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Management, 9/e
John R. Schermerhorn, Jr. Chapter 2: Management Ethics and Social Responsibility

Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc.

Planning Ahead Chapter 2 Study Questions

 What is ethical behavior?  How do ethical dilemmas complicate

the workplace?  How can high ethical standards be maintained?  What is social responsibility and governance?

Management 9/e - Chapter 2

Study Question 1: What is ethical behavior?

 Ethics
 

Code of moral principles. Set standards of good or bad or right or wrong in ones conduct. What is accepted as good and right in the context of the governing moral code.

 Ethical behavior


Management 9/e - Chapter 2

Study Question 1: What is ethical behavior?

 Law, values, and ethical behavior:

 Legal behavior is not necessarily ethical

behavior.
 Personal values help determine

individual ethical behavior.

Terminal values Instrumental values

Management 9/e - Chapter 2

Study Question 1: What is ethical behavior?

 Utilitarian view of ethics greatest good to

the greatest number of people.  Individualism view of ethics primary commitment is to ones long-term selfinterests.  Moral-rights view of ethics respects and protects the fundamental rights of all people.  Justice view of ethics fair and impartial treatment of people according to legal rules and standards.
Procedural justice Distributive justice Interactional justice
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Figure 2.1 Four views of ethical behavior.

Management 9/e - Chapter 2

Study Question 1: What is ethical behavior?

 Cultural issues in ethical behavior:

 Cultural relativism


Ethical behavior is always determined by cultural context. Behavior unacceptable in ones home environment should not be acceptable anywhere else. Considered by some to be ethical imperialism
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 Cultural universalism


Figure 2.2 The extremes of cultural relativism and ethical imperialism in international business ethics.

Source: Developed from Thomas Donaldson, Values in Tension: Ethics Away from Home, Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.

Management 9/e - Chapter 2

Study Question 1: What is ethical behavior?

How international businesses can respect core or universal values: Respect for human dignity Create culture that values employees, customers, and suppliers. Keep a safe workplace. Produce safe products and services. Respect for basic rights Protect rights of employees, customers, and communities. Avoid anything that threatening safety, health, education, and living standards. Be good citizens Support social institutions, including economic and educational systems. Work with local government and institutions to protect environment.
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Study Question 2: How do ethical dilemmas complicate the workplace?

 An ethical dilemma occurs when choices,

although having potential for personal and/or organizational benefit, may be considered unethical.  Ethical dilemmas include:
    

Discrimination Sexual harassment Conflicts of interest Customer confidence Organizational resources

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Study Question 2: How do ethical dilemmas complicate the workplace?

 Ethical behavior can be rationalized by

convincing yourself that:

   

Behavior is not really illegal. Behavior is really in everyones best interests. Nobody will ever find out. The organization will protect you.

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Study Question 2: How do ethical dilemmas complicate the workplace?

 Factors influencing ethical behavior include:
 The person
 Family influences, religious values, personal

standards, and personal needs.

 The organization
 Supervisory behavior, peer group norms and

behavior, and policy statements and written rules.

 The environment
 Government laws and regulations, societal norms

and values, and competitive climate in an industry.

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Figure 2.3 Factors influencing ethical managerial behaviorthe person, organization, and environment.

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Study Question 3: How can high ethical standards be maintained?

 Ethics training:  Structured programs that help participants to understand ethical aspects of decision making.  Helps people incorporate high ethical standards into daily life.  Helps people deal with ethical issues under pressure.

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Study Question 3: How can high ethical standards be maintained?

 Whistleblowers


Expose misdeeds of others to:

Preserve ethical standards  Protect against wasteful, harmful, or illegal acts


Laws protecting whistleblowers vary

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Study Question 3: How can high ethical standards be maintained?

 Barriers to whistleblowing include:  Strict chain of command  Strong work group identities  Ambiguous priorities  Organizational methods for

overcoming whistleblowing barriers:

 Ethics staff units who serve as ethics

advocates  Moral quality circles

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Study Question 3: How can high ethical standards be maintained?

 Ethical role models:

 Top managers serve as ethical role models.  All managers can influence the ethical behavior

of people who work for and with them.

 Excessive pressure can foster unethical

behavior.
 Managers should be realistic in setting

performance goals for others.

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Study Question 3: How can high ethical standards be maintained?

 Codes of ethics:


Formal statement of an organizations values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.

Areas often covered by codes of ethics:

    

Bribes and kickbacks Political contributions Honesty of books or records Customer/supplier relationships Confidentiality of corporate information

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Study Question 3: How can high ethical standards be maintained?

 Checklist for dealing with ethical dilemmas:
     

Recognize the ethical dilemma Get the facts Identify your options Test each option: Is it legal? Is it right? Is it beneficial? Decide which option to follow Double-check decision by asking spotlight questions:  How would I feel if my family found out about my decision?  How would I feel about this if my decision were in the local news? Take action
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Study Question 3: How can high ethical standards be maintained?

 Moral Management  How managers act and communicate as role models

Immoral manager  Amoral manager  Moral manager


Ethics mindfulness


Enriched ethical awareness that affects behavior

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Figure 2.4 How can high ethical standards be maintained?

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Study Question 4: What is social responsibility and governance?

 Corporate social responsibility and

governance:
 Looks at ethical issues on the

organization level.
 Obligates organizations to act in ways

that serve both its own interests and the interests of society at large.

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Study Question 4: What is social responsibility and governance?

 Organizational stakeholders
 Those persons, groups, and other organizations directly

affected by the behavior of the organization and holding a stake in its performance. Employees Customers Suppliers Owners Competitors Regulators Interest groups

 Typical organizational stakeholders

      

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Figure 2.5 Multiple stakeholders in the environment of an organization.

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Study Question 4: What is social responsibility and governance?

 Perspectives on social

responsibility:
 Classical view


Managements only responsibility is to maximize profits.

 Socioeconomic view


Management must be concerned for the broader social welfare, not just profits.
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Study Question 4: What is social responsibility and governance?

Arguments against social responsibility:

    

Arguments in favor of social responsibility:

  

Reduced business profits Higher business costs Dilution of business purpose Too much social power for business Lack of public accountability

Adds long-run profits Improved public image Avoids more government regulation Businesses have resources and ethical obligation

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Study Question 4: What is social responsibility and governance?

 Criteria for evaluating corporate

social performance:


Is the organizations
   

Economic responsibility met? Legal responsibility met? Ethical responsibility met? Discretionary responsibility met?

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Figure 2.6 Criteria for evaluating corporate social performance.

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Study Question 4: What is social responsibility and governance?

 Strategies for pursuing social

responsibility:
 Obstructionist meets economic

responsibilities.  Defensive meets economic and legal responsibilities.  Accommodative meets economic, legal, and ethical responsibilities.  Proactive meets economic, legal, ethical, and discretionary responsibilities.
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Figure 2.7 Four strategies of corporate social responsibilityfrom obstructionist to proactive behavior.

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Study Question 4: What is social responsibility and governance?

 How government influences

organizations:
 Common areas of government

regulation of business affairs:

Occupational safety and health Fair labor practices Consumer protection Environmental protection

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Study Question 4: What is social responsibility and governance?

 How organizations influence

governments:
    

Personal contacts and networks Public relations campaigns Lobbying Political action committees Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns
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Study Question 4: What is social responsibility and governance?

 Leadership beliefs that guide

socially responsible practices:

    

People Communities Natural environment Long term Reputation

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Figure 2.8 Centrality of ethics and social responsibility in leadership and the managerial role.

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Study Question 4: What is social responsibility and governance?

 Corporate governance:
 The oversight of the top management of an

organization by a board of directors.

 Corporate governance involves:

 Hiring, firing, and compensating the CEO.  Assessing strategy.  Verifying financial records.

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