1. Management 11e John Schermerhorn Chapter 3 Ethics and Social Responsibility

2. Planning Ahead — Chapter 3 Study Questions 1.What is ethical behavior? 2.How do ethical dilemmas complicate the workplace? 3.How can high ethical standards be maintained? 4.What is social responsibility and governance?

3. Study Question 1: What is ethical behavior?  Ethics  Code of moral principles.  Set standards of “good” or “bad” or “right” or “wrong” in one’s conduct.  Ethical behavior  What is accepted as good and right in the context of the governing moral code.

4. Study Question 1: What is ethical behavior?  Law, values, and ethical behavior:  Values - underlying beliefs and attitudes that help determine individual behavior  Terminal values - preferences about desired ends  Instrumental values – preferences regarding the means to desired ends  Legal behavior is not necessarily ethical behavior.  Personal values help determine individual ethical behavior.

5. Study Question 1: What is ethical behavior?  Alternative ethical views  Utilitarian  Delivers the greatest good to the most people  Individualism  Advances long-term self-interests  Moral rights  Maintains fundamental rights of all human beings  Justice view of ethics  fair and impartial treatment of people according to legal rules and standards  Procedural justice – policies and rules fairly applied  Distributive justice – equal treatment for all people  Interactional justice – people treated with dignity and respect  Commutative justice – fairness to all involved

6. Four views of ethical behavior Management 11e/ Chapter 36

7. Study Question 1: What is ethical behavior?  Cultural issues in ethical behavior:  Cultural relativism  Ethical behavior is always determined by cultural context.  Universalism  Behavior unacceptable in one’s home environment should not be acceptable anywhere else.  Ethical imperialism  Imposing one’s ethical standards on others. Management 11e/ Chapter 37

8. The extremes of cultural relativism and ethical imperialism in international business ethics. Management 11e/ Chapter 38 Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.

9. Study Question 1: What is ethical behavior?  Sources of information on ethical behavior:  Institute for Global Ethics at www.globalethics.org and on Facebook at http://www.facebook.com/pages/Rockland- ME/Institute-for-Global-Ethics/51585783748?ref=tswww.globalethics.org http://www.facebook.com/pages/Rockland- ME/Institute-for-Global-Ethics/51585783748?ref=ts  Ethics Resource Center at www.ethics.orgwww.ethics.org Management 11e/ Chapter 39

10. Study Question 2: How do ethical dilemmas complicate the workplace?  An ethical dilemma  occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.  Ethical dilemmas include: Management 11e/ Chapter 310 DiscriminationSexual harassmentConflicts of interestProduct SafetyOrganizational resources

11. Checklist for ethical dilemmas Step 1Recognize the ethical dilemma.Step 2Get the facts.Step 3 Identify your options.Step 4Test each option: Is it legal? Is it right? Is it beneficial?Step 5Decide which option to follow.Step 6Ask the Spotlight Questions: To double check your decision. “How would I feel if my family found out about my decision?” “How would I feel if my decision was printed in the local paper or posted online?” Step 7Take action Management 11e/ Chapter 311

12. Study Question 2: How do ethical dilemmas complicate the workplace?  Influences on Ethical Decision Making  Ethical framework  Provides personal rules or strategies for ethical decision making  Includes personal values  Honesty  Fairness  Integrity  Self-respect Management 11e/ Chapter 312

13. Kohlberg’s stages of individual moral development Management 11e/ Chapter 313

14. Study Question 2: How do ethical dilemmas complicate the workplace?  Situational Context and Ethics Intensity  Will the situation pose an important ethic challenge?  Magnitude of the situation  Risk of immediate harm  Proximity and concentration of harm  Social consensus  Organizational Culture Influence  What is considered ethical behavior within the organizational context?  What are the expectations of management?  What are the expectations of co-workers?  Is there a code of ethics? Management 11e/ Chapter 314

15. Study Question 2: How do ethical dilemmas complicate the workplace? Management 11e/ Chapter 315

16. Study Question 2: How do ethical dilemmas complicate the workplace?  External environment Management 11e/ Chapter 316 Government laws and regulations Societal norms and values Competitive climate in an industry

17. Study Question 2: How do ethical dilemmas complicate the workplace?  Ethical behavior can be rationalized by convincing yourself that: 17 Behavior is not really illegal.Behavior is really in everyone’s best interests.Nobody will ever find out.The organization will “protect” you. Management 11e – Management 11e/ Chapter 3

18. Study Question 3: How can high ethical standards be maintained?  Ethics training:  Structured programs that help participants to understand ethical aspects of decision making.  Helps people incorporate high ethical standards into daily life.  Helps people deal with ethical issues under pressure.  Codes of Ethical Conduct  Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas Management 11e/ Chapter 318

19. Study Question 3: How can high ethical standards be maintained?  Moral Management  Managers behave in one of three ways Management 11e/ Chapter 319 Chooses to behave unethically immoral manager Disregards ethics of actions, intentionally or unintentionally amoral manger Considers ethical behavior as a personal goal moral manager

20. How can high ethical standards be maintained? 20

21. Study Question 3: How can high ethical standards be maintained?  Areas often covered by codes of ethics: Management 11e/ Chapter 321 Bribes and kickbacksPolitical contributionsHonesty of books or recordsCustomer/supplier relationshipsConfidentiality of corporate information

22. Study Question 3: How can high ethical standards be maintained?  Whistleblowers  Expose misdeeds of others to:  Preserve ethical standards  Protect against wasteful, harmful, or illegal acts  Laws protecting whistleblowers vary  Barriers to whistleblowing include:  Strict chain of command  Strong work group identities  Ambiguous priorities  Organizational methods for overcoming whistleblowing barriers:  Ethics staff units who serve as ethics advocates  Moral quality circles Management 11e/ Chapter 322

23. Study Question 3: How can high ethical standards be maintained?  Social entrepreneurship:  a unique form of entrepreneurship that seeks novel ways to solve pressing social problems at home and abroad  Housing and job training for homeless  Bringing technology to poor families  Improving literacy among disadvantaged youth  Offering small loans to start minority-owned businesses  Corporate social responsibility and governance:  Looks at ethical issues on the organization level.  Obligates organizations to act in ways that serve both its own interests and the interests of society at large Management 11e/ Chapter 323

24. Study Question 4: What is social responsibility and corporate governance?  Stakeholder Management  Stakeholders  persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.  Perspectives on social responsibility:  Classical view  Management’s only responsibility is to maximize profits.  Socioeconomic view  Management must be concerned for the broader social welfare, not just profits. Management 11e/ Chapter 324

25. Study Question 4: What is social responsibility and corporate governance?  Typical organizational stakeholders Management 11e/ Chapter 325 Organization EmployeesCustomersSuppliersOwnersCompetitorsRegulators Interest groups

26. Study Question 4: What is social responsibility and governance? Arguments against social responsibility: Reduced business profits Higher business costs Dilution of business purpose Too much social power for business Lack of public accountability Arguments in favor of social responsibility: Adds long-run profits Improved public image Avoids more government regulation Businesses have resources and ethical obligation Management 11e/ Chapter 326

27. Criteria for evaluating corporate social performance. Management 11e/ Chapter 327

28. Study Question 4: What is social responsibility and corporate governance?  Strategies for pursuing social responsibility: Management 11e/ Chapter 328 Obstructionist meets economic responsibilities. Defensive meets economic and legal responsibilities. Accommodative meets economic, legal, and ethical responsibilities. Proactive meets economic, legal, ethical, and discretionary responsibilities.

29. Four strategies of corporate social responsibility—from obstructionist to proactive behavior. Management 11e/ Chapter 329

30. Study Question 4: What is social responsibility and governance?  Corporate governance:  The oversight of the top management of an organization by a board of directors.  Corporate governance involves:  Hiring, firing, and compensating the CEO.  Assessing strategy.  Verifying financial records.  How government influences organizations:  Common areas of government regulation of business affairs:  Occupational safety and health  Fair labor practices  Consumer protection  Environmental protection Management 11e/ Chapter 330

31. Chapter 3 Case  Patagonia: Turning a profit without losing your soul Management 11e/ Chapter 331