1. CHAPTER 4 SOCIAL RESPONSIBILITY AND ETHICS IN MANAGEMENT
Chapter 4 is the last chapter of Part 1 (Introduction) in the text. It rounds off the general discussions of what management is, management history, and external and internal environments.
The Chapter starts with an interview from CEO Forum with Steve Bertamini, CEO of GE Australia (Pages ).
The interview is interesting as a case study on organisational culture - it does not contain a lot of direct “social responsibility” material.
Students should recognise the importance of studying social responsibility because they will have heard of some of the famous corporate collapses of recent years (Enron, WorldCom, HIH Insurance and OneTel - all mentioned on Page 111).
Fraud and financial scandals not the only relevant aspects of corporate social responsibility - environmental effects (pollution, global warming) and harmful or unsafe products are other concerns. Unfortunately, there is usually some new and topical example of bad management behaviour to discuss each semester, and students could discuss any current issues.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

2. Lecture Outline Organisational social responsibility
- Perspectives, stakeholders, managerial responsibilities, does it pay?
Organisational social responsiveness
Being an ethical manager
- Types, guidelines, career issues
Managing an ethical organisation
The detailed Chapter outline is at Page 108.
Learning objectives are set out on Page 109.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

3. MANAGERIAL ETHICS Ethics Managerial ethics
Standards of behaviour and moral judgment differentiating right from wrong
Managerial ethics
Standards of conduct and moral judgment mangers use in their business
Society is increasingly focused on the social responsibility of organisations and the ethics of their managers.
This lecture explores the nature and extent of organisations’ social responsibilities and the issue of managerial ethics.
Further discussion can be found on Page 112.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

4. ORGANISATIONAL SOCIAL RESPONSIBILITY
‘The obligation of an organisation to act to protect and improve society’s welfare as well as its own interests.’ p112
Organisational social responsibility is often referred to as corporate social responsibility (CSR) when the concept is applied to business firms.
Views differ on how much organisations need to consider social responsibility in their operations.
Concern for organisational social responsibility is fairly recent. In America, social responsibility emerged as an issue in the late 1800s when organisations grew larger. Social movements (feminism, environmentalism and civil rights) in the 1960s drew more attention to organisational social responsibility.
The text indicates that corporations can take different approaches to CSR: economic, legal, ethical and discretionary. These are then brought out in more detail in the subsequent discussions covered later in the lecture.
Further discussion can be found on Page 112.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

5. ORGANISATIONAL SOCIAL RESPONSIBILITY
Major perspectives:
Invisible hand
Hand of government
Hand of management
Pages
This slide notes the three major and contrasting points-of-view that have emerged on CSR. The three perspectives are covered in detail in the seven slides which follow.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

6. ORGANISATIONAL SOCIAL RESPONSIBILITY
INVISIBLE HAND ARGUMENT
A view holding that the entire social responsibility of a corporation can be summed up as ‘make profits and obey the law’.
Corporate responsibility is guided by the ‘invisible hand’ of free market forces
Championed by hard-line or “monetarist” economists such as Milton Friedman(who died in 2006), but can be traced back to Adam Smith in the 18th century (“The Wealth of Nations, 1776).
This approach also argues that charitable activities are not socially responsible since they remove the ability of shareholders to make decisions about the disposal of funds.
The hard-line economic approach is based on the belief that the free operation of market forces of supply and demand will eventually lead to greatest efficiency of resource allocation, greater productivity, and overall, to a better and wealthier society.
Further discussion can be found on Page 112.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

7. ORGANISATIONAL SOCIAL RESPONSIBILITY
HAND OF GOVERNMENT PERSPECTIVE
A view holding that the interests of society are best served by having the law and the political process guide the corporation’s activities.
Law and political processes control organisations on employee well-being, customer protection and community issues e.g. the natural environment.
This point of view argues that the invisible hand of the profit motive and market forces alone will not lead to good results for society, because of negative effects possible from corporate activities: exploitation of workers or consumers, monopolistic profit-gouging, “externalities” such as pollution. Therefore, governments need to regulate corporate activity for overall social benefit.
This point of view was put forward by economists such as J K Galbraith (1962)
Neither the Invisible Hand nor the Hand of Government approaches allow corporate leaders latitude on social issues.
Further discussion can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

8. ORGANISATIONAL SOCIAL RESPONSIBILITY
Hand of Management perspective
Incorporates:
Anti-freeloader argument
Capacity argument
Enlightened self-interest argument
This perspective and the three arguments listed above are dealt with in the following slides.
See Page 113.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

9. ORGANISATIONAL SOCIAL RESPONSIBILITY
HAND OF MANAGEMENT PERSPECTIVE
A view stating that corporations and their managers are expected to act in ways that protect and improve society’s welfare as well as make profit.
This perspective takes a point of view about managerial responsibilities being wider than just economics.
The three arguments typically used to support this perspective are outlined in the following slides.
See page 113.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

10. ORGANISATIONAL SOCIAL RESPONSIBILITY
ANTI-FREELOADER ARGUMENT
Holds that since businesses benefit from a better society, they should bear part of the costs by actively working to bring about solutions to social problems.
Page 113. This anti “free ride” argument focuses on the benefits that firms get from social improvements (e.g. a more stable environment for doing business, better-educated potential workers, more prosperous potential consumers) and claims businesses should therefore make some contribution towards social progress.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

11. ORGANISATIONAL SOCIAL RESPONSIBILITY
CAPACITY ARGUMENT
States that the private sector, because of its considerable economic resources, must make up for government cutbacks in social programs.
Page 113.
This argument arose largely in response to cutbacks in government expenditures in western countries in the 1980s and 1990s, including privatisation, downsizing of government employment, introduction of “user pays” systems and a generally harder-line on welfare payments. It was argued that corporations had the economic power to make up for these cuts in government programs (e.g. sponsoring education programs).
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

12. ORGANISATIONAL SOCIAL RESPONSIBILITY
ENLIGHTENED SELF-INTEREST
ARGUMENT
Holds that businesses exist at society’s pleasure and that, for their own legitimacy and survival, businesses should meet the public’s expectations regarding social responsibility.
This relates to the “iron law of responsibility”, which states that ‘in the long run, those who do not use power in a manner that society considers responsible will tend to lose it’.
The argument is that it is good business practice for firms to keep in line with the expectations of society. Firms which develop bad reputations will be unlikely to prosper. It also seems that most people believe firms have responsibilities much wider than just making profits - see Table 4.1 at the bottom of Page 113 for an example drawn from one US survey.
Page 113.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

13. SOCIAL RESPONSIBILITIES OF MANAGERS
Economic and legal
Responsibility to make a profit and obey the law
(recognised by: invisible hand, hand of government, hand of management).
Ethical and discretionary
Ethical behaviour expected by society (recognised by: hand of management).
Difficult to determine, identify
As previously mentioned, managerial responsibilities can be economic, legal, ethical and discretionary. These are set out as a hierarchy in Figure 4.1 on Page 114.
The idea that managers have social responsibilities comes in part from greater interdependencies. These interdependencies have built ties of common interest between corporations and the communities in which they operate.
Further discussion can be found on Pages
Some examples of discretionary or philanthropic activities (e.g. sponsoring AIDS clinics) are on Page 114.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

14. SOCIAL STAKEHOLDERS Shareholders Employees Customers Local community
General society
International community
The Social Stakeholders approach answers the question: ‘If corporations and managers are to be socially responsible, to whom are they responsible?’
The groups identified in this slide are considered to be social stakeholders because the actions of the corporation can directly affect them, negatively or positively.
The six overlapping groups identified above are set out graphically in the next slide, with further detail in the text in Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

15. Society (regional & national)
SOCIAL STAKEHOLDERS
Employees
THE
ORGANISATION
Shareholders
Customers
International
community
Pages
The main concerns of the different stakeholder groups are outlined in the text.
Attention is devoted to employees - particularly the challenges and benefits of managing a diverse workforce. This is covered in the next slide.
Local community
Society (regional & national)
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

16. SOCIAL STAKEHOLDERS DIVERSITY AS COMPETITIVE ADVANTAGE
Attracting workers is costly, diversity may help attract and retain workers
Workforce that reflects customer base may give insight into customer wants, needs, preferences
Innovations are more likely where diversity exists
Organisations must at least honour specific employee agreements and obey relevant employee–employer laws, including anti-discrimination legislation. Indeed, recognition of workforce diversity and public feelings about abuses by employers has led to greater regulation.
However, socially responsible actions are potentially good for business. See Table 4.2, Page 115 in the text for advantages of having a diverse workforce in slightly more detail than in the above slide.
Further discussion can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

17. DOES SOCIAL RESPONSIBILITY PAY?
Evidence is mixed
Strategically beneficial
Likely, profit  socially responsible management
Shareholders are sensitive to the extent that it affects profit
Evidence is mixed. However, to balance conflicting expectations of shareholders between profit and corporate philanthropy, many firms focus on socially-responsible activities that affect their profit. See the Hubbard’s Foods example, Page 117 in the text.
The text points out that strong financial performance can often result in socially responsible actions by firms (rather than the other way around).
Further discussion can be found on Page 117.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

18. PROMOTING INNOVATION: VANGUARD COMPANIES
Characteristically, they:
try to satisfy all their stakeholders
are committed to some higher purpose (profits not the only end of corporate efforts)
value continuous learning
aim high (dedicated to being best in all they do)
Vanguard companies are “out in front” as in the vanguard or lead sections of an army.
Although it is hard (as identified in the previous slide) to establish a solid cause and effect relationship between social responsibility and profitability, some firms rate highly on both factors - these have been called vanguard companies (O’Toole 1985). Some identified are Motorola, Levi Strauss, Honeywell and John Deere.
The four characteristics of vanguard companies, set out above, are given in more detail on Page 117.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

19. ORGANISATIONAL SOCIAL RESPONSIVENESS
‘A term referring to the development of organisational decision processes where managers anticipate, respond to and manage areas of social responsibility.’
Two aspects:
Monitoring social demands and expectations
Internal social response mechanisms
In order to be socially responsive, an organisation must first set up methods to monitor the external environment’s social demands and expectations; and secondly, create internal social response mechanisms.
These two aspects are covered in detail in following slides.
Further discussion can be found on Page 119.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

20. MONITORING SOCIAL DEMANDS/EXPECTATIONS
Social forecasting
Opinion surveys
Social audits
Issues management
Social scanning
Pages
Social forecasting: often using futurists - systematically identifying social trends.
Opinion surveys: Polls and surveys - either generally available or specially commissioned.
Social audits: study of an organisation’s social (rather than economic) performance. (Can be difficult).
Issues management: identifying specific issues for attention (to “reduce surprises” from environmental forces).
Social scanning: monitoring task-environment elements - less formal and systematic than issues management.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

21. INTERNAL SOCIAL RESPONSE MECHANISMS
Individual executives
Temporary task forces
Permanent committees
Permanent departments
Combination approaches
Pages
The varying mechanisms and their degree of commitment or involvement are set out in the text. In practice, organisations generally use some combination of approaches.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

22. BEING AN ETHICAL MANAGER
The difficulties and concerns with business ethics raise three important issues about being a manager:
Types of managerial ethics
Ethical guidelines for managers
Ethical career issues
Corporate social responsibility and responsiveness are dependent upon managers’ ethical standards. In response to this, companies are clarifying ethical standards in an attempt to assist employees in internalising company standards.
This section on being an ethical manager will cover the three issues mentioned above in more detail in following slides.
Page 122.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

23. TYPES OF MANAGERIAL ETHICS
Immoral management
Lacks ethical principles, concern for profit only
Amoral management
Ignores, or is oblivious to, ethical issues
Moral management
Conscious attention to ethical standards and issues
Because standards of conduct or moral judgments that managers use come from society’s general norms and values, ethical standards will differ between managers. These differences may be generalised as being immoral, amoral and moral in their approach to issues.
The text give a couple of examples of managerial behaviour of each type.
Further detail can be found on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

24. ETHICAL GUIDELINES FOR MANAGERS
Obey the law.
Tell the truth.
Show respect for people.
Stick to the Golden Rule.
Above all, do no harm.
Participation not paternalism.
Responsibility requires action.
Because of the different social upbringings and influences that may create an individual manager’s own moral standards, firms have attempted to standardise managerial ethical responses by providing ethical guidelines, such as those in this slide, based upon an approach of ‘enlightened self-interest’.
The seven guidelines above are set out in greater detail on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

25. FACTORS AFFECTING CSR STAGES OF MORAL DEVELOPMENT (Kohlberg, 1969)
Level 1: Pre-conventional morality (Punishment/reward)
Level 2: Conventional morality (Good by/Good girl - Authority orientation)
Level 3: Post-conventional morality (Social contracts/Ethical principles)
Students may possibly find some of this social and ethical theory hard to grasp, but it is quite clearly set out jn the the text, including in Table 4.4 on Page 126.
Students should also discuss Heinz’s story on Page 125. This is one of the “ethical dilemmas” that Kohlberg used in developing his “stages” framework.
As well as staged of moral development, the text mentions briefly mentions the importance of organisational culture in fostering ethical behaviour (Page 126).
This is not dealt with in a separate slide, although students should be reminded of the importance of organisational culture, covered in Chapter 3.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

26. FACTORS AFFECTING CSR Moral intensity of ethical issues (Jones 1991)
Magnitude of consequences
Social consensus
Probability of effect
Temporal immediacy
Proximity
Concentration of effect
Jones’ ethical decision-making model is set out in Figure 4.4 on page 127.
The characteristics of moral intensity (set out in the above slide) are explained in more detail on Page 127.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

27. FACTORS AFFECTING CSR Individual values… four modes
Practical - what worked in the past
Moral - strong sense of right or wrong
Gratifying - drive to feel good about decisions
Economic - focus on organisational resources
Individual values and the four modes outlined above are set out in greater detail on Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

28. ETHICAL CAREER ISSUES Assessing values and protecting yourself
Seek advice and support from trusted sources.
Take action to change what you see as not being ethical.
Take actions to protect yourself.
Anticipating ethical conflicts
Pre-employment checks: Is this an ethical company?
Is the industry marked by patterns of unethical behaviour?
Avoid ethical compromises - they can escalate.
As discussed at a general or theoretical level in the lecture, students will have practical and immediate issues to deal with in their careers. Because the consequences of being caught up in unethical organisations, or in unethical behaviour at an individual level, can be so devastating, it is important for students to be able to protect themselves.
See Pages
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

29. MANAGING AN ETHICAL ORGANISATION
Situational factors influencing ethical behaviour:
External factors
Extreme competitiveness, high/low opportunities for success, dependency on other organisations
Internal factors
Push for high performance, labour unrest, delegation, quests for innovation
The factors which can make unethical behaviour more likely are set out above.
They are also explained on Pages , and are given in Table 4.5 on Page 129.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

30. MECHANISMS FOR ETHICAL MANAGEMENT
Increasing awareness of diversity
Top management commitment
Codes of ethics
Ethics committees
Ethics audits
Ethics hotlines
Ethics training
Each of these mechanisms that organisations can use to foster ethical behaviour is set out in a short paragraph on Pages (based on Post et al. 1996).
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)

31. LECTURE SUMMARY Organisational social responsibility defined
Three major perspectives (Invisible hand, Hand of government, Hand of management).
Management’s social responsibility: Six stakeholder groups, links to organisational success?
CSR: two processes - monitoring social expectations; internal response mechanisms
Managers’ ethical standards: immoral, amoral and moral; Ethical guidelines; Ethical career issues
Operating an ethical organisation: mechanisms to facilitate ethical behaviour.
The detailed Chapter 4 summary is at Pages
Students should find the “Gaining the Edge” feature “What ticks us off” on Pages of interest. It reports on survey work in Australia on what people dislike or distrust most about major corporations.
Copyright  2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)