John R. Schermerhorn, Jr Daniel G. Bachrach Introduction to Management 13th edition Chapter 3 Ethical Behavior and Social Responsibility Planning Ahead — Key Takeaways Define ethics and describe the foundations of ethical behavior Discuss ethical dilemmas and issues in the workplace Describe approaches to maintaining high ethical standards Discuss social responsibility and corporate governance Copyright ©2015 John Wiley & Sons, Inc Chapter 3 Outline Ethics • Laws and values as influences on ethical behavior • Alternative views of ethics • Cultural issues in ethical behavior Ethics in the workplace • Ethical dilemmas • Influences on ethical decision making • Rationalizations for unethical behavior Copyright ©2015 John Wiley & Sons, Inc Chapter 3 Outline Maintaining High Ethical Standards • Moral management • Ethics training • Codes of ethical conduct • Whistleblower protection Social Responsibility • Social responsibility, sustainability, and the triple bottom line • Perspectives on corporate social responsibility • Evaluating corporate social performance • Corporate governance Copyright ©2015 John Wiley & Sons, Inc Ethics Ethics Moral code of principles Set standards of “good” or “bad” or “right” or “wrong” in one’s conduct Ethical behavior What is accepted as good and right in the context of the governing moral code Copyright ©2015 John Wiley & Sons, Inc Ethics Laws and values as influences on ethical behavior: Legal behavior is not necessarily ethical behavior Personal values help determine individual ethical behavior Copyright ©2015 John Wiley & Sons, Inc Ethics Laws and values as influences on ethical behavior: Values - underlying beliefs and attitudes that help influence individual behavior Terminal values - preferences about desired ends Instrumental values – preferences regarding the means to desired ends Copyright ©2015 John Wiley & Sons, Inc Figure 3.1: Four views of ethical behavior Copyright ©2015 John Wiley & Sons, Inc Ethics Four alternative ethical views Utilitarian Individualism Advances long-term self-interests Moral rights Delivers the greatest good to the most people Respects and protects the fundamental rights of all people Justice Fair and impartial treatment of people according to legal rules and standards Procedural justice – policies and rules fairly applied Distributive justice – fair distribution of outcomes Interactional justice – people treated with dignity and respect Commutative justice – fairness to all involved Copyright ©2015 John Wiley & Sons, Inc Ethics Cultural issues in ethical behavior: Cultural relativism Moral absolutism Ethical behavior is always determined by cultural context Behavior unacceptable in one’s home environment should not be acceptable anywhere else Ethical imperialism Imposing one’s ethical standards on others Copyright ©2015 John Wiley & Sons, Inc Ethics in the Workplace Rationalizations for unethical behavior People often rationalize ethical transgressions with after-the-fact justifications: Copyright ©2015 John Wiley & Sons, Inc Maintaining High Ethical Standards • Moral Management Managers behave in one of three ways Copyright ©2015 John Wiley & Sons, Inc Maintaining High Ethical Standards Ethics training: Structured programs that help participants to understand ethical aspects of decision making Helps people incorporate high ethical standards into daily life Codes of Ethical Conduct Formal statement of an organization’s values and ethical principles that set expectations for behavior Copyright ©2015 John Wiley & Sons, Inc Maintaining High Ethical Standards Areas often covered by codes of ethics: Copyright ©2015 John Wiley & Sons, Inc Maintaining High Ethical Standards Whistleblowers Expose misdeeds of others to: Preserve ethical standards Protect against wasteful, harmful, or illegal acts Laws protecting whistleblowers vary Copyright ©2015 John Wiley & Sons, Inc Maintaining High Ethical Standards Barriers to whistleblowing include: Strict chain of command Strong work group identities Ambiguous priorities Copyright ©2015 John Wiley & Sons, Inc Social Responsibility • Stakeholder Management Stakeholders: persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance – Stakeholder power: the capacity of the stakeholder to positively or negatively affect the operations of the organization – Demand legitimacy: the validity and legitimacy of a stakeholder’s interest in the organization – Issue urgency: the extent to which a stakeholder’s concerns need immediate attention – Copyright ©2015 John Wiley & Sons, Inc Figure 3.4: The Many Stakeholders of Organizations Copyright ©2015 John Wiley & Sons, Inc Social Responsibility Corporate social responsibility and governance: Looks at ethical issues on the organization level Obligates organizations to act in ways that serve both its own interests and the interests of society at large Copyright ©2015 John Wiley & Sons, Inc Social Responsibility Stewardship Sustainability: Taking personal responsibility to always respect and protect the interests of society at large acting in ways that support a high quality of life for present and future generations Alternative energy Recycling Waste avoidance Triple bottom line evaluates organizational performance on economic, social, and environmental criteria P’s of organizational performance – profit, people, and planet Copyright ©2015 John Wiley & Sons, Inc Social Responsibility Perspectives Classical view Management’s only responsibility is to maximize profits Socioeconomic view on social responsibility: Management must be concerned for the broader social welfare, not just profits Shared value view Approaches business decisions with the understanding that economic and social progress are interconnected Virtuous circle-socially responsible behavior improves financial performance which leads to more responsible behavior Copyright ©2015 John Wiley & Sons, Inc Social Responsibility Copyright ©2015 John Wiley & Sons, Inc Four strategies of corporate social responsibility—from obstructionist to proactive behavior Copyright ©2015 John Wiley & Sons, Inc Social Responsibility Corporate governance: The oversight of the top management of an organization by a board of directors Corporate governance involves: Hiring, firing, and compensating the CEO Assessing strategy Verifying financial records How government influences organizations: Businesses required by law to have boards of directors that are elected by stockholders Copyright ©2015 John Wiley & Sons, Inc Figure 3.6: Ethics Self-governance in Leadership and the Managerial Role Copyright ©2015 John Wiley & Sons, Inc ... obstructionist to proactive behavior Copyright ©2015 John Wiley & Sons, Inc Social Responsibility Corporate governance: The oversight of the top management of an organization by a board of directors... Responsibility Perspectives Classical view Management s only responsibility is to maximize profits Socioeconomic view on social responsibility: Management must be concerned for the broader... records How government influences organizations: Businesses required by law to have boards of directors that are elected by stockholders Copyright ©2015 John Wiley & Sons, Inc