edition
Stephen Management
tenth P. Robbins
Mary Coulter
Chapter
5
Social Social Responsibility and Managerial Ethics Managerial
51
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
Learning Outcomes
Follow this Learning Outline as you read and study Follow this chapter. this 5.1 What Is Social Responsibility?
Differentiate between social obligation, social Differentiate responsiveness and social responsibility. responsiveness Discuss whether organizations should be socially Discuss involved. involved. Describe what conclusion can be reached regarding Describe social involvement and economic importance. social
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 52
Learning Outcomes
5.2 Green Management.
Define green management. Describe how organizations can go green. Explain how green management can be evaluated.
5.3 Managers And Ethical Behavior
Define ethics. Discuss the factors that influence whether a person behave Discuss ethically or unethically. ethically Describe what managers need to know about international Describe ethics. ethics.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 53
Learning Outcomes
5.4 Encouraging Ethical Behavior
Describe managers important role in encouraging ethical Describe behavior. behavior. Discuss specific ways managers can encourage ethical Discuss behavior. behavior.
5.5 Social Responsibility And Ethics Issues In Todays World.
Discuss how managers can manage ethical lapses and social Discuss responsibility. responsibility. Explain the role of social entrepreneurs. Discuss how businesses can promote positive social change.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 54
Learning Outcomes
5.5 Social Responsibility Issues In Todays World.
Discuss how managers and organizations can protect Discuss employees who raise ethical issues or concerns. employees Explain what role social entrepreneurs play. Discuss how businesses can promote positive social Discuss change. change.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
55
From Obligation to Responsiveness From to Responsibility to
Social Obligation
The obligation of a business to meet its economic and The legal responsibilities and nothing more. legal
Social Responsiveness
When a firm engages in social actions in response to When some popular social need.
Social Responsibility
A businesss intention, beyond its legal and economic businesss obligations, to do the right things and act in ways that are good for society. are
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 56
What Is Social Responsibility?
The Classical View
Managements only social responsibility is to Managements maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation). stockholders Expending the firms resources on doing social good Expending unjustifiably increases costs that lower profits to the owners and raises prices to consumers. owners
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
57
What Is Social Responsibility? What
The Socioeconomic View
Managements social responsibility goes beyond Managements making profits to include protecting and improving societys welfare. societys Corporations are not independent entities responsible Corporations only to stockholders. only Firms have a moral responsibility to larger society to Firms become involved in social, legal, and political issues. become To do the right thing
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 58
Exhibit 51 Social Responsibility Versus Social Responsiveness
SocialResponsibility Majorconsideration Focus Emphasis Decisionframework Ethical Ends Obligation Longterm
SocialResponsiveness Pragmatic Means Responses Mediumandshortterm
Source: Adapted from S.L. Wartick and P.L. Cochran, The Evolution of the Corporate Social Performance Model, Academy of Management Review, October 1985, p. 766.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
59
Exhibit 52 Arguments For and Against Social Responsibility
For
Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further Discouragement governmental regulation governmental Balance of responsibility Balance and power and Stockholder interests Possession of resources Superiority of prevention Superiority over cures over
Against
Violation of profit Violation maximization maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
510
Does Social Responsibility Pay?
Studies appear to show a positive relationship Studies between social involvement and the economic performance of firms. performance
Difficulties in defining and measuring social Difficulties responsibility and economic performance raise issues of validity and causation in the studies. issues Mutual funds using social screening in investment Mutual decisions slightly outperformed other mutual funds. decisions
A general conclusion is that a firms social general actions do not harm its long-term performance. actions
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 511
Exhibit 53
Trends in SRI
Source: Social Investment 2010 Pearson Education, Inc. Publishing as Prentice Hall Copyright Forum Foundation.
512
The Greening of Management
The recognition of the close link between an The organizations decision and activities and its impact on the natural environment. impact
Global environmental problems facing managers:
Air, water, and soil pollution from toxic wastes Global warming from greenhouse gas emissions Natural resource depletion
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
513
How Organizations Go Green
Legal (or Light Green) Approach
Firms simply do what is legally required by obeying laws, rules, Firms and regulations willingly and without legal challenge. and
Market Approach
Firms respond to the preferences of their customers for Firms environmentally friendly products. environmentally
Stakeholder Approach
Firms work to meet the environmental demands of multiple Firms stakeholdersemployees, suppliers, and the community. stakeholders
Activist Approach
Firms look for ways to respect and preserve environment and be Firms actively socially responsible. actively
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 514
Exhibit 54
Green Approaches
Source: Based on R.E. Freeman. J. Pierce, and R. Dodd. Shades of Green: Business Ethics and the Environment (New York: Oxford University Press, 1995).
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
515
Evaluating the Greening of Evaluating Management Management
Organizations become greener by
Using the Sustainability Reporting Guidelines to Using document green actions. document Adopting ISO 14000 standards for environmental Adopting management. management. Being named as one of the 100 Most Sustainable Being Corporations in the World. Corporations
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
516
Managerial Ethics
Ethics Defined
Principles, values, and beliefs that define what is right Principles, and wrong behavior. and
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
517
Exhibit 55 Factors That Determine Ethical and Unethical Behavior
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
518
Factors That Affect Employee Ethics
Moral Development
A measure of independence from outside influences
Levels of Individual Moral Development Preconventional level Conventional level Principled level
Stage of moral development interacts with:
Individual characteristics The organizations structural design The organizations culture The intensity of the ethical issue
519
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
Exhibit 56
Stages of Moral Development
Source: Based on L. Kohlberg, Moral Stages and Moralization: The CognitiveDevelopment Approach, in T. Lickona (ed.). Moral Development and Behavior: Theory, Research, and Social Issues (New York: Holt, Rinehart & Winston, 1976), pp. 3435.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
520
Factors That Affect Employee Ethics
Moral Development
Research Conclusions:
People proceed through the stages of moral development People sequentially. sequentially. There is no guarantee of continued moral development. Most adults are in Stage 4 (good corporate citizen).
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
521
Factors That Affect Employee Ethics
Individual Characteristics
Values
Basic convictions about what is right or wrong. Basic
Personality
Ego strength - A personality measure of the strength of a Ego persons convictions persons Locus of Control A personality attribute that measures the degree to which personality people believe they control their own life. people Internal locus: the belief that you control destiny. your External locus: the belief that what happens to you is due to luck or chance. to
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
522
Factors That Affect Employee Ethics
Structural Variables
Organizational characteristics and mechanisms that Organizational guide and influence individual ethics: guide
Performance appraisal systems Reward allocation systems Behaviors (ethical) of managers
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
523
Factors That Affect Employee Ethics
Organizations Culture
Values-Based Management
An approach to managing in which managers establish and An uphold an organizations shared values. uphold
The Purposes of Shared Values
Guiding managerial decisions Shaping employee behavior Influencing the direction of marketing efforts Building team spirit
The Bottom Line on Shared Corporate Values
An organizations values are reflected in the decisions and An actions of its employees. actions
Intensity of the Ethical Issue
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 524
Exhibit 57 Determinants of Issue Intensity
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
525
Ethics in an International Context
Ethical standards are not universal.
Social and cultural differences determine acceptable Social behaviors. behaviors.
Foreign Corrupt Practices Act
Makes it illegal to corrupt a foreign official, yet token Makes payments to officials are permissible when doing so is an accepted practice in that country. an
The Global Compact
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
526
Exhibit 58 Ten Principles of the United Nations
Human Rights
Principle 1: Support and respect the protection of international human rights within their sphere of influence. Principle 2: Make sure business corporations are not complicit in human rights abuses.
Labor Standards
Principle 3: Freedom of association and the effective recognition of the right to collective bargaining. Principle 4: The elimination of all forms of forced and compulsory labor. Principle 5: The effective abolition of child labor. Principle 6: The elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: Support a precautionary approach to environmental challenges. Principle 8: Undertake initiatives to promote greater environmental responsibility. Principle 9: Encourage the development and diffusion of environmentally friendly technologies. Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
Source: Courtesy of Global Compact.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
527
How Managers Can Improve Ethical How Behavior in An Organization Behavior
1. 2. 3. 4. Hire individuals with high ethical standards. Establish codes of ethics and decision rules. Lead by example. Set realistic job goals and include ethics in Set performance appraisals. performance 5. Provide ethics training. 6. Conduct independent social audits. 7. Provide support for individuals facing ethical Provide dilemmas. dilemmas.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 528
Exhibit 59
Codes of Ethics
Cluster 3. Be Good to Customers 1. Convey true claims in product advertisements. 2. Perform assigned duties to the best of your ability. 3. Provide products and services of the highest quality.
Cluster 1. Be a Dependable Organizational Citizen 1. Comply with safety, health, and security regulations. 2. Demonstrate courtesy, respect, honesty, and fairness. 3. Illegal drugs and alcohol at work are prohibited. 4. Manage personal finances well. 5. Exhibit good attendance and punctuality. 6. Follow directives of supervisors. 7. Do not use abusive language. 8. Dress in business attire. 9. Firearms at work are prohibited.
Cluster 2. Do Not Do Anything Unlawful or Improper That Will Harm the Organization 1. Conduct business in compliance with all laws. 2. Payments for unlawful purposes are prohibited. 3. Bribes are prohibited. 4. Avoid outside activities that impair duties. 5. Maintain confidentiality of records. 6. Comply with all antitrust and trade regulations. 7. Comply with all accounting rules and controls. 8. Do not use company property for personal benefit. 9. Employees are personally accountable for company funds. 10. Do not propagate false or misleading information. 11. Make decisions without regard for personal gain.
Source: F. R. David, An Empirical Study of Codes of Business Ethics: A Strategic Perspective, paper presented at the 48th Annual Academy of Management Conference, Anaheim, California, August 1988.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
529
Effective Use of a Code of Ethics
Develop a code of ethics as a guide in handling Develop ethical dilemmas in decision making. ethical Communicate the code regularly to all Communicate employees. employees. Have all levels of management continually Have reaffirm the importance of the ethics code and the organizations commitment to the code. the Publicly reprimand and consistently discipline Publicly those who break the code. those
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 530
Exhibit 510
Twelve Questions Approach
1. Have you defined the problem accurately? 2. How would you define the problem if you stood on the other side of the fence? 3. How did this situation occur in the first place? 4. To whom and to what do you give your loyalty as a person and as a member of the corporation? 5. What is your intention in making this decision? 6. How does this intention compare with the probable results? 7. Whom could your decision or action injure? 8. Can you discuss the problem with the affected parties before you make the decision? 9. Are you confident that your position will be as valid over a long period of time as it seems now? 10. Could you disclose without qualm your decision or action to your boss, your chief executive officer, the board of directors, your family, society as a whole? 11. What is the symbolic potential of your action if understood? If misunderstood? 12. Under what conditions would you allow exceptions to your stand?
Source: Reprinted by permission of Harvard Business Review. An exhibit from Ethics Without the Sermon, by L. L. Nash. NovemberDecember 1981, p. 81. Copyright 1981 by the President and Fellows of Harvard College. All rights reserved.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
531
The Value of Ethics Training
Can make a difference in ethical behaviors. Increases employee awareness of ethical issues Increases in business decisions. in Clarifies and reinforces the organizations Clarifies standards of conduct. standards Helps employees become more confident that Helps they will have the organizations support when taking unpopular but ethically correct stances. taking
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
532
Exhibit 511 Being an Ethical Leader Be a good role model by being ethical and honest. Tell the truth always. Dont hide or manipulate information Be willing to admit your failures. Share your personal values by regularly communicating them to employees. Stress the organizations or teams important shared values. Use the reward system to hold everyone accountable to the values.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
533
Managing Ethical Lapses and Social Managing Irresponsibility Irresponsibility
Provide ethical leadership Protect employees who raise ethical issues Protect (whistle-blowers) (whistle-blowers)
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
534
Awareness of Social Issues
Social Entrepreneurs
Are individuals or organizations who seek out Are opportunities to improve society by using practical, innovative, and sustainable approaches. innovative, Want to make the world a better place and have a Want driving passion to make that happen.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
535
Businesses Promoting Positive Businesses Social Change Social
Corporate Philanthropy
Campaigns Donations Funding own foundations
Employee Volunteering Efforts
Team volunteering Individual volunteering during work hours
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 536
Terms to Know
classical view socioeconomic view social obligation social responsiveness social responsibility social screening greening of management values-based values-based management management ethics values ego strength locus of control code of ethics whistle-blower social entrepreneur
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
537
All rights reserved. No part of this publication may be reproduced, All stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Printed
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
538