Transcript CHAPTER 3 Ethics and Social Responsibility

Ethics and Social Responsibility
CHAPTER THREE
Prepared by
Deborah Baker
Texas Christian University
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved
Management
3rd Edition
Chuck Williams
1
CHAPTER THREE
What Would You Do?
You are the new CFO of Rite Aid,
and you are worried…

the company’s finances contain
numerous problems and mistakes

financial reports may have been
“doctored” to improve results

CEO Martin Grass may
“shoot the messenger”
If ethics means
“doing the right thing,”
then what should you do?
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2
CHAPTER THREE
What Is Ethical and Unethical
Workplace Behavior?
After reading the next three
sections, you should be able to:
1.
discuss how the nature of management jobs
creates the possibility for ethical abuses.
2.
identity common kids of workplace deviance.
3.
describe the U.S. Sentencing Commission
Guidelines for Organizations and explain how its
recommendations make ethical behavior much
more important for businesses.
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3
CHAPTER THREE
Ethics and the Nature of Management Jobs
Unethical Managerial Behavior
Authority and Power
Handling Information
Influencing the Behavior of Others
Setting Goals
More
1
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4
CHAPTER THREE
Ethics and the Nature of Management Jobs
Ethics: the set of moral principles or
values that define right and wrong.
Managers can encourage ethical behaviors by…
 using resources for company
 handling information confidentially
 not influencing others to engage in
unethical behavior
 not creating policies that reward employees
for unethical behavior
 setting reasonable goals
1
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5
CHAPTER THREE
Workplace Deviance
 Behavior that violates organizational norms
about right and wrong
 Two dimensions
 Degree of deviance
 minor to serious
 Target of deviant behavior
 the organization or particular people
2
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6
CHAPTER THREE
Workplace Deviance
Production Deviance
Types of
Workplace
Deviance
Property Deviance
Political Deviance
Personal Aggression
2
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CHAPTER THREE
Production Deviance
 Hurts the quality and/or quantity of work
 Examples are leaving early, taking excessively
long breaks, etc.
2
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CHAPTER THREE
Property Deviance
 Unethical behavior aimed at company property
 Examples are sabotage, stealing, damaging
equipment, etc.
2
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9
CHAPTER THREE
Political Deviance
 Using one’s influence to harm others in the
company
 Examples are favoritism, spreading rumors,
falsely blaming others, etc.
2
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10
CHAPTER THREE
Personal Aggression
 Hostile or aggressive behavior toward
others
 Examples are sexual harassment,
verbal abuse, threatening others, etc.
2
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11
CHAPTER THREE
Workplace Deviance
ORGANIZATIONAL
Production Deviance
•leaving early
•excessive breaks
•working slow
•wasting resources
Property Deviance
•sabotaging equipment
•accepting kickbacks
•lying about hours worked
•stealing from the company
MINOR
SERIOUS
Political Deviance
•showing favoritism
•gossiping about co-workers
•blaming co-workers
•competing nonbeneficially
2
Adapted from
Exhibit 3.1
Personal Aggression
•sexual harassment
•verbal abuse
•stealing from co-workers
•endangering co-workers
INTERPERSONAL
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12
CHAPTER THREE
U.S. Sentencing Commission Guidelines
 Companies can be prosecuted and punished
even if management didn’t know about the
unethical behavior
 Who, What, and Why
 Determining Punishment
3
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CHAPTER THREE
Who, What, and Why?
 Nearly all businesses are covered
 Punishes a number of offenses
 Encourages businesses to be proactive
3.1
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14
CHAPTER THREE
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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15
CHAPTER THREE
Compliance Program Steps
1. Establish standards and procedures to meet the
company’s business needs
2. Put upper-level managers in charge of the
compliance program
3. Don’t delegate decision-making authority to employees who
are likely to act illegally or unethically.
4. Use auditing, monitoring, and other methods to encourage
employees to report violations.
5. Use company publications and training to inform employees
about the company’s compliance standards and procedures.
6. Enforce compliance standards by fairly and
consistently disciplining violators.
7. After violations occur, find appropriate ways to
improve the compliance program.
3.2
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Adapted from Exhibit 3.3
16
CHAPTER THREE
How Do You Make Ethical Decisions?
After reading the next two
sections, you should be able to:
4.
describe what influences ethical decision making
5.
explain what practical steps managers can
take to improve ethical decision making.
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17
CHAPTER THREE
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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18
CHAPTER THREE
Ethical Intensity
Magnitude of consequences
Social consensus
Probability of effect
Factors
Temporal immediacy
Proximity of effect
Concentration of effect
4.1
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19
CHAPTER THREE
Moral Development
Preconventional
Conventional
Postconventional
Selfish
Societal
Expectations
Internalized
Principles
More
Selfish
4.2
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More
Mature
More
20
CHAPTER THREE
Stages of Moral Development
Preconventional
Conventional
Postconventional
1. Punishment and
Obedience
3. Good boy, nice
girl
5. Social contract
2. Instrumental
Exchange
4. Law and order
6. Universal
principle
4.2
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21
CHAPTER THREE
Principles of Ethical Decision Making
Long-term self-interest
Personal virtue
Religious injunctions
Government requirements
Utilitarian benefits
Principles
of…
Individual rights
Distributive justice
4.3
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22
CHAPTER THREE
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
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23
CHAPTER THREE
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
4.3
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CHAPTER THREE
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
4.3
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CHAPTER THREE
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
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CHAPTER THREE
Principles of Ethical Decision Making
Principle of Utilitarian Benefit
Never take any action that does not result in
greater good for society
4.3
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CHAPTER THREE
Principles of Ethical Decision Making
Principle of Individual Rights
Never take any action that infringes on
others’ agreed-upon rights
4.3
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CHAPTER THREE
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.
4.3
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CHAPTER THREE
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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30
CHAPTER THREE
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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CHAPTER THREE
What Really Works
Studies show that Integrity Tests…
 Help reduce workplace deviance
 Help hire workers who are better performers
However they have a smaller effect
on assessing theft.
More
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32
CHAPTER THREE
What Really Works (continued)
Workplace Deviance (Counterproductive Behaviors)
Overt Integrity Tests & Workplace Deviance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success
82%
Personality-Based Integrity Tests & Workplace Deviance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success
68%
More
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33
CHAPTER THREE
What Really Works (continued)
Job Performance
Overt Integrity Tests & Job Performance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 69%
Personality-Based Integrity Tests & Job Performance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success
70%
More
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34
CHAPTER THREE
What Really Works (continued)
Theft
Overt Integrity Tests & Theft
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
probability of success 57%
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35
CHAPTER THREE
Practical Steps to Ethical Decision Making
Establish a Code of Ethics
 Communicate code of ethics to both inside
and outside the company
 Develop ethical standards and procedures
specific to business
http://www.nortelnetworks.com
5.2
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36
CHAPTER THREE
Ethics Training
Ethics Training
 Develops employee awareness of ethics
 Achieves credibility with employees
 Teaches a practical model of ethical
decision making
http://active.boeing.com
5.3
General Info & Images,
Ethics & Business Conduct,
Take the Ethics Challenge
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37
CHAPTER THREE
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
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Adapted from Exhibit 3.6
38
CHAPTER THREE
Ethical Climate
Establishing an Ethical Climate
Managers:
 Act ethically
 Are active in company ethics programs
 Report potential ethics violations
 Punish those who violate the code of ethics
5.4
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39
CHAPTER THREE
Been There Done That
 Blowing the Whistle on the FBI,
WorldCom, and Enron
 Leaders must set the value system
 All Americans are responsible for
ethics and morals
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40
CHAPTER THREE
What Is Social Responsibility?
After reading the next four
sections, you should be able to
explain:
6.
to whom organizations are socially responsible.
7.
for what organizations are socially responsible.
8.
how organizations can choose to respond to
societal demands for social responsibility.
9.
whether social responsibility hurts or helps an
organization’s economic performance.
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41
CHAPTER THREE
To Whom Are Organizations Socially
Responsible?
Shareholder
Model
Maximize Profits
Stakeholder
Model
Satisfy Interests
of Multiple Stakeholders
6
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42
CHAPTER THREE
Shareholder Model
 Managers cannot act effectively as moral
agents for shareholders
 Time, money, and attention diverted to social
causes undermine market efficiency
6
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CHAPTER THREE
Stakeholder Model
Primary
Stakeholders:
Secondary
Stakeholders:
Shareholders
Employees
Customers
Suppliers
Governments
Local Communities
Media
Special Interest Groups
Trade Associations
6
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44
CHAPTER THREE
Organization’s Social Responsibilities
Social responsibilities
Discretionary
Don’t violate principles
of right and wrong
Ethical
Obey the Law.
Make a Profit
Legal
Economic
7
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45
CHAPTER THREE
Blast from the Past
100 Years of Corporate Philanthropy
 1800s – illegal under the doctrine of ultra vires
 Late 1800s—benefits to employees acceptable
and legal
 1940s corporate philanthropy took place
 1950s – corporate philanthropy “right thing” to do
 Present-- U.S. companies donate approximately
$6 billion a year
7
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CHAPTER THREE
Responses to Demands for Social
Responsibility
Reactive
Defensive
Accommodative
Strategies
Proactive
8
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CHAPTER THREE
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
Problem
Solving
DO
NOTHING
8
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DO
MUCH
Adapted from Exhibit 3.10
48
CHAPTER THREE
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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Adapted from Exhibit 3.10
49
CHAPTER THREE
What Would You Do--II?
BMG Records
BMG Records is concerned over the marketing of
offensive recordings to children…
 You are torn that children are listening to offensive
materials
 But, parental advisory labels sell product!
How can you develop a strategy that meets social
responsibilities and addresses the concerns of
stakeholders?
What would you do?
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50
CHAPTER THREE