Chapter 6 Management

Management
Fourteenth Edition
Chapter 6
Managing Social
Responsibility and Ethics
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Learning Objectives
6.1 Discuss what it means to be socially responsible and
what factors influence that decision.
6.2 Explain green management and how organizations can
go green.
6.3 Discuss the factors that lead to ethical and unethical
behavior.
Develop your skill at creating trust in work groups.
6.4 Describe management’s role in encouraging ethical
behavior.
Know how to make good decisions about ethical
dilemmas.
6.5 Discuss current social responsibility and ethics issues.
From Obligations to Responsiveness to
Responsibility
• Social obligation: when a firm engages in social
actions because of its obligation to meet certain
economic and legal responsibilities
• Classical view: the view that management’s only
social responsibility is to maximize profits
The Socioeconomic View
• Socioeconomic view: when a firm engages in
social actions because of its obligation to meet
certain economic and legal responsibilities
• Social responsiveness: the view that
management’s only social responsibility is to
maximize profits
• Social responsibility: A business’s intention,
beyond its legal and economic obligations, to do
the right things and act in ways that are good for
society
Should Organizations Be Socially Involved?
• Social screening: Applying social criteria
(screens) to investment decisions
Exhibit 6-1
Arguments For and Against Social Responsibility
Exhibit 6-1 outlines arguments for and against social involvement.

Green Management and Sustainability
• Green management: managers consider the
impact of their organization on the natural
environment
How Organizations Go Green
• Legal (light green) approach
• Market approach
• Stakeholder approach
• Activist approach
Exhibit 6-2
Green Approaches
Exhibit 6-2 uses the terms shades of green to describe the different environmental
approaches that organizations may take.
Evaluating Green Management Actions
• Company-issued reports on environmental
performance
• ISO 9000 (quality management) and ISO 14000
(environmental management) standards
• Global 100 list of the most sustainable
corporations in the world
Managers and Ethical Behavior
• Ethics: principles, values, and beliefs that define
right and wrong behavior
Exhibit 6-3
Factors that Determine Ethical and Unethical Behavior
Exhibit 6-3 shows factors that determine ethical and unethical behavior.
Stage of Moral Development
• Preconventional level
• Conventional level
• Principled level
Exhibit 6-4
Stages of Moral Development
Exhibit 6-4 shows the three levels and six stages of moral development.
Individual Characteristics
• Values
• Ego strength
• Locus of control
Structural Variables
• Ethical behavior can be influenced by:
– An organization’s structural design
– Goals
– Performance appraisal system
– Reward allocation
Exhibit 6-5
Issue Intensity
As Exhibit 6-5 shows, six characteristics determine issue intensity or how important an
ethical issue is to an individual: greatness of harm, consensus of wrong, probability of
harm, immediacy of consequences, proximity to victim(s), and concentration of effect.
Issue Intensity
• The six factors suggest that:
– the larger the number of people harmed
– the more agreement that the action is wrong
– the greater the likelihood that the action will cause
harm
– the more immediately the consequences of the action
will be felt
– the closer the person feels to the victim
– The more concentrated the effect of the action on the
victim(s)…
• The greater the issue intensity or importance
Ethics in an International Context
• Ethical standards are not universal
• Foreign Corrupt Practices Act
• United Nations Global Contract
Exhibit 6-6
The Ten Principles of the UN Global Compact (1 of 2)
Principle Number Principle Text
Human Rights blank
Principle 1 Business should support and respect the protection of internationally
proclaimed human rights within their sphere of influence; and
Principle 2 Make sure they are not complicit in human rights abuses.
Labor Standards blank

Principle 3 Business should uphold the freedom of association and the effective
recognition of the right to collective bargaining;
Principle 4 The elimination of all forms of forced and compulsory labor;
Principle 5 The effective abolition of child labor; and
Principle 6 The elimination of discrimination in respect to employment and
occupation.
Exhibit 6-6 shows the UN Global Compact, which asks companies to embrace, support,
and enact, within their sphere of infuence, a set of core values in the areas of human rights,
labor standards, the environment, and anti-corruption.
Exhibit 6-6
The Ten Principles of the UN Global Compact (2 of 2)
Principle Number Principle Text
Environment blank
Principle 7 Business should support a precautionary approach to environmental

challenges;
Principle 8 Undertake initiatives to promote greater environmental responsibility;

and
Principle 9 Encourage the development and diffusion of environmentally friendly

technologies.
Anti-Corruption blank
Principle 10 Business should work against corruption in all its forms, including
extortion and bribery.
Exhibit 6-6 shows the UN Global Compact, which asks companies to embrace, support,
and enact, within their sphere of infuence, a set of core values in the areas of human rights,
labor standards, the environment, and anti-corruption.
Employee Selection
• Values-based management: the organization’s
values guide employees in the way they do their
jobs
Codes of Ethics and Decision Rules
• Code of ethics: a formal statement of an
organization’s primary values and the ethical rules
it expects its employees to follow
Exhibit 6-7
Codes of Ethics (1 of 3)
Cluster 1. Be a Dependable Organizational Citizen
1. Comply with safety, health, and security regulations.
2. Demonstrate courtesy, respect, honesty, and fairness.
3. Illegal drugs and alcohol at work are prohibited.
4. Manage personal finances well.
5. Exhibit good attendance and punctuality.
6. Follow directives of supervisors.
7. Do not use abusive language.
8. Dress in business attire.
9. Firearms at work are prohibited.
Exhibit 6-7 shows the three categories into which the content of codes of ethics falls.
Exhibit 6-7
Cluster 2. Do Not Do Anything Unlawful or Improper That Will Harm the
Organization
1. Conduct business in compliance with all laws.
2. Payments for unlawful purposes are prohibited.
3. Bribes are prohibited.
4. Avoid outside activities that impair duties.
5. Maintain confidentiality of records.
6. Comply with all antitrust and trade regulations.
7. Comply with all accounting rules and controls.
8. Do not use company property for personal benefit.
9. Employees are personally accountable for company funds.
10. Do not propagate false or misleading information.
11. Make decisions without regard for personal gain.
Exhibit 6-7
Cluster 3. Be Good to Customers

1. Convey true claims in product advertisements.
2. Perform assigned duties to the best of your ability.
3. Provide products and services of the highest quality.
Developing Codes of Ethics
• Organizational leaders should model appropriate behavior
and reward those who act ethically.
• Managers should reaffirm the importance of the ethics
code and discipline those who break it
• Stakeholders should be considered as an ethics code is
developed or improved
• Managers should communicate and reinforce the ethics
code regularly
• Managers should use the five-step process to guide
employees when faced with ethical dilemmas
Exhibit 6-8
A Process for Addressing Ethical Dilemmas
A Process for Addressing Ethical Dilemmas

Step 1: What is the ethical dilemma?
Step 2: Who are the affected stakeholders?
Step 3: Which personal, organizational, and external factors are
important in this decision?
Step 4: What are possible alternatives?
Step 5: What is my decision and how will I act on it?
Exhibit 6-8 shows the five-step process to guide employees when faced with ethical
dilemmas.
Leadership at the Top
• Doing business ethically requires a commitment
from managers at all levels, but especially the top
level because:
– they uphold the shared values and set the
cultural tone
– they’re role models in both words and actions
Job Goals and Performance Appraisal
• Under the stress of unrealistic goals, otherwise
ethical employees may feel they have no choice
but to do whatever is necessary to meet those
goals.
Ethics Training
• More organizations are setting up seminars,
workshops, and similar ethics training programs to
encourage ethical behavior.
Independent Social Audits
• Independent social audits: evaluate decisions
and management practices in terms of the
organization’s code of ethics
Managing Ethical Lapses and Social
Responsibility
• One survey reported that among 5,000
employees: 45 percent admitted falling asleep at
work and 22 percent said they spread a rumor
about a coworker
Ethical Leadership
• What managers do has a strong influence on
employees’ decisions whether to behave ethically.
Exhibit 6-9
Being an Ethical Leader
Being an Ethical Leader

Be a good role model by being ethical and honest.
• Tell the truth always.
• Don’t hide or manipulate information.
• Be willing to admit your failures.
Share your personal values by regularly communicating them to employees.
Stress the organization’s or team’s important shared values.
Use the reward system to hold everyone accountable to the values.
Exhibit 6-9 gives some suggestions on how managers can provide ethical leadership.
Protection of Employees Who Raise Ethical
Issues
• Whistle-blower: individual who raises ethical
concerns or issues to others
Social Entrepreneurship
• Social entrepreneur: an individual or
organization that seeks out opportunities to
improve society by using practical, innovative, and
sustainable approaches
Business Promoting Positive Social Change
• Corporate philanthropy: can be an effective way
for companies to address societal problems
• Employee volunteering efforts: a popular way
for businesses to be involved in promoting social
change
Review Learning Objective 6.1
• Discuss what it means to be socially
responsible and what factors influence that
decision.
– Social obligation: a firm engages in social
actions because of its obligation to meet
certain economic and legal responsibilities
– Social responsiveness—when a firm engages
in social actions in response to some popular
social need
• Explain green management and how
organizations can go green.
– Different approaches
 Light green
 Market approach
 Stakeholder approach
 Activist or dark green approach
• Discuss the factors that lead to ethical and
unethical behavior.
– Factors that affect ethical and unethical behavior
include
 An individual’s level of moral development
 Individual characteristics
 Structural variables
 Organizational culture
 Issue intensity
• Describe management’s role in encouraging
ethical behavior.
– The behavior of managers is the single most important
influence on an individual’s decision to act ethically or
unethically).
– Nonprogrammed decisions are unique decisions that
require a custom-made solution and are used when the
problems are new or unusual (unstructured) and for
which information is ambiguous or incomplete.
• Discuss current social responsibility and
ethics issues.
– Ethical leaders also are honest, share their values,
stress important shared values, and use the reward
system appropriately.
– Managers can protect whistle-blowers (employees who
raise ethical issues or concerns) by encouraging them
to come forward.
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Management

Exhibit 6-1 outlines arguments for and against social involvement.

Labor Standards blank

Principle 7 Business should support a precautionary approach to environmental

Principle 8 Undertake initiatives to promote greater environmental responsibility;

Principle 9 Encourage the development and diffusion of environmentally friendly

Cluster 3. Be Good to Customers

A Process for Addressing Ethical Dilemmas

Being an Ethical Leader

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