Download Chapter One - Pearson Higher Education

Managing Behavior In
Organizations
Sixth Edition
Jerald Greenberg
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Chapter Two
Organizational Justice, Ethics, and
Corporate Social Responsibility
Learning Objectives
•
IDENTIFY the different forms of organizational justice
•
DESCRIBE the relationships between perceived managerial controls
and the form of justice monitoring that occurs
•
EXPLAIN what is meant by ethical behavior and why organizations
should be concerned about ethics
•
DESCRIBE the individual and situational factors responsible for
unethical behavior in organizations and methods for minimizing such
behavior
•
COMPARE ethical relativism and ethical imperialism as orientations
to ethics in the international arena
•
EXPLAIN what is meant by corporate social responsibility and the
nature of the relationship between responsible behavior and financial
profitability Copyright © 2013 Pearson Education, Inc., publishing as Prentice Hall
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Three Good Reasons Why You Should
Care About . . . Justice, Ethics, CSR
1. Treating employees unfairly adversely
affects work attitudes and behaviors.
2. The public is growing increasingly intolerant
of unethical corporate behavior, but
managers can take steps to promote ethical
behavior in organizations.
3. Consumers and investors tend to support
socially responsible companies, enhancing
the companies’ financial performance.
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Organizational Justice
• Organizational justice - the study of
people’s perceptions of fairness in
organizations
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Forms of Organizational Justice
1. Distributive justice - the form of organizational
justice that focuses on people’s beliefs that they have
received fair amounts of valued work-related
outcomes
2. Procedural justice - people’s perceptions of the
fairness of the procedures used to determine the
outcomes they receive
 Fair process effect
3. Interactional justice consists of
 Interpersonal justice - people’s perceptions of the fairness
of the manner in which they are treated by other people
 Informational justice - people’s perceptions of the fairness
of the information used as the basis for making a decision
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Assessing Fairness…
• Fairness monitoring - the practice of
gathering and processing information in an
effort to figure out how fairly people are
treated in their organizations
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Assessing Fairness…
Managerial controls - the processes that
managers use to communicate and
monitor the performance of their
subordinates to ensure that they are
behaving as expected
Market controls
Bureaucratic controls
Clan controls
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Promoting Organizational
Justice
•
•
•
•
Pay workers what they deserve
Offer workers a voice
Openly follow fair procedures
Explain decisions thoroughly in a manner
demonstrating dignity and respect
• Train workers to be fair
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Ethical Behavior in
Organizations
• Surveys show that today, managers are
•
•
•
•
more likely to keep their promises
less likely to engage in misconduct
less likely to feel pressure to be unethical
believe that more attention is paid to
practicing honesty and respect for others
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Ethical Behavior in
Organizations
• Different orientations:
• The prescriptive orientation - approach
favored by philosophers
• What is ethical?
• The descriptive orientation - approach
favored by social scientists
• How do people try to be ethical?
• How do people respond to unethical behavior?
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Prescriptive Approach to Ethics
• Utilitarianism - an action is considered
ethical to the extent that it maximizes
happiness among stakeholders
• Natural rights approach - all people are
entitled to rights for life, liberty, and
property
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Descriptive Approach to Ethics
• Moral values - people’s fundamental
beliefs about what is right or wrong, good,
or bad
• Ethics - standards of conduct that guide
people’s decisions and behavior
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Why Ethics Matters
• Good ethics is good business
•
•
•
•
Improved financial performance
Reduced operating costs
Enhanced corporate reputation
Increased ability to attract and retain
employees
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Why Ethics Matters
• Legal regulations
• Federal Sentencing Guidelines for
Organizations - provides guidelines for
federal judges to follow when imposing
penalties on organizations
• Sarbanes-Oxley Act - holds senior company
officials personally accountable for their
companies’ accounting practices and reports
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Reasons for Unethical Behavior
• Individual differences in cognitive moral development
• Situational determinants of unethical behavior
• Some managerial values undermine integrity.
• Bottom line mentality - financial success is the only value to
be considered
• Exploitative mentality - use people in a way that promotes
stereotypes and undermines empathy and compassion
• Madison Avenue mentality - anything is right if the public
can be made to see it as right
• Organizations may encourage behavior that violates ethical
standards.
• Stonewalling
• Counternorms
• Workers emulate the unethical behavior of their superiors.
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Kohlberg’s Theory of Moral
Development
Level One: Preconventional Level: What’s right is whatever avoids getting
punished
Level Two: Conventional Level: What’s right is whatever fulfills obligations
to society
Level Three: Postconventional Level: What’s right is determined by
universal moral principle
(e.g. human rights)
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Ethical Norms and
Counternorms
Ethical Norms
vs.
Organizational Countermorms
Be open and honest
vs.
Be secretive deceitful
Follow the rules at all costs
vs.
Do whatever it takes to get the job done
Be cost-effective
vs.
Use it or lose it
Take Responsibility
vs.
Pass the buck
Be a team player
vs.
Take credit for your own actions: grandstand
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Corporate Ethics Programs
• Corporate ethics program - formal,
systematic mechanisms designed to promote
ethics by creating organizational cultures that
both make people sensitive to potentially
unethical behaviors and discourage them from
engaging in them
• Components
•
•
•
•
•
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A code of ethics
Ethics training
Ethics audits
An ethics committee
An ethics officer
A mechanism
forPearson
communicating
ethical
standards
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Education, Inc., publishing as Prentice
Hall
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Conducting an Ethics Audit
A thorough ethics audit can reveal a great deal about a company’s commitment to ethics and the extent to which its
efforts to foster ethical behavior are effective. However, to recognize these benefits, it is crucial to conduct an
ethics audit in an appropriate manner. The following guidelines will help.
1.
Ensure that top executives, such as the CEO, are committed to the ethics audit and appoint a committee to guide
it.
2.
Create a diverse team of employees to write questions regarding the company’s ethical performance. These
should focus on existing practices (e.g. codes of ethics) as well as prevailing norms about company practices (e.g.
billing clients for services not actually performed).
3.
Carefully analyze official documents, such as ethical mission statements and codes of ethics, to see how clear and
thorough they are.
4.
Ask people questions about why they think various unethical behaviors have occurred.
5.
Compare your company’s ethical practices to those of other companies in the same industry.
6.
Write a formal report summarizing these findings and present it to all concerned parties.
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Ethics in the International Arena
 Two approaches:
– Ethical relativism - adopt the ethics of
whatever country in which one does
business
– Ethical imperialism - do everywhere what
is considered right at home
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Guiding Principles of Global
Ethics
 Show respect for core human values
 Demonstrate sensitivity to local traditions
 Recognize that context matters when
distinguishing between right and wrong
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Corporate Social Responsibility
 Organizations have four fundamental
responsibilities known as the pyramid of
corporate social responsibility.
1.
2.
3.
4.
Economic
Legal
Ethical
Philanthropic
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Corporate Social Responsibility
Philanthropic Responsibilities- Contributing to and helping society at large
Ethical Responsibilities- Doing what is right and good for everyone
Legal Responsibilities- Following the laws of society
Financial Responsibilities- Making a profit for stockholders
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Corporate Social Responsibility
 Corporate social responsibility business practices that adhere to ethical
values that comply with legal
requirements, demonstrate respect for
individuals, and promote the betterment
of the community at large and the
environment
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Corporate Social Responsibility
 Forms of corporate social responsibility:
 Helping the community by making charitable
contributions
 Promoting environmental sustainability
 Socially responsible investing
 Promoting the welfare of employees
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The Virtuous Circle
Companies make money because
they are highly socially responsible
(i.e. they do well by doing good)
↓
Companies can afford to be very
socially responsible because they
have made a lot of money (i.e. they
do good by doing well)
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