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MANAGEMENT’S
SOCIAL AND ETHICAL
RESPONSIBILITIES
Prepared by:
Prof. Emilia. S. Bio
Source:
Principles of Management by Krietner, 11th Edition
THE CHANGING WORKPLACE
• As the social, political, economic, and technological
environments of management have changed, the
practice of management itself has changed. This is
especially true for managers in the private business
sector.
THE CHANGING WORKPLACE
• Today, it is far less acceptable for someone in business to stand
before the public and declare that his or her sole job is to make as
much profit as possible.
• The public is wary of the abuse of power and the betrayal of trust,
and business managers—indeed, managers of all types of
organizations—are expected to make a wide variety of economic
and social contributions.
• Demands on business that would have been considered patently
unreasonable 30 or 40 years ago have become the norm today.
SOCIAL RESPONSIBILITY:
DEFINITION AND
PERSPECTIVES
CORPORATE SOCIAL RESPONSIBILITY
• It is the notion that corporations have an obligation to
constituent groups in society other than stockholders and
beyond that prescribed by law or union contract.
• In other terms, it is the idea that business has social
obligations ABOVE and BEYOND making a profit.
CARROLL’S GLOBAL CORPORATE SOCIAL
RESPONSIBILITY PYRAMID
Be ethical
Philanthropic
responsibility
Be a good global citizen
Obey the law
Be profitable
Do what is desired by
global stockholders
Ethical responsibility
Legal responsibility
Economic responsibility
Do what is expected by
global stockholders
Do what is required by
global stockholders
Do what is required by
global capitalism
CORPORATE SOCIAL RESPONSIBILITY
• From the previous figure, global and transnational companies
have four main areas of responsibility: ECONOMIC, LEGAL,
ETHICAL, and PHILANTHROPIC.
CORPORATE SOCIAL RESPONSIBILITY
• Working from bottom to top, this means that the global
corporation should:
• Make a profit consistent with expectations for international
businesses
• Obey the law of host countries as well as international law
• Be ethical in its practices, taking host-country and global
standards into consideration
• Be a good corporate citizen, especially as defined by the host
country’s expectations
CSR REQUIRES VOLUNTARY ACTION
• An implicit feature of the above definition and
perspective is that an action must be voluntary to
qualify as socially responsible.
WHAT IS THE ROLE OF BUSINESS IN
SOCIETY?
• Much of the disagreement over what social responsibility
involves can be traced to a fundamental debate about the
exact purpose of a business.
• “Is business an economic entity responsible only for
making a profit for its stockholders? Or is it a
socioeconomic entity obligated to make both economic
and social contributions to society?”
THE STOCKHOLDER AUDIT—THE IDENTIFICATION OF ALL
PARTIES THAT MIGHT BE AFFECTED BY THE ORGANIZATION.
Customers
Neighbors of stores
and facilities
(homeowners’
association)
All levels of
domestic and
foreign
government
(FOR)
WAL-MART
Domestic and
Foreign suppliers
and distributors
WAL-MART
Stockholders
Public-at-large
Political Parties
Competitors
Stockholders
Financial
Community
(bankers,
brokers, and
investors)
Public-at-large
Political Parties
Customers
ARGUMENTS FOR SOCIAL
RESPONSIBILITY
1. Business is unavoidably involved in social issues.
2. Business has the resources to tackle today’s complex societal
problems.
3. A better society means a better environment for doing business.
4. Corporate social action will prevent government intervention.
ARGUMENTS AGAINST SOCIAL
RESPONSIBILITY
1. Profit maximization ensures the efficient use of society’s
resources.
2. As an economic institution, business lacks the ability to pursue
social goals.
3. Business already has enough power.
4. Because managers are not elected, they are not directly
accountable to the people.
TOWARD GREATER SOCIAL
RESPONSIBILITY
THE IRON LAW OF RESPONSIBILITY
• Is it inevitable that management will assume greater social
responsibility? Some scholars believe so. It has been said that
business Is bound by an IRON LAW OF RESPONSIBILITY,
which states that “in the long run, those who do not use power in a
way that society considers responsible will tend to lose it.
WHO BENEFITS FROM CORPORATE
SOCIAL RESPONSIBILITY?
• Is it accurate to say of social responsibility what used be said about
home medicine, “It has to taste bad to be good”? In other words,
does social responsibility have to be a hardship for the
organization? Those who answer yes believe that it should be
motivated by ALTRUISM, an unselfish devotion to the interests of
others.
• This implies that businesses that are not socially responsible are
motivated strictly by self-interest.
WHO BENEFITS FROM CORPORATE
SOCIAL RESPONSIBILITY?
• On the basis of evidence alone, one would hard pressed to
say that social responsibility pays. But research paints a
brighter picture:
A study of 243 companies for two years found a positive correlation
between industry leadership in environmental protection/pollution control
and profitability. The researchers concluded, “It pays to be green.”
A second study found a good reputation for corporate social responsibility
to be a competitive advantage in recruiting talented people.
WHO BENEFITS FROM CORPORATE
SOCIAL RESPONSIBILITY?
• ENLIGHTENED SELF-INTEREST, the realization that
business ultimately helps itself by helping to solve societal
problems, involves balancing short-run costs and long-run benefits.
Advocates of enlightened self-interest contend that social
responsibility expenditures are motivated by profit.
• Research into CORPORATE PHILANTHROPY, the charitable
donation of company resources ($12.7 billion in US in 2006),
supports this contention.
AN ARRAY OF BENEFITS FOR THE
ORGANIZATION
• In addition to the advertising effect, other possible longrun benefits include:
- Tax-free incentives to employees.
- Retention of talented employees by satisfying their altruistic motives.
- Help in recruiting talented and socially conscious personnel.
- Swaying public opinion against government intervention.
- Improved community living standards for employees.
- Attracting socially conscious investors.
- A nontaxable benefit for employees in which company funds are donated
to their favorite causes.
THE ETHICAL DIMENSION OF
MANAGEMENT
THE ETHICAL DIMENSION OF
MANAGEMENT
• ETHICS is the study of moral obligation involving the
distinction between right and wrong.
Moral
Immoral
Amoral Managers – managers who are neither moral nor
immoral, but ethically lazy.
• Business ethics, sometimes referred to as management
ethics or organizational ethics, narrows the frame of
reference to productive organizations.
PRACTICAL LESSONS FROM BUSINESS
ETHICS RESEARCH
• ETHICAL HOT SPOTS.
In a survey of 1,324 US employees from all levels across
several industries, 48 percent admitted to having performed at
least one illegal or unethical act from a list of 25 questionable
practices.
The list included everything from calling in sick when feeling
well through cheating on expense accounts, forging signatures,
and giving or accepting kickbacks, to ignoring violations of
environmental laws.
PRACTICAL LESSONS FROM BUSINESS
ETHICS RESEARCH
• The top ten workplace hot spots responsible for triggering unethical conduct are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Balancing work and family
Poor internal communications
Poor leadership
Work hours, workload
Lack of management support
Need to meet sales, budget, or profit goals
Little or no recognition of achievements
Company politics
Personal financial worries
Insufficient resources
• Materials used are of Original Copyright of
- Prof. Emilia. S. Bio, P.I.E.,IE-EMG Dept.
• Revisions made by:
-Bachini John Karlos J EMG20/B5
-1st Qtr. S.Y.2014-2015