Chapter 4 - Managing Ethics and Corporate Social Responsibility

Conventional Level

People learn to conform to the expectations of good behavior as defined by colleagues, family, friends, and society

Stakeholder Mapping

Provides a systematic way to identify the expectations, needs, importance, and relative power of various stakeholders, which may change over time

Sustainability

Refers to economic development that generates wealth and meets the needs of the current generation while preserving the environment and society so future generations can meet their needs as well

Green Movement

Relates to the growing concern with protection and preservation of the environment

Distributive Justice

Requires that different treatment of people not be based on arbitrary characteristics Example - Men and women should not receive different salaries if they have the same qualifications and are performing the same job

Procedural Justice

Requires that rules be administered fairly. Rules should be clearly stated and consistently and impartially enforced

The 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

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

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 Codes of ethics tend to exist in two types: principle-based statements and policy-based statements

Ethics Committee

A group of executives (and sometimes lower-level employees as well) appointed to oversee company ethics

Chief Ethics Officer

A manager who oversees all aspects of ethics and legal compliance

Managerial Ethics

A set of standards that dictate the conduct of a manager operating within a workplace

Individualism Approach

Acts are moral if they promote the individual's long-term interest

Stakeholder

Any group or person within or outside the organization that has some type of investment or interest in the organization's performance and is affected by the organization's actions (employees, customers, shareholders, and so forth)

Compensatory Justice

Argues that individuals should be compensated for the cost of their injuries by the party responsible

The Moral-Rights Approach

Asserts that human beings have fundamental rights and liberties that cannot be taken away by an individual's decision. Thus, an ethically correct decision is one that best maintains the rights of those affected by it

Practical Approach

Bases decisions on prevailing standards, society, and all stakeholders

Ethical Responsibilty

Behaviors that are not necessarily codified into law and may not serve the corporation's direct economic interests

The Individualism Approach

Contends that acts are moral when they promote the individual's best long-term interests

Legal Responsibility

Defines what society deems as important with respect to appropriate 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

Profit-Maximizing View

Economic responsibility, carried to the extreme

Whistle-Blowing

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

Corporate Credos

General statements of principle

The Utilitarian Approach

Holds that moral behavior produces the greatest good for the greatest number Espoused by the nineteenth-century philosophers Jeremy Bentham and John Stuart Mil

The Justice Approach

Holds that moral decisions must be based on standards of equity, fairness, and impartiality

Moral-Rights Approach

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

Ethical Dilemma

Includes the technological, economic, political/legal, and socio-cultural dimensions that affect a firm's external environment

Pre-Conventional Level

Individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences. This level may be associated with managers who use an autocratic or coercive leadership style, with employees oriented toward dependable accomplishment of specific tasks

Post-conventional (or Principled 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

Economic Responsibility

Its responsibility is to produce the goods and services that society wants and to maximize profits for its owners and shareholders

Corporate Social Responsibility (CSR)

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

Policy-Based Statements

Outline the procedures to be used in specific ethical situation These situations include marketing practices, conflicts of interest, observance of laws, proprietary information, political gifts, and equal opportunities