Ebbpa3 b ch 3

Chapter 3

Ethical Behavior and Social

Responsibility

Chapter 3 Learning Dashboard

1. What is ethical behavior?1. Laws and values as determinants of ethical behavior2. Alternative views of ethics3. Cultural issues in ethical behavior

2. Ethics in the workplace1. Ethical dilemmas at work2. Influences on ethical decision making3. Rationalizations for unethical behavior

Chapter 3 Learning Dashboard

3. Maintaining High Ethical Standards1. Ethics training2. Codes of ethical conduct3. Moral management4. Whistleblower protection

4. Social Responsibility1. Stakeholder management2. Perspectives on corporate social responsibility3. Evaluating corporate social performance4. Corporate governance

What Is Ethical Behavior?

• Ethics – Moral code of 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.

What Is Ethical Behavior?

• Law, values, and ethical behavior:– Legal behavior is not necessarily ethical behavior.

– Personal values help determine individual ethical behavior.

What Is Ethical Behavior?

• 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

What Is Ethical Behavior?

• Four alternative ethical views (MUJI)– Utilitarian• Delivers the greatest good to the most people

– Individualism• Advances long-term self-interests

– Moral rights• Maintains fundamental rights of all human beings

What Is Ethical Behavior?

– Justice view of ethics • Fair and impartial treatment of people according to

legal rules and standards (PDIC + PEPF)– Procedural justice – policies and rules fairly applied– Distributive justice – equal treatment for all people – Interactional justice – people treated with dignity and respect– Commutative justice – fairness to all involved

Ethics in the Workplace

• An ethical dilemma – occurs when choices, although having potential

for personal and/or organizational benefit, may be considered unethical.

Ethics in the Workplace

• Ethical dilemmas include: (SCOPD)

Checklist for ethical dilemmas(RGTDAT)

Ethics in the Workplace

• Influences on Ethical Decision Making– Ethical framework• Provides personal rules or strategies for ethical

decision making• Includes personal values (FISH)

– Honesty– Fairness– Integrity– Self-respect

Kohlberg’s stages of individual moral development(AMAFLA)

Ethics in the Workplace

• Situational Context and Ethics Intensity– Will the situation pose an important ethic

challenge?• Magnitude of the situation• Risk of immediate harm• Proximity and concentration of harm• Social consensus

Ethics in the Workplace

• Organizational Culture– What is considered ethical behavior within the

organizational context?• What are the expectations of management?• What are the expectations of co-workers?• Is there a code of ethics?

Ethics in the Workplace

• External environment

Ethics in the Workplace

• Ethical behavior can be rationalized by convincing yourself that: (BBTN)

Maintaining High Ethical Standards

•Moral ManagementManagers behave in one of three

ways

Maintaining High Ethical Standards

• 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.

Maintaining High Ethical Standards

• Codes of Ethical Conduct– Formal statement of an organization’s values and

ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas

Maintaining High Ethical Standards

• Areas often covered by codes of ethics:

Maintaining High Ethical Standards

• Whistleblowers– Expose misdeeds of others to:• Preserve ethical standards• Protect against wasteful, harmful, or illegal acts

– Laws protecting whistleblowers vary

• Barriers to whistleblowing include:– Strict chain of command– Strong work group identities– Ambiguous priorities

Social Responsibility

• Sustainability:– acting in ways that support a high quality of life for

present and future generations• Alternative energy• Recycling• Waste avoidance

• 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.

Social Responsibility

• Stakeholder Management– Stakeholders: persons, groups, and other organizations directly

affected by the behavior of the organization and holding a stake in its performance.

– Stakeholder power: the capacity of the stakeholder to positively or negatively affect the operations of the organization.

– Demand legitimacy: the validity and legitimacy of a stakeholder’s interest in the organization.

– Issue urgency: the extent to which a stakeholder’s concerns need immediate attention.

The Many Stakeholders of Organizations

Social Responsibility

• 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.

Social Responsibility

• Perspectives on social responsibility:– Shared value view• Approaches business decisions with the understanding

that economic and social progress are interconnected• Virtuous circle-socially responsible behavior improves

financial performance which leads to more responsible behavior

Social Responsibility Against:(RHDLT) Favor:(ABIA)

Four strategies of corporate social responsibility—from obstructionist to proactive behavior.

Social Responsibility

• 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.

• How government influences organizations:– Businesses required by law to have boards of directors

that are elected by stockholders

Ethics Self-governance in Leadership and the Managerial Role