Copyright Atomic Dog Publishing, 2003 1/18 Social Responsibility and Management Ethics Chapter 3.

Copyright Atomic Dog Publishing, 20031/18

Social Responsibility and Management Ethics

Chapter 3


Ethics and Social Responsibility The issue of ethics and practicing ethical

behavior took on a new meaning with the passage in 1991 of the U.S. Sentencing Commission Guidelines

Under the Guidelines, companies and managers could be prosecuted and punished even if they didn’t know about the unethical behavior

The Guidelines cover such laws as price fixing, fraud, antitrust violations, civil rights, money laundering, conflict of interest, stolen property, copyrights, and extortion


The Meanings of Social Responsibility Social Obligation

Corporation engages in socially responsible behavior when it pursues profit only within the constraints of law

Social Reaction Firms are reactive Social reaction is behavior that is in reaction to

currently prevailing social norms, values, and performance expectations

Business must be accountable for the ecological, environmental, and social costs incurred by its actions


The Meaning of Social Responsibility (cont.)

Social Responsiveness (SR) Behaviors are anticipatory and preventive, rather

than reactive and retroactive SR involves actions that exceed social obligation

and social reaction SR actively seeks solutions to social problems The SR view is the broadest meaning of social

responsibility


Specific Socially Responsible Activities

1. Product Line

2. Marketing Practices

3. Environmental Control

4. Employee Education and Training

5. Employee Relations, Benefits, and Satisfaction

6. Employment and Advancement of Minorities or Women

7. Employee Safety and Health

8. Corporate Philanthropy


Beneficiaries of Socially Responsible Actions

Internal Beneficiaries Customers Employees Stockholders (owners)

External Beneficiaries Specific General


Internal Beneficiaries

Customers Respond promptly to complaints Provide complete and accurate product information Implement advertising programs that are

completely truthful


Internal Beneficiaries (cont.) Employees

Adhere particularly to the safety and health issues, wage and hour provisions, and union and unionization

Provide environments where employees are free from pressure to act in unethical or illegal ways

Provide fringe benefits

Stockholders Disclose fully and accurately to stockholders its

uses of corporate resources and the results of those uses


External Beneficiaries

Specific Special-interest groups: racial and ethnic

minorities, women, the handicapped, and the aged Corporate actions: obligatory, reactive, or

responsive Important characteristic of these actions:

economic, social, and political well-being of a special group is enhanced through the corporation’s efforts


External Beneficiaries (cont.)

General Involves efforts to solve or prevent environmental

or ecological water, air, and noise pollution, and waste and radiation disposal

Introduce stakeholder management devices (SMDs)—relatively new mechanisms through which organizations respond to stakeholder concerns


Business Ethics Today Business ethics refers to:

Standards of right and wrong Development of one’s own ethical standards

Implicit, informal social contract between the corporation and its employees

Will not guarantee lifetime employment

Will offer employees new responsibilities, new benefits, and new power

New compensation schemes such as stock options and gain sharing

Employee rights

“Human Rights Audit”


Impact of Technology on Business Ethics

Helps to manage and protect the security and integrity of company data

Monitors and controls organizational equipment and processes

Facilitates high-tech crime

Ranges from employees using their computers to snoop through confidential computer files to criminal theft of trade secrets


Impact of Technology on Business Ethics (cont.)

Credit card fraud

Telecommunications fraud

Employee use of computers for personal reasons

Unauthorized access to confidential files

Unlawful copying of copyrighted or licensed software

Computer-based sexual harassment

Pornography

Copyright infringement

Obscenities

Software piracy

The inadvertent and deliberate communication of trade secrets to external audiences

Most common crimes reported were:


Managerial Ethics

Ethics are used by managers as guidelines in making decisions that affect employees, the organization, consumers, and other parties

Continues to be a topic of concern because businesses are realizing that ethical misconduct by management can be extremely costly for the company and society as a whole

Determining what is and isn’t ethical is often difficult to do

Currently, several ethical issues are being debated in employee surveillance and polygraph tests


Ethical Standards

Managers must reconcile competing values in making decisions. They make decisions that have consequences

Some prefer a pluralistic approach comprising several principles arranged in a hierarchy of importance

The advantage of the pluralistic approach to ethical decision making is that the decision maker, with intentions to do right, has the basis for evaluating decisions


The Organization’s Role in Ethical Behavior

Provides managers with specific guidelines concerning ethics in decision making


How Companies Make Ethical Governance the Norm

Create credo that publicly proclaims ethical position

Ensure that top management makes clear that it believes in and personally lives up to those standards

Establish ethics officers

Establish ongoing education training programs

Include ethics as part of performance reviews

Place procedures for dealing with those who violate the code of ethics


End of Chapter 3

Copyright Atomic Dog Publishing, 2003 1/18 Social Responsibility and Management Ethics Chapter 3.

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