Managing A Socially Responsible Business

Making Ethical Decisions and Managing a Socially Responsible BusinessChapter 3Chapter 3 Learning Goals•Whatphilosophies and concepts shape personal ethical standards, and what are the stages of ethical development?•How can managers influence organizational ethics?•What are the techniques for creating employee ethical awareness?•What is social responsibility?Chapter 3 Learning Goals (cont‟d.)•Howdo businesses meet their social responsibilities to various stakeholders?•What are the global and domestic trends in ethics and social responsibility?Ethics:a set of moral standards for judging whether something is right or wrongLearning Goal 1•What philosophies and concepts shape personal ethical standards, and what are the stages of ethical development?–Utilitarianism approach–Justice approach–Three stages of ethical development•Preconditional ethics•Conventional ethics•Postconventional ethicsIndividual Business Ethics1.Utilitarianismthe consequences of an act determine whether it is right or wrong2. Individual Rightshuman rights, legal rights3. Justicewhat is fair according to societal standards4. Stages of Ethical Developmentpreconventional, conventional, postconventionalTypes of Justice2 ways that people judge fairness:Procedural justiceIs the processfair?Distributive justiceIs the resultfair?Learning Goal 2•How can managers influence organizational ethics?–Recognize the categories of unethical business actions–When faced with ethical dilemmas, teach employees to use •The three-question test•Front page of the newspaper test–Management should lead by exampleHow Organizations Influence Ethical Conduct1.Recognizing Unethical Business Actions2. Resolving Ethical Problems in Business3. Ethics Training4. Establishing a Formal Code of EthicsTypes of Unethical Business Actions1.Taking things that don‟t belong to you2. Saying things you know aren‟t true3. Giving or allowing false impressions4. Buying influence or engaging in a conflict of interest5. Hiding or divulging information6. Taking unfair advantage7. Committing improper personal behavior1.Recognizing Unethical Business ActionsTypes of Unethical Business Actions8.Abusing another person9. Permitting organizational abuse10. Violating the rules11. Condoning unethical actions1.Recognizing Unethical Business Actions“Cyberslacking” on the JobPersonal use of the Internet at work is a concern for many employersOf the time employees spend online at work, 1/3 of it is spent „recreationally‟GeneralnewsInvestmentOtherShoppingSportsEntertainmentTravelPornographySource:Surfwatch Checknet/Newsweek, Nov. 29, 1999, p. 63How employees slack onthe Internet:Ways of Resolving Ethical Problems1.Three-Questions TestIs it legal?Is is balanced?How does it make me feel?2. Front Page of the Newspaper Test3. Leading by Example4. Ethics Training2.Resolving Ethical Problems in Business Learning Goal 3•What are the techniques for creating employee ethical awareness?–Ethics training •Analyzing ethical dilemmas•Discussing ethical dilemmas–Companies can heighten ethical awareness by •Creating codes of ethics•Distributing codes of ethicsLearning Goal 4•What is social responsibility?–Concern of businesses for the welfare of society as a whole–Obligations go beyond •Making a profit•What is required by law or union contract–Companies engage in •Illegal and irresponsible behavior,•Irresponsible but legal behavior, or•Legal and responsible behavior (vast majority)Social Responsibility:the concern of businesses for the welfare of society as a whole; includes concerns beyond legal and contractual obligationsPyramid of Business ResponsibilityEconomic ResponsibilityLegal ResponsibilityEthical ResponsibilityPhilanthropic ResponsibilityBe a good corporate citizenDo what is fairObey lawPursueprofitTwo Dimensionsof Social Responsibility:1. LegalityDoes the action break a law?2.ResponsibilityIs the action responsible?Does the action benefit society?Discussion:Think of an example of each combinationResponsibleIrresponsibleLegalIllegalFollows laws and benefits societyBenefits society,but breaks lawsFollows laws,but harms societyHarms societyand breaks lawsExamplesResponsibleIrresponsibleLegalIllegalFollows laws and benefits societycharitable donationof profitsBenefits society,but breaks lawstax evasion by a charitable organizationFollows laws,but harms societycigarette advertisements targeted at teensHarms societyand breaks lawsillegal disposalof waste materialLearning Goal 5•How do businesses meet their social responsibilities to various stakeholders?–Employees•Provide a clean, safe working environment•Build employees‟ self-worth through empowerment programs–Customers •Provide good, safe products and services–General public •Be good corporate citizens–Protect the environment–Provide a good place to workLearning Goal 5 (cont‟d.)•How do businesses meet their social responsibilities to various stakeholders?–Corporate philanthropy•Contributing cash•Donating goods and services•Supporting volunteer efforts of employees–Investors •Companies should try to earn a reasonable profit for the ownersResponsibilities to Stakeholders 1.Responsibility to Employees2.Responsibility to Customers3. Responsibility to the General Public–environmental protection–corporate philanthropy4. Responsibilities to InvestorsDiscussion:What do YouExpect from Companies? When I am a(n):EmployeeCustomerMember of SocietyInvestorI expect:Examples: When I am a(n):EmployeeCustomerMember of SocietyInvestorI expect:•job security, benefits, flexibility, compensation•safe products, response to complaints, honest advertising•charitable contribution, minimal environmental harm•profits, disclosure, ethical practicesStopping SweatshopsThe US Department of Labor has formed an organization, No Sweat, to put an end to sweatshops3 things consumers can do:–Ask retailers where and how garments are made–Ask retailers if they purposefully don‟t buy from sweatshops–Ask retailers if they support “No Sweat” clothingSource:No Sweat, www.dol.govLearning Goal 6•What are the global and domestic trends in ethics and social responsibility?–Corporate philanthropy •focusing on strategic giving –New social contract between employer and employee •Each assumes part of the responsibility for maintaining jobs•Employees find ways to add value to the business–Multinational corporations must assume a global set of ethics and responsibility•Understand local customs•Involve local stakeholders in decision making•Be sure suppliers are not involved in human rights violationsTrends in Business Ethics:1.Strategic Givingties philanthropy to corporate mission2. Social Contracts with Employees3. Carrying Ethical Conduct OverseasStrategic Giving ExampleIn 1999, Bill Gates, CEO of Microsoft, donated a total of $3.35 billion to –The Gates Learning Foundation,which provides computers & software to libraries in low-income areas–The William H. Gates Foundation, which grants money to aid world health & human services and to local Seattle causesSource:Fortune, Mar. 1, 1999, p. 35