MANAGEMENT’SMANAGEMENT’SSOCIAL AND ETHICAL SOCIAL AND ETHICAL

RESPONSIBILITIESRESPONSIBILITIESPrepared by: Prepared by:

Prof. Emilia. S. BioProf. Emilia. S. Bio

Source: Source:

Principles of Management by Krietner, 11th EditionPrinciples of Management by Krietner, 11th Edition

THE CHANGING WORKPLACETHE CHANGING WORKPLACE

• As the social, political, economic, and technological environments of management have changed, the practice of management itself has changed. This is especially true for managers in the private business sector.

THE CHANGING WORKPLACETHE CHANGING WORKPLACE

• Today, it is far less acceptable for someone in business to stand before the public and declare that his or her sole job is to make as much profit as possible.

• The public is wary of the abuse of power and the betrayal of trust, and business managers—indeed, managers of all types of organizations—are expected to make a wide variety of economic and social contributions.

• Demands on business that would have been considered patently unreasonable 30 or 40 years ago have become the norm today.

SOCIAL RESPONSIBILITY: SOCIAL RESPONSIBILITY: DEFINITION AND DEFINITION AND

PERSPECTIVESPERSPECTIVES

CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY

• It is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract.

• In other terms, it is the idea that business has social obligations ABOVE and BEYOND making a profit.

CARROLL’S GLOBAL CORPORATE CARROLL’S GLOBAL CORPORATE SOCIAL RESPONSIBILITY PYRAMIDSOCIAL RESPONSIBILITY PYRAMID

Be a good global citizen

Be ethical

Obey the law

Be profitable

Do what is desired by global stockholders

Do what is expected by global stockholders

Do what is required by global stockholders

Do what is required by global capitalism

CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY

• From the previous figure, global and transnational companies have four main areas of responsibility: ECONOMIC, LEGAL, ETHICAL, and PHILANTHROPIC.

CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY

• Working from bottom to top, this means that the global corporation should:

• Make a profit consistent with expectations for international businesses

• Obey the law of host countries as well as international law

• Be ethical in its practices, taking host-country and global standards into consideration

• Be a good corporate citizen, especially as defined by the host country’s expectations

CSR REQUIRES VOLUNTARY CSR REQUIRES VOLUNTARY ACTIONACTION

• An implicit feature of the above definition and perspective is that an action must be voluntary to qualify as socially responsible.

WHAT IS THE ROLE OF BUSINESS WHAT IS THE ROLE OF BUSINESS IN SOCIETY?IN SOCIETY?

• Much of the disagreement over what social responsibility involves can be traced to a fundamental debate about the exact purpose of a business.

• “Is business an economic entity responsible only for making a profit for its stockholders? Or is it a socioeconomic entity obligated to make both economic and social contributions to society?”

THE STOCKHOLDER AUDIT—THE IDENTIFICATION OF ALL PARTIES THAT MIGHT BE AFFECTED BY THE ORGANIZATION.

(FOR) WAL-MART

Customers

CompetitorsDomestic and Foreign suppliers

and distributors

Customers

Stockholders

Public-at-large

Political Parties

Financial Community

(bankers, brokers, and

investors)

Neighbors of stores and facilities

(homeowners’ association)

All levels of domestic and

foreign government

Stockholders

Public-at-large

Political Parties

WAL-MART

ARGUMENTS FOR SOCIAL ARGUMENTS FOR SOCIAL RESPONSIBILITYRESPONSIBILITY

1. Business is unavoidably involved in social issues.2. Business has the resources to tackle today’s

complex societal problems.3. A better society means a better environment for

doing business.4. Corporate social action will prevent government

intervention.

ARGUMENTS AGAINST SOCIAL ARGUMENTS AGAINST SOCIAL RESPONSIBILITYRESPONSIBILITY

1. Profit maximization ensures the efficient use of society’s resources.

2. As an economic institution, business lacks the ability to pursue social goals.

3. Business already has enough power.4. Because managers are not elected, they are not

directly accountable to the people.

TOWARD GREATER TOWARD GREATER SOCIAL RESPONSIBILITYSOCIAL RESPONSIBILITY

THE IRON LAW OF RESPONSIBILITYTHE IRON LAW OF RESPONSIBILITY• Is it inevitable that management will assume greater

social responsibility? Some scholars believe so. It has been said that business Is bound by an IRON LAW OF RESPONSIBILITY, which states that “in the long run, those who do not use power in a way that society considers responsible will tend to lose it.

WHO BENEFITS FROM CORPORATE WHO BENEFITS FROM CORPORATE SOCIAL RESPONSIBILITY?SOCIAL RESPONSIBILITY?

• Is it accurate to say of social responsibility what used be said about home medicine, “It has to taste bad to be good”? In other words, does social responsibility have to be a hardship for the organization? Those who answer yes believe that it should be motivated by ALTRUISM, an unselfish devotion to the interests of others.

• This implies that businesses that are not socially responsible are motivated strictly by self-interest.

WHO BENEFITS FROM CORPORATE WHO BENEFITS FROM CORPORATE SOCIAL RESPONSIBILITY?SOCIAL RESPONSIBILITY?

• On the basis of evidence alone, one would hard pressed to say that social responsibility pays. But research paints a brighter picture:

A study of 243 companies for two years found a positive correlation between industry leadership in environmental protection/pollution control and profitability. The researchers concluded, “It pays to be green.”

A second study found a good reputation for corporate social responsibility to be a competitive advantage in recruiting talented people.

WHO BENEFITS FROM CORPORATE WHO BENEFITS FROM CORPORATE SOCIAL RESPONSIBILITY?SOCIAL RESPONSIBILITY?

• ENLIGHTENED SELF-INTEREST, the realization that business ultimately helps itself by helping to solve societal problems, involves balancing short-run costs and long-run benefits. Advocates of enlightened self-interest contend that social responsibility expenditures are motivated by profit.

• Research into CORPORATE PHILANTHROPY, the charitable donation of company resources ($12.7 billion in US in 2006), supports this contention.

AN ARRAY OF BENEFITS FOR THE AN ARRAY OF BENEFITS FOR THE ORGANIZATIONORGANIZATION

• In addition to the advertising effect, other possible long-run benefits include:

- Tax-free incentives to employees.- Retention of talented employees by satisfying their altruistic motives.- Help in recruiting talented and socially conscious personnel.- Swaying public opinion against government intervention.- Improved community living standards for employees.- Attracting socially conscious investors.- A nontaxable benefit for employees in which company funds are donated to their favorite causes.

THE ETHICAL DIMENSION THE ETHICAL DIMENSION OF MANAGEMENTOF MANAGEMENT

THE ETHICAL DIMENSION OF THE ETHICAL DIMENSION OF MANAGEMENTMANAGEMENT

• ETHICS is the study of moral obligation involving the distinction between right and wrong.MoralImmoralAmoral Managers – managers who are neither moral

nor immoral, but ethically lazy.• Business ethics, sometimes referred to as management ethics or organizational ethics, narrows the frame of reference to productive organizations.

PRACTICAL LESSONS FROM PRACTICAL LESSONS FROM BUSINESS ETHICS RESEARCHBUSINESS ETHICS RESEARCH

• ETHICAL HOT SPOTS. In a survey of 1,324 US employees from all levels

across several industries, 48 percent admitted to having performed at least one illegal or unethical act from a list of 25 questionable practices.

The list included everything from calling in sick when feeling well through cheating on expense accounts, forging signatures, and giving or accepting kickbacks, to ignoring violations of environmental laws.

PRACTICAL LESSONS FROM PRACTICAL LESSONS FROM BUSINESS ETHICS RESEARCHBUSINESS ETHICS RESEARCH

• The top ten workplace hot spots responsible for triggering unethical conduct are:

1. Balancing work and family2. Poor internal communications3. Poor leadership4. Work hours, workload5. Lack of management support6. Need to meet sales, budget, or profit goals7. Little or no recognition of achievements8. Company politics9. Personal financial worries10. Insufficient resources

• Materials used are of Original Copyright of- Prof. Emilia. S. Bio, P.I.E.,IE-EMG Dept.

• Revisions made by: -Bachini John Karlos J EMG20/B5-1st Qtr. S.Y.2014-2015