Chapter 5

Chief ethics officer

A company executive who oversees all aspects of ethics and legal compliance, including establishing and broadly communicating standards, ethics training, dealing with exceptions or problems, and advising senior managers in the ethical and compliance aspects of decisions.

Legal responsibility

Defines what society deems as important with respect to appropriate corporate behavior.

Organizational virtuousness

Means that an organization pursues a positive human impact, moral goodness, and unconditional society betterment for its own sake.

Building an Ethical Organization

*Code of Ethics: * A formal statement of the organization's values regarding ethics and social responsibility. *Ethics Committee: * A group of executives (and sometimes lower-level employees as well) charged with overseeing company ethics by ruling on questionable issues and disciplining violators. *Chief Ethics Officer: * A manager who oversees all aspects of ethics and legal compliance. *Whistle-blowing: * The disclosure by employees of unethical, illegitimate, or illegal practices by an organization. (snitching)

Giving vs Taking

*Giving Culture* People help one another, share information, and collaborate, also tend to be more effective. *Taking Culture*: People who put their own interests first could climb to the top over the backs of givers (That is changing as the nature of work has shifted).

Three Stages Moral Development

1. *Pre-conventional*: Follows runs to avoid punishment. Acts in own interest. Obedience if for own sake. 2. *Conventional*: Lives up to expectations of others. Fulfills duties and obligations of social system. Upholds laws. (Most managers operate at this level) 3. *Postconventional*: Follows self-chosen principles of justice. Balances concerns of individual and common good. (Only 20% of adults reach this level)

Ethical Dilemma:

A situation in which all alternative choices or behaviors have potentially negative consequences. 1. Utilitarian Approach: A method of ethical decision making saying that the ethical choice is the one that produces the greatest good for the greatest number. 2. Individualism Approach: A decision-making approach suggesting that actions are ethical when they promote the individual's best long-term interests, because with everyone pursuing self-interest, the greater good is ultimately served (This concept is not considered appropriate today) 3. Moral-rights Approach: Holds that ethical decisions are those that best maintain the fundamental rights of the people affected by them. 4. Justice Approach: Says that ethical decisions must be based on standards of equity, fairness, and impartiality. -Distributive Justice: Requires that different treatment of individuals not be based on arbitrary characteristics. -Procedural Justice: Holds that rules should be clearly stated and consistently and impartially enforced. -Compensatory Justice: Argues that individuals should be compensated for the cost of their injuries by the party responsible, and individuals should not be held responsible for matters over which they have no control. 5. Practical Approach: A decision-making approach that sidesteps debates about what is right, good, or just, and bases decisions on the prevailing standards of the profession and the larger society.

Discretionary responsibility

Purely voluntary and is guided by a company's desire to make social contributions not mandated by economics, law, or ethics. Discretionary activities include generous philanthropic contributions that offer no payback to the company and are not expected.

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.

Corporate Social Responsibility (CSR):

The obligation of organizational managers to make choices and take actions that will enhance the welfare and interests of society as well as the organization. *Stakeholder:* Any group or person within or outside the organization that has some type of investment or interest in the organization's performance. *Stakeholder Mapping:* A systematic way to identify the expectations, needs, importance, and relative power of various stakeholders. *Conscious Capitalism:* Following organizational policies and practices that both enhance the success of a company and advance the economic and social conditions of the communities in which the company operates. *Greenwashing:* Efforts to portray a company as being more environmentally minded that it actually is. *Sustainability/Sustainable Development: * Economic development that generates wealth without compromising environmental responsibility and social stewardship, thus meeting the current and future needs of stakeholders while preserving society and the environment for the needs of future generations. *Triple Bottom Line:* Refers to measuring the organization's financial performance, social performance, and environmental performance. -Three Ps: People, Planet, and Profit. -People: Measures social performance - treatment of employees -Planet: Measures environmental performance -Profit: Measures financial performance *Benefit Corporation:* A for-profit organization that has a stated purpose of creating a positive impact on society; is required to consider the impact of decisions on all stakeholders; and voluntarily holds itself to high standards of accountability and transparency.

Code of ethics

a formal statement of a company's values concerning ethics and social issues; it communicates to employees what the company stands for. C

ethics committee

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