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CHAPTER THREE
Ethics and Social
Responsibility
Prepared by
Deborah Baker
Texas Christian University
Effective Management
2nd Edition
Chuck Williams
Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved
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CHAPTER THREE
Ethics and the Nature of Management Jobs
Ethics: the set of moral principles or
values that define right and wrong.
Managers can encourage ethical behaviors by…
 using resources for company
 handling information confidentially
 not influencing others to engage in
unethical behavior
 not creating policies that reward employees
for unethical behavior
 setting reasonable goals
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CHAPTER THREE
U.S. Sentencing Commission Guidelines
 Companies can be prosecuted and
punished even if management didn’t know
about the unethical behavior
 Who, What, and Why
 Determining Punishment
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CHAPTER THREE
Compliance Program Steps
1. Establish standards and procedures to meet the
company’s business needs.
2. Put upper-level managers in charge of the
compliance program.
3. Don’t delegate decision-making authority to employees who
are likely to act illegally or unethically.
4. Use auditing, monitoring, and other methods to encourage
employees to report violations.
5. Use company publications and training to inform employees
about the company’s compliance standards and procedures.
6. Enforce compliance standards by fairly and
consistently disciplining violators.
7. After violations occur, find appropriate ways to
improve the compliance program.
2.2
Adapted from Exhibit 3.1
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CHAPTER THREE
Influences on Ethical Decision Making
Ethical Intensity of Decision
Ethical
Answers
Depend
on…
Moral Development of Manager
Ethical Principles Used
More
3
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CHAPTER THREE
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
More
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CHAPTER THREE
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
Adapted from Exhibit 3.3
Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved
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CHAPTER THREE
To Whom Are Organizations Socially
Responsible?
Shareholder
Model
Maximize Profits
Stakeholder
Model
Satisfy Interests
of Multiple Stakeholders
More
5
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CHAPTER THREE
Organization’s Social Responsibilities
Social responsibilities
Discretionary
Don’t violate principles
of right and wrong
Ethical
Obey the Law
Make a Profit
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Legal
Economic
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9
CHAPTER THREE
Responses to Demands for Social
Responsibility
Reactive
Defensive
Accommodative
Strategies
Proactive
More
7
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10
CHAPTER THREE
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
Public
Relations
Approach
Legal
Approach
DO
NOTHING
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Bargaining
Problem
Solving
DO
MUCH
Adapted from Exhibit 3.6
Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved
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CHAPTER THREE
Social Responsibility and
Economic Performance
Can cost a company
Realities of
Social
Responsibility
Sometimes it does pay
Does not guarantee
profitability
8
Adapted from Exhibit 3.6
Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved
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CHAPTER THREE