Ethics and Social Responsibility Chapter

Introduction

• This chapter examines ethics and social responsibility
• It covers how these apply to environmental issues, customer/employee/investor relations
• It also discusses approaches and implementation steps for social responsibility programs

Learning Objectives

• Explain how individuals develop personal ethics codes, and why they're important in the workplace
• Distinguish social responsibility from ethics, identify stakeholders, and describe social consciousness
• Explain social responsibility's application to environmental issues, customer/employee/investor relationships

Learning Objectives (Page 4)

• Identify four general approaches to social responsibility in small businesses
• Explain the role of government in social responsibility, and how governments/businesses interact
• Discuss how businesses manage social responsibility and how organizations can evaluate their social responsibility

Ethics in the Workplace

• Ethics are beliefs about right/wrong/good/bad that affect others
• Business ethics refers to ethical/unethical employee behaviors in a work context

Ethics in the Workplace (cont.)

• Ethical behavior follows individual & social norms of right/good
• Unethical behavior follows norms of wrong/bad

Business and Managerial Ethics

• Managerial ethics are standards of behavior guiding individual managers
• Behaviors toward employees, the organization, and other economic agents (customers, competitors, stakeholders, suppliers, dealers, unions) are parts of managerial ethics

Assessing Ethical Behavior

• Gather pertinent factual information
• Analyze facts to determine appropriate moral values
• Make an ethical judgment based on right/wrong aspects of the activity/policy

Ethical Norms

• Utility: does an act maximize benefits for those impacted?
• Rights: does the act respect the rights of all involved?
• Justice: is the act consistent with fairness?
• Caring: is the act in line with people's responsibilities to each other?

Model of Ethical Judgment Making

• Gather factual information on the act/policy
• Analyze facts to determine appropriate moral values
• Make an ethical judgment using the four ethical norms; If not ethical, consider if any ethical norms should be overridden, prioritizing one over others, or whether external pressures influenced the activity or policy

Company Practices and Business Ethics

• Key formalizing methods include adopting written codes and instituting ethics programs

Core Principles and Organizational Values

• Organization's core principles and values should remain steady despite changes to strategy/practices and objectives

Social Responsibility

• Social responsibility is the overall way a company balances commitments to relevant groups/individuals in its social environment

Organizational Stakeholders

• Stakeholders are groups, individuals, and organizations directly affected by an organization's practices and have a stake in its performance

Major Corporate Stakeholders

• Major corporate stakeholders include employees, investors, local communities, business organizations, customers, suppliers

The Stakeholder Model of Responsibility

• Most responsible companies prioritize customers, employees, investors, suppliers, and local communities.

The Stakeholder Model of Responsibility (cont.)

• Treating customers fairly and honestly, fairly treating employees, following accounting procedures to inform shareholders about financial performance are key for stakeholder satisfaction

Responsibility toward Customers

• Consumer rights: social activism protecting consumer rights in business dealings
• Unfair pricing: includes collusion (collaboration by firms to fix prices) and price gouging (unwarranted price increases)

Responsibility toward Employees

• Providing opportunities to balance work/life, help employees maintain job skills, and treating terminated employees with respect are essential.

Responsibility toward Employees (cont.)

• Companies that provide equal opportunity without regard to things like race/sex are meeting ethical/legal obligations.

Responsibility toward Suppliers

• Establishing mutually beneficial partnership arrangements and involvement in programs/charitable events are parts of responsible supplier relations

Responsibility toward the Environment

• Pollution prevention (air, water, land) and waste disposal are vital for environmental responsibility
• Recycling plays a large role in environmental responsibility

Consumerism

• Consumerism is social activism that protects consumer rights.
• Collusion is an illegal agreement between companies to engage in wrongful acts

Contemporary Social Consciousness

• Accountability is expected of business in protecting and increasing society's welfare

Formal Organizational Dimensions

• Legal compliance: adhering to local/state/federal/international laws
• Ethical compliance: members of the organization following basic ethical/legal standards of behavior
• Philanthropic giving: donating funds/gifts to worthy causes

Evaluating Social Responsibility

• Corporate social audit is analyzing a business's success in using funds to meet its social responsibility goals

Applying What You've Learned

• This section includes 5 key steps for applying learned concepts

Applying What You've Learned (cont.)

• Identifying social responsibility approaches and analyzing the impact of government/business interactions are part of applying learned concepts

The Government and Social Responsibility

• Regulation: laws & rules dictating organization actions, typically evolved from societal beliefs and enforced by special government agencies
• Direct & indirect forms of regulation; such as tax codes, shape organizational social responsibility

How Organizations Influence Government

• PACs (Political Action Committees) solicit money and donate to candidates
• Lobbying is representing organizations before political bodies to influence policy

Formal Organizational Dimensions (cont.)

• Philanthropic giving is providing funds/gifts to charities

Evaluating Social Responsibility (cont.)

• Corporate social audits systematically assess a firm's success in meeting social responsibility goals

This chapter quiz delves into the concepts of ethics and social responsibility, particularly within environmental contexts and stakeholder relations. It covers individual ethics development, the distinction between ethics and social responsibility, and various approaches for businesses. Additionally, it discusses the role of government and methods for evaluating social responsibility in organizations.