Transcript Chapter 4 - Cengage Learning

Chapter
4
Ethics and
Social
Responsibility
Management
4th Edition
Chuck Williams
Chapter 4
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved
Prepared by
Deborah Baker
Texas Christian University
1
What Would You Do?
Gap, Inc. Headquarters

Gap has received negative news
coverage regarding sweatshop
labor exploitation

Retailers rely on foreign
factories to keep their prices low

Protest groups are calling for boycotts; Gap is losing $$
How do you decide whose interests take precedence?
Is Gap responsible for poor treatment of workers?
What would you do?
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2
Ethical and Unethical
Workplace Behavior
Ethics
The set of moral principles or values
that defines right and wrong for a
person or group.
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3
What Is Ethical and Unethical
Workplace Behavior?
After reading these sections,
you should be able to:
1.
discuss how the nature of management jobs
creates the possibility for ethical abuses.
2.
identity common kinds of workplace deviance.
3.
describe the U.S. Sentencing Commission
Guidelines for Organizations and explain how
they both encourage ethical behavior and punish
unethical behavior by businesses.
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4
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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Ethics and the
Nature of Management Jobs
Managers can encourage ethical behaviors by…
 using resources for company business only
 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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6
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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7
Types of Workplace Deviance
Organizational
Production
Deviance
Property
Deviance
Minor
Serious
Political
Deviance
Personal
Aggression
Interpersonal
2
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Adapted from Exhibit 4.1
8
Production Deviance




Leaving early
Taking excessive breaks
Intentionally working slow
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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10
Political Deviance




Showing favoritism
Gossiping about
coworkers
Blaming coworkers
Competing nonbeneficially
2
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11
Personal Aggression




Sexual harassment
Verbal abuse
Stealing from coworkers
Endangering coworkers
2
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12
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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13
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
Partial List of Offenses
Invasion of privacy
Price fixing
Fraud
Customs violations
Antitrust violations
Civil rights violations
Theft
Money laundering
Conflicts of interest
Embezzlement
Dealing in stolen goods
Copyright infringements
Extortion
…and more
3.1
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15
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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16
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
17
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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18
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
Social consensus
Probability of effect
Temporal immediacy
Proximity of effect
Concentration of effect
4.1
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20
Moral Development
Kohlberg’s Stages of Moral Development
Preconventional
Conventional
Postconventional
Selfish
Societal
Expectations
Internalized
Principles
4.2
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Adapted from Exhibit 4.4
21
Stages of Moral Development
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
4.2
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22
Principles of
Ethical Decision Making
Long-term self-interest
Personal virtue
Religious injunctions
Government requirements
Utilitarian benefits
Individual rights
Distributive justice
4.3
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23
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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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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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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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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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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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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29
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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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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Doing the Right Thing
If You Cheat in College,
Will You Cheat in the Workplace?
 College students who cheat are likely to cheat again.
 70 percent of students don’t see cheating as a problem.
 People who cheat and cheat again see their
behavior as normal.
 60 percent of people who cheat their employers
don’t feel guilty for doing so.
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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.
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34
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%
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35
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%
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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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37
Practical Steps to
Ethical Decision Making
Establish a Code of Ethics
5.2

Communicate code of ethics to both inside
and outside the company

Develop ethical standards and procedures
specific to business
Web Link
http://www.nortelnetworks.com
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38
Ethics Training
Ethics Training
5.3

Develops employee awareness of ethics

Achieves credibility with employees

Teaches a practical model of ethical
decision making
Web Link
http://ethics.bellsouth.com
“Ethics Scenarios Game”
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39
Ethics Training
Tower Records
Lockheed
Boeing
Bell South
U.S. Dept. of
Justice
3M
City of
Philadelphia
And more require employees to take ethics training
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40
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 4.6
41
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
http://www.whistleblowers.org
Chapter 4
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42
What Is Social Responsibility?
After reading these 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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43
What Is Social Responsibility?
Social Responsibility
A business’s obligation to…
 pursue policies
 make decisions
 take actions that benefit society
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44
What Is Social Responsibility?

Recall from
Chapter 3 that
PETA and
Procter &
Gamble have
an ongoing
disagreement
about what is
socially
responsible.
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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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46
Shareholder Model
Pros
Cons

Firm maximizes
shareholder wealth and
satisfaction

Organizations cannot act
effectively as moral agents
for shareholders

The company stock
increases in value

Time, money, and attention
diverted to social causes
undermine market
efficiency
6
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47
Stakeholder Model
Primary
Stakeholders:
Secondary
Stakeholders:
Shareholders
Employees
Customers
Suppliers
Governments
Local Communities
Media
Special Interest Groups
Trade Associations
6
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48
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
DO
NOTHING
Bargaining
Problem
Solving
DO
MUCH
8
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Social Responsibility and
Economic Performance
Can cost a company
Realities of
Social
Responsibility
Sometimes it does pay
Does not guarantee
profitability
9
Chapter 4
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51