Lesson 5: Ethics and Social Responsibility

Chapter 3

Identify 4 unethical workplace behaviors.

1. production deviance
2. property deviance

harm the company


3. political deviance
4. personal aggression

harm individuals within the company

Describe ethics guidelines and legislation in North America.

In the $United States, under the **Sarbanes-Oxley Act**$, organizations found guilty of fraudulent practices and accounting errors may face fines and/or imprisonment.

Currently there is no national ethics legislation in Canada; however, an $**International Code of Ethics was released in 1997**$ to act as a __guideline__ for Canadian businesses and a number of associations and regulatory bodies have adopted their own codes of ethics.

Describe what 3 factors influences ethical decision making.

1. the ethical intensity of the decision
2. the moral development of the manager
3. the ethical principles used to solve the problem

Ethical intensity is strong when

decisions have large, certain, immediate consequences and when we are physically or psychologically close to those affected by the decision.

What are the three phases of moral maturity?

1. preconventional level - decisions are made for selfish reasons
2. conventional level - decisions conform to societal expectations
3. postconventional level - internalized principles are used to make ethical decisions.

Managers can use a number of different principles when making ethical decisions:

* long-term self-interest
* personal virtue
* religious injunctions
* government requirements
* utilitarian benefits
* individual rights
* distributive justice

Explain what practical steps managers can take to improve ethical decision making.

* Employers can test all job applicants.
* Most large companies now have corporate codes of ethics. Ethics codes must also provide specific, practical advice.
* Ethics training seeks to increase employees' awareness of ethical issues; to make ethics a serious, credible factor in organizational decisions; and to teach employees a practical model of ethical decision making.
* The most important factors in creating an ethical business climate are:
* the personal examples set by company managers
* the involvement of management in the company ethics program
* a reporting system that encourages whistle blowers to report potential ethics violations
* fair but consistent punishment of violators

Explain to whom and for what organizations are socially responsible.

* shareholder model - a company's only social responsibility is to maximize shareholder wealth by maximizing company profits.
* stakeholder model - companies must satisfy the needs and interests of multiple corporate stakeholders, not just shareholders. The needs of primary stakeholders, on which the organization relies for its existence, take precedence over those of secondary stakeholders.

Companies can best benefit their stakeholders by fulfilling what 4 responsibilities?

1. economic responsibility - Being profitable
2. legal responsibility - following a society's laws and regulations
3. ethical responsibility - not violating accepted principles of right and wrong when doing business
4. discretionary responsibility - social responsibilities beyond basic economic, legal, and ethical responsibilities

Ethics

the set of moral principles or values that defines right and wrong for a person or group

Ethical behaviour

behaviour that conforms to a society’s accepted principles of right and wrong

Workplace deviance

unethical behaviour that violates organizational norms about right and wrong

Production deviance

unethical behaviour that hurts the quality and quantity of work produced

Property deviance

unethical behaviour aimed at the organization’s property or products

Employee shrinkage

employee theft of company merchandise

Political deviance

using one’s influence to harm others in the company

Personal aggression

hostile or aggressive behaviour toward others

Ethical intensity

the degree of concern people have about an ethical issue

Magnitude of consequences

the total harm or benefit derived from an ethical decision

Social consensus

agreement on whether behaviour is bad or good

Probability of effect

the chance that something will happen and then harm others

Temporal immediacy

the time between an act and the consequences the act produces

Proximity of effect

the social, psychological, cultural, or physical distance between a decision maker and those affected by his or her decisions

Concentration of effect

the total harm or benefit that an act produces on the average person

Preconventional level of moral development

the first level of moral development, in which people make decisions based on selfish reasons

Conventional level of moral development

the second level of moral development, in which people make decisions that conform to societal expectations

Postconventional level of moral development

the third level of moral development, in which people make decisions based on internalized principles

Principle of long-term self-interest

an ethical principle that holds that you should never take any action that is not in your or your organization’s long-term self-interest

Principle of personal virtue

an ethical principle that holds that you should never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers, on TV or on the Internet

Principle of religious injunctions

an ethical principle that holds that you should never take any action that is not kind and that does not build a sense of community

Principle of government requirements

an ethical principle that holds that you should never take any action that violates the law, for the law represents the minimal moral standard

Principle of utilitarian benefits

an ethical principle that holds that you should never take any action that does not result in greater good for society

Principle of individual rights

an ethical principle that holds that you should never take any action that infringes on others’ agreed-upon rights

Principle of distributive justice

an ethical principle that holds that you should never take any action that harms the least fortunate among us: the poor, the uneducated, the unemployed

Self-dealing

actions taken by a fiduciary that further his or her own best interest, rather than the benefit of the corporation

Overt integrity test

a written test that estimates job applicants’ honesty by directly asking them what they think or feel about theft or about punishment of unethical behaviours

Personality-based integrity test

a written test that indirectly estimates job applicants’ honesty by measuring psychological traits, such as dependability and conscientiousness

Whistle blowing

reporting others’ ethics violations to management or legal authorities

Social responsibility

an individual’s or a business’s obligation to pursue policies, make decisions, and take actions that benefit society

Corporate social responsibility

the voluntary activities undertaken by a company to operate in an economically, socially, and environmentally sustainable manner

Shareholder model

a view of social responsibility that holds that an organization’s overriding goal should be to maximize profit for the benefit of shareholders

Stakeholder model

a theory of corporate responsibility that holds that management’s most important responsibility, long-term survival, is achieved by satisfying the interests of multiple corporate stakeholders

Stakeholders

persons or groups with a “stake” or legitimate interest in a company’s actions

Primary stakeholder

any group on which an organization relies for its long-term survival

Secondary stakeholder

any group that can influence or be influenced by a company and can affect public perceptions about its socially responsible behaviour

Economic responsibility

the expectation that a company will make a profit by producing a valued product or service

Legal responsibility

a company’s social responsibility to obey society’s laws and regulations

Ethical responsibility

a company’s social responsibility not to violate accepted principles of right and wrong when conducting its business

Discretionary responsibility

the expectation that a company will voluntarily serve a social role beyond its economic, legal, and ethical responsibilities

Social responsiveness

a company’s strategy for responding to stakeholders’ economic, legal, ethical, or discretionary expectations concerning social responsibility

Reactive strategy

a social responsiveness strategy in which a company does less than society expects

Defensive strategy

a social responsiveness strategy in which a company admits responsibility for a problem but does the least required to meet societal expectations

Accommodative strategy

a social responsiveness strategy in which a company accepts responsibility for a problem and does all that society expects to solve that problem

Proactive strategy

a social responsiveness strategy in which a company anticipates responsibility for a problem before it occurs and does more than society expects to address the problem