Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved ©2013 John Wiley & Sons, Inc. All rights reserved. JOHN R. SCHERMERHORN, JR. MANAGEMENT 12 th Edition Chapter 3 Ethics and Social Responsibility

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-2 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?

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-3 Chapter 3 Learning Dashboard 1.What is ethical behavior? 1.Laws and values as determinants of ethical behavior 2.Alternative views of ethics 3.Cultural issues in ethical behavior 2.Ethics in the workplace 1.Ethical dilemmas at work 2.Influences on ethical decision making 3.Rationalizations for unethical behavior

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-4 Chapter 3 Learning Dashboard 3.Maintaining High Ethical Standards 1.Ethics training 2.Codes of ethical conduct 3.Moral management 4.Whistleblower protection 4.Social Responsibility 1.Stakeholder management 2.Perspectives on corporate social responsibility 3.Evaluating corporate social performance 4.Corporate governance

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-5 Takeaway 1: What Is Ethical Behavior? Ethics – Moral code of 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.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved : Takeaway 1: What Is Ethical Behavior? Law, values, and ethical behavior: – Legal behavior is not necessarily ethical behavior. – Personal values help determine individual ethical behavior.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-7 Takeaway 1: Takeaway 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-8 Figure 3.1: Four views of ethical behavior

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved. 3-9 Takeaway 1: What Is Ethical Behavior? Four 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 1: What Is Ethical Behavior? – 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 1: What Is Ethical Behavior? Cultural issues in ethical behavior: – Cultural relativism Ethical behavior is always determined by cultural context. – Moral absolutism Behavior unacceptable in one’s home environment should not be acceptable anywhere else. – Ethical imperialism Imposing one’s ethical standards on others. Management 12e/ Chapter 3 11

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved The extremes of cultural relativism and ethical imperialism in international business ethics.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in the Workplace An ethical dilemma – occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in the Workplace Ethical dilemmas include: DiscriminationSexual harassmentConflicts of interestProduct SafetyOrganizational resources

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Checklist for ethical dilemmas Step 1Recognize the ethical dilemma.Step 2Get the facts and identify your options.Step 3Test each option: Is it legal? Is it right? Is it beneficial?Step 4Decide which option to follow.Step 5Ask 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 6Take action

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Kohlberg’s stages of individual moral development

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in the Workplace Organizational Culture – 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?

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in the Workplace External environment Government laws and regulations (Sarbanes/Oxley Act of 2002) Societal norms and values Competitive climate in an industry

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 2: Ethics in the Workplace Ethical behavior can be rationalized by convincing yourself that: Behavior is not really illegal.Behavior is really in everyone’s best interests.Nobody will ever find out.The organization will “protect” you.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 3: Maintaining High Ethical Standards Moral Management Managers behave in one of three ways

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 3: Maintaining High Ethical Standards 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.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 3: Maintaining High Ethical Standards 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 3: Maintaining High Ethical Standards Areas often covered by codes of ethics: Bribes and kickbacksPolitical contributionsHonesty of books or recordsCustomer/supplier relationshipsConfidentiality of corporate information

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 3: Maintaining High Ethical Standards Whistleblowers – Expose misdeeds of others to: Preserve ethical standards Protect against wasteful, harmful, or illegal acts – Laws protecting whistleblowers vary

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 3: Maintaining High Ethical Standards Barriers to whistleblowing include: – Strict chain of command – Strong work group identities – Ambiguous priorities

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility Sustainability: – acting in ways that support a high quality of life for present and future generations Alternative energy Recycling Waste avoidance

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility 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.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility Stewardship – Taking personal responsibility to always respect and protect the interests of society at large – Triple bottom line – 3 P’s of organizational performance – profit, people, and planet

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility Stakeholder Management – Stakeholders: persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance. – Stakeholder power: the capacity of the stakeholder to positively or negatively affect the operations of the organization. – Demand legitimacy: the validity and legitimacy of a stakeholder’s interest in the organization. – Issue urgency: the extent to which a stakeholder’s concerns need immediate attention.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Figure 3.4: The Many Stakeholders of Organizations

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility 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.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility Perspectives on social responsibility: – Shared value view Approaches business decisions with the understanding that economic and social progress are interconnected Virtuous circle-socially responsible behavior improves financial performance which leads to more responsible behavior

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility 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

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Four strategies of corporate social responsibility— from obstructionist to proactive behavior.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility 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.

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Takeaway 4: Social Responsibility How government influences organizations: – Businesses required by law to have boards of directors that are elected by stockholders

Place Slide Title Text Here ©2013 John Wiley & Sons, Inc. All rights reserved Figure 3.6: Ethics Self-governance in Leadership and the Managerial Role