Chapter 4: Managing Ethics and Social Responsibility

Conventional morality

People learn to conform to expectations of good behavior as defined by colleagues, family, friends, and society, fulfills duties and obligations of social system, upholds laws, guiding/encouraging leader style, team orientated, work group collaboration behavior

Postconventional morality

Principle level, individuals are guided by an internal set of values based on universal principles of justice and right and will even disobey rules or laws that violate these principles, seeks creative solutions to ethical dilemmas, balances concern for individual with concern for common good, internal values, transforming or servant leadership style, empowered employees, full participation behavior

Stakeholder mapping

Provides a systematic way to identify expectations, needs, importance, and relative power of various stakeholders

Discretionary responsibility

Purely voluntary and is guided by the organization's desire to make social contributions not mandated by economics, laws, or ethics

Stakeholder

Refers to any group or person within or outside the organization that has some type of investment or interest in the organization's performance

Sustainability

Refers to economic development that generates wealth and meets the needs of the current population while preserving society and the environment for the needs of future generations

Triple bottom line

Refers to measuring an organization's social performance, its environmental performance, and its financial performance (three Ps: People, Planet, and Profit)

Corporate social responsibility

Refers to the obligation of organizational managers to make choices and take actions that will enhance the welfare and interests of society, as well as the organization

Distributive justice

Requires that different treatment of individual not be based on arbitrary charactieristics

Economic responsibility

Responsibility to produce the goods and services that society wants and to maximize profits for its owners and shareholders

Primary stakeholders

Shareholders, employees, customers, and suppliers, government, community, and special interest groups are also important

Practical approach

Sidesteps debates about what is right, good, or just, and bases decisions on prevailing standards of the profession and the larger society, taking the interests of all stakeholders into account

Individualism approach

Suggests that actions are ethical when they promote the individual's best long-term interests, because with everyone pursuing self-interest, the greater good is ultimately served, not popular in the highly organized and group-orientated society of today

Ethics

The code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong

Utilitarian approach

The ethical choice is the one that produces the greatest good for the greatest number, decision maker expected to consider effect of each decision alternative on all parties and select the one that optimizes the benefits for the greatest number of people

Moral agent

The individual who must make an ethical choice in an organization

Unethical behavior toward society

Violating environmental standards, exposing public to safety risks, violating international human rights

Chief Ethics Officer

A company executive who oversees all aspects of ethical and legal compliance, including establishing and broadly communicating standards, ethics training, dealing with exceptions or problems, and advising senior managers in the ethical and compliance aspects of decisions

Code of ethics

A formal statement of the company's values concerning ethics and social issues; it communicates to employees what the company stands for (principle vs. policy-based)

Ethics committee

A group of executives appointed to oversee company ethics

Green movement

A special interest group of particular importance today

Unethical behavior toward suppliers

Accepting favors or kickbacks, violating contract terms, paying without accurate records or invoices

Compensatory justice

Argues that individuals should be compensated for the cost of their injuries by the party responsible, and individuals should not be held responsible for matters over which they have no control

Legal responsibility

Defines what society deems as important with respect to appropriate corporate behavior, businesses are expected to fulfill their economic goals within the framework of legal requirements imposed by local town councils, state legislators, and federal regulatory agencies

Principle-based statements

Designed to affect corporate culture; define fundamental values and contain general language about company responsibilities, quality of products, and treatment of employees

Unethical behavior toward employees

Discriminating against employees, creating a hostile work environment, violating health and safety rules

Profit-maximizing view

Economic responsibility carried to the extreme, advocated by Nobel economist Milton Friedman, view argues that the corporation should be operated on a profit-orientated basis, mission to increase its profit, staying within rules, not allowed in many countries

Whistle-blowing

Employee disclosure of illegal, unethical, or illegitimate practices on the employer's part

Justice approach

Ethical decisions must be based on standards of equity, fairness, and impartiality, closest to the thinking underlying the domain of law because it assumes that justice is applied through rules and regulations (distributive, procedural, compensatory)

Parts of an ethical organization

Ethical leadership, codes of ethics, ethics committee, chief ethics officer, ethics hotline, ethics training, support for whistle-blowers

Unethical behavior toward customers

False or deceptive sales, submitting misleading invoices, fabricating product quality data

Unethical behavior toward financers

Falsifying financial reports, breaching database controls, using confidential information

Corporate credos

General statements of principle

Policy-based statements

Generally outline the procedures to be used in specific ethical situations

Moral-rights approach

Holds that ethical decisions are those that best maintain the fundamental rights and liberties of the people affected by them, an ethically correct decision avoids interfering with the fundamental rights of others, such as the right to privacy, the right of free consent, or the right to freedom of speech

Procedural justice

Holds that rules should be clearly stated and consistently and impartially enforced

Preconventional morality

Individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences, self-interest, autocratic/coercive leader style, task accomplishment behavior

Ethical leadership

Managers are honest and trustworthy, fair in their dealings with employees and customers, and behave ethically in both their personal and professional lives

Ethical dilemma

A situation in which all alternative choices or behaviors have potentially negative consequences, right and wrong can not clearly be distinguished, most involve a conflict between interests of different groups or between the needs of individuals versus needs of organization

Ethical responsibility

Includes behaviors that are not necessarily codified into law and may not serve the corporation's direct economic interests, ethical decision makers act with equity, fairness, impartiality, and respect the rights of individuals