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MODULE 5 SOCIAL RESPONSIBILITY AND GOVERNANCE

MODULE 5 SOCIAL RESPONSIBILITY AND GOVERNANCE. “Organizations have ethics, too”. What should we know about organizational environments and social responsibility? What are current issues in corporate governance?.

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MODULE 5 SOCIAL RESPONSIBILITY AND GOVERNANCE

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  1. MODULE 5SOCIAL RESPONSIBILITY AND GOVERNANCE “Organizations have ethics, too” • What should we know about organizational environments and social responsibility? • What are current issues in corporate governance?

  2. SOCIAL RESPONSIBILITY AND GOVERNANCEOrganizational Environments And Social ResponsibilityMODULE GUIDE 5.1 • Organizations operate within conditions set by the general environment. • The specific environment includes an organization’s stakeholders. • Social responsibility is an organization’s obligation to best serve society. • Social performance by organizations can be evaluated in different ways. • Scholars argue cases for and against corporate social responsibility. • Organizations follow different social responsibility strategies. • Failures of ethics and social responsibility prompt calls for stronger governance.

  3. ORGANIZATIONAL ENVIORNMENTS AND SOCIAL RESPONSIBILITYOrganizational Environments • General Environment • Consists of cultural, economic, legal, political and educational conditions • Specific Environment • Consists of the people and groups with which an organization interacts • Stakeholders • People and Institutions most directly affected by an organization’s performance

  4. ORGANIZATIONAL ENVIRONMENTSGeneral Environment • Economic • Health of the economy in terms of inflation, income levels, gross domestic product, unemployment, and job outlook • Sociocultural • Norms, customs, and social values on such matters as human rights, trends in education and related social institutions, as well as demographic patterns in society • Legal-political • Prevailing philosophy and objectives of the political party or parties running the government, as well as laws and government regulations • Technological • Development and availability of technology, including scientific advancements • Natural • Nature and conditions of the natural environment, including levels of public concern expressed through environmentalism

  5. ORGANIZATIONAL ENVIRONMENTS Specific Environment • Specific Environment : • The people and groups with whom an organization interacts.

  6. ORGANIZATIONAL ENVIRONMENTS Social Responsibility • Corporate Social Responsibility • The obligation of an organization to serve its own interest and those of its stakeholders • Social Responsibility Audit • Assesses an organization’s performance in the area of social responsibility

  7. ORGANIZATIONAL ENVIRONMENTS Social Responsibility

  8. The Case “In Favor Of” Corporate Social Responsibility Responsibility Increases long-run profits Improves public image Helps avoid government regulation Businesses have resources and ethical obligations to act responsibly The Case “Against” Corporate Social Responsibility Reduces business profits Creates higher business costs Dilutes business purpose Gives too much social power to business ORGANIZATIONAL ENVIRONMENTS Social Responsibility

  9. ORGANIZATIONAL ENVIRONMENTS Social Responsibility Strategies

  10. SOCIAL RESPONSIBILITY AND GOVERNANCECorporate GovernanceMODULE GUIDE 5.2 • Failures of ethics and social responsibility prompt calls for stronger governance. • Weak corporate governance can result in more government regulation. • Moral management builds capacities for self-governance in organizations.

  11. CORPORATE GOVERNANCECorporate Governance • Corporate Governance • The oversight of top management by a board of directors • Weak corporate governance leads to government regulation • Boeing • WorldCom • Enron

  12. CORPORATE GOVERNANCECorporate Governance

  13. CORPORATE GOVERNANCEGovernment Regulations • Government Regulations • Sarbanes-Oxley Act – 2002 • Goal is to see that top CEO’s oversee the financial conduct of their organizations • Occupational and Safety Act (OSHA) – 1970 • Goal is to protect employees from workplace injuries • Equal Opportunity Act (EEO) – 1972 • Goal is to protect minorities against discrimination • Consumer Product Safety Act – 1972 • Goal is to protect consumers from harmful products

  14. CORPORATE GOVERNANCEMoral management • Moral Management • Moral Manager • Considers ethical behavior as a personal goal • Amoral Manager • Is unethical but unintentionally • Immoral Manager • Chooses to behave unethically

  15. CORPORATE GOVERNANCEMoral Management

  16. CORPORATE GOVERNANCEEthics Mindfulness • Ethics Mindfulness • Enriched awareness that leads to consistent ethical behavior

  17. MANAGEMENT TIPS • A social responsibility audit assesses an organization’s accomplishments in areas of social responsibility. • Discretionary Responsibility: • Contribute to Community • Ethical Responsibility: • Do What Is Right • Legal Responsibility: • Obey the Law • Economic Responsibility: • Be Profitable

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