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Ethics and Social Responsibility

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Title: Ethics and Social Responsibility


1
Ethics and Social Responsibility
  • chapter four

2
Learning Objectives
  1. Explain the relationship between ethics and the
    law
  2. Differentiate between the claims of the different
    stakeholder groups that are affected by managers
    and their companies actions
  3. Describe four rules that can be used to help
    companies and their managers act in ethical ways

3
Learning Objectives
  1. Discuss why it is important for managers to
    behave ethically
  2. Identify the four main sources of managerial
    ethics
  3. Distinguish between the four main approaches
    toward social responsibility that a company can
    take

4
The Nature of Ethics
  • Ethical Dilemma
  • quandary people find themselves in when they have
    to decide if they should act in a way that might
    help another person even though doing so might go
    against their own self-interest

5
The Nature of Ethics
  • Ethics
  • The inner-guiding moral principles, values, and
    beliefs that people use to analyze or interpret
    a situation and then decide what is the right
    or appropriate way to behave

6
Dealing with Ethical Issues
  • There are no absolute or indisputable rules or
    principles that can be developed to decide if an
    action is ethical or unethical
  • Neither laws nor ethics are fixed principles

7
Stakeholders and Ethics
  • Stakeholders
  • The people and groups that supply a company with
    its productive resources and so have a claim on
    and stake in the company.

8
Types of Company Stakeholders
Figure 4.1
9
Stockholders
  • Want to ensure that managers are behaving
    ethically and not risking investors capital by
    engaging in actions that could hurt the companys
    reputation
  • Want to maximize their return on investment

10
Managers
  • Responsible for using a companys financial
    capital and human resources to increase its
    performance
  • Have the right to expect a good return or reward
    by investing their human capital to improve a
    companys performance
  • Frequently juggle multiple interests

11
Managers
  • Problem has been that in many companies corrupt
    managers focus not on building the companys
    capital and stockholders wealth but on
    maximizing their own personal capital and wealth

12
Employees
  • Expect to receive rewards consistent with their
    performance
  • Companies can act ethically toward employees by
    creating an occupational structure that fairly
    and equitably rewards employees for their
    contributions

13
Suppliers and Distributors
  • Suppliers expect to be paid fairly and promptly
    for their inputs
  • Distributors expect to receive quality products
    at agreed-upon prices

14
Some Principles from the Gaps Code of Vendor
Conduct
Table 4.1
15
Customers
  • Most critical stakeholder
  • Company must work to increase efficiency and
    effectiveness in order to create loyal
    customers and attract new ones

16
Whole Foods Stakeholder Approach to Ethical
Business
Figure 4.2
17
Community, Society, and Nation
  • Community
  • Physical locations like towns or cities in which
    companies are located
  • A community provides a company with the physical
    and social infrastructure that allows it to
    operate
  • A company contributes to the economy of the town
    or region through salaries, wages, and taxes

18
Example Houston Non-Profits
  • Many Houston area were adversely affected by the
    demise of Enron
  • Many were dependent on donations from Enron
  • The arts community was especially hit hard

19
Ethical Decision Making
Figure 4.3
20
Practical Decision Model
  • Does my decision fall within the acceptable
    standards that apply in business today?
  • Am I willing to see the decision communicated to
    all people and groups affected by it?
  • Would the people with whom I have a significant
    personal relationship approve of the decision?

21
Why should managers behave ethically?
  • The relentless pursuit of self-interest can lead
    to a collective disaster when one or more people
    start to profit from being unethical because this
    encourages other people to act in the same way

22
Some Effects of Ethical/Unethical Behavior
Figure 4.4
23
Trust and Reputation
  • Trust
  • willingness of one person or group to have faith
    or confidence in the goodwill of another person

24
Trust and Reputation
  • Reputation
  • esteem or high repute that individuals or
    organizations gain when they behave ethically

25
Sources of Ethics
Figure 4.5
26
Societal Ethics
  • Societal Ethics
  • Standards that govern how members of a society
    should deal with one another in matters involving
    issues such as fairness, justice, poverty, and
    the rights of the individual
  • People behave ethically because they have
    internalized certain values, beliefs, and norms

27
Occupational Ethics
  • Occupational Ethics
  • Standards that govern how members of a
    profession, trade, or craft should conduct
    themselves when performing work-related
    activities
  • Medical legal ethics

28
Individual Ethics
  • Individual Ethics
  • Personal standards and values that determine how
    people view their responsibilities to other
    people and groups
  • How they should act in situations when their own
    self-interests are at stake

29
Organizational Ethics
  • Organizational Ethics
  • Guiding practices and beliefs through which a
    particular company and its managers view their
    responsibility toward their stakeholders
  • Top managers play a crucial role in determining
    a companys ethics

30
Social Responsibility
  • Social Responsibility
  • The way a companys managers and employees view
    their duty or obligation to make decisions that
    protect, enhance, and promote the welfare and
    well-being of stakeholders and society as a whole

31
Approaches to Social Responsibility
Figure 4-6
32
Approaches to Social Responsibility
  • Obstructionist approach
  • Companies choose not to behave in a social
    responsible way and behave unethically and
    illegality

33
Approaches to Social Responsibility
  • Defensive approach
  • companies and managers stay within the law and
    abide strictly with legal requirements but make
    no attempt to exercise social responsibility

34
Approaches to Social Responsibility
  • Accommodative approach
  • Companies behave legally and ethically and try to
    balance the interests of different stakeholders
    against one another so that the claims of
    stockholders are seen in relation to the claims
    of other stakeholders

35
Approaches to Social Responsibility
  • Proactive approach
  • Companies actively embrace socially responsible
    behavior, going out of their way to learn about
    the needs of different stakeholder groups and
    utilizing organizational resources to promote the
    interests of all stakeholders

36
Why Be Socially Responsible?
  1. Demonstrating its social responsibility helps a
    company build a good reputation
  2. If all companies in a society act socially, the
    quality of life as a whole increases

37
Role of Organizational Culture
  • Ethical values and norms help organizational
    members
  • Resist self-interested action
  • Realize they are part of something bigger than
    themselves

38
Johnson Johnson Credo
Figure 4.7
39
Ethics Ombudsman
  • Responsible for communicating ethical standards
    to all employees
  • Designing systems to monitor employees conformity
    to those standards
  • Teaching managers and employees at all levels of
    the organization how to appropriately respond to
    ethical dilemmas

40
Video Case Whose Life is It Anyway?
  • Do you think it is ethical for Scotts or other
    companies to fire employees who smoke, even if
    they only smoke outside of work?
  • In implementing Scotts health initiatives, does
    Hagedorn put the interests of one group of
    stakeholders above those of another?
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