Chapter 5 - Social Responsibility and Ethics PDF

SOCIAL RESPONSIBILITY AND ETHICS Chapter 5 FROM OBLIGATION TO RESPONSIVENESS TO RESPONSIBILITY  Social Obligation  The obligation of a business to meet its economic and legal responsibilities and nothing more.  Social Responsiveness  It means that a company engages i...

SOCIAL RESPONSIBILITY AND ETHICS Chapter 5 FROM OBLIGATION TO RESPONSIVENESS TO RESPONSIBILITY  Social Obligation  The obligation of a business to meet its economic and legal responsibilities and nothing more.  Social Responsiveness  It means that a company engages in social actions in response to some popular social need.  Managers in these companies are guided by social norms and values and make practical, market- oriented decisions about their actions.  Social Responsibility  A socially responsible company goes beyond what it is obligated to do or chooses to do because of some popular social need and does what it can to help improve society because it’s the right thing to do. For example, Abt Electronics in Glenview, Illinois, would be described as socially responsible according to our definition. As one of the largest single-store electronics retailers in the United States, it responded to soaring energy costs and environmental concerns by shutting off lights more frequently and reducing air conditioning and heating HOW ORGANIZATIONS GO GREEN  Legal (or light green) approach- Firms simply do what is required legally by obeying laws, rules, and regulations willingly without legal challenge.  Market approach- Firms respond to preferences of customers in terms of environmentally friendly products.  Stakeholder approach- Firms work to meet the environmental demands of multiple stakeholders such as employees, suppliers, or community.  Activist (or dark green) approach- Firms looks for ways to protect the earth’s natural resources and be actively socially responsible. EVALUATING GREEN MANAGEMENT ACTIONS  Organizations become “greener” by  Using the Sustainability Reporting Guidelines to document “green” actions.  ISO 9000 (quality management)  Adopting ISO 14000 standards for environmental management  Being named as one of the 100 Most Sustainable Corporations in the world. MANAGERIAL ETHICS  Ethics Defined  Therules and principles that define right and wrong conduct FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR Whether someone behaves ethically or unethically when faced with an ethical dilemma is influenced by several things:  His/her stage of Moral development  Preconventional level  Conventional level  Principled/Postconventional level Stages of Moral development interacts with  Individual characteristics  The organization’s structural design  The organization’s culture  The intensity of the ethical issue Copyright © 2005 Prentice Hall, Inc. All rights reserved. 5–7 EXHIBIT 5-3 FACTORS THAT DETERMINE ETHICAL AND UNETHICAL BEHAVIOR EXHIBIT 5-4 STAGES OF MORAL DEVELOPMENT FACTORS THAT AFFECT EMPLOYEE ETHICS (CONT’D)  Moral Development  Research Conclusions:  People proceed through the stages of moral development sequentially.  There is no guarantee of continued moral development.  Most adults are in Stage 4. 5–10 FACTORS THAT AFFECT EMPLOYEE ETHICS (CONT’D)  Individual Characteristics  Values Basic convictions about what is right or wrong  Two Personality Variables  Ego strength  A personality measure of the strength of a person’s convictions  Locus of Control  A personality attribute that measures the degree to which people believe they control their own life/fate.  Internal locus: the belief that you control your destiny.  External locus: the belief that what happens to you is due to luck or chance. 5–11 FACTORS THAT AFFECT EMPLOYEE ETHICS (CONT’D)  Structural Variables  Organizational characteristics and mechanisms that guide and influence individual ethics:  Goals  Performance appraisal systems  Reward allocation systems Good structural design minimizes ambiguity and uncertainty and fosters ethical behavior. Copyright © 2005 Prentice Hall, Inc. All rights reserved. 5–12  FACTORS THAT AFFECT EMPLOYEE ETHICS (CONT’D)  Organizational culture Organizational culture reflects what the organization stands for and what it believes in, and they create an environment that influences employee behaviour ethically or unethically.  Values-based management An approach to managing in which managers establish and uphold an organization’s shared values. The purpose of shared values Guiding managerial decisions Shaping employee behavior Influencing the direction of marketing efforts Building team spirit FACTORS THAT AFFECT EMPLOYEE ETHICS (CONT’D)  Intensity of the Ethical issue ETHICS IN AN INTERNATIONAL CONTEXT  Ethical standards are not universal Social and cultural differences determine acceptable behaviors  Foreign Corrupt Practices Act (FCPA) Makes it illegal to knowingly corrupt a foreign official, yet “token” payment to officials are permissible when doing so is an accepted practice in that country  The Global Compact Document created by the United Nations outlining principles for doing business globally in the areas of human rights, labor, the environment, and anticorruption. HOW MANAGERS CAN IMPROVE ETHICAL BEHAVIOUR IN AN ORGANIZATION  Hire individuals with high ethical standards.  Establish codes of ethics and decision rules.  Lead by example.  Delineate job goals and performance appraisal mechanisms.  Provide ethics training.  Conduct independent social audits.  Provide support for individuals facing ethical dilemmas. 17 CODE OF ETHICS  A formal statement of an organization’s primary values and the ethical rules it expects its employees to follow  Be a dependable organizational citizen  Don’t do anything unlawful or improper that will harm the organization  Be good to customers Source: F.R. David, “An Empirical Study of Codes of Business Ethics: A Strategic Perspective.” Paper presented at the 48th Annual Academy of Management Conference, Anaheim, California, August 1988. 18 EFFECTIVE USE OF A CODE OF ETHICS  Develop a code of ethics to guide decision making  Communicate the code regularly  Have all levels of management show commitment to the code  Publicly reprimand and consistently discipline those who break the code 19 ETHICAL LEADERSHIP  Managers must provide a good role model by:  Being ethical and honest at all times  Telling the truth  Admitting failure and not trying to cover it up  Communicating shared ethical values to employees through symbols, stories, and slogans  Rewarding employees who behave ethically and punishing those who do not  Protecting employees (whistleblowers) who bring to light unethical behaviours or raise ethical issues 20 THE VALUE OF ETHICS TRAINING  Training can make a difference in ethical behaviours  Training increases employee awareness of ethical issues in business decisions  Training clarifies and reinforces the standards of conduct  Employees are more confident of support when taking unpopular but ethically correct stances 21 MANAGING ETHICAL LAPSES AND SOCIAL IRRESPONSIBILITY  Provide ETHICAL LEADERSHIP  PROTECTION OF EMPLOYEES WHO RAISE ETHICAL ISSUES (whistle-blowers) AWARENESS OF SOCIAL ISSUES  Social Entrepreneurs  Are individual or organization who seeks out opportunities to improve society by using practical, innovative, and sustainable approaches.  Want to make the world a better place and have a driving passion to make that happen. BUSINESSES PROMOTING POSITIVE SOCIAL CHANGE  CORPORATE PHILANTHROPY  Campaigns  Donations  Funding own foundations  EMPLOYEE VOLUNTEERING EFFORTS  Team volunteering  Individual volunteering during work hours