Part Two: The Culture of

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Part Two: The Culture of
Management

Chapter 3:
Managing Social
Responsibility and Ethics

Chapter 4:
Managing
Employee Diversity

Chapter 5:
Managing
Organizational Culture and
Change

Chapter 6:

Entrepreneurship

Chapter 3

Managing Social
Responsibility and Ethics

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Management Challenges

After reading this chapter, you should be able to:


Apply the four key ethical criteria that
managers and employees are likely to use
when making business decisions.


Understand why businesses establish codes
of ethics as a way of guiding the conduct of
employees faced with ethical dilemmas.


Recognize how to encourage ethical
behavior in business.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Management Challenges
(continued)


Make ethical decisions in morally challenging
business situations.


Recognize the significance of corporate
social responsibility.


Value stakeholders and understand their
influence on a company’s priorities and
goals.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Ethics and social
responsibility should
be high
-
priority
concerns of all
members of an
organization, not just
managers and
executives.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

What are business ethics?


Ethics

are principles that explain what is
good and right and what is bad and wrong
and that prescribe a code of behavior based
on these definitions.


Business ethics

provide standards or
guidelines for the conduct and decision
making of employees and managers.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

What are business ethics?
(continued)


In the absence of a code of ethics,


There is usually a lack of consensus about
appropriate ethical behavior; and


Different people use different ethical criteria
to determine whether a practice or behavior is
ethical or unethical.


Business ethics are not the same things as
laws.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

What are business ethics?
(continued)


People operate under different ethical value
systems depending on their:


Personal experiences


Religious background


Education


Family background

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Management skills needed to make ethical decisions
and deal with concerns of stakeholders:


Ethical decision making skills


Ability to see beyond own self
-
interest


Skills at analyzing stakeholder concerns


Ability to be more proactive in dealing with
stakeholder issues


Ability to identify stakeholders, how they are
affected by company policies, how they have
been treated in the past, and how they can
affect your ability to pursue business goals

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Criteria for ethical decision making:


Utilitarianism


A means of making decisions based on what
is good for the greatest number of people.


Individualism


The degree to which a society values
individual self
-
interest over group needs and
goals.


Individual self
-
interest should be promoted as
long as it does not harm others.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Criteria for ethical decision making:
(continued)


Rights approach


A means of making decisions based on the
belief that each person has fundamental
human rights that should be respected and
protected.


Justice approach


An approach to decision making based on
treating all people fairly and consistently when
making business decisions.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Code of Ethics

Corporate Credos

Ethical Policy
Statements

A company needs to ensure agreement about the relevant
criteria on which to judge the ethics of a business decision so
that people do not base decisions on personal value systems.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Numerous companies have adopted ethical policy
statements that inform employees of acceptable
standards of conduct:


St. Paul Companies


Employees may accept gifts of inexpensive
pens or appointment diaries, but not liquor,
lavish entertainment, travel, or clothing.


Eli Lilly and Company


Employees may not conduct business with a
company with which they or their relatives are
associated, unless Eli Lily has given specific
approval and authorization.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Company examples
(continued)


General Dynamics Corporation


Employees may not use or share inside
information (that is not available to the
general public) for personal gain.


J.D. Edwards and Company


Profanity and racial and sexual slurs are not
tolerated.


Language should convey a loving, caring, and
sensitive attitude toward other people.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Managing Ethics

Ethics Training

Ethical Structures

Whistleblower
Policies

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Whistleblower policies should include the
following key features:


The policy encourages reporting unethical conduct.


Meaningful procedure to deal fairly with reported
violations.


Those who report violations are protected from
retaliation.


Alternative reporting procedures.


Anonymous reporting to an ethics officer/committee.


Feedback to employees on ethics violations.


Top management support and involvement.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Eight steps to sound ethical decision making
in business:

1.
Gather the facts.

2.
Define the ethical
issues.

3.
Identify the affected
parties.

4.
Identify the
consequences.

5.
Identify your
obligations.

6.
Consider your
character and
integrity.

7.
Think creatively
about potential
actions.

8.
Check your gut
feelings.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Should firms be socially responsible?


Do corporations have a responsibility to
conduct their affairs ethically?


Should corporations be judged by the same
standards as individuals?


Should a business be concerned with more
than the pursuit of profits for its
shareholders?

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Benefits of social responsibility:


Pursuit of social responsibility as a goal may
ultimately lead to survival of the organization.


Narrow focus on producing goods and
services for profit may impair company
performance in the long run.


Corporate responsibility is related to higher
financial performance and the ability to
recruit better quality job applicants.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Disadvantages of social responsibility:


Socially responsible firms are likely to be less
efficient and may be driven out of business
by more efficient competitors willing to
single
-
mindedly pursue profits.


Firms that give profits are more likely to fail
and become a detriment to society because
jobs and stockholders’ investments are lost.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Organizational Stakeholders

Owners

Employees

Governments

Customers

Community

Competitors

Social Activist
Groups

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Strategies for Managing Stakeholders

Confrontation

Damage Control

Accommodation

Proactive
Approach

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Applications of Management Perspectives:

For the Manager


It is critical for a manager to be seen as an ethical
person.


Managers are role models for other employees
and are held to a higher standard of personal
conduct.


Managers are responsible for creating an
environment that supports ethical behavior and
discourages unethical behavior.


A manager should set goals for ethical conduct.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Applications of Management Perspectives:

For Managing Teams


Teams must place a high priority on behaving
ethically.


When teams or groups tolerate unethical conduct,
it can be very difficult to extinguish this norm.


Tolerance of unethical activities can lead to more
serious breaches of conduct that can damage the
reputation of the entire team.

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Copyright © 2002 by The McGraw
-
Hill Companies, Inc. All rights reserved.

Applications of Management Perspectives:

For Individuals


Front
-
page ethical test.


How would I feel if my decision became a headline in
a local newspaper?


Would I feel comfortable describing my actions or
decision to a customer or stockholder?


Golden rule ethical test.


Would I be willing to be treated in the same manner?


Personal gain test.


Is an opportunity for personal gain clouding my
judgment?