CHAPTER 14: ETHICS, SOCIAL RESPONSIBILITY, AND SUSTAINABILITY

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Business Leadership: Management FundamentalsJohn R. Schermerhorn, Jr., Barry Wright, and Lorie Guest

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• Ethics: – Code of moral principles– Set standards of “good” or “bad” or “right” or

“wrong” in one’s conduct

• Ethical behaviour: – What is accepted as good and right in the

context of the governing moral code

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WHAT IS ETHICAL BEHAVIOUR?

• Law, values, and ethical behaviour:– Legal behaviour is not necessarily ethical

behaviourBRAINSTORM: CAN YOU THIN OF AN EXAMPLE?

– Personal values help determine individual ethical behaviour

– Values span broad beliefs:• beliefs and attitudes that help determine your

behaviour– Terminal values: preferences about desired

ends– Instrumental values: preferences regarding

the means to desired ends

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WHAT IS ETHICAL BEHAVIOUR? (CONT’D)

1. Utilitarian view of ethics: – Greatest good to the greatest number of people.

2. Individualism view of ethics: – Primary commitment is to one’s long-term self-interests.

3. Moral-rights view of ethics:– Respects and protects the fundamental rights of all

people.4. Justice view of ethics:

– Fair and impartial treatment of people according to legal rules and standards• Procedural justice: policies and rules fairly applied• Distributive justice: equal treatment for all people • Interactional justice: people treated with dignity and

respect

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ALTERNATE VIEWS OF ETHICS

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FIGURE 14.1 FOUR VIEWS OF ETHICAL BEHAVIOUR

• http://www.youtube.com/watch?v=vstg5c3c3g8

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ETHICS IN THE WORKPLACE

• An ethical dilemma occurs when certain choices may be considered unethical, despite possible potential for personal and/or organizational benefit

• Ethical dilemmas include:– Discrimination– Sexual harassment– Conflicts of interest– Customer confidence– Organizational resources

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ETHICS IN THE WORKPLACE

• Checklist for dealing with ethical dilemmas:1. Recognize the ethical dilemma2. Get the facts3. Identify your options4. Test each option: Is it legal? Is it right? Is it

beneficial?5. Decide which option to follow6. Double-check decision by asking “spotlight”

questions:• “How would I feel if my family found out about

my decision?”• “How would I feel about this if my decision

were in the local news?”7. Take action© John Wiley & Sons Canada Ltd.

ETHICAL DECISION MAKING

• Unethical behaviour can be rationalized by convincing yourself that:

– The behaviour is not actually illegal– The behaviour is truly in everyone’s best

interests– Nobody will ever find out– The organization will “protect” you

HAVE YOU EVER FOUND YOURSELF FALLING INTO THIS TRAP?

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HOW DO WE CONVINCE OURSELVES THAT UNETHICAL BEHAVIOUR IS OKAY?

• Whistleblowers:– Expose the misdeeds of others in order to:• Preserve ethical standards• Protect against wasteful, harmful, or illegal acts

– Laws protecting whistleblowers may vary

THINK – PAIR – SHARE: WOULD YOU EVER EXPOSE SOMEONE ELSE? WHY/WHY NOT?

orWHAT WOULD SOMEONE HAVE TO DO FOR YOU TO STEP IN AND SAY SOMETHING?© John Wiley & Sons Canada Ltd.

MAINTAINING HIGH ETHICAL STANDARDS

• A unique form of entrepreneurship that seeks novel ways to solve pressing social problems at home and abroad

• Examples include:– Housing and job training for homeless– Bringing technology to poor families– Improving literacy among disadvantaged youth– Offering small loans to start minority-owned

businesses

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SOCIAL ENTREPRENEURSHIP

• Corporate social responsibility:– Obligates organizations to act in ways that serve

both its own interests and the interests of society at large

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SOCIAL RESPONSIBILITY

In 1988, Jeffery Hollender founded cleaning, paper, and personal care products company Seventh Generation. The company focuses on producing products that have a reduced environmental impact, avoiding the harsh chemicals that are part of many of today's leading cleaning and personal care products.

• Organizational stakeholders:– Those persons, groups, and other organizations

directly affected by the behaviour of the organization and holding a stake in its performance

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STAKEHOLDER ISSUES AND ANALYSIS

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FIGURE 14.7 SAMPLE STAKEHOLDER MODEL

• Classical view:– Management’s only responsibility is to maximize

profits• Socioeconomic view:

– Management must be concerned for the broader social welfare, not just profits

– Examples:– Environment– People in Community– Employee Benefit

http://www.youtube.com/watch?v=SXOJEH0se9A© John Wiley & Sons Canada Ltd.

PERSPECTIVES ON SOCIAL RESPONSIBILITY

• Social Responsibility Audit: assesses organization’s accomplishments in areas of CSR– Asks: is the organization’s…

1. Economic responsibility met? Is it profitable?2. Legal responsibility met? Does it obey the

law?3. Ethical responsibility met? Is it doing the

right thing?4. Discretionary responsibility met? Does it

contribute to the broader community?

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EVALUATING CORPORATE SOCIAL PERFORMANCE

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FIG. 14.8 CRITERIA FOR EVALUATING CORPORATE SOCIAL PERFORMANCE

• Strategies for pursuing social responsibility:– Obstructionist: meets only economic

responsibilities– Defensive: meets economic and legal

responsibilities– Accommodative: meets economic, legal, and

ethical responsibilities– Proactive: meets economic, legal, ethical, and

discretionary responsibilities

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EVALUATING CORPORATE SOCIAL PERFORMANCE (CONT’D)

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FIGURE 14.9 FOUR STRATEGIES OF CORPORATE SOCIAL RESPONSIBILITY—FROM OBSTRUCTIONIST TO

PROACTIVE BEHAVIOUR

• How “green” is a business? How can a business be “green”? Why is it so important in today’s society for businesses to go “green”?

• http://www.youtube.com/watch?v=TTNzuXZyl28

ETHICS AND THE ENVIRONMENT

• http://www.youtube.com/watch?v=bd2jFAyEnrY

What do you think of the outcome?

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YOU BE THE JUDGEETHICAL OR NOT?!

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