Management & Organization Behavior class Two Discussions

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Ethics, Corporate Responsibility, and Sustainability

Chapter Five

Learning Objectives

LO1 Describe how different ethical perspectives guide decision making

LO2 Explain how companies influence their ethics environment

LO3 Outline a process for making ethical decisions

LO4 Summarize the important issues surrounding corporate social responsibility

LO5 Discuss reasons for businesses’ growing interest in the natural environment

LO6 Identify actions managers can take to manage with the environment in mind

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Ethics

The system of rules that governs the ordering of values

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Telling the Truth and Lying: Possible Outcomes

Table 5.1

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It’s a Personal Issue

Most of us think we are good decision makers, ethical, and unbiased.

But most people have unconscious biases that favor themselves and their own group.

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It’s a Personal Issue

Managers often:

Hire people who are like them

Think they are immune to conflicts of interest

Take more credit than they deserve

Blame others when they deserve some blame themselves

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It’s a Personal Issue

If the employer pays for the computer and the time you spend sitting in front of it, is it ethical for you to use the computer to do tasks unrelated to your work?

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Ethics

Ethical issue

Situation, problem, or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong

Business ethics

The moral principles and standards that guide behavior in the world of business.

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Ethical Systems

Moral philosophy

Principles, rules, and values people use in deciding what is right or wrong

Universalism

The ethical system stating that all people should uphold certain values that society needs to function.

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Caux Principles

Ethical principles established by international executives based in Caux, Switzerland, in collaboration with business leaders from Japan, Europe, and the United States.

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Caux Principles

Kyosei

living and working together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competition

Human dignity

concerns the value of each person as an end, not a means to the fulfillment of others’ purposes

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Question

Which ethical system bases ethical behavior on the opinions and behaviors of relevant other people?

Egoism

Utilitarianism

Relativism

Virtue ethics

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The correct answer is c – relativism. See slide 5-14

Ethical Systems

Egoism

An ethical system defining acceptable behavior as that which maximizes consequences for the individual

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Ethical Systems

Utilitarianism

An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers.

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Ethical Systems

Relativism

Philosophy that bases ethical behavior on the opinions and behaviors of relevant other people

Virtue ethics

Classification of people based on their level of moral judgment.

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Ethical Systems

Kohlberg’s model of cognitive moral development

Perspective that what is moral comes from what a mature person with “good” moral character would deem right.

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Current Ethical Issues in Business

Table 5.2

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Question

What act passed into law by Congress in 2002 established strict accounting and reporting rules?

Wagner Act

Sarbanes-Oxley Act

Chapin Act

GAAP Act

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The correct answer is b – Sarbanes-Oxley. See next slide

The Ethics Environment

Sarbanes-Oxley Act

An act passed into law by Congress in 2002 to establish strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence

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Business Ethics

Ethical climate

In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong

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Danger Signs

Excessive emphasis on short-term revenues over longer-term considerations.

Failure to establish a written code of ethics.

A desire for simple, “quick fix” solutions to ethical problems.

An unwillingness to take an ethical stand that may impose financial costs.

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Danger Signs (cont.)

Consideration of ethics solely as a legal issue or a public relations tool

Lack of clear procedures for handling ethical problems.

Responding to the demands of shareholders at the expense of other constituencies

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Danger Signs

Ethical leader

One who is both a moral person and a moral manager influencing others to behave ethically.

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Ethics Programs

Compliance-based ethics programs

Company mechanisms typically designed by corporate counsel to prevent, detect, and punish legal violations.

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Ethics Programs

Integrity-based ethics programs

Company mechanisms designed to instill in people a personal responsibility for ethical behavior

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A Process for Ethical Decision Making

Figure 5.1

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Ethical Decision Making

Making ethical decisions takes:

Moral awareness

realizing the issue has ethical implications

Moral judgment

knowing what actions are morally defensible

Moral character

the strength and persistence to act in accordance with your ethics despite the challenges

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Courage

Behaving ethically requires not just moral awareness and moral judgment but also moral character, including the courage to take actions consistent with your ethical decisions

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Corporate Social Responsibility

Corporate social responsibility (CSR)

Obligation toward society assumed by business.

Triple bottom line

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Corporate Social Responsibility

Economic responsibilities

To produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors.

Legal responsibilities

To obey local, state, federal, and relevant international laws

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Corporate Social Responsibility

Ethical responsibilities

Meeting other social expectations, not written as law.

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Corporate Social Responsibility

Philanthropic responsibilities

Additional behaviors and activities that society finds desirable and that the values of the business support.

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Pyramid of Global Corporate Social Responsibility and Performance

Figure 5.2

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Corporate Social Responsibility

Transcendent education

An education with five higher goals that balance self-interest with responsibility to others

Empathy, generativity, mutuality, civil aspiration, intolerance of ineffective humanity

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Contrasting Views

First - holds that managers act as agents for shareholders and, as such, are obligated to maximize the present value of the firm

Second - managers should be motivated by principled moral reasoning

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Reconciliation

Profit maximization and corporate social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can converge

Recent attention has also been centered on the possible competitive advantage of socially responsible actions

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Ecocentric Management

Ecocentric management

Goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders.

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Ecocentric Management

Sustainable growth

Economic growth and development that meet present needs without harming the needs of future generations

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Ecocentric Management

Life-cycle analysis (LCA)

A process of analyzing all inputs and outputs, though the entire “cradle-to-grave” life of a product, to determine total environmental impact

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Video: Cell Phones for Soldiers

Why is it important for Rob and Brittany Bergquist to be socially responsible?

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