Transcript Ethics and Social Responsibility

Chapter 4
Ethics and
Social Responsibility
Chapter 4
Copyright ©2009 by Cengage Learning Inc. All rights reserved
1
Ethical and Unethical
Workplace Behavior
Ethics
The set of moral principles or values
that defines right and wrong for a
person or group.
Question: it an act is illegal,
is it unethical by default?
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ETHICS: MURKIER THAN YOU THINK
Legal and Unethical
Legal and Ethical
Promoting R-rated movies to young teens
Producing high quality products
Producing products that you know will break before
their time
Rewarding integrity
Paying non-living wages to workers in developing
countries
Leading by example
Ford Pinto case
Treating employees fairly
Contributing to the community
Respecting the environment
Illegal and Unethical
Illegal and Ethical
Embezzling money
Providing rock-bottom prices only to distributors in
underserved areas
Engaging in sexual harassment
Collaborating with other medical clinics to guarantee
low prices in low-income countries (collusion)
Practicing Collusion with competitors
Parking in a no-parking zone
Encouraging fraudulent accounting
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UNIVERSAL ETHICAL STANDARDS
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Developed by
Character
Counts, a
nonpartisan
organization of
educators,
community
leaders, and
ethicists.
Ethics and the
Nature of Management Jobs
Unethical Managerial Behavior
Authority and Power
Handling Information
Influencing the Behavior of Others
Setting Goals
1
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Workplace Deviance
Workplace Deviance
Unethical behavior that violates
organizational norms about
right and wrong

Two dimensions
 Degree of deviance
 Target of deviant behavior
2
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Types of Workplace Deviance
Organizational
Production
Deviance
Property
Deviance
Negative impact on production….
Minor
Causing political harm to others…
Political
Deviance
2
Misuse of corporate property….
Serious
Personal aggression
Personal
Aggression
Interpersonal
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Adapted from Exhibit 4.1
10
Production Deviance
 Leaving early
 Taking excessive breaks
 Intentionally working slowly
 Wasting resources
2
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Property Deviance
 Sabotaging
equipment
 Accepting
kickbacks
 Lying about
hours worked
 Stealing from
company
2
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Political Deviance
 Showing favoritism
 Gossiping about
coworkers
 Blaming coworkers
 Competing
nonbeneficially
2
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Personal Aggression
 Sexual harassment
 Verbal abuse
 Stealing from coworkers
 Endangering coworkers
2
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U.S. Sentencing
Commission Guidelines
Companies can be prosecuted and
punished even if management didn’t
know about the unethical behavior.
3
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Who, What, and Why?
Nearly all businesses are covered
Punishes a number of offenses
Encourages businesses to be proactive
3.1
Includes all businesses, nonprofits, partnerships, labor
unions, unincorporated organizations and associations,
incorporated organizations and even pension funds,
trusts, and joint stock companies.
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Partial List of Offenses
Invasion of privacy
Price fixing
Fraud
Customs violations
Antitrust violations
Civil rights violations
Theft
3.1
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Money laundering
Conflicts of interest
Embezzlement
Dealing in stolen
goods
Copyright
infringements
Extortion
…and more
17
Compliance Program Steps
Steps in determining fine size
1. determine the base fine
2. compute a culpability score
3. multiply the base fine by the
culpability score
Smaller fines for
companies that
are proactive
3.2
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Compliance Program Steps
1. Establish standards and procedures.
2. Assign upper-level managers to be in charge.
Revise if required
3. Delegate decision-making authority only
to ethical employees.
4. Encourage employees to report violations.
5. Train employees on standards and procedures.
6. Enforce standards consistently and fairly.
3.2
7. Improve program after violations.
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Adapted from Exhibit 4.3
Influences on Ethical Decision Making
Ethical Intensity of Decision
Ethical
Answers
Depend
on…
Moral Development of Manager
Ethical Principles Used
4
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Ethical Intensity Depends on…
Magnitude of consequences
Total harm or benefit derived from an ethical decision
Social consensus
Agreement on whether behavior is bad or good.
Probability of effect
The chance that something will happen and harm others
Temporal immediacy
The time between an act and the consequences of the act.
Proximity of effect
Social, psychological, cultural or physical distance of a
decision maker to those affected by his/her decisions.
4.1
Concentration of effect
How much the act affects the average person.
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Moral Development
Kohlberg’s Stages of Moral Development
Preconventional
Conventional
Postconventional
Selfish
Societal
Expectations
Internalized
Principles
Expectations:
Selfish:
Internal:
I don’t
What
You
want
do
have
you
to aget
want
conscious….
intofrom
trouble…..
me??????
4.2
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Adapted from Exhibit 4.4
24
Stages of Moral Development
You are given a copy of Microsoft Office 2010. Should
you copy it to your system?
Preconventional
Conventional
Postconventional
1. Punishment and 3. Good boy,
Obedience
nice girl
5. Social contract
2. Instrumental
Exchange
6. Universal
principle
4. Law and order
It’s
law, so itI will
not
copy
Others are copying the software, so I
IfYour
I against
copy
thethe
software,
willofafraid
cause
This
I’m
will
itorwillhelp
cause
me,
trouble
so I copy
for me,
the
personal
principles
rightreally
the
software.
will
do
it also..
to the authors,
so I do not
4.2harm wrong
so
Icopy
do notsoftware.
copy the software.
rule, regardless
of the
it.
consequences.
25
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Principles of Ethical Decision
Making (Larue Hosmer)
Long-term self-interest
Personal virtue
Religious injunctions
Government requirements
Utilitarian benefits
Individual rights
Distributive justice
4.3
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Consider an example
 One winter morning, Richard Addessi (an IBM employee)
showered, shaved and dressed for the office. Before he
could get to his car, he fell dead on the garage floor of a
sudden heart attack. Addessi was four months short of his
30-year anniversary with the company, at which he could
have retired. Given that he was only four months short of
full retirement, do you award full retirement benefits to
Addessi’s wife and daughters? If yes, they will receive his
full retirement benefits of $1800/month and free lifetime
medical coverage. If no, they will receive only
$340/month and will have to pay $473 a month just to
continue their current medical coverage. What would be
the ethical thing to do?
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Principles of
Ethical Decision Making
Principle of long-term self-interest
Never take any action not in your
organization’s long-term self-interest.
4.3
Under this principle, IBM should NOT award offer
the retirement benefits to Mrs. Addessi, since IBM
always has thousands of employees this close to
Retirement.
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Principles of
Ethical Decision Making
Principle of Personal Virtue
Never do anything that is not honest, open,
and truthful and that you would not be
glad to see reported in the newspapers
or on TV.
Under this principle, IBM should have quietly
offered the benefits to Mrs. Addessi. Who
needs this type of publicity?
4.3
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Principles of
Ethical Decision Making
Principle of Religious Injunctions
Never take any action that is not kind
and that does not build a
sense of community.
Under this principle, IBM should offer the benefits
To Mrs. Addessi out of compassion and kindness.
4.3
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Principles of
Ethical Decision Making
Principle of Government Requirements
Never take any action that violates the law,
for the law represents the minimal
moral standard.
4.3
Using this principle, IBM would deny full benefits to Mrs.
Addessi, since her husband did not qualify for them.
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Principles of
Ethical Decision Making
Principle of Utilitarian Benefit
Never take any action that does not result in
greater good for society.
Using this principle, IBM should deny benefits,
Since by doing so with regularity might result in
Cutting stock dividend, hurting millions.
4.3
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Principles of
Ethical Decision Making
Principle of Individual Rights
Never take any action that infringes on
others’ agreed-upon rights.
4.3
Using this principle, IBM should deny benefits,
Since offering them could be perceived as
Violating the rights of other employees who
Had to wait 30 years to receive the same benefits.
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Principles of
Ethical Decision Making
Principle of Distributive Justice
Never take any action that harms the
least among us:
the poor, the uneducated,
the unemployed.
Using this principle, IBM would award Mrs.
Addessi full benefits.
4.3
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Practical Steps to
Ethical Decision Making
Select and hire ethical employees
Establish a Code of Ethics
Train employees to make ethical decisions
Create an ethical climate
5
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Practical Steps to
Ethical Decision Making
Select and hire ethical employees
If you found a wallet containing $50,
would you return it with the money?
 Overt Integrity Tests
 Personality-Based Integrity Tests
5.1
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Practical Steps to
Ethical Decision Making
Establish a Code of Ethics
 Communicate code of ethics to those both
inside and outside the company
 Develop ethical standards and procedures
specific to your business
5.2
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Ethics Training
Ethics Training
 Develops employee awareness of ethics
 Achieves credibility with employees
 Teaches a practical model of ethical
decision making
5.3
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43
Ethics Training
Tower Records
Lockheed
Boeing
Bell South
U.S. Dept. of Justice
3M
TCU
And more require employees to take ethics training
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A Basic Model of
Ethical Decision Making
1. Identify the problem
2. Identify the constituents
3. Diagnose the situation
4. Analyze your options
5. Make your choice
6. Act
5.3
What is your
Imagine
the range
intention
of possibilities.
in making this
Limit
decision?
yourselfCan
to the
youtwo
discuss
or three
the
Whathas
Who
makes
been
it an
hurt?
ethical
Whoproblem?
could beThink
hurt? inWho
terms
could
of rights,
be helped?
obligations,
Are
Howwhat
most
problem
Do
did
manageable.
itwith
you
happen
have
the affected
in
toWhat
the
do. first
Don't
are
parties
place?
the
bebefore
likely
afraid
What
outcomes
you
to could
admit
act? have
of
errors.
Could
each?
prevented
you
BeWhat
as
disclose
bold
it?
are in
Is
fairness,
they
willing
relationships,
players, or are
andthey
integrity.
victims?
HowCan
would
youyou
negotiate
define the
with
it going
the
without
confronting
likelyqualm
tocosts?
get
a problem
worse
your
Look
decision
oras
tobetter?
the
youto
company
were
your
Caninboss,
the
causing
mission
damage
the CEO,
it.statement
now
the
beboard
undone?
or code
of of
45Exhibit 4.6
Adapted
from
Chapter them?
4
problem
if you stood on the other side of the fence?
ethics
directors,
for
guidance.
yourLearning
family
as a whole?
Copyright
©2009 by
Cengage
Inc.or
Allsociety
rights reserved
Ethical Climate
Establishing an Ethical Climate
Managers:
1.
2.
3.
4.
5.4
Act ethically
Are active in company ethics programs
Report potential ethics violations
Punish those who violate the code of
ethics
Web Link
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http://www.whistleblowers.org
46
What Is Social Responsibility?
Social Responsibility
A business’s obligation to…
 pursue policies
 make decisions
 take actions that benefit society
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What Is Social Responsibility?
Recall from
Chapter 3
that PETA
and
Procter &
Gamble
have an
ongoing
disagreement about what is socially
responsible.
49
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To Whom Are Organizations
Socially Responsible?
Shareholder
Model
Maximize Profits
Stakeholder
Model
Satisfy Interests
of Multiple Stakeholders
6
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Stakeholder Model
Primary
Stakeholders:
Secondary
Stakeholders:
Shareholders
Employees
Customers
Suppliers
Governments
Local Communities
Media
Special Interest Groups
Trade Associations
6
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Organization’s Social
Responsibilities
Serve a social role
Discretionary
Abide by principles
of right and wrong
Ethical
Obey laws and
regulations
Legal
Be profitable
?
Economic
$
7
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Responses to Demands
for Social Responsibility
Reactive
Defensive
Accommodative
Proactive
Fight all
the way
Do only what
is required
Be
progressive
Lead the
industry
Withdrawal
Public
Relations
Approach
Legal
Approach
Bargaining
DO
NOTHING
DO
MUCH
8
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Problem
Solving
54
Social Responsibility and
Economic Performance
Can cost a company
Realities of
Social
Responsibility
Sometimes it does pay
Does not guarantee
profitability
9
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55