Topic 6 How An Organization Influences Ethical DecisionMaking

Topic 6 : How An Organization Influences Ethical Decision-Making 2021/12/19 1

The Influences Of Corporate Culture ¹ Values, beliefs, goals, norms and rituals that members share ¹Explicitly documented ¹Informally expressed ¹ Influencing employee behaviour in various ways ¹e. g. providing meanings ¹Indicating directions ¹Serving as standards of behaviour 2021/12/19 2

The Influences Of Corporate Culture ¹ Four organizational cultures ¹ Apathetic – minimal concern for either people or performance ¹ Caring – high concern for people and minimal concern for performance ¹ Exacting – little concern for people and high concern for performance ¹ Integrative – high concern for people and for performance ¹ Ethics as a component of corporate culture ¹ If ethical behaviors are not valued, unethical behaviors may be rewarded 2021/12/19 3

The Purposes Of A Code Of Conduct À A written statement of expected behaviour Purposes : ÀDemonstrating a company’s commitment ÀProviding ethical guidance ÀEncouraging more ethical practices ÀProviding enforceable rules ÀFunction as a tool for self-regulation ÀServing as a public relations statement. . . 2021/12/19 4

The Usual Contents Of A Code of Conduct Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 5

The Usual Contents Of Afor Code of Conduct • Provide meaning and basis judgment • Flexible in applications • Provide rationale and justifications • Enable individuals to apply the code further to situations that are not handled well by rules • …. Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 6

The Usual Contents Ofof. Aprinciples: Code of Conduct Examples • We offer only those services we can deliver and strive to deliver no less than our commitments • We meet our contractual obligations and report and charge honestly for our services Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 7

The Usual Ofin. Aresolving Code of ethical Conduct • Provide clear. Contents instructions dilemma • Allow more consistent actions and behaviors from employees • Easy to interpret, understand apply Á Consisting of both principles and rules • ……… ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 8

The Usual Contents Of A Code of Conduct Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 9

The Usual Contents Of A Code of Conduct Principles: Broad moral principles and values that govern ethical actions Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 10

The Usual Contents Of A Code of Conduct Rules: Specific standards of behaviour that employees can apply Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 11

The. Examples Usual Contents Of A Code of Conduct of Rules (Texas Instruments) • “No company funds may be used for making political contributions of any kind to any political candidate or holder of any office of any government. . ” Á Consisting of both principles and rules ÁWhy providing principles ? ÁWhy providing rules ? ½ Representing the substance and form of a code 2021/12/19 12

The Influences Of Formal Groups ½Formal groups ½Existing within an organizational structure ½e. g. committees, work groups and teams

The. Examples Influences Of Formal Groups of influences: • Provide acceptable values e. g. punctuality, following rules • Provide directions for accepted behaviour e. g. , what should be done and what should not be done. • Provide standards for behaviour e. g. , how well should one perform. • Improve team spirit e. g. , audit group in a CPA firm. • …… ½Formal groups ½Existing within an organizational structure ½e. g. committees, work groups and teams 2021/12/19 14

The Influences Of Formal Groups Sub-divide duties within specific functions • Homogeneous ½Formal groups ½Existing within an organizational structure • Less conflicts ½e. g. committees, work groups and teams 2021/12/19 15

The Influences Of Formal Groups Several functional areas on a single project • Heterogeneous • More conflicts • Formal Provide more options ½ groups ½Existing within an organizational structure ½e. g. committees, work groups and teams 2021/12/19 16

The Influences Of Informal Groups ½ Informal groups ½Consisting of members who have similar interests, backgrounds, and viewpoints and who band together for companionship ½ Help to develop informal channels of communication

The Influences Informal Groups Examples of. Of influences: • Make corporate culture come alive • Providing direction for employee’s daily activities • Providing norms and expectations • Providing mutual supports ½ Informal groups • Enhancing morale and job satisfaction ½Consisting of members who have similar • Imposing peer pressures interests, backgrounds, and viewpoints and • ……. . who band together for companionship ½ Help to develop informal channels of communication 2021/12/19 18

Group Norms ½ Standards of behavior that groups expect of their members ½Define acceptable and unacceptable behavior ½Define the limit on deviation from group expectations ½ Sometimes conflict with the values and rules prescribed by the corporate culture

The Meaning Of Corporate Social Responsibility ¸Beyond the production of goods and services for a profit ¸Obligation to maximize positive impact on society and to minimize negative impact ½Trading-off conflicting responsibilities ½Affect employees in resolving ethical dilemma

PHILANTHROPIC Meaning. RESPONSIBILITIES Of Corporate Social The Responsibility Be a good corporate citizen. Contribute resources to the community; improve quality of life ETHICAL RESPONSIBILITIES Be ethical. Obligation to do what is right, just, and fair. Avoid harm ¸ Beyond LEGAL the production of goods and RESPONSIBILITIES Obey the law. is society’s codification of right services for. Law a profit and wrong. Play by the rules of the game. ¸ Obligation to maximize positive impact on ECONOMIC RESPONSIBILITIES Be society profitable. and Theto foundation upon which all others rest. minimize negative impact ½Bearing a pyramid of responsibilities to different stakeholders ½Trading-off conflicting responsibilities ½Affect 2021/12/19 employees in resolving ethical dilemma 21

1. Promotion of employee welfare. Social The Meaning Of Corporate Responsibility 2. Enhancement of consumer interests e. g. in providing after-sales services 3. Environmental protection 4. Donations to non-profit–making organizations 5. Sponsoring cultural activities … ¸ Beyond the production of goods and services for a profit ¸ Obligation to maximize positive impact on society and to minimize negative impact ½Bearing a pyramid of responsibilities to different stakeholders ½Trading-off conflicting responsibilities ½Affect 2021/12/19 employees in resolving ethical dilemma 22

Arguments For Corporate Social Responsibility ½ Balancing power with responsibility ½ Avoiding government regulations ½ Improving company image ½ Promoting long-run interest ½ Recognizing business’s moral obligations ½ Responding to rising public expectations. . . 2021/12/19 23

Arguments Against Corporate Social Responsibility ¹ Unfair to place CSR on corporations ¹ Imposing hidden costs onto society ¹ Lacking social accountability ¹ Lowering economic efficiency and profits ¹ Friedman : Business is business … 2021/12/19 24