1. MANAGING: A COMPETENCY BASED APPROACH
Don Hellriegel
Susan E. Jackson
John W. Slocum, Jr.
MANAGING: A COMPETENCY BASED APPROACH
11th Edition
Chapter 3—Ethics and Social Responsibility
Prepared by
Argie Butler
Texas A&M University

2. CHAPTER 3—ETHICS AND SOCIAL RESPONSIBILITY
LEARNING GOALS
1. State the importance of ethics for individual employees and organizations
Describe four influences that shape the ethical behavior and decisions of individuals and organizations
Describe three approaches that people use when making ethical judgments
Explain stakeholder social responsibility and how it influences managers’ ethical decisions and behavior
Chapter 3: PowerPoint 3.1

3. IMPORTANCE OF ETHICS: SNAPSHOT
“While the majority of corporate CEOs are honest leaders dedicated to building their companies, far too many got caught up in the quest for personal gain and wound up sacrificing their values and their stakeholders. Call it greed, because that’s what it is. It threatens the very fabric of our system.”
William W. George, Former CEO and Chairman, Medtronic, Inc.
Ethics
The set of values, principles, and rules that define right and wrong conduct
Chapter 3: PowerPoint 3.2

4. LONG-TERM ORGANIZATIONAL EFFECTIVENESS
Stronger financial performance over the long run
Greater sales, brand image, and reputation
More employee loyalty and commitment
Less vulnerability to activist pressure and boycotts
Fewer or no fines, court-imposed remedies, and criminal charges
Chapter 3: PowerPoint 3.3

5. SHAPING ETHICAL CONDUCT
Cultural Influences
Legal and Regulatory Influences
Organizational Influences
Individual Influences
Ethical Conduct
Individual
Organization
Chapter 3: PowerPoint 3.4 (Figure 3.1)

6. Cultural Influences Culture Culture Values
The dominant pattern of living, thinking, and believing that is developed and transmitted by people, consciously or unconsciously, to subsequent generations
Culture Values
Those consciously and subconsciously deeply held beliefs that specify general preferences and behaviors, and define what is right and wrong
Chapter 3: PowerPoint 3.5

7. Respect for Other People
Personal Values
Core Values in North American Culture
Honesty
Family
Integrity
Achievement
Trustworthiness
Reliability
Respect for Other People
Fairness
Self-respect
Loyalty
Chapter 3: PowerPoint 3.6

8. Legal and Regulatory Influences
At one time U.S. organizations could legally discriminate against women and minorities
Legality doesn’t always mean ethical
Laws: Society’s values and standards that are enforceable in the courts
Chapter 3: PowerPoint 3.7

9. Legal and Regulatory Influences
Examples of Lawful Reasons for Dismissing Employees
Incompetence in performance that does not respond to training or to accommodation
Gross or repeated insubordination
Civil rights violations such as engaging in harassment
Illegal behavior such as theft or physical violence
Repeated lateness or unexcused absences
Drug activity or drunkenness on the job
Chapter 3: PowerPoint 3.8

10. Legal and Regulatory Influences
Examples of Unlawful Reasons for Dismissing Employees
Blowing the whistle about illegal conduct by the employer
Reporting Occupational Safety and Health Administration violations
Filing discrimination charges with the Equal Employment Opportunity Commission or a state or municipal fair employment agency
Filing unfair labor practice charges with the National Labor Relations Board or a state agency
Engaging in union activities, provided there is no violence or unlawful behavior
Complaining or testifying about violations of equal pay, wage, or hour law
Chapter 3: PowerPoint 3.9 (Adapted from Table 3.1)

11. Legal and Regulatory Influences
Sarbanes-Oxley Act
Imposes rigorous auditing, financial disclosure, executive compensation, and corporate governance requirements on publicly traded companies
Snapshot
“…today’s compliance challenges are really information challenges. At its core, the Sarbanes-Oxley Act is about ensuring that data is turned into financial information in a way that enables accurate, reliable, transparent and timely financial reporting.”
Lee Dittmar, Principal, Deloitte Consulting LLP
Chapter 3: PowerPoint 3.10

12. Organizational Influences
Management’s Day-to-Day Behaviors and Decisions are Key
Create Formal Ethics System
Make It Acceptable to Talk About Ethics
Communicate Ethical Expectations
Fostering an Ethical Culture
Include Ethical Conduct in Performance Evaluations
Chapter 3: PowerPoint 3.11

13. Organizational Influences
Abbreviated Principles in a World Code of Ethics
Fiduciary Principle: Act as a fiduciary (representative) for the company and its investors
Property Principle: Respect property and the rights of those who own it
Reliability Principle: Honor commitments
Transparency Principle: Conduct business in a truthful and open manner
(continued)
Chapter 3: PowerPoint 3.12 (Adapted from Table 3.2)

14. Continued: Abbreviated Principles in a World Code of Ethics
Dignity Principle: Respect the dignity of all people; protect the health, safety, privacy, and human rights of others
Fairness Principle: Engage in free and fair competition, deal with all parties fairly and equitably
Citizenship Principle: Act as responsible citizens of the community
Responsiveness Principle: Engage with parties who may have legitimate claims and concerns relating to the company’s activities
Source: Adapted from L. Paine, R. Deshpandé, J.D. Margolis, and K.E. Bettcher. Up to code: Does your company’s conduct meet world-class standards? Harvard Business Review, 2005, 82(2),
Chapter 3: PowerPoint 3.13 (Adapted from Table 3.2)

15. Individual Influences
Kohlberg’s Stages of Moral Development
Universal Principles
Social Contract
Law & Order
Interpersonal
Instrumental
Obedience & Punishment
Childhood
Through
Adulthood
Chapter 3: PowerPoint 3.14 (Figure 3.2)

16. Individual Influences
Kohlberg’s Stages of Moral Development (cont’d)
Obedience and Punishment Stage: a person does the right thing mainly to avoid punishment or to obtain approval
Instrumental Stage: a person becomes aware that others also have needs and begins to defer to them to get what the individual wants
Interpersonal Stage: a person considers appropriate behaviors as that which pleases or is approved by friends or family
Chapter 3: PowerPoint 3.15

17. Individual Influences
Kohlberg’s Stages of Moral Development (cont’d)
Law and Order Stage: a person considers proper behavior as doing one’s duty (obligation), showing respect for authority, and maintaining the social order for its own sake; loyalty to the nation and its laws are paramount
Social Contract Stage: a person is aware that people hold a variety of conflicting personal views that go beyond the letter of the law; a “greatest good for the greatest number” emphasis
Universal Principles Stage: a person considers appropriate conduct as determined by a person’s conscience, based on universal ethical principles
Chapter 3: PowerPoint 3.16

18. Individual Influences
Whistle-blowing
Four questions to ask before whistle-blowing
Whistle-blowers: employees who report unethical or illegal actions by their employers to other people or organizations that are capable of taking corrective action
1. Is this the only way?
4. Am I ready?
Key Questions
2. Do I have the evidence?
3. Why am I doing this?
Chapter 3: PowerPoint 3.17

19. Making Ethical Judgments: Utilitarian Approach
Focuses on behaviors and their results, not on the motives for such actions
Organizational Goal
Primary managerial obligation is to maximize shareholders’ profits and their long-term interests
Efficiency
Obligation is to minimize inputs and maximize outputs
Conflicts of Interest
Personal interests are not to conflict with achievement of organizational goals
Chapter 3: PowerPoint 3.18

20. Making Ethical Judgments: Utilitarian Approach
Profit maximization
Competition benefits society and consumers
Rewards based on abilities and achievements
Core Values
Sacrifice and hard work
Chapter 3: PowerPoint 3.19

21. Freedom of conscience and speech
Moral Rights
Approach
Decisions should be consistent with fundamental rights and privileges (e.g., life, freedom, health, and privacy).
Life and Safety
Freedom of conscience and speech
Moral Rights
Truthfulness
Privacy
Chapter 3: PowerPoint 3.20 (Figure 3.3)

22. Tom Asacker, Business Consultant and Author of Sandbox Wisdom
Moral Rights Approach
Snapshot
“If you are truly interested in teaching a grand and critically important concept like honesty, you must be willing to accept the awkward situations and inevitable flaring of human passions that are certain to occur. However, it’s unquestionably worth the effort.”
Tom Asacker, Business Consultant and Author of Sandbox Wisdom
Chapter 3: PowerPoint 3.21

23. Justice Approach
Decisions and behavior are evaluated with regard to how equitably they distribute benefits and costs among individuals and group
Distributive Justice Principle
Requires that individuals not be treated differently on the basis of arbitrarily defined characteristics
Individuals who are similar in relevant respects should be treated similarly
Individuals who differ in relevant respects should be treated differently in proportion to the differences among them
Chapter 3: PowerPoint 3.22

24. Justice Approach Fairness Principle
Requires employees to support the rules of the organization as long as the organization is just (or fair) and employees have voluntarily accepted some benefits or opportunities in order to further their own interests
Both the organization and its employees have obligations and both should accept their responsibilities
Procedural justice: formal process for investigating grievances and taking remedial actions
Chapter 3: PowerPoint 3.23

25. Justice Approach Universal duties Natural Duty Principle
Requires that decisions and behaviors be based on universal principles associated with being a responsible member of society
Help others who are in need or jeopardy, without excessive personal risk or loss
Not to harm or injure another
Universal
duties
To support and comply with just institutions
Not to cause unnecessary suffering
Chapter 3: PowerPoint 3.24

26. Combining Ethical Approaches Ideal in Ethical Decision Making
Justice Approach
Moral Rights Approach
Ideal in Ethical Decision Making
Utilitarian
Approach
Chapter 3: PowerPoint 3.25 (Figure 3.4)

27. Stakeholder Social Responsibility
Managers and other employees have obligations to identifiable groups that are affected by or can affect the achievement of an organization’s goals
Rationale
Enlightened self-interest
Sound investment
Inference avoidance
Chapter 3: PowerPoint 3.26

28. Common Stakeholders Secondary Stakeholders
Governments (Regulatory Agencies)
Media
Primary Stakeholders
Customers
Political Action Groups/ Activists
The Organization
Suppliers
Employees
Unions
Shareholders
Nongovernmental Organizations
Chapter 3: PowerPoint 3.27 (Figure 3.5)

29. Stakeholder Pressures
Examples of Types of
Stakeholder Pressures
Employees
Pay and benefits
Safety and health
Rights at work/global labor standards
Shareholders
Demands for efficiency/profitability
Viability (sustainability)
Growth of investment
Chapter 3: PowerPoint 3.28 (Adapted from Table 3.4)

30. Stakeholder Stakeholder Pressures
Examples of Types of
Stakeholder Stakeholder Pressures
(cont’d)
Customers
Competitive prices
Quality and safe products
Respect for customer’s privacy
Suppliers
Meet commitments
Repeat business
Fair trade practices/ethical treatment
Chapter 3: PowerPoint 3.29 (Adapted from Table 3.4)

31. Sustainable Development
Conducting business in a way that protects the natural environment while making economic progress, thus meeting the needs of the present generation without compromising the ability of future generations to meet their own needs
Chapter 3: PowerPoint 3.30

32. Sustainable Development
A Few Components of Sustainable Development and Sustainability
Integrated solutions to environmental, social and economic needs
Using resources more efficiently and decoupling growth from environmental damage
Recognizing that decisions and actions taken locally have global impacts
Acting now to address sustainable development concerns, many of which will be global and long-term in nature
Win-win-win solutions possible, rather than trade-offs between social, environmental and economic issues
Chapter 3: PowerPoint 3.31 (Adapted from Table 3.5)

33. Evaluating Social Performance
Disclosure of Social and Environmental Information
Creating Shareholder Value with Corporate Responsibility
Communication and Engagement with Various Groups
Major Themes
Proactive Management Beyond Minimum Requirements
Chapter 3: PowerPoint 3.32