20140404 1 BOH4M Ms. Schirk CHAPTER 3: ETHICS AND CORPORATE SOCIAL RESPONSIBILITY Management - Chapter 2 2 PLANNING AHEAD — CHAPTER 3 STUDY QUESTIONS What is ethical behavior? How do ethical dilemmas complicate the workplace? How can high ethical standards be maintained? What is corporate social responsibility? How do organizations and governments work together in society? STUDY QUESTION 1: WHAT IS ETHICAL BEHAVIOUR?
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BOH4M Ms. Schirk
CHAPTER 3: ETHICS AND CORPORATE SOCIAL
RESPONSIBILITY
Management - Chapter 2 2
PLANNING AHEAD — CHAPTER 3 STUDY QUESTIONS
Ø What is ethical behavior? Ø How do ethical dilemmas complicate the workplace? Ø How can high ethical standards be maintained? Ø What is corporate social responsibility? Ø How do organizations and governments work together
in society?
STUDY QUESTION 1: WHAT IS ETHICAL BEHAVIOUR?
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¡ Ethics § Code of moral principles. § Set standards of “good” and “bad” as opposed to
“right” and “wrong.” ¡ Ethical behavior
§ What is accepted as good and right in the context of the governing moral code.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
¡ Law, values, and ethical behavior:
§ Legal behavior is not necessarily ethical behavior.
§ Personal values help determine individual ethical behavior.
§ Terminal values (end means)
§ Instrumental values (ways to achieve terminal values)
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
§ Utilitarian view of ethics — greatest good for 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.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
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STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
§ Cultural issues in ethical behavior: § Cultural relativism § Ethical behavior is always determined by cultural
context. § Cultural universalism § Behavior that is unacceptable in one’s home
environment should not be acceptable anywhere else.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
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¡ 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.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
¡ How international businesses can respect core or universal values (continued): § Be good citizens § Support social institutions, including economic and
educational systems. § Work with local government and institutions to
protect environment.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
STUDY QUESTION 2: HOW DO ETHICAL DILEMMAS COMPLICATE THE
WORKPLACE?
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§ 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 Q.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.
STUDY Q.2: HOW DO ETHICAL DILEMMAS COMPLICATE THE WORKPLACE?
§ Factors influencing ethical behavior include: § The person:
§ Family influences, religious values, personal standards, and personal needs.
§ The organization: § Supervisory behavior, peer group norms and
behavior, and policy statements and written rules. § The environment:
§ Government laws and regulations, societal norms and values, and competitive climate in an industry.
STUDY Q.2: HOW DO ETHICAL DILEMMAS COMPLICATE THE WORKPLACE?
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§ Factors influencing ethical behavior:
STUDY Q.2: HOW DO ETHICAL DILEMMAS COMPLICATE THE WORKPLACE?
STUDY QUESTION 3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
¡ 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?
STUDY Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
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¡ Checklist for dealing with ethical dilemmas § Step 5. Decide which option to follow § Step 6. Double-check decision by asking the
“spotlight” questions: “How would I feel if my family found out about my decision?” “How would I feel about this if my decision were printed in the local newspaper?”
§ Step 7. Take action.
STUDY Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
¡ 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 Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
¡ Whistleblowers: § Expose misdeeds of others to: § Preserve ethical standards § Protect against wasteful, harmful, or illegal acts
¡ Laws protecting whistleblowers vary.
STUDY Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
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¡ 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
STUDY Q.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.
STUDY Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
¡ 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 Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
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STUDY QUESTION 4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
¡ Corporate social responsibility: § 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.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
¡ Organizational stakeholders § Those persons, groups, and other organizations
directly affected by the behavior of the organization and holding a stake in its performance.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
¡ Beliefs that guide socially responsible business practices: § People do their best with a balance of work and
family life. § Organizations perform best in healthy
communities. § Organizations gain by respecting the natural
environment. § Organizations must be managed and led for long-
term success. § Organizations must protect their reputations.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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¡ Perspectives on corporate 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.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
¡ 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
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
§ Criteria for evaluating corporate social performance:
§ Is the organization’s…
§ Economic responsibility met?
§ Legal responsibility met?
§ Ethical responsibility met?
§ Discretionary responsibility met?
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
§ 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.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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STUDY QUESTION 5: HOW DO ORGANIZATIONS AND GOVERNMENTS
WORK TOGETHER IN SOCIETY?
§ How government influences organizations: § Common areas of government regulation of
business affairs: § Occupational safety and health (e.g. Occupational
Health and Safety Act passed in 1973) § Fair labor practices (e.g. Employment Equity Act
passed in 1985 and adapted in 1995) § Consumer protection (e.g. Hazardous Products
Act passed in 1985) § Environmental protection (e.g. Environmental
Pollution Act passed in 1999)
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?
§ How organizations influence governments: § Personal contacts and networks (get to know
people in government and gain their support) § Public relations campaigns (communicate positive
images of their businesses) § Lobbying (expressing opinions and preferences to
public officials in order to persuade or pressure) § Political action committees (collect money for
donation to political campaigns) § (Sometimes by) illegal acts, such as bribery or
illegal financial contributions to political campaigns
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?
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§ Figure 3.7 Centrality of ethics and social responsibility in leadership and the managerial role.
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?
§ 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.
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?