Presentation on theme: "Ethics and Social Responsibility"— Presentation transcript:
1 Ethics and Social Responsibility Chapter 4Ethics and Social Responsibility
2 Learning ObjectivesDefine ethics and understand the relationship between law and ethics.Identify the stakeholders of organizations and understand each group’s claims on the organization and how each is affected by the organization’s actions.Explain four approaches (utilitarian, moral rights, justice and practical) to help organizations evaluate choices in ethical dilemmas.Describe the four main sources of a manager’s ethics – societal, occupational, individual, organizational ethicsDefine corporate social responsibility and the four approaches which organization’s may take regarding social responsibility.
3 What is Managerial Ethics? What is Managerial Ethics?The inner-guiding moral principles, values, and beliefs that people use to decide what is the “right” or appropriate way to behave.Ethics is about making decisions.Poor managerial ethicsCan generate negative publicityBring down company’s stock pricePut the company out of business.
4 Ethical DilemmaAn ethical dilemma is a quandary which people find themselves in when right and wrong cannot be clearly identified. Their actions might help one person at the expense of another or their own self-interest.All choices have potentially negative consequencesValues are in conflict
5 Ethics and Law Ethics Law Ethics and LawEthicsUnenforceable norms and values guide behaviorThere are no specific lawsLawValues are written into enforceable standards of behaviorLaws are enforced by the justice systemEthics and laws change as norms and values of society changes
6 Stakeholders and Ethics Stakeholders and EthicsOrganizational Stakeholders – people or groups that supply a company with its productive resources and have a claim on its resources.Has a stake in the organization’s performanceWhen there are no laws to specify behavior, managers must decide what is the ethical way to behave toward organizational stakeholders
8 Stakeholders and Ethics Stakeholders and EthicsStockholdersWant to maximize their return on investmentWant to be sure management is not engaging in actions which could hurt company’s reputationManagersResponsible for using resources to increase organization’s performanceHave the right to expect a reward for their use of resources to improve organization’s performanceJuggle multiple interests
9 Stakeholders and Ethics Stakeholders and EthicsCustomersMost critical stakeholderWant quality product at low price – organization must create loyal customers and attract new onesCommunityWant success of organization for economic development (taxes and income of citizens)Want good quality of life with safe environment for citizens
10 Stakeholders and Ethics Stakeholders and EthicsEmployeesOrganizations have a responsibility to create structure that rewards employees fairly for their contributionSuppliers and DistributorsSuppliers expect to be paid fairly and promptly for their inputsDistributors expect to receive quality products at agreed-upon prices.
11 Approaches For Ethical Decision Making Approaches For Ethical Decision Making
12 Utilitarian ApproachEthical dilemmas are resolved by making decisions which result in the greatest good for the greatest number.In making decisions, consider the effect of each alternative on all partiesSelect the alternative which satisfies the greatest number of people.Decisions are based on outcomes or consequencesProblem: Adhering to the common good approach can result in ignoring the individual’s rights.
13 Moral Rights ApproachEthical dilemmas are resolved by making decisions which maintain and protect the fundamental rights and privileges of people affected by the decisionAsserts human beings have fundamental rights and liberties.Right to freedom, life and safetyRight to privacyRight to free speechRight to freedom of conscienceFocuses on “ethics” of decision independent of consequences
14 Justice ApproachEthical dilemmas are resolved by basing decisions on standards of equity, fairness, and impartiality.In making decisions, choose alternatives which result in fair and impartial treatment to the involved partiesDifferent treatment should not be based on arbitrary characteristicsAdminister rules fairlyIf harm done, injured party should be made whole
15 Practical ApproachEthical dilemmas are resolved by making decisions based on whether the typical person in society would think it is acceptable.A decision is ethical if the manager can answer yes to three questionsIs my decision within accepted values and standards of business today?Are you willing to communicate the decision to all groups?Would people I am closest to (family, friends) approve of the decision?
16 Determinants of Business Ethics Determinants of Business EthicsThere are four main determinants of differences in ethics between people, employees, companies and countriesSocietal EthicsOccupational EthicsIndividual EthicsOrganizational Ethics
17 Individual Ethics: Three Levels of Personal Moral Development (based on L. Kohlberg)Preconventional LevelIndividual is concerned with concrete consequences – stick to rules to avoid punishment. Ethical actions are those that “follow the rules.”At a higher stage within this level, individual follows rules when it is in his/her immediate interests. Ethical actions are those that result in an equal exchange or “fair deal.”Managers at this level expect dependable accomplishment of tasks within the approved methods
18 Individual Ethics: Three Levels of Personal Moral Development Individual Ethics: Three Levels of Personal Moral DevelopmentConventional LevelThe individual conforms to expectations of what is good behavior. Expectations are defined by people closest to you, society, and groups.Ethical actions are those that “live up” to what is expected by people close to you. Fulfill duties and obligations.Managers at this level emphasize cooperation and collaboration to accomplish tasks.Most adults operate at this level.
19 Individual Ethics: Three Levels of Personal Moral Development Individual Ethics: Three Levels of Personal Moral DevelopmentPostconventional or Principled LevelThe individual is guided by own values and standards and will disobey rules which violate own principles.Ethical actions are those which conform to an individual’s own principles and standards. May result in “civil disobedience.”According to Kohlberg, less than 20 percent of American adults reach this level.Managers at this level focus on the needs of employees and encourage them to think for themselves.
20 Organizational Ethics Organizational EthicsMost of us operate at the Conventional level of moral development, so …The norms and values of your immediate work group, department and the organization will have great influence on ethical behavior.Company culture lets people know what behaviors the company supports and those actions considered “unethical.”The organization’s rules, policies and reward systems guide people’s actions
21 Organizational Structures Organizational StructuresDevelop a code of ethics or credo for the organization - A formal statement of the company’s values concerning ethics and social issues; it communicates to employees what the company stands for.Creation of Ethics officers – a management position dedicated to monitoring organizational practices and teaching ethical practices to employeesThe Sarbanes-Oxley Act passed in 2003 requires procedures for handling whistleblowers’ concerns regarding accounting complaints
22 Social Responsibility Social ResponsibilityThe way a company’s managers and employees view their obligation to make decisions that protect, enhance and promote the welfare of society as well as the organization.Does the organization have responsibilities beyond economic responsibilities (maximizing profits for owners and shareholders)?