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Managerial Ethics and Social Responsibility The Community of Stakeholders Inside the Organization • Stakeholders the people whose interests are affected by an organization’s activities Internal, external The Organization’s Environment Figure 3.1 3-3 Is Ethics important? • • Yet… • 76% of business students have cheated on at least one test 19% on four more • 56% of workers report having lied to their boss • Organizations short change employees $19B a year in overtime pay Flawed Justifications • • • • • • • “It’s only a little white lie” “When in Rome” “I’m Desperate” “The Devil made me do it” “Ignorance” “Eye for Eye” “No one will know” Working Definitions • Legal Compliance Conforming with formal laws and regulations • Ethical Behavior Conforming with accepted social norms and standards of right and wrong • Social Responsibility actions that will benefit the interests of society as well as of the organization Ethical Perspectives • Utilitarian guided by what will result in the greatest good for the greatest number of people • Moral Imperatives Moral rules are without exception, conditions, or extenuating cicumstances • Individual guide by what will result in the individual’s best long term interest, which ultimately are in everyone’s self-interest Ethical Perspectives • Moral-rights guided by respect for the fundamental rights of human beings • Justice guided by respect for impartial standards of fairness and equity Ethical Dilemmas • • Ethical Dilemmas • Drug Testing • Cultural Differences • Technology How Managers Can Promote Ethics 1. Support by top managers of a strong ethical climate 2. Selection 3. Ethics codes • • Communicated internally and externally Must be specific to the business How Managers Can Promote Ethics 4. Ethics training programs • • • • • • • 5. Rewarding ethical behavior: • Encourage and protect whistleblowers 6. Punish unethical behavior Two Types of Social Responsibility • Sustainability economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs Example: GE, Walmart, Toyota • Philanthropy making charitable donations to benefit humankind Examples: Google, Bill Gates, McDonalds Social Responsibility • Classical Economics (Milton Friedman) Management’s responsibility is to maximize profits and generate shareholder wealth • Socioeconomics Management also has a responsibility to protect and improve society • Which perspective makes sense to you?