schermerhorn mgmt9 ch02
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Management, 9/eJohn R. Schermerhorn, Jr.
Chapter 2:
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Chapter 2: Management Ethics and Social
Responsibility
Planning Ahead — Chapter 2 Study Questions
�What is ethical behavior?
�How do ethical dilemmas complicate the workplace?
How can high ethical standards be
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�How can high ethical standards be maintained?
�What is social responsibility and governance?
� Ethics
� Code of moral principles.
� Set standards of “good” or “bad” or
“right” or “wrong” in one’s conduct.
Study Question 1: What is ethical behavior?
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“right” or “wrong” in one’s conduct.
� Ethical behavior
� What is accepted as good and right in
the context of the governing moral
code.
� Law, values, and ethical behavior:
� Legal behavior is not necessarily ethical
behavior.
Study Question 1: What is ethical behavior?
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� Personal values help determine
individual ethical behavior.
�Terminal values
�Instrumental values
Study Question 1: What is ethical behavior?
� Utilitarian view of ethics — greatest good to the greatest number of people.
� Individualism view of ethics — primary commitment is to one’s long-term self-interests.
� Moral-rights view of ethics — respects and
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� Moral-rights view of ethics — respects and protects the fundamental rights of all people.
� Justice view of ethics — fair and impartial treatment of people according to legal rules and standards.• Procedural justice
• Distributive justice
• Interactional justice
� Cultural issues in ethical behavior:
� Cultural relativism
� Ethical behavior is always determined by
cultural context.
Study Question 1: What is ethical behavior?
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cultural context.
� Cultural universalism
� Behavior unacceptable in one’s home
environment should not be acceptable
anywhere else.
� Considered by some to be ethical
imperialism
Figure 2.2 The extremes of cultural relativism and ethical
imperialism in international business ethics.
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Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,”
Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.
Study Question 1: What is ethical behavior?
How international businesses can respect core or universal values:
Respect for human dignity
• Create culture that values employees, customers, and suppliers.
• Keep a safe workplace.
• Produce safe products and services.
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• Produce safe products and services.
Respect for basic rights
• Protect rights of employees, customers, and communities.
• Avoid anything that threatening safety, health, education, and living standards.
Be good citizens
• Support social institutions, including economic and educational systems.
• Work with local government and institutions to protect environment.
� An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.
� Ethical dilemmas include:
Study Question 2: How do ethical dilemmas
complicate the workplace?
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� Ethical dilemmas include:� Discrimination
� Sexual harassment
� Conflicts of interest
� Customer confidence
� Organizational resources
Study Question 2: How do ethical dilemmas
complicate the workplace?
� Ethical behavior can be rationalized by
convincing yourself that:
� Behavior is not really illegal.
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� Behavior is not really illegal.
� Behavior is really in everyone’s best interests.
� Nobody will ever find out.
� The organization will “protect” you.
� Factors influencing ethical behavior include:
� The person
�Family influences, religious values, personal
standards, and personal needs.
Study Question 2: How do ethical dilemmas complicate the workplace?
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� The organization
�Supervisory behavior, peer group norms and
behavior, and policy statements and written rules.
� The environment
�Government laws and regulations, societal norms
and values, and competitive climate in an industry.
Figure 2.3 Factors influencing ethical managerial
behavior—the person, organization, and environment.
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�Ethics training:� Structured programs that help participants to understand ethical aspects of decision making.
Study Question 3: How can high ethical standards be maintained?
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aspects of decision making.
� Helps people incorporate high ethical standards into daily life.
� Helps people deal with ethical issues under pressure.
�Whistleblowers
� Expose misdeeds of others to:
Study Question 3: How can high ethical standards be maintained?
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� Expose misdeeds of others to:
� Preserve ethical standards
� Protect against wasteful, harmful, or illegal acts
� Laws protecting whistleblowers vary
Study Question 3: How can high ethical standards
be maintained?
� Barriers to whistleblowing include:� Strict chain of command
� Strong work group identities
� Ambiguous priorities
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� Ambiguous priorities
�Organizational methods for overcoming whistleblowing barriers:� Ethics staff units who serve as ethics advocates
�Moral quality circles
Study Question 3: How can high ethical standards
be maintained?
� Ethical role models:
� Top managers serve as ethical role models.
� All managers can influence the ethical behavior
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of people who work for and with them.
� Excessive pressure can foster unethical
behavior.
� Managers should be realistic in setting
performance goals for others.
� Codes of ethics:� Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.
Areas often covered by codes of
Study Question 3: How can high ethical standards be maintained?
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� Areas often covered by codes of ethics:� Bribes and kickbacks� Political contributions� Honesty of books or records� Customer/supplier relationships� Confidentiality of corporate information
� Checklist for dealing with ethical dilemmas:
� Recognize the ethical dilemma� Get the facts� Identify your options
Study Question 3: How can high ethical standards be maintained?
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� Identify your options� Test each option: Is it legal? Is it right? Is it beneficial?
� Decide which option to follow� Double-check decision by asking “spotlight” questions:
� “How would I feel if my family found out about my decision?”
� “How would I feel about this if my decision were in the local news?”
� Take action
�Moral Management
� How managers act and communicate as role models
� Immoral manager
Study Question 3: How can high ethical standards be maintained?
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� Immoral manager
� Amoral manager
�Moral manager
� Ethics mindfulness
� Enriched ethical awareness that affects behavior
Study Question 4: What is social responsibility and governance?
� Corporate social responsibility and
governance:
� Looks at ethical issues on the
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organization level.
�Obligates organizations to act in ways
that serve both its own interests and
the interests of society at large.
Study Question 4: What is social responsibility and governance?
� Organizational stakeholders� Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.
� Typical organizational stakeholders
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� Typical organizational stakeholders� Employees
� Customers
� Suppliers
� Owners
� Competitors
� Regulators
� Interest groups
Figure 2.5 Multiple stakeholders in the environment of
an organization.
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Study Question 4: What is social responsibility and governance?
� Perspectives on social
responsibility:
� Classical view—
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� Classical view—
�Management’s only responsibility is to
maximize profits.
� Socioeconomic view—
�Management must be concerned for the
broader social welfare, not just profits.
Study Question 4: What is social responsibility and governance?
� Arguments against social responsibility:� Reduced business profits
� Arguments in favor of social responsibility:
� Adds long-run profits
� Improved public image
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profits
� Higher business costs
� Dilution of business purpose
� Too much social power for business
� Lack of public accountability
� Avoids more government regulation
� Businesses have resources and ethical obligation
Study Question 4: What is social responsibility and governance?
� Criteria for evaluating corporate
social performance:
� Is the organization’s …
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� Economic responsibility met?
� Legal responsibility met?
� Ethical responsibility met?
� Discretionary responsibility met?
Study Question 4: What is social responsibility and governance?
� Strategies for pursuing social responsibility:�Obstructionist — meets economic responsibilities.
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responsibilities.
�Defensive — meets economic and legal responsibilities.
� Accommodative — meets economic, legal, and ethical responsibilities.
� Proactive — meets economic, legal, ethical, and discretionary responsibilities.
Figure 2.7 Four strategies of corporate social
responsibility—from obstructionist to proactive
behavior.
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Study Question 4: What is social responsibility and governance?
�How government influences
organizations:
� Common areas of government
regulation of business affairs:
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regulation of business affairs:
�Occupational safety and health
�Fair labor practices
�Consumer protection
�Environmental protection
Study Question 4: What is social responsibility and
governance?
�How organizations influence
governments:
� Personal contacts and networks
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� Public relations campaigns
� Lobbying
� Political action committees
� Sometimes by illegal acts, such as bribery or
illegal financial contributions to political
campaigns
Study Question 4: What is social responsibility and
governance?
� Leadership beliefs that guide
socially responsible practices:
� People
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� People
� Communities
� Natural environment
� Long term
� Reputation
Figure 2.8 Centrality of ethics and social responsibility
in leadership and the managerial role.
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Study Question 4: What is social responsibility and governance?
� Corporate governance:
� The oversight of the top management of an
organization by a board of directors.
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� Corporate governance involves:
� Hiring, firing, and compensating the CEO.
� Assessing strategy.
� Verifying financial records.
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