Ethics &

Social
Responsibility

Don Hellriegel
Susan E. Jackson
John W. Slocum, Jr.

MANAGING: A COMPETENCY
BASED APPROACH
11th Edition
Chapter 3Ethics and Social
Responsibility
Prepared by
Argie Butler
Texas A&M University

Ethics &
Social
Responsibility

CHAPTER 3ETHICS AND SOCIAL

RESPONSIBILITY

LEARNING GOALS
1. State the importance of ethics for individual employees
and organizations
2. Describe four influences that shape the ethical behavior
and decisions of individuals and organizations
3. Describe three approaches that people use when making
ethical judgments
4. Explain stakeholder social responsibility and how it
influences managers ethical decisions and behavior
Chapter 3: PowerPoint 3.1

Ethics &
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IMPORTANCE OF ETHICS:
SNAPSHOT

While the majority of corporate CEOs are honest leaders

dedicated to building their companies, far too many got caught
up in the quest for personal gain and wound up sacrificing their
values and their stakeholders. Call it greed, because thats what
it is. It threatens the very fabric of our system.
William W. George, Former CEO and Chairman, Medtronic, Inc.

Ethics
The set of values, principles, and rules that define right
and wrong conduct
Chapter 3: PowerPoint 3.2

Ethics &
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LONG-TERM ORGANIZATIONAL
EFFECTIVENESS
Stronger financial performance over the long run
Greater sales, brand image, and reputation
More employee loyalty and commitment
Less vulnerability to activist pressure and boycotts
Fewer or no fines, court-imposed remedies,
and criminal charges
Chapter 3: PowerPoint 3.3

Ethics &
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Cultural Influences
Legal and Regulatory Influences
Organizational Influences
Individual Influences
Ethical Conduct
Individual
Organization

Chapter 3: PowerPoint 3.4 (Figure 3.1)

Ethics &
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Cultural Influences
Culture
The dominant pattern of living, thinking, and believing
that is developed and transmitted by people, consciously
or unconsciously, to subsequent generations

Culture Values
Those consciously and subconsciously deeply held
beliefs that specify general preferences and behaviors,
and define what is right and wrong
Chapter 3: PowerPoint 3.5

Ethics &
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Personal Values
Core Values in North American Culture

Chapter 3: PowerPoint 3.6

Honesty

Family

Integrity

Achievement

Trustworthiness

Reliability

Respect for
Other People

Fairness

Self-respect

Loyalty

Ethics &
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Legal and Regulatory Influences

At one time U.S.
organizations could legally
discriminate against women
and minorities
Legality doesnt always mean
ethical

Laws: Societys values and standards

that are enforceable in the courts

Chapter 3: PowerPoint 3.7

Ethics &
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Legal and Regulatory Influences

Examples of Lawful Reasons for Dismissing Employees
Incompetence in performance that does not respond
to training or to accommodation
Gross or repeated insubordination
Civil rights violations such as engaging in harassment
Illegal behavior such as theft or physical violence
Repeated lateness or unexcused absences
Drug activity or drunkenness on the job
Chapter 3: PowerPoint 3.8

Ethics &
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Legal and Regulatory Influences

Examples of Unlawful Reasons for Dismissing Employees

Blowing the whistle about illegal conduct by the employer
Reporting Occupational Safety and Health Administration
violations
Filing discrimination charges with the Equal Employment
Opportunity Commission or a state or municipal fair
employment agency
Filing unfair labor practice charges with the National
Labor Relations Board or a state agency
Engaging in union activities, provided there is no violence
or unlawful behavior
Complaining or testifying about violations of equal pay,
wage, or hour law
Chapter 3: PowerPoint 3.9 (Adapted from Table 3.1)

Ethics &
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Legal and Regulatory Influences

Sarbanes-Oxley Act
Imposes rigorous auditing, financial disclosure, executive
compensation, and corporate governance requirements
on publicly traded companies

Snapshot
todays compliance challenges are really information
challenges. At its core, the Sarbanes-Oxley Act is about
ensuring that data is turned into financial information in
a way that enables accurate, reliable, transparent and
timely financial reporting.
Lee Dittmar, Principal, Deloitte Consulting LLP
Chapter 3: PowerPoint 3.10

Ethics &
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Managements Day-to-Day Behaviors and Decisions are Key

Create Formal Ethics System
Make It
Acceptable
to Talk
About Ethics

Fostering an
Ethical
Culture

Communicate
Ethical
Expectations

Include Ethical
Conduct in
Performance Evaluations

Chapter 3: PowerPoint 3.11

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Organizational Influences
Abbreviated Principles in a World Code of Ethics
Fiduciary Principle: Act as a fiduciary (representative)
for the company and its investors
Property Principle: Respect property and the rights
of those who own it
Reliability Principle: Honor commitments
Transparency Principle: Conduct business in a
truthful and open manner
Chapter 3: PowerPoint 3.12 (Adapted from Table 3.2)

(continued)

Ethics &
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Continued: Abbreviated Principles in a World Code of Ethics

Dignity Principle: Respect the dignity of all people; protect the
health, safety, privacy, and human rights of others
Fairness Principle: Engage in free and fair competition, deal with all
parties fairly and equitably
Citizenship Principle: Act as responsible citizens of the community
Responsiveness Principle: Engage with parties who may have
legitimate claims and concerns relating to the companys activities
Source: Adapted from L. Paine, R. Deshpand, J.D. Margolis, and K.E.
Bettcher. Up to code: Does your companys conduct meet world-class
standards? Harvard Business Review, 2005, 82(2), 122-133.
Chapter 3: PowerPoint 3.13 (Adapted from Table 3.2)

Ethics &
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Kohlbergs Stages of Moral Development

Universal
UniversalPrinciples
Principles
Social
SocialContract
Contract
Law
Law&
&Order
Order
Interpersonal
Interpersonal
Instrumental
Instrumental
Obedience
Obedience&
&Punishment
Punishment
Childhood

Through

Chapter 3: PowerPoint 3.14 (Figure 3.2)

Adulthood

Ethics &
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Kohlbergs Stages of Moral Development (contd)

Obedience and Punishment Stage: a person does the
right thing mainly to avoid punishment or to obtain
approval
Instrumental Stage: a person becomes aware that others
also have needs and begins to defer to them to get what
the individual wants
Interpersonal Stage: a person considers appropriate
behaviors as that which pleases or is approved by friends
or family
Chapter 3: PowerPoint 3.15

Ethics &
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Kohlbergs Stages of Moral Development (contd)

Law and Order Stage: a person considers proper behavior
as doing ones duty (obligation), showing respect for
authority, and maintaining the social order for its own
sake; loyalty to the nation and its laws are paramount
Social Contract Stage: a person is aware that people hold
a variety of conflicting personal views that go beyond the
letter of the law; a greatest good for the greatest number
emphasis
Universal Principles Stage: a person considers appropriate
conduct as determined by a persons conscience, based on
universal ethical principles
Chapter 3: PowerPoint 3.16

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Individual Influences
Whistle-blowing
Whistle-blowers:
employees who
report unethical
or illegal actions
by their employers
to other people or
organizations that
are capable of
taking corrective
action

Chapter 3: PowerPoint 3.17

Four questions to ask before whistle-blowing

1. Is this the only way?

4. Am I ready?

2. Do I have the
Key
evidence?
Questions

3. Why am I doing this?

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Making Ethical Judgments:

Utilitarian Approach

Focuses on behaviors and their results,

not on the motives for such actions
Organizational Goal
Primary managerial obligation is to maximize
shareholders profits and their long-term interests

Efficiency
Obligation is to minimize inputs and maximize outputs

Conflicts of Interest
Personal interests are not to conflict with achievement
of organizational goals
Chapter 3: PowerPoint 3.18

Ethics &
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Making Ethical Judgments:

Utilitarian Approach
Profit maximization
Competition
benefits society
and consumers

Core
Values
Sacrifice and
hard work

Chapter 3: PowerPoint 3.19

Rewards based
on abilities and
achievements

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Decisions should be consistent with fundamental rights

and privileges (e.g., life, freedom, health, and privacy).
Life and Safety
Freedom
of
conscience
and speech

Moral
Rights

Privacy
Chapter 3: PowerPoint 3.20 (Figure 3.3)

Truthfulness

Ethics &
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Snapshot
If you are truly interested in teaching a grand and
critically important concept like honesty, you must be
willing to accept the awkward situations and inevitable
flaring of human passions that are certain to occur.
However, its unquestionably worth the effort.
Tom Asacker, Business Consultant and Author of
Sandbox Wisdom
Chapter 3: PowerPoint 3.21

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Decisions and behavior are evaluated with regard

to how equitably they distribute benefits and costs
among individuals and group
Distributive Justice Principle
Requires that individuals not be treated differently on the
basis of arbitrarily defined characteristics
Individuals who are similar in relevant respects should be
treated similarly
Individuals who differ in relevant respects should be treated
differently in proportion to the differences among them
Chapter 3: PowerPoint 3.22

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Fairness Principle
Requires employees to support the rules of the
organization as long as the organization is just (or fair)
and employees have voluntarily accepted some benefits
or opportunities in order to further their own interests
Both the organization and its employees have obligations
and both should accept their responsibilities
Procedural justice: formal process for investigating
grievances and taking remedial actions
Chapter 3: PowerPoint 3.23

Ethics &
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Natural Duty Principle

Requires that
decisions and
behaviors be
based on
universal
principles
associated
with being a
responsible
member of
society
Chapter 3: PowerPoint 3.24

Help others who are

Not to harm or
in need or jeopardy,
injure another
without excessive
personal risk
or loss Universal

duties
To support
and comply with
just institutions

Not to cause
unnecessary
suffering

Ethics &
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Justice Approach
Moral Rights Approach
Utilitarian
Approach

Chapter 3: PowerPoint 3.25 (Figure 3.4)

Ideal in
Ethical
Decision
Making

Ethics &
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Stakeholder Social Responsibility

Managers and other employees have obligations to
identifiable groups that are affected by or can affect
the achievement of an organizations goals

Rationale
Enlightened self-interest
Sound investment
Inference avoidance
Chapter 3: PowerPoint 3.26

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Media
Political
Action
Groups/
Activists

Secondary Stakeholders
Governments
(Regulatory Agencies)
Primary Stakeholders
Customers
Suppliers

The
Employees
Organization
Shareholders

Nongovernmental
Organizations
Chapter 3: PowerPoint 3.27 (Figure 3.5)

Unions

Ethics &
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Examples of Types of
Stakeholder Pressures

Employees
Pay and benefits
Safety and health
Rights at work/global labor standards

Shareholders
Demands for efficiency/profitability
Viability (sustainability)
Growth of investment
Chapter 3: PowerPoint 3.28 (Adapted from Table 3.4)

Ethics &
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Examples of Types of
Stakeholder Stakeholder Pressures
(contd)

Customers
Competitive prices
Quality and safe products
Respect for customers privacy

Suppliers
Meet commitments
Repeat business
Fair trade practices/ethical treatment
Chapter 3: PowerPoint 3.29 (Adapted from Table 3.4)

Ethics &
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Sustainable Development
Conducting business in a way that protects the
natural environment while making economic
progress, thus meeting the needs of the present
generation without compromising the ability of
future generations to meet their own needs

Chapter 3: PowerPoint 3.30

Ethics &
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Sustainable Development
A Few Components of Sustainable Development and
Sustainability
Integrated solutions to environmental, social and economic
needs
Using resources more efficiently and decoupling growth
from environmental damage
Recognizing that decisions and actions taken locally have
global impacts
Acting now to address sustainable development concerns,
many of which will be global and long-term in nature
Win-win-win solutions possible, rather than trade-offs
between social, environmental and economic issues
Chapter 3: PowerPoint 3.31 (Adapted from Table 3.5)

Ethics &
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Evaluating Social Performance

Disclosure of Social and
Environmental
Information

Creating
Shareholder
Value with
Corporate
Responsibility

Communication
Major
and
Themes
Engagement
with Various
Proactive
Groups
Management Beyond
Minimum
Requirements

Chapter 3: PowerPoint 3.32