Principles of Management

Schermerhorn

Planning Ahead Chapter 3 Study Questions

What is ethical behavior? How do ethical dilemmas complicate the

workplace? How can high ethical standards be maintained? What is corporate social responsibility? How do organizations and governments work together in society?
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Study Question 1: What is ethical behavior?

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.

Management Fundamentals - Chapter 3

Study Question 1: What is ethical behavior?

Law, values, and ethical behavior:

Legal behavior is not necessarily ethical

behavior.
Personal values help determine individual

ethical behavior.
Terminal values

Instrumental values

Management Fundamentals - Chapter 3

Study Question 1: What is ethical behavior?

Utilitarian view of ethics greatest good to the

greatest number of people. Individualism view of ethics primary commitment is to ones 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.
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Figure 3.1 Four views of ethical behavior.

Management Fundamentals - Chapter 3

Study Question 1: What is ethical behavior?

Cultural issues in ethical behavior:

Cultural relativism
Ethical behavior is always determined by cultural context.

Cultural universalism
Behavior that is unacceptable in ones home environment should not be acceptable anywhere else.

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Figure 3.2 The extremes of cultural relativism and ethical imperialism

in international business ethics.

Source: Developed from Thomas Donaldson, Values in Tension: Ethics Away from Home, Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62. Management Fundamentals - Chapter 3 8

Study Question 1: What is ethical behavior?

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. Be good citizens Support social institutions, including economic and educational systems. Work with local government and institutions to protect environment.
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Study Question 2: How do ethical dilemmas complicate the workplace?

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
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Study Question 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 everyones best interests.

Nobody will ever find out.

The organization will protect you.

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Study Question 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.

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Figure 3.3 Factors influencing ethical managerial behaviorthe

person, organization, and environment.

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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? 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.

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Study Question 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.
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Study Question 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

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Study Question 3: How can high ethical standards be maintained?

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

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Study Question 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.

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Study Question 3: How can high ethical standards be maintained?

Codes of ethics:
Formal statement of an organizations 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

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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.

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Study Question 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.

Typical organizational stakeholders

Employees Customers Suppliers Owners Competitors Regulators Interest groups

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Figure 3.4 Multiple stakeholders in the

environment of an organization.

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Study Question 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 longterm success. Organizations must protect their reputations.
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Study Question 4: What is corporate social responsibility?

Perspectives on corporate social responsibility:

Classical view

Managements only responsibility is to maximize profits.

Socioeconomic view

Management must be concerned for the broader social welfare, not just profits.

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Study Question 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

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Study Question 4: What is corporate social responsibility?

Criteria for evaluating corporate social

performance:
Is the organizations
Economic responsibility met?
Legal responsibility met? Ethical responsibility met?

Discretionary responsibility met?

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Figure 3.5 Criteria for evaluating corporate social

performance.

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Study Question 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.
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Figure 3.6 Four strategies of corporate social responsibilityfrom

obstructionist to proactive behavior.

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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 Fair labor practices Consumer protection Environmental protection

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Study Question 5: How do organizations and governments work together in society?

How organizations influence governments:

Personal contacts and networks Public relations campaigns

Lobbying
Political action committees Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns
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Figure 3.7 Centrality of ethics and social responsibility in leadership

and the managerial role.

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Study Question 5: How do organizations and governments work together in society?

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.
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