1. Social Responsibility and Ethics
Management
Organizational Behavior
C H A P T E R 3
Social Responsibility and Ethics
An Integrated Perspective
Jon L. Pierce & Donald G. Gardner with Randall B. Dunham
PowerPoint Presentation by Charlie Cook
Copyright © 2002 by South-Western

2. Learning Objectives
Define social responsibility and trace its historical development.
Name and discuss three levels of commitment to social responsibility.
Compare and contrast two divergent views on corporate social responsibility.
Define and distinguish ethics from social responsibility.
Discuss individuals’ and organizations’ responsibility for ethical behavior and list sources of unethical behavior.
Identify the three ethical standards and discuss how they affect decision making.
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3. Learning Objectives
Discuss steps managers can take to encourage ethical behavior in organizations.
Discuss the ethical challenge associated with efforts to “manage” employee work-related attitudes, motivation, and behavior.
Discuss the ethical issues associated with workplace diversity.
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4. The Nature of Social Responsibility
An organization’s obligation to engage in activities that protect and contribute to the welfare of society.
The law and social responsibility
Social Responsibility
illegal and irresponsible
illegal and responsible
legal and irresponsible
legal and responsible
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5. An Historical Perspective
Principle of charity
Suggests that those who have plenty should give to those who do not.
Principle 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.
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6. Historical Phases of Social Responsibility
Social Responsibility 1900’s 1930’s 1960’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 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.
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7. An Historical Perspective on Social Responsibility
1800
25%
50%
75%
100%
1900
2000
Phase One:
Profit Maximization
Phase Two:
Trusteeship
Phase Three: Quality of Life
Proportion of
Firms Adopting
Each Perspective
FIGURE 3–1
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8. 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
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9. The Social Audit
An Organization’s
Social Goals
(e.g. Improving
Environment,
Increasing
Employment)
Measurement
of Social
Performance
Gap Analysis
Goal Successes
Goal Failures
Changes Needed
Report to
Management
Organizational Goals
Social Exposures
Report to Internal
Stakeholders
Report to External
Future Goals
The Needs
of Society
Organizational
Resources
A detailed examination and evaluation of an organization’s social performance
FIGURE 3–3
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10. Levels and Types of Social Commitment
*Proscriptive means the firm reacts when its action is called (or threatened to be called) to the public’s attention.
TABLE 3–3
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11. 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.
Minnesota Power’s Environmental Ethic
Source: Minnesota Power—Environmental Ethic, 1998.
FIGURE 3–4
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12. Diverging Views on Social Responsibility
Arguments 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.
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13. Diverging Views… (cont’d)
Arguments 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.
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14. The Growth of Attention to Social Issues
1950
Much
Little
1960
1970
1980
1990
Phase I
Phase II
Phase III
Gestation and Innovation
Development
and Expansion
Maturity and
Institutionalization
Amount of Attention
Source: L. E. Preston Social issues in management: A evolutionary perspective. In D. A. Wren and J. A. Pearce (eds.), Papers dedicated to the development of modern management. Chicago: Academy of Management, 52. Copyright 1986 by Academy of Management. Reproduced with permission of Academy of Management in the format Textbook via Copyright Clearance Center.
FIGURE 3–5
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15. The Nature of Managerial Ethics
The set of standards and code of conduct that defines what is right, wrong, and just in human actions.
Sources 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.
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16. Moral Development Models
Ethic of care
An act is judged as ethical depending on whether the act derives from feelings, emotions, and empathy for others.
Ethic of justice
Abstract rules (personal moral principles) are used to define which actions are fair and which actions are not.
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17. Managerial Ethics Managerial 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
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18. An Organization’s Ethical Responsibility
Top 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.
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19. The Impact of Reward and Punishment on Unethical Behavior
punished
Unethical behavior
rewarded and
neither rewarded
nor punished
rewarded
Mostly
ethical
unethical
Behavior
Managerial Response to Behavior
Source: W. H. Hegarty and H. P. Sims, Jr Organizational philosophy, policies, and objectives related to unethical decision behavior: a laboratory experiment. Journal of Applied Psychology 64:331–338.
FIGURE 3–6
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20. Theories Affecting Ethical Standards
Utilitarian theory
An action is considered morally right if its consequences for everyone affected by the action are greater than those which would be realized by a different action.
Rights theory
Decision makers’ paramount concern is respecting the moral and/or legal rights to which people are entitled.
Procedural justice is applied to ensure that, while all individual outcomes may not be equal, the process of outcome allocation is perceived as fair and impartial.
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21. Ethical Dilemmas Ethical dilemmas
Situations that arise when managers attempt to balance the utilitarian (future-oriented) ethic and the formalistic (perpetuating rights and the status quo) ethic.
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22. Encouraging Ethical Behavior
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.
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23. The Interactionist Model of Ethical Decision Making in Organizations
Dilemma
Cognitions
Stage of
Cognitive Moral
Development
Ethical/
Unethical
Behavior
SITUATIONAL FORCES
Immediate Job Context
Reinforcement
Job Pressures
Organizational Culture
Responsibility for Consequences
Characteristics of the Work
Role Taking
Resolution of Moral Conflict
Individual Belief Systems
Locus of Control
Source: Modified from L. K. Trevino Ethical Decision Making in Organizations: A Person-Situation Interactionist Model. Academy of Management Review 11:603.
FIGURE 3–7
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24. Diversity—A Contemporary Issue of Ethics and Social Responsibility
Organizational 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?
Diversity is ethical.
Diversity is socially responsible.
Diversity is good business (competitive advantage).
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