schermerhorn mgmt9 ch02

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Management, 9/eJohn R. Schermerhorn, Jr.

Chapter 2:

Prepared by: Jim LoPresti

University of Colorado, Boulder

Published by: John Wiley & Sons, Inc.

Chapter 2: Management Ethics and Social

Responsibility

Planning Ahead — Chapter 2 Study Questions

�What is ethical behavior?

�How do ethical dilemmas complicate the workplace?

How can high ethical standards be

Management 9/e - Chapter 2 2

�How can high ethical standards be maintained?

�What is social responsibility and governance?

� Ethics

� Code of moral principles.

� Set standards of “good” or “bad” or

“right” or “wrong” in one’s conduct.

Study Question 1: What is ethical behavior?


“right” or “wrong” in one’s conduct.

� Ethical behavior

� What is accepted as good and right in

the context of the governing moral

code.

� Law, values, and ethical behavior:

� Legal behavior is not necessarily ethical

behavior.



� Personal values help determine

individual ethical behavior.

�Terminal values

�Instrumental values


� Utilitarian view of ethics — greatest good to the greatest number of people.

� Individualism view of ethics — primary commitment is to one’s long-term self-interests.

� Moral-rights view of ethics — respects and


� Moral-rights view of ethics — respects and protects the fundamental rights of all people.

� Justice view of ethics — fair and impartial treatment of people according to legal rules and standards.• Procedural justice

• Distributive justice

• Interactional justice

Figure 2.1 Four views of ethical behavior.


� Cultural issues in ethical behavior:

� Cultural relativism

� Ethical behavior is always determined by

cultural context.



cultural context.

� Cultural universalism

� Behavior unacceptable in one’s home

environment should not be acceptable

anywhere else.

� Considered by some to be ethical

imperialism

Figure 2.2 The extremes of cultural relativism and ethical

imperialism in international business ethics.


Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,”

Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.


How international businesses can respect core or universal values:

Respect for human dignity

• Create culture that values employees, customers, and suppliers.

• Keep a safe workplace.

• Produce safe products and services.


• Produce safe products and services.

Respect for basic rights

• Protect rights of employees, customers, and communities.

• Avoid anything that threatening safety, health, education, and living standards.

Be good citizens

• Support social institutions, including economic and educational systems.

• Work with local government and institutions to protect environment.

� An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.

� Ethical dilemmas include:

Study Question 2: How do ethical dilemmas

complicate the workplace?


� Ethical dilemmas include:� Discrimination

� Sexual harassment

� Conflicts of interest

� Customer confidence

� Organizational resources

Study Question 2: How do ethical dilemmas

complicate the workplace?

� Ethical behavior can be rationalized by

convincing yourself that:

� Behavior is not really illegal.


� Behavior is not really illegal.

� Behavior is really in everyone’s best interests.

� Nobody will ever find out.

� The organization will “protect” you.

� Factors influencing ethical behavior include:

� The person

�Family influences, religious values, personal

standards, and personal needs.

Study Question 2: How do ethical dilemmas complicate the workplace?


� The organization

�Supervisory behavior, peer group norms and

behavior, and policy statements and written rules.

� The environment

�Government laws and regulations, societal norms

and values, and competitive climate in an industry.

Figure 2.3 Factors influencing ethical managerial

behavior—the person, organization, and environment.


�Ethics training:� Structured programs that help participants to understand ethical aspects of decision making.

Study Question 3: How can high ethical standards be maintained?


aspects of decision making.

� Helps people incorporate high ethical standards into daily life.

� Helps people deal with ethical issues under pressure.

�Whistleblowers

� Expose misdeeds of others to:



� Expose misdeeds of others to:

� Preserve ethical standards

� Protect against wasteful, harmful, or illegal acts

� Laws protecting whistleblowers vary

Study Question 3: How can high ethical standards

be maintained?

� Barriers to whistleblowing include:� Strict chain of command

� Strong work group identities

� Ambiguous priorities


� Ambiguous priorities

�Organizational methods for overcoming whistleblowing barriers:� Ethics staff units who serve as ethics advocates

�Moral quality circles

Study Question 3: How can high ethical standards

be maintained?

� Ethical role models:

� Top managers serve as ethical role models.

� All managers can influence the ethical behavior


of people who work for and with them.

� Excessive pressure can foster unethical

behavior.

� Managers should be realistic in setting

performance goals for others.

� Codes of ethics:� Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.

Areas often covered by codes of



� Areas often covered by codes of ethics:� Bribes and kickbacks� Political contributions� Honesty of books or records� Customer/supplier relationships� Confidentiality of corporate information

� Checklist for dealing with ethical dilemmas:

� Recognize the ethical dilemma� Get the facts� Identify your options



� Identify your options� Test each option: Is it legal? Is it right? Is it beneficial?

� Decide which option to follow� Double-check decision by asking “spotlight” questions:

� “How would I feel if my family found out about my decision?”

� “How would I feel about this if my decision were in the local news?”

� Take action

�Moral Management

� How managers act and communicate as role models

� Immoral manager



� Immoral manager

� Amoral manager

�Moral manager

� Ethics mindfulness

� Enriched ethical awareness that affects behavior

Figure 2.4 How can high ethical standards be maintained?


Study Question 4: What is social responsibility and governance?

� Corporate social responsibility and

governance:

� Looks at ethical issues on the


organization level.

�Obligates organizations to act in ways

that serve both its own interests and

the interests of society at large.


� Organizational stakeholders� Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.

� Typical organizational stakeholders


� Typical organizational stakeholders� Employees

� Customers

� Suppliers

� Owners

� Competitors

� Regulators

� Interest groups

Figure 2.5 Multiple stakeholders in the environment of

an organization.



� Perspectives on social

responsibility:

� Classical view—


� Classical view—

�Management’s only responsibility is to

maximize profits.

� Socioeconomic view—

�Management must be concerned for the

broader social welfare, not just profits.


� Arguments against social responsibility:� Reduced business profits

� Arguments in favor of social responsibility:

� Adds long-run profits

� Improved public image


profits

� Higher business costs

� Dilution of business purpose

� Too much social power for business

� Lack of public accountability

� Avoids more government regulation

� Businesses have resources and ethical obligation


� Criteria for evaluating corporate

social performance:

� Is the organization’s …


� Economic responsibility met?

� Legal responsibility met?

� Ethical responsibility met?

� Discretionary responsibility met?

Figure 2.6 Criteria for evaluating corporate social

performance.



� Strategies for pursuing social responsibility:�Obstructionist — meets economic responsibilities.


responsibilities.

�Defensive — meets economic and legal responsibilities.

� Accommodative — meets economic, legal, and ethical responsibilities.

� Proactive — meets economic, legal, ethical, and discretionary responsibilities.

Figure 2.7 Four strategies of corporate social

responsibility—from obstructionist to proactive

behavior.



�How government influences

organizations:

� Common areas of government

regulation of business affairs:


regulation of business affairs:

�Occupational safety and health

�Fair labor practices

�Consumer protection

�Environmental protection

Study Question 4: What is social responsibility and

governance?

�How organizations influence

governments:

� Personal contacts and networks


� Public relations campaigns

� Lobbying

� Political action committees

� Sometimes by illegal acts, such as bribery or

illegal financial contributions to political

campaigns

Study Question 4: What is social responsibility and

governance?

� Leadership beliefs that guide

socially responsible practices:

� People


� People

� Communities

� Natural environment

� Long term

� Reputation

Figure 2.8 Centrality of ethics and social responsibility

in leadership and the managerial role.



� Corporate governance:

� The oversight of the top management of an

organization by a board of directors.


� Corporate governance involves:

� Hiring, firing, and compensating the CEO.

� Assessing strategy.

� Verifying financial records.

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