1. PowerPoint Presentation to Accompany Management, 10/e John R. Schermerhorn, Jr. Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc. Chapter 4: Ethics and Social Responsibility

2. Management 10/e - Chapter42 Planning Ahead — Chapter 4 Study Questions  What is ethical behavior?  How do ethical dilemmas complicate the workplace?  How can high ethical standards be maintained?  What is social responsibility and governance?

3. Management 10/e - Chapter43  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. Study Question 1: What is ethical behavior?

4. Management 10/e - Chapter44  Law, values, and ethical behavior: Legal behavior is not necessarily ethical behavior. Personal values help determine individual ethical behavior. Values broad beliefs  Terminal values  Instrumental values Study Question 1: What is ethical behavior?

5. Management 10/e - Chapter45  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 Study Question 1: What is ethical behavior?

6. Management 10/e - Chapter46 Study Question 1: What is ethical behavior?  Utilitarian view of ethics greatest good to the greatest number of people.  Individualism view of ethics primary commitment is to one’s long-term self- interests.  Moral-rights view of ethics respects and protects the fundamental rights of all people.  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

7. Management 10/e - Chapter47 Figure 4.1 Four views of ethical behavior.

8. Management 10/e - Chapter48  Cultural issues in ethical behavior: Cultural relativism  Ethical behavior is always determined by cultural context. Cultural universalism  Behavior unacceptable in one’s home environment should not be acceptable anywhere else.  Considered by some to be ethical imperialism Study Question 1: What is ethical behavior?

9. Management 10/e - Chapter49 Figure 4.2 The extremes of cultural relativism and ethical imperialism in international business ethics. Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.

10. Management 10/e - Chapter410 Study Question 1: What is ethical behavior? How international businesses can respect core or universal values: Respect for human dignity Create culture that values employees, customers, and suppliers. Keep a safe workplace. Produce safe products and services. Respect for basic rights Protect rights of employees, customers, and communities. Avoid anything that threatening safety, health, education, and living standards. Be good citizens Support social institutions, including economic and educational systems. Work with local government and institutions to protect environment.

11. Management 10/e - Chapter411  An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.  Ethical dilemmas include : Discrimination Sexual harassment Conflicts of interest Customer confidence Organizational resources Study Question 2: How do ethical dilemmas complicate the workplace?

12. Management 10/e - Chapter412  Factors influencing ethical behavior include : Situational context  ethics intensity or issue intensity indicates the degree to which a situation is recognized to pose ethical challenges The person  Family influences, religious values, personal standards, and personal needs. ethical framework is a personal rule or strategy for making ethical decisions Kohlberg’s stages of individual moral development  pre-conventional stage  conventional stage Study Question 2: How do ethical dilemmas complicate the workplace?

13. Management 10/e - Chapter413 Figure 4.3 Kohlberg’s stages

14. Management 10/e - Chapter414  Factors influencing ethical behavior Internal environment and the organization  Supervisory behavior, peer group norms and behavior, and policy statements and written rules. External environment  Government laws and regulations, societal norms and values, and competitive climate in an industry. Study Question 2: How do ethical dilemmas complicate the workplace?

15. Management 10/e - Chapter415  Checklist for dealing with ethical dilemmas: Recognize the ethical dilemma Get the facts Identify your options Test each option: Is it legal? Is it right? Is it beneficial? Decide which option to follow Double-check decision by asking “spotlight” questions:  “How would I feel if my family found out about my decision?”  “How would I feel about this if my decision were in the local news?” Take action Study Question 2: How do ethical dilemmas complicate the workplace?

16. Management 10/e - Chapter416 Study Question 2: How do ethical dilemmas complicate 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.

17. Management 10/e - Chapter417  Whistleblowers Expose misdeeds of others to:  Preserve ethical standards  Protect against wasteful, harmful, or illegal acts Laws protecting whistleblowers vary Study Question 3: How can high ethical standards be maintained?

18. Management 10/e - Chapter418 Study Question 3: How can high ethical standards be maintained?  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

19. Management 10/e - Chapter419  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. Study Question 3: How can high ethical standards be maintained?

20. Management 10/e - Chapter420  Codes of ethics: Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.  Areas often covered by codes of ethics: Bribes and kickbacks Political contributions Honesty of books or records Customer/supplier relationships Confidentiality of corporate information Study Question 3: How can high ethical standards be maintained?

21. Management 10/e - Chapter421 Study Question 3: How can high ethical standards be maintained?  Ethical role models : Top managers serve as ethical role models. All managers can influence the ethical behavior of people who work for and with them. Excessive pressure can foster unethical behavior. Managers should be realistic in setting performance goals for others.

22. Management 10/e - Chapter422 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

23. Management 10/e - Chapter423 Figure 4.4 How can high ethical standards be maintained?

24. Management 10/e - Chapter424 Study Question 3: How can high ethical standards be maintained?  Criteria for evaluating corporate social performance :  Social responsibility audit – assesses organization’s accomplishments in areas of CSR Is the organization’s …  Economic responsibility met?  Legal responsibility met?  Ethical responsibility met?  Discretionary responsibility met?

25. Management 10/e - Chapter425 Study Question 3: How can high ethical standards be maintained?  Strategies for pursuing social responsibility: 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.

26. Management 10/e - Chapter426 Study Question 3: How can high ethical standards be maintained?  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.

27. Management 10/e - Chapter427 Study Question 4: What is social responsibility and governance?  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.

28. Management 10/e - Chapter428 Study Question 4: What is social responsibility and governance?  Organizational stakeholders Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.  Typical organizational stakeholders Employees Customers Suppliers Owners Competitors Regulators Interest groups

29. Management 10/e - Chapter429 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

30. Management 10/e - Chapter430 Figure 4.5 Criteria for evaluating corporate social performance.

31. Management 10/e - Chapter431 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.

32. Management 10/e - Chapter432 Figure 4.6 Four strategies of corporate social responsibility—from obstructionist to proactive behavior.

33. Management 10/e - Chapter433 Study Question 4: What is social responsibility and governance?  How government influences organizations: Common areas of government regulation of business affairs:  Occupational safety and health  Fair labor practices  Consumer protection  Environmental protection

34. Management 10/e - Chapter434 Figure 4.7 Centrality of ethics and social responsibility in leadership and the managerial role.

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