Management Ch 6
Management Ethics and Social Responsibility Overview
Learning Objectives
After studying this chapter, you should be able to:
Describe the two broad categories of ethical theories.
Explain what individuals need in order to act ethically.
Describe the organizational influences on ethical conduct.
Discuss three primary ways in which businesses can promote ethical conduct.
Describe the relationship between law and ethics.
Explain the concept of an ethical dilemma.
Discuss the guidelines for acting ethically.
Explain the three approaches by businesses to social responsibility.
Explain the responsibilities businesses have to stakeholders.
Describe government’s role in promoting socially responsible conduct by businesses.
Discuss the ways in which businesses can promote socially responsible conduct.
Managing Ethically
Two Broad Categories of Ethical Theories:
Consequential Principles:
Judge the ethics of a situation based on the consequences of an action.
Determine the “rightness” or “wrongness” by evaluating the ratio of good to evil produced by the action.
Nonconsequential Principles:
Focus on the concept of duty.
A person acts ethically based on fidelity to duty regardless of consequences.
Balancing Demands
Managers must continually balance diverse and sometimes contradictory demands from multiple constituencies.
Challenges include:
Conflicting demands on those who manage institutions.
Consequences of management decisions affecting a broad range of stakeholders and environments.
Individuals and Ethical Conduct
Morality:
Core values and beliefs that guide action formulation (conscience).
Personal Moral Code of Ethics Influences Include:
Religious beliefs and training.
Educational background.
Political and economic philosophy.
Socialization through family and peer influences.
Work experience.
Leaders’ Ethics
Important characteristics for ethical leadership include:
Treatment of employees with respect.
Maintaining a high standard of personal ethics and responsibility.
An understanding of personal motivation.
Caring for the public interest.
Practicing what they preach ("walk the talk").
Organizational Influences on Ethical Conduct
Ways organizations may encourage unethical behavior:
Offering unusually high rewards for performance.
Threatening severe punishments for failure.
Emphasizing results over ethical considerations.
Importance of Organizational Controls
Key Elements:
Commitment of Top Management.
Promoting Ethical Conduct through compliance programs.
Establishing Codes of Ethics.
Commitment of Top Management
Three Steps Top Managers Can Take:
Establish Behavioral Boundaries:
Draw a clear line between acceptable and punishable behaviors;
Create and enforce a code of ethics or conduct.
Investment in Understanding:
Allocate time and resources to ensure employees understand ethical distinctions.
Implement training, oversight, and rewards for ethical behavior.
Raise Risk of Exposure:
Increase the likelihood of detection for unethical actions;
Enforce punishment fairly and swiftly to set a precedent.
Codes of Ethics
Characteristics of Effective Codes of Ethics:
Serve as visible guidelines for behavior at all organizational levels.
Provide a basis for terminating employees who act unethically, regardless of legalities.
Protect employees from market pressures that may lead to unethical behavior.
Encourage employees to consider the broader impact beyond profitability.
Compliance Programs
Two Areas of Ethics Training:
Compliance Training:
Educates on policies, regulations, and laws establishing acceptable behavior.
Cognitive Thinking:
Develops skills for navigating moral dilemmas in the workplace.
Cognitive Thinking Techniques: Texas Instruments Ethics Quick Test
Questions to consider when facing ethical decisions include:
Is the action legal?
Does it align with our values?
Will I feel guilty about the action?
How would it be perceived in the news?
If it feels wrong, refrain from doing it.
If uncertain, seek answers and clarification.
Legal Constraints
Acknowledges the interplay between ethical issues and legal regulations, highlighting possible conflicts and combinations.
Ethical Dilemmas
Suggestions for handling dilemmas:
When unsure, refrain from acting.
Avoid testing the limits of ethical conduct.
Recognize that pressure from superiors may lead to crossing ethical lines.
Guidelines for Acting Ethically
Recommendations Include:
Consider the well-being of others, including nonparticipants.
Engage as part of the business community rather than isolated individuals.
Follow the law, but do not rely solely on legal standards.
Acknowledge personal and corporate societal roles.
Uphold moral codes.
Think objectively about ethical scenarios.
Assess what kind of person would engage in a certain action.
Respect others’ customs without compromising one’s own ethics.
Nature of Social Responsibility
Definition:
Acknowledges that both individuals and organizations have obligations to protect society and individuals while avoiding harm.
Social Responsibility Assessment Tools:
Harris Interactive Reputation QuotientSM is used to measure corporate reputation, covering aspects like social responsibility, emotional appeal, product service quality, vision and leadership, workplace environment, and financial performance.
Dimensions of Reputation
Key Attributes Include:
Emotional Appeal: Trust and admiration towards the company.
Products & Services: Innovation, quality, and value offered by products/services.
Financial Performance: Profitability and risk assessment of investments in the company.
Social Responsibility: Support for worthy causes and environmental consciousness.
Workplace Environment: Company management and employee satisfaction perceptions.
Vision & Leadership: Strength and clarity of company leadership and market opportunity recognition.
Approaches to Social Responsibility
Strategies Include:
Resistance Approach:
Actively works against social responsibility demands.
Reactive Approach:
Responds to social responsibility demands after they arise.
Proactive Approach:
Continuously anticipates and acts on stakeholder needs.
Responsibilities to Stakeholders
Definition of Stakeholders:
Individuals or groups affected by business operations, including:
Owners and stockholders.
Employees.
Customers.
Suppliers.
Communities.
Government Regulation: Pros and Cons
Whistleblower:
An individual reporting unethical or illegal practices within an organization.
Sustainable Communities:
A framework for community resource usage that meets current needs while preserving future resource availability.
Managing for Social Responsibility
Critical Elements for Proactive Management:
Top-level commitment and support for social responsibility.
Policies that integrate environmental considerations.
Collaborative efforts between corporate and business staff.
Comprehensive employee awareness and training programs.
Robust auditing systems.
Established accountability for addressing environmental issues.
Key Terms
business ethics
ethical dilemma
green products
morality
proactive approach
reactive approach
resistance approach
social audit
social responsibility
sustainable communities
whistleblower