BSAD 310 Spring 2017 - CH 13

Chapter 13: Organizational

Ethics, Sustainability,

and Social Responsibility

2Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.

Ethical Organizations• Unethical behavior by companies risks

loss of public trust and threatens integrity of business.

• Ethical business practices need to be reinforced on a global scale to offset continuing decline in business ethics.


Ethical Organizations• Ethics

– Application of values and principles to make right choice(s)

• Trust– Core of ethical business practices


Contributing Factors to Unethical Behavior

• Personality Traits and Attitudes– Such as integrity, honesty, sincerity

• Moral Development– Ability to distinguish right from wrong

• Preconventional level• Conventional level• Postconventional level


Contributing Factors to Unethical Behavior

• The Situation– Unethical behavior is often found in

organizations with no formal ethics policies or when unethical behavior goes unpunished.

• Justification of Unethical Behavior– People respond to incentives and can be

manipulated to behave ethically or unethically, depending on incentive.


Ethical Approaches • Golden Rule• Four-Way Test • Stakeholders’ Approach to Ethics• Discernment and Advice

– Research indicates that making decisions without using ethical guides leads to less ethical choices.

– Research shows companies having trust of employees experience lower turnover, higher revenue, profitability, and shareholder returns.


Codes of Ethics• Values • Principles• Management Support

– If senior managers pay no attention to code of ethics, subordinate managers and employees will follow suit.

• Personal Responsibility• Compliance

– Identify applicable laws or industry regulations that must be adhered to as part of a code of ethics.


Exhibit 13-1: Berkshire Hathaway Code of Business

Conduct and Ethics30


Creating and Maintaining Ethical Organizations

• Authority – The right to give orders, enforce obedience, make

decisions, and commit resources toward completing organizational goals

• Responsibility – The obligation to answer for something/someone– The duty to carry out an assignment to a satisfactory

conclusion• Accountability

– Lies and cover-ups, not the initial unethical behavior, usually escalate problems to unmanageable proportions.


Managers Face Ethical Questions on a Daily Basis

• Bribery – Payments made to encourage favorable

decisions that may benefit a person or an organization while causing harm to other organizations or stakeholders

• Corrupt Payments to Government Officials – Payments made to allow companies to avoid

regulatory scrutiny by government agencies



• Employment and Personal Issues – Managerial decisions that determine who

to hire or fire; decisions affect productivity, absenteeism, and turnover

• Marketing Practices – Dishonest and predatory marketing

practices can devastate a company’s image in the marketplace.



• Impact on Economy and Environment – Disregard for health and safety in use and

abuse of hazardous materials has damaging effects on a company’s reputation.

• Employee and Customer Privacy – Technological ability to gather and maintain

sensitive business and customer data creates an obligation to use data only for legitimate purposes.


Corporate Social Responsibility (CSR)

• CSR is belief that organizations have a duty to all societal stakeholders to operate in a manner that takes each of their needs into consideration.

• Social responsibility goes beyond legal and economic obligations to make sound decisions by acting in ways that benefit society.


Corporate Social Responsibility (CSR)

• Companies should strive to improve quality of life without destroying environment.

• Companies should compete fairly with competitors and work with suppliers in a cooperative manner while abiding by laws and regulations imposed by government.


Stakeholders and CSR• Corporate compliance laws at state and

federal levels dictate adherence to ethical standards.

• Laws protecting older workers• Female executives and the “glass

ceiling”• LGBT employees• Diversity management


Increasing Diversity• The birthrate of Caucasian children is now

less than 50% of the total birthrate. • In 10 states, white children are a minority,

and in 23 states, minorities now make up more than 40% of the child population.

• One in 12 children (8%) born in America are offspring of illegal immigrants, and those children are U.S. citizens.


Exhibit 13-2: Levels of CSR


Sustainability• Sustainability is the state of physical

and psychological wellness in the workforce; refers to meeting needs without compromising the corporation’s ability to meet future needs.

• Sustainability Training – Organizations with sustainability programs

tend to gain trust of customers and surrounding communities.


Sustainability• HR and Organizational Sustainability

– Green companies act to minimize damage to environment.

– Nearly all of the world’s top 150 companies have a sustainability officer who serves at rank of vice president or higher.


The Sustainable 21st Century Organization

• Benefits of Sustainability – 6% of companies indicate sustainability

initiatives are necessary to remain competitive in world markets.

• Sustainability-Based Benefits – Reward workers for taking public

transportation and reducing carbon footprints to support sustainability movement

21

Exhibit 13-3: Resources for Corporate Sustainability (see p. 343)

• World Business Council for Sustainable Development (WBCSD)

• International Organization for Standardization (ISO)• International Institute for Sustainable Development (IISD)

• United Nations Global Compact• International Organization for Sustainable Development

(IOSD) • World Economic Forum (WEF) • National Association of Environmental Managers (NAEM)

• Corporate Social Responsibility Newswire (CSRwire)

Lussier and Hendon, Fundamentals of Human Resource Management. © 2017, SAGE Publications.


Trends and Issues in HRM• Sustainability-Based Benefits

– A number of companies are looking at options for providing benefits to their employees that assist with improving environmental stability and sustainability over the long term.

• Does Diversity Training Work?– Organizations must create a cultural change

in order for diversity training to be successful.