Chapter 5 - Managing Ethics and Social Responsibility

ethics comittee

group of executives appointed to oversee company ethics

justice approach

holds that moral decision must be based on standards of equity, fairness, and impartiality

utilitarian approach

holds that the moral behavior produces the greatest good for the greatest number

stakeholder

any group/person within/outside the organization that has some type of investment/interest in the organization's performance and is affected by organization's action.

ethical dilemma

arises in a situation concerning right or wrong when values are in conflict

moral-rights approach

asserts that human beings have fundamental rights and liberties that cannot be taken away by an individual's decision

chief executive officer (aka chief ethics and compliance officer)

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

individualism approach

contends that acts are moral when they promote the individual's best term interests

practical approach

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

legal responsility

deems what society sees as important with respect to corporate behavior

principle-based statements

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

amount of explicit control (from left to right from high to low)

domain of codified law (legal standard), domain of ethics (social standard), domain of

code of ethics

formal statement of a company's values concerning ethics and social issues; it communicates to employees what the company stands for

economic responsibility

-first criterion of social responsibility -role to produce goods and maximize profit

triple bottom line

-measuring an organization's social performance, its environmental performance, and its financial performance. -aka Three Ps: People, Planet, and Profit.

criteria of corporate social performance (from top to bottom)

1. discretionary responsibility (organizational virtuousness): contribute to community and be good corporate citizen 2. ethical responsibility: do what's right 3. legal responsibility: obey the law 4. economic responsibility: make money!

the four types of ethical manager behavior

1. display honesty and integrity 2. show kindness, compassion, and concern for needs and feelings for others 3. is fair in decision and distribution of rewards 4. communicates and enforces ethical standards through behavior

Three types of justice approach

1. distributive justice - requires that different treatment of people not be based on arbitrary characteristics 2. procedural justice - requires that rules be administered fairly 3. compensatory justice - argues that the individual should be compensated for the cost of injuries by the partly responsible.

The components of ethical organization

1. ethical leadership 2. code of ethics 3. ethics committee 4. chief ethics officer 5. ethics hotline 6. ethics training 7. support for whistle-blower

corporate credos

general statements of principle

stages of moral development

1. pre-conventional level: individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences. 2. conventional level: people learn to conform to the expectations of good behavior as defined by colleagues, family, friends, and society. 3. post-conventional/principled level: individuals are guided by an internal set of values based on universal principles of justice and will even disobey rules/laws that violate these principles.

frameworks for ethical decision making

1. utilitarian approach 2. individualism approach 3. moral-rights approach 4. justice approach 5. practical approach

profit-maximizing view

goal should be to make the most amount of money while still playing by the rules

sustainability

weaving environmental and social concerns into all their decisions, had a significantly higher sales growth, return on assets, profits, and cash flow from operations in at least some areas of the business.

corporate social responsibility

management's obligation to make choices and take actions that will contribute to the welfare and interests of society, not just the organization.

ethical leadership

managers are honest and trustworthy, and fair in their dealings with employees/customers, and behave ethical in both professional and personal lives.

policy based statements

outline procedures to be used in specific ethical situations.

ethics hotline

report questionable behavior and can seek guidance form here

stakeholder mapping

systematic way to identify the expectations, needs, importance, and relative power of various stakeholders.

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 (personal standard)