1 Week 8 MGT 424 – Senior Seminar in Management Topics MGT 424 – Senior Seminar in Management Topics Ethics and Social Responsibility.

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Week 8

MGT 424 – Senior Seminar in ManagementTopics

MGT 424 – Senior Seminar in ManagementTopics

Ethics andSocialResponsibility

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What Would You Do?

Gap has received negative news coverage regarding sweatshop labor exploitation

Retailers rely on foreign factories to keep their prices low

How do you decide whose interests take precedence? Is Gap responsible for poor treatment of workers?

What would you do?

Gap, Inc. Headquarters

Protest groups are calling for boycotts; Gap is losing $$

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Ethical and Unethical Workplace Behavior

Ethics

The set of moral principles or values that defines right and wrong for a person or group.

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What Is Ethical and Unethical Workplace Behavior?

After reading these sections, you should be able to:

1. discuss how the nature of management jobs creates the possibility for ethical abuses.

2. identity common kinds of workplace deviance.

3. describe the U.S. Sentencing Commission Guidelines for Organizations and explain how they both encourage ethical behavior and punish unethical behavior by businesses.

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Ethics and the Nature of Management Jobs

Unethical Managerial BehaviorUnethical Managerial Behavior

Authority and PowerAuthority and Power

Handling InformationHandling Information

Influencing the Behavior of OthersInfluencing the Behavior of Others

Setting GoalsSetting Goals

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Ethics and the Nature of Management Jobs

Managers can encourage ethical behaviors by…

using resources for company business only

handling information confidentially

not influencing others to engage in unethical behavior

not creating policies that reward employees for unethical behavior

setting reasonable goals

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Workplace Deviance

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Workplace Deviance

Unethical behavior that violates organizational norms about right and wrong

Two dimensions Degree of deviance Target of deviant behavior

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Types of Workplace Deviance

22Adapted from Exhibit 4.1

Production Deviance

Production Deviance

Property DevianceProperty Deviance

Political DeviancePolitical Deviance

Personal AggressionPersonal

Aggression

Minor Serious

Organizational

Interpersonal

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Production Deviance

Leaving early Taking excessive breaks Intentionally working slow Wasting resources

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10

Property Deviance

Sabotaging equipment

Accepting kickbacks

Lying about hours worked

Stealing from company

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Political Deviance

Showing favoritism Gossiping about

coworkers Blaming coworkers Competing nonbeneficially

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Personal Aggression

Sexual harassment Verbal abuse Stealing from coworkers Endangering coworkers

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U.S. Sentencing Commission Guidelines

Companies can be prosecuted and punished even if management didn’t know about

the unethical behavior.

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Who, What, and Why?

Nearly all businesses are covered

Punishes a number of offenses

Encourages businesses to be proactive

3.13.1

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Partial List of Offenses

3.13.1

Invasion of privacy

Price fixing

Fraud

Customs violations

Antitrust violations

Civil rights violations

Theft

Money laundering

Conflicts of interest

Embezzlement

Dealing in stolen goods

Copyright infringements

Extortion

…and more

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Steps in determining fine size

1. determine the base fine

2. compute a culpability score

3. multiply the base fine by the culpability score

Steps in determining fine size

1. determine the base fine

2. compute a culpability score

3. multiply the base fine by the culpability score

Compliance Program Steps

Smaller fines for companies that are

proactive

3.23.2

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Compliance Program Steps

Adapted from Exhibit 4.3

1. Establish standards and procedures.

7. Improve program after violations.

6. Enforce standards consistently and fairly.

5. Train employees on standards and procedures.

3. Delegate decision-making authority only to ethical employees.

4. Encourage employees to report violations.

2. Assign upper-level managers to be in charge.

3.23.2

Revise if required

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How Do You Make Ethical Decisions?

After reading the next two sections, you should be able to:

4. describe what influences ethical decision making.

5. explain what practical steps managers can take to improve ethical decision making.

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Influences on Ethical Decision Making

EthicalEthicalAnswersAnswersDepend Depend

on…on…

EthicalEthicalAnswersAnswersDepend Depend

on…on…

Ethical Intensity of DecisionEthical Intensity of Decision

Moral Development of ManagerMoral Development of Manager

Ethical Principles UsedEthical Principles Used

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Ethical Intensity Depends on…

Concentration of effectConcentration of effect

Magnitude of consequencesMagnitude of consequences

Social consensusSocial consensus

Probability of effectProbability of effect

Proximity of effectProximity of effect

Temporal immediacyTemporal immediacy

4.14.1

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Biz Flix: Emperor’s Club

Take Two Video

Click

What is Bell’s level of morality? Explain.

How typical do you think this conflict is in business? In daily life?

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Moral Development

4.24.2Adapted from Exhibit 4.4

Societal Societal ExpectationsExpectationsSelfishSelfish InternalizedInternalized

PrinciplesPrinciples

PreconventionalPreconventionalPreconventionalPreconventional ConventionalConventionalConventionalConventional PostconventionalPostconventionalPostconventionalPostconventional

Kohlberg’s Stages of Moral Development

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Stages of Moral Development

PreconventionalPreconventionalPreconventionalPreconventional

1. Punishment andObedience

2. InstrumentalExchange

1. Punishment andObedience

2. InstrumentalExchange

ConventionalConventionalConventionalConventional

3. Good boy, nice girl

4. Law and order

3. Good boy, nice girl

4. Law and order

PostconventionalPostconventionalPostconventionalPostconventional

5. Social contract

6. Universalprinciple

5. Social contract

6. Universalprinciple

4.24.2

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Principles of Ethical Decision Making

Long-term self-interestLong-term self-interest

Personal virtuePersonal virtue

Religious injunctionsReligious injunctions

Government requirementsGovernment requirements

Utilitarian benefitsUtilitarian benefits

Individual rightsIndividual rights

Distributive justiceDistributive justice4.34.3

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Principle of long-term self-interestPrinciple of long-term self-interest

Never take any action not in your organization’s long-term self-interest.

Never take any action not in your organization’s long-term self-interest.

4.34.3

Principles of Ethical Decision Making

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Principles of Ethical Decision Making

Principle of Personal VirtuePrinciple of Personal Virtue

Never do anything that is not honest, open, and truthful and that you would not beglad to see reported in the newspapers

or on TV.

Never do anything that is not honest, open, and truthful and that you would not beglad to see reported in the newspapers

or on TV.

4.34.3

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Principles of Ethical Decision Making

Principle of Religious InjunctionsPrinciple of Religious Injunctions

Never take any action that is not kindand that does not build a

sense of community.

Never take any action that is not kindand that does not build a

sense of community.

4.34.3

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Principles of Ethical Decision Making

Principle of Government RequirementsPrinciple of Government Requirements

Never take any action that violates the law,for the law represents the minimal

moral standard.

Never take any action that violates the law,for the law represents the minimal

moral standard.

4.34.3

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Principles of Ethical Decision Making

Principle of Utilitarian BenefitPrinciple of Utilitarian Benefit

Never take any action that does not result ingreater good for society.

Never take any action that does not result ingreater good for society.

4.34.3

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Principles of Ethical Decision Making

Principle of Individual RightsPrinciple of Individual Rights

Never take any action that infringes on others’ agreed-upon rights.

Never take any action that infringes on others’ agreed-upon rights.

4.34.3

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Principles of Ethical Decision Making

Principle of Distributive JusticePrinciple of Distributive Justice

Never take any action that harms the least among us:

the poor, the uneducated,the unemployed.

Never take any action that harms the least among us:

the poor, the uneducated,the unemployed.

4.34.3

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Practical Steps to Ethical Decision Making

Select and hire ethical employeesSelect and hire ethical employees

Establish a Code of EthicsEstablish a Code of Ethics

Train employees to make ethical decisionsTrain employees to make ethical decisions

Create an ethical climateCreate an ethical climate

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Practical Steps to Ethical Decision Making

Overt Integrity Tests Personality-Based Integrity Tests

Select and hire ethical employeesSelect and hire ethical employees

If you found a wallet containing $50, would you return it with the money?

5.15.1

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Doing the Right Thing

If You Cheat in College, Will You Cheat in the Workplace?

College students who cheat are likely to cheat again.

70 percent of students don’t see cheating as a problem.

People who cheat and cheat again see their behavior as normal.

60 percent of people who cheat their employers don’t feel guilty for doing so.

If You Cheat in College, Will You Cheat in the Workplace?

College students who cheat are likely to cheat again.

70 percent of students don’t see cheating as a problem.

People who cheat and cheat again see their behavior as normal.

60 percent of people who cheat their employers don’t feel guilty for doing so.

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What Really Works

Studies show that Integrity Tests…

Help reduce workplace deviance Help hire workers who are better performers

Studies show that Integrity Tests…

Help reduce workplace deviance Help hire workers who are better performers

However they have a smaller effect on assessing theft.

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What Really Works (continued)

Overt Integrity Tests & Workplace Deviance10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

probability of success 82%

Workplace Deviance (Counterproductive Behaviors)

Personality-Based Integrity Tests & Workplace Deviance10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

probability of success 68%

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What Really Works (continued)

Overt Integrity Tests & Job Performance10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

probability of success 69%

Job Performance

Personality-Based Integrity Tests & Job Performance10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

probability of success 70%

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What Really Works (continued)

Overt Integrity Tests & Theft10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

probability of success 57%

Theft

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Practical Steps to Ethical Decision Making

Establish a Code of EthicsEstablish a Code of Ethics

Communicate code of ethics to both inside and outside the company

Develop ethical standards and proceduresspecific to business

5.25.2http://www.nortelnetworks.comWeb Link

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Ethics Training

Ethics TrainingEthics Training

Develops employee awareness of ethics

Achieves credibility with employees

Teaches a practical model of ethical decision making

5.35.3http://ethics.bellsouth.com“Ethics Scenarios Game”

Web Link

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Ethics Training

Tower Records

Lockheed

Boeing

Bell South

U.S. Dept. of Justice

3M

City of Philadelphia

And more require employees to take ethics training

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A Basic Model of Ethical Decision Making

1. Identify the problem1. Identify the problem

2. Identify the constituents2. Identify the constituents

3. Diagnose the situation3. Diagnose the situation

4. Analyze your options 4. Analyze your options

5. Make your choice5. Make your choice

6. Act6. Act

Adapted from Exhibit 4.6

5.35.3

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Ethical Climate

Managers:

1. Act ethically

2. Are active in company ethics programs

3. Report potential ethics violations

4. Punish those who violate the code of ethics

Establishing an Ethical ClimateEstablishing an Ethical Climate

5.45.4http://www.whistleblowers.orgWeb Link

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What Is Social Responsibility?

After reading these sections, you should be able to explain:

6. to whom organizations are socially responsible.

7. for what organizations are socially responsible.

8. how organizations can choose to respond to societal demands for social responsibility.

9. whether social responsibility hurts or helps an organization’s economic performance.

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What Is Social Responsibility?

Social Responsibility

A business’s obligation to… pursue policies make decisions take actions that benefit society

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What Is Social Responsibility?

Recall from Chapter 3 that PETA and Procter & Gamble have an ongoing disagreement about what is socially responsible.

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To Whom Are Organizations Socially Responsible?

StakeholderModel

StakeholderModel

Satisfy Interests of Multiple Stakeholders

Satisfy Interests of Multiple Stakeholders

ShareholderModel

ShareholderModel Maximize ProfitsMaximize Profits

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ProsPros

Shareholder Model

Firm maximizes shareholder wealth and satisfaction

The company stock increases in value

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ConsCons

Organizations cannot act effectively as moral agents for shareholders

Time, money, and attention diverted to social causes undermine market efficiency

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Stakeholder Model

Primary Stakeholders:

ShareholdersEmployeesCustomersSuppliers

GovernmentsLocal Communities

Primary Stakeholders:

ShareholdersEmployeesCustomersSuppliers

GovernmentsLocal Communities

Secondary Stakeholders:

MediaSpecial Interest Groups

Trade Associations

Secondary Stakeholders:

MediaSpecial Interest Groups

Trade Associations

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Organization’s Social Responsibilities

Abide by principlesAbide by principlesof right and wrongof right and wrong

Obey laws andObey laws andregulationsregulations

EthicalEthical

LegalLegal

EconomicEconomic

DiscretionaryDiscretionary

Be profitableBe profitable

Serve a social roleServe a social role

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$

?

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Responses to Demands for Social Responsibility

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ReactiveReactive DefensiveDefensive Accommo-dative

Accommo-dative ProactiveProactive

Fight all the way

DO NOTHING

DO MUCH

Withdrawal

Do only what is required

Legal Approach

BargainingProblemSolving

PublicRelationsApproach

Beprogressive

Lead theindustry

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Social Responsibility and Economic Performance

Realities ofSocial

Responsibility

Can cost a companyCan cost a company

Sometimes it does paySometimes it does pay

Does not guarantee profitability

Does not guarantee profitability

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