Management Chapter 4 Ethics and Social Responsibility
Approaches to Social Responsibility
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Ethics and Social Responsibility
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Justice Rule
Ethical decision distributes benefits and burdens in a fair and impartial way. EX: Employees who are similar in skill and performance should receive the same pay. Outcomes should bot be based on gender, race, religion, favorites, etc.
Managers
are a vital stakeholder group because they are responsible for using a company's financial, capital, and human resources to increase its performance and thus its stock price. Managers have a claim on an organization because they bring to it their skills, expertise, and experience. Managers are sometimes conflicted with ethical values because some decisions that benefit one stakeholder group (managers and stockholders) harm other groups (individual workers and local communities).
Individual Ethics
are personal standards and values that determine how people view their responsibilities to other people and groups and thus how they should act in situations when their own self-interest are at stake. sources include family, peers, upbringing, personality and experiences.
Stockholders
have a claim on a company because when they buy its stock or shares they become its owners.
Social Responsibility
is the way its managers and employees view their duty or obligation to make decisions that protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole.
Trust
is the willingness of one person or group to have faith or confidence in the goodwill of another person, even though this puts them at risk (because the other might act in a deceitful way).
Stakeholders and Ethics
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The Nature of Ethics
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Rules for Ethical Decision Making
Principles to analyze the impact of your decision on stakeholders 1. Utilitarian Rule 2. Moral Rights Rule 3. Justice Rule 4. Practical Rule
Moral Rights Rule
Ethical decision maintains and protects the fundamental rigts of people. (Freedom, life, safety, property, privacy, free speech, religion)
Social Contract
Between organization and society, duties organization must perform to retain society's respect and support, partly expressed in law, also resides in social values, complex, ambiguous, and ever changing.
Defensive approach
Companies and their managers behave ethically to the degree that they stay within the law and strictly abide by legal requirements.
Accomodative approach
Companies and their managers behave legally and ethically and try to balance the interest of different stakeholders as the need arises.
Obstructional approach
Companies and their managers choose not to behave in a socially responsible way and instead behave unethically and illegally.
Employees
Companies, for example, need to develop recruitment, training, performance appraisal, and reward systems that do not discriminate against employees and that employees believe are fair.
How will action affect the rights of the different stakeholders?
Conflicting viewpoints and beliefs. Protecting the rights of some may hurt the rights of others.
Are all stakeholders of equal importance?
NO.
Milton Friedman!
Nobel Prize winner. Sole objective of a corporation is the maximize shareholder wealth.
Why is being unethical bad?
Ruins business, spend more time negotiating and bargaining with people you don't trust instead of innovating and restructuring.
Ethical behavior from a manager fulfills the "Social Contract"
Social Contract for a manager: Between manager and employee, duties manager must perform to retain employee's respect and support, partly expressed in law and company policy, also resides in social values, complex, ambiguous, and ever changing.
Reputation
The esteem or high repute that individuals or organizations gain when they behave ethically.
Ethics
The inner guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the right or appropriate way to behaves Ethics go beyond the law: Just because it is legal, does not make it ethical. Ethics and laws are not fixed principles Ethical beliefs change over time Laws change to reflect society's changing ethical beliefs: Slavery, capital punishment (Britain) Ethical behavior from an organization fulfills the "Social Contract"
Ethical Dilemma
The quandary people find themselves in when they have to decide if they should act in a way that might help another person or group even though doing so might go against their own self-interest What is the "right" thing to do? Lesser of two evils Do the "right" thing, even though doing so might go against self-interest.
Stakeholders
Various groups of people who may benefit or be harmed by how managers make decisions. (Employees, Stockholders, Managers, Customers, Community, society, and nation-state, Suppliers and distributors. The people and groups that supply a company with its productive resources and so have a claim on and a stake in the company. Stakeholders have a claim on a company because when they buy its stock or shares they become its owners. Managers are a vital stakeholder group because they are responsible for using a company's financial, capital, and human resources to increase its performance and thus its stock price. Managers have a claim on an organization because they bring to it their skills, expertise, and experience.
Can fulfilling the social contract conflict with maximizing profit?
Yes, in the short run. Potential benefits in the long run.
Can ethical behavior be used by an organization as a competitive advantage in the marketplace?
Yes, more likely in the long run.
Ethics ombudsperson
a manager responsible for communicating and teaching ethical standards to all employees and monitoring their conformity to those standards. Have the right to look at ethical problems organizational-wide
Utilitarian Rule
an ethical decision is a decision that produces the greatest good for the greatest number of people. Ethical decision produces the greatest good for the greatest number of people. May lead to decisions that permit harm to an individual or minority group's rights.
Practical Rule
an ethical decision is one that a manager has no reluctance about communicating to people outside the company because the typical person in a society would think it is acceptable. Ethical decision is one a manager could easily share with others. Does my action fall within accepted standards?
Customers
are often regarded as the most critical stakeholder group because if a company cannot attract them to buy its products, it cannot stay in business.
Occupational Ethics
are standards that govern how members of a profession, trade, or craft, should conduct themselves when performing work-related activities. If a professional messes up, they can be punished.
Social ethics
are standards that govern how members of a society should deal with one another in matters involving issues such as fairness, justice, poverty, and the rights of the individual. Emanate froma society's laws, customs, unwritten attitudes, values, and norms. Vary greatly among societies.
Organizational Ethics
are the guiding practices beliefs through which a particular company and its managers view their responsibility towards their stakeholders. EX: Johnson and Johnson's credo is meant to deter self-interest, unethical behavior, to demonstrate to manager and employees that a company will not tolerate people who, because of their own poor ethics, put their personal interest above the interests of other organizational stakeholders and ignore the harm they are inflicting on others; and to demonstrate that those who act unethically will be punished. Employees are much more likely to act unethically when a credo does not exist or is disregarded.
Proactive approach
companies and their managers actively embrace socially responsible behavior, going out of their way to learn about the needs of different stakeholder groups and using organizational resources to promote the interest of all stakeholders.
Community
refers to physical locations like towns or cities or to social milieus like ethnic neighborhoods in which companies are located.