8 th edition Steven P. Robbins Mary Coulter

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–2 From Obligation to Responsiveness to Responsibility Decisions of a manager may directly or indirectly affect the society. Social responsibility has been described in different ways by different people – profit making only, going beyond profit making, any discretionary corporate activity intended to enhance social welfare and improving social or environmental conditions.

Social Responsibility Classical View Socioeconomic View

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–4 The Classical View  Management’s only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).  Spending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.  However, the most outspoken advocate of this view, Milton Friedman, is not against social responsibility but his interpretation of social responsibility is to maximize profits for stockholders.

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–5 The Socioeconomic View  Management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare.  Corporations are not independent entities responsible only to stockholders but to stakeholders as well.  Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.  “To do the right thing”  Companies must balance between obligation to shareholders and obligations to the public.

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–6 Social Obligation  The obligation of a business to meet its economic and legal responsibilities and nothing more. The organization does what it is obligated to do and nothing else. Social Responsiveness  It means that a company engages in social actions in response to some popular social need.  Managers in these companies are guided by social norms and values and make practical, market- oriented decisions about their actions.

Social Responsibility  A socially responsible company goes beyond what it is obligated to do or chooses to do because of some popular social need and does what it can to help improve society because it’s the right thing to do. It is a business’s intention that goes beyond its legal and economic obligations, to do the right things and act in ways that are good for society. This definition assumes that a business obeys the law and cares for its stockholders, and concentrates on doing things that make the society better and not worse. A socially responsible organization does what is right because it feels it has an ethical responsibility to do so.

Source: RankCompany 1Statoil 2Ferrovial 3Walt Disney 4Edison 5ENI 6Whole Foods Market 7Total 8*Hochtief 8*Nestlé 10*NextEra Energy 10*Weyerhaeuser World’s Best Companies in terms of Social Responsibility

Where does Bangladesh stand in terms of CSR?  CSR is not a new concept in the context of Bangladesh.  Being a part of the global market, it is difficult to ignore CSR standard specifically in the export sector.  By now, many CSR dimensions are practised in Bangladesh.  Although consumer rights movement, enforcement of government regulations and a structured view regarding the economic importance of CSR are not yet so widespread in the corporate world in Bangladesh, companies have gradually been attaching more importance to CSR in the local market as well.  Because of global competitiveness and demand, the CSR practices and standards have to be gradually implemented in Bangladesh. But it has a long way to go. Source:

A CSR INITIATIVE IN BANGLADESH....

Renata, DBL, Nestle BD receive StanChart-FE CSR Award Source: A view of the 4th Standard Chartered - Financial Express CSR Award giving ceremony

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–12 Green Management The recognition of the close link between an organization’s decision and activities and its impact on the natural environment.  Global environmental problems facing managers:  Air, water, and soil pollution from toxic wastes  Global warming from greenhouse gas emissions  Natural resource depletion

5–13 Recognition for environmental concern by Viyellatex Bangladesh

5–14 Another Green effort of Viyellatex Bangladesh Bangladesh's RMG industry will see one of the first of its kind, Green Factory to be constructed on the outskirts of Gazipur, Dhaka. The factory will be LEED (Leadership in Energy and Environmental Design) Gold Category certified by the United States Green Building Council (USGBC). The project is scheduled to be completed by the end of Additional info at The Daily StarThe Daily Star, bangladesheconomy.wordpress.com &

5–15

ETHICS The rules and principles that define right and wrong conduct. Managers must consider the outcome of their decisions and actions. To better understand the implication of ethics on managerial decision making, we have to look at the factors that determine ethical and unethical behavior. 5–16

REALITIES OF ETHICS......

Source: Company Gap Inc Ford Motor Company National Australia Bank Intel Corporation Colgate-Palmolive Company General Electric Co. American Express Kellogg Company L’ORÉAL Time Warner Inc. Tata Steel Ltd

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–19 Factors That Determine Ethical and Unethical Behavior Whether someone behaves ethically or unethically when faced with an ethical dilemma is influenced by several things: (I) his/her stage of moral development (i) Preconventional level (ii) Conventional level (iii) Principled/Postconventional level (II) individual characteristics (III) the organization’s structural design (IV) the organization’s culture (V) the intensity of the ethical issue

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–20 Exhibit 5.7 Factors That Affect Ethical and Unethical Behavior

Stage of Moral Development Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–21 Research shows that there are three levels of moral development, each having two stages. At each successive stage, an individual’s moral judgement becomes less dependent on outside influences and more internalized. Level 1: a person’s choice between right and wrong is based on personal consequences from outside sources, such as punishment, reward, etc. Level 2: ethical decisions rely on maintaining expected standards and living up to the expectations of others.

Stage of Moral Development (contd) Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–22 Level 3: individuals define moral values apart from the authority groups to which they belong.

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–23 Factors That Affect Employee Ethics (cont’d) Moral Development  Research Conclusions:  People proceed through the stages of moral development sequentially.  There is no guarantee of continued moral development.  Most adults are in Stage 4.

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–24 Individual Characteristics Personality Variables  Ego strength  A personality measure of the strength of a person’s convictions  Locus of Control  A personality attribute that measures the degree to which people believe they control their own life/fate.  Internal locus: the belief that you control your destiny.  External locus: the belief that what happens to you is due to luck or chance.

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–25 Structural Variables Organizational characteristics and mechanisms that guide and influence individual ethics:  Goals  Performance appraisal systems  Reward allocation systems Good structural design minimizes ambiguity and uncertainty and fosters ethical behavior.

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–26 Exhibit 5.9 Determinants of Issue Intensity

Organizational culture Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–27 Organizational culture reflects what the organization stands for and what it believes in, and they create an environment that influences employee behavior ethically or unethically.

Encouraging Ethical Behavior 5–28 Managers can do a number of things if they are serious about encouraging ethical behaviors. By themselves, such actions won’t have much of an impact. However, a comprehensive ethics program can potentially improve an organization’s ethical environment. Some specific ways to encourage ethical behavior and create a comprehensive ethics program are: (i)Employee selection (ii)Codes of ethics and decision rules (iii)Top management’s leadership (iv)Job goals and performance appraisal (v)Ethics training – can ethics be taught? (vi)Independent social audits – evaluate decisions and management practices in terms of the organization’s code of ethics (vii)Protective mechanisms

Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–29 Ethical Leadership Managers must provide a good role model by:  Being ethical and honest at all times.  Telling the truth; don’t hide or manipulate information.  Admitting failure and not trying to cover it up.  Communicating shared ethical values to employees through symbols, stories, and slogans.  Rewarding employees who behave ethically and punish those who do not.  Protecting employees (whistleblowers) who bring to light unethical behaviors or raise ethical issues.