Ethics and Corporate Social Responsibility Chapter 4 Fundamentals

Ethics and Corporate Social Responsibility. Chapter 4 Fundamentals of Business

Topic 1: What is ethical behavior? Ø Ethics – Code of moral principles. – Set standards of “good” and “bad” as opposed to “right” and “wrong. ” Ø Ethical behavior – What is accepted as good and right in the context of the governing moral code.

Topic 1: What is ethical behavior? Ø Law, values, and ethical behavior: – Legal behavior is not necessarily ethical behavior. Ø Many unethical behaviors lead to legislation Ø Unsafe working conditions such as sweatshops Ø OSHA (Occupational Safety and Health Administration) – enforces health and safety in the workplace Ø Discrimination Ø Consumers Ø Truthfulness in financial reporting

Topic 1: What is ethical behavior? Ø Utilitarian view — greatest good to the greatest number of people. Ø Individualism view — primary commitment is to one’s long-term self-interests. Ø Moral-rights view — respects and protects the fundamental rights of all people. Ø Justice view — fair and impartial treatment of people according to legal rules and standards. 4

Figure 3. 1 Four views of ethical behavior. 5

Topic 1: What is ethical behavior? How businesses can respect core or universal values: Respect for human dignity • Create culture that values employees, customers, and suppliers. • Keep a safe workplace. • Produce safe products and services. Respect for basic rights • Protect rights of employees, customers, and communities. • Avoid anything that threatens safety, health, education, and living standards. Be good citizens • Support social institutions, including economic and educational systems. • Work with local government and institutions to protect environment. 6

Approaches to Promoting Ethical Behavior 4 Two Approaches to Promoting Ethical Behavior in the Workplace – 1. Compliance Based Approach • Uses legal terms, training, rules of conduct, and penalties for non-compliance • Focuses on what not to do – 2. Values Based Approach • Relies of self-policing and motivation, rather than coercion • Encouraging good behavior rather than punishing bad behavior Management Fundamentals - Chapter 3 7

Group Activity 4 Two groups will be formed 4 Each group will examine of the different approaches to promoting ethical behavior in the workplace – Compliance vs Values Based 4 1. Determine the advantages of your approach 4 2. After hearing the response from the other group, determine a major disadvantage of the other approach. Management Fundamentals - Chapter 3 8

Topic 2: How do ethical dilemmas complicate the workplace? Ø An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical. Ø Ethical dilemmas include: – – – Discrimination Sexual harassment Conflicts of interest Customer confidence Organizational resources 9

Topic 2: How do ethical dilemmas complicate the workplace? Ø Ethical behavior can be rationalized by convincing yourself that: – Behavior is not really illegal. – Behavior is really in everyone’s best interests. – Nobody will ever find out. – The organization will “protect” you. 10

Topic 2: How do ethical dilemmas complicate the workplace? Ø Factors influencing ethical behavior include: – The person • Family influences, religious values, personal standards, and personal needs. – The organization • Supervisory behavior, peer group norms and behavior, and policy statements and written rules. – The environment • Government laws and regulations, societal norms and values, and competitive climate in an industry. 11

Figure 3. 3 Factors influencing ethical managerial behavior —the person, organization, and environment. 12

Class Activity Ø Break into the groups determined by your card Ø Address the following ethical dilemma as a group: ØA lifeboat is overflowing with survivors. There isn’t room for everyone. If someone is not thrown overboard, the lifeboat will sink. What will you do? Support your answer.

Topic 3: How can high ethical standards be maintained? Checklist for dealing with ethical dilemmas Step 1: Identify the ethical dilemma Step 2: Get the facts and identify your options Step 3: Determine who will be affected Step 4: List the effects of the alternatives Step 5: Choose the best option Double-check decision by asking the “spotlight” questions: “How would I feel if my family found out about my decision? ” “How would I feel about this if my decision were printed in the local newspaper? ” 14

Ethical Scenarios 4 With a partner, address the ethical dilemmas handed out to you. 4 Write your responses using the 5 steps learned today Management Fundamentals - Chapter 3 15

Topic 3: How can high ethical standards be maintained? ØEthics training: – Structured programs that help participants to understand ethical aspects of decision making. – Helps people incorporate high ethical standards into daily life. – Helps people deal with ethical issues under pressure. 16

Topic 3: How can high ethical standards be maintained? Ø Whistleblowers – Expose misdeeds of others to: • Preserve ethical standards • Protect against wasteful, harmful, or illegal acts Ø Laws protecting whistleblowers vary 17

Topic 3: How can high ethical standards be maintained? Ø Barriers to whistleblowing include: – Strict chain of command – Strong work group identities – Ambiguous priorities Ø Organizational methods for overcoming whistleblowing barriers: – Ethics staff units who serve as ethics advocates – Moral quality circles 18

Topic 3: How can high ethical standards be maintained? Ø Ethical role models: – Top managers serve as ethical role models. – All managers can influence the ethical behavior of people who work for and with them. – Excessive pressure can foster unethical behavior. – Managers should be realistic in setting performance goals for others. 19

Topic 3: How can high ethical standards be maintained? Ø Codes of ethics: – Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas. Ø Areas often covered by codes of ethics: – – – Bribes and kickbacks Political contributions Honesty of books or records Customer/supplier relationships Confidentiality of corporate information 20

Topic 4: What is corporate social responsibility? Ø Corporate Social Responsibility: – Delivering economic, social, or environmental benefits to all stakeholders • 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. 21

Topic 4: What is corporate social responsibility? Ø Organizational stakeholders – Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance. Ø Typical organizational stakeholders – – – – Suppliers Customers Owners Regulators Employees Interest groups Competitors 22

Figure 3. 4 Multiple stakeholders in the environment of an organization. 23

Topic 4: What is corporate social responsibility? Ø Beliefs that guide socially responsible business practices: – Motivated employees = higher morale – Organizations perform best in healthy communities and environments. – Organizations must be managed and led for long-term success. – Organizations must protect their reputations. 24

Topic 4: What is corporate social responsibility? Ø Perspectives on corporate social responsibility: – Classical view • Management’s only responsibility is to maximize profits. (Does not focus on CSR) – Socioeconomic view • Management must be concerned for the broader social welfare, not just profits. (Focuses on CSR) 25

Topic 4: What is corporate social responsibility? Ø Arguments against social responsibility: – Reduced business profits – Higher business costs – Dilution of business purpose Ø Arguments in favor of social responsibility: – Adds long-run profits – Improved public image – Avoids more government regulation – Businesses have resources and ethical obligation 26

Companies “Doing it Right” 4 Tom’s Founder on Ellen https: //www. youtube. com/watch? v=57 TOTx 5 UEp. A Management Fundamentals - Chapter 3 27

Topic 5: How do organizations and governments work together in society? Ø How government influences organizations: – Common areas of government regulation of business affairs: • Occupational safety and health • Fair labor practices • Consumer protection • Environmental protection 28

Topic 5: How do organizations and governments work together in society? Ø How organizations influence governments: – Personal contacts and networks – Public relations campaigns – Lobbying – Political action committees – Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns 29

Figure 3. 7 Centrality of ethics and social responsibility in leadership and the managerial role. 30

Topic 5: How do organizations and governments work together in society? Ø Corporate governance: – The oversight of the top management of an organization by a board of directors. Ø Corporate governance involves: – Hiring, firing, and compensating the CEO. – Assessing strategy. – Verifying financial records. 31