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CHAPTER THREE Ethics and Social Responsibility

This chapter explores ethics and social responsibility in management. It discusses how managers can encourage ethical behaviors and the U.S. Sentencing Commission Guidelines. The chapter also covers ethical decision-making, the importance of an ethical climate, and the different models of social responsibility.

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CHAPTER THREE Ethics and Social Responsibility

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  1. Effective Management 2nd Edition Chuck Williams CHAPTER THREEEthics and Social Responsibility Prepared byDeborah BakerTexas Christian University

  2. Ethics: the set of moral principles or values that define right and wrong. Ethics and the Nature of Management Jobs Managers can encourage ethical behaviors by… • using resources for company • handling information confidentially • not influencing others to engage in unethical behavior • not creating policies that reward employees for unethical behavior • setting reasonable goals 1

  3. U.S. Sentencing Commission Guidelines • Companies can be prosecuted and punished even if management didn’t know about the unethical behavior • Who, What, and Why • Determining Punishment 2

  4. 1. Establish standards and procedures to meet the company’s business needs. 3. Don’t delegate decision-making authority to employees whoare likely to act illegally or unethically. 4. Use auditing, monitoring, and other methods to encourageemployees to report violations. 5. Use company publications and training to inform employeesabout the company’s compliance standards and procedures. 6. Enforce compliance standards by fairly and consistently disciplining violators. 7. After violations occur, find appropriate ways toimprove the compliance program. Compliance Program Steps 2. Put upper-level managers in charge of the compliance program. Adapted from Exhibit 3.1 2.2

  5. Ethical Intensity of Decision EthicalAnswersDepend on… Moral Development of Manager Ethical Principles Used Influences on Ethical Decision Making More 3

  6. Practical Steps to Ethical Decision Making Select and hire ethical employees Establish a Code of Ethics Train employees to make ethical decisions Create an ethical climate More 4

  7. A Basic Model of Ethical Decision Making 1. Identify the problem 2. Identify the constituents 3. Diagnose the situation 4. Analyze your options 5. Make your choice 6. Act Adapted from Exhibit 3.3 4.3

  8. To Whom Are Organizations Socially Responsible? ShareholderModel Maximize Profits StakeholderModel Satisfy Interests of Multiple Stakeholders More 5

  9. Discretionary Ethical Legal Economic Organization’s Social Responsibilities Social responsibilities Don’t violate principlesof right and wrong Obey the Law Make a Profit 6

  10. Responses to Demands for Social Responsibility Strategies Reactive Defensive Accommodative Proactive More 7

  11. Responses to Demands for Social Responsibility Reactive Defensive Accommo-dative Proactive Fight all the way Do only what is required Beprogressive Lead theindustry PublicRelationsApproach Legal Approach ProblemSolving Withdrawal Bargaining DO NOTHING DO MUCH Adapted from Exhibit 3.6 7

  12. Realities ofSocialResponsibility Social Responsibility and Economic Performance Can cost a company Sometimes it does pay Does not guarantee profitability Adapted from Exhibit 3.6 8

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