BMGT Midterms Reviewers - Chapter 5: Social Responsibility and Managerial Ethics PDF

BMGT MIDTERMS REVIEWERS - Using the Sustainability Reporting Guidelines to document ―green‖ actions. Chapter 5: Social Responsibility and Managerial - Adopting ISO 14000 standards for Et...

BMGT MIDTERMS REVIEWERS - Using the Sustainability Reporting Guidelines to document ―green‖ actions. Chapter 5: Social Responsibility and Managerial - Adopting ISO 14000 standards for Ethics environmental management. Social Obligation - Being named as one of the 100 Most - A firm’s engaging in social actions because Sustainable Corporations in the World. of its obligation to meet certain economic Managerial Ethics and legal responsibilities. Ethics Defined - Classical view of social responsibility: - Principles, values, and beliefs that define - The view that management’s only social what is right and wrong behavior. responsibility is to maximize profits (create a financial return). By operating the business in the best interests of the stockholders (owners of the corporation) - The obligation of a business to meet its economic and legal responsibilities and nothing more. Factors that affect employee ethics Social Responsiveness Moral Development - When a firm engages in social actions in - A measure of e from outside influences: response to some popular social need. - Levels of Individual Moral Development Social Responsibility 1. Pre-conventional Level - A business’s intention, beyond its legal and 2. Conventional Level economic obligations, to do the right things 3. Principled Level and act in ways that are good for society. - Stage of moral development interacts with: 1. The organization’s structural design How Organizations Go Green 2. The organization's culture Legal Approach 3. The intensity of the ethical issue - Firms simply do what is legally required by obeying laws, rules, and regulations willingly and without legal challenge. Market Approach - Firms respond to the preferences of their customers for environmentally friendly products. Stakeholder Approach Moral Development - Firms work to meet the environmental Research Conclusions: demands of multiple stakeholders— - People proceed through the stages of moral employees, suppliers, and the community. development sequentially. Activist Approach - There is no guarantee of continued moral - Firms look for ways to respect and preserve development. the environment and be actively socially Individual Characteristics responsible. Values - Basic convictions about what is right and wrong. Personality - Ego strength - A personality measure of the strength of a person’s convictions. Evaluating the Greening of Management Organizations become ―greener‖ by Locus of control permissible when doing so is an accepted - A personality attribute that measures the practice in that country. degree to which people believe they control their own life. How Managers can Improve Ethical Behavior in an Internal Locus: the belief that you control your Organization destiny 1. Hire individuals with high ethical standards. External Locus: the belief that what happens to you 2. Establish codes of ethics and decision rules. is due to luck or chance. 3. Lead by example. 4. Set realistic job goals and include ethics in Structural Variables performance appraisals. - Organizational characteristics and 5. Provide ethics training. mechanisms that guides and influence 6. Conduct independent social audits. individuals ethics: 7. Provide support for individuals facing ethical 1. Performance appraisal systems dilemmas. 2. Reward allocation systems 3. Behavior (ethical) of managers Effective Use of Code of Ethics - Develop a code of ethics as a guide in handling ethical dilemmas in decision Organization’s Culture making. Values-Based Management - Communicate the code regularly to all - An approach to managing in which employees. managers establish and uphold an - Have all levels of management continually organization’s shared values. reaffirm the importance of the ethics code The Purposes of Shared Values and the organization’s commitment to the - Guiding managerial decisions code. - shaping employee behavior - Publicly reprimand and consistently - influencing the direction of marketing efforts discipline those who break the code. - building team spirit The Bottom Line on Shared Corporate Values The Values of Ethics Training - An organization’s values are reflected in the - Can make a difference in ethical behaviors. decisions and actions of its employees. - Increases employee awareness of ethical issues in business decisions. The Intensity of the Ethical Issue - Clarifies and reinforces the organization’s standards of conduct. - Helps employees become more confident that they will have the organization’s support when taking unpopular but ethically correct stances. Managing Ethical Lapses and Social Irresponsibility - Provide ethical leadership Ethics in an International Context - Protect employees who raise ethical issues Ethical Standards are not universal (whistle-blowers) - Social and cultural differences determine Awareness of Social Issues acceptable behaviors. Foreign Corrupt Practices Act Social Entrepreneurs - Makes it illegal to corrupt a foreign official, - Are individuals or organizations who seek yet ―token‖ payments to officials are out opportunities to improve society by  using practical, innovative, and sustainable 10. Values - the beliefs people have, especially approaches. about what is right and wrong and what is - Want to make the world a better place and most important in life, that control their have a driving passion to make that happen. behavior. Businesses Promoting Positive Social Change 11. Ego Strength - the ability of the ego to deal Corporate Philanthropy effectively with the demands of the id, the superego, and reality. Campaigns 12. Locus of control - A personality attribute Donations that measures the degree to which people Funding own foundations believe they control their own life. 13. Code of Ethics - a guiding set of principles Employee Volunteering Efforts intended to instruct professionals to act in a way that aligns with the organization's Team Volunteering values and benefits all stakeholders. Individual volunteering during work hours. 14. Whistle-blower - any individual who provides the right information to the right Chapter 5 Terms to Remember: people. 15. Social Entrepreneur - interested in starting 1. Classical View - simply that all complex a business for the greater social good and concepts have classical analyses. not just the pursuit of profits. 2. Socioeconomic View - A way of describing people based on their education, income, and type of job. Chapter 6: Managers as Decision Makers 3. Social Obligation - A firm’s engaging in social actions because of its obligation to Decision - Making a choice from two or more meet certain economic and legal alternatives. responsibilities. 8 Steps of Decision-Making Process 4. Social Responsiveness - When a firm Step 1: Identifying a problem engages in social actions in response to Step 2: Identifying decision criteria some popular social need. Step 3: Allocating weights to the criteria 5. Social Responsibility - A business’s Step 4: Developing alternatives intention, beyond its legal and economic Step 5: Analyzing alternatives obligations, to do the right things and act in Step 6: Selecting an alternative ways that are good for society. Step 7: Implementing the selected alternative. 6. Social Screening - the process of Step 8: Evaluating the decision’s effectiveness. evaluating job applications, scanning resumes and selecting suitable candidates that match with the job description. 7. Greening of Management - when a company does its best to minimize processes that harm the environment. 8. Values-Based Management - An approach to managing in which managers establish and uphold an organization’s shared values. 9. Ethics - what is right and wrong behavior.  Identify viable alternatives - Alternatives are listed (without evaluation) that can resolve the problem Step 5: Analyzing Alternatives Appraising each alternative’s strengths and weaknesses - An alternative’s appraisal is based on its ability to resolve the issues identified in steps 2 & 3 Step 6: Selecting an Alternative Choosing the best alternative Step 7: Implementing the Alternative Putting the chosen alternative into action - Conveying the decision to and gaining commitment from those who will carry out the decision. Step 8: Evaluating the Decision’s Effectiveness The soundness of the decision is judged by its Step 1: Identifying the Problem outcomes Problem - A discrepancy between an existing and ❖ How effectively was the problem resolved desired state of affairs. by outcomes resulting from the chosen Characteristics of Problems alternatives? - A problem becomes a problem when a ❖ If the problem was not resolved, what went manager becomes aware of it. wrong? - There is pressure to solve the problem. Was the problem incorrectly - The manager must have the authority, defined? information, or resources needed to solve Were errors made when evaluating the problem. alternatives? Was the right alternative selected Step 2: Identifying Decision Criteria but poorly implemented? Decision Criteria are factors that are important to resolving the problem such as: ❖ The answers might lead to redo an earlier - Costs that will be incurred (investments step or might even require starting the required) whole process over. - Risks likely to be encountered (chance of failure) - Outcomes that are desired (growth of the firm) Step 3: Allocating Weights to the Criteria Decision criteria are not of equal importance: - Assigning a weight to each item places the items in the correct priority order of their importance in the decision-making process. Making Decisions Step 4: Developing Alternatives  evidence that it may have been wrong. Rationality ❖ Managers make consistent, value- maximizing choices with specified constraints. ❖ Assumptions are that decision makers: - Are perfectly rational, fully objective, and logical. Making Decisions: The role of Intuition - Have carefully defined the Intuitive decision making - Making decisions problem and identified all based on experience, feelings, and accumulated viable alternatives. judgment. - Have a clear and specific 5 Different Aspects of Intuition goal 1. Experience-based Decisions - Based on - Will select the alternative that past experiences maximizes outcomes in the 2. Affect-Initiated Decisions - Based on organization’s interests feelings or emotions rather than in their personal 3. Cognitive-Based Decisions - Based on interests. skills, knowledge and training - For Managerial decision 4. Subconscious Mental Processing - Use data making: Decisions are made from subconscious mind to help them make in the best interests of the decisions organization. 5. Values or ethics based decisions - Based on ethical values or culture Types of Problems and Decisions Structured Problems - refers to a straightforward, familiar and easily defined problem. - Involve goals that are clear - Are familiar (have occured before) - Are easily and completely defined - information about the problem is available Bounded Rationality and complete Managers make decisions rationally, but are limited Programmed Decision (bounded) by their ability to process information. - A repetitive decision that can be handled by Assumptions are that decision makers: a routine approach - Will not seek out or have knowledge of all Procedure alternatives - A series of interrelated steps that a - Will satisfy—choose the first alternative manager can use to respond (applying a encountered that satisfactorily solves the policy) to a structured problem. problem—rather than maximize the Rule outcome of their decision by considering all - An explicit statement that tells managers alternatives and choosing the best. Accept what can or cannot be done. solutions that are “good enough”. - Rules are frequently used because that are Influence on decision making simple to follow and ensure consistency - Escalation of commitment: an increased Policy commitment to a previous decision despite - a guideline for making decisions  - typically contain an ambiguous term that psychological orientation of the decision leaves interpretation up to the decision maker. makers. Maximax: the optimistic manager’s choice to Unstructured Problems maximize the maximum profit - Problems that are new or unusual and for Maximin: the pessimistic manager’s choice to which information is ambiguous or maximize the minimum payoff incomplete. Minimax: the manager’s choice to minimize the - Problems that will require custom-made maximum regret solutions. When problems are unstructured, managers must Decision-Making Styles rely on nonprogrammed decision making in order to Thinking Style- reflects on 2 things develop unique solutions. Non-programmed Decisions 1. The source of information a person tend to use (external data and facts or internal - Decisions that are unique and nonrecurring. sources, such as feelings and intuition). - Decisions that generate unique responses. 2. How the person processes that information (linear – rational, logical, analytical; or nonlinear – intuitive, creative , insightful). Lower-level managers mostly rely on programmed decisions (procedures, rules and Linear Thinking Style policies) because they confront familiar and - A decision style characterized by a person’s repetitive problems. preference for using external data and facts As managers move up the organizational and processing this information through hierarchy, the problems they confront become rational, logical thinking. more unstructured. Nonlinear Thinking Style Decision-Making Conditions Certainty - A decision style characterized by a person’s - A situation in which a manager can make an preference for internal sources of accurate decision because the outcome of information and processing this information every alternative choice is known. through with internal insights, feelings and - Managers are certain about the outcomes of hunches. each alternative. Decision-Making Biases and Errors Risk Heuristics - A situation in which the manager is able to estimate the likelihood (probability) of - Using ―rules of thumb‖ to simplify decision outcomes that result from the choice of making. particular alternatives. - help make sense of complex, uncertain and - Under risk, managers have historical data ambiguous situations. from past experiences or secondary - isn't always reliable information that lets them assign probabilities to different alternatives. Uncertainty - Refers to a situation in which the decision maker has neither certainty nor reasonable probability estimates available. - The choice of alternative is influenced by limited information available and by the  - Forgetting that current actions cannot Overconfidence Bias influence past events and relate only to - decision makers tend to think they know future consequences. more than they do or hold unrealistically - Incorrectly fixate on past expenditures of positive views of themselves and their time, money, or effort in assessing choices. performance. Self-Serving Bias - Taking quick credit for successes and Immediate Gratification Bias blaming outside factors for failures. - Choosing alternatives that offer immediate Hindsight Bias rewards and that to avoid immediate costs. - Mistakenly believing that an event could have been predicted once the actual Anchoring Effect outcome is known (after-the-fact). - Fixating on initial information as a starting point and ignoring subsequent information. Selective Perception Bias - Selecting, organizing and interpreting events based on the decision maker’s biased perceptions. Confirmation bias Guidelines for making effective decisions: - Seeking out information that reaffirms past Understand cultural differences choices and discounting contradictory - Values, beliefs, attitudes and behavioral information. patterns of the people involved. - tend to accept at face value information that Know when it's time to call quits confirms their preconceived views and are - When it’s evident that a decision isn’t critical and skeptical of information. working, don’t be afraid to pull the plug. Use Effective decision-making process Framing Bias Build an org. that can spot the unexpected and - Selecting and highlighting certain aspects of quickly adapt to changes. a situation while ignoring other aspects. - Omitting other aspects, distort what they HRO (Highly Reliable Orgs.) 5 Habits see and create incorrect reference points. 1. Are not tricked by their success, Availability bias 2. Defer to the experts on the front line - Losing decision-making objectivity by 3. Let unexpected circumstances provide the focusing on the most recent events. Distort solution the ability to recall events in an objective 4. Embrace complexity manner. 5. Anticipate, but also anticipate their limits Representation Bias - Drawing analogies and seeing identical Characteristics of an Effective Decision-Making situations when none exist. Process Randomness Bias - It focuses on what is important. - Creating unfounded meaning out of random - It is logical and consistent. events. - It acknowledges both subjective and Sunk Costs Errors objective thinking and blends analytical with intuitive thinking.  Directive - It requires only as much information and - characterized by low tolerance for ambiguity analysis as is necessary to resolve a and a rational way of thinking. particular dilemma. - efficient and logical - It encourages and guides the gathering of - make fast decisions and focus on the short relevant information and informed opinion. run - It is straightforward, reliable, easy to use, Analytic and flexible. - characterized by high tolerance for ambiguity and a rational way of thinking Chapter 6 Terms to Remember - want more information before making a 1. Decision decision 2. Decision-making process - make careful decisions in unique situations 3. problem Conceptual 4. decision criteria - characterized by high tolerance for 5. rational decision making ambiguity and an intuitive way of thinking. 6. bounded rationality - maintain a broad outlook, considers many 7. satisficing alternatives 8. escalation of commitment - focuses on the long run, finds creative 9. intuitive decision making solutions 10. structured problems Behavioral 11. programmed decision - characterized by low tolerance for ambiguity 12. procedure and a rational way of thinking. 13. rule - avoid conflict by working well with others 14. policy - acceptance by others 15. unstructured problems 16. nonprogrammed decisions 17. certainty 18. risk 19. uncertainty 20. directive style 21. analytic style 22. conceptual style 23. behavioral style 24. heuristics 25. business performance management (BPM) software Decision-Making Styles Dimensions Chapter 7: Foundations of Planning Ways of thinking Planning - rational, orderly and consistent - A primary managerial activity that involves - intuitive, creative and unique - defining the organization’s goals Tolerance of ambiguity - establishing an overall strategy for - Low tolerance: require consistency and achieving those goals order - developing plans for organizational work - High tolerance: multiple thoughts activities simultaneously Types of Decision Makers Types of Planning: Formal - written, specific, and long-term focus, involves shared goals for the organization Informal - not written down, short-term focus; specific to an organizational unit Purposes of Planning - Provides direction - Reduces uncertainty - Minimizes waste and redundancy - Sets the standards for controlling Relationship between Planning and Performance Formal Planning is associated with higher profits and returns on assets and a positive financial result. - The quality of planning and implementation Types of Plans affects performance more than the extent of Strategic Plans planning. - Apply to the entire organization. - The external environment can reduce the - Establish the organization’s overall goals. impact of planning on performance, - Seek to position the organization in terms of - Formal planning must be used for several its environment. years before planning begins to affect - Cover extended periods of time. performance. Operational Plans Elements of Planning - Specify the details of how the overall goals Goals are to be achieved. - Cover a short time period. - Desired outcomes for individuals, groups, or entire organizations Long-Term Plans - Provide direction and evaluation - Plans with time frames extending beyond performance criteria three years Plans Short-Term Plans - Documents that outline how goals are to be - Plans with time frames on one year or less accomplished - Describe how resources are to be allocated Specific Plans and establish activity schedules - Plans that are clearly defined and leave no Types of Goals room for interpretation Financial Goals Directional Plans - Are related to the expected internal financial - Flexible plans that set out general performance of the organization guidelines, provide focus, yet allow Strategic Goals discretion in implementation. - Are related to the performance of the firm relative to factors in its external environment Stated Goals vs. Real Goals - Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization). Single-Use Plan  - A one-time plan specifically designed to meet the need of a unique situation Standing Plans - Ongoing plans that provide guidance for activities performed repeatedly Establishing Goals and Developing Plans Traditional Goal Setting - Broad goals are set at the top - Goals are broken into subgoals - Assumes that top management knows best because they can see the ―big picture.‖ - Goals are intended to direct, guide, and constrain from above. - Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility. Steps in Goal Setting 1. Review the organization’s mission statement 2. Evaluate available resources 3. Determine goals individually or with others 4. Write down the goals and communicate Maintaining the Hierarchy of Goals them Means-Ends Chain 5. Review results and whether goals are being - The integrated network of goals that results met from establishing a clearly-defined hierarchy of organizational goals. Developing Plans - Achievement of lower-level goals is the Contingency Factors in a Manager’s Planning means by which to reach higher-level goals Manager’s level- Strategic plans at higher levels, (ends). operational plans at lower levels Management by Objectives (MBO) Degree of environmental uncertainty - Specific performance goals are jointly - Stable environment - specific plans determined by employees and managers. - Dynamic environment - specific but flexible - Progress toward accomplishing goals is plans periodically reviewed. Length of future commitments - Rewards are allocated on the basis of - Commitment Concept - current plans progress towards the goals. affecting future commitments must be Key elements sufficiently long-term to meet those - goal specificity, participative decision commitments. making, an explicit performance/evaluation period, feedback  5. real goals 6. framing - a thinking method used to understand, define, and prioritize difficult business obstacles and issues. 7. strategic plans 8. operational plans 9. long-term plans 10. short-term plans 11. specific plans Approaches to Planning 12. directional plans Establishing a formal planning department 13. single-use plan - A group of planning specialists who help 14. standing plans managers write organizational plans. 15. traditional goal setting - Planning is a function of management; it 16. means-ends chain should never become the sole responsibility 17. management by objectives (MBO) of planners. 18. mission - tells us what our goal is – where Involving organizational members in the process are we going. It provides the compass - Plans are developed by members of setting for the organization. organizational units at various levels and 19. commitment concept - direct participation then coordinated with other units across the by the highest level executives in a specific organization. and critically important aspect or program Contemporary Issues in Planning of an organization. Criticisms of Planning 20. formal planning department - a team of - Planning may create rigidity. planning specialists whose only - Plans cannot be developed for dynamic responsibility is to help write the different environments. organizational plans. - Formal plans cannot replace intuition and creativity. Mahatma Gandhi - Planning focuses managers’ attention on 7 Blunders of the world today’s competition not tomorrow’s survival. 1. Wealth without work - Formal planning reinforces today’s success, 2. Pleasure without conscience which may lead to tomorrow’s failure. 3. Commerce without morality Effective Planning in Dynamic Environments 4. Science without humanity - Develop plans that are specific but flexible. 5. Worship without sacrifice - Understand that planning is an ongoing 6. Knowledge without character process. 7. Politics without principles - Change plans when conditions warrant. - Persistence in planning eventually pay off. Additional examples to different types of biases: - Flatten the organizational hierarchy to foster Heuristics the development of planning skills at all - A person is stuck in traffic and makes an organizational levels. impulsive decision to take the other route even though you don't know the way. Chapter 7 Terms to Remember: Overconfidence Bias 1. planning - College students often overestimate how 2. goals quickly they can finish writing a paper and 3. plans are forced to pull an all-nighter when they 4. stated goals realize it takes longer than expected. Immediate Gratification Bias you once wore it on a day when you closed - A person who wakes up to an alarm and a big deal. hits the snooze button is instantly gratifying Sunk Costs Errors themselves with nine minutes of not having - Choosing to finish a boring movie because to get up. you already paid for the ticket. Anchoring effect Self-Serving Bias - If you first see a T-shirt that costs $1,200 – - Α student who performs well on an exam then see a second one that costs $100 – may ascribe their success to their excellent you're prone to see the second shirt as preparation and intelligence. In the case of cheap. a poor performance, the same student Selective Perception Bias would likely think that the exam was too - A customer focuses only on the product's difficult or that the questions did not price and ignores the salesperson's advice correspond to the material taught. on quality. Hindsight Bias Confirmation Bias - After attending a baseball game, you might - During presidential elections, people tend to insist that you knew that the winning team seek information that paints the candidate was going to win beforehand. they support in a positive light, while dismissing any information that paints them in a negative light. Framing Bias - While doing your groceries, you see two different beef products. Both cost and weigh exactly the same. One is labeled ―80% lean‖ and the other ―20% fat.‖ - Comparing the two, you feel that 20% fat sounds like an unhealthy option, so you choose the 80% lean option. In reality, there is no difference between the two products, but one sounds more appealing than the other due to the framing effect. Availability Bias - Excessive coverage on the news or social media about plane crashes uses vivid images and stories to elicit an emotional response. That's why many people develop a fear of flying - they remember those images the next time they fly. Representation Bias - Thinking that because someone is wearing a suit and tie and carrying a briefcase, that they must be a lawyer, because they look like the stereotype of a lawyer. Randomness Bias - If you are certain your lucky tie will help you earn a client's business at a meeting later today, you're committing a randomness error. A tie does not bring you luck, even if