Personal Ethics Social Responsibility and Decision Making Chapter
Personal Ethics, Social Responsibility, and Decision Making Chapter 61 b A Survey of Personal Ethical/Unethical Behavior at Work General Advice
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Percent who have ever done this: Activity General Executives Public Taken home work supplies 74% 40% Called in sick when not ill 14% 31% 78% Overstated deductions on taxes 35% 13% Driven while drunk 80% 33% 2% 8% Used Co. phone for personal long-distance telephone calls Used Cocaine 2
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Personal Morality: Commonsense Advice § § § Obey the law Obey relevant professional codes Tell the truth Obey Jesus’ Golden Rule: “Do unto others as you would have them do unto you. ” Refresh yourself with your religious & ethical value system daily. When values are salient, behavior tends to comply with those values. “Do no harm. ” 3
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Personal Morality: Commonsense Advice Seek a wide range of trusted advisors § Anticipate reactions to proposals § Don’t allow yourself to be the scapegoat for another’s unethical or illegal activity. § When seeking a job, research the firm for clues about their ethical behavior § 4
Chapter Personal Ethics, Social Responsibility, and Decision Making 61 b
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Learning Objectives l Understand the relationship between ethics and the law l Appreciate why it is important to be ethical l Differentiate between claims of different stakeholder groups l Describe four rules that help managers act ethically l Identify four sources of managerial ethics l Distinguish between the main approaches toward social responsibility that a company can take 6 Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. All rights reserved.
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. The Nature of Ethics – Inner-guiding moral principles, values, and beliefs that people use to analyze a situation and then decide what is the appropriate way to behave 7
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. The Nature of Ethics Ethical Dilemma – When conflict exists as to who should benefit in a situation. 8
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Why should managers behave ethically? The relentless pursuit of self-interest can lead to a collective disaster when one or more people start to profit from being unethical because this encourages other people to act in the same way 9
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Ethics and the Law The law is not permanent; it changes as social norms change. Ethics may (or may not) contribute to the development of the law. 10
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Types of Company Stakeholders For a video about stakeholder theory, see: http: //redwardfreeman. com/s takeholder-management/ For a longer video by the same professor, see: https: //www. youtube. com/wa tch? v=Ih 5 IBe 1 cn. Qw A company is accountable to/ pressured by many stakeholders. Stockholders l Customers l Community groups l Employees l Suppliers & Distributors l 11
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Government, Community & Interest Groups Government & Community § § Expects stable tax base. Expects compliance with laws (safety, fair trade) May expect donations to local charities. In return, provides infrastructure, police, etc. 12
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Government, Community & Interest Groups § Expect companies to comply with their ethical standards (e. g. , decency on television) § May boycott firms that do not comply (e. g. , American Family Association boycotts sponsors of indecent television programs). 13
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Ethical Decision Making Figure 4. 3 Ethical Rules: Utilitarian Rule Decision should produce the greatest good for the greatest number of people. Justice Rule Distribute benefits and harm in an impartial manner on the basis of one of the following criteria: **Equality **Equity **Need Moral Rights Decision protects fundamental human rights and privileges of each individual. Practical Rule Decision maker has no qualms about telling the public how decision was reached because typical person would see decision as appropriate 14
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Practical Decision Model 1. 2. 3. The “Professional Ethics Board” test: Does my decision fall within the acceptable standards that apply in business today? The “Newspaper” test: Am I willing to see the decision communicated to all people and groups affected by it? The “Family” test: Would the people with whom I have a significant personal relationship approve of the decision? 15
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Ethical Decision Models l Pluralism § § § rule: Weigh competing demands and competing ethical principles Put them in a hierarchy Hierarchy gives a basis for making decisions. 16
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Determinants of Ethics Sources of business ethics: Individual ethics § Ethics of society § Occupational / Professional ethics § Pre-existing organizational ethics § For a business ethics case (11 min. ) interview, see: https: //www. youtube. com/watch? v=74 q. Q 0 xk. Yn 28 How do these sources of ethics apply to this case (either in terms of the problems or solutions)? 17
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Social Responsibility The way a company views its duty or obligation to make decisions that protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole 18
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Approaches to Social Responsibility Obstructionist approach Low social responsibility Defensive approach Accommodative approach Proactive approach High social responsibility 19
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Approaches to Social Responsibility l Obstructionist approach – Companies choose not to behave in a social responsible way and behave unethically and illegality § May only respond when ethical employees (Whistleblowers) Whistleblowers report the firm to the government. l D_______ approach – companies behave ethically to the degree that they stay within the law and abide strictly with legal requirements 20
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Approaches to Social Responsibility l A___________ approach – Companies behave legally and ethically and try to balance the interests of different stakeholders as the need arises l P________ approach – Companies actively embrace socially responsible behavior, going out of their way to attempt to meet the needs of different stakeholder groups 21
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. A Different View of Corporate Social Responsibility l Social Obligation: (the “Classical View”) § Managers do just that – they manage someone else’s investment. Therefore, they have NO RIGHT to give profits away (e. g. , by “charitable donations”). § Firm should make a profit and obey the law § If contributions are to be made, they should be made by individual investors or stockholders. § “The invisible hand of the Market (and prevailing morality)” will ultimately allocate resources in society. § Social Obligation view is similar to what is also called the “Defensive” position. 22
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. A Different View of Corporate Social Responsibility l Social Obligation: (the “Classical View”): l Managers are not experts at evaluating charitable funding requests. l Managers are not elected to office as politicians are; therefore, no accountability. l Donated money must be recovered for shareholders through higher prices or absorbed costs. 23
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. A Different View of Corporate Social Responsibility l Social § § Reaction: (“Hand of government”) Firms should respond (react) to various pressure and stakeholder groups (incl. trade groups). Firms should especially react to government, whose job it is to regulate business Ethical behavior and social responsibility is provided for by a system of laws, stakeholder pressure, and industry self-regulation. Similar to “Accommodative” approach. 24
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. A Different View of Corporate Social Responsibility l Social § § § Responsiveness: (“Hand of Mgt. ”) Management must anticipate and meet stakeholder needs and interests This is in the firm’s “enlightened self-interest. ” Mgt. should bear part of the costs of improving society (“anti-freeloader” view) Mgt should take stands on social issues. Mgt should work with government to develop laws. Similar to “Proactive Approach”. 25
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. A Different View of Corporate Social Responsibility l Typical § § § arguments for Social Responsiveness: Its good for long-run profits. Public expects it. Good Public relations. Improves the community’s quality of life. Discourages further government regulation. “An ounce of prevention is worth a pound of cure. ” 26
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Johnson & Johnson Credo Go to this website and read the Johnson & Johnson Credo: https: //www. jnj. com/credo/ What is the Johnson & Johnson Credo? Why was it written? To what stakeholders does J & J pledge to be accountable? How? Has the J & J Credo actually guided business decisions? What decisions were guided by the Credo? 27
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. How do “Socially Responsive”/Proactive firms anticipate social demands? l Futurists create social forecasts l Opinion surveys l Conducting a “Social Audit” of the firm’s practices, looking for possible ethical concerns. l Issues Managers monitor trends in newspapers & other media outlets. 28
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Role of Organizational Culture Ethical values and norms help organizational members: Resist self-interested action § Realize they are part of “something bigger than themselves” § 29
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Using Culture and Policies to Encourage Ethical Behavior l Visible top management commitment l Code of ethics for the firm or industry l Ethics committee l Ethics training l Ethics hot line or ombudsman 30
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Ethics Ombudsman Manager responsible for communicating and teaching ethical standards to all employees and monitoring their conformity to those standards 31
© Pearson/Prentice-Hall. Some slides © The Mc. Graw-Hill Companies, Inc. All rights reserved. Summary l Workers and companies should behave ethically. l However, what is ‘ethical’ is not always clear, depending upon your perspective. l Firms use several methods to anticipate changing social expectations and communicate ethics with employees. 32
- Slides: 32