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Chapter 4
Ethics and Social Responsibility
MGMT
Chuck Williams
Designed & Prepared by
B-books, Ltd.
1
Ethical and Unethical
Workplace Behavior
Ethics
The set of moral principles or values
that defines right and wrong for a
person or group.
2
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
Common Kinds of Workplace Deviance
1.1
4
U.S. Sentencing
Commission Guidelines
Companies can be prosecuted and
punished
even if management didn’t know about
the unethical behavior.
2
5
Who, What, and Why?
• Nearly all businesses are covered
• Punishes a number of offenses
• Encourages businesses to be proactive
2.1
6
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
7
Compliance Program Steps
Steps in determining fine size:
1. Determine the base fine.
2. Compute a culpability score.
3. Multiply the base fine by the
culpability score.
Proactive
companies get
smaller fines!
2.2
8
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.
7. Improve program after violations.
2.2
9
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.
10
Influences on Ethical Decision
Making
Ethical Intensity of Decision
Ethical
Answers
Depend
on…
Moral Development of Manager
Ethical Principles Used
3
11
Ethical Intensity Depends on…
Magnitude of consequences
Social consensus
Probability of effect
Temporal immediacy
Proximity of effect
Concentration of effect
3.1
12
Moral Development
Kohlberg’s Stages of Moral Development
Preconventional
Conventional
Postconventional
Selfish
Societal
Expectations
Internalized
Principles
3.2
13
Stages of Moral Development
Preconventional
Conventional
Postconventional
1. Punishment and
Obedience
3. Good boy,
nice girl
5. Social contract
2. Instrumental
Exchange
4. Law and order
6. Universal
principle
3.2
14
Principles of
Ethical Decision Making
Long-term self-interest
Personal virtue
Religious injunctions
Government requirements
Utilitarian benefits
Individual rights
Distributive justice
3.3
15
Principles of
Ethical Decision Making
Principle of long-term self-interest
Never take any action not in your
organization’s long-term self-interest.
3.3
16
Principles of
Ethical Decision Making
Principle of Personal Virtue
Never do anything that is not honest, open,
and truthful and that you would not be
glad to see reported in the newspapers
or on TV.
3.3
17
Principles of
Ethical Decision Making
Principle of Religious Injunctions
Never take any action that is not kind
and that does not build a
sense of community.
3.3
18
Principles of
Ethical Decision Making
Principle of Government Requirements
Never take any action that violates the law,
for the law represents the minimal
moral standard.
3.3
19
Principles of
Ethical Decision Making
Principle of Utilitarian Benefit
Never take any action that does not result in
greater good for society.
3.3
20
Principles of
Ethical Decision Making
Principle of Individual Rights
Never take any action that infringes on
others’ agreed-upon rights.
3.3
21
Principles of
Ethical Decision Making
Principle of Distributive Justice
Never take any action that harms the
least among us:
the poor, the uneducated,
the unemployed.
3.3
22
Practical Steps to
Ethical Decision Making
Select and hire ethical employees
Establish a Code of Ethics
Train employees to make ethical decisions
Create an ethical climate
4
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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
4.1
24
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
http://www.nortelnetworks.com
25
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
http://ethics.bellsouth.com
26
Ethics Training
Lockheed
Boeing
Bell South
U.S. Dept. of Justice
3M
City of Philadelphia
…and more require employees to take ethics
training.
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A Basic Model of
Ethical Decision Making
1. Identify the problem
2. Identify the constituents
3. Diagnose the situation
4. Analyze your options
5. Make your choice
6. Act
4.3
28
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.
4.4
Web Link
http://www.whistleblowers.org
29
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
What Is Social
Responsibility?
Social Responsibility
A business’s obligation to…
 pursue policies
 make decisions
 take actions
…that benefit society.
31
To Whom Are Organizations
Socially Responsible?
Shareholder
Model
Maximize Profits
Stakeholder
Model
Satisfy Interests
of Multiple Stakeholders
5
32
Shareholder Model
Pros
Cons
• Firm maximizes
shareholder wealth and
satisfaction
• Organizations cannot
act effectively as moral
agents for shareholders
• The company stock
increases in value
• Time, money, and
attention diverted to
social causes undermine
market efficiency
5
33
Stakeholder Model
Primary
Stakeholders:
Secondary
Stakeholders:
Shareholders
Employees
Customers
Suppliers
Governments
Local Communities
Media
Special Interest Groups
Trade Associations
5
34
Organization’s Social Responsibilities
Serve a social role
Discretionary
Abide by principles
of right and wrong
Ethical
Obey laws and
regulations
Legal
Be profitable
Economic
?
$
6
35
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
DO
NOTHING
Public
Relations
Approach
Legal
Approach
Bargaining
Problem
Solving
DO
MUCH
7
36
Social Responsibility and
Economic Performance
Can cost a company
Realities of
Social
Responsibility
Sometimes it does pay
Does not guarantee
profitability
8
37