MANAGING SOCIAL

RESPONSIBILITY
AND ETHICS

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 LEARNING OBJECTIVES
1. Discuss what it means to be socially responsible and what
factors influence that decision.
2. Explain green management and how organizations can go
green.
3. Discuss the factors that lead to ethical and unethical
behavior.
• Develop your skill at creating trust in work groups.
4. Describe management’s role in encouraging ethical
behavior.
 Know how to make good decisions about ethical dilemmas.

5. Discuss current social responsibility and ethics issues.

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 FROM OBLIGATION TO RESPONSIVENESS
TO RESPONSIBILITY

• Social Obligation – the obligation of a

business to meet its economic and legal
responsibilities and nothing more.
• This idea reflect the Classical view of social
responsibility
• Classical view – the view that management’s
only social responsibility is to maximize
profits.

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 FROM OBLIGATION TO RESPONSIVENESS
TO RESPONSIBILITY (CONT.)
• Socioeconomic view – the view that management’s social
responsibility goes beyond making profits to include protecting and
improving society’s welfare.
• 84% of global executives said that companies must balance obligations to
shareholders with obligations to the public good.
• That’s why firms are now required to publish corporate social report in
addition to corporate annual report
• Social responsiveness – when a firm engages in social actions in
response to some popular social need.
• Managers are guided by social norms and values and make practical,
market-oriented decisions about their actions.
• For instance, Ford Motor Company became the first automaker to endorse a
federal ban on sending text messages while driving.

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 FROM OBLIGATION TO RESPONSIVENESS
TO RESPONSIBILITY (CONT.)

• Social responsibility –
a business’s intention,
beyond its legal and
economic obligations, to do
the right things and act in
ways that are good for
society.
• A socially responsible
organization does what is
right because it feels it has an
ethical responsibility to do so.

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  As one of the largest single-store electronics retailers in the United States, it responded to
soaring energy costs and environmental concerns by shutting off lights more frequently and
reducing air conditioning and heating. However, an Abt family member said, “These actions
weren’t just about costs, but about doing the right thing. We don’t do everything just
because of money.” Which would be described as socially responsible according to our
definition.

 A Bangladeshi firm that meets Govt pollution control standards is meeting its social
obligation because laws mandate these actions.

 Again when it provides on- site child-care facilities for employees or packages products
using recycled paper, it’s being socially responsive.
 Why? Working parents and environmentalists have voiced these social concerns and
demanded such actions.

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 SHOULD ORGANIZATIONS BE SOCIALLY
INVOLVED?
 Numerous studies have examined whether social
involvement affects a company’s economic performance.

 most found a small positive relationship


Because these studies have shown that relationship is
affected by various circumstantial factors such as firm
size, industry, economic conditions, and regulatory
environment

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 SHOULD ORGANIZATIONS BE SOCIALLY
INVOLVED?

 Another way to view social involvement and economic

performance is by looking at socially responsible investing
(SRI) funds

Social Screening – applying social and environmental criteria

(screens) to investment decisions.
• SRI funds usually will not invest in companies involved in
liquor, gambling, tobacco, nuclear power weapons, price
fixing, fraud, or in companies that have poor product safety,
employee relations, and environmental track records.

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 SHOULD ORGANIZATIONS BE SOCIALLY
INVOLVED?

 Social Investment Forum reports that the performance of

most SRI funds is comparable to that of non-SRI funds.
 So, what can we conclude about social involvement and
economic performance?
 It appears that a company’s social actions don’t hurt its
economic performance.
 Given political and societal pressures to be socially involved,
managers probably need to take social issues and goals into
consideration as they plan, organize, lead, and control.

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 BUT WHAT DO YOU THINK? SHOULD ORGANIZATIONS
BE SOCIALLY INVOLVED?
ARGUMENTS FOR AND AGAINST SOCIAL RESPONSIBILITY

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 GREEN MANAGEMENT AND SUSTAINABILITY

• Until the late 1960s, few people (and organizations) paid attention to the
environmental consequences of their decisions and actions.

• However, a number of environmental disasters brought a new spirit of

environmentalism to individuals, groups, and organizations.

• Managers have begun to consider the impact of their organization on the natural
environment, which we call green management.

• Green Management – managers consider the impact of their organization on

the natural environment.

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 HOW ORGANIZATIONS GO GREEN

• Managers and organizations can do many things to protect

and preserve the natural environment.
• There are four approaches:
• Legal (or Light Green) Approach – firms simply do what is
legally required by obeying laws, rules, and regulations
willingly and without legal challenge that is, they fulfill their
social obligation.

• Market Approach – firms respond to the preferences of their

customers for environmentally friendly products.

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 HOW ORGANIZATIONS GO GREEN (CONT.)

• Stakeholder Approach – firms work to meet the

environmental demands of multiple stakeholders—
employees, suppliers, and the community.
• Activist Approach – firms look for ways to protect
the natural resources. They respect and preserve
the environment and be actively socially
responsible.
• E.g. In Bangladesh, most eco friendly facilities are
run by Ha-meem group through their 26 plants.
• Square Fashions most social and technically
compliant organization.

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 EXHIBIT 6-2
GREEN APPROACHES

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 EVALUATING GREEN MANAGEMENT ACTIONS

Ways that organizations show their commitment to be green:

 voluntarily report their efforts in promoting environmental
sustainability using the guidelines developed by the Global
Reporting Initiative (GRI).
 follow ISO 14000 (environmental management) standards
developed by the nongovernmental International Organization for
Standardization (ISO).
 If a company qualify for Global 100 list of the most sustainable
corporations in the world [www.global100.org].
 To be named to Global 100 list, a company must display a
superior ability to effectively manage environmental and social
factors

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 MANAGERS
AND ETHICAL BEHAVIOR
 Ethics – principles, values, and beliefs that define right and
wrong behavior.

 People who lack a strong moral sense are much less likely to do the
wrong things if they’re constrained by rules, policies, job descriptions,
or strong cultural norms that disapprove of such behaviors.

 Conversely, intensely moral individuals can be corrupted by an

organizational structure and culture that permits or encourages
unethical practices.

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 EXHIBIT 6-3
FACTORS THAT DETERMINE ETHICAL
AND UNETHICAL BEHAVIOR

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 FACTORS THAT DETERMINE ETHICAL AND UNETHICAL
BEHAVIOR

 Stageof Moral Development

Preconvention level – a person’s choice between right or wrong is
based on personal consequences from outside sources, such as
physical punishment, reward, or exchange of favors.
Conventional level, ethical decisions rely on maintaining expected
standards and living up to the expectations of others.
1. A manager is likely to make decisions based on peer approval
also
2. Make decisions based on organization’s rules and procedures
– Principled level, individuals define moral values apart from the
authority of the groups to which they belong or society in general.

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 EXHIBIT 6-4
STAGES OF MORAL DEVELOPMENT

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 FACTORS THAT DETERMINE ETHICAL
AND UNETHICAL BEHAVIOR (CONT.)
 Individual
Characteristics: Values and personality
– Values– basic convictions about what is right and
wrong.
Two personality variables have been found to influence an individual’s
actions according to his or her beliefs about what is right or wrong: ego
strength and locus of control.
Ego Strength – a personality measure of the strength of a
person’s convictions.
1. People with high ego strength are likely to resist impulses to
act unethically and instead follow their convictions.
2. Individuals high in ego strength are more likely to do what
they think is right and be more consistent in their moral
judgments and actions than those with low ego strength.
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 FACTORS THAT DETERMINE ETHICAL
AND UNETHICAL BEHAVIOR (CONT.)
 Locus of Control – a personality attribute that measures the
degree to which people believe they control their own fate.

 They’re more likely to take responsibility for consequences

and
 rely on their own internal standards of right and wrong to
guide their behavior.

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 FACTORS THAT DETERMINE ETHICAL
AND UNETHICAL BEHAVIOR (CONT.)
 STRUCTURAL VARIABLES: An organization’s structural
design can influence whether employees behave ethically.
 Those structures that minimize ambiguity and uncertainty
with formal rules and regulations and continuously remind
employees of what is ethical are more likely to encourage
ethical behavior.
 Other structural variables that influence ethical choices
include goals, performance appraisal systems, and
reward allocation procedures.

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 FACTORS THAT DETERMINE ETHICAL
AND UNETHICAL BEHAVIOR (CONT.)
Culture: The shared values, principles,
 Organization’s
traditions, and ways of doing things that influence the
behavior of the organizational members
– Organization’s culture consists of the shared
organizational values.
– These values reflect what the organization stands for
and what it believes in
– Organization’s culture create an environment that
influences employee behavior ethically or unethically.
– Values-based management – the organization’s
values guide employees in the way they do their jobs.

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 FACTORS THAT DETERMINE ETHICAL
AND UNETHICAL BEHAVIOR (CONT.)
–When an ethical issue is important,
 Issue Intensity
employees are more likely to behave ethically.
six characteristics determine issue intensity or
how important an ethical issue is to an individual:
– Greatness of harm
– Consensus of wrong
– Probability of harm
– Immediacy of consequences
– Proximity to victim(s)
– Concentration of effect
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 EXHIBIT 6-5 ISSUE INTENSITY

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 ETHICS IN AN INTERNATIONAL
CONTEXT
• Ethical standards are not universal
– Social and cultural differences determine
acceptable behaviors.
• Foreign Corrupt Practices Act
– It is illegal to corrupt a foreign official, yet “token”
payments to officials are permissible when doing
so is an accepted practice in that country.

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 EXHIBIT 6-6
THE TEN PRINCIPLES OF THE UNITED NATIONS
GLOBAL COMPACT

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 ENCOURAGING ETHICAL
BEHAVIOR
• Employee Selection –The selection process
should be viewed as an opportunity to learn
about an individual’s level of moral development,
personal values, ego strength, and locus of
control.
• Code of ethics – a formal statement of an
organization’s primary values and the ethical
rules it expects its employees to follow.

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 EXHIBIT 6-7 CODES OF ETHICS

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 EXHIBIT 6-7 CODES OF ETHICS
(CONT.)

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 EXHIBIT 6-8
A PROCESS FOR ADDRESSING ETHICAL DILEMMAS

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 ENCOURAGING ETHICAL BEHAVIOR
(CONT.)
– doing business ethically
 Leadership
requires a commitment from top managers
because:
– they’re the ones who uphold the shared
values and set the cultural tone.
– they’re role models in terms of both words and
actions.
– what they do is far more important than what
they say.

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 ENCOURAGING ETHICAL BEHAVIOR
(CONT.)
 JobGoals and Performance Appraisal
– Unrealistic goals provide stress which may
pressure ethical employees to do whatever is
necessary to meet those goals.
– If performance (outcomes) appraisals focus
only on economic goals, ends will begin to
justify means.
– To encourage ethical behavior, both ends and
means should be evaluated.
– Whether they follow the company’s code of
INC.
ethics as well as how well goals were met.
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 ENCOURAGING ETHICAL BEHAVIOR
(CONT.)
• Ethics Training – seminars, workshops, and similar ethics training
programs to encourage ethical behavior.

• Independent Social Audits – evaluate decisions and

management practices in terms of the organization’s code of
ethics.
• Protective Mechanisms –An organization might appoint designate
ethical counselors for employees facing an ethical dilemma.
• Allow employees who face ethical dilemmas to do what’s right
without fear of scolding.

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 SOCIAL RESPONSIBILITY AND
ETHICS ISSUES IN TODAY’S WORLD
 Managing Ethical Lapses and Social
Irresponsibility
– One survey reported that among 5,000 employees: 45
percent admitted falling asleep at work and 22 percent
said they spread a rumor about a coworker.
– Another showed that 26 percent of college and
university business majors admitted to “serious
cheating” on exams and 54 percent admitted to
cheating on written assignments.

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 SOCIAL RESPONSIBILITY AND ETHICS
ISSUES IN TODAY’S WORLD (CONT.)
 Ethical Leadership – managers must
provide ethical leadership. What managers
do have a strong influence on employees’
decisions whether to behave ethically.

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 PROTECTION OF EMPLOYEES WHO RAISE ETHICAL
ISSUES:

Whistle-Blower – individuals who raise

ethical concerns or issues to others
How can managers protect employees so they’re willing to
step up if they see unethical or illegal things occurring?

 One way is to set up toll-free ethics hotlines so that employees can call
anonymously to report infractions that the company will then investigate.
 Managers need to create a culture where bad news can be heard and take
actions before it’s too late.

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 EXHIBIT 6-9
BEING AN ETHICAL LEADER

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 SOCIAL RESPONSIBILITY AND ETHICS
ISSUES IN TODAY’S WORLD (CONT.)
 Social Entrepreneur – an individual or
organization who seeks out opportunities to
improve society by using practical, innovative,
and sustainable approaches.
• Corporate Philanthropy – can be an effective
way for companies to address societal problems.
• Employee Volunteering Efforts – a popular
way for businesses to be involved in promoting
social change.

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 REVIEW LEARNING OBJECTIVE 6.1

• Discuss what it means to be socially

responsible and what factors influence that
decision.
– Social obligation – a firm engages in social
actions because of its obligation to meet certain
economic and legal responsibilities.
– Social responsiveness – when a firm engages in
social actions in response to some popular
social need.

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 REVIEW LEARNING OBJECTIVE 6.2

• Explain green management and how

organizations can go green.
– Different approaches
• Light green
• Market approach
• Stakeholder approach
• Activist or dark green approach

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 REVIEW LEARNING OBJECTIVE 6.3

• Discuss the factors that lead to ethical and

unethical behavior.
– Factors that affect ethical and unethical behavior
include
• an individual’s level of moral development
• individual characteristics
• structural variables
• organizational culture
• issue intensity

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 REVIEW LEARNING OBJECTIVE 6.4

• Describe management’s role in

encouraging ethical behavior.
– The behavior of managers is the single most
important influence on an individual’s decision to act
ethically or unethically.
– Other ways include employee selection, a code of
ethics, using means and ends for goals and
performance appraisal and ethics training.

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 REVIEW LEARNING OBJECTIVE 6.5

• Discuss current social responsibility and

ethics issues.
– Ethical leaders also are honest, share their
values, stress important shared values, and use
the reward system appropriately.
– Managers can protect whistle-blowers
(employees who raise ethical issues or concerns)
by encouraging them to come forward.

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COPYRIGHT © 2016 BY PEARSON
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