Description
THIS PPT DISCIRBES THE ETHICS AND RESPONSBILTIES OF ANY ORG.
Chapter 3 SOCIAL RESPONSIBILITY AND MANAGERIAL ETHICS
5-1
Learning Objectives
You should learn to: – Explain the classical and socioeconomic views of social responsibility – List the arguments for and against business’s being socially responsible – Differentiate among social obligation, social responsiveness, and social responsibility – Explain the relationship between corporate social responsibility and economic performance
5-2
Learning Objectives (cont.)
You should learn to: – Differentiate among the four views of ethics – Identify the factors that affect ethical behavior – Discuss various ways organizations can improve the ethical behavior of their employees
5-3
What Is Social Responsibility?
Two Opposing Views of Social Responsibility – Classical view - management’s only social responsibility is to maximize profits • Milton Friedman - managers’ primary responsibility is to serve the interests of the stockholders – doing “social good” adds to the cost of doing business – costs have to be passed on to consumers
5-4
What is Social Responsibility (cont.)
Two Opposing Views of Social Responsibility (cont.)
– Socioeconomic view - businesses are not just economic institutions • management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare • businesses have responsibility to a society that: – endorses their creation through laws and regulations – supports them by buying their products/services • more organizations around the world have increased their social responsibility
5-5
What Is Social Responsibility (cont.)
From Obligations to Responsiveness – social responsibility - a business’s obligation to pursue long-term goals that help society • goes beyond legal and economic requirements • views business as a moral agent – social obligation - obligation of a business to meet its economic and legal responsibilities • pursues social goals only when they contribute to economic goals – social responsiveness - capacity of a firm to adapt to changing societal conditions • tries to satisfy social needs in line with social norms
5-6
Levels Of Social Involvement
Social Responsibility
Social Responsiveness
Social Obligation
5-7
Social Responsibility versus Social Responsiveness
Social Responsibility Major consideration Focus Emphasis Decision framework Ethical Ends Obligation Long term Social Responsiveness Pragmatic Means Responses Medium and short term
5-8
Social Responsibility And Economic Performance Most Research Shows a Positive Relationship
– methodological questions associated with trying to measure “social responsibility” and “economic performance” – issue of causation
Evaluation of Socially Conscious Mutual Stock Funds
– social screening - applying social criteria to investment • these funds often outperform the market average
Conclusion
– a company’s socially responsible actions do not hurt its long-term economic performance
5-9
Obligation of different business groups Responsibilities towards shareholders
– Committing funds in the best possible manner. – Ensuring a fair rate of return – Fair & honest reporting of business operation from time to time. – to ensure safety of investment. – To offer reasonable appreciation of capital.
5-10
Obligation of different business groups Responsibilities towards employees.
– Ensure good working condition. – Proper arrangement for the safety of the workers. – Providing housing, educational, recreational, transport and other facilities for workers and their families. – Not to interferes in workers organization. – Not resort to lockout or closure of the plant. – Disburse pay in time. – Protect women employees for sexual harassment. – Pay fair day’s wages for a fair day’s work.
5-11 © Prentice Hall, 2002 5 -11
Obligation of different business groups Responsibilities towards employees.
– – – – – – Promote & encourage workers participation. Not to make unauthorized deduction from pay. Make adequate provision for social security of workers. Pay compensation. Adhere to the arrangement and code of conduct. Invite and honors' workers suggestion.
5-12 © Prentice Hall, 2002 5 -12
Obligation of different business groups Responsibilities towards governments.
– – – – To follow fair trade policies and practices. To pay taxes to the government honestly. To obey the laws. To discourage unhealthy practices.
5-13 © Prentice Hall, 2002 5 -13
Obligation of different business groups Responsibilities towards society
– Elimination of poverty and provision of quality health care. – Preservation of the environment by reducing the level of pollution. – Providing sufficient no of jobs and career opportunities and facilities for all members of society. – Improving the physical environment and developing human resources.
5-14 © Prentice Hall, 2002 5 -14
Obligation of different business groups Responsibilities towards customers.
– Providing goods of quality at reasonable price. – Avoiding deceitful & false, highly exaggerated advertisements. – Management should not indulge in anti social activities. – To provide products and services. – To ensure regular and adequate supply of goods. – To provide goods of proper quality. – To serve as a friend an guide by providing prompt and courteous services. – To ensure a fairly wide distribution of products among all sections of consumers. 5-15
© Prentice Hall, 2002 5 -15
Obligation of different business groups Responsibilities towards creditors and suppliers.
– To provide accurate information regarding the financial health of the organization. – To ensure a reasonable price for the articles supplied and make prompt repayments. – To prompt a healthy atmosphere where creditors, suppliers and interest groups are treated as partners in a cooperative endeavor.
5-16 © Prentice Hall, 2002 5 -16
Obligation of different business groups Responsibilities towards community.
– To develop constructive relationship with those in the community. – Provide safe, livable conditions with good housing and efficient transportation. – To avoid extravagant living standards and vulgar display of wealth. – To promote social institutions – To help wreaker sections of the society and backward regions of the country. – To participate in community activities and promote community welfare.
5-17 © Prentice Hall, 2002 5 -17
Managerial Ethics
Ethics – rules and principles that define right and wrong conduct Four Views of Ethics – utilitarian view - ethical decisions are made on the basis of their outcomes or consequences • offers the greatest good for the greatest number • encourages efficiency and productivity • may ignore the rights of some stakeholders • most businesspeople subscribe to this view
© Prentice Hall, 2002 5-18
Managerial Ethics (cont.)
Four Views of Ethics (cont.) – rights view - respects and protects individual liberties and privileges • may present obstacles to high productivity and efficiency – theory of justice view - managers impose and enforce rules fairly and impartially • protect the interests of stakeholders who may be underrepresented or lack power • encourages a sense of entitlement that might make employees reduce risk taking, innovation, and productivity
© Prentice Hall, 2002 5-19
Managerial Ethics (cont.)
Four Views of Ethics (cont.) – integrative social contracts theory - decisions should be based on empirical and normative factors • based on integration of two “contracts’ – general social contract - allows businesses to operate » defines the acceptable ground rules – specific contract - addresses acceptable ways of behaving in a particular community
© Prentice Hall, 2002 5-20
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics
– Stage of moral development - at each successive stage, moral judgment is less dependent on outside influences • people proceed through the levels sequentially • no guarantee of continued moral development • majority of adults at Stage 4 – preconventional level - choice between right and wrong is based on personal consequences – conventional level - moral values reside in living up to others’ expectations – principled level - individual tries to define moral principles apart from the authority of society
© Prentice Hall, 2002 5-21
Stages of Moral Development
© Prentice Hall, 2002
5-22
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics (cont.)
– Individual characteristics • values - basic convictions about right and wrong • ego strength - strength of a person’s convictions • locus of control - degree to which people believe that they control their own fate – internals - believe that they control their own destinies – externals - believe that what happens to them is due to luck or chance
© Prentice Hall, 2002 5-23
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics (cont.)
– Structural variables • design of organization affects ethical behavior – designs that minimize ambiguity and uncertainty more likely to encourage ethical behavior • rules and regulations – written codes of ethics • behavior of superiors • performance appraisal systems that focus on means as well as ends • reward systems that punish failure to achieve ends is likely to compromise ethics
© Prentice Hall, 2002 5-24
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics (cont.) – Organizational culture • strong culture more influential than a weak culture • high ethical standards result from a culture that is high in risk tolerance, control, and conflict tolerance – Issue intensity • importance of an ethical issue • more intense issues prompt greater ethical behavior
© Prentice Hall, 2002 5-25
Determinants of Issue Intensity
© Prentice Hall, 2002
5-26
Factors That Affect Ethical And Unethical Behavior
Individual Characteristics Issue Intensity
Ethical Dilemma
Stage of Moral Development
Moderators
Ethical/Unethical Behavior
Structural Variables
Organizational Culture
© Prentice Hall, 2002
5-27
Managerial Ethics (cont.)
Ethics in an International Context – social and cultural differences determine ethical and unethical behavior – Foreign Corrupt Practices Act - makes it illegal for U.S. firms to knowingly corrupt foreign officials – global firms must clarify their ethical guidelines – Global Compact - United Nations document containing principles for doing business globally in the areas of human rights, labor, and environment
© Prentice Hall, 2002 5-28
Managerial Ethics (cont.)
Toward Improving Ethical Behavior – comprehensive ethics programs have the potential to improve an organization’s ethical climate • no guarantees that even well-designed ethics programs will lead to the desired outcome – Employee selection - eliminate ethically questionable applicants – Codes of ethics - formal statement of an organization’s primary values and ethical rules • shouldn’t be developed and applied in isolation • must consistently reaffirm the importance of the code • must consistently discipline those who break the code
© Prentice Hall, 2002 5-29
Clusters of Variables Found in 83 Corporate Codes of Business Ethics
© Prentice Hall, 2002
5-30
Managerial Ethics (cont.)
Toward Improving Ethical Behavior (cont.) – Top management’s leadership - what they do is far more important than what they say • set the cultural tone by their reward and punishment practices – Job goals - goals should be clear and realistic • reduce ambiguity – Performance appraisal - must focus on ethical standards – Ethics training - an increasing number of organizations use training to encourage ethical behavior • reinforce the organization’s standards of conduct • clarify acceptable and unacceptable practices
© Prentice Hall, 2002 5-31
Managerial Ethics (cont.)
Toward Improving Ethical Behavior (cont.) – Formal protective mechanisms - protect employees who face ethical dilemmas • can do what is right without fear of retribution • ethical counselors - act as a sounding board and provide guidance • ethics officers - design, direct, and modify the organization’s ethics program
© Prentice Hall, 2002
5-32
doc_626356198.ppt
THIS PPT DISCIRBES THE ETHICS AND RESPONSBILTIES OF ANY ORG.
Chapter 3 SOCIAL RESPONSIBILITY AND MANAGERIAL ETHICS
5-1
Learning Objectives
You should learn to: – Explain the classical and socioeconomic views of social responsibility – List the arguments for and against business’s being socially responsible – Differentiate among social obligation, social responsiveness, and social responsibility – Explain the relationship between corporate social responsibility and economic performance
5-2
Learning Objectives (cont.)
You should learn to: – Differentiate among the four views of ethics – Identify the factors that affect ethical behavior – Discuss various ways organizations can improve the ethical behavior of their employees
5-3
What Is Social Responsibility?
Two Opposing Views of Social Responsibility – Classical view - management’s only social responsibility is to maximize profits • Milton Friedman - managers’ primary responsibility is to serve the interests of the stockholders – doing “social good” adds to the cost of doing business – costs have to be passed on to consumers
5-4
What is Social Responsibility (cont.)
Two Opposing Views of Social Responsibility (cont.)
– Socioeconomic view - businesses are not just economic institutions • management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare • businesses have responsibility to a society that: – endorses their creation through laws and regulations – supports them by buying their products/services • more organizations around the world have increased their social responsibility
5-5
What Is Social Responsibility (cont.)
From Obligations to Responsiveness – social responsibility - a business’s obligation to pursue long-term goals that help society • goes beyond legal and economic requirements • views business as a moral agent – social obligation - obligation of a business to meet its economic and legal responsibilities • pursues social goals only when they contribute to economic goals – social responsiveness - capacity of a firm to adapt to changing societal conditions • tries to satisfy social needs in line with social norms
5-6
Levels Of Social Involvement
Social Responsibility
Social Responsiveness
Social Obligation
5-7
Social Responsibility versus Social Responsiveness
Social Responsibility Major consideration Focus Emphasis Decision framework Ethical Ends Obligation Long term Social Responsiveness Pragmatic Means Responses Medium and short term
5-8
Social Responsibility And Economic Performance Most Research Shows a Positive Relationship
– methodological questions associated with trying to measure “social responsibility” and “economic performance” – issue of causation
Evaluation of Socially Conscious Mutual Stock Funds
– social screening - applying social criteria to investment • these funds often outperform the market average
Conclusion
– a company’s socially responsible actions do not hurt its long-term economic performance
5-9
Obligation of different business groups Responsibilities towards shareholders
– Committing funds in the best possible manner. – Ensuring a fair rate of return – Fair & honest reporting of business operation from time to time. – to ensure safety of investment. – To offer reasonable appreciation of capital.
5-10
Obligation of different business groups Responsibilities towards employees.
– Ensure good working condition. – Proper arrangement for the safety of the workers. – Providing housing, educational, recreational, transport and other facilities for workers and their families. – Not to interferes in workers organization. – Not resort to lockout or closure of the plant. – Disburse pay in time. – Protect women employees for sexual harassment. – Pay fair day’s wages for a fair day’s work.
5-11 © Prentice Hall, 2002 5 -11
Obligation of different business groups Responsibilities towards employees.
– – – – – – Promote & encourage workers participation. Not to make unauthorized deduction from pay. Make adequate provision for social security of workers. Pay compensation. Adhere to the arrangement and code of conduct. Invite and honors' workers suggestion.
5-12 © Prentice Hall, 2002 5 -12
Obligation of different business groups Responsibilities towards governments.
– – – – To follow fair trade policies and practices. To pay taxes to the government honestly. To obey the laws. To discourage unhealthy practices.
5-13 © Prentice Hall, 2002 5 -13
Obligation of different business groups Responsibilities towards society
– Elimination of poverty and provision of quality health care. – Preservation of the environment by reducing the level of pollution. – Providing sufficient no of jobs and career opportunities and facilities for all members of society. – Improving the physical environment and developing human resources.
5-14 © Prentice Hall, 2002 5 -14
Obligation of different business groups Responsibilities towards customers.
– Providing goods of quality at reasonable price. – Avoiding deceitful & false, highly exaggerated advertisements. – Management should not indulge in anti social activities. – To provide products and services. – To ensure regular and adequate supply of goods. – To provide goods of proper quality. – To serve as a friend an guide by providing prompt and courteous services. – To ensure a fairly wide distribution of products among all sections of consumers. 5-15
© Prentice Hall, 2002 5 -15
Obligation of different business groups Responsibilities towards creditors and suppliers.
– To provide accurate information regarding the financial health of the organization. – To ensure a reasonable price for the articles supplied and make prompt repayments. – To prompt a healthy atmosphere where creditors, suppliers and interest groups are treated as partners in a cooperative endeavor.
5-16 © Prentice Hall, 2002 5 -16
Obligation of different business groups Responsibilities towards community.
– To develop constructive relationship with those in the community. – Provide safe, livable conditions with good housing and efficient transportation. – To avoid extravagant living standards and vulgar display of wealth. – To promote social institutions – To help wreaker sections of the society and backward regions of the country. – To participate in community activities and promote community welfare.
5-17 © Prentice Hall, 2002 5 -17
Managerial Ethics
Ethics – rules and principles that define right and wrong conduct Four Views of Ethics – utilitarian view - ethical decisions are made on the basis of their outcomes or consequences • offers the greatest good for the greatest number • encourages efficiency and productivity • may ignore the rights of some stakeholders • most businesspeople subscribe to this view
© Prentice Hall, 2002 5-18
Managerial Ethics (cont.)
Four Views of Ethics (cont.) – rights view - respects and protects individual liberties and privileges • may present obstacles to high productivity and efficiency – theory of justice view - managers impose and enforce rules fairly and impartially • protect the interests of stakeholders who may be underrepresented or lack power • encourages a sense of entitlement that might make employees reduce risk taking, innovation, and productivity
© Prentice Hall, 2002 5-19
Managerial Ethics (cont.)
Four Views of Ethics (cont.) – integrative social contracts theory - decisions should be based on empirical and normative factors • based on integration of two “contracts’ – general social contract - allows businesses to operate » defines the acceptable ground rules – specific contract - addresses acceptable ways of behaving in a particular community
© Prentice Hall, 2002 5-20
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics
– Stage of moral development - at each successive stage, moral judgment is less dependent on outside influences • people proceed through the levels sequentially • no guarantee of continued moral development • majority of adults at Stage 4 – preconventional level - choice between right and wrong is based on personal consequences – conventional level - moral values reside in living up to others’ expectations – principled level - individual tries to define moral principles apart from the authority of society
© Prentice Hall, 2002 5-21
Stages of Moral Development
© Prentice Hall, 2002
5-22
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics (cont.)
– Individual characteristics • values - basic convictions about right and wrong • ego strength - strength of a person’s convictions • locus of control - degree to which people believe that they control their own fate – internals - believe that they control their own destinies – externals - believe that what happens to them is due to luck or chance
© Prentice Hall, 2002 5-23
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics (cont.)
– Structural variables • design of organization affects ethical behavior – designs that minimize ambiguity and uncertainty more likely to encourage ethical behavior • rules and regulations – written codes of ethics • behavior of superiors • performance appraisal systems that focus on means as well as ends • reward systems that punish failure to achieve ends is likely to compromise ethics
© Prentice Hall, 2002 5-24
Managerial Ethics (cont.)
Factors That Affect Managerial Ethics (cont.) – Organizational culture • strong culture more influential than a weak culture • high ethical standards result from a culture that is high in risk tolerance, control, and conflict tolerance – Issue intensity • importance of an ethical issue • more intense issues prompt greater ethical behavior
© Prentice Hall, 2002 5-25
Determinants of Issue Intensity
© Prentice Hall, 2002
5-26
Factors That Affect Ethical And Unethical Behavior
Individual Characteristics Issue Intensity
Ethical Dilemma
Stage of Moral Development
Moderators
Ethical/Unethical Behavior
Structural Variables
Organizational Culture
© Prentice Hall, 2002
5-27
Managerial Ethics (cont.)
Ethics in an International Context – social and cultural differences determine ethical and unethical behavior – Foreign Corrupt Practices Act - makes it illegal for U.S. firms to knowingly corrupt foreign officials – global firms must clarify their ethical guidelines – Global Compact - United Nations document containing principles for doing business globally in the areas of human rights, labor, and environment
© Prentice Hall, 2002 5-28
Managerial Ethics (cont.)
Toward Improving Ethical Behavior – comprehensive ethics programs have the potential to improve an organization’s ethical climate • no guarantees that even well-designed ethics programs will lead to the desired outcome – Employee selection - eliminate ethically questionable applicants – Codes of ethics - formal statement of an organization’s primary values and ethical rules • shouldn’t be developed and applied in isolation • must consistently reaffirm the importance of the code • must consistently discipline those who break the code
© Prentice Hall, 2002 5-29
Clusters of Variables Found in 83 Corporate Codes of Business Ethics
© Prentice Hall, 2002
5-30
Managerial Ethics (cont.)
Toward Improving Ethical Behavior (cont.) – Top management’s leadership - what they do is far more important than what they say • set the cultural tone by their reward and punishment practices – Job goals - goals should be clear and realistic • reduce ambiguity – Performance appraisal - must focus on ethical standards – Ethics training - an increasing number of organizations use training to encourage ethical behavior • reinforce the organization’s standards of conduct • clarify acceptable and unacceptable practices
© Prentice Hall, 2002 5-31
Managerial Ethics (cont.)
Toward Improving Ethical Behavior (cont.) – Formal protective mechanisms - protect employees who face ethical dilemmas • can do what is right without fear of retribution • ethical counselors - act as a sounding board and provide guidance • ethics officers - design, direct, and modify the organization’s ethics program
© Prentice Hall, 2002
5-32
doc_626356198.ppt