Management Fourteenth Edition Chapter 6

6-1 Management Fourteenth Edition Chapter 6 Managing Social Responsibility and Ethics Copyright © 2018 Pearson Education, Inc. ...

6-1 Management Fourteenth Edition Chapter 6 Managing Social Responsibility and Ethics Copyright © 2018 Pearson Education, Inc.  6-2 Learning Objectives 6.1 Discuss what it means to be socially responsible and what factors influence that decision. 6.2 Explain green management and how organizations can go green. 6.3 Discuss the factors that lead to ethical and unethical behavior. Develop your skill at creating trust in work groups. 6.4 Describe management’s role in encouraging ethical behavior. Know how to make good decisions about ethical dilemmas. 6.5 Discuss current social responsibility and ethics issues. Copyright © 2018 Pearson Education, Inc.  6-3 From Obligations to Responsiveness to Responsibility Social obligation: when a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities Classical view: the view that management’s only social responsibility is to maximize profits Copyright © 2018 Pearson Education, Inc.  6-4 The Socioeconomic View Socioeconomic view: when a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities Social responsiveness: the view that management’s only social responsibility is to maximize profits Social responsibility: A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society Copyright © 2018 Pearson Education, Inc.  6-5 Should Organizations Be Socially Involved? Social screening: Applying social criteria (screens) to investment decisions Copyright © 2018 Pearson Education, Inc.  6-6 Exhibit 6-1 Arguments For and Against Social Responsibility Exhibit 6-1 outlines arguments for and against social involvement. Copyright © 2018 Pearson Education, Inc.  6-7 Green Management and Sustainability Green management: managers consider the impact of their organization on the natural environment Copyright © 2018 Pearson Education, Inc.  6-8 How Organizations Go Green Legal (light green) approach Market approach Stakeholder approach Activist approach Copyright © 2018 Pearson Education, Inc.  6-9 Exhibit 6-2 Green Approaches Exhibit 6-2 uses the terms shades of green to describe the different environmental approaches that organizations may take. Copyright © 2018 Pearson Education, Inc.  6-10 Evaluating Green Management Actions Company-issued reports on environmental performance ISO 9000 (quality management) and ISO 14000 (environmental management) standards Global 100 list of the most sustainable corporations in the world Copyright © 2018 Pearson Education, Inc.  6-11 Managers and Ethical Behavior Ethics: principles, values, and beliefs that define right and wrong behavior Copyright © 2018 Pearson Education, Inc.  6-12 Exhibit 6-3 Factors that Determine Ethical and Unethical Behavior Exhibit 6-3 shows factors that determine ethical and unethical behavior. Copyright © 2018 Pearson Education, Inc.  6-13 Stage of Moral Development Preconventional level Conventional level Principled level Copyright © 2018 Pearson Education, Inc.  6-14 Exhibit 6-4 Stages of Moral Development Exhibit 6-4 shows the three levels and six stages of moral development. Copyright © 2018 Pearson Education, Inc.  6-15 Individual Characteristics Values Ego strength Locus of control Copyright © 2018 Pearson Education, Inc.  6-16 Structural Variables Ethical behavior can be influenced by: – An organization’s structural design – Goals – Performance appraisal system – Reward allocation Copyright © 2018 Pearson Education, Inc.  6-17 Exhibit 6-5 Issue Intensity As Exhibit 6-5 shows, six characteristics determine issue intensity or how important an ethical issue is to an individual: greatness of harm, consensus of wrong, probability of harm, immediacy of consequences, proximity to victim(s), and concentration of effect. Copyright © 2018 Pearson Education, Inc.  6-18 Issue Intensity The six factors suggest that: – the larger the number of people harmed – the more agreement that the action is wrong – the greater the likelihood that the action will cause harm – the more immediately the consequences of the action will be felt – the closer the person feels to the victim – The more concentrated the effect of the action on the victim(s)… The greater the issue intensity or importance Copyright © 2018 Pearson Education, Inc.  6-19 Ethics in an International Context Ethical standards are not universal Foreign Corrupt Practices Act United Nations Global Contract Copyright © 2018 Pearson Education, Inc.  6-20 Exhibit 6-6 The Ten Principles of the UN Global Compact (1 of 2) Principle Number Principle Text Human Rights blank Principle 1 Business should support and respect the protection of internationally proclaimed human rights within their sphere of influence; and Principle 2 Make sure they are not complicit in human rights abuses. Labor Standards blank Principle 3 Business should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4 The elimination of all forms of forced and compulsory labor; Principle 5 The effective abolition of child labor; and Principle 6 The elimination of discrimination in respect to employment and occupation. Exhibit 6-6 shows the UN Global Compact, which asks companies to embrace, support, and enact, within their sphere of infuence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption. Copyright © 2018 Pearson Education, Inc.  6-21 Exhibit 6-6 The Ten Principles of the UN Global Compact (2 of 2) Principle Number Principle Text Environment blank Principle 7 Business should support a precautionary approach to environmental challenges; Principle 8 Undertake initiatives to promote greater environmental responsibility; and Principle 9 Encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption blank Principle 10 Business should work against corruption in all its forms, including extortion and bribery. Exhibit 6-6 shows the UN Global Compact, which asks companies to embrace, support, and enact, within their sphere of infuence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption. Copyright © 2018 Pearson Education, Inc.  6-22 Employee Selection Values-based management: the organization’s values guide employees in the way they do their jobs Copyright © 2018 Pearson Education, Inc.  6-23 Codes of Ethics and Decision Rules Code of ethics: a formal statement of an organization’s primary values and the ethical rules it expects its employees to follow Copyright © 2018 Pearson Education, Inc.  6-24 Exhibit 6-7 Codes of Ethics (1 of 3) Cluster 1. Be a Dependable Organizational Citizen 1. Comply with safety, health, and security regulations. 2. Demonstrate courtesy, respect, honesty, and fairness. 3. Illegal drugs and alcohol at work are prohibited. 4. Manage personal finances well. 5. Exhibit good attendance and punctuality. 6. Follow directives of supervisors. 7. Do not use abusive language. 8. Dress in business attire. 9. Firearms at work are prohibited. Exhibit 6-7 shows the three categories into which the content of codes of ethics falls. Copyright © 2018 Pearson Education, Inc.  6-25 Exhibit 6-7 Codes of Ethics (2 of 3) Cluster 2. Do Not Do Anything Unlawful or Improper That Will Harm the Organization 1. Conduct business in compliance with all laws. 2. Payments for unlawful purposes are prohibited. 3. Bribes are prohibited. 4. Avoid outside activities that impair duties. 5. Maintain confidentiality of records. 6. Comply with all antitrust and trade regulations. 7. Comply with all accounting rules and controls. 8. Do not use company property for personal benefit. 9. Employees are personally accountable for company funds. 10. Do not propagate false or misleading information. 11. Make decisions without regard for personal gain. Exhibit 6-7 shows the three categories into which the content of codes of ethics falls. Copyright © 2018 Pearson Education, Inc.  6-26 Exhibit 6-7 Codes of Ethics (3 of 3) Cluster 3. Be Good to Customers 1. Convey true claims in product advertisements. 2. Perform assigned duties to the best of your ability. 3. Provide products and services of the highest quality. Exhibit 6-7 shows the three categories into which the content of codes of ethics falls. Copyright © 2018 Pearson Education, Inc.  6-27 Developing Codes of Ethics Organizational leaders should model appropriate behavior and reward those who act ethically. Managers should reaffirm the importance of the ethics code and discipline those who break it Stakeholders should be considered as an ethics code is developed or improved Managers should communicate and reinforce the ethics code regularly Managers should use the five-step process to guide employees when faced with ethical dilemmas Copyright © 2018 Pearson Education, Inc.  6-28 Exhibit 6-8 A Process for Addressing Ethical Dilemmas A Process for Addressing Ethical Dilemmas Step 1: What is the ethical dilemma? Step 2: Who are the affected stakeholders? Step 3: Which personal, organizational, and external factors are important in this decision? Step 4: What are possible alternatives? Step 5: What is my decision and how will I act on it? Exhibit 6-8 shows the five-step process to guide employees when faced with ethical dilemmas. Copyright © 2018 Pearson Education, Inc.  6-29 Leadership at the Top Doing business ethically requires a commitment from managers at all levels, but especially the top level because: – they uphold the shared values and set the cultural tone – they’re role models in both words and actions Copyright © 2018 Pearson Education, Inc.  6-30 Job Goals and Performance Appraisal Under the stress of unrealistic goals, otherwise ethical employees may feel they have no choice but to do whatever is necessary to meet those goals. Copyright © 2018 Pearson Education, Inc.  6-31 Ethics Training More organizations are setting up seminars, workshops, and similar ethics training programs to encourage ethical behavior. Copyright © 2018 Pearson Education, Inc.  6-32 Independent Social Audits Independent social audits: evaluate decisions and management practices in terms of the organization’s code of ethics Copyright © 2018 Pearson Education, Inc.  6-33 Managing Ethical Lapses and Social Responsibility One survey reported that among 5,000 employees: 45 percent admitted falling asleep at work and 22 percent said they spread a rumor about a coworker Copyright © 2018 Pearson Education, Inc.  6-34 Ethical Leadership What managers do has a strong influence on employees’ decisions whether to behave ethically. Copyright © 2018 Pearson Education, Inc.  6-35 Exhibit 6-9 Being an Ethical Leader Being an Ethical Leader Be a good role model by being ethical and honest. Tell the truth always. Don’t hide or manipulate information. Be willing to admit your failures. Share your personal values by regularly communicating them to employees. Stress the organization’s or team’s important shared values. Use the reward system to hold everyone accountable to the values. Exhibit 6-9 gives some suggestions on how managers can provide ethical leadership. Copyright © 2018 Pearson Education, Inc.  6-36 Protection of Employees Who Raise Ethical Issues Whistle-blower: individual who raises ethical concerns or issues to others Copyright © 2018 Pearson Education, Inc.  6-37 Social Entrepreneurship Social entrepreneur: an individual or organization that seeks out opportunities to improve society by using practical, innovative, and sustainable approaches Copyright © 2018 Pearson Education, Inc.  6-38 Business Promoting Positive Social Change Corporate philanthropy: can be an effective way for companies to address societal problems Employee volunteering efforts: a popular way for businesses to be involved in promoting social change Copyright © 2018 Pearson Education, Inc.  6-39 Review Learning Objective 6.1 Discuss what it means to be socially responsible and what factors influence that decision. – Social obligation: a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities – Social responsiveness—when a firm engages in social actions in response to some popular social need Copyright © 2018 Pearson Education, Inc.  6-40 Review Learning Objective 6.2 Explain green management and how organizations can go green. – Different approaches  Light green  Market approach  Stakeholder approach  Activist or dark green approach Copyright © 2018 Pearson Education, Inc.  6-41 Review Learning Objective 6.3 Discuss the factors that lead to ethical and unethical behavior. – Factors that affect ethical and unethical behavior include  An individual’s level of moral development  Individual characteristics  Structural variables  Organizational culture  Issue intensity Copyright © 2018 Pearson Education, Inc.  6-42 Review Learning Objective 6.4 Describe management’s role in encouraging ethical behavior. – The behavior of managers is the single most important influence on an individual’s decision to act ethically or unethically). – Nonprogrammed decisions are unique decisions that require a custom-made solution and are used when the problems are new or unusual (unstructured) and for which information is ambiguous or incomplete. Copyright © 2018 Pearson Education, Inc.  6-43 Review Learning Objective 6.5 Discuss current social responsibility and ethics issues. – Ethical leaders also are honest, share their values, stress important shared values, and use the reward system appropriately. – Managers can protect whistle-blowers (employees who raise ethical issues or concerns) by encouraging them to come forward. Copyright © 2018 Pearson Education, Inc.  6-44 Copyright © 2018 Pearson Education, Inc.