CH 4 MANAGEMENT 3303

OUTLINE THE PROCESS FOR MAKING ETHICAL DECISIONS.

1. Understand all the moral standards and recognize all the moral impacts: -benefits to some -harms to some -rights exercised -rights denied 2. Define the complete moral problem. 3. Determine the outcomes 4. Consider the legal requirements 5. Evaluate the ethical duties 6. Propose a convincing moral solution.

SARBANES-OXLEY ACT

An act that established strict accounting and reporting rules to make senior managers more accountable and to improve and maintain investor confidence • Establish written standards of ethical conduct and controls for enforcing them • Assign responsibility to top managers to ensure that the program is working as intended • Exclude anyone who violates the standards from holding management positions • Provide training in ethics to all employees and monitor compliance • Give employees incentives for complying and consequences for violating the standards

LEVELS OF CORPORATE SOCIAL RESPONSIBILITY

ECONOMIC- To produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors LEGAL-To obey local, state, federal, and relevant international laws ETHICAL-Meeting other social expectations, not written as law PHILANTHROPIC-Additional behaviors and activities that society finds desirable and that the values of the business support

SUSTAINABLE GROWTH

Economic growth and development that meet present needs without harming the needs of future generations

ECOCENTRIC MANAGEMENT

Goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders

TRANSCENDENT EDUCATION

HAS FIVE HIGHER GOALS THAT BALANCE SELF-INTEREST WITH RESPONSIBILITY TO OTHERS

ETHICAL CLIMATE

In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong

UNIVERSALISM

The ethical system stating that all people should uphold certain values that society needs to function

SHAREHOLDER MODEL

Theory of corporate social responsibility that holds that managers are agents of shareholders whose primary objective is to maximize profits

1. EMPATHY

feeling your decisions as potential victims might feel them, to gain wisdom

Moral judgment

knowing what actions are morally defensible

2. GENERATIVITY

learning how to give as well as take, to others in the present as well as to future generations

DESCRIBE HOW DIFFERENT ETHICAL PERSPECTIVES GUIDE DECISION MAKING.

most people have unconscious biases that favor themselves and their own group. -Managers often: o Hire people who are like them o Think they are immune to conflicts of interest o Take more credit than they deserve o Blame others when they deserve some blame themselves

Moral awareness

realizing the issue has ethical implications o Moral awareness begins with considering whether a decision has ramifications that disadvantage employees, the environment, or other stakeholders. Then the challenge is to apply moral judgment.

5. INTOLERANCE OF INEFFECTIVE HUMANITY

speaking out against unethical actions

Moral character

the strength and persistence to act in accordance with your ethics despite the challenges

4. CIVIL ASPIRATION

thinking not just in terms of "don'ts" (lie, cheat, steal, kill), but also in terms of positive contributions

3. MUTUALITY

viewing success not merely as personal gain, but a common victory

Milton Friedman

• "The social responsibility of business is to increase profits," Friedman contended that organizations may help improve the quality of life as long as such actions are directed at increasing profits. • Some considered Friedman to be "the enemy of business ethics," but his position was ethical: He believed it is unethical for unelected business leaders to decide what is best for society, and unethical for them to spend shareholders' money on projects unconnected to key business interests. • Friedman's famous statement includes the qualifier that business should increase its profits while conforming to society's laws and ethical customs.

LIFE-CYCLE ANALYSIS (LCA)

• A process of analyzing all inputs and outputs, though the entire "cradle-to-grave" life of a product, to determine total environmental impact

EGOISM

• According to egoism, individual self-interest is the actual motive of all conscious action. • "Doing the right thing," the focus of moral philosophy, is defined by egoism as "do the act that promotes the greatest good for oneself." • If everyone follows this system, according to its proponents, the well-being of society as a whole should increase.

UTILITARIANISM

• An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers

COMPLIANCE-BASED

• Compliance-based ethics programs are designed by corporate counsel to prevent, detect, and punish legal violations. • Compliance-based programs increase surveillance and controls on people and impose punishments on wrongdoers.

INTEGRITY-BASED

• Integrity-based ethics programs go beyond the mere avoidance of illegality; they are concerned with the law but also with instilling in people a personal responsibility for ethical behavior. • With such a program, individuals govern themselves through a set of guiding principles that they embrace.

EXPLAIN HOW MANAGERS INFLUENCE THEIR ETHICS ENVIRONMENT.

• Managers are in part responsible for setting the right standards, selecting employees with the ability to meet standards, and providing employees with the resources required for success. • Managers also need to keep the lines of communication open so that employees will discuss problems in meeting goals, rather than resorting to unethical and possibly illegal behavior. • When employees feel pressured to meet unreasonable goals or deadlines, they may act unethically.

RELATIVISM

• Relativism defines ethical behavior based on the opinions and behaviors of relevant other people. • Relativism acknowledges the existence of different ethical viewpoints. • It defines ethical behavior according to how others behave

SUMMARIZE THE IMPORTANT ISSUES SURROUNDING CORPORATE SOCIAL RESPONSIBILITY

• The economic responsibilities of business are to produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors. • Legal responsibilities are to obey local, state, federal, and relevant international laws. • Ethical responsibilities include meeting other societal expectations, not written as law.

VIRTUE ETHICS

• Virtue ethics is a perspective that goes beyond the conventional rules of society by suggesting that what is moral must also come from what a mature person with good "moral character" would deem right. • Society's rules provide a moral minimum; moral individuals can transcend rules by applying their personal virtues such as faith, honesty, and integrity.

STAKEHOLDER MODEL

• assumes that managers are obliged to look beyond profitability to help their organizations succeed by interacting with groups that have a stake in the organization. • A firm's stakeholders include shareholders, employees, customers, suppliers, competitors, society, and the government. -As members of society, organizations should actively and responsibly participate in the community and in the larger environment.