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2014-‐04-‐04
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BOH4M Ms. Schirk
CHAPTER 3: ETHICS AND CORPORATE SOCIAL
RESPONSIBILITY
Management - Chapter 2 2
PLANNING AHEAD — CHAPTER 3 STUDY QUESTIONS
Ø What is ethical behavior? Ø How do ethical dilemmas complicate the workplace? Ø How can high ethical standards be maintained? Ø What is corporate social responsibility? Ø How do organizations and governments work together
in society?
STUDY QUESTION 1: WHAT IS ETHICAL BEHAVIOUR?
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¡ 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 Q.1: WHAT IS ETHICAL BEHAVIOUR?
¡ Law, values, and ethical behavior:
§ Legal behavior is not necessarily ethical behavior.
§ Personal values help determine individual ethical behavior.
§ Terminal values (end means)
§ Instrumental values (ways to achieve terminal values)
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
§ Utilitarian view of ethics — greatest good for the greatest number of people.
§ Individualism view of ethics — primary commitment is to one’s long-term self-interests.
§ Moral-rights view of ethics — respects and protects the fundamental rights of all people.
§ Justice view of ethics — fair and impartial treatment of people according to legal rules and standards.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
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STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
§ Cultural issues in ethical behavior: § Cultural relativism § Ethical behavior is always determined by cultural
context. § Cultural universalism § Behavior that is unacceptable in one’s home
environment should not be acceptable anywhere else.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
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¡ How international 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.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
¡ How international businesses can respect core or universal values (continued): § Be good citizens § Support social institutions, including economic and
educational systems. § Work with local government and institutions to
protect environment.
STUDY Q.1: WHAT IS ETHICAL BEHAVIOUR?
STUDY QUESTION 2: HOW DO ETHICAL DILEMMAS COMPLICATE THE
WORKPLACE?
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§ 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 Q.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 Q.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.
STUDY Q.2: HOW DO ETHICAL DILEMMAS COMPLICATE THE WORKPLACE?
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§ Factors influencing ethical behavior:
STUDY Q.2: HOW DO ETHICAL DILEMMAS COMPLICATE THE WORKPLACE?
STUDY QUESTION 3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
¡ Checklist for dealing with ethical dilemmas § Step 1. Recognize the ethical dilemma § Step 2: Get the facts § Step 3. Identify your options § Step 4. Test each option: Is it legal? Is it right? Is it
beneficial?
STUDY Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
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¡ Checklist for dealing with ethical dilemmas § Step 5. Decide which option to follow § Step 6. 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?”
§ Step 7. Take action.
STUDY Q.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 Q.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 Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
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¡ 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 Q.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 Q.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 Q.3: HOW CAN HIGH ETHICAL STANDARDS BE MAINTAINED?
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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 Q.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.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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¡ Typical organizational stakeholders § Employees § Customers § Suppliers § Owners § Competitors § Regulators § Interest groups
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
STUDY Q.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 Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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¡ 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.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
¡ 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 Q.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?
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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STUDY Q.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.
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
STUDY Q.4: WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
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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 (e.g. Occupational
Health and Safety Act passed in 1973) § Fair labor practices (e.g. Employment Equity Act
passed in 1985 and adapted in 1995) § Consumer protection (e.g. Hazardous Products
Act passed in 1985) § Environmental protection (e.g. Environmental
Pollution Act passed in 1999)
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?
§ How organizations influence governments: § Personal contacts and networks (get to know
people in government and gain their support) § Public relations campaigns (communicate positive
images of their businesses) § Lobbying (expressing opinions and preferences to
public officials in order to persuade or pressure) § Political action committees (collect money for
donation to political campaigns) § (Sometimes by) illegal acts, such as bribery or
illegal financial contributions to political campaigns
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?
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§ Figure 3.7 Centrality of ethics and social responsibility in leadership and the managerial role.
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?
§ 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.
STUDY Q.5: HOW DO ORGANIZATIONS & GOVERNMENTS WORK TOGETHER?