Chapter 3
Managing
Social
Responsibility
and Ethics
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Slide 2
Learning Objectives
After reading this chapter, you should be able to:
Apply the four key ethical criteria that managers and
employees should use when making business decisions.
Explain why businesses establish codes of ethics as a
method of guiding employee conduct.
Recognize ways to encourage ethical behavior in
business.
Recognize morally challenging situations where ethical
decisions should be made.
Identify important categories of stakeholders.
Recognize the influence of various stakeholders on a
companys priorities, policies, plans, and goals.
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Slide 3
Ethics and social
responsibility should be
high-priority concerns of
all members of an
organization, not just
managers and executives.
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Slide 4
What are Business Ethics?
Ethics are principles that explain what is
right or wrong, good or bad, and what is
appropriate or inappropriate in various
settings.
Business ethics provide standards or
guidelines for the conduct and decision
making of employees and managers.
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Slide 5
What are Business Ethics?
(continued)
Without a code of ethics:
There is no consensus regarding ethical principles
Different people will use different ethical criteria in
determining whether a practice or behavior is ethical or
unethical
Business ethics are not the same things
as laws.
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Slide 6
Some Ethical Issues in
Business
Employee-Employer Relations
Petty theft of office supplies
Employer-Employee Relations
Sexual harassment
Company-Customer Relations
Deceptive marketing or advertising
Company-Shareholder Relations
Excessive pay for top executives
Company-Community/Public Interest
Sponsoring activities that harm the environment
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Slide 7
Ethics Approaches
People utilize different ethical value
systems
These systems are based on:
Personal experiences
Religious background
Education
Family training
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Slide 8
Approaches for Ethical
Decision Making
Utilitarianism
A means of making decisions based on what is good for
the greatest number of people.
Individualism
The degree to which a society values personal goals,
autonomy, and privacy over group loyalty, commitment
to group norms, involvement in collective activities,
social cohesiveness, and intense socialization.
Individual self-interest should be promoted as long as it
does not harm others.
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Slide 9
Approaches for Ethical
Decision Making (continued)
Rights approach
A means of making decisions based on the belief that
each person has fundamental human rights that should
be respected and protected.
Justice approach
An approach to decision making based on treating all
people fairly and consistently when making business
decisions.
Distributive Justice
Procedural Justice
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Slide 10
Comparison of Ethical
Approaches
Individuals
Matter
Rights Individualism
Approach Approach
How much
do
individuals
matter?
Justice Utilitarianism
Approach Approach
Community
matters
Egalitarian Economic freedom Libertarian
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Slide 11
A company needs to ensure agreement about the relevant criteria on which
to judge the ethics of a business decision so that people do not base
decisions on personal value systems.
Code of Ethics
Corporate Credos
Ethical Policy Statements
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Slide 12
Numerous companies have adopted ethical
policy statements that inform employees of
acceptable standards of conduct
St. Paul Companies
Employees may accept gifts of inexpensive pens or
appointment diaries, but not liquor, lavish entertainment,
travel, or clothing.
Eli Lilly and Company
Employees may not conduct business with a company
with which they or their relatives are associated, unless
Eli Lily has given specific approval and authorization.
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Slide 13
Company Examples (continued)
General Dynamics Corporation
Employees may not use or share inside
information (that is not available to the general
public) for personal gain.
J.D. Edwards and Company
Profanity and racial and sexual slurs are
prohibited.
Language should convey a loving, caring, and
sensitive attitude toward other people.
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Slide 14
Managing Ethics
Ethics Training
Ethical Structures
Whistleblower Policies
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Slide 15
Ethics Training
Usually contains three
elements:
Messages from top
executives emphasizing
ethical business practices
Discussion of Code of
Ethics
Procedures for discussing or
reporting unethical behavior
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Slide 16
Ethical Structures
Ethical structures are the procedures and
divisions or departments within a company
that promotes and advocates ethical
behavior.
Two types of ethical structures:
Ethics Officer
Ethics Committee
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Slide 17
Whistleblower Policies Should
Include the Following Key Features
The policy encourages reporting
unethical conduct.
Meaningful procedure to deal fairly with
reported violations.
Those who report violations are protected from
retaliation.
Alternative reporting procedures.
Anonymous reporting to an ethics officer/committee.
Feedback to employees on ethics violations.
Top management support and involvement.
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Eight Ways Mangers Can Influence
Slide 18
the Ethical Behavior of Associates
Take actions that Meet with employees to
develop trust. discuss and define what
is expected of them.
Act consistently.
Ensure employees are
Be truthful and avoid treated equitably.
white lies and Adhere to clear
manipulative actions. standards that are seen
as just and reasonable.
Demonstrate integrity.
Respect employees.
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Slide 19
Four Examples of Ethical
Dilemmas At Work
Performance
appraisal
Employee discipline
Office romance
Giving gifts in the
workplace
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Slide 20
Performance Appraisals
Formal evaluations of an employees
performance provided on a recurring basis
To perform effective evaluations, the
supervisor should devote substantial time to
collecting accurate performance information
Rating are used for:
Letting employees know which skills they have
mastered and which require improvement
A basis for pay increases, future work
assignments, promotions, and sometimes
layoffs
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Slide 21
Employee Discipline
Guidelines for giving employee
discipline in a fair and impartial
way:
Notify employees in advance of a
companys work rules and the
consequences for violating them
Investigate the facts of an employees
misconduct before applying discipline
Be consistent in the response to rule
violations
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Slide 22
Office Romances
Suggestions for ethical
employee conduct in a
romantic relationship in the
workplace:
Public displays of affection at
work should be discouraged
Employees should be
prohibited from dating people
they directly supervise
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Slide 23
Giving Gifts
Ethical test of accepting gifts:
Think about how a manager or co-worker
would perceive the gift and the person who
gave it
If you feel uncomfortable explaining the
gift, the discomfort probably means it
would be ethically problematic
The laws and ethics related to giving
gifts between parties as a business
practice are highly diverse from
culture to culture
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Slide 24
Social Responsibility
Do corporations have a
responsibility to conduct their
affairs ethically?
Should corporations be judged by
the same standards as
individuals?
Should a business be concerned
with more than the pursuit of
profits for its shareholders?
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Slide 25
Benefits of Social
Responsibility
Socially responsible Are more likely to influence
stakeholders to become loyal
companies: customers and become
Are good corporate citizens advocates of the companys
to the community and to the
products.
environment.
Policies can enhance the Research shows that
image of a company as well corporate social responsibility
as its product brands from the is related to higher financial
perspective of the performance and the ability to
consumers. recruit better quality job
applicants.
Have fewer conflicts with
stakeholder groups who
disagree with the company
over how it uses its
resources.
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Slide 26
Costs of Social
Responsibility
Socially responsible companies may:
Lose focus on the business goals while
focusing on goals related to good corporate
citizenship.
Divert needed resources for improving the
business into other social responsibility projects
which could put a company at a competitive
disadvantage.
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Slide 27
Organizational Stakeholders
Owners Employees
Governments
Customers
Community
Social Activist
Groups Competitors
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Strategies for Managing
Slide 28
Stakeholders
Confrontation Damage Control
Accommodation Proactive Approach
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Slide 29
Strategies for Managing
Stakeholders (continued)
Confrontation strategies use courts, public relations,
and lobbying to fight a stakeholder group.
Damage control strategies admit mistakes and
attempt to improve public image and their relationship with
stakeholders.
Accommodation strategies accept social
responsibility for business practices and make appropriate
changes.
Proactive strategies signify a partnership with the
stakeholder and go beyond the groups expectations.
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