jones global mgt ch04.ppt

8/10/2019 jones global mgt ch04.ppt

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Ethics andSocial

Responsibility

chapter four


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Learning Objectives

1. Explain the relationship between ethics andthe law

2. Differentiate between the claims of the

different stakeholder groups that are affectedby managers and their companies actions

3. Describe four rules that can be used to help

companies and their managers act in ethicalways

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Learning Objectives

4. Discuss why it is important for managers to

behave ethically

5. Identify the four main sources of managerial

ethics

6. Distinguish between the four main

approaches toward social responsibility that

a company can take

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The Nature of Ethics

Ethical Dilemma

quandary people find themselves in when they

have to decide if they should act in a way that

might help another person even though doing somight go against their own self-interest

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The Nature of Ethics

Ethics

The inner-guiding moral

principles, values, and

beliefs that people useto analyze or interpret

a situation and then

decide what is the

right or appropriateway to behave

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Dealing with Ethical Issues

There are no absolute or indisputable rules or

principles that can be developed to decide if

an action is ethical or unethical

Neither laws nor ethics are fixed principles

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Stakeholders and Ethics

Stakeholders

The people and groups that supply a company

with its productive resources and so have a claim

on and stake in the company.

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Types of Company Stakeholders

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Figure 4.1


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Stockholders

Want to ensure that managers are behaving

ethically and not risking investors capital by

engaging in actions that could hurt the

companys reputation

Want to maximize their return on investment

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Managers

Responsible for using a companys financial

capital and human resources to increase its

performance

Have the right to expect a good return or

reward by investing their human capital to

improve a companys performance

Frequently juggle multiple interests

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Managers

In the 2000s, it has been easy for top

managers to find ways to ruthlessly pursue

their self-interest at the expense of

stockholders and employees because laws and

regulations are not strong enough to force

them to behave ethically

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Employees

Expect to receive rewards consistent with

their performance

Companies can act ethically toward

employees by creating an occupational

structure that fairly and equitably rewards

employees for their contributions

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Suppliers and Distributors

Suppliers expect to be

paid fairly and

promptly for their

inputs

Distributors expect to

receive quality

products at agreed-

upon prices

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Some Principles from the Gaps Code

of Vendor Conduct

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Table 4.1


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Customers

Most critical stakeholder

Company must work to increase efficiency and

effectiveness in

order to create

loyal customers

and attract new

ones

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Whole Foods Stakeholder Approach to

Ethical Business

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Figure 4.2


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Community, Society, and Nation

Community

Physical locations like towns or cities in which

companies are located

A community provides a company with the

physical and social infrastructure that allows it to

operate

A company contributes to the economy of thetown or region through salaries, wages, and taxes

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ExampleHouston Non-Profits

Many charitable organizations in the Houston,

TX area, location of Enrons headquarters,

were adversely affected by its demise

Many were dependent on donations from

Enron

The arts community was especially hit hard

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http://www.nptimes.com/Apr06/news-040106_1.html


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Ethical Decision Making

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Figure 4.3


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Practical Decision Model

1. Does my decision fall within the acceptable

standards that apply in business today?

2. Am I willing to see the decision communicated

to all people and groups affected by it?

3. Would the people with whom I have a significant

personal relationship approve of the decision?

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Why should managers behave

ethically?

The relentless pursuit of self-interest can lead

to a collective disaster when one or more

people start to profit from being unethical

because this encourages other people to act inthe same way

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Some Effects of

Ethical/Unethical Behavior

4-22Figure 4.4


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Trust and Reputation

Trust

willingness of one

person or group to

have faith orconfidence in the

goodwill of another

person

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Trust and Reputation

Reputation

esteem or high repute that individuals or

organizations gain when they behave ethically

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Sources of Ethics

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Figure 4.5


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Societal Ethics

Societal Ethics

Standards that govern how members of a society

should deal with one another in matters involving

issues such as fairness, justice, poverty, and therights of the individual

People behave ethically because they have

internalized certain values, beliefs, and norms

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Occupational Ethics

Occupational Ethics

Standards that govern how members of a

profession, trade, or craft should conduct

themselves when performing work-relatedactivities

Medical & legal ethics

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Individual Ethics

Individual Ethics

Personal standards and values that determine

how people view their responsibilities to other

people and groups

How they should act in situations when their own

self-interests are at stake

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Organizational Ethics

Organizational Ethics

Guiding practices and beliefs through which a

particular company and its managers view their

responsibility toward their stakeholdersTop managers play

a crucial role in

determining a

companys ethics

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Social Responsibility

Social Responsibility

The way a companys managers and employees

view their duty or obligation to make decisions

that protect, enhance, and promote the welfareand well-being of stakeholders and society as a

whole

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Approaches to Social Responsibility

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Figure 4-6


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Obstructionist approach

Companies choose not to behave in a social

responsible way and behave unethically and

illegality

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Defensive approach

companies and managers stay within the law and

abide strictly with legal requirements but make

no attempt to exercise social responsibility

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Accommodative approach

Companies behave legally and ethically and try to

balance the interests of different stakeholders

against one another so that the claims ofstockholders are seen in relation to the claims of

other stakeholders

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Proactive approach

Companies actively embrace socially responsible

behavior, going out of their way to learn about

the needs of different stakeholder groups andutilizing organizational resources to promote the

interests of all stakeholders

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Why Be Socially Responsible?

1. Demonstrating its social responsibility helps

a company build a good reputation

2. If all companies in a society act socially, the

quality of life as a whole increases

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Role of Organizational Culture

Ethical values and norms help organizational

members:

Resist self-interested action

Realize they are part of something bigger than

themselves

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Ethics Ombudsperson

Responsible for communicating ethical

standards to all employees

Designing systems to monitor employees

conformity to those standards

Teaching managers and employees at all levels

of the organization how to appropriately

respond to ethical dilemmas

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Video Case Whose Life is It


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Video Case: Whose Life is It

Anyway?

Do you think it is ethical for Scotts or other

companies to fire employees who smoke,

even if they only smoke outside of work?

In implementing Scotts health initiatives,

does Hagedorn put the interests of one group

of stakeholders above those of another?

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