Chapter 4 Ethics and Social Responsibility

Transcription

1 Chapter 4 Ethics and Social Responsibility MGMT3 Chuck Williams Designed & Prepared by B-books, Ltd. 1

2 Ethical and Unethical Workplace Behavior Ethics The set of moral principles or values that defines right and wrong for a person or group. 2

3 What Is Ethical and Unethical Workplace Behavior? After reading these sections, you should be able to: 1. identity common kinds of workplace deviance. 2. describe the U.S. Sentencing Commission Guidelines for Organizations and explain how they both encourage ethical behavior and punish unethical behavior by businesses. 3

4 Common Kinds of Workplace Deviance 1.1 4

5 Dan Ariely on Beyond the Book Cheating In his studies on factors that lead to cheating, behavioral economist Dan Ariely has found that people are more likely to cheat when they don t receive the payoff directly. Further cheating can build on itself, once a person takes the first step the next one becomes easier. Sometimes, however, honest behavior just requires a little reminder. In a test in which participants were rewarded for correct answers and allowed to report their own scores, Ariely found that quizzing participants on the Ten Commandments first eliminated cheating. Source: E. Gibson, When People Reckon It s O.K. to Cheat, Business Week, 5 October

6 U.S. Sentencing Commission Guidelines istockphoto.com/terry Hankins Companies can be prosecuted and punished even if management didn t know about the unethical behavior. 2 6

7 Who, What, and Why? Nearly all businesses are covered Punishes a number of offenses Encourages businesses to be proactive 2.1 7

8 Partial List of Offenses Invasion of privacy Price fixing Fraud Customs violations Antitrust violations Civil rights violations Theft Money laundering Conflicts of interest Embezzlement Dealing in stolen goods Copyright infringements Extortion and more 2.1 8

9 Compliance Program Steps Steps in determining fine size: Determine the base fine Compute a culpability score Multiply the base fine by the culpability score. Proactive companies get smaller fines! 2.2 9

10 Compliance Program Steps 1. Establish standards and procedures. 2. Assign upper-level managers to be in charge. 3. Delegate decision-making authority only to ethical employees. 4. Encourage employees to report violations. 5. Train employees on standards and procedures. 6. Enforce standards consistently and fairly Improve program after violations. 10

11 How Do You Make Ethical Decisions? After reading the next two sections, you should be able to: 4. describe what influences ethical decision making. 5. explain what practical steps managers can take to improve ethical decision making. 11

12 Influences on Ethical Decision Making Ethical Intensity of of Decision Ethical Answers Depend on Moral Development of of Manager Ethical Principles Used 3 12

13 Ethical Intensity Depends on Magnitude of of consequences Social consensus Probability of of effect Temporal immediacy Proximity of of effect 3.1 Concentration of of effect 13

14 Moral Development Kohlberg s Stages of Moral Development Preconventional Selfish Conventional Societal Expectations Postconventional Internalized Principles 3.2 VIDEO 14

15 Stages of Moral Development Preconventional Conventional Postconventional Punishment and Obedience Instrumental Exchange Good boy, nice girl girl Law and order Social contract Universal principle

16 3.3 Principles of Ethical Decision Making Long-term self-interest Personal virtue Community injunctions Government requirements Utilitarian benefits Individual rights Distributive justice 16

17 Principles of Ethical Decision Making Principle of of long-term self-interest Never take any action not not in in your organization s long-term self-interest

18 Principles of Ethical Decision Making Principle of of Personal Virtue Never do do anything that is is not not honest, open, and truthful and that you would not not be be glad to to see reported in in the the newspapers or or on on TV. TV

19 Principles of Ethical Decision Making Principle of of Community Injunctions Never take any action that is is not not kind and that does not not build a sense of of community

20 Principles of Ethical Decision Making Principle of of Government Requirements Never take any action that violates the the law, for for the the law represents the the minimal moral standard

21 Principles of Ethical Decision Making Principle of of Utilitarian Benefit Never take any action that does not not result in in greater good for for society

22 Principles of Ethical Decision Making Principle of of Individual Rights Never take any action that infringes on on others agreed-upon rights

23 Principles of Ethical Decision Making Principle of of Distributive Justice Never take any action that harms the the least among us: us: the the poor, the the uneducated, the the unemployed

24 Practical Steps to Ethical Decision Making Select and hire ethical employees Establish a Code of of Ethics Train employees to to make ethical decisions Create an ethical climate 4 24

25 Practical Steps to Ethical Decision Making Select and hire ethical employees If you found a wallet containing $50, would you return it with the money? Overt Integrity Tests Personality-Based Integrity Tests

26 Practical Steps to Ethical Decision Making Establish a Code of Ethics Communicate code of ethics both inside and outside the company Develop ethical standards and procedures specific to business 4.2 Web Link 26

27 Ethics Training Ethics Training Develops employee awareness of ethics Achieves credibility with employees Teaches a practical model of ethical decision making 4.3 Web Link 27

28 A Basic Model of Ethical Decision Making Identify the problem Identify the constituents Diagnose the situation Analyze your options Make your choice Act

29 Ethical Climate Establishing an Ethical Climate Managers establish an ethical climate when they 1. act ethically. 2. are active in company ethics programs. 3. report potential ethics violations. 4. punish those who violate the code of ethics. istockphoto.com 4.4 Web Link 29

30 What Is Social Responsibility? After reading these sections, you should be able to explain: 6. to whom organizations are socially responsible. 7. for what organizations are socially responsible. 8. how organizations can choose to respond to societal demands for social responsibility. 9. whether social responsibility hurts or helps an organization s economic performance. 30

31 What Is Social Responsibility? Social Responsibility A business s obligation to pursue policies make decisions take actions that benefit society. 31

32 To Whom Are Organizations Socially Responsible? Shareholder Model Maximize Profits Stakeholder Model Satisfy Interests of of Multiple Stakeholders 5 32

33 Shareholder Model Pros Cons Firm maximizes shareholder wealth and satisfaction The company stock increases in value Organizations cannot act effectively as moral agents for shareholders Time, money, and attention diverted to social causes undermine market efficiency 5 33

34 Stakeholder Model Primary Stakeholders: Shareholders Employees Customers Suppliers Governments Local Communities Secondary Stakeholders: Media Special Interest Groups Trade Associations 5 34

35 Organization s Social Responsibilities Serve a social role Discretionary Abide by principles of right and wrong Ethical? Obey laws and regulations Legal 6 Be profitable Economic $ 35

36 Responses to Demands for Social Responsibility Reactive Defensive Accommodative Proactive Fight all the way Do only what is required Be progressive Lead the industry Withdrawal Public Relations Approach Legal Approach Bargaining Problem Solving DO NOTHING DO MUCH 7 36

37 Green Labels at Beyond the Book Wal-Mart Wal-Mart has announced a new environmental labeling program which will require all of its suppliers to calculate and disclose the full environmental costs of making their products. This plan has been controversial as it would increase costs for Wal-Mart s 100,000 suppliers. Similar efforts in Europe have proven difficult to implement with sometimes confusing results for consumers. Some experts think customers could start seeing these labels as early as Source: M. Bustillo, Wal-Mart Puts Green Movement Into Stores, The Wall Street Journal, 16 July A1. 37

38 Social Responsibility and Economic Performance No tradeoff between social responsibility and profit Realities of Social Responsibility Usually it it does pay Does not guarantee profitability 8 38

39 Nike s Green Goes Beyond the Book Undercover Nike is quietly incorporating green production methods. When Nike released an eco-friendly boot in 2005, critics said the earthy looking design detracted from the company s high-tech image. So while Nike is implementing new measures to help cut costs and improve its bottom line, such as recycling rubber from old shoes into its new ones and investing in faster sewing machines to cut production times and save on electricity costs, Nike s new greener side might not be apparent on the store shelves. Source: R. Jana, Nike Goes Green. Very Quietly, Business Week, 22 June