The ethical and social environemnt LN 5 (1)

The Ethical and Social Environment

• Course Information

  • MGT 2300 Principles of Management

  • Lecturer: Ms. Sumudu Kariyawasam

Learning Objectives

• Understand individual ethics in organizations.

• Discuss emerging ethical issues in organizations.

• Understand the social responsibility of organizations.

Definitions

• Ethics

  • Beliefs about right and wrong.

• Social Responsibility

  • Obligation of a business to contribute to society.

Ethics in the Workplace

• Ethics: Beliefs about what’s right and wrong or good and bad.

• Ethical Behavior: Conforms to individual beliefs and social norms about what is right and good.

• Unethical Behavior: Conforms to individual beliefs and social norms about what is defined as wrong and bad.

• Business Ethics: Ethical or unethical behaviors by employees in the context of their jobs.

Individual Values and Codes of Ethics

• Sources of Personal Codes of Ethics:

  • Childhood responses to adult behavior (e.g., copying parents).

  • Peer influence (e.g., friends introducing smoking).

  • Adult experiences (e.g., unfair treatment by a boss).

  • All influences help shape morals and values.

  • Employees may need special attention or training if they come from diverse cultural backgrounds.

Individual Ethics

• Individual ethics are based on personal beliefs and social concepts; they vary across individuals, situations, and cultures.

• Ambiguity of Law and Ethics:

  • Laws stem from ethical principles, yet not all ethical issues are legislated.

Business and Managerial Ethics

• Managerial Ethics: Standards of behavior guiding managers.

  • Affects various stakeholders:

    • Employees: addressing attendance issues.

    • Organization: fostering a culture of openness.

    • Economic Agents: managing communication styles with stakeholders.

Ethical Concerns

• Ambiguity: E.g., financial disclosures and potential concealment.

• Global Practice Variation: E.g., bribery as a common practice in certain regions.

Assessing Ethical Behavior

• Steps for Ethical Judgments:

  • Gather relevant facts.

  • Analyze facts to identify moral values.

  • Make judgments on the rightness or wrongness of proposed activities.

Ethical Norms

• Analyze issues based on:

  • Utility: Optimizing overall benefits.

  • Rights: Respecting rights of individuals.

  • Justice: Fairness in practices like salary and hours.

  • Caring: Consistency with people’s responsibilities to one another.

Encouraging Ethical Behavior

• Codes of Conduct: Establish clear guidelines for business conduct.

  • Example: Prohibiting gifts from suppliers/customers.

• Top Management Support: Management’s adherence to ethics.

• Ethics Training: Regular programs to foster ethical understanding.

• Ethical Hotlines: Mechanisms for reporting unethical behavior.

Social Responsibility

• Definition: Balancing commitments to stakeholders in society.

• Organizational Stakeholders: Groups directly affected by business practices.

The Stakeholder Model of Responsibility

• Customers: Fair and honest treatment.

• Employees: Fair treatment, inclusion, and respect.

• Investors: Proper financial practices and information disclosure.

• Suppliers: Building mutually beneficial partnerships.

• Communities: Fostering social responsibility.

Contemporary Social Consciousness

• Accountability: Expanded role of businesses in societal welfare.

  • Example: Transparent product information.

Areas of Social Responsibility

• Environment: Proper waste disposal, recycling, and pollution control.

• Customers: Quality products and fair pricing.

• Employee Rights: Safety, non-discrimination, and whistleblower protections.

Additional Areas of Social Responsibility

• Unfair Pricing: Practices like collusion and price gouging.

• Ethics in Advertising: Truthfulness and avoidance of offensive content.

Responsibility Toward Investors

• Financial Management: Avoid insider trading and misrepresentation.

• Examples of unethical practices: Excessive salaries, and misleading projections.

Implementing Social Responsibility Programs

• Arguments Against Social Responsibility:

  • Cost threats to profits and lack of expertise.

• Arguments for Social Responsibility:

  • Priority over profits and problem-solving as part of corporate citizenship.

Approaches to Social Responsibility

• Stances:

  • Obstructionist: Minimum compliance.

  • Defensive: Legal compliance only.

  • Accommodative: Meeting legal and ethical requirements.

  • Proactive: Actively contributing to social welfare.

Managing Social Responsibility Programs

• Social responsibility must be a strategic priority.

• Development of a management-supported plan and social audits.

Emerging Ethical Issues

• Scandals: Prevalence in various sectors affecting stakeholder trust.

• Ethical Leadership: Stories of both unethical and ethical corporate leaders.

• Corporate Governance: Ensuring proper management in the interests of stakeholders.

• Ethics in Information Technology: Privacy rights and abuse of technology.