Download ETHICAL BEHAVIOR AND SOCIAL RESPONSIBILITY

ETHICAL BEHAVIOR AND SOCIAL RESPONSIBILITY
WHAT IS ETHICAL BEHAVIOR?
Ethics can be defined as the code of moral principles that sets standards of good
or bad, or right or wrong, in one’s conduct and thereby guides the behavior of a person or
group. Ethics provide principles to guide behavior and help people make the moral
choices among alternative courses of action.
Ethical Behavior is that which is accepted to be “good” and “right” as opposed to
“bad” or “wrong” in the context of the governing moral code.
LAWS, VALUES, AND ETHICAL BEHAVIOR
It makes sense that there should be a legal component to ethical behavior; that is
one would expect that any legal behavior should be considered ethical.
Most ethical problems in the workplace arise when people are asked to do find
themselves about to do something that violates their personal conscience. The ethical
question extends to personal values- the underlying beliefs and attitudes that help
determine individual behavior. Values are board beliefs about what is or is not
appropriate behavior.
ALTERNATIVE VIEWS OF ETHICAL BEHAVIOR
Individualism view
Does a decision or
Behavior promote
One’s long-term
Self-interest?
Moral-rights view
Does the decision or
behavior maintain the
fundamental rights of all
human beings?
Justice view
Does a decision or
behavior show
Fairness and
impartiality?
Utilitarinism view
Does the decision or
Behavior do the
Greatest good for most
People?
Figure 6.1 Four views of ethical behavior.
UTILITARIAN VIEW
Behavior that would be considered ethical from this perspective delivers the
greatest good to the greatest number of people. Business decision makers, for example
are inclined to use profits, efficiency, and other performance criteria to judge what is best
for the most people.
INDIVIDUALISM VIEW
Ethical Behavior is based on the belief that one’s primary commitment is to
advancement of long-term self- interest. The individualism view is supposed to promote
honesty and integrity. But in business practice it may result in pecuniary ethic, or as the
tendency to “push the law to its outer limits” and run roughshod over the individuals to
achieve one’s objectives.”
MORAL RIGHTS VIEW
Ethical behavior is that which respects and protects the fundamental rights of
people. From the teachings of John Locke and Thomas Jefferson, for example, the rights
of all people to life, liberty, and fair treatment under the law are considered inviolate.
In organization today, this concept extends to ensuring that employees are always
protected in their rights to privacy, due process, free speech, free consent, health and
safety, and freedom of conscience.
JUSTICE VIEW
Moral behavior is based on the belief that ethical decisions treat people
impartially and fairly according to guiding rules and standards. This approach evaluates
the ethical aspects of any decisions on the basis whether the it is “equitable” for everyone
affected.

Procedural justice- the degree to which policies and rules are fairly administered.

Interactional justice- the degree to which the others are treated with dignity and
respect.

Cultural relativism- “ When in Rome, do as Romans do”
This is the notion that there is no one right way to behave and that ethical
behavior is always determined by its cultural context.

Universalism- This ethical positions suggest if the behavior or practice is not okay
in one’s home environment, it shouldn’t be acceptable practice is anywhere else.
It suggests that ethical standards are universal and should apply absolutely across
the national boundaries.

Ethical Imperialism- is an attempt to externally impose one’s ethical standards on
others.
Thomas Donaldson, a Business ethicist discusses the debate between cultural
relativism and ethical imperialism. Although there is no simple answer, he finds fault
with both extremes. He argues instead that certain fundamental rights and ethical
standards can be preserved while values and traditions of a given culture are
respected.
Cultural relativism
Ethical imperialism
No culture’s ethics are superior.
Certain
absolute
thruths
apply
everywhere
The values and practices of the local
Universal values trancends cultures
Settings determine what is right or wrong.
In determining what is wrong or
right
When you are in Rome, do as Romans do.
Don’t do anything you wouldn’t do at
home.
Figure 6.2 The extremes of cultural relativism and ethical imperialism.
ETHICS IN THE WORKPLACE
“Ethical business is good business”.
MANAGER’S NOTEPAD 6.1
How Multinationals can respect universal values
Respect for Human Dignity

Create a culture valuing employees, customers, and suppliers.

Keep a safe workplace.

Produce safe products and services.
Respect for Basic Rights

Protect rights of the employees, customers, and communities.

Avoid any threats to safety, health, education, living standards.
Be Good Citizens

Support social institutions, economic and educational systems.

Work with governments and institutions to protect environment.
WHAT IS AN ETHICAL DILEMMA?
An Ethical Dilemma is a situation that requires a choice regarding a possible
course of action that, although offering the potential for personal or organizational benefit
or both, may be considered unethical.
ETHICAL PROBLEMS FACED BY MANAGERS

Discrimination- where the managers denies promotion of appointment to a job
candidate because of the candidate’s race, religion, gender, age, or other non-jobrelevant action.

Sexual harassment- where the manager makes a coworker feel uncomfortable
because an inappropriate comments or actions regarding sexuality; or where a
manager request sexual harassment in return to favorable job treatment.

Conflicts of interest- where the manager takes a bribe or kickback or
extraordinary gift in return for making a decision favorable to the gift giver.

Customer confidence- where the manager has privileged information regarding
the activities of a customer and shares that information with another party.

Organizational resources-where the manager uses official stationery or company
e-mail account to communicate personal opinions or request community
organizations.
RATIONALIZATIONS FOR UNETHICAL BEHAVIOR
Four ways of thinking about ethical behavior

Convincing yourself that the behavior is not really illegal

Convincing yourself that the behavior is really in everyone’s best interests.

Convincing yourself that nobody will ever find out what you have done.

Convincing yourself that the organization will protect you.
FACTORS INFLUENCING ETHICAL BEHAVIOR
The Person
Family influences, religious values, personal standards and personal needs,
financial and otherwise, will help determine a person’s ethical conduct in any given
circumstances.
The Organization
The organization is another important influence on ethics in the workplace. The
person’s immediate supervisor can have an important effect on the employee’s behavior.
Just exactly what the superior request, and which actions are rewarded or punished, can
certainly effect an individual’s decisions and actions The expectations and reinforcement
provided by peers and group norms are likely to have similar impact. Formal policy
statements and written rules are also very important in establishing an ethical climate for
the organization as a whole.
The Environment
Organizations operate in external environments composed of competitors,
government laws and regulations, and social norms and values, among other influences.
Laws interpret social values to define appropriate behaviors for organizations and their
members; regulations help government monitors these behaviors and keep them within
acceptable standards.
Manager as a person

Family influences

Religious values

Personal standards and
needs.
Employing Organization

Policies, codes of conduct

Behavior of supervisors,
peers

Organization pressure
External environment

Government regulations

Norms and Values of
society

Ethical climate of industry
Ethical managerial
behavior
Figure 6.3 Factors influencing ethical managerial behavior- the person, organization, and
the environment.
MAINTAINING HIGH ETHICAL STANDARDS
ETHICS TRAINING
Ethics training, in the form of structured programs to help participants understand
the ethical aspects of decision making, is designed to help people incorporate high ethical
standards into their daily behaviors.
MANAGER’S NOTEPAD 6.2
Checklist for Making Ethical decisions
Step 1. Recognize the ethical dilemma.
Step 2. Get the facts.
Step 3. Identify your options.
Step 4. Test each option: Is it Legal? Is it right? Is it beneficial?
Step 5. Decide which option to follow.
Step 6. Double check decision by asking follow-up questions:
“ How would I feel if my family found out about my decision?’
“How would I feel about this if my decision were printed in the local newspaper?”
Step 7. Take action.
WHISTLEBLOWER PROTECTION
Whistleblowers are persons who expose the misdeeds of others in organizations in
order to preserve ethical standards and protect against wasteful, harmful, or illegal acts.
ETHICAL ROLE MODELS
CODES OF ETHICS
Codes of Ethics are official written guidelines on how to behave in situation susceptible
to the creation of Ethical dilemmas. Most codes of ethical conduct identify expected
behaviors in terms of general organizational citizenship, the avoidance of illegal or
improper acts in ones work, and good relationships with customers.
SOCIAL RESPONSIBILITY
ORGANIZATIONAL STAKEHOLDERS
Are directly affected by the behavior of the organization and hold a stake in its
performance.
CORPORATE SOCIAL RESPONIBILITY
Corporate social responsibility is the obligation of an organization to act in ways
that serve the interests of its stakeholders.
STAKEHOLDER ISSUES AND PRACTICES
LEADERSHIP beliefs guiding socially responsible practices.

People

Communities

Natural environment

Long term

Reputation
PERSPECTIVE ON SOCIAL RESPONSIBILITY
The classical view holds that the management’s only responsibility in running a
business is to maximize profits
The Socioeconomic view holds that management of any organization must be
concerned for the broader social welfare and not just for corporate profits.
EVALUARING SOCIAL PERFORMANCE
A Social audit is a systematic assessment of an organization’s accomplishments
in areas of social responsibility.
A Formal assessment of corporate social performance might include questions
posed at these four levels: (1) is the organization’s economic responsibility met- is it
profitable? (2) Is the organization’s legal responsibility met- does it obey the law? (3) Is
the organization’s ethical responsibility met- is it doing the “right” things? (4) Is the
Organization’s discretionary responsibility met- does it contribute to the broader
community.
SOCIAL RESPONSIBILITY STRATEGIES
An obstructionist strategy (fight the social demands) reflects mainly economic
priorities; social demands lying outside the organization’s perceived self-interest are
resisted.
A defensive strategy (Do the minimum legally required) seek to protect the
organization by doing the legally necessary to satisfy expectations. Corporate behavior at
this level conforms only to legal requirements, competitive market pressure, and\ perhaps
activist voices.
An accommodative strategy (Do the minimum ethically required) accepts their
social responsibility. They try to satisfy economic, legal, and the ethical criteria.
A Proactive strategy (Take leadership in social initiatives) is designed to meet all
the criteria of social performance, including discretionary performance.
Proactive
strategy
Accommodation
Strategy
Defensive
“Take leadership in social initiatives”
Meet economic, legal, ethical, and discretionary
responsibility.
“ Do minimum ethically required”
Meet economic, legal and ethical responsibility
“ Do the minimum legally required”
Meet economic and legal responsibilities
Strategy
Obstructionist
Strategy
“ Fight social demands”
Meet economic responsibilities.
Commitment to corporate social responsibilities.
Figure
6.4
Four
strategies
of
corporate
social
responsibility- from “obstructionist” to “proactive”
behavior.
ORGANIZATION AND SOCIETY
HOW GOVERNMENTS INFLUENCES ORGANIZATIONS
Governments often pass laws and establish regulating agencies to control and
direct the behavior of organizations. It may not be too farfetched to say that behind every
piece of legislation- national, state, or local- is a government agency charged with the
responsibility of monitoring and ensuring compliance with its mandates.
Four Areas in regulating role in regulating business affairs
1. Area is occupational safety and health
2. The area of fair labor practices
3. Consumer protection
4. Environmental protection.
HOW ORGANIZATIONS INFLUENCE GOVERNMENT
The line of influence between government and organization is not one way, with
the government simply passing legislation and acting as a regulator. Just as governments
take variety of actions to influence organization, so do the leaders and representative of
organizations take the action to influence the government.

Lobbying expresses opinions and preferences to government officials.

Political action committees collect money for donation to political campaign.
WHY MANAGERS MAKE DIFFERENCE
Trends in evolution of social values point to ever-increasing demands from
governments and other organizational stakeholders that managerial decisions reflects
ethical as well as high-performance standard.
Figure 6.5 Centrality of ethics and social responsibility
in leadership and in managerial role.
High Management
Accountability
Dependency
Performance with

Leader

High Ethical
standards
Social responsibility