Principles of Management Chapter 4; Ethics and Social Responsibility

accommodative strategy

a social responsiveness strategy in which a company accepts responsibility for a problem and does all that society expects to solve that problem

It ______ pay to be socially responsible. a: does b: does not

a: does It usually does pay to be socially responsible, and that relationship becomes stronger particularly when a company or its products have a strong reputation for social responsibility.

As a manager, when Vijay makes decisions, he always thinks about how he would feel if his decision was reported on the evening news. Vijay uses the ________. a: principle of long-term self-interest b: principle of utilitarian benefits c: principle of religious injunctions d: principle of personal virtue

d: principle of personal virtue The principle of personal virtue says that you should never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers or on TV.

Employee shrinkage

employee theft of company merchandise

behavior that conforms to a society's accepted principles of right and wrong is

ethical behavior

The Sentencing Commission Guidelines Manual established

much stricter penalties, companies can be prosecuted and punished even if management didn't know about unethical behavior.

Stakeholders

persons or groups with a stake, or legitimate interest, in a company's actions

Whistleblowing

reporting others' ethics violations to management or legal authorities

Probability of effect

the chance that something will happen that results in harm to others

ethical intensity

the degree of concern people have about an ethical issue

preconventional level of moral development

the first level of moral development, in which people make decisions based on selfish reasons. Also called Punishment and Obedience

Law and order stage of moral development

the fourth level of moral development, in which people make decisions based on external guidance but do whatever the law permits.

conventional level of moral development

the second level of moral development, in which people make decisions that conform to societal expectation. Also called the Instrumental Exchange

Ethics is

the set of moral principles or values that defines right and wrong for a person or group.

Discretionary responsibilities

the social roles that a company fulfills beyond its economic, legal, and ethical responsibilities

Proximity of effect

the social, psychological, cultural, or physical distance between a decision maker and those affected by his or her decisions

postconventional level of moral development

the third level of moral development, in which people make decisions based on internalized principles. Also called the Good Boy, Nice Girl stage

Temporal immediacy

the time between an act and the consequences the act produces

Magnitude of consequences

the total harm or benefit derived from an ethical decision

concentration of effect

the total harm or benefit that an act produces on the average person

Property deviance

unethical behavior aimed at the organization's property or products

production deviance

unethical behavior that hurts the quality and quantity of work produced

Workplace deviance

unethical behavior that violates organizational norms about right and wrong

Political deviance

using one's influence to harm others in the company

Legal responsibility

a company's social responsibility to obey society's laws and regulations

The Seven Necessary Components for an Effective Compliance Program are

1: Establish standards and procedures 2: Assign upper-level managers to be in charge 3: Delegate decision-making authority only to ethical employees 4: Encourage employees to report violations 5: Train employees on standards and procedures 6: Enforce standards consistently and fairly 7: Improve program after violations

The following table contains the steps used to create a compliance program under the U.S. Sentencing Commission Guidelines for Organizations. Identify the order in which the steps are usually taken. Encourage employees to report violations. Establish standards and procedures. Improve program after violations. Assign upper level managers to be in charge. Train employees on standards and procedures. Delegate decision-making authority only to ethical employees. Enforce standards consistently and fairly.

Step 1: Establish standards and procedures. Step 2: Assign upper level managers to be in charge. Step 3: Delegate decision-making authority only to ethical employees. Step 4: Encourage employees to report violations. Step 5: Train employees on standards and procedures. Step 6: Enforce standards consistently and fairly. Step 7: Improve program after violations.

Social Contract Stage of moral development

The fifth level of moral development,at this stage of moral reasoning, the individual acts with an understanding that laws are created by people coming together for the common good, and that these same people can change these laws if new demands or conditions arise. Thus, laws are not fixed in concrete, but need to be flexible and accommodate new circumstances.

Universal Ethical Principles

The sixth level of moral development, at this stage of moral reasoning, the individual acts with the understanding that there are "higher laws" that go beyond conventional socially-imposed laws, and that these higher laws encompass abstract philosophical ethical principles (e.g. Kant's categorical imperative). This is the stage of a Martin Luther King or a Mahatma Gandhi.

Social responsibility

a business's obligation to pursue policies, make decisions, and take actions that benefit society

Ethical responsibility

a company's social responsibility not to violate accepted principles of right and wrong when conducting its business

economic responsibility

a company's social responsibility to make a profit by producing a valued product or service

Social responsiveness

a company's strategy to respond to stakeholders' economic, legal, ethical, or discretionary expectations concerning social responsibility

defensive strategy

a social responsiveness strategy in which a company admits responsibility for a problem but does the least required to meet societal expectations

proactive strategy

a social responsiveness strategy in which a company anticipates a problem before it occurs and does more than society expects to take responsibility for and address the problem

reactive strategy

a social responsiveness strategy in which a company does less than society expects

stakeholder model

a theory of corporate responsibility that holds that management's most important responsibility, long-term survival, is achieved by satisfying the interests of multiple corporate stakeholders

shareholder model

a view of social responsibility that holds that an organization's overriding goal should be profit maximization for the benefit of shareholders

Overt integrity tests

a written test that estimates job applicants' honesty by directly asking them what they think or feel about theft or about punishment of unethical behaviors

Personality-based integrity tests

a written test that indirectly estimates job applicants' honesty by measuring psychological traits, such as dependability and conscientiousness

Which of the following scenarios illustrates the strongest temporal immediacy? a: Bronwyn Inc. will have to lay off 50 employees before the following week because of poor economic conditions. b: Tox-O Chemical Corp. will make a nearby stream unfit for aquatic life within 20 years by regularly dumping its toxic wastes into the stream. c: Employees at Darwin Pharmaceuticals will stop receiving incentives next year as a result of deteriorating sales performance. d: Administrative assistants at Carson Office Supply will probably have carpal tunnel syndrome as a result of typing on computer keyboards for eight hours every day.

a: Bronwyn Inc. will have to lay off 50 employees before the following week because of poor economic conditions. The scenario in which Bronwyn Inc. will have to lay off 50 employees before the following week because of poor economic conditions has the strongest temporal immediacy. Temporal immediacy is stronger if a manager has to lay off workers next week as opposed to three months from now.

Which of the following are examples of production deviance? Check all that apply. a: Cyberloafing b: Leaving early c: Employee shrinkage d: Taking long breaks e: Damaging equipment

a: Cyberloafing b: Leaving early d: Taking long breaks Taking long breaks, wasting resources, leaving early, and cyberloafing are all examples of production deviance. Production deviance is unethical behavior that hurts the quality and quantity of work produced.

Which of the following are examples of political deviance? Check all that apply. a: Spreading rumors about coworkers b: Cyberloafing c: Employee shrinkage

a: Spreading rumors about coworkers d: Blaming others for mistakes e: Making decisions based on favoritism rather than performance Blaming others for mistakes, spreading rumors about coworkers, and making decisions based on favoritism rather than performance are all examples of political deviance.

Social consensus

agreement on whether behavior is bad or good

principle of personal virtue

an ethical principle that holds that you should never do anything that is not honest, open, and truthful and that you would not be glad to see reported in the newspapers or on TV

principle of utilitarian benefits

an ethical principle that holds that you should never take any action that does not result in greater good for society

principle of distributive justice

an ethical principle that holds that you should never take any action that harms the least fortunate among us: the poor, the uneducated, the unemployed

principle of individual rights

an ethical principle that holds that you should never take any action that infringes on others' agreed-upon rights

principle of long-term self-interest

an ethical principle that holds that you should never take any action that is not in your or your organization's long-term self-interest

principle of religious injunctions

an ethical principle that holds that you should never take any action that is not kind and that does not build a sense of community

principle of government requirements

an ethical principle that holds that you should never take any action that violates the law, for the law represents the minimal moral standard

Primary stakeholders

any group on which an organization relies for its long-term survival

Secondary stakeholders

any group that can influence or be influenced by a company and can affect public perceptions about the company's socially responsible behavior

The managers at Johnson & Johnson who authorized the buyback of defective products might have endorsed Milton Friedman's shareholder, or profit-maximizing view. Which of the following arguments also support Friedman's position? Check all that apply. a: Organizations have the knowledge and resources to do good in the community, so they are responsible for helping others. b: Organizations have one responsibility: to increase the wealth of their shareholders. c: Organizations are responsible for acting as good citizens in the society in which they operate. d: Organizations must make money to stay in existence. Making money, then, should be the sole focus of an organization's activities.

b: Organizations have one responsibility: to increase the wealth of their shareholders. d: Organizations must make money to stay in existence. Making money, then, should be the sole focus of an organization's activities. Friedman believed that a company's sole responsibility was to make money for its stockholders; therefore, any activities that are not related directly to increasing the profitability of the company should be eliminated. Thus, organizations should not be held accountable for improving the quality of life in their environment, society, or community. They are not expected to serve the underprivileged, because doing so would decrease the bottom line.

Several coworkers of yours at the local swimming pool have been taking snacks from the snack bar without paying. This is an example of: a: personal aggression. b: property deviance. c: political deviance. d: production deviance.

b: property deviance. Stealing, damaging equipment, and overcharging for services and taking the difference are all examples of property deviance. Employee shrinkage is when employees steal company merchandise.

A company that accepts responsibility for a problem and does all that society expects to solve that problem is using: a: a defensive strategy. b: a proactive strategy. c: an accommodative strategy. d: a reactive strategy.

c: an accommodative strategy. An accommodative strategy is one in which a company accepts responsibility for a problem and does all that society expects to solve that problem. Companies that have adopted a reactive strategy may believe "Do as little as possible to solve social problems." In a proactive strategy, a company anticipates responsibility for a problem before it occurs and does more than expected to address the problem. A defensive strategy is one in which a company admits responsibility for a problem, but does the least required to meet societal expectations.

In a demonstration of how perception can sometimes trump reality, Johnson & Johnson topped a list of companies perceived by American consumers as having the best reputations for corporate social responsibility (CSR) practices. The Corporate Social Responsibility Index, developed by the Boston College Center for Corporate Citizenship and the Reputation Institute, attempts to measure how companies' reputations are affected by public perceptions of performance related to citizenship (the community and the environment), governance (ethics and transparency), and workplace practices. The 2010 CSR Index is based on a survey of 7,790 online U.S. consumers conducted in January and February 2010. Johnson & Johnson has since admitted — months after the CSR Index survey was conducted — that it misled regulators and consumers by using company-paid contractors to buy defective Motrin painkiller products from store shelves rather than announce a recall. In testimony before a Congressional committee, company CEO William Weldon said, "This was not one of our finer moments." The "phantom recall" is reportedly the subject of a U.S. criminal investigation and at least one shareholder lawsuit. The Johnson &

c: an economic When Johnson & Johnson managers decided to buy back defective products rather than recalling them, they were concerned with the economic aspects of social responsibility. They thought that simply buying back the products would cost the company less money in the long run than collecting the defective products through a recall. Unfortunately, they failed to see that not attending to the legal aspects of social responsibility could damage the company even more than a recall.

Use your understanding of ethics to complete the sentence. Debra notes that Theo Chocolate has started holding its own operations to the same IMO standards of fair trade to which it holds its suppliers. This type of behavior encourages more ethical decision-making by _____________ a specific code of ethics sends a powerful message to employees and customers. a: training employees in ethical behavior b: selecting ethical employees c: establishing a specific code of ethics

c: establishing a specific code of ethics By holding itself to the same standards it expects of others, Theo Chocolate is establishing a specific code of ethics. They are telling their suppliers that the suppliers must abide by the IMO standards of fair trade. While complying with these standards and being audited for compliance undoubtedly costs money, research has shown a positive correlation between corporate social responsibility and profitability, so there is no reason to think that certification will be unprofitable.

A toy manufacturer has just learned that the small, button nose on the stuffed teddy bear it produces might detach and become a choking hazard for young children. If this company is using a defensive strategy, it might: a: recall the stuffed bears, offer a refund to all customers, and redesign the bear to have a felt nose. b: claim that if parents put the bear in the washing machine, the button stitching will come loose, causing it to detach. As a result, parents should not put the bear in the washing machine. c: issue a statement apologizing for the choking hazard and recall the stuffed bears. d: create a set of industry-wide guidelines to help prevent choking hazards on toys for children.

c: issue a statement apologizing for the choking hazard and recall the stuffed bears. A toy manufacturer using a defensive strategy might issue a statement apologizing for the choking hazard and recall the stuffed bears. In this case, the company has admitted responsibility and done the least required to meet societal expectations. Claiming that machine washing the bear causes the button to come loose is placing blame elsewhere and would be an example of a reactive strategy. If the toy manufacturer used an accommodative strategy, it might recall the stuffed bears, offer a refund to all customers, and redesign the bear to have a felt nose. Finally, if the toy manufacturer utilized a proactive strategy, it would do more than expected to address the problem, perhaps by creating industry-wide guidelines to help prevent choking hazards on toys for children.

A coworker of yours consistently takes 20-minute breaks-10 minutes longer than management allows. This is an example of: a: political deviance. b: property deviance. c: production deviance. d: employee shrinkage.

c: production deviance. Taking long breaks, wasting resources, leaving early, and cyberloafing are all examples of production deviance. Production deviance is unethical behavior that hurts the quality and quantity of work produced.

If a company's employees are found guilty of unethical behavior, the U.S. Sentencing Commission can impose a base fine and multiply that fine by up to ______ times, based on the organization's _____________. a: 10 b: 6 c: 2 d: 4 2nd blank: a: culpability b: ability to pay

d: 4 a: culpability The U.S. Sentencing Commission is responsible for determining how much money organizations should pay in fines when their employees engage in unethical behavior. Base fines can range from $8,500 to $150 million, depending on the seriousness of the offense, but these fines can also be multiplied by up to 4 times, depending on the extent to which an organization has encouraged or sanctioned the behavior (culpability).

Jose is a manager at Zoien Corp. He wants to hire an honest person for the position of software engineer at his firm. While interviewing candidates, Jose asks each candidate, "What would you do if someone in the management asked you to do something unethical?" Which of the following types of tests is Jose using to screen the candidates? a: A personality-based integrity test b: An aptitude-based integrity test c: A covert integrity test d: An overt integrity test

d: An overt integrity test Jose is using an overt integrity test to screen the candidates. Overt integrity tests estimate job applicants' honesty by asking them directly what they think or feel about theft or about punishment of unethical behaviors.

Joe and Debra are deeply interested in the well-being of the cocoa farmers they buy from. They make sure that they follow fair trade standards when buying cocoa, and they hold their own manufacturing units to the same standards they hold their suppliers to. In doing this, Theo Chocolates is assuming what degree of social responsibility? a: Obstructionist stance b: Defensive stance c: Accommodative stance d: Proactive stance

d: Proactive stance Theo Chocolates is assuming a proactive stance to corporate social responsibility by taking action to make sure both it's own manufacturers and its suppliers meet fair trade standards. Companies that assume a proactive stance take opportunities to contribute to society without pressure from outside sources and actively engage in actions which will help society as a whole.

Rose found strong evidence that her supervisor was stealing confidential documents from the company. She immediately reported her manager's actions to the top management. Rose's action is an example of: a: brainstorming. b: personal aggression. c: property deviance. d: whistle-blowing.

d: whistle-blowing. Rose's action is an example of whistle-blowing. Whistle-blowing is the act of reporting others' ethics violations to management or legal authorities.

Personal aggression

hostile or aggressive behavior toward others