Module 3 Ethics and Social Responsibility

Module 3 How do ethics and ethical behavior play out in the workplace? How can we maintain high standards of ethical conduct? What should we know about the social responsibilities of organizations?

3.1 Ethics in the workplace Ethical behavior is values driven. What is considered ethical varies among moral reasoning approaches. What is considered ethical can vary across cultures. Ethical dilemmas arise as tests of personal ethics and values. People have tendencies to rationalize unethical behaviors.

ETHICS IN THE WORKPLACE Ethical Behavior Ethics –A code of moral standards of conduct for what is “good” and “right” as opposed to what is “bad” or “wrong”. Ethical Behavior –That which is “right” or “good” in the context of governing moral code. –Ethical behavior is value driven

ETHICS IN THE WORKPLACE Values Values –Broad beliefs about what is appropriate behavior Terminal Values –Preferences about desired end states Instrumental Values –Preferences regarding the means to desired ends

Moral Reasoning –Reasons for various ethical practices ETHICS IN THE WORKPLACE Moral Reasoning

ETHICS IN THE WORKPLACE Ethics and Culture Cultural Relativism –Suggest that there is no one right way to behave; cultural context determines ethical behavior

ETHICS IN THE WORKPLACE Ethics and Culture Excerpt From Universal Declaration of Human Rights United Nations Article 1—All human beings are born free and equal in dignity and right Article 18—Everyone has the right to freedom of thought, conscience, and religion Article 19—Everyone has the right to freedom of opinion and expression Article 23—Everyone has the right to work, to free choice of employment, to just and favorable conditions of work Article 26—Everyone has the right to education

ETHICS IN THE WORKPLACE Ethical Dilemma Ethical Dilemma –A situation that, although offering potential benefits, is unethical. –One of the most common ethical dilemmas occurs when a company’s culture conflicts with an employee’s personal ethics.

ETHICS IN THE WORKPLACE Ethical Dilemma Checklist for dealing with ethical dilemmas Step 1 Recognize the ethical dilemma. Step 2 Get the facts. Step 3 Identify your options. Step 4 Test each option: Is it legal? Is it right? Is it beneficial? Step 5 Decide which option to follow. Step 6 Ask 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 the local newspaper printed my decision?” Step 7 Take action

ETHICS IN THE WORKPLACE Ethics and Work The Wall Street Journal reports: 36% of workers calling in sick are lying. 35% keep quiet about co-worker misconduct. 12% of job resumes contain falsehoods. Managers are more likely than other workers to report wrongdoing. Managers with 0–3 years experience feel most pressure to violate personal ethics.

ETHICS IN THE WORKPLACE Rationalizing Unethical Behavior Four reasons: 1. “What I’m doing is not really illegal.”2. “My behavior is in everyone’s best interests.”3. “Nobody will ever find out what I’ve done.”4. “The organization will protect me.”

3.2 Maintaining high standards Personal factors moral development influence ethical conduct. Training in ethical decision making may improve ethical conduct. Protection of whistleblowers may encourage ethical conduct. Managers acting as positive role models can inspire ethical conduct. Formal codes of ethics set standards for ethical conduct

MAINTAINING HIGH STANDARDS Influence on Moral Development Ethical Frameworks –Personal rules and strategies for making ethical decisions Lawrence Kohlberg –Three levels of moral development

MAINTAINING HIGH STANDARDS Ethics Training Ethics Training –Seeks to help people understand the ethical aspects of decision making and to incorporate high ethical standards into their daily behavior. Code of Ethics –A formal statement of values and ethical standards.

MAINTAINING HIGH STANDARDS Ethics Training Highlight the risk of public exposure of one’s actions: “How would I feel if my family found out about my decision?” How would I feel if the local newspaper printed my decision?

MAINTAINING HIGH STANDARDS Whistleblowing Whistleblowers –Persons who expose organizational misdeeds in order to preserve ethical standards and protect against wasteful, harmful, or illegal acts. –Many whistleblowers were / are fired for their actions. –State and federal laws now offer some protection.

MAINTAINING HIGH STANDARDS Management Influence Management Behavior –In order to have a positive impact on ethical conduct throughout an organization, those at the top must walk the talk.

MAINTAINING HIGH STANDARDS Management Influence

MAINTAINING HIGH STANDARDS Codes of Ethics Formal codes of ethics set standards for ethical conduct. –Explain ethical principles –Describe expected behavior

3.3 Social Responsibility Social responsibility is an organization’s obligation to best serve society. Scholars argue cases for and against corporate social responsibility. Social business and social entrepreneurship point the way in social responsibility Failures of ethics and social responsibility prompt calls for stronger governance.

SOCIAL RESPONSIBILITY Social Responsibility is Serving Society Stakeholders are the groups that have a direct interest in the success or failure of an organization.

SOCIAL RESPONSIBILITY Social Responsibility is Serving Society Corporate Social Responsibility –The obligation of an organization to serve its own interest and those of its stakeholders Triple Bottom Line—how well an organization performs when measured not only on financial criteria, but also on social and environmental ones. –Is the decision economically sound? –Is the decision socially responsible? –Is the decision environmentally sound?

Socioeconomic View Responsibility Increases long-run profits Improves public image Helps avoid government regulation Businesses have resources and ethical obligations to act responsibly Classical View Reduces business profits Creates higher business costs Dilutes business purpose Gives too much social power to business SOCIAL RESPONSIBILITY Corporate Social Responsibility

SOCIAL RESPONSIBILITY Social Responsibility is Serving Society Virtuous Circle –Socially responsible actions lead to improved financial performance. –Organization is more likely to engage in socially responsible acts in the future. Example: car manufacturers who produce fuel- efficient and hybrid cars may see improved financial performance and introduce more fuel efficient models.

SOCIAL RESPONS IB ILITY New Business Models Social Business –Business addresses a social problem Example: Micro-credit lending –Social Entrepreneurship Example: many non-profits fight poverty or illiteracy

SOCIAL RESPONSIBILITY Governance Failures of ethics and social responsibility prompt calls for stronger governance. Weak corporate governance can result in more government regulation. Moral management builds capacities for self-governance in organizations.

Module 3 Case Tom’s of Maine– Where doing business means doing good.