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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