24312286 Social Responsibility and Managerial Ethics Principles of Management

8/3/2019 24312286 Social Responsibility and Managerial Ethics Principles of Management

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Chapter 5

Social Responsibility and Managerial

Ethics


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LEARNING OUTLINEFollow this Learning Outline as you read and study this chapter.

What Is Social Responsibility?

Contrast the classical and socio-economic views of social

responsibility.

Discuss the role that stakeholders play in the four

approaches to social responsibility.


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LEARNING OUTLINE (contd)Follow this Learning Outline as you read and study this chapter.

Social Responsibility and Economic Performance

Explain what research studies have shown about therelationship between an organizations social involvement

and its economic performance.


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Values-based Management

Discuss the four purposes that shared values serve.

Describe the relationship of values-based management to

ethics.


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Managerial Ethics

Contrast the four views of ethics.

Discuss the factors that affect ethical and unethical behaviour.Discuss the six determinants of issue intensity.

Explain codes of ethics and how their effectiveness can be

improved.

Describe the important roles managers play in encouragingethical behaviour.

Discuss how managers and organizations can protect

employees who raise ethical issues or concerns.


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The Classical View

Maximize profits for the benefit of the

stockholders Doing social good unjustifiably increases costs


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(contd)

The Socio-economic View

Management should also protect and improvesocietys welfare

Corporations are responsible not only to

stockholders

Firms have a moral responsibility to larger

society to do the right thing


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Exhibit 4.1 Approaches to Social

Responsibility

Source:Adapted from S.L. Wartick and P.L. Cochran, The Evolution of the CorporateSocial Performance Model, Academy of Management Review, October 1985, p. 766.

DefensiveApproach

Minimalcommitment

to socialresponsibility

AccommodativeApproach

Moderatecommitment


ProactiveApproach

Strongcommitment


ObstructionistApproach

Disregardfor social

responsibility

No Social Responsibility High Social Responsibility


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Exhibit 4.2 Arguments For and

Against Social Responsibility For

Public expectations

Long-run profits

Ethical obligation Public image

Better environment

Discouragement of furthergovernmental regulation

Balance of responsibility andpower

Stockholder interests

Possession of resources

Superiority of prevention over cure

Against

Violation of profit

maximization Dilution of purpose

Costs

Too much power

Lack of skills Lack of accountability


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Managers establish and uphold an organizations sharedvalues

Purposes of Shared Values Guiding managerial decisions

Shaping employee behaviour

Influencing the direction of marketing efforts

Building team spirit The Bottom Line on Shared Corporate Values

An organizations values are reflected in the decisions andactions of its employees


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Exhibit 4.3 Purposes of Shared

Values

Build Team SpiritGuide Managers'

Decisions and ActionsShape Employee

BehaviorInfluence

Marketing Efforts

SHAREDORGANIZATIONAL

VALUES


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Exhibit 4.4

Stated Values ofOrganizations

Percentage ofCore Value Respondents

Customer satisfaction 77%

Ethics/integrity 76%

Accountability 61%

Respect for others 59%

Open communication 51%

Profitability 49%

Teamwork 47%

Innovation/change 47%

Continuous learning 43%

Positive work environment 42%

Diversity 41%

Community service 38%

Trust 37%

Social responsibility 33%

Security/safety 33%

Empowerment 32%

Employee job satisfaction 31%

Have fun 24%

Source:AMA Corporate Values Survey, (www.amanet.org), October 30, 2002.


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Managerial Ethics

Ethics Defined

The rules and principles that define right and

wrong conduct Four Views of Ethics

Utilitarian view

Rights viewTheory of justice view

Integrative social contracts theory


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Managerial Ethics (contd)

Utilitarian View

Greatest good is provided for the greatestnumber

Encourages efficiency and productivity and isconsistent with the goal of profit maximization

Rights View

Respecting and protecting individual libertiesand privileges

Seeks to protect individual rights of conscience, freespeech, life and safety, and due process


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Managerial Ethics (contd)

The Theory of Justice

Organizational rules are enforced fairly and impartially

and follow all legal rules and regulations

Protects the interests of underrepresented stakeholders and the

rights of employees

Integrative Social Contracts Theory

Ethical decisions should be based on existing ethical

norms in industries and communities Based on integration of the general social contract and the

specific contract between community members


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Exhibit 4.5 Factors That Affect

Ethical and Unethical Behaviour

EthicalDilemma

Stage of MoralDevelopment

Organizational Culture

StructuralVariables

IndividualCharacteristics

IssueIntensity

Moderators Ethical/UnethicalBehavior


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Factors That Affect Employee Ethics

Stages of moral development

Individual characteristics

Structural variables Organizational culture

Issue intensity

A measure of independence from outside influences

Levels of Individual Moral Development

Pre-conventional level

Conventional level

Principled level


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Exhibit 4.6 Stages of Moral

Development

Source:Based on L. Kohlberg, Moral Stages and Moralization: The Cognitive-Development Approach, in T. Lickona (ed.). Moral Development and Behavior: Theory,Research, and Social Issues(New York: Holt, Rinehart & Winston, 1976), pp. 3435.

6. Following self -chosen ethical principles ev en ifthey v iolate the law

5. Valuing rights of others and upholding absolute

v alues and rights regardless of the majority

sopinion4. Maintaining conv entional order by f ulf illing obligations

to which y ou hav e agreed3. Liv ing up to what is expected by people close to y ou

2. Following rules only when doing so is in y our immediate interest1. Sticking to rules to av oid physical punishment

Preconv entional

Conv entional

Lev el Description of Stage

Principled


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Structural variables

Organizational culture

Issue intensity

Stage of moral development interacts with:

Individual characteristicsThe organizations structural design

The organizations culture

The intensity of the ethical issue


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Issue intensity

Research Conclusions:

People proceed through the stages of moral developmentsequentially

There is no guarantee of continued moral development

Most adults are in Stage 4 (good corporate citizen)


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Issue intensity

Values

Basic convictions about what is right or wrong on a broad range ofissues

Ego strengthA personality measure of the strength of a persons convictions


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Issue intensity

Locus of Control

A personality attribute that measures the degree to whichpeople believe they control their own life

Internal locus: the belief that you control your destiny

External locus: the belief that what happens to you is due to

luck or chance


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Stages of moral development Individual characteristics


Organizational culture Issue intensity

Organizational characteristics and mechanisms thatguide and influence individual ethics:

Performance appraisal systems

Reward allocation systems

Behaviors (ethical) of managers

An organizations culture

Intensity of the ethical issue


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Issue intensity

Good structural design minimizes ambiguity anduncertainty and fosters ethical behavior


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Issue intensity

Cultures high in risk tolerance, control, and conflicttolerance are most likely to encourage high ethicalstandards

Weak cultures have less ability to encourage high ethicalstandards


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Exhibit 4.7 Determinants of Issue Intensity

Issue Intensity

Consensusof Wrong

Proximity toVictim(s)

Concentrationof Effect

Greatnessof Harm

Immediacy ofConsequences

Probabilityof Harm

How many peoplewill be harmed?

How concentratedis the effect of the

action on the victim(s)?

How likely is itthat this action

will cause harm?

Will harm be feltimmediately?

How much agreementis there that thisaction is wrong?

How close are thepotential victims?


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Ethics in an International Context

Ethical standards are not universal

Social and cultural differences determine

acceptable behaviors


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The Global Compact

Human Rights Principle 1: Support and respect the protection of international

human rights within their sphere of influence

Principle 2: Make sure business corporations are not complicit in

human rights abuses

Labor Standards Principle 3: Freedom of association and the effective recognition

of the right to collective bargaining

Principle 4: Eliminate all forms of forced and compulsory labor Principle 5: Abolish child labor

Principle 6: Eliminate discrimination in respect of employment andoccupation

Source:The Global Compact Web Site (www.unglobalcompact.org), November 7, 2004.


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The Global Compact (contd)

Environment

Principle 7: Support a precautionary approach to environmental

challenges

Principle 8: Undertake initiatives to promote greater environmentalresponsibility

Principle 9: Encourage the development and diffusion of

environmentally friendly technologies

Anticorruption

Principle 10: Work against all forms of corruption, including

extortion and bribery

Source:The Global Compact Web Site (www.unglobalcompact.org), November 7, 2004.


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How Managers Can Improve Ethical

Behavior 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.


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Code of Ethics

A formal statement of an organizations

primary values and the ethical rules it expects

its employees to followBe a dependable organizational citizen

Dont 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. Paperpresented at the 48th Annual Academy of Management Conference, Anaheim, California, August 1988.


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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 disciplinethose who break the code


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Exhibit 4.8 Examining Ethics


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Ethical Leadership

Managers must provide agood role modelby:

Being ethical and honest at all times

Telling the truth

Admitting failure and not trying to cover it up

Communicating shared ethical values to employeesthrough symbols, stories, and slogans

Rewarding employees who behave ethically andpunishing those who do not

Protecting employees (whistleblowers) who bring to lightunethical behaviours or raise ethical issues


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The Value of Ethics Training

Training can make a difference in ethical

behaviors

Training increases employee awareness ofethical 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

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