Managerial Ethics and Social Responsibility

The Community of Stakeholders Inside the Organization

• Stakeholders the people whose interests are affected by

an organization’s activities Internal, external

3 - 3

The Organization’s Environment

Figure 3.1

Is Ethics important?

• •

Yet…

• 76% of business students have cheated on at least one test 19% on four more

• 56% of workers report having lied to their boss

• Organizations short change employees $19B a year in overtime pay

Flawed Justifications

• “It’s only a little white lie”• “When in Rome”• “I’m Desperate”• “The Devil made me do it”• “Ignorance”• “Eye for Eye”• “No one will know”

Working Definitions

• Legal Compliance Conforming with formal laws and

regulations

• Ethical Behavior Conforming with accepted social norms

and standards of right and wrong

• Social Responsibility actions that will benefit the interests of

society as well as of the organization

Ethical Perspectives

• Utilitarian guided by what will result in the greatest

good for the greatest number of people

• Moral Imperatives Moral rules are without exception,

conditions, or extenuating cicumstances

• Individual guide by what will result in the individual’s

best long term interest, which ultimately are in everyone’s self-interest

Ethical Perspectives

• Moral-rights guided by respect for the fundamental

rights of human beings

• Justice guided by respect for impartial standards of

fairness and equity

Ethical Dilemmas

• •

Ethical Dilemmas

• Drug Testing• Cultural Differences• Technology

How Managers Can Promote Ethics

1. Support by top managers of a strong ethical climate

2. Selection

3. Ethics codes• Communicated internally and externally• Must be specific to the business

How Managers Can Promote Ethics

4. Ethics training programs• • • • • • •

5. Rewarding ethical behavior: • Encourage and protect whistleblowers

6. Punish unethical behavior

Two Types of Social Responsibility

• Sustainability economic development that meets the

needs of the present without compromising the ability of future generations to meet their own needs

Example: GE, Walmart, Toyota

• Philanthropy making charitable donations to benefit

humankind Examples: Google, Bill Gates, McDonalds

Social Responsibility

• Classical Economics (Milton Friedman) Management’s responsibility is to maximize

profits and generate shareholder wealth

• Socioeconomics Management also has a responsibility to

protect and improve society

• Which perspective makes sense to you?