chap004,jones,6th edition, final

8/8/2019 Chap004,Jones,6th Edition, FINAL

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Chapter Four

Ethics and Social

Responsibility

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin


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Learning Objectives

1. Explain the relationship between ethicsand the law

2. Differentiate between the claims of thedifferent stakeholder groups that areaffected by managers and theircompanies actions

3. Describe four rules that can be used tohelp companies and their managers actin ethical ways


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Learning Objectives

4. Discuss why it is important for

managers to behave ethically

5. Identify the four main sources ofmanagerial ethics

6. Distinguish between the four main

approaches toward social responsibility

that a company can take


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The Nature of Ethics

Ethical Dilemma

quandary people find themselves in when they

have to decide if they should act in a way that

might help another person even though doingso might go against their own self-interest


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The Nature of Ethics

Ethics

The inner-guiding moral principles, values, and

beliefs that people use to analyze or interpret

a situation and then

decide what is the

right or appropriate

way to behave


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Dealing with Ethical Issues

There are no absolute or indisputable rules

or principles that can be developed to

decide if an action is ethical or unethical


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Stakeholders and Ethics

Stakeholders

people and groups affected by the way a

company and its managers behave

supply a company with its productive

resources and have a claim on its resources


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Question?

Who has a claim on a companys

resources?

A. EmployeesB. Customers

C. Suppliers

D. Stakeholders


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Types of Company Stakeholders

Figure 4.1


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Stockholders

Want to ensure that managers are

behaving ethically and not risking investors

capital by engaging in actions that couldhurt the companys reputation

Want to maximize their return on

investment


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Managers

Responsible for using a companysfinancial capital and human resources toincrease its performance

Have the right to expect a good return orreward by investing their human capital toimprove a companys performance

Frequently juggle multiple interests


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Employees

Companies can act ethically toward

employees by creating an occupational

structure that fairly and equitably rewardsemployees for their contributions


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Suppliers and Distributors

Suppliers expect to be paid fairly and

promptly for their inputs

Distributors expect to receive quality

products at agreed-upon prices


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Customers

Most critical stakeholder

Company must work to increase efficiency

andeffectiveness in

order to create

loyal customers

and attract new

ones


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Whole Foods Approach to Ethical Business

Figure 4.2


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Community, Society, and Nation

Community

Physical locations like towns or cities in which

companies are locatedA community provides a company with the

physical and social infrastructure that allows it

to operate

A company contributes to the economy ofthe town or region through salaries,

wages, and taxes


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Ethical Decision Making

Figure 4.3


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Question?

Which ethical decision rule produces the

greatest good for the greatest number?

A. Utilitarian RuleB. Moral Rights Rule

C. Justice Rule

D. Practical Rule


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Practical Decision Model

1. Does my decision fall within the acceptablestandards that apply in business today?

2. Am I willing to see the decision communicated

to all people and groups affected by it?3. Would the people with whom I have a

significant personal relationship approve of thedecision?


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Why should managers behave ethically?

The relentless pursuit of self-interest can

lead to a collective disaster when one or

more people start to profit from being

unethical because this encourages other

people to act in the same way


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Trust and Reputation

Trust

willingness of one

person or group tohave faith or

confidence in the

goodwill of another

person


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Effects of Ethical/Unethical Behavior

Figure 4.4


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Trust and Reputation

Reputation

esteem or high repute that individuals or

organizations gain when they behave ethically


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Sources of Ethics

Figure 4.5


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Societal Ethics

Societal Ethics

Standards that govern how members of a

society should deal with one another in matters

involving issues such as fairness, justice,poverty, and the rights of the individual

People behave ethically because they have

internalized certain values, beliefs, and

norms


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Occupational Ethics

Occupational Ethics

Standards that govern how members of a

profession, trade, or craft should conduct

themselves when performing work-relatedactivities

Medical & legal ethics


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Individual Ethics

Individual Ethics

Personal standards and values that determine

how people view their responsibilities to other

people and groupsHow they should act in situations when their

own self-interests are at stake


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Organizational Ethics

Organizational Ethics

Guiding practices and beliefs through which a

particular company and its managers view their

responsibility toward their stakeholdersTop managers play

a crucial role in

determining a

companys ethics


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Social Responsibility

Social Responsibility

Way a company views its duty or obligation to

make decisions that protect, enhance, and

promote the welfare and well-being ofstakeholders and society as a whole


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Approaches to Social Responsibility

Figure 4-6


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Obstructionist approach

Companies choose not to behave in a social

responsible way and behave unethically and

illegality


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Defensive approach

companies and managers stay within the law

and abide strictly with legal requirements but

make no attempt to exercise socialresponsibility


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Accommodative approach

Companies behave legally and ethically and try

to balance the interests of different stakeholders

against one another so that the claims ofstockholders are seen in relation to the claims of

other stakeholders


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Proactive approach

Companies actively embrace socially

responsible behavior, going out of their way to

learn about the needs of different stakeholdergroups and utilizing organizational resources to

promote the interests of all stakeholders


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Why Be Socially Responsible?

1. Demonstrating its social responsibility

helps a company build a good

reputation

2. If all companies in a society act

socially, the quality of life as a whole

increases


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Role of Organizational Culture

Ethical values and norms help

organizational members:

Resist self-interested actionRealize they are part of something bigger than

themselves


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Johnson & Johnson Credo

Figure 4.7


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Ethics Ombudsman

Responsible for communicating ethical

standards to all employees

Designing systems to monitor employees

conformity to those standards

Teaching managers and employees at all

levels of the organization how to

appropriately respond to ethical dilemmas


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Movie Example: John Q

What should be the

ethical standard in

communicating job status

changes and healthcare

changes to employees?


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Video Case: Whose Life is It Anyway?

Do you think it is ethical for Scotts or other

companies to fire employees who smoke,

even if they only smoke outside of work?

In implementing Scotts health initiatives,does Hagedorn put the interests of one

group of stakeholders above those of

another?

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