Managing Social Responsibility and Ethics

Being and Ethical Leader

-Be a good role model by being ethical and honest: tell the truth always, don't hide or manipulate information; be willing to admit your failures. -Share your personal values by regularly communicating them to employees. - Stress the organization's or team's important shared values. -Use the reward system to hold everyone accountable to the values.

Whistle-Blower

Individuals who raise ethical concerns or issues to others.

Stages of Moral Development

Preconventional - 1. Sticking to rules to avoid physical punishment. 2. Following rules only when doing so is in your immediate interest. Conventional - 3. Living up to what is expected by people close to you. 4. Maintaining conventional order by fulfilling obligations to which you have agreed. Principled - 5. Valuing rights of others and upholding absolute values and rights regardless of the majority's opinion. 6. Following self-chosen ethical principles even if they violate the law.

Ethics

Principles, values, and beliefs that define what is right and wrong behavior.

Social Responsibility

A business's intention, beyond the legal and economic obligations, to do the right things and act in ways that are good for society.

Social Entrepreneur

An individual or organization who seeks out opportunities to improve society by using practical innovative, and sustainable approaches.

Social Screening

Applying social criteria (screens) to investment decisions.

Values

Basic convictions about what is right and wrong.

International Organization for Standardization (ISO)

Developed more than 18,000 international standards, bet known for its ISO 9000 (quality management) and ISO 14000 (environmental management) standards (organizations must develop a total management system for meeting environmental challenges).

2 personality variable that influence individual actions

Ego strength and locus of control

Ten Principles of the UN Global Compact

Human Rights - Principle 1: Support and respect the protection of international human rights within their sphere of influence. 2: Make use business corporations are not complicit in human rights abuses. Labor Standards - 3: Freedom of association and the effective recognition of the right to collective bargaining. 4: The elimination of all forms of forced and compulsory labor. 5: The effective abolition of child labor. 6: The limitation of discrimination in respect to employment and occupation. Environment - 7: Support a precautionary approach to environmental challenges. 8: Undertake initiatives to promote greater environmental responsibility. 9: Encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption - 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Green Approaches

Low - Legal Approach (Light Green)- doing what is legally required. Market Approach - organization becomes more sensitive to environmental issues, respond to environmental preferences of customers. Whatever customers demand in term of environmentally friendly products will be what the organization provides. Stakeholder Approach - an organization works to meet the environmental demands of multiple stakeholders such as employees, suppliers, or community. High - Activist Approach (Dark Green) - organization looks for ways to protect the earth's natural resources. Reflects the highest degree of environmental sensitivity and illustrates social responsibility.

Green Management

Managers consider the impact of their organization on the natural environment.

A Process for Addressing Ethical Dilemmas

Step 1: What is the ethical dilemma? Step 2: Who are the affected stakeholders? Step 3: What personal, organization, and external factors are important in this decision? Step 4: What are possible alternatives? Step 5: What is my decision and how will I act on it?

Individual Characteristics that play a role in determining ethical behavior

Values and personality

Value-Based Management

The organization's values guide employees in the way they do their jobs.

Classical View

The view that management's only social responsibility is to maximize profits.

Socioeconomic View

The view that management's social responsibility goes beyond making profits to include protecting and improving society's welfare. This view is basedon the belief that corporations are not independent entities responsible only to stock herders, but have an obligation to the large society.

Management considerations

1. Organizational leaders should model appropriate behavior and reward those who act ethically. 2. All managers should continually reaffirm the importance of the ethics code and consistently discipline those who break it. 3. The organization's stakeholders (employees, customers, and so forth) should be considered as an ethics code is developed or improved. 4. Managers should communicate and reinforce the ethics code regularly. 5. Managers should use the five-step process to guide employees when faced with ethical dilemmas.

Factors that Determine Ethical and Unethical Behavior

1. Stage of moral development, 2. Moderating variables including individual characteristics, the organization's structural design, the organization's culture, and the intensity of the ethical issue.

Issue Intensity

6 characteristics determine issue intensity or how important an ethical issue is to an individual: greatness of harm (how many people will be harmed), consensus of wrong (how much agreement is there that this action is wrong?), probability of harm (how likely is it that this action will cause harm?), immediacy of consequences (will harm be felt immediately?), proximity to victim(s) (how close are the potential victims?), and concentration of effect (how concentrated is the effect of the action on the victim(s)?).

Organization's Culture

A culture most likely to encourage high ethical standards is one that's high in risk tolerance, control, and conflict tolerance. Employees in such a culture are encouraged to be aggressive and innovative, are aware that unethical practices will be discovered, and feel free to openly challenge expectations they consider to be unrealistic or personally undesirable.

Code of Ethics

A formal statement of an organization's primary values and the ethical rules it expects its employees to follow.

Locus of Control

A personality attribute that measures the degree to which people believe they control their own fate.

Ego Strength

A personality measure of the strength of a person's convictions.

Arguments For Social Responsibility

Public Expectations: Public opinion now supports businesses pursuing economic and social goals. Long-Run Profits: Socially responsible companies tend to have more secure long-run profits. Ethical Obligation: Busineses should be socially responsible because responsible actions are the right thing to do. Public Image: Businesses can create a favorable public image by pursuing social goals. Better Environment: Business involvement can help solve difficult social problems. Discouragement of further governmental regulation: By becoming socially responsible, businesses can expect less government regulation. Balance of responsibility and power: Businesses have a lot of power and an equally large amount of responsibility is needed to balance against that power. Stockholder interests: Social responsibility will improve a business's stock price in the long run. Possession of resources: Businesses have the resources to support public and charitable projects that need assistance. Superiority of prevention over cures: Businesses should address social problems before they become serious and costly to correct.

Arguments Against Social Responsibility

Violation of profit maximization: Business is being socially responsible only when it pursues its economic interests. Dilution of purpose: Pursuing social goals dilutes business's primary purpose-economic productivity. Costs: Many socially responsible actions do not cover their costs and someone must pay those costs. Too much power: Businesses have a lot of power already and if they pursue social goals they will have even more. Lack of skills: Business leaders lack the necessary skills to address social issues. Lack of accountability: There are not direct lines of accountability for social actions.

Social Obligation

When a firm engages in social actions because of its obligation to meet certain economic and legal responsibilities.

Social Responsiveness

When a firm engages in social actions in response to some popular social need.