PowerPoint Presentation
to Accompany
Management, 9/e
John R. Schermerhorn, Jr.
Chapter 2:
Management Ethics and Social
Responsibility
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Planning Ahead — Chapter 2 Study Questions
What is ethical behavior?
How do ethical dilemmas complicate
the workplace?
How can high ethical standards be
maintained?
What is social responsibility and
governance?
Management 9/e - Chapter 2 2
Study Question 1: What is ethical behavior?
Ethics
Code of moral principles.
Set standards of “good” or “bad” or
“right” or “wrong” in one’s conduct.
Ethical behavior
What is accepted as good and right in
the context of the governing moral
code.
Management 9/e - Chapter 2 3
Study Question 1: What is ethical behavior?
Law, values, and ethical behavior:
Legal behavior is not necessarily ethical
behavior.
Personal values help determine
individual ethical behavior.
Terminal values
Instrumental values
Management 9/e - Chapter 2 4
Study Question 1: What is ethical behavior?
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
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
Management 9/e - Chapter 2 5
Figure 2.1 Four views of ethical behavior.
Management 9/e - Chapter 2 6
Study Question 1: What is ethical behavior?
Cultural issues in ethical behavior:
Cultural relativism
Ethical behavior is always determined by
cultural context.
Cultural universalism
Behavior unacceptable in one’s home
environment should not be acceptable
anywhere else.
Considered by some to be ethical
imperialism
Management 9/e - Chapter 2 7
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.
Management 9/e - Chapter 2 8
Study Question 1: What is ethical behavior?
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.
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.
Management 9/e - Chapter 2 9
Study Question 2: How do ethical dilemmas
complicate the workplace?
An ethical dilemma occurs when choices,
although having potential for personal
and/or organizational benefit, may be
considered unethical.
Ethical dilemmas include:
Discrimination
Sexual harassment
Conflicts of interest
Customer confidence
Organizational resources
Management 9/e - Chapter 2 10
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 really in everyone’s best interests.
Nobody will ever find out.
The organization will “protect” you.
Management 9/e - Chapter 2 11
Study Question 2: How do ethical dilemmas
complicate the workplace?
Factors influencing ethical behavior include:
The person
Family influences, religious values, personal
standards, and personal needs.
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.
Management 9/e - Chapter 2 12
Figure 2.3 Factors influencing ethical managerial
behavior—the person, organization, and environment.
Management 9/e - Chapter 2 13
Study Question 3: How can high ethical standards
be maintained?
Ethics training:
Structured programs that help
participants to understand ethical
aspects of decision making.
Helps people incorporate high
ethical standards into daily life.
Helps people deal with ethical
issues under pressure.
Management 9/e - Chapter 2 14
Study Question 3: How can high ethical standards
be maintained?
Whistleblowers
Expose misdeeds of others to:
Preserve ethical standards
Protect against wasteful, harmful, or
illegal acts
Laws protecting whistleblowers vary
Management 9/e - Chapter 2 15
Study Question 3: How can high ethical standards
be maintained?
Barriers to whistleblowing include:
Strict chain of command
Strong work group identities
Ambiguous priorities
Organizational methods for
overcoming whistleblowing barriers:
Ethics staff units who serve as ethics
advocates
Moral quality circles
Management 9/e - Chapter 2 16
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.
Management 9/e - Chapter 2 17
Study Question 3: How can high ethical standards
be maintained?
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
ethics:
Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information
Management 9/e - Chapter 2 18
Study Question 3: How can high ethical standards
be maintained?
Checklist for dealing with ethical dilemmas:
Recognize the ethical dilemma
Get the facts
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
Management 9/e - Chapter 2 19
Study Question 3: How can high ethical standards
be maintained?
Moral Management
How managers act and communicate
as role models
Immoral manager
Amoral manager
Moral manager
Ethics mindfulness
Enriched ethical awareness that affects
behavior
Management 9/e - Chapter 2 20
Figure 2.4 How can high ethical standards be
maintained?
Management 9/e - Chapter 2 21
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.
Management 9/e - Chapter 2 22
Study Question 4: What is social responsibility and
governance?
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
Employees
Customers
Suppliers
Owners
Competitors
Regulators
Interest groups
Management 9/e - Chapter 2 23
Figure 2.5 Multiple stakeholders in the environment of
an organization.
Management 9/e - Chapter 2 24
Study Question 4: What is social responsibility and
governance?
Perspectives on social
responsibility:
Classical view—
Management’s only responsibility is to
maximize profits.
Socioeconomic view—
Management must be concerned for the
broader social welfare, not just profits.
Management 9/e - Chapter 2 25
Study Question 4: What is social responsibility and
governance?
Arguments against Arguments in favor of
social social responsibility:
responsibility: Adds long-run profits
Reduced business
Improved public image
profits
Higher business Avoids more
costs government regulation
Dilution of business Businesses have
purpose resources and ethical
Too much social obligation
power for business
Lack of public
accountability
Management 9/e - Chapter 2 26
Study Question 4: What is social responsibility and
governance?
Criteria for evaluating corporate
social performance:
Is the organization’s …
Economic responsibility met?
Legal responsibility met?
Ethical responsibility met?
Discretionary responsibility met?
Management 9/e - Chapter 2 27
Figure 2.6 Criteria for evaluating corporate social
performance.
Management 9/e - Chapter 2 28
Study Question 4: What is social
responsibility and governance?
Strategies for pursuing social
responsibility:
Obstructionist — meets economic
responsibilities.
Defensive — meets economic and legal
responsibilities.
Accommodative — meets economic, legal,
and ethical responsibilities.
Proactive — meets economic, legal,
ethical, and discretionary responsibilities.
Management 9/e - Chapter 2 29
Figure 2.7 Four strategies of corporate social
responsibility—from obstructionist to proactive
behavior.
Management 9/e - Chapter 2 30
Study Question 4: What is social responsibility and
governance?
How government influences
organizations:
Common areas of government
regulation of business affairs:
Occupational safety and health
Fair labor practices
Consumer protection
Environmental protection
Management 9/e - Chapter 2 31
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
Management 9/e - Chapter 2 32
Study Question 4: What is social responsibility and
governance?
Leadership beliefs that guide
socially responsible practices:
People
Communities
Natural environment
Long term
Reputation
Management 9/e - Chapter 2 33
Figure 2.8 Centrality of ethics and social responsibility
in leadership and the managerial role.
Management 9/e - Chapter 2 34
Study Question 4: What is social responsibility and
governance?
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.
Management 9/e - Chapter 2 35
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