Principles of Management CH 4

3 Levels of Personal Moral Development:

1) Preconventional Level 2) Conventional Level 3) Postconventional Level

4 types of ethical manager behavior:

1) displays honesty & integrity 2) communicates & enforces ethical standards through behavior 3) is fair in decisions & distribution of rewards 4) shows kindness, compassion & concern for needs & feelings of others

human behavior falls into 3 domain categories:

1) domain of CODIFIED LAW (legal standard) <highest amount of explicit control ( green ) 2) domain of ETHICS (social standard) in the middle ( blue ) 3) domain of FREE CHOICE (personal standard) lowest end of explicit control> (red)

Managers faced with tough ethical choices often benefit from a NORMATIVE STRATEGY—one based on norms & values—to guide their decision making using 5 APPROACHES:

1) utilitarian approach 2) individualism approach 3) moral-rights approach 4) justice approach 5) practical approach * I JUMP ( to approach ! )

the green movement

Ecomagination was born & is one of the world's most widely recognized corporate green programs: it has cut greenhouse gas emissions by 30% & added innovative products that are generating billions in annual revenue. Going green has become a new business imperative, driven by shifting social attitudes, new governmental policies, climate changes, and information technology (IT) that quickly spreads any news of a corporation's negative impact on the environment. Energy is an area of growing concern for the green movement, How do we apply technology and sustainability to addressing the economics of scarcity? The result was GE's major commitment to social responsibility through a green technology movement.

givers vs takers

Research has shown that people will work harder and more effectively for people who put others' interests and needs above their own. changes in society and organizations make self-sacrifice for the sake of a larger purpose an increasingly beneficial characteristic. the single biggest predictor of a team's effectiveness was the amount of help and support that members gave to one another in the past, takers (people who put their own interests first) could climb to the top over the backs of givers, but that is changing as the nature of work has shifted. The shift toward admiring and rewarding givers over takers can bring significant positive changes within organizations Servant leadership means that managers are "givers" and try to place service to others before self-interest, listen as a way to care about others, and nourish others to help them become whole.

code of ethics

a formal statement of a company's values concerning ethics & social issues; communicates to employees what the company stands for. a code of ethics does little to influence/ ensure ethical behavior among employees & managers, but they are a key element of the organization's ethical framework. state the values or behaviors expected & those that will not be tolerated. tend to exist in 2 types: 1) PRINCIPLE-BASED STATEMENTS: designed to affect corporate culture; define fundamental values & contain general language about company responsibilities, quality of products, & treatment of employees. General statements of principle are often called "corporate credos" 2) POLICY-BASED STATEMENTS: generally outline the procedures to be used in specific ethical situations situations include: marketing practices, conflicts of interest, observance of laws, proprietary information, political gifts, & equal opportunities

ethics committee

a group of executives (& sometimes lower-level employees) appointed to oversee company ethics. The committee provides rulings on questionable ethical issues & assumes responsibility for disciplining wrongdoers

managerial ethics question: (is the manager making these rules for the employees or is this a guide for the manager himself)

a set of standards that dictate the conduct of a manager operating within a workplace the moral guidance a supervisor provides his employees ( managers are questioned if profit is ever put before safety )

ethical dilemma

a situation in which all alternative choices or behaviors have potentially negative consequences & right and wrong cannot be clearly distinguished includes the technological, economic, political/legal, & sociocultural dimensions that affect a firm's external environment ex: Lance Armstrong experienced this

stakeholder

any group/ person within or outside the organization that has some type of investment or interest in the organization's performance & is affected by the organization's actions (employees, customers, shareholders, investors, & suppliers ) < are considered primary stakeholders, without whom the organization cannot survive & served by managerial efficiency—that is, use of resources to achieve profits Other important stakeholders are the government and the community The community includes local governments, the natural environment, and the quality of life provided for residents. For many companies such as Gap, trade unions and human rights organizations are highly important stakeholders. Special interest groups may include trade associations, political action committees, professional associations, and consumerists. One special interest group of particular importance today is the green movement.

domain of codified law

the set values & standards written into the legal system & enforceable in the courts that people & corporations must follow ex: driver's license/ paying taxes (legal standard) <highest amount of explicit control ( green ;)

legal responsibility

defines what society deems as important with respect to appropriate corporate behavior businesses are expected to fulfill their economic goals within the framework of legal requirements imposed by local town councils, state legislators, and federal regulatory agencies. "For a long time, people believed that the only purpose of industry was to make a profit. They are wrong. Its purpose is to serve the general welfare." In the United States, employers have a legal responsibility to comply with laws designed to protect workers, such as the health and safety laws enforced by the Occupational Safety and Health Administration (OSHA). obey the law.

whistle-blowing

employee disclosure ( the action of making new or secret information known) of illegal, unethical, or illegitimate practices on the employer's part often report wrongdoing to outsiders (regulatory agencies, senators, or newspaper reporters) some firms have instituted innovative programs & confidential hotlines to encourage this -for people throughout an organization to be willing to speak out on unethical or illegal behavior companies must make heroes of those who come forward, view this as a benefit to the company, & make dedicated efforts to encourage/ protect whistle-blowers -"it's a benefit rather than a threat" however, many managers still look on whistle-blowers as disgruntled employees who aren't good team players, but to maintain high ethical standards, organizations need people who are willing to point out wrongdoing

domain of ethics

has no specific laws, but it does have standards of conduct based on shared principles & values about moral conduct to guide an individual or company. ex: it is not illegal for a manager to have a consensual extramarital affair with a female executive, but his behavior will violate the organizations code of ethical conduct which is just asking him to get fired ( just because its not illegal does not mean it is ethical ! ) (social standard) in the middle ( blue )

ethical responsibility

includes behaviors that are not necessarily codified into law & may not serve the corporation's direct economic interests to be ethical, organization decision makers should act with equity, fairness, & impartiality, respect the rights of individuals, & provide different treatment of individuals only when relevant to the organization's goals/ tasks. *Unethical behavior occurs when decisions enable an individual or company to gain at the expense of other people or society as a whole be ethical. do what is right.avoid harm.

preconventional level

individuals are concerned with external rewards & punishments & obey authority to avoid personal consequences based on SELF-INTEREST leader style: autocratic or coercive ( dictator/mean ) employee behavior: task accomplishment

postconventional ( principle ) level

individuals are guided by an internal set of values based on universal principles of justice & right & will even disobey rules or laws that violate these principles -values become more important than the expectations of others -aware that people hold different values & seeks creative solutions for ethical dilemmas -balances concern for individual with concern for the common good based on INTERNAL VALUES leader style: transforming or servant leadership employee behavior: empowered employees, full participation ex: when the lifeguard was fired for leaving his assigned zone to help a drowning man even though his supervisor ordered him not to leave his zone & to call 911 instead "What he did was his own decision," said a manager for the company. "He knew the rules." (( only about 20% of American adults reach this stage of moral development meaning they are able to act in an independent, ethical manner regardless of expectations from others inside/ outside the organization ))

discretionary responsibility

is purely voluntary & is guided by a company's desire to make social contributions not mandated by economics, law, or ethics. include generous philanthropic contributions that offer no payback to the company & are not expected. the highest criterion of social responsibility because it goes beyond societal expectations to contribute to the community's welfare Corporations that sent generous donations to Japan following the devastating earthquake and tsunami in 2011 were practicing discretionary responsibility. Discretionary responsibility is related to organizational virtuousness contribute to the community; be q good corporate citizen

conventional level

lives up to expectations, duties & obligations of good behavior as defined by colleagues, family, friends, & society -upholds laws based on SOCIAL EXPECTATIONS leader style: guiding/ encouraging, team oriented employee behavior: work group collaboration (( the majority of managers operate at this level, meaning that their ethical thought & behavior is greatly influenced by their superiors/ colleagues in the organization ))

corporate social responsibility ( CSR )

management's obligation to make choices & take actions that will contribute to the welfare & interests of society, not just the organization distinguishing right from wrong & doing right; being a good corporate citizen contain moral, legal, & economic complexities that make socially responsible behavior hard to define because different people have different beliefs as to which actions improve society's welfare managers must confront the question, "Responsibility to whom?" organizations view the internal/ external environment as a variety of stakeholders can be divided into 4 primary criteria: economic, legal, ethical, & discretionary responsibilities

chief ethics officer

many companies set up these offices with full-time staff to ensure that ethical standards are an integral part of company operations these offices are headed by a company executive who oversees all aspects of ethics & legal compliance including: establishing & broadly communicating standards, ethics training, dealing with exceptions or problems, & advising senior managers in the ethical & compliance aspects of decisions

organizational virtuousness

means that an organization pursues a positive human impact, moral goodness, & unconditional society betterment for its own sake

cultivating a service mind-set

organizations want managers who have a service & sustainability mind-set rather than an attitude of getting all they can for themselves -Global service programs benefit everyone. Companies gain greater knowledge of emerging markets, develop social capital & goodwill, & get more well-rounded managers with the service & sustainability mind-set Participants get an increased self-awareness, new skills, & greater cross-cultural understanding -Many managers view these opportunities as plum (desirable) assignments. -How widespread is the trend?

what may cause a manager to act unethically ?

personal ego, greed, or pressures to increase profits or appear successful putting an overemphasis on *pleasing shareholders* may cause some managers to behave poorly toward customers, employees, & the broader society when they are under enormous *pressure to meet short-term earnings goals* use *accounting gimmicks* to show returns that meet market expectations rather than ones that reflect true performance plans include hefty *stock-based incentive*s that encourage managers to *do whatever will increase the share price, even if it hurts the company in the long run* being payed Drastically higher than employees

domain of free choice

pertains to behavior about which the law has NO say & for which an individual or organization enjoys 'complete freedom' ex: choosing who to hire for a position (personal standard) lowest end of explicit control> ( red )

stakeholder mapping

provides a systematic way to identify the expectations, needs, importance, & relative power of various stakeholders, which may change over time helps managers identify or prioritize the key stakeholders related to a specific issue or project can be ranked by importance Starting with mapping gave managers a way to focus their efforts and join with the most influential stakeholders to improve labor practices

triple bottom line

refers to measuring an organization's social performance (People), environmental performance (Planet), & financial performance (Profit) aka the 3 P's: People, Planet, & Profit "People" looks at how socially responsible the organization is in terms of fair labor practices, diversity, supplier relationships, treatment of employees, contributions to the community, & so forth. "Planet" measures the organization's commitment to environmental sustainability "Profit" looks at the organization's profit, the financial bottom line. ensures that managers take social & environmental factors into account rather than blindly pursuing profit, no matter the cost to society & the natural environment.

justice approach

says that moral decisions must be based on standards of equity, fairness, & impartiality 3 types of justice are of concern to managers: 1) DISTRIBUTIVE Justice requires that different treatment of people not be based on arbitrary ( based on random choice or personal whim, rather than any reason or system ) characteristics. ex: men and women should not receive different salaries if they have the same qualifications & are performing the same job 2) PROCEDURAL Justice: requires that rules be administered fairly/ clearly stated & consistently/impartially enforced 3) COMPENSATORY Justice: argues that individuals should be compensated for the cost of their injuries by the party responsible

utilitarian approach

the approach where a decision maker is expected to consider the effect of each decision alternative on all parties & select the one that optimizes the benefits for the greatest # of people holds that moral behavior produces the greatest good for the greatest # best approach for monitoring an employees: use of the Internet & alcohol/ drug intake because such behavior affects the entire workplace

economic responsibility

the business institution is, above all, the basic economic unit of society. Its responsibility is to produce the goods/ services that society wants & to maximize profits for its owners & shareholders carried to the extreme, is called the profit-maximizing view argues that the corporation should be operated on a profit-oriented basis, with its sole mission to increase its profits so long as it stays within the rules of the game. The purely profit-maximizing view is no longer considered an adequate criterion of social performance in Canada, the United States, and Europe. This approach means that economic gain is the only responsibility, and this can lead companies into trouble, as recent events in the mortgage and finance industries have clearly shown. Companies may get into trouble when they use economic criteria as their only measure of responsibility, which is sometimes called the profit-maximizing view. be profitable.

ethics

the code of moral principles & values that governs the behaviors of a person or group with respect to what is right or wrong in conduct & decision making

sustainability

the economic development that generates wealth & meets the needs of the current generation while preserving the environment & society so that future generations can meet their needs as well with this philosophy managers weave environmental & social concerns into every strategic decision so that financial goals are achieved in a responsible way. Managers in organizations that embrace sustainability measure their success in terms of a triple bottom line.

practical approach

this approach avoids debates about what is right, good, or just and bases decisions on prevailing standards of the profession & the larger society, taking the interests of all stakeholders into account a decision would be considered ethical if it is one that would be considered acceptable by the professional community, one that the manager would not hesitate to publicize on the evening news, & one that a person would typically feel comfortable explaining to family and friends using the practical approach, managers may combine elements of the utilitarian, moral rights, & justice approaches in their thinking & decision making

moral-rights approach

this approach says that human beings have fundamental rights & liberties that cannot be taken away by an individual's decision an ethically correct decision is one that best maintains the rights of those affected by it & avoiding violating actions such as the right to privacy, the right of free consent, or the right to freedom of speech

individualism approach

this approach states that acts are moral when they promote the individual's best long-term interests in theory, with everyone pursuing self-direction, the greater good is ultimately served because people learn to accommodate each other in their own long-term interest -Individualism is believed to lead to honesty & integrity because that works best in the long run. ( Lying and cheating for immediate self-interest just causes business associates to lie & cheat in return ) -ultimately leads people to treat others the way they want to be treated however, pursuing "self-direction" can be easily misinterpreted as immediate "self-gain"

ethics hotline

this is a toll-free, confidential system that allows employees to report questionable behavior & seek guidance concerning ethical dilemmas large public firms need an individual who is responsible for the ethics & compliance program with direct access to the board of directors

sustainability

weaving environmental & social concerns into all their decisions there shows to be a positive relationship between ethical & socially responsible behavior & a firm's financial performance... like having significantly higher sales growth, return on assets, profits, & cash flow people prefer to work for companies that demonstrate a high level of ethics & social responsibility; thus, attracting & retaining high-quality employees consumers are willing to pay slightly more for products they were told had been made using high ethical standards

ethical leadership

means that managers are honest & trustworthy, fair in their dealings with employees/ customers, & behave ethically in both their personal & professional lives Managers and first-line supervisors are important role models for ethical behavior, and they strongly influence the ethical climate in the organization by adhering to high ethical standards in their own behavior and decisions. Moreover, managers are proactive in influencing employees to embody and reflect ethical values In line with the growing emphasis on sustainability and the triple bottom line, organizations want managers who have a service and sustainability mind-set rather than an attitude of getting all they can for themselves. through this practicing, it is one of the most important ways that managers create ethical & socially responsible organizations