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Managing A Socially Responsible Business

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					Making Ethical Decisions and Managing a Socially Responsible Business
Chapter 3

Chapter 3 Learning Goals
• What philosophies 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.)
•
•

How do 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 wrong

Learning 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 ethics

Individual Business Ethics
1. Utilitarianism
the consequences of an act determine whether it is right or wrong

2. Individual Rights
human rights, legal rights

3. Justice
what is fair according to societal standards

4. Stages of Ethical Development
preconventional, conventional, postconventional

Types of Justice
2 ways that people judge fairness:
Procedural justice
Is the process fair?

Distributive justice
Is the result fair?

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 example

How Organizations Influence Ethical Conduct
1. Recognizing Unethical Business Actions 2. Resolving Ethical Problems in Business 3. Ethics Training 4. Establishing a Formal Code of Ethics

1. Recognizing Unethical Business Actions

Types of Unethical Business Actions
1. Taking things that don‟t belong to you 2. Saying things you know aren‟t true 3. Giving or allowing false impressions 4. Buying influence or engaging in a conflict of interest 5. Hiding or divulging information 6. Taking unfair advantage 7. Committing improper personal behavior

1. Recognizing Unethical Business Actions

Types of Unethical Business Actions
8. Abusing another person 9. Permitting organizational abuse 10. Violating the rules 11. Condoning unethical actions

“Cyberslacking” on the Job
Personal use of the Internet at work is a concern for many employers Of the time employees spend online at work, 1/3 of it is spent „recreationally‟
How employees Shopping slack on the Internet: Sports
Entertainment Travel Source: Surfwatch Pornography Checknet/Newsweek, Nov. 29, 1999, p. 63 Investment
Other

General news

2. Resolving Ethical Problems in Business

Ways of Resolving Ethical Problems
1. Three-Questions Test
Is it legal? Is is balanced? How does it make me feel?

2. Front Page of the Newspaper Test 3. Leading by Example 4. Ethics Training

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 ethics

Learning 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 obligations

Pyramid of Business Responsibility
Be a good corporate citizen
Philanthropic Responsibility

Ethical Responsibility
Obey law

Do what is fair

Legal Responsibility
Economic Responsibility

Pursue profit

Two Dimensions of Social Responsibility:
1. Legality
Does the action break a law?

2. Responsibility
Is the action responsible? Does the action benefit society?

Discussion: Think of an example of each combination
Responsible
Legal
Follows laws and benefits society

Irresponsible
Follows laws, but harms society

Illegal

Benefits society, but breaks laws

Harms society and breaks laws

Examples
Responsible
Legal
Follows laws and benefits society charitable donation of profits Benefits society, but breaks laws tax evasion by a charitable organization

Irresponsible
Follows laws, but harms society
cigarette advertisements targeted at teens

Illegal

Harms society and breaks laws illegal disposal of waste material

Learning 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 work

Learning 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 owners

Responsibilities to Stakeholders
1. Responsibility to Employees 2. Responsibility to Customers 3. Responsibility to the General Public
– environmental protection – corporate philanthropy

4. Responsibilities to Investors

Discussion: What do You Expect from Companies?
When I am a(n):
Employee Customer

I expect:

Member of Society
Investor

Examples:
When I am a(n):
Employee Customer

I expect:
• job security, benefits, flexibility, compensation • safe products, response to complaints, honest advertising • charitable contribution, minimal environmental harm • profits, disclosure, ethical practices

Member of Society
Investor

Stopping Sweatshops
The US Department of Labor has formed an organization, No Sweat, to put an end to sweatshops 3 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” clothing
Source: No Sweat, www.dol.gov

Learning 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 violations

Trends in Business Ethics:
1. Strategic Giving
ties philanthropy to corporate mission

2. Social Contracts with Employees 3. Carrying Ethical Conduct Overseas

Strategic Giving Example
In 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 causes
Source: Fortune, Mar. 1, 1999, p. 35


				
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