MANAGERIAL ETHICS AND CORPORATE SOCIAL

RESPONSIBILITY

Prepared By : ZAREEN SHAIKH, SZABIST LarkanaSession-5

Class-BBA.2

What is Managerial Ethics?

Ethics The code of moral principles and values that

govern the behaviors of a person or group with respect to what is right or wrong.

Ethics set standard of what is right or what is wrong.

Ethics deals with internal values of the organizations

Practical Examples

Bridgestone & Ford motors (series of deadly tires)

Enron (7th largest company in mid-2000) Alibris (online book seller) Ivillage company American Electric Power Company spend

$5.5 million ebay & Infoseek

Ethics set directions while making decisions.

What is Managerial Ethics?

Legal Standards Social Standard Personal Standard

Codified Law Free ChoiceEthicsDomain of

Three Domain of Human Action or Human Behavior

Because we do not have hard and fast rules to deal with ethics or lack of ethical standard always lead to Ethical Dilemmas

What is a Ethical Dilemma: A situation when all choices or behaviors are

undesirable because they possibly can produce negative ethical outcomes , making difficult to judge between right or wrong.

Case examples : Text Book

What is Managerial Ethics?

Guide for Ethical Decision Making

1. Utilitarian Approach 2. Individualism Approach3. Moral Right Approach 4. Justice Approach

Utilitarian Approach The ethical concept that moral produce the

greatest good for the greatest number

1. Decision which optimizes the satisfaction for greatest number of people

2. Espoused by 19th Century philosophers Jermy Bentham and John Stuart.

3. Alcohol and Tobacco consumption at work place

Individualism Approach

The ethical concept that acts are moral when they promote the individual best’s long term interests, which ultimately leads to the greater good.

Based on element of Self Direction and pursing long term interest

Close to Domain of Free Choice

Moral Right Approach The ethical concept that moral decisions are those that

best maintain the right of those affected by them.1. The right of free consent 2. The right to privacy3. The right of freedom and Conscience-related to moral

and religious norms 4. The right of Free Speech5. The right of Due process- impartial hearing and fair

treatment6. The right to life and safety

Justice Approach The ethical concept that moral decisions must be

based on standards of equity, fairness and impartiality.

1. Distributive Justice: Different treatment of people should not be based on characteristics. Same people same treatment. Only in the case of huge difference. (Male & Female Salary difference)

2. Procedural Justice: clear rules, consistently applied and for all.

3. Compensatory Justice: Injuries should be paid by the party responsible and individual should not be responsible for matters on which they have no control.

SOCIAL RESPONSIBILITY

The obligation of organization management to make decisions and take actions that will enhance the welfare and interests of society as well as the organization.

Concepts of right wrong for a organizations Being a corporate citizen

Problem: Different people have different believes related to society welfare

Social Responsibility to Whom?

To Stakeholders

Who are stakeholders ?

A group within or out side the organization that has a stake in the organization’s performance

SZABIST -Stakeholders

1. ?2. ?3. ?4. ?5. ?6. ?7. ?8. ?9. ?10. ?

Stakeholders Employees Stockholders Customers Suppliers Competitors Labor Unions

Financial Institutions

Political Parties Educational

Institutions Courts and Legal

Institutions

© 2007 Prentice Hall, Inc. All rights reserved.

Arguments For and Against Social ResponsibilityArguments For and Against Social Responsibility

• ForFor Public expectationsPublic expectations Long-run profitsLong-run profits Ethical obligationEthical obligation Public imagePublic image Better environmentBetter environment Discouragement of further Discouragement of further

governmental regulationgovernmental regulation Balance of responsibility Balance of responsibility

and powerand power Stockholder interestsStockholder interests Possession of resourcesPossession of resources Superiority of prevention Superiority of prevention

over cureover cure

• AgainstAgainst Violation of profit Violation of profit

maximizationmaximization Dilution of purposeDilution of purpose CostsCosts Too much powerToo much power Lack of skillsLack of skills Lack of accountabilityLack of accountability

Model for evaluating Corporate Social Performance Total Corporate Responsibility

Contribute to societyAnd community

Be Profitable

Do what is rightAvoid Harm

Obey the Law

Economic Resp.

Legal Resp.

Ethical

Discr.

Corporate Responses to Social Responsibility

High

Degree of Social Responsibility

Low

Proactive

Accommodative

Defensive

Obstruction

Corporate

Responses

Managing Company Ethics and Social Responsibility

1. Leadership By Example2. Code of Ethics3. Ethics Committee4. Whistle Blowing5. Staff Motivation6. Working Environment7. Trainings

Any Question