Week 7 & final Project

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Chapter7.DesignsforSocialImpactDual-PurposeOrganizationsCorporateSustainabilityandEthics.pptx

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Chapter 7 Designs for Societal Impact: Dual-Purpose Organizations, Corporate Sustainability, and Ethics

Organization Theory and Design

Thirteenth Edition

Richard L. Daft

Chapter

Learning Objectives (slide 1 of 2)

Describe how a hybrid organization differs from a typical nonprofit or profit-seeking organization, including the two major “logics” that are embraced in hybrid organizations.

Describe how organizations implement corporate social responsibility using the green movement, the triple bottom line, conscious capitalism, and the bottom of the pyramid approaches.

Identify important stakeholders for an organization and discuss how managers balance the interests of various stakeholders.

Learning Objectives (slide 2 of 2)

Discuss how ethical norms can be maintained through organizational structures and systems.

Compare the various sustainability approaches organizations can adopt.

Designing the Dual-Purpose Organization

A hybrid organization pursues both profit and social missions within a single organization

Such enterprises face the risk of mission drift, or giving more importance to generating revenue and profit

Pressure to be financially viable and socially responsible has pushed both for-profit and nonprofit organizations to create social and financial value as part of their core business

Organizational Approaches for Societal Benefit (slide 1 of 2)

Term	Description
Benefit corporation	A legal for-profit entity whose charter includes legal responsibility for positive social or environmental goals in addition to profit-seeking goals.
B Corporation	An organization that has received a private certification issued by B Lab, based on an 80-item assessment of accountability and transparency in social and environmental performance. Often used in locations where legal government chartering as a benefit corporation is not available.
L3C – Low profit limited liability company	A legal structure used in a few states that allows for investment in socially responsible enterprises that are for-profit.
Shared Value Approach	Business practices that increase the competitiveness of a company and at the same time contribute to positive economic and social impact in the community.

Organizational Approaches for Societal Benefit (slide 2 of 2)

Term	Description
Bottom of the pyramid ventures	Corporate approach of expanding business by creating products or services to serve poorer populations.
Conscious Capitalism	Concerned with social and environmental issues both at a local and global level. Awareness of the impact of products and services on people and the environment.
Social Entrepreneurship	Founding a profit-seeking new business venture with the goal of tackling a specific societal problem while earning enough profit to sustain the business.
Social Enterprise	An established hybrid business with the dual goals of addressing a societal problem and making a profit.

Facing the Challenge

Logics are the personal beliefs, values, and preferences of an organization’s employees

Within hybrid organizations, two main logics are usually at play

Commercial logic: Sell products and services for economic gain or profit

Social welfare logic: Sell products and services as a mechanism for meeting societal needs

The Two Opposing Logics Embedded Within a Hybrid Organization

Designs for Achieving Dual Commercial and Social Welfare Goals

Structures and techniques for organizing people who hold opposing mindsets and values about an organization’s purpose include:

Knowing when to use an integrated structure versus separate departments

Hiring employees with a balanced mindset

Setting clearly defined goals and measures of effectiveness

Collaborating with like-minded organizations

Keeping the social mission alive in the minds of employees

Choosing the correct legal framework, such as incorporating as a benefit corporation

Corporate Social Responsibility (slide 1 of 2)

Corporate social responsibility (CSR) refers to management’s efforts to make choices and take actions that contribute to the welfare and interest of all organizational stakeholders

Companies can now be measured on their performance along environmental, social, and governance (ESG) dimensions

Trade-offs can exist between a firm’s financial performance and its performance on ESG-type dimensions: Improving one may involve a cost to the other

Corporate Social Responsibility (slide 2 of 2)

Approaches and models that businesses adopt to organize their socially responsible activities include:

The green movement and sustainability

The triple bottom line

Conscious capitalism

Stakeholder mapping

Serving the bottom of the pyramid (BOP)

The Triple Bottom Line

Major Stakeholder Groups and What They Expect

The World Economic Pyramid

The Consequences for Doing Good

Studies have generally found a positive relationship between socially responsible behavior and a firm’s financial performance

Researchers have also found that people prefer to work for companies that demonstrate a high level of ethical behavior and social responsibility

Many customers would switch brands to do business with ethical and socially responsible companies

United Nations Sustainable Development Goals (slide 1 of 3)

Goal	Description of Goals
1. No Poverty	End poverty in all forms everywhere
2. Zero Hunger	End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Good Health and Well-being	Ensure healthy lives and promote well-being for all at all ages
4. Quality Education	Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
5. Gender Equality	Achieve gender equality and empowerment for all women and girls
6. Clean Water and Sanitation	Ensure availability and sustainable management of water and sanitation for all

United Nations Sustainable Development Goals (slide 2 of 3)

Goal	Description of Goals
7. Affordable and Clean Energy	Ensure access to affordable, reliable, sustainable and modern energy for all
8. Decent Work and Economic Growth	Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Industry, Innovation and Infrastructure	Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
10. Reduced Inequalities	Reduce inequality within and among countries
11. Sustainable Cities and Communities	Make cities and human settlements inclusive, safe, resilient and sustainable
12. Responsible Consumption and Production	Ensure sustainable consumption and production patterns

United Nations Sustainable Development Goals (slide 3 of 3)

Goal	Description of Goals
13. Climate Action	Take urgent action to combat climate change and its impacts
14. Life Below Water	Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Life on Land	Sustainably manage forests, combat desertification, and halt and reserve land degradation, halt biodiversity loss
16. Peace, Justice and Strong Institutions	Promote just, peaceful and inclusive societies
17. Partnership for Goals	Revitalize the global partnership for sustainable development

Designing a Structure for Executing a Sustainability Program

A successful implementation of a sustainability or CSR program depends heavily on:

Inclusion of all employees in the sustainability initiative

External stakeholder collaboration and involvement

Tying sustainability or CSR planning to company-wide strategy and goals

Recognition or reward of employee dedication to the sustainability initiative

Designs to Uphold Ethical Values (slide 1 of 2)

Ethics refers to the code of moral principles and values that governs behavior with respect to what is right or wrong

The rule of law arises from a set of codified principles and regulations that describe how people are required to act, that are generally accepted in society, and that are enforceable in the courts

Designs to Uphold Ethical Values (slide 2 of 2)

Ethical standards generally apply to behaviors not covered by the law

The rule of law applies to behaviors not necessarily covered by ethical standards

Organizational ethics are principles that guide managerial decisions and behaviors with regard to whether they are right or wrong

Some decisions represent ethical dilemmas that are exceedingly difficult to resolve

Relationship Between the Rule of Law and Ethical Standards

Formal Structure and Systems

Managers can shape their organization’s ethical values through:

Structure (i.e., ethics committees, compliance officers)

Disclosure mechanisms (i.e., whistle-blowing)

A code of ethics

Corporate credos

Structures and Systems for Building an Ethical Organization

Corporate Ethics in a Global Environment

Complexity of the global environment and organizational domain creates a greater potential for ethical problems or misunderstandings

Varied attitudes and beliefs among employees in different countries make it difficult to establish a sense of community and cohesiveness based on the ethical culture

Organizational Design Essentials (slide 1 of 2)

Effective structures and techniques for organizing people who hold opposing mindsets and values about an organization’s purpose include separating people into distinct departments, careful employee selection, and a strong leadership role.

Managers can assess and measure the organization’s performance on environmental, social, and governance (ESG) dimensions.

For a successful sustainability or CSR program, managers should involve all employees rather than assigning responsibility to a separate department.

Organizational Design Essentials (slide 2 of 2)

Sustainable businesses engage and communicate with all stakeholders.

Sustainability planning should be incorporated into the organization’s strategic planning process so top managers set clear goals and assign responsibility for sustainability efforts.

Organizational managers can support and encourage ethical behaviors through their actions and through formal structures and systems.

Global organizations face particularly tough ethical challenges because of the various cultural and market factors they deal with.