Management Chapter 2
conventional stage,
attention broadens to include more social concerns. Decisions made in this stage are likely to be based on following social norms, meeting the expectations of others, and living up to agreed-upon obligations
shared value
executives can and should make business decisions with full understanding that economic gains and social progress are fun- damentally interconnected. In other words, businesses can make profits while striving to do good and overcome social ills such as pollution, poverty, illiteracy, and disease. - offers a win-win perspective.
a virtuous circle,
exists when corporate social responsibility leads to improved financial performance that leads to more social responsibility
The triple bottom line of organizational performance includes financial, social, and environmental criteria
financial, social, and environmental criteria - Some call this triple bottom line the 3 Ps of organizational performance—profit, people, and planet
Commutative justice
focuses on the fairness of ex- changes or transactions. An exchange is considered fair if all parties enter into it freely, have access to relevant and available information, and obtain some type of benefit from the transaction.
Interactional justice
focuses on treating everyone with dignity and respect. For ex- ample, does a bank loan officer take the time to fully explain to an applicant why he or she was turned down for a loan?
Critics of the universal approach claim it is a form of ethical imperialism,
or the attempt to externally impose one's ethical standards on others.
ethics training
seeks to help people understand the ethical aspects of decision making and to incorporate high ethical standards into their daily behavior
Managers at all levels in all organizations have a lot of power to shape policies and set a moral tone.
significantly large part of this power works through the personal examples managers set as ethics role models. In order to have a positive impact, a manager must walk the ethics talk. An example is to set realis- tic and achievable performance goals rather than impossible ones.30 A Fortune survey re- ported that 34% of its respondents felt a company president can help to create an ethical climate by setting reasonable goals "so that subordinates are not pressured into unethical actions."
can have different interests.
Customers typi- cally want value prices and quality products; owners want profits as returns on their invest- ments; suppliers want long-term business relationships; communities want good corporate citizenship and support for public services; employees want good wages, benefits, security, and satisfaction in their work.
The psychologist Milton Rokeach distinguishes between "terminal" and "instrumental" values.
- Terminal values focus on desired ends or what someone wants to achieve, such as the goal of career advancement. - Instrumental values focus on the means one is willing to use to accomplish desired ends, such as honesty in relationships.
SOCIAL RESPONSIBILITY AUDITS MEASURE THE SOCIAL PERFORMANCE OF ORGANIZATIONS
- The social performance of business firms varies along a continuum that ranges from compliance—acting to avoid adverse consequences, to conviction—acting to create positive impact.
moral absolutism.
- This is a universalist ethical position suggesting that if a behavior or practice is not okay in one's home environment, it is not acceptable practice anywhere else. -In other words, ethical standards are absolute and should apply universally across cultures and national boundaries. -The American executive in the former example would not do business in a setting where child labor was used because it is unacceptable at home.
A social responsibility audit
- can be used at regular intervals to report on and systematically assess an organization's performance in various areas of corporate social responsibility. - an audit of corporate social performance might cover the organization's performance on four criteria for evaluating socially responsible practices: economic, legal, ethical, and discretionary.
Moral Rights View
- considers behavior to be ethical when it respects and protects the fundamental rights of people. -Based on the teachings of John Locke and Thomas Jefferson, this view believes all people have rights to life, liberty, and fair treatment under the law. -In organizations, this translates into protecting the rights of employees to privacy, due process, free speech, free consent, health and safety, and freedom of conscience.
Utilitarian View
- delivers the greatest good to the greatest number of people. - Ex; A business owner decides to cut 30% of a small firm's workforce in order to keep the business profitable and save the remaining jobs, rather than lose them all to failure. - John Stuart Mill, the results-oriented utilitarian view tries to assess the moral implications of our actions in terms of their consequences.
individualism view
- focuses the ethics analysis on long-term advancement of self- interests. The notion is that people become self-regulating and ethics are maintained as they strive for individual advantage over time
Ethics
- is defined as the code of moral principles that sets standards of good or bad, or right or wrong, in our conduct. - Personal ethics are guides for behavior, helping people make moral choices among alternative courses of action. - Most typically, we use the term ethical behavior to describe what we accept as "good" and "right" as opposed to "bad" or "wrong."
social entrepreneurs,
- people who take business risk with the goal of finding novel ways to solve pressing social problems at home and abroad. - Social entrepreneurs are like business entrepreneurs with one big difference: They are driven by a social mission, not financial gain.They pursue original thinking and innovations to help solve social problems and make lives better for people who are disadvantaged.
cultural relativism.
- suggests there is no one right way to behave; cultural context determines ethical behavior. - "when in Rome, do as the Romans do" - An American international business executive guided by rules of cultural relativism, for example, would argue that the use of child labor is okay in another country as long as it is consistent with local laws and customs.
Management scholar Archie Carroll makes distinctions among amoral, immoral, and moral managers
- the immoral manager chooses to behave unethically. This manager seeks only personal gain and intentionally disregards the ethics of an action. - he amoral manager also disregards the ethics of a decision, but does so unintentionally. This manager simply fails to consider the ethical consequences of his or her actions. - the moral manager has a strong ethics framework and values ethical behavior as a personal goal. This manager always makes decisions in full consideration of ethical issues.
Lawrence Kohlberg : the three levels of moral development
- we move step-by-step through the levels as we grow in maturity and education. - Not everyone, in fact perhaps only a few of us, will reach the top
Thomas Donaldson argues instead that fundamental human rights and ethical standards can be preserved while values and traditions of a local culture are respected
-The core values or "hypernorms" that must travel across cultural and national boundaries focus on human dignity, basic rights, and good citizenship. But once these core values have been met, Donald- son believes that international business behaviors can be tailored to local cultures. - In the case of child labor, the American executive might ensure that any children employed in a factory under contract to his or her business work in safe conditions and are provided regular schooling during scheduled work hours.
PERSONAL CHARACTER AND MORAL DEVELOPMENT INFLUENCE ETHICAL DECISION MAKING.
56% of U.S. workers in one survey reported feeling pressured to act unethically in their jobs . . . or, that 48% of them self-reported as having committed questionable acts
Justice View
A behavior is ethical under the justice view of moral reasoning when people are treated impartially and fairly, and according to legal rules and standards. This view judges the ethics of any decision on the basis of how equitable it is in terms of workplace justice—procedural, distributive, interactional, and commutative.
Social businesses are profit driven.
But, instead of the profits being returned to investors or owners, they are used to pay off initial start-up costs and then reinvested to expand the social business to serve more clients and customers.
ethical frameworks
are well- thought-out personal rules and strategies for ethical decision making that give high priority to virtues like honesty, fairness, integrity, and self-respect. - Ethical frameworks help us to act consistently and confidently even under the most difficult conditions.
corporate social responsibility
Often called CSR, it is defined as an obligation of the organization to act in ways that serve both its own interests and the interests of its stakeholders, representing society at large
The importance of environmental capital is reflected in ISO 14001,
a global quality standard that requires certified organizations to set environmental objectives and targets; account for the environmental impact of their activities, products, or services; and continuously improve environmental performance.
Stakeholders
are people and institutions most directly affected by an organization's performance - include customers, suppliers, competitors, regulators, investors/owners, and employees, as well as future generations.
Socioeconomic View of CSR
believes that because businesses have vast resources with the potential for great social impact, business executives have ethical obligations to ensure that their firms act in socially responsible ways. This broad stakeholder perspective puts the focus on the triple bottom line of not just profits but also social and environmental performance. -those in favor of corporate social responsibility argue that it will boost long-run profits, improve public images, and help businesses avoid more government regulation.
Character
comes from family influences, religious beliefs, personal standards, personal values, and even past experiences - Character shouldn't stay home when we go to work - it isn't always easy to stand up for what we believe when we are exposed to extreme performance pressures, when we get contradictory or just plain bad advice, or when our career or personal well being is threatened.
Spotlight questions
highlight the risks from public disclosure of one's actions. • "How would I feel if my family found out about my decision?" • "How would I feel if my decision was reported in the local newspaper or posted on the Internet?" • "What would the person I know who has the strongest character and best ethical judgment say about my decision?"
Classical View of CSR
holds that management's only responsibility in running a busi- ness is to maximize profits and shareholder value. This narrow stakeholder perspective puts the focus on the single bottom line of financial performance.
Distributive justice
involves the allocation of outcomes without respect to individual characteristics, such as those based on ethnicity, race, gender, or age. For example, does a woman with the same qualifications and experience as a man receive the same consideration for hiring or promotion?
Procedural justice
involves the fair administration of policies and rules. For example, does a sexual harassment charge levied against a senior executive receive the same full hear- ing as one made against a first-level supervisor?
A code of ethics
is a formal statement of values and ethical standards.
An ethical dilemma
is a situation requiring a decision about a course of action that, although offering potential benefits, may be considered unethical. -As a further complication, there may be no clear consensus on what is "right" and "wrong." - In these circumstances, one's personal values are often the best indicators that something isn't right. -"I define an unethical situation as one in which I have to do something I don't feel good about."
Legal responsibility
is fulfilled when an organization operates within the law and according to the requirements of various external regulations.
Sustainable development
is making use of natural resources to meet today's needs while also preserving and protecting the environment for use by future generations.
A social business
is one in which the underlying business model directly addresses a social problem - EX: Muhammad Yunus won a Nobel prize for his pioneering work in Bangladesh creating the Grameen Bank.
Environmental capital or natural capital
is the storehouse of natural resources— atmosphere, land, water, and minerals—that we use to sustain life and produce goods and services for society
The highest level of social performance comes through the satisfaction of discretionary responsibility.
provide leadership in advancing the well-being of individuals, communities, and society as a whole. Perhaps you would consider the Starbucks College Achievement Plan as a commitment to discretionary social responsibility.
The term sustainable business
refers to firms that operate in ways that both meet the needs of customers and protect or advance the well-being of our natural environment. - A sustainable business operates in harmony with nature rather than by exploiting nature. Its actions produce minimum negative impact on the environment and help preserve it for future generations.
WHAT IS CONSIDERED ETHICAL CAN VARY ACROSS CULTURES.
that an ethical problem "becomes even more difficult when you overlay the complexities of different cultures and values systems that exist throughout the world."
postconventional or principled stage
the individual is driven by core principles and beliefs. A strong ethics framework is evident. The individual is willing to break with norms and conventions, even laws, to act consistently with personal principles. An example is the student who passes on an opportunity to cheat on a take-home examination because he or she believes it is wrong, even though the consequence will be a lower grade.
preconventional stage
the individual is self-centered and the ethics framework is weak. Moral thinking is largely limited to issues of punishment, obedience, and personal interest. Decisions made in the preconventional stage are likely to be directed toward personal gain and based on obedience to rules.
Ethical issues and problems arise when people do something that violates their— or someone else's—values—
underlying beliefs and judgments regarding what is right or desirable and that influence individual attitudes and behaviors.
four different philosophical views of ethical behavior—
utilitarian, individualism, justice, and moral rights. - Each represents an alternative approach to moral reasoning and may conclude differently about whether or not a given behavior is ethical.
An organization is meeting its economic responsibility
when it earns a profit through the provision of goods and services desired by customers. Although it might seem unusual to focus on financial performance as a component of CSR, a firm's economic performance provides the foundation on which all the other types of responsibility rest. If a firm is not financially viable, it will not be able to take care of its owners or employees or en- gage in any of the other aspects of CSR.
An organization meets its ethical responsibility
when its actions voluntarily conform not only to legal expectations but also to the broader values and moral expectations of society