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Chapter 3
Ethics and Social
Responsibility
Management, by Williams
South-Western College Publishing
Copyright © 2000
2
What Would You Do?
Should you
offer domesticpartner
benefits?
Whose
interests take
precedence?
What is the
ethical thing to
do?
Management, by Williams
South-Western College Publishing
Copyright © 2000
3
Learning Objectives
Ethics
After discussing this section,
you should be able to:
discuss how the nature of a management job
creates the possibility for ethical abuses.
identify common kinds of workplace deviance.
describe the 1991 U.S. Sentencing Commission
Guidelines and how its recommendations now
make ethical behavior much more important for
businesses.
Management, by Williams
South-Western College Publishing
Copyright © 2000
4
Ethics and the Nature of
Management Jobs
Ethical behavior follows accepted
principles of right and wrong
Intentional managerial unethical
behaviors
company resources for personal use
mishandling information
encouraging others’ unethical behavior
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Ethics and the Nature of Management
Jobs (Cont’d.)
5
Unintentional managerial unethical
behavior
poorly constructed policies
unrealistic employee goals
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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
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Types of Workplace Deviance
Production
Property
Political
Personal Aggression
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Production Deviance
Hurts the quality and/or quantity of work
Such as leaving early, taking
excessively long breaks, etc.
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Property Deviance
Unethical behavior aimed at company
property
Such as sabotage, stealing, damaging
equipment, etc.
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Political Deviance
Using one’s influence to harm others in
the company
Such as favoritism, spreading rumors,
falsely blaming others, etc.
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Personal Aggression
Hostile or aggressive behavior toward
others
Such as sexual harassment, verbal
abuse, threatening others, etc.
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Workplace Deviance
ORGANIZATIONAL
Production Deviance
•leaving early
•excessive breaks
•working slowly
•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
Adapted from
Figure 3.1
Personal Aggression
•sexual harassment
•verbal abuse
•stealing from co-workers
•endangering co-workers
INTERPERSONAL
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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
Who, What, and Why
Determining Punishment
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Who, What, and Why
Nearly all businesses - profit and
nonprofit- are covered
Punishes a number of actions
Encourages businesses to be proactive
on employee crime
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Determining Punishment
Smaller fines for companies that are
proactive
Steps in determining fine size
determine the base fine
compute a culpability score
multiply the base fine by the culpability
score
Compliance programs are important
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Compliance Program Steps for the
1991 U.S. Sentencing Guidelines
16
 Establish standards and procedures to meet the
company’s business needs.
 Put upper-level managers in charge of the compliance
program.
 Don’t delegate decision-making authority to employees
who are likely to act illegally or unethically.
 Use auditing, monitoring, and other methods to encourage
employees to report violations.
 Use company publications and training to inform
employees about the company’s compliance standards
and procedures.
 Enforce compliance standards by fairly and consistently
disciplining violators.
 After violations occur, find appropriate ways to improve
the compliance program.
Management, by Williams
Adapted from Table 3.1
South-Western College Publishing
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17
Learning Objectives
Making Ethical Decisions
After discussing this section,
you should be able to:
describe what influences ethical decision
making.
explain what practical steps managers can
take to improve ethical decision making.
Management, by Williams
South-Western College Publishing
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Influences on Ethical Decision
Making
18
Ethical Intensity of the
Decision
Moral Development of the
Manager
Ethical Principles Used to
Solve the Problem
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Ethical Intensity of the Decision
Magnitude of
consequences
Social consensus
Probability of effect
Temporal immediacy
Proximity of effect
Concentration of
effect
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Moral Development of the Manager
20
Preconventional Level
Stage 1: Punishment & Obedience
Stage2: Instrumental Exchange
Conventional Level
Stage 3: Good Boy - Nice Girl
Stage 4: Law & Order
Post Conventional Level
Stage 5: Legal Contract
Stage 6: Universal Principle
Adapted from
Table 3.2
Davidson & Worrell, Business & Society 34 (1995): 171-196
Management, by Williams
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Copyright © 2000
21
Principles of Ethical Decision
Making
Principle of Longterm Self-interest
Principle of Personal
Virtue
Principle of
Religious Injunctions
Principle of
Government
Requirements
Principle of
Utilitarian Benefits
Principle of
Individual Rights
Principle of
Distributive Justice
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22
Principle of Long-term Self-interest
People should never take any action
that is not in their or their organization’s
long-term self-interest
The key is long-term, not short-term
interests
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Principle of Personal Virtue
People should never do anything that is
not honest, open, and truthful, and
which they would not be glad to see
reported in the newspapers or on TV
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Principle of Religious Injunctions
People should never take an action that
is unkind or that harms a sense of
community, such as the positive feelings
that come from working together to
accomplish a commonly accepted goal.
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Principle of Government
Requirements
The law represents the minimal moral
standards of society
People should never take any action
that violates the law.
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Principle of Utilitarian Benefits
People should never take any action
that does not result in greater good for
society
People should do whatever creates the
greatest good for the greatest number
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Principle of Individual Rights
People should never take any action
that infringes on others’ agreed-on
rights
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Principle of Distributive Justice
People should never take any action
that harms the least among us in some
way
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South-Western College Publishing
Copyright © 2000
Practical Steps to Ethical Decision
Making
29
Selecting and Hiring Ethical Employees
Codes of Ethics
Ethics Training
Ethical Climate
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Selecting and Hiring Ethical
Employees
Increase ethical behaviors by hiring
more ethical employees
Testing for ethics
Overt integrity tests
Personality-based integrity tests
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Copyright © 2000
31
What Really Works?
Workplace Deviance
(Counterproductive Behaviors)
Overt Integrity Tests & Workplace Deviance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
82%
Probability of success
Personality-Based Integrity Tests & Workplace
Deviance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
68%
Management, by Williams
South-Western College Publishing
Copyright © 2000
32
What Really Works? (Cont’d.)
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%
Management, by Williams
South-Western College Publishing
Copyright © 2000
33
What Really Works? (Cont’d.)
Theft
Overt Integrity Tests & Job Performance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 57%
Management, by Williams
South-Western College Publishing
Copyright © 2000
34
Codes of Ethics
Corporate statements on ethics
The relationship between codes and
behavior depend on:
companies communicating the codes to
others both within and outside the
company
companies developing practical ethical
standards and procedures specific to the
company’s line of business
Management, by Williams
South-Western College Publishing
Copyright © 2000
35
Ethics Training
Develop employee awareness about
ethics
Achieve credibility with employees
Teach employees a practical model of
ethical decision making
Management, by Williams
South-Western College Publishing
Copyright © 2000
A Basic Model of Ethical Decision
Identify
Making Identify
the
the
proble
m
Make
your
choice
Adapted from Table 3.4
36
constituent
s
Analyze
your
options
Ac
t
Diagnose
the
situation
Management, by Williams
South-Western College Publishing
Copyright © 2000
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Ethical Climate
Management, by Williams
South-Western College Publishing
Copyright © 2000
38
Learning Objectives
Social Responsibility
After discussing this section,
you should be able to
explain:
to whom organizations are socially responsible.
for what organizations are socially responsible.
how organizations can choose to respond to
societal demands for social responsibility.
whether social responsibility hurts or helps an
organization’s economic performance.
Management, by Williams
South-Western College Publishing
Copyright © 2000
Who are Organizations Socially
Responsible to?
39
Shareholders
managers must satisfy the owners
social responsibility is maximizing
shareholder wealth
Stakeholders
persons with a legitimate interest in the
company
social responsibility is satisfying the
interests of multiple stakeholders
Management, by Williams
South-Western College Publishing
Copyright © 2000
40
Been There, Done That
Martin P. Connell on Corporate Social Responsibility
Corporate leadership gifts
Community investment rather than
philanthropy
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Copyright © 2000
41
Shareholders Only - Friedman
Managers cannot act effectively as
moral agents for shareholders
Time, money, and attention diverted to
social causes undermine market
efficiency
Management, by Williams
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Copyright © 2000
42
Stakeholder View
Management, by Williams
South-Western College Publishing
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43
Back to the Future
Anthropocentric v. Ecocentric
Management
Greater emphasis on corporate
recycling efforts
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South-Western College Publishing
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For What Are Organizations Socially
Responsible?
44
Legal
Responsibilities
Economic
Responsibilities
Adapted from
Figure 3.3
Discretionary
Responsibilities
Ethical
Responsibilities
Carroll, Academy of Management Review 4 (1979): 497-505
Management, by Williams
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Copyright © 2000
45
Blast From The Past
100 Years of Corporate Philanthropy
1800s - doctrine of ultra vires
Benefits to employees allowed in late
19th century
1940s corporate philanthropy took place
Now, U.S. companies donate
approximately $6 billion a year
Management, by Williams
South-Western College Publishing
Copyright © 2000
46
Responses to Demands for Social
Responsibility
Reaction
Defense
Accommodation
Proaction
Fight all
the way
Do only what
is required
Be
Progressive
Lead the
industry
Withdrawal Public
Legal Bargaining Problem
Relations Approach
Solving
Approach
Do
Nothing
Adapted from
Figure 3.4
Do
Much
Carroll, Academy of Management Review 4 (1979): 497-505
Management, by Williams
South-Western College Publishing
Copyright © 2000
Social Responsibility and Economic
Performance
Social responsibility can sometimes
cost a company significantly if it
chooses to be socially responsible
Sometimes it does pay to be socially
responsible
While socially responsible behavior may
be “the right thing to do,” it does not
guarantee profitability
47
Management, by Williams
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48
What Really Happened?
Disney offered domestic-partner
benefits to same-sex partners
They did not offer these benefits to livein partners of unmarried, heterosexual
employees
Management, by Williams
South-Western College Publishing
Copyright © 2000