Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol,...

Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, SharmaSlides prepared by Rob Lawrence, Victoria University (Australia)

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CHAPTER 4

SOCIAL RESPONSIBILITY AND ETHICS IN MANAGEMENT


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Lecture Outline• Organisational social responsibility

- Perspectives, stakeholders, managerial responsibilities, does it pay?

• Organisational social responsiveness• Being an ethical manager

- Types, guidelines, career issues

• Managing an ethical organisation


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MANAGERIAL ETHICS

• Ethics Standards of behaviour and moral

judgment differentiating right from wrong

• Managerial ethics

Standards of conduct and moral judgment mangers use in their business


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ORGANISATIONAL SOCIAL RESPONSIBILITY

‘The obligation of an organisation to act to protect and improve society’s welfare as well as its own interests.’ p112


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Major perspectives:• Invisible hand

• Hand of government

• Hand of management


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INVISIBLE HAND ARGUMENT• A view holding that the entire social responsibility

of a corporation can be summed up as ‘make profits and obey the law’.

• Corporate responsibility is guided by the ‘invisible hand’ of free market forces


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HAND OF GOVERNMENT PERSPECTIVE• A view holding that the interests of society are best

served by having the law and the political process guide the corporation’s activities.

• Law and political processes control organisations on employee well-being, customer protection and community issues e.g. the natural environment.


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Hand of Management perspective

Incorporates:• Anti-freeloader argument• Capacity argument• Enlightened self-interest argument


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HAND OF MANAGEMENT PERSPECTIVE

• A view stating that corporations and their managers are expected to act in ways that protect and improve society’s welfare as well as make profit.


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ANTI-FREELOADER ARGUMENT• Holds that since businesses benefit from a

better society, they should bear part of the costs by actively working to bring about solutions to social problems.


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CAPACITY ARGUMENT• States that the private sector,

because of its considerable economic resources, must make up for government cutbacks in social programs.


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ENLIGHTENED SELF-INTEREST

ARGUMENT• Holds that businesses exist at society’s

pleasure and that, for their own legitimacy and survival, businesses should meet the public’s expectations regarding social responsibility.


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SOCIAL RESPONSIBILITIES OF MANAGERS

• Economic and legalResponsibility to make a profit and obey the law

(recognised by: invisible hand, hand of government, hand of management).

• Ethical and discretionaryEthical behaviour expected by society (recognised by: hand of management).

Difficult to determine, identify


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SOCIAL STAKEHOLDERS

• Shareholders• Employees• Customers• Local community• General society• International community


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SOCIAL STAKEHOLDERS

Employees

Local community

Shareholders

Society (regional & national)

Customers

International community

THEORGANISATION


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SOCIAL STAKEHOLDERS

DIVERSITY AS COMPETITIVE ADVANTAGE• Attracting workers is costly, diversity may

help attract and retain workers• Workforce that reflects customer base may

give insight into customer wants, needs, preferences

• Innovations are more likely where diversity exists


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DOES SOCIAL RESPONSIBILITY PAY?• Evidence is mixed

• Strategically beneficial

• Likely, profit socially responsible management

• Shareholders are sensitive to the extent that it affects profit


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PROMOTING INNOVATION:VANGUARD COMPANIESCharacteristically, they:

• try to satisfy all their stakeholders• are committed to some higher purpose

(profits not the only end of corporate efforts)

• value continuous learning• aim high (dedicated to being best in all

they do)


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ORGANISATIONAL SOCIAL RESPONSIVENESS ‘A term referring to the development of

organisational decision processes where managers anticipate, respond to and manage areas of social responsibility.’

Two aspects:• Monitoring social demands and expectations

• Internal social response mechanisms


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MONITORING SOCIAL DEMANDS/EXPECTATIONS

• Social forecasting

• Opinion surveys

• Social audits

• Issues management

• Social scanning


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INTERNAL SOCIAL RESPONSE MECHANISMS• Individual executives

• Temporary task forces

• Permanent committees

• Permanent departments

• Combination approaches


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BEING AN ETHICAL MANAGER

The difficulties and concerns with business ethics raise three important issues about being a manager:

• Types of managerial ethics

• Ethical guidelines for managers

• Ethical career issues


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TYPES OF MANAGERIAL ETHICS• Immoral management

Lacks ethical principles, concern for profit only

• Amoral managementIgnores, or is oblivious to, ethical issues

• Moral managementConscious attention to ethical standards and issues


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ETHICAL GUIDELINES FOR MANAGERS

• Obey the law.• Tell the truth.• Show respect for people.• Stick to the Golden Rule.• Above all, do no harm.• Participation not paternalism.• Responsibility requires action.


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FACTORS AFFECTING CSR

STAGES OF MORAL DEVELOPMENT

(Kohlberg, 1969)

• Level 1: Pre-conventional morality (Punishment/reward)

• Level 2: Conventional morality (Good by/Good girl - Authority orientation)

• Level 3: Post-conventional morality (Social contracts/Ethical principles)


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Moral intensity of ethical issues (Jones 1991)• Magnitude of consequences• Social consensus• Probability of effect• Temporal immediacy• Proximity• Concentration of effect


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Individual values… four modes• Practical - what worked in the past• Moral - strong sense of right or wrong• Gratifying - drive to feel good about

decisions• Economic - focus on organisational

resources


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ETHICAL CAREER ISSUES• Assessing values and protecting yourself

– Seek advice and support from trusted sources.– Take action to change what you see as not being

ethical.– Take actions to protect yourself.

• Anticipating ethical conflicts– Pre-employment checks: Is this an ethical company?– Is the industry marked by patterns of unethical

behaviour?– Avoid ethical compromises - they can escalate.


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MANAGING AN ETHICAL ORGANISATION

Situational factors influencing ethical behaviour:

• External factors

Extreme competitiveness, high/low opportunities for success, dependency on other organisations

• Internal factors

Push for high performance, labour unrest, delegation, quests for innovation


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MECHANISMS FOR ETHICAL MANAGEMENT• Increasing awareness of diversity• Top management commitment• Codes of ethics• Ethics committees• Ethics audits• Ethics hotlines• Ethics training


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LECTURE SUMMARY• Organisational social responsibility defined• Three major perspectives (Invisible hand, Hand of

government, Hand of management).• Management’s social responsibility: Six

stakeholder groups, links to organisational success?

• CSR: two processes - monitoring social expectations; internal response mechanisms

• Managers’ ethical standards: immoral, amoral and moral; Ethical guidelines; Ethical career issues

• Operating an ethical organisation: mechanisms to facilitate ethical behaviour.

Copyright 2008 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 5e by Bartol,...

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