Organizational Justice, Ethics, and Corporate Social Responsibility Chapter Two

Organizational Justice, Ethics, and Corporate Social Responsibility

Chapter Two

© Copyright Prentice-Hall 20042

Three Good Reasons Why You Should Care About . . . Justice, Ethics, CSRJustice, Ethics, CSR

1. Treating employees unfairly can adversely affect many different types of work attitudes and behaviors

2. The public is growing increasingly intolerant of unethical corporate behavior, but managers can take steps to promote ethical behavior in organizations

3. Consumers and investors tend to support socially responsible companies, enhancing their financial performance


Organizational Justice

The study of people’s perceptions of fairness in organizationsDistributive JusticeDistributive Justice: The form of organizational justice that focuses on people’s beliefs that they have received fair amounts of valued work-related outcomesProcedural JusticeProcedural Justice: People’s perceptions of the fairness of the procedures used to determine the outcomes they receiveInterpersonal JusticeInterpersonal Justice: People’s perceptions of the fairness of the manner in which they are treated by other peopleInformational JusticeInformational Justice: People’s perceptions of the fairness of the information used as the basis for making a decision


Forms of Organizational Justice


Procedural Justice and Outcomes


Promoting Organizational Justice Pay workers what they deserve Offer workers a voice Openly follow fair procedures Explain decisions thoroughly in a manner

demonstrating dignity and respect Train workers to be fair


The Fair Process Effect


Moral Values versus Ethics


Why Ethics MattersGood ethics is good business Improved financial performance Reduced operating costs Enhanced corporate reputation Increased ability to attract and retain employees

Legal regulations False Claims Act (1986) Foreign Corrupt Practices Act (revised 1988) Federal Sentencing Guidelines for Organizations (1991) Sarbanes-Oxley Act (2002) Federal Prosecution of Business Organizations (2003)


Reasons for Unethical BehaviorIndividual differences in cognitive moral development

Situational determinants of unethical behavior Some managerial values undermine integrity

Bottom line mentality: This line of thinking supports financial success as the only value to be considered

Exploitative mentality: This view encourages “using” people in a way that promotes stereotypes and undermines empathy and compassion

Madison Avenue mentality: This perspective suggests that anything is right if the public can be made to see it as right

Organizations sometimes encourage behavior that violates ethical standards

Workers emulate the unethical behavior of their superiors


Kohlberg’s Theory of Moral Development


Ethical Norms and Counternorms


Corporate Ethics ProgramsFormal, systematic mechanisms designed to promote ethics by creating organizational cultures that both make people sensitive to potentially unethical behaviors and discourage them from engaging in themComponents A code of ethics Ethics training Ethics audits An ethics committee An ethics officer A mechanism for communicating ethical standards


Ethics Program Effectiveness


Corporate Social ResponsibilityBusiness decision making linked to ethical values, compliance with legal requirements,

and respect for individuals, the community at large, and the environment


Most Socially Responsible Firms


The Virtuous Circle

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Organizational Justice, Ethics, and Corporate Social Responsibility Chapter Two