Chapter 4 Slides Management 2024 PDF

 ANNOUNCEME NTS Quiz for chapter 4 closed last night at 11H59p.m The online class quiz will be on Wednesday from 12H30 to 14H00 for chapter 4 Quiz for chapter 7 will open on Wednesday at 13H00 until Sunday at 11H59 -28 July Wednesday we will have a guest speaker from RSA – Mr Jaco f...

 ANNOUNCEME NTS Quiz for chapter 4 closed last night at 11H59p.m The online class quiz will be on Wednesday from 12H30 to 14H00 for chapter 4 Quiz for chapter 7 will open on Wednesday at 13H00 until Sunday at 11H59 -28 July Wednesday we will have a guest speaker from RSA – Mr Jaco from 11H10 to 12H00 Test one has been moved from the 7th of August to the 10th of August Test one will be on four chapters 1,2,4,7 We will reopen quizzes on request on week 13  Chapter 4: Ethics and corporate social responsibility Learning Outcomes After studying this chapter, you should be able to: Explain the four principles of corporate citizenship State the importance of ethics for organisations and their employees Describe four forces that influence the ethical behaviour of individuals and corporate social responsibility Describe three approaches that people use when making ethical judgements Describe the role of good corporate governance in the organisation Explain the role of stakeholders in managing corporate social responsibility Explain how an organisation, by being socially responsible, can increase their sustainability Explain how the concerns of stakeholders influence managers’ ethical decisions Describe how individuals can contribute to improving ethical conduct in the workplace Describe how organisations can contribute to improving ethical conduct in the workplace. Corporate citizenship Corporate citizenship is about creating a contract between an organisation and the society in which it operates because the factors that influence societies also influence business operations. Corporate citizenship requires the organisation to take four main principles into consideration: Minimise harm Maximise benefits Be accountable and responsive to key stakeholders Support strong financial results  Corporate citizenship Sustainable Business ethics CSR development Nurture, protect, enhance and promote Considers societal & Moral principles & the welfare & well- environmental values being of stakeholders concerns and society as a whole Importance of ethics and corporate social responsibility Today’s managers are responsible for creating and sustaining conditions in which people are likely to conduct themselves with integrity. Ethics and corporate responsibility build the framework for making business decisions in a morally and ethically acceptable manner. For this reason, ethics and social responsibility have become major concerns in global markets. In a world of increasing local and global competition, being aligned with society’s expectations can be beneficial to both employees and customers in the long run.  Ethics and ethical behaviour are essential for good management. Ethics is the set of moral principles or values that define right and wrong for a person. Ethical behaviour is the behaviour that matches the society’s accepted principles of right and wrong. An ethical issue is a situation where the actions of a manager can harm or benefit a person or group. Organisational ethics is the application of ethics in the organisation and the maintaining harmony with the society  Employees evaluate the corporate social performance (CSP) of organisations in terms of the following criteria: Employment selection and promotion based on merit in a non- discriminatory manner Extent of workforce diversity Payment of market-related wages and salaries based on job level Workplace safety and privacy The availability of training and development. Customers tend to evaluate an organisation in terms of the following criteria: Offering of quality products or services on a continuous basis Extent of offering innovative products and services fulfilling customer needs Not selling faulty or unsafe products or services Safe disposal of harmful or sub-standard products or services Reasonable pricing policies and practices Honest advertising by providing truthful, reliable product or service information.  An organisation that acts in an ethical manner can gain many advantages, including the following: Obtaining a competitive advantage (customers increasingly favour ethical organisations) Attracting investors (they regard the organisation as having integrity and a sense of responsibility) Attracting potential employees and retaining employees (people want to work for an ethical organisation) Improving staff morale and culture (employees tend to be happier and less stressed) Building up a good reputation of being socially responsible. Forces that shape ethical conduct Figure 4.1 Ethical perspectives for evaluating behaviour (p. 93) Source: Compiled by the author Societal norms and culture What is perceived as ethical in one society may be perceived as unethical in another. An organisation that operates in many different countries must be aware that local standards for ethical conduct may differ greatly from one location to the next. Developing ethical guidelines that make sense in various settings can be a complex task. Laws and regulations Laws are simply society’s values and standards that are enforceable in the courts. The legality of actions and decisions does not necessarily make them ethical. Societal norms and culture It is polite to cover your mouth when you yawn. It is rude to spit in public. Show respect to anyone older than you in all situations. It is common to tip about 10% of bills in South Africa, and tips are usually not included in the overall bill. Laws and Regulations Does ethics begin where the law ends? Organisational practices and culture Employees need clarity on what an organisation regards as ethical or unethical behaviours. These directions can be provided in a formal or informal manner. Codes of conduct and ethics policies can guide employee behaviour. Organisations that are serious about ethics in the workplace, can screen potential employees and only select those who share the Individual perspectives ethical values of the organisation. The personal moral philosophy of the individual and his or her stage of moral development may impact on ethics in the organisation. Psychological studies of ethical behaviour indicate that individuals develop both physically and morally from an early age. As they mature, their ethical and moral criteria and reasoning change.  At Engen, we strive to always operate in accordance with good business ethics and in a safe and environmentally responsible way, not simply to comply with legislation but because it is the right thing to do. Ethical considerations and our corporate values inform all our business decisions. EGENE shareholders We are committed to creating and enhancing long-term shareholder value using the principles of value-based management. Employees We are committed to maintaining a safe work environment enriched by diversity and characterized by open communication, trust, fair treatment, and respect. Customers Success depends upon our ability to consistently satisfy changing customer preferences. We pledge to continuously provide products and services that conform to requirements of both our internal and external customers. Business Partners We will seek mutually beneficial relationships with our counterparts, contractors, suppliers, financial institutions, and other entities with whom we do business.  Question Which of the following gifts would you be willing to accept from sales representatives of the transportation companies? Pen and pencil set (with the company’s logo) Five-year supply of scratch pads (with logo) Dinner for four at an exclusive restaurant Season tickets to a professional soccer game Approaches to making ethical judgements Three models have been identified to understand how organisations make ethical judgements that guide their ethical business behaviour. Each of the models discussed provides a different but somewhat related set of principles or standards for judging whether managerial and employee decisions and behaviour are right or wrong. 1. The utilitarian model 2. The moral rights model 3. The justice model The utilitarian model The utilitarian model focuses on actions (behaviour) and not on the motives for such actions. When a person is choosing between two courses of action, the chosen course should be the one that benefits the greatest number of people, although this benefit may come at the expense of a few people or those with little power. The utilitarian model drives organisations to assess constantly how activities – even so-called charitable contributions – are related to business performance. All employees should strive to use the organisation’s resources to increase its profits and engage in activities designed to do so, while performing within the ‘rules of the game’.  Employing the utilitarian approach in a competitive market system entails maximising profits or surpluses for the greatest good of the greatest number of people No organisation should unilaterally go beyond what the law requires, for example, in preserving the environment. Doing so would only reduce that organisation’s profits and would do nothing to eliminate the pollution caused by its competitors. They would obtain a greater share of the market and profits because of lower costs and thus lower prices. Efficiency is accomplished by simultaneously minimising inputs and maximising quantity of products produced and sold, or quality of service rendered. The moral rights model The moral rights model holds that decisions should be consistent with fundamental rights and privileges The basis of the moral rights model is respect for other people. Morality is supported by logical, factual, and consistent reasoning. Employees, customers, and the general public have the right not to have their lives and safety jeopardised. Employees, customers, and the general public have the right to be informed about important product or service matters that could influence their safety. Products and services offered by organisations should indicate potential harm or influence on the user or consumer thereof.  The general public has a right to the protection of their personal information and to not have it distributed to government agencies, employers, and others. Speech is often a vehicle for expressing matters of conscience, so freedom of speech is closely related to freedom of conscience. As a guide to ethical decision-making in organisations, the moral rights approach serves as an effective counterweight that protects the non-business sectors of society from overenthusiastic capitalists strictly following the utilitarian approach. However, as a guide to ethical behaviour in organisations, the moral rights approach says more about what organisations should not do – to include infringing the moral rights of employees, customers, and the general public – than about what it should do. The justice model The justice model assesses decisions and behaviour concerning how equitably they share benefits and costs among individuals and groups This model suggests that people should appreciate the viewpoints of other people. The supporters of this model suggest that when designing management systems and making organisational decisions that are just and fair, they must be based on the following three principles: Distributive justice: Individuals be treated on the same bases not discriminated Fairness: obeying the rules (fair and chosen by employee) Natural duty : being responsible person Distributive justice principle Individuals who are similar in relevant respects should be treated similarly Individuals who differ in relevant respects should be treated differently in proportion to the differences between them. Fairness principle The organisation is just (or fair) Employees have chosen to accept benefits provided by the organisation or have utilised opportunities offered in order to further their own interests. Natural duty principle To help those in need or in trouble provided that the assistance given is without undue personal risk or loss Not to cause harm or hurt another person Not to cause undeserved distress To support ethical institutions. Combining ethical approaches Using these three models in combination increases the probability that decisions and behaviour will be judged as ethical by others. Many changes in organisational practices reflect solutions that were developed by managers who accepted the utilitarian model, but also believed that doing what was right was one way for the organisation to do well. Managing corporate social responsibility Some organisations focus on maximising profit and Ethical organisations focus return on investment on maximising profit and without worrying about return on investment how profit is made. They while minimising or are unconcerned about avoiding negative social the social effects of their effects. business activities. Stakeholders Figure 4.2 Stakeholders of an organisation (p. 105) Source: Compiled by the author Stakeholder concerns Customers Customer related concerns are often associated with cost savings or product or service quality improvements. Employees Many of the concerns that employees currently have reflect changes in the structure of organisations, and the fact that work is a major activity in their lives. Remuneration is another area of concern to employees. Society As part of their corporate social investment programmes, many South African organisations have invested in areas that could rightfully be said to be the responsibility of government. Stakeholder concerns Owners and shareholders In the case of organisations, such as public schools, NGOs, and government organisations, the concerns of owners are often, in essence, those of society at large. On the other hand, the concerns of shareholders (owners of privately and publicly owned companies who trade with shares on the JSE) may be very different from those of society in general. Most shareholders invest their money in organisations to preserve it for later use or for financial reasons, such as to receive dividends as financial benefits. As professional investors, these shareholders have considerable power to influence management’s decisions.  When making decisions and implementing organisational changes to improve sales or profits, managers must consider the effects of the changes on employees, customers, the community, shareholders, and other relevant stakeholders. The interests of shareholders and employees often seem to be in conflict, especially over restructuring and downsizing. The reason why employees are made redundant is often because of the need for the organisation to survive. Employees need to recognise that their own long-term employment depends on the ability of their organisation – and even an entire industry – to satisfy the concerns of the communities, especially customers, affected by their business. Managing sustainability According to Alan Chapman, the four cornerstones of sustainable development in any modern business venture are: Purpose People Planet Probity (having strong moral principles). An organisation should try to reconcile its organisational purpose (profit for shareholders or cost-effective service delivery) with the needs and feelings of people (employees, customers, suppliers, and local communities) with consideration for our planet (wildlife, natural resources or heritage) by acting with probity (integrity, compassion, honesty, and truth) at all times.  The King IV Report requires all listed companies, public- sector enterprises, and financial institutions to conform to the concept of the triple bottom line, which involves disclosing their social and environmental performance alongside their financial results. In addition to the corporate governance guidelines outlined in the King III Report, the King IV Report introduces the following concepts or topics: Outcomes‑based governance by placing accountability on the governing body Apply and explain the approach to disclosure of publicly available information 16 principles applicable to all organisations outlining 208 recommended practices and a 17th principle applicable to institutional investors as well as provision of a sectors supplement to guide different types of organisations. Table 4.2 Stakeholders’ concerns when evaluating corporate performance (p. 112) Source: Compiled by the author Management tools for encouraging ethical conduct Code of ethics/code of conduct Ethics committee Oversee social and economic development Ensure practices of good corporate citizenship Advise management on environment, health, and public safety issues Manage consumer relationships Ensure adherence to labour and employment conditions. Ethics training Whistle-blowing Questions to ask yourself if you are thinking about blowing the whistle* Table 4.3: Questions to think about asking yourself if you are thinking about blowing the whistle Sources: Adapted from Near& Miceli(1996), Near & Miceli (1995), Miceli & Near (1992) Netflix This Code has been reasonably designed to deter wrongdoing and to promote: Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company; Compliance with applicable governmental laws, rules and regulations; The prompt internal reporting to an appropriate person or persons identified in this Code of violations of this Code; and Accountability for adherence to this Code Approaches to corporate social responsibility (cont.) Community Environmental sensitivity in product design and packaging. Recycling of products. Pollution prevention. Donations. Availability of facilities for community use. Chapter Summary Concerns about ethics in business are increasing The four forces that influence a person’s ethical conduct are societal norms and culture, laws and regulations, organisational practices and culture, and the individual’s own perspectives. Managers and employees commonly rely on one of three ethical approaches and models (or a combination of them). The diverse values and ethical approaches prevalent in advanced economies introduce a great deal of complexity for organisations that attempt to act in socially responsible ways. Although unethical conduct will never be eliminated, at an organisational level, managers can implement a variety of organisational practices to support ethical conduct, including adopting a code of ethics, setting up an ethics committee, and ethical training. Whistle-blowing is another organisational practice to support ethical conduct in the workplace. The goal of whistle-blowing is to stop illegal or unethical wrongdoing.