3–1 C H A P T E R 3 Social Responsibility and Ethics Jon L. Pierce & Donald G. Gardner with...

3–3–11

C H A P T E R 3

SocialResponsibility and Ethics

Jon L. Pierce &Donald G. Gardnerwith Randall B. Dunham

Management

OrganizationalBehavior

PowerPoint Presentationby Charlie Cook

An Integrated Perspective

Copyright © 2002 by South-Western

Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 3–3–22

Learning ObjectivesLearning Objectives

1.1. Define social responsibility and trace its historical Define social responsibility and trace its historical development.development.

2.2. Name and discuss three levels of commitment to Name and discuss three levels of commitment to social responsibility.social responsibility.

3.3. Compare and contrast two divergent views on Compare and contrast two divergent views on corporate social responsibility.corporate social responsibility.

4.4. Define and distinguish ethics from social Define and distinguish ethics from social responsibility.responsibility.

5.5. Discuss individuals’ and organizations’ responsibility Discuss individuals’ and organizations’ responsibility for ethical behavior and list sources of unethical for ethical behavior and list sources of unethical behavior.behavior.

6.6. Identify the three ethical standards and discuss how Identify the three ethical standards and discuss how they affect decision making.they affect decision making.


Learning ObjectivesLearning Objectives

7.7. Discuss steps managers can take to encourage Discuss steps managers can take to encourage ethical behavior in organizations.ethical behavior in organizations.

8.8. Discuss the ethical challenge associated with efforts Discuss the ethical challenge associated with efforts to “manage” employee work-related attitudes, to “manage” employee work-related attitudes, motivation, and behavior.motivation, and behavior.

9.9. Discuss the ethical issues associated with workplace Discuss the ethical issues associated with workplace diversity.diversity.


The Nature of Social ResponsibilityThe Nature of Social Responsibility

• Social responsibilitySocial responsibility An organization’s obligation to engage in activities that An organization’s obligation to engage in activities that

protect and contribute to the welfare of society.protect and contribute to the welfare of society.

• The law and social responsibilityThe law and social responsibility

Social ResponsibilitySocial ResponsibilitySocial ResponsibilitySocial Responsibility

illegal andillegal andirresponsibleirresponsible

illegal andillegal andirresponsibleirresponsible

illegal andillegal andresponsibleresponsible

illegal andillegal andresponsibleresponsible

legal andlegal andirresponsibleirresponsible

legal andlegal andirresponsibleirresponsible

legal andlegal andresponsibleresponsible

legal andlegal andresponsibleresponsible


An Historical PerspectiveAn Historical Perspective

• Principle of charityPrinciple of charity Suggests that those who have plenty should give to Suggests that those who have plenty should give to

those who do not.those who do not.

• Principle of stewardshipPrinciple of stewardship Suggests that organizations have an obligation to see Suggests that organizations have an obligation to see

that the public’s interests are served by corporate that the public’s interests are served by corporate action and the ways in action and the ways in which profits are spent.which profits are spent.


Historical Phases of Social Historical Phases of Social ResponsibilityResponsibility

Social ResponsibilitySocial Responsibility1900’s1900’s 1930’s1930’s 1960’s1960’s

Social ResponsibilitySocial Responsibility1900’s1900’s 1930’s1930’s 1960’s1960’s

Phase One:Phase One:Profit-Maximizing Profit-Maximizing

ManagementManagement

Business’s primary Business’s primary responsibility to society responsibility to society

is to underwrite the is to underwrite the country’s economic country’s economic

growth and to oversee growth and to oversee the accumulation of the accumulation of

wealth.wealth.

Phase One:Phase One:Profit-Maximizing Profit-Maximizing

ManagementManagement

Business’s primary Business’s primary responsibility to society responsibility to society

is to underwrite the is to underwrite the country’s economic country’s economic

growth and to oversee growth and to oversee the accumulation of the accumulation of

wealth.wealth.

Phase Two: Phase Two: Trusteeship Trusteeship ManagementManagement

Corporate managers Corporate managers need to maintain an need to maintain an equitable balance equitable balance

among the competing among the competing interests of all groups interests of all groups

with a stake in the with a stake in the organization.organization.

Phase Two: Phase Two: Trusteeship Trusteeship ManagementManagement

Corporate managers Corporate managers need to maintain an need to maintain an equitable balance equitable balance

among the competing among the competing interests of all groups interests of all groups

with a stake in the with a stake in the organization.organization.

Phase Three:Phase Three:Quality-of-Life Quality-of-Life ManagementManagement

Managers have to do Managers have to do more than achieve more than achieve

economic goals, but economic goals, but they should manage the they should manage the quality-of-life by helping quality-of-life by helping

develop solutions for develop solutions for society’s ills.society’s ills.

Phase Three:Phase Three:Quality-of-Life Quality-of-Life ManagementManagement

Managers have to do Managers have to do more than achieve more than achieve

economic goals, but economic goals, but they should manage the they should manage the quality-of-life by helping quality-of-life by helping

develop solutions for develop solutions for society’s ills.society’s ills.


An Historical Perspective on Social An Historical Perspective on Social ResponsibilityResponsibility

1800

25%

50%

75%

100%

1900 2000

Phase One:Profit Maximization

Phase Two:Trusteeship

Phase Three: Quality of Life

Proportion ofFirms AdoptingEach Perspective

FIGURE 3FIGURE 3–1–1


OrganizationalOrganizationalStakeholdersStakeholders

Employees Societyat Large

Allies

Competitors

Regulatory Agencies andInfluence Groups:GovernmentsUnionsProfessional AssociationsInterest Groups

Customers

Suppliers of:CapitalRaw MaterialsHuman ResourcesInformation

Organization



The SocialThe SocialAuditAudit

An Organization’sSocial Goals(e.g. ImprovingEnvironment,IncreasingEmployment)

Measurementof SocialPerformance

Gap AnalysisGoal SuccessesGoal FailuresChanges Needed

Report toManagement

Organizational GoalsGoal SuccessesGoal FailuresSocial ExposuresChanges Needed

Report to InternalStakeholdersOrganizational GoalsGoal SuccessesGoal FailuresChanges Needed

Report to ExternalStakeholders

Organizational GoalsGoal SuccessesGoal FailuresFuture Goals

The Needsof Society

OrganizationalResources


A detailed examination and evaluation of an organization’s social performance


Levels and Types of Social Levels and Types of Social CommitmentCommitment

Social Obligation

Social Responsibility

Social Responsiveness

Low High

Reactive Prescriptive Proactive

Proscriptive* Does more than required by law

Anticipates and prevents problems

Adheres to legal requirements

Does more than required by economic considerations

Searches for socially responsible acts

Adheres to economic considerations

Avoids public stands on issues

Takes public stands on issues

*Proscriptive means the firm reacts when its action is called (or threatened to be called) to the public’s attention.

TABLE 3TABLE 3–3–3


MinnesotaMinnesotaPower’sPower’sEnvironmentalEnvironmentalEthicEthic

Recognizing that all human activities affect the naturalenvironment, the people of Minnesota Power are sensitive to the environmental effects of our conduct as individuals and collectively as a company.

We will be leaders in environmental stewardship. And, consistent with public policy, we will:

• Meet or surpass all environmental compliance criteria.

• Seek and adopt safeguards to prevent injury to the environment, and be prepared to respond quickly should an accident occur.

• Promote land, air, water and energy conservation by encouraging customers and employees to use our products and services efficiently.

• Solicit public and regulatory agency views about environmental concerns and company activities.

In addition, we seek ways to:

• Reduce adverse environmental impacts of our activities.

• Prevent waste by stressing efficiency, recycling and reduced consumption.

• Enhance the environment as we carry out our responsibilities.

• Demonstrate conservation of land, air, water and energy.FIGURE 3FIGURE 3–4–4

Source: Minnesota Power—Environmental Ethic, 1998.


Diverging Views on Social Diverging Views on Social ResponsibilityResponsibility• Arguments for social responsibilityArguments for social responsibility

The assumption of social responsibility balances The assumption of social responsibility balances corporate power with corporate responsibilities.corporate power with corporate responsibilities.

The voluntary assumption of social responsibility The voluntary assumption of social responsibility discourages the creation and imposition of of discourages the creation and imposition of of government regulations.government regulations.

Acts of social responsibility by organizations help Acts of social responsibility by organizations help correct the social problems that organizations create.correct the social problems that organizations create.

Organizations, as members of society, have a moral Organizations, as members of society, have a moral obligation to help society deal with its problems and to obligation to help society deal with its problems and to contribute to its welfare.contribute to its welfare.


Diverging Views… (cont’d)Diverging Views… (cont’d)

• Arguments against social responsibilityArguments against social responsibility Socially responsible behavior lowers operating Socially responsible behavior lowers operating

efficiency and weakens the ability to offer goods and efficiency and weakens the ability to offer goods and services at the lowest possible competitive cost.services at the lowest possible competitive cost.

Socially responsible behavior costs reduce dividends, Socially responsible behavior costs reduce dividends, lower wages, and increase consumer prices.lower wages, and increase consumer prices.

Social responsibility may conflict with organizational Social responsibility may conflict with organizational goals for profit making. goals for profit making.

Assuming social responsibilities makes organizations Assuming social responsibilities makes organizations too powerful.too powerful.

Business persons are not trained to deal with social Business persons are not trained to deal with social problems.problems.


The Growth of Attention to Social IssuesThe Growth of Attention to Social Issues

1950

Much

Little

1960 1970 1980 1990

Phase I Phase II Phase III

Gestation and Innovation Developmentand Expansion

Maturity andInstitutionalization

Am

ou

nt

of

Att

en

tio

n


Source: L. E. Preston. 1986. Social issues in management: A evolutionary perspective. In D. A. Wren and J. A. Pearce (eds.), Papers dedicated to the development of modern management. Chicago: Academy of Management, 52. Copyright 1986 by Academy of Management. Reproduced with permission of Academy of Management in the format Textbook via Copyright Clearance Center.


The Nature of Managerial EthicsThe Nature of Managerial Ethics

• EthicsEthics The set of standards and code of conduct that defines The set of standards and code of conduct that defines

what is right, wrong, and just in human actions.what is right, wrong, and just in human actions.

• Sources of ethicsSources of ethics Socialization—the process through which people Socialization—the process through which people

develop beliefs (social values, norms, and mores) about develop beliefs (social values, norms, and mores) about what is right, wrong, and just.what is right, wrong, and just.

Organizations teaching ethics: religious, educational, Organizations teaching ethics: religious, educational, cultural, and family.cultural, and family.


Moral Development ModelsMoral Development Models

• Ethic of careEthic of care An act is judged as ethical depending on whether the An act is judged as ethical depending on whether the

act derives from feelings, emotions, and empathy for act derives from feelings, emotions, and empathy for others.others.

• Ethic of justiceEthic of justice Abstract rules (personal Abstract rules (personal

moral principles) are used moral principles) are used to define which actions are to define which actions are fair and which actions are fair and which actions are not.not.


Managerial EthicsManagerial Ethics

• Managerial ethics and responsibilitiesManagerial ethics and responsibilities The application of personal ethics within the context of The application of personal ethics within the context of

the management of organizations.the management of organizations. Ethical responsibilities:Ethical responsibilities:

Personal decisions and actionsPersonal decisions and actions Actions taken at the direction of superiorActions taken at the direction of superior Actions taken by subordinates following ordersActions taken by subordinates following orders Inaction that allows unethical behavior to occurInaction that allows unethical behavior to occur


An Organization’s Ethical An Organization’s Ethical ResponsibilityResponsibility• Top management’s responsibilitiesTop management’s responsibilities

Infuse ethical behavior into the organizational culture.Infuse ethical behavior into the organizational culture. Provide role models for ethical behavior.Provide role models for ethical behavior. Punish unethical behavior when it occurs.Punish unethical behavior when it occurs. Make explicit statements of what ethical conduct is.Make explicit statements of what ethical conduct is. Establish a ethical code of conduct.Establish a ethical code of conduct. Encourage the reporting of unethical conduct Encourage the reporting of unethical conduct

(whistleblowing) and protect those who report it.(whistleblowing) and protect those who report it.


The Impact of Reward and Punishment on The Impact of Reward and Punishment on Unethical BehaviorUnethical Behavior

Unethicalbehaviorpunished

Unethical behaviorrewarded andpunished

Unethical behaviorneither rewardednor punished

Unethicalbehaviorrewarded

Mostlyethical

MostlyunethicalBehavior

Man

ager

ial R

esp

on

se t

o B

ehav

ior

FIGURE 3FIGURE 3–6–6Source: W. H. Hegarty and H. P. Sims, Jr. 1979. Organizational philosophy, policies, and objectives related to unethical decision behavior: a laboratory experiment. Journal of Applied Psychology 64:331–338.


Theories Affecting Ethical StandardsTheories Affecting Ethical Standards

• Utilitarian theoryUtilitarian theory An action is considered morally right if its An action is considered morally right if its

consequences for everyone affected by the action are consequences for everyone affected by the action are greater than those which would be realized by a greater than those which would be realized by a different action.different action.

• Rights theoryRights theory Decision makers’ paramount concern is respecting the Decision makers’ paramount concern is respecting the

moral and/or legal rights to which people are entitled.moral and/or legal rights to which people are entitled. Procedural justice is applied to ensure that, while all Procedural justice is applied to ensure that, while all

individual outcomes may not be equal, the process of individual outcomes may not be equal, the process of outcome allocation is perceived as fair and impartial.outcome allocation is perceived as fair and impartial.


Ethical DilemmasEthical Dilemmas

• Ethical dilemmasEthical dilemmas Situations that arise when managers attempt to balance Situations that arise when managers attempt to balance

the utilitarian (future-oriented) ethic and the formalistic the utilitarian (future-oriented) ethic and the formalistic (perpetuating rights and the status quo) ethic.(perpetuating rights and the status quo) ethic.


Encouraging Ethical BehaviorEncouraging Ethical Behavior

• Encourage ethical behavior in short-term by:Encourage ethical behavior in short-term by: Hiring persons who are not prone to unethical behavior.Hiring persons who are not prone to unethical behavior. Making public statements (e.g., a code of ethics) about Making public statements (e.g., a code of ethics) about

the importance of ethical behavior.the importance of ethical behavior. Developing policies that specify ethical objectives.Developing policies that specify ethical objectives. Rewarding ethical behavior; punishing unethical Rewarding ethical behavior; punishing unethical

behavior.behavior. Avoiding competitive situations where there is a Avoiding competitive situations where there is a

potential for unethical behavior.potential for unethical behavior. Using groups to make decisions requiring moral Using groups to make decisions requiring moral

judgment.judgment.


The Interactionist The Interactionist Model of Ethical Model of Ethical Decision Making Decision Making in Organizationsin Organizations

EthicalDilemma

CognitionsStage ofCognitive MoralDevelopment

Ethical/UnethicalBehavior

SITUATIONAL FORCES

Immediate Job ContextReinforcementJob Pressures

Organizational CultureResponsibility for Consequences

Characteristics of the WorkRole TakingResolution of Moral Conflict

Individual Belief SystemsLocus of Control


Source: Modified from L. K. Trevino. 1986. Ethical Decision Making in Organizations: A Person-Situation Interactionist Model. Academy of Management Review 11:603.


DiversityDiversity—A Contemporary Issue of —A Contemporary Issue of Ethics and Social ResponsibilityEthics and Social Responsibility• Organizational diversityOrganizational diversity

The goal of having a heterogeneous work group where The goal of having a heterogeneous work group where no one group occupies a majority position, and all no one group occupies a majority position, and all members are expected to work effectively with people members are expected to work effectively with people different from themselves.different from themselves.

• Why value diversity?Why value diversity? Diversity is ethical.Diversity is ethical. Diversity is socially responsible.Diversity is socially responsible. Diversity is good business (competitive advantage).Diversity is good business (competitive advantage).

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