Managing with Ethics and Social Responsibility

[Admiral "Bull" Halsey]

II. What is Ethnical Behaviour?

A Ethnics – in concept and in practice

1. Moral – Relating to dealing with or capable of making the distinction between right and wrong in conduct or character.

2. Ethnics – The system or code of morals of a person or group that sets standards as to what is good or bad or right or wrong in ones conduct.

3. Ethical behaviour – Behaviour that is accepted as “good” and “right” as oppose to “bad” or “wrong” in the context of the governing moral code.

4. An expanded view of ethical behaviour is reflected by the following “ethical behaviour” equations: Ethical Behaviour = Legal behaviour + “something else”

5. The social context involves the group, organizational, societal, or border context within which the prevailing norms and values underlying a governing moral code established.

B. Ways of thinking about Ethical behaviour.

1. Use Teaching Transparency 11 to demonstrate the 4 ways of thinking about ethical behaviour:

a. Unitarian View – Delivering greatest good to greatest number of people

b. Individual View – Doing what is best for long-term self-interests

c. Moral rights View – Doing what respects the fundamental rights of human being

d. Justice View – Being impartial, fair, and “equitable”

C. Ethical dilemmas faced by managers

1. An ethical dilemma occurs when someone much choose whether or not to pursue a course of action that although offering the potential of personal and organization benefit or both is also unethical and/or illegal

2. Use Transparency Teaching 12 to illustrate examples of manager’s bosses pursuing their subordinate to engage in unethical activities.

D. Rationalization for Unethical behaviour Teaching Transparency 13.

1. “It’s not really illegal” This rationalization is particularly common in ambiguous situation. A good rule of thumb is “When in doubt don’t do it”

2. “It’s in everyone’s best interest.” Look beyond this view to the long run implications. When asking “How far should I go” the answer is “don’t find out”

3. No one will ever know about it – This argument assumes no crime is committed unless discovered. To deter this view, make sure sanctions for wrong doing are public.

4. The organization will stand behind me – This implies the organization will condone the practice, but organizational norms should not be put above the law or social morality.

III. Managerial Ethics

A.) Managerial Ethics are principles that guide actions and the actions and decisions of managers, and determine if they’re good or bad or right or wrong in moral sense.

B.) Ethical Managerial behaviour is behaviour that conforms not only to the law, but also to a boarder set of moral principles common society.

Factors Affecting Managerial Ethics – Used Transparency 15 to summarize the following factors affecting ethical managerial behaviour.

1. The manger as a person. In developing ethical frameworks as personal strategies for ethical decision making, managers are influenced by the following factors:

-Family influence

-Religious values

-Personal standards and needs

2. The employing organization:

-Policies, code of conduct

-Behaviour of supervisors

-Behaviour of peers

3. The external environment

-Government regulation

-Norms and values and society

-Ethical climate of the industries

IV. Maintaining High Ethical Standards.

A.) Ethic training is designed to help people better understand the ethical aspects of decision making, and incorporate high ethical standards into their daily behaviours.

B.) A 6 step checklist for making Ethical Decisions.

1. Recognize and define the ethical dilemma

2. Get the fact

3. Make your decision

4. List your opinion:

Is it legal?

Is it Right?

Is it beneficial?

5. Test your option.

6. Before taking action, double check your decision and ask “How will I feel if my family finds out about my decision”. How will I feel if my decision is printed in the newspaper?

C.) Whistleblower Protection.

1. A Whistleblower is someone who exposes the misdeeds of others in organizations to preserve ethical standards and protecting against wasteful, harmful, or illegal acts.

2. New provincial laws protect Whistleblower from retaliatory discharge

3. Nevertheless, organizational blocks to Whistleblowing includes:

a. A strict chain of commands which makes it different to report unethical practices to higher level managers.

b. Strong work group identifies. Group norms may support unethical practices. Violations of those norms through Whistleblower make result in group sanctions.

c. Ambiguous priorities. Formal policies may be inconsistent which day-to-day practices, thus making it difficult to determine if a behaviour is unethical, let alone expose it.

4. Ethic advisors and moral quality circles are 2 ways to overcome these barriers and encourage high ethical standards.

5. Use Teaching Transparency 15 to illustrate Do and Don’t Tips for Whistleblowers:

a. Do be sure that you really understand what is happening and that your allegation is absolutely correct.

b. Don’t assume that you are automatically protected by law – federal or provincial

c. Do research federal and provincial laws to determine your protection and other procedural guidelines.

d. Don’t talk first to the media; consult with an attorney to ensure that your rights will be protected.

e. Do keep accurate records to document your case, with copies filed outside the office.

f. Don’t act in anticipation of a big financial windfall if you end up being fired.

D.) Top Management support

1. Because top managers serve as a role models, their behaviour can either encourage or discourage unethical behaviour.

2. Too much pressure to accomplish goals that are too difficult can also encourage unethical behaviour. Surveys of executives suggest that most feeling they are under pressure to compromise their ethics to achieve company coals.

E.) Formal Codes of Ethics.

1. Codes of Ethics documents in writing the commitment to values and ethical conducts and organization expects of its employees.

2. A report of a business Roundtable of 200 CEOS recommended

A.) Executives make greater commitments to ethics programs.

B.) Written codes to be established to clearly communicate management’s expectation to all employees.

3. Areas often covered in written codes of ethics:

a.) Workplace diversity

b.) Bribes and kickbacks

c.) Conflicts of interest

d.) Political contributions

e.) Honesty of books and records

f.) Custome/Supplier relationships

g.) Misappropriation of corporate assets

h.) Confidentiality of corporate information

F.) Positive Ethical Climates

The above ways of maintaining high ethical standards rest upon the underlying human resource foundations of the organization – its managers and other employees, who must act as positives role modes to create and maintain positive ethical climates.

IV. Corporate Social Responsibility

a) The concept of Corporate Social Responsibility

1. Corporate Social Responsibility is an obligation of the organization to act in ways that serve both its own interests and the interests of its many external publics.

2. These publics are considered stakeholders, the persons and groups who are affected in one way or another by the behaviour of an organization.

3. The arguments of the classical view “against” social responsibility and the arguments of the socio-economic view “for” social responsibility are summarized below:

Against:

- Loss of business profits

- Increased business cost

- Dilution of business purpose

- Too much social power for business

- Lack of business accountability to be public

For:

- Long-run profits for business

- Public expectations support business social responsibility

- Public images of business will improve

- Better environment for everyone

- Business may avoid more regulations

- Business has the resources

- Business have the ethical obligation

C. Evaluation Corporate Social Performance

1.) A social audit is a systematic assessment and reporting of an organization’s resources and action commitments, and performance accomplishments in these areas of social responsibility.

2.) 4 Criteria for evaluating corporate social performance:

a. Is the organization’s economic responsibility met?

- It’s economic responsibility is met when it earns a profit through the provision of goods and services desired by customers.

b. Is the organization’s legal responsibility met?

- Its legal responsibility if fulfilled when it operates within the law and according to the requirements of various external regulations.

c. Is the organizational discretionary responsibility met?

- It’s ethical responsibility is met when it’s actions voluntarily movement beyond basic economic, legal, and ethical expectation to providing leadership in advancing a well being of stakeholders.

d. A continuum of Social Responsibility Strategies.

Use Transparency 17 to display this continuum and the primary concerns of the following strategies of social responsibility.

a.) Obstruction – “fight the social demands”, met economic and legal responsibilities.

b.) Defence – Do the minimum legally requirement. Meet economic and legal responsibilities.

c.) Accommodation – “Do the minimum ethically required”. Meet economic, legal, and ethical responsibilities.

d.) Pro-action – “Take leadership in social initiative” – Meet direct economic, legal, ethical, and discretionary responsibility.

V. Government Regulation of business

A. Government agencies as Regulators – Government agencies such as CRTC (Canadian Radio and Telecommunication Commission), Environment Canada, and Agriculture Canada’s Food Production and inspection Branch are charged with monitoring and ensuring compliance with government legislation.

B. The complex Legal Environment – Provincial and federal laws have lead to the following “quality-of-life” protections for Canadian Workers.

1. Occupational Safety and Health

2. Fair labour practices are governed by such laws as the Employment Standard Act.

3. Consumers protection which gives the government authority to remove from sale any product considered dangerous,

4. Environmental protection is provided by many laws.

C. International Dimensions of Government Regulations

Government regulations considerably complicate international business operations. Examples: It took 14 years to negotiate the start-up of the Moscow McDonald’s. Lengthy bureaucratic delays and political risk concerns about dealing with Soviet government agencies have lessened the appeal of Soviet ventures for many of the other western firms.

D. Political Actions by Business- Use Transparency 18 to illustrate how business attempts to influence government through:

1. Interpersonal contacts - Business executives try to persuade government officials and politicians to adopt pro-business stands on pending legislation.

2. Public relations campaigns – Business try to create positive public images to garner support for pro-business government.

3. Lobbying – Business employ lobbyists to persuade legislation to adopt pro-business positions.

4. Direct Candidate support – Business executives can individually endorse political candidates or get involved in political action committees (PAC’s) organized to assist the election of candidates of favour special interests.

5. Illegal acts – Business repetitive gain special favours by bribing government officials making illegal campaign contributions, blackmail, etc.

VII. Ethics, Social Responsibility, and Managerial Performance.

Use Transparency 19 to illustrate how high ethical standards and corporate social responsibility are important issues when add complexity to the managers challenge.

a.) Managerial ethics and social responsibility are important issues when add complexity to the managers challenge.

b.) While the benefits may not be immediately apparent in a short run, high ethical standards and socially responsible behaviour paying long-term dividends.

Edited March 9, 2009 by Takanori Nishikawa