Chapter 4 Social Responsibility and Managerial Ethics Chapter

Chapter 4 Social Responsibility and Managerial Ethics Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 1

What Is Social Responsibility? “a business’s obligation, beyond that required by law and economics, to pursue long-term goals that are good for society” Robbins, et. al. , 2006, P. 96 • The Classical View – Maximize profits for the benefit of the stockholders – Doing “social good” unjustifiably increases costs • The Socio-economic View – Management should also protect and improve society’s welfare – Corporations are responsible not only to stockholders – Firms have a moral responsibility to larger society “to do the right thing” Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 2

Exhibit 4. 1 Approaches to Social Responsibility Obstructionist Approach Defensive Approach Accommodative Approach Proactive Approach Disregard for social responsibility Minimal commitment to social responsibility Moderate commitment to social responsibility Strong commitment to social responsibility No Social Responsibility High Social Responsibility Source: Adapted from S. L. Wartick and P. L. Cochran, “The Evolution of the Corporate Social Performance Model, ” Academy of Management Review, October 1985, p. 766. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 3

Values-based Management • Values-based Management – Managers establish and uphold an organization’s shared values • Purposes of Shared Values – – Guiding managerial decisions Shaping employee behaviour Influencing the direction of marketing efforts Building team spirit • The Bottom Line on Shared Corporate Values – An organization’s values are reflected in the decisions and actions of its employees Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 4

Exhibit 4. 3 Purposes of Shared Values SHARED ORGANIZATIONAL VALUES Guide Managers' Decisions and Actions Shape Employee Behaviour Influence Marketing Efforts Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. Build Team Spirit 5

Managerial Ethics • Ethics: “The rules and principles that define right and wrong conduct” Robbins, et. al. , 2006, p. 103 • Four Views of Ethics – – Utilitarian view Rights view Theory of justice view Integrative social contracts theory Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 6

Managerial Ethics (cont’d) • Utilitarian View – Greatest good is provided for the greatest number • Encourages efficiency and productivity and is consistent with the goal of profit maximization • Rights View – Respecting and protecting individual liberties and privileges • Seeks to protect individual rights of conscience, free speech, life and safety, and due process Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 7

Managerial Ethics (cont’d) • Theory of Justice – Organizational rules are enforced fairly and impartially and follow all legal rules and regulations • Protects the interests of underrepresented stakeholders and the rights of employees • Integrative Social Contracts Theory – Ethical decisions should be based on existing ethical norms in industries and communities • Based on integration of the general social contract and the specific contract between community members Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 8

Factors That Affect Employee Ethics • • • Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 9

• • • Factors That Affect Employee Ethics Stages of moral development Individual characteristics Structural variables Organizational culture Issue intensity Locus of Control A personality attribute that measures the degree to which people believe they control their own life • Internal locus: the belief that you control your destiny • External locus: the belief that what happens to you is due to luck or chance 1. Write down which applies most to you (Internal or External) and explain why. 2. Get into your groups and try to figure out on average how the group as a whole is motivated? Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 10

Exhibit 4. 7 Determinants of Issue Intensity How much agreement is there that this action is wrong? How likely is it that this action will cause harm? How many people will be harmed? Consensus of Wrong Greatness of Harm Probability of Harm Issue Intensity Concentration of Effect How concentrated is the effect of the action on the victim(s)? Immediacy of Consequences Proximity to Victim(s) Will harm be felt immediately? How close are the potential victims? Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 11

Ethics in an International Context • Ethical standards are not universal – Social and cultural differences determine acceptable behaviours – LIST THREE ITEMS YOU FEEL ARE OF UTMOST IMPORTANCE TO YOU in regards to ethics! – IN YOUR GROUPS DISCUSS TWO ethics you all have in COMMON – IN YOUR GROUP find ONE ethic that you have DIFFERENT Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 12

How Managers Can Improve Ethical Behaviour in an Organization • Hire individuals with high ethical standards. • Establish codes of ethics and decision rules. • Lead by example. • Delineate job goals and performance appraisal mechanisms. • Provide ethics training. • Conduct independent social audits. • Provide support for individuals facing ethical dilemmas. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 13

Code of Ethics • A formal statement of an organization’s primary values and the ethical rules it expects its employees to follow – Be a dependable organizational citizen – Don’t do anything unlawful or improper that will harm the organization – Be good to customers Source: F. R. David, “An Empirical Study of Codes of Business Ethics: A Strategic Perspective. ” Paper presented at the 48 th Annual Academy of Management Conference, Anaheim, California, August 1988. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 14

Ethical Leadership • Managers must provide a good role model by: – Being ethical and honest at all times – Telling the truth – Admitting failure and not trying to cover it up – Communicating shared ethical values to employees through symbols, stories, and slogans – Rewarding employees who behave ethically and punishing those who do not – Protecting employees (whistleblowers) who bring to light unethical behaviours or raise ethical issues Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 15

The Value of Ethics Training • Training can make a difference in ethical behaviours • Training increases employee awareness of ethical issues in business decisions • Training clarifies and reinforces the standards of conduct • Employees are more confident of support when taking unpopular but ethically correct stances Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 16