Ethics & Social Responsibility

Don ell#ie&el S'san E- +ac0son +ohn ,- Sloc'./ +#-

MANAGING: A COMPETENCY BASED APPROAC !!th E"ition

Chapte# $%Ethics an" Social Responsibility
Prepared by A#&ie B'tle# Te(as A&M )ni*e#sity

Ethics & Social Responsibility

C APTER $%ET ICS AND SOCIA2 RESPONSIBI2ITY

2EARNING GOA2S
1. State the importance of ethics for individual employees and organizations 2. Describe four influences that shape the ethical behavior and decisions of individuals and organizations 3. Describe three approaches that people use when making ethical udgments !. "#plain stakeholder social responsibility and how it influences managers$ ethical decisions and behavior
Chapte# $: Po1e#Point $-!

Ethics & Social Responsibility

IMPORTANCE O4 ET ICS: SNAPS OT

While the majority of corporate CEOs are honest leaders dedicated to building their companies, far too many got caught up in the quest for personal gain and wound up sacrificing their values and their stakeholders Call it greed, because that!s what it is "t threatens the very fabric of our system #
William W $eorge, %ormer CEO and Chairman, &edtronic, "nc

Ethics
The set o5 *al'es/ p#inciples/ an" #'les that "e5ine #i&ht an" 1#on& con"'ct
Chapte# $: Po1e#Point $-3

Ethics & Social Responsibility

2ONG6TERM ORGANI7ATIONA2 E44ECTI8ENESS

St#on&e# 5inancial pe#5o#.ance o*e# the lon& #'n G#eate# sales/ b#an" i.a&e/ an" #ep'tation Mo#e e.ployee loyalty an" co..it.ent 2ess *'lne#ability to acti*ist p#ess'#e an" boycotts 4e1e# o# no 5ines/ co'#t6i.pose" #e.e"ies/ an" c#i.inal cha#&es
Chapte# $: Po1e#Point $-$

Ethics & Social Responsibility

C'lt'#al In5l'ences 2e&al an" Re&'lato#y In5l'ences O#&ani<ational In5l'ences In"i*i"'al In5l'ences Ethical Con"'ct In"i*i"'al O#&ani<ation

Chapte# $: Po1e#Point $-9 :4i&'#e $-!;

Ethics & Social Responsibility

C'lt'#al In5l'ences
C'lt'#e
%he dominant pattern of living& thinking& and believing that is developed and transmitted by people& consciously or unconsciously& to subse'uent generations

C'lt'#e 8al'es
%hose consciously and subconsciously deeply held beliefs that specify general preferences and behaviors& and define what is right and wrong
Chapte# $: Po1e#Point $-=

Ethics & Social Responsibility

Pe#sonal 8al'es
Co#e 8al'es in No#th A.e#ican C'lt'#e onesty Inte&#ity T#'st1o#thiness Respect 5o# Othe# People Sel56#espect 4a.ily Achie*e.ent Reliability 4ai#ness 2oyalty

Chapte# $: Po1e#Point $->

Ethics & Social Responsibility

2e&al an" Re&'lato#y In5l'ences

*t one time +.S. organizations could legally discriminate against women and minorities (egality doesn$t always mean ethical

(aws) Society$s values and standards that are enforceable in the courts

Chapte# $: Po1e#Point $-?

Ethics & Social Responsibility

2e&al an" Re&'lato#y In5l'ences

E(a.ples o5 2a15'l Reasons 5o# Dis.issin& E.ployees
Inco.petence in pe#5o#.ance that "oes not #espon" to t#ainin& o# to acco..o"ation G#oss o# #epeate" ins'bo#"ination Ci*il #i&hts *iolations s'ch as en&a&in& in ha#ass.ent Ille&al beha*io# s'ch as the5t o# physical *iolence Repeate" lateness o# 'ne(c'se" absences D#'& acti*ity o# "#'n0enness on the Aob
Chapte# $: Po1e#Point $-@

Ethics & Social Responsibility

2e&al an" Re&'lato#y In5l'ences

E(a.ples o5 )nla15'l Reasons 5o# Dis.issin& E.ployees

Blo1in& the 1histle abo't ille&al con"'ct by the e.ploye# Repo#tin& Occ'pational Sa5ety an" ealth A".inist#ation *iolations 4ilin& "isc#i.ination cha#&es 1ith the EC'al E.ploy.ent Oppo#t'nity Co..ission o# a state o# .'nicipal 5ai# e.ploy.ent a&ency 4ilin& 'n5ai# labo# p#actice cha#&es 1ith the National 2abo# Relations Boa#" o# a state a&ency En&a&in& in 'nion acti*ities/ p#o*i"e" the#e is no *iolence o# 'nla15'l beha*io# Co.plainin& o# testi5yin& abo't *iolations o5 eC'al pay/ 1a&e/ o# ho'# la1
Chapte# $: Po1e#Point $-B :A"apte" 5#o. Table $-!;

Ethics & Social Responsibility

2e&al an" Re&'lato#y In5l'ences

Sa#banes6O(ley Act
I.poses #i&o#o's a'"itin&/ 5inancial "isclos'#e/ e(ec'ti*e co.pensation/ an" co#po#ate &o*e#nance #eC'i#e.ents on p'blicly t#a"e" co.panies

Snapshot
EFto"ayGs co.pliance challen&es a#e #eally in5o#.ation challen&es- At its co#e/ the Sa#banes6O(ley Act is abo't ens'#in& that "ata is t'#ne" into 5inancial in5o#.ation in a 1ay that enables acc'#ate/ #eliable/ t#anspa#ent an" ti.ely 5inancial #epo#tin&-H 2ee Ditt.a#/ P#incipal/ Deloitte Cons'ltin& 22P
Chapte# $: Po1e#Point $-!D

Ethics & Social Responsibility

,anagement$s Day-to-Day .ehaviors and Decisions are /ey 0reate 1ormal "thics System ,ake 2t *cceptable to %alk *bout "thics 0ommunicate "thical "#pectations

1ostering an "thical 0ulture

2nclude "thical 0onduct in Performance "valuations

Chapte# $: Po1e#Point $-!!

Ethics & Social Responsibility

O#&ani<ational In5l'ences
Abb#e*iate" P#inciples in a ,o#l" Co"e o5 Ethics 4i"'cia#y P#inciple: *ct as a fiduciary 5representative6 for the company and its investors P#ope#ty P#inciple: 4espect property and the rights of those who own it Reliability P#inciple: 3onor commitments T#anspa#ency P#inciple: 0onduct business in a truthful and open manner
Chapte# $: Po1e#Point $-!3 :A"apte" 5#o. Table $-3; :contin'e";

Ethics & Social Responsibility

Contin'e": Abb#e*iate" P#inciples in a ,o#l" Co"e o5 Ethics

Di&nity P#inciple: 4espect the dignity of all people7 protect the health& safety& privacy& and human rights of others 4ai#ness P#inciple: "ngage in free and fair competition& deal with all parties fairly and e'uitably Citi<enship P#inciple: *ct as responsible citizens of the community Responsi*eness P#inciple: "ngage with parties who may have legitimate claims and concerns relating to the company$s activities
So'#ce: A"apte" 5#o. 2- Paine/ R- Deshpan"I/ +-D- Ma#&olis/ an" J-EBettche#- )p to co"e: Does yo'# co.panyGs con"'ct .eet 1o#l"6class stan"a#"sK 'arvard (usiness )eview/ 3DD=/ @3:3;/ !336!$$Chapte# $: Po1e#Point $-!$ :A"apte" 5#o. Table $-3;

Ethics & Social Responsibility

Johlbe#&Gs Sta&es o5 Mo#al De*elop.ent )ni*e#sal P#inciples Social Cont#act 2a1 & O#"e# Inte#pe#sonal Inst#'.ental Obe"ience & P'nish.ent Chil"hoo" Th#o'&h A"'lthoo"

Chapte# $: Po1e#Point $-!9 :4i&'#e $-3;

Ethics & Social Responsibility

Johlbe#&Gs Sta&es o5 Mo#al De*elop.ent :contG"; Obe"ience an" P'nish.ent Sta&e: a pe#son "oes the #i&ht thin& .ainly to a*oi" p'nish.ent o# to obtain app#o*al Inst#'.ental Sta&e: a pe#son beco.es a1a#e that othe#s also ha*e nee"s an" be&ins to "e5e# to the. to &et 1hat the in"i*i"'al 1ants Inte#pe#sonal Sta&e: a pe#son consi"e#s app#op#iate beha*io#s as that 1hich pleases o# is app#o*e" by 5#ien"s o# 5a.ily
Chapte# $: Po1e#Point $-!=

Ethics & Social Responsibility

Johlbe#&Gs Sta&es o5 Mo#al De*elop.ent :contG";

2a1 an" O#"e# Sta&e: a pe#son consi"e#s p#ope# beha*io# as "oin& oneGs "'ty :obli&ation;/ sho1in& #espect 5o# a'tho#ity/ an" .aintainin& the social o#"e# 5o# its o1n sa0eL loyalty to the nation an" its la1s a#e pa#a.o'nt Social Cont#act Sta&e: a pe#son is a1a#e that people hol" a *a#iety o5 con5lictin& pe#sonal *ie1s that &o beyon" the lette# o5 the la1L a E&#eatest &oo" 5o# the &#eatest n'.be#H e.phasis )ni*e#sal P#inciples Sta&e: a pe#son consi"e#s app#op#iate con"'ct as "ete#.ine" by a pe#sonGs conscience/ base" on 'ni*e#sal ethical p#inciples
Chapte# $: Po1e#Point $-!>

Ethics & Social Responsibility

In"i*i"'al In5l'ences
,histle6blo1in&
,histle6blo1e#s: e.ployees 1ho #epo#t 'nethical o# ille&al actions by thei# e.ploye#s to othe# people o# o#&ani<ations that a#e capable o5 ta0in& co##ecti*e action 4o'# C'estions to as0 be5o#e 1histle6blo1in& !- Is this the only 1ayK

9- A. I #ea"yK

3- Do I ha*e the Jey e*i"enceK M'estions

$- ,hy a. I "oin& thisK

Chapte# $: Po1e#Point $-!?

Ethics & Social Responsibility

Ma0in& Ethical +'"&.ents: )tilita#ian App#oach

4oc'ses on beha*io#s an" thei# #es'lts/ not on the .oti*es 5o# s'ch actions O#&ani<ational Goal
P#i.a#y .ana&e#ial obli&ation is to .a(i.i<e sha#ehol"e#sG p#o5its an" thei# lon&6te#. inte#ests

E55iciency
Obli&ation is to .ini.i<e inp'ts an" .a(i.i<e o'tp'ts

Con5licts o5 Inte#est
Pe#sonal inte#ests a#e not to con5lict 1ith achie*e.ent o5 o#&ani<ational &oals
Chapte# $: Po1e#Point $-!@

Ethics & Social Responsibility

Ma0in& Ethical +'"&.ents: )tilita#ian App#oach

P#o5it .a(i.i<ation Co.petition bene5its society an" cons'.e#s Re1a#"s base" on abilities an" achie*e.ents

Co#e 8al'es
Sac#i5ice an" ha#" 1o#0

Chapte# $: Po1e#Point $-!B

Ethics & Social Responsibility

Decisions sho'l" be consistent 1ith 5'n"a.ental #i&hts an" p#i*ile&es :e-&-/ li5e/ 5#ee"o./ health/ an" p#i*acy;2i5e an" Sa5ety 4#ee"o. o5 conscience an" speech

Mo#al Ri&hts

T#'th5'lness

P#i*acy
Chapte# $: Po1e#Point $-3D :4i&'#e $-$;

Ethics & Social Responsibility

Snapshot
"f you are truly interested in teaching a grand and critically important concept like honesty, you must be willing to accept the awkward situations and inevitable flaring of human passions that are certain to occur 'owever, it!s unquestionably worth the effort # *om +sacker, (usiness Consultant and +uthor of ,andbo- Wisdom
Chapte# $: Po1e#Point $-3!

Ethics & Social Responsibility

Decisions an" beha*io# a#e e*al'ate" 1ith #e&a#" to ho1 eC'itably they "ist#ib'te bene5its an" costs a.on& in"i*i"'als an" &#o'p Dist#ib'ti*e +'stice P#inciple
4e'uires that individuals not be treated differently on the basis of arbitrarily defined characteristics 2ndividuals who are similar in relevant respects should be treated similarly 2ndividuals who differ in relevant respects should be treated differently in proportion to the differences among them
Chapte# $: Po1e#Point $-33

Ethics & Social Responsibility

4ai#ness P#inciple
ReC'i#es e.ployees to s'ppo#t the #'les o5 the o#&ani<ation as lon& as the o#&ani<ation is A'st :o# 5ai#; an" e.ployees ha*e *ol'nta#ily accepte" so.e bene5its o# oppo#t'nities in o#"e# to 5'#the# thei# o1n inte#ests Both the o#&ani<ation an" its e.ployees ha*e obli&ations an" both sho'l" accept thei# #esponsibilities P#oce"'#al A'stice: 5o#.al p#ocess 5o# in*esti&atin& &#ie*ances an" ta0in& #e.e"ial actions
Chapte# $: Po1e#Point $-3$

Ethics & Social Responsibility

Nat'#al D'ty P#inciple

ReC'i#es that "ecisions an" beha*io#s be base" on 'ni*e#sal p#inciples associate" 1ith bein& a #esponsible .e.be# o5 society
Chapte# $: Po1e#Point $-39

3elp others who are 8ot to harm or in need or eopardy& in ure another without e#cessive personal risk or loss )ni*e#sal

"'ties
%o support and comply with ust institutions 8ot to cause unnecessary suffering

Ethics & Social Responsibility

+'stice App#oach Mo#al Ri&hts App#oach )tilita#ian App#oach I"eal in Ethical Decision Ma0in&

Chapte# $: Po1e#Point $-3= :4i&'#e $-9;

Ethics & Social Responsibility

Sta0ehol"e# Social Responsibility

Mana&e#s an" othe# e.ployees ha*e obli&ations to i"enti5iable &#o'ps that a#e a55ecte" by o# can a55ect the achie*e.ent o5 an o#&ani<ationGs &oals

Rationale
Enli&htene" sel56inte#est So'n" in*est.ent In5e#ence a*oi"ance
Chapte# $: Po1e#Point $-3>

Ethics & Social Responsibility

Me"ia Political Action G#o'psN Acti*ists

Secon"a#y Sta0ehol"e#s Go*e#n.ents :Re&'lato#y A&encies; P#i.a#y Sta0ehol"e#s C'sto.e#s S'pplie#s The E.ployees O#&ani<ation Sha#ehol"e#s Non&o*e#n.ental O#&ani<ations )nions

Chapte# $: Po1e#Point $-3? :4i&'#e $-=;

Ethics & Social Responsibility

E(a.ples o5 Types o5 Sta0ehol"e# P#ess'#es

E.ployees
Pay an" bene5its Sa5ety an" health Ri&hts at 1o#0N&lobal labo# stan"a#"s

Sha#ehol"e#s
De.an"s 5o# e55iciencyNp#o5itability 8iability :s'stainability; G#o1th o5 in*est.ent
Chapte# $: Po1e#Point $-3@ :A"apte" 5#o. Table $-9;

Ethics & Social Responsibility

E(a.ples o5 Types o5 Sta0ehol"e# Sta0ehol"e# P#ess'#es

:contG";

C'sto.e#s
Co.petiti*e p#ices M'ality an" sa5e p#o"'cts Respect 5o# c'sto.e#Gs p#i*acy

S'pplie#s
Meet co..it.ents Repeat b'siness 4ai# t#a"e p#acticesNethical t#eat.ent
Chapte# $: Po1e#Point $-3B :A"apte" 5#o. Table $-9;

Ethics & Social Responsibility

S'stainable De*elop.ent
Con"'ctin& b'siness in a 1ay that p#otects the nat'#al en*i#on.ent 1hile .a0in& econo.ic p#o&#ess/ th's .eetin& the nee"s o5 the p#esent &ene#ation 1itho't co.p#o.isin& the ability o5 5't'#e &ene#ations to .eet thei# o1n nee"s

Chapte# $: Po1e#Point $-$D

Ethics & Social Responsibility

S'stainable De*elop.ent
A 4e1 Co.ponents o5 S'stainable De*elop.ent an" S'stainability
Inte&#ate" sol'tions to en*i#on.ental/ social an" econo.ic nee"s )sin& #eso'#ces .o#e e55iciently an" "eco'plin& &#o1th 5#o. en*i#on.ental "a.a&e Reco&ni<in& that "ecisions an" actions ta0en locally ha*e &lobal i.pacts Actin& no1 to a""#ess s'stainable "e*elop.ent conce#ns/ .any o5 1hich 1ill be &lobal an" lon&6te#. in nat'#e ,in61in61in sol'tions possible/ #athe# than t#a"e6o55s bet1een social/ en*i#on.ental an" econo.ic iss'es
Chapte# $: Po1e#Point $-$! :A"apte" 5#o. Table $-=;

Ethics & Social Responsibility

E*al'atin& Social Pe#5o#.ance

Disclos'#e o5 Social an" En*i#on.ental In5o#.ation Co..'nication MaAo# an" The.es En&a&e.ent 1ith 8a#io's P#oacti*e G#o'ps Mana&e.ent Beyon" Mini.'. ReC'i#e.ents

C#eatin& Sha#ehol"e# 8al'e 1ith Co#po#ate Responsibility

Chapte# $: Po1e#Point $-$3