Managerial Ethics and Corporate Social Responsibility

1
Managerial Ethics and Corporate Social
Responsibility

• Chapter 3

2
Outline of Topics

• What is managerial ethical behavior?
• What factors should be considered in situations
  involving ethical challenges?
• What frameworks guide ethical decision making?
• What are the typical ethical challenges we face?
• How can we encourage more ethical behaviors in
  organizations?

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What is the definition of ethics?

• Values or guiding principles for our behavior
• They are NOT legal principles or laws
• Some laws may be unethical, while some ethical
  principles may be unlawful

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Factors to consider to determine ethical nature
of acts or decisions on stakeholders

• Magnitude of consequences
• Social consensus
• Probability of harmful or helpful effect
• Temporal immediacy
• Proximity of effect
• Effect on average person

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Moral Development of Decision Maker
Societal Expectations
InternalizedPrinciples
Selfish
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Stages of Moral Development
Preconventional
Conventional
Postconventional

• Punishment andObedience
• InstrumentalExchange

• Good boy, nicegirl
• Law and order

• Social contract
• Universalprinciple

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Situational Context

• Beliefs, norms, and values of the organizational
  culture
• Pressures and threats from managers
• Power and authority structuresno checks and
  balances
• Unrealistic goals

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Ethical Decision Making
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What are the typical ethical challenges we face?

• Write down a situation in which you feel you have
  been ethically challenged?
• What did you decide to do?
• Are you satisfied with what you did? Or, would
  you do things differently now?

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What Typical Moral Dilemmas Do Managers Face?

• Failing to act when one observes unethical
  behavior
• Carrying out decisions/orders that you clearly
  believe are wrong
• Acting unethically because everyone else is
  doing it
• Falsifying data to meet deadlines, quality
  standards, avoid extra work, etc.
• Reducing safety and quality standards for
  products sold in other countries with less strict
  laws

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What Typical Moral Dilemmas Do Managers Face?

• Making phone calls, surfing the internet, playing
  computer games, doing personal business on
  company time
• Lying about being sick or late
• Stealing office supplies for personal use
• Padding expense accounts or stealing monetary
  resources from the company
• Harassment of other employees, including e-mail
• Failure to walk the talk or the say-do gap

Moral Dilemmas MBA Students Report
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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 or culture
Set up effective compliance and whistleblower
programs
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What is Social Responsibility?
To what groups in society do organizations have
a responsibility to ensure that their interests
and concerns are addressed in the decision
making process?
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Stakeholders that Managers are Responsible to in
Making Decisions
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To Whom are Organizations Socially Responsible?
ShareholderModel
Maximize Profits
StakeholderModel
Satisfy Interests of Multiple Stakeholders
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Organizations Social Responsibilities
Social responsibilities
Dont violate principlesof right and wrong
Obey the Law.
Make a Profit
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Responses to Demands for Social Responsibility
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Social Responsibility and Economic Performance
Whole Foods Market
Wal-Mart