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Ethics and Corporate Social Responsibility. . Chapter 4 Fundamentals of Business. Study Question 1: What is ethical behavior?. Ethics Code of moral principles. Set standards of “good” and “bad” as opposed to “right” and “wrong.” Ethical behavior
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Ethics and Corporate Social Responsibility . Chapter 4 Fundamentals of Business
Study Question 1: What is ethical behavior? • Ethics • Code of moral principles. • Set standards of “good” and “bad” as opposed to “right” and “wrong.” • Ethical behavior • What is accepted as good and right in the context of the governing moral code.
Study Question 1: What is ethical behavior? • Law, values, and ethical behavior: • Legal behavior is not necessarily ethical behavior. • Many unethical behaviors lead to legislation • Unsafe working conditions such as sweatshops • OSHA (Occupational Safety and Health Administration) – enforces health and safety in the workplace • Discrimination • Consumers • Truthfulness in financial reporting
Study Question 1: What is ethical behavior? • Utilitarian view — greatest good to the greatest number of people. • Individualism view — primary commitment is to one’s long-term self-interests. • Moral-rights view — respects and protects the fundamental rights of all people. • Justice view — fair and impartial treatment of people according to legal rules and standards.
Study Question 1: What is ethical behavior? How businesses can respect core or universal values: Respect for human dignity • Create culture that values employees, customers, and suppliers. • Keep a safe workplace. • Produce safe products and services. Respect for basic rights • Protect rights of employees, customers, and communities. • Avoid anything that threatening safety, health, education, and living standards. Be good citizens • Support social institutions, including economic and educational systems. • Work with local government and institutions to protect environment.
Group Activity • Two Approaches to Promoting Ethical Behavior in the Workplace • 1. Compliance Based Approach • Uses legal terms, training, rules of conduct, and penalties for non-compliance • Focuses on what not to do • 2. Values Based Approach • Relies of self-policing and motivation, rather than coercion • Encouraging good behavior rather than punishing bad behavior Management Fundamentals - Chapter 3
Group Activity • Two groups will be formed • Each group will examine one of the different approaches to promoting ethical behavior in the workplace • Compliance vs Values Based • 1. Determine the advantages of your approach • 2. After hearing the response from the other group, determine a major disadvantage of the other approach. Management Fundamentals - Chapter 3
Study Question 2: How do ethical dilemmas complicate the workplace? • An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical. • Ethical dilemmas include: • Discrimination • Sexual harassment • Conflicts of interest • Customer confidence • Organizational resources
Study Question 2: How do ethical dilemmas complicate the workplace? • Ethical behavior can be rationalized by convincing yourself that: • Behavior is not really illegal. • Behavior is really in everyone’s best interests. • Nobody will ever find out. • The organization will “protect” you.
Study Question 2: How do ethical dilemmas complicate the workplace? • Factors influencing ethical behavior include: • The person • Family influences, religious values, personal standards, and personal needs. • The organization • Supervisory behavior, peer group norms and behavior, and policy statements and written rules. • The environment • Government laws and regulations, societal norms and values, and competitive climate in an industry.
Figure 3.3 Factors influencing ethical managerial behavior—the person, organization, and environment.
Class Activity • Break into the groups determined by your card • Address the following ethical dilemma as a group: • A lifeboat is overflowing with survivors. There isn’t room for everyone. If someone is not thrown overboard, the lifeboat will sink. What will you do? Support your answer.
Study Question 3: How can high ethical standards be maintained? Checklist for dealing with ethical dilemmas Step 1: Identify the ethical dilemma Step 2: Get the facts and identify your options Step 3: Determine who will be affected Step 4: List the effects of the alternatives Step 5: Choose the best option Double-check decision by asking the “spotlight” questions: “How would I feel if my family found out about my decision?” “How would I feel about this if my decision were printed in the local newspaper?”
Ethical Scenarios • With a partner, address the ethical dilemmas handed out to you. • Write your responses using the 5 steps learned today Management Fundamentals - Chapter 3
Study Question 3: How can high ethical standards be maintained? • Ethics training: • Structured programs that help participants to understand ethical aspects of decision making. • Helps people incorporate high ethical standards into daily life. • Helps people deal with ethical issues under pressure.
Study Question 3: How can high ethical standards be maintained? • Whistleblowers • Expose misdeeds of others to: • Preserve ethical standards • Protect against wasteful, harmful, or illegal acts • Laws protecting whistleblowers vary
Study Question 3: How can high ethical standards be maintained? • Barriers to whistleblowing include: • Strict chain of command • Strong work group identities • Ambiguous priorities • Organizational methods for overcoming whistleblowing barriers: • Ethics staff units who serve as ethics advocates • Moral quality circles
Study Question 3: How can high ethical standards be maintained? • Ethical role models: • Top managers serve as ethical role models. • All managers can influence the ethical behavior of people who work for and with them. • Excessive pressure can foster unethical behavior. • Managers should be realistic in setting performance goals for others.
Study Question 3: How can high ethical standards be maintained? • Codes of ethics: • Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas. • Areas often covered by codes of ethics: • Bribes and kickbacks • Political contributions • Honesty of books or records • Customer/supplier relationships • Confidentiality of corporate information
Study Question 4: What is corporate social responsibility? • Corporate social responsibility: • Looks at ethical issues on the organization level. • Obligates organizations to act in ways that serve both its own interests and the interests of society at large.
Study Question 4: What is corporate social responsibility? • Organizational stakeholders • Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance. • Typical organizational stakeholders • Employees • Customers • Suppliers • Owners • Competitors • Regulators • Interest groups
Figure 3.4 Multiple stakeholders in the environment of an organization.
Study Question 4: What is corporate social responsibility? • Beliefs that guide socially responsible business practices: • People do their best with a balance of work and family life. • Organizations perform best in healthy communities. • Organizations gain by respecting the natural environment. • Organizations must be managed and led for long-term success. • Organizations must protect their reputations.
Study Question 4: What is corporate social responsibility? • Perspectives on corporate social responsibility: • Classical view • Management’s only responsibility is to maximize profits. • Socioeconomic view • Management must be concerned for the broader social welfare, not just profits.
Arguments against social responsibility: Reduced business profits Higher business costs Dilution of business purpose Too much social power for business Lack of public accountability Arguments in favor of social responsibility: Adds long-run profits Improved public image Avoids more government regulation Businesses have resources and ethical obligation Study Question 4: What is corporate social responsibility?
Study Question 4: What is corporate social responsibility? • Criteria for evaluating corporate social performance: • Is the organization’s … • Economic responsibility met? • Legal responsibility met? • Ethical responsibility met? • Discretionary responsibility met?
Figure 3.5 Criteria for evaluating corporate social performance.
Study Question 4: What is corporate social responsibility? • Strategies for pursuing social responsibility: • Obstructionist— meets economic responsibilities. • Defensive— meets economic and legal responsibilities. • Accommodative— meets economic, legal, and ethical responsibilities. • Proactive— meets economic, legal, ethical, and discretionary responsibilities.
Figure 3.6 Four strategies of corporate social responsibility—from obstructionist to proactive behavior.
Companies “Doing it Right” • Tom’s Founder on Ellen https://www.youtube.com/watch?v=57TOTx5UEpA Management Fundamentals - Chapter 3
Study Question 5: How do organizations and governments work together in society? • How government influences organizations: • Common areas of government regulation of business affairs: • Occupational safety and health • Fair labor practices • Consumer protection • Environmental protection
Study Question 5: How do organizations and governments work together in society? • How organizations influence governments: • Personal contacts and networks • Public relations campaigns • Lobbying • Political action committees • Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns
Figure 3.7 Centrality of ethics and social responsibility in leadership and the managerial role.
Study Question 5: How do organizations and governments work together in society? • Corporate governance: • The oversight of the top management of an organization by a board of directors. • Corporate governance involves: • Hiring, firing, and compensating the CEO. • Assessing strategy. • Verifying financial records.
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