Chapter 5 Managing Ethics and Social Responsibility 2016

Chapter 5 Managing Ethics and Social Responsibility © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Managerial Ethics v Ethics – code of moral principles and values that govern the behaviors of right or wrong v Standards about good/bad v Ethical issues can be complex v People in organizations have divergent views about right/wrong © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2

5. 1 Three Domains of Human Action © 2016 Cengage Learning. All Rights Reserved.

Ethical Management Today v Ethical lapses during the last decade have been pervasive v Corporations and people have become associated with greed, deceit, irresponsibility, and lack of moral conscience v Managers carry a big responsibility for setting an ethical climate v Ethical crises have brought ethical management to the forefront © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4

Ethical Management Today v Ethical managers v. Display honesty and integrity v. Communicate and enforce ethical standards through their behavior v. Are fair in their decisions and the distribution of rewards v. Show kindness and concern for others © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5

5. 2 Four Types of Ethical Manager Behavior © 2016 Cengage Learning. All Rights

The Business Case for Ethics and Social Responsibility v Ethics and social responsibility are important business issues v The connection between ethics and financial performance has been widely debated v Customers would switch brands to do business with a company that is ethical and socially responsible © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7

Ethical Dilemmas You are the moral agent–what would you do? Your company requires a terrorist watch list that screens all new customers and takes approximately 24 hours from the time an order is placed. You can close a lucrative deal with a potential long-term customer overnight, even though that means the required watch list screening will have to be done after the fact. © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8

Criteria for Ethical Decision Making Utilitarian approach – moral behavior produces the greatest good for the greatest number v Individualism approach – acts are moral if they promote the individual’s long-term interest v Moral-rights approach – humans have fundamental rights and liberties that cannot be taken away by an individual’s decision v © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9

Criteria for Ethical Decision Making (cont’d) v Justice approach – moral decisions must be based on standards of equity, fairness, and impartiality v. Distributive justice v. Procedural justice v. Compensatory justice v Practical approach – bases decisions on prevailing standards, society, and all stakeholders © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10

A Manager’s Ethical Choices v Individuals bring their own personality and traits to organizations v Personal needs, family influence, and religious background shape individuals v Personality characteristics such as ego, confidence, and independence may enable managers to make ethical choices © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11

5. 3 Three Levels of Personal Moral Development © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12

What Is Corporate Social Responsibility (CSR)? v Distinguishing right from wrong; doing right v Good corporate citizenship v Make choices that contribute to society and stakeholders v Stakeholders – any group within or outside v Stakeholder mapping identifies needs, importance and power of stakeholders © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13

5. 4 Major Stakeholders Relevant to Gap Inc. © 2016 Cengage Learning. All Rights

The Green Movement v Going GREEN is a new business imperative v. Change in social attitudes v. New governmental policies v. Climate change Information technology immediately spreads the negative decisions of corporations v More organizations are embracing sustainability v © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15

The Ethic of Sustainability – economic development that generates wealth and meets the needs of current generation while preserving the environment for the needs of future generations © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16

Evaluating Corporate Social Responsibility v Legal Responsibility vappropriate business behavior v Discretionary Responsibility vvoluntary contributions to society v Organizational Virtuousness va positive human impact, moral goodness © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17

5. 5 Criteria of Corporate Social Performance © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18

5. 6 Building an Ethical Organization © 2016 Cengage Learning. All Rights Reserved. May

Managing Company Ethics and Social Responsibility v Code of ethics – a formal statement of the company’s values regarding ethics and social issues v Ethical structures – systems, positions, and programs like ethics training v Whistle-blowing – employee disclosure of illegal, immoral, or illegitimate practices © 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20