power’s Environmental Ethic Recognizing that all human activities affect the natural environment, the people of Minnesota Power are sensitive to the environmental effects of our conduct as individuals and collectively as a company. We will be leaders in environmental stewardship. And, consistent with public policy, we will: Meet or surpass all environmental compliance criteria. Seek and adopt safeguards to prevent injury to the environment, and be prepared to respond quickly should an accident occur. Promote land, air, water and energy conservation by encouraging customers and employees to use our products and services efficiently. Solicit public and regulatory agency views about environmental concerns and company activities. In addition, we seek ways to: Reduce adverse environmental impacts of our activities. Prevent waste by stressing efficiency, recycling and reduced consumption. Enhance the environment as we carry out our responsibilities. Demonstrate conservation of land, air, water and energy. FIGURE 3–4 Source: Minnesota Power— Environmental Ethic, 1998.

7. Copyright © 2002 by South-Western 3–7 Diverging Views on Social Responsibility Arguments for social responsibilityArguments for social responsibility  The assumption of social responsibility balances corporate power with corporate responsibilities.  The voluntary assumption of social responsibility discourages the creation and imposition of of government regulations.  Acts of social responsibility by organizations help correct the social problems that organizations create.  Organizations, as members of society, have a moral obligation to help society deal with its problems and to contribute to its welfare.

8. Copyright © 2002 by South-Western 3–8 Diverging Views… (cont’d) Arguments against social responsibilityArguments against social responsibility  Socially responsible behavior lowers operating efficiency and weakens the ability to offer goods and services at the lowest possible competitive cost.  Socially responsible behavior costs reduce dividends, lower wages, and increase consumer prices.  Social responsibility may conflict with organizational goals for profit making.  Assuming social responsibilities makes organizations too powerful.  Business persons are not trained to deal with social problems.

9. Copyright © 2002 by South-Western 3–9 The Nature of Managerial Ethics EthicsEthics  The set of standards and code of conduct that defines what is right, wrong, and just in human actions. Sources of ethicsSources of ethics  Socialization—the process through which people develop beliefs (social values, norms, and mores) about what is right, wrong, and just.  Organizations teaching ethics: religious, educational, cultural, and family.

10. Copyright © 2002 by South-Western 3–10 Managerial Ethics Managerial ethics and responsibilitiesManagerial ethics and responsibilities  The application of personal ethics within the context of the management of organizations.  Ethical responsibilities:  Personal decisions and actions  Actions taken at the direction of superior  Actions taken by subordinates following orders  Inaction that allows unethical behavior to occur

11. Copyright © 2002 by South-Western 3–11 An Organization’s Ethical Responsibility Top management’s responsibilitiesTop management’s responsibilities  Infuse ethical behavior into the organizational culture.  Provide role models for ethical behavior.  Punish unethical behavior when it occurs.  Make explicit statements of what ethical conduct is.  Establish a ethical code of conduct.  Encourage the reporting of unethical conduct (whistleblowing) and protect those who report it.

12. Copyright © 2002 by South-Western 3–12 Encouraging Ethical Behavior Encourage ethical behavior in short-term by:Encourage ethical behavior in short-term by:  Hiring persons who are not prone to unethical behavior.  Making public statements (e.g., a code of ethics) about the importance of ethical behavior.  Developing policies that specify ethical objectives.  Rewarding ethical behavior; punishing unethical behavior.  Avoiding competitive situations where there is a potential for unethical behavior.  Using groups to make decisions requiring moral judgment.

13. Copyright © 2002 by South-Western 3–13 Diversity—A Contemporary Issue of Ethics and Social Responsibility Organizational diversityOrganizational diversity  The goal of having a heterogeneous work group where no one group occupies a majority position, and all members are expected to work effectively with people different from themselves. Why value diversity?Why value diversity?  Diversity is ethical.  Diversity is socially responsible.  Diversity is good business (competitive advantage).