PART A

QUESTION 1
FOUR VIEWS OF ETHICAL BEHAVIOUR

The individualism view of ethical behaviour is based on the belief that our main commitment is to the
advancement of long‐term self‐interests. When people pursue individual self‐interests, they supposedly
become self‐regulating.
• The individualism view is supposed to promote honesty and integrity.

Ethical behaviour under a moral‐rights view is that which respects and protects the fundamental rights of
people.
- ensuring that employees are always protected in their rights to privacy, due process, free speech, free
consent, health and safety, and freedom of conscience.
- people are not a cost; they are a resource.

Finally, the justice view of moral behaviour is based on the belief that ethical decisions treat people
impartially and fairly according to guiding rules and standards. \
- This approach evaluates the ethical aspects of any decision on the basis of whether it is ‘equitable’
for everyone affected.
- procedural justice — the degree to which policies and rules are fairly administered.
For example, does a sexual harassment charge levied against a senior executive receive the same full
hearing as one made against a first‐level supervisor?
- distributive justice — the degree to which outcomes are allocated without respect to individual
characteristics based on ethnicity, race, gender, age or other criteria. For example, does a woman
with the same qualifications and experience as a man receive the same consideration for hiring or
promotion?
- interactional justice —the degree to which others are treated with dignity and respect. For example,
does a bank loan officer take the time to fully explain to an applicant why he or she was turned down
for a loan?

CULTURAL ISSUES AND UNIVERSAL VALUES

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FACTORS INFLUENCING ETHICAL BEHAVIOUR

The person
Family influences, religious values, personal standards and personal needs, financial and otherwise, will
help determine a person’s ethical conduct in any given circumstance.
Managers who lack a strong and consistent set of personal ethics will find that their decisions vary from
situation to situation as they strive to maximise self‐interests. Those who operate within strong ethical
frameworks (personal rules or strategies for ethical decision‐making) will be more consistent and confident
since choices are made against a stable set of ethical standards.
The organisation
The organisation is another important influence on ethics in the workplace. The first port of call is at the
staff selection stage. Unethical or unsavoury characters should not be recruited and appointed in the first
instance. We noted earlier that a person’s immediate supervisor can have an important effect on the
employee’s behaviour. Just exactly what a supervisor requests, and which actions are rewarded or punished,
can certainly affect an individual’s decisions and actions. The expectations and reinforcement provided by
peers and group norms are likely to have a similar impact.
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Honesty, integrity and caring form the foundations of the company and should flow through everything
we do — we will demonstrate our care for the world in which we live by respecting fellow human
beings, by not harming animals, by preserving our forests.
The fact that The Body Shop still has to respond to occasional criticisms about its operations demonstrates
the inadequacy of formal policies alone to guarantee consistent ethical behaviour. A visit to The
Body Shop website, however, shows the firm’s ongoing ethical commitments and provides answers to
frequently asked questions regarding such controversial issues as animal testing in the cosmetics industry.

The environment
Organisations operate in external environments composed of competitors, government laws and regulations,
and social norms and values, among other influences. Laws interpret social values to define appropriate
behaviours for organisations and their members; regulations help governments monitor these
behaviours and keep them within acceptable standards.
The climate of competition in an industry sets a standard of behaviour for those who hope to prosper
within it. Sometimes the pressures of competition contribute further to the ethical dilemmas of managers.
The late Australian billionaire Richard Pratt, founder of the multibillion dollar cardboard and
packaging company Visy, provided a prime example of this. Although widely known as a generous
philanthropist throughout his life, in his later years Pratt became embroiled in a price fixing scandal.
His company was forced to pay a fine of $36 million after Pratt signed a statement admitting guilt in
colluding with competitors to fix the price of cardboard, forcing customers to pay artificially high prices.
Subsequent criminal charges against Pratt were dropped on health grounds just a day before he passed
away from prostate cancer in 2009.

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PART A
QUESTION 2
GUIDING BELIEFS: FIVE LEADERSHIP BELIEFS THAT SHAPE SOCIALLY RESPONSIBLE BEHAVIOUR

Ultimately, organisational leadership is a critical influence on behaviour by organisations and their

members. The leadership beliefs that guide socially responsible organisational practices have been
described as follows:
• people — belief that people do their best in healthy work environments with a balance of work and
family life
• communities — belief that organisations perform best when located in healthy communities
• natural environment — belief that organisations gain by treating the natural environment with
respect
• long term — belief that organisations must be managed and led for long‐term success
• reputation — belief that the organisation’s reputation must be protected to ensure consumer and
stakeholder support.

EVALUATION: CAROLL’S FOUR LEVELS OF SOCIAL RESPONSIBILITY

The four responsibilities displayed on the pyramid are:

ECONOMIC
• This is the responsibility of business to be profitable
• Only way to survive and benefit society in long-term
LEGAL
• This is the responsibility to obey laws and other regulations
• E.g. Employment, Competition, Health & Safety
ETHICAL
• This is the responsibility to act morally and ethically
• With this responsibility, businesses should go beyond narrow requirements of the law
• E.g. Treatment of suppliers & employees
PHILANTHROPIC
• This is the responsibility to give back to society
• The responsibility is discretionary, but still important
• E.g. charitable donations, staff time on projects
Evaluating Carroll's CSR Pyramid
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Strengths
• The model is easy to understand
• Simple message – CSR has more than one element
• Emphasises importance of profit
Weaknesses
• Perhaps too simplistic?
• Should ethics be at the top?
• Businesses don’t always do what they claim when it comes to CSR

STRATEGIES: FOUR STRATEGIES OF SOCIAL RESPONSIBILITY

An obstructionist strategy (‘fight the social demands’) reflects mainly economic priorities — social
demands lying outside the organisation’s perceived self‐interests are resisted. If the organisation is criticised
for wrongdoing, it can be expected to deny the claims.
A defensive strategy
(‘do the minimum legally required’) seeks to protect the organisation by doing the minimum legally
necessary to satisfy expectations. Corporate behaviour at this level conforms only to legal requirements,
competitive market pressure and perhaps activist voices. If criticised, intentional wrongdoing is likely to be
denied.
accommodative strategy (‘do the minimum ethically required’) accept their social responsibilities. They try
to satisfy economic, legal and ethical criteria. Corporate behaviour at this level is congruent with society’s
prevailing norms, values and expectations, but at times it may be so only because of outside pressures. An
oil firm, for example, may be willing to ‘accommodate’ with cleanup activities when a spill occurs, but
remain quite slow in taking action to prevent them in the first place.
proactive strategy (‘take leadership in social initiatives’) is designed to meet all the criteria of social
performance, including discretionary performance. Corporate behaviour at this level takes preventive action
to avoid adverse social impacts from company activities, and it even anticipates or takes the lead in
identifying and responding to emerging social issues. One strategy might be charitable contributions,
although cynics suggest that such philanthropic giving may be a legitimisation tool.

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PART A
QUESTION 3
SUSTAINABILITY

Definition and three pillars

The Environmental Pillar

The environmental pillar often gets the most attention. Companies are focusing on reducing their carbon
footprints, packaging waste, water usage and their overall effect on the environment. Companies have found
that have a beneficial impact on the planet can also have a positive financial impact. Lessening the amount
of material used in packaging usually reduces the overall spending on those materials, for example. Walmart
keyed in on packaging through their zero-waste initiative, pushing for less packaging through their supply
chain and for more of that packaging to be sourced from recycled or reused materials.
Other businesses that have an undeniable and obvious environmental impact, such as mining or food
production, approach the environmental pillar through benchmarking and reducing. One of the challenges
with the environmental pillar is that a business's impact are often not fully costed, meaning that there
are externalities that aren't being captured. The all-in costs of wastewater, carbon dioxide, land reclamation
and waste in general are not easy to calculate because companies are not always the ones on the hook for the
waste they produce. This is where benchmarking comes in to try and quantify those externalities, so that
progress in reducing them can be tracked and reported in a meaningful way.

The Social Pillar

The social pillar ties back into another poorly defined concept: social license. A sustainable business should
have the support and approval of its employees, stakeholders and the community it operates in. The
approaches to securing and maintaining this support are various, but it comes down to treating employees
fairly and being a good neighbor and community member, both locally and globally.
On the employee side, businesses refocus on retention and engagement strategies, including more responsive
benefits such as better maternity and paternity benefits, flexible scheduling, and learning and development
opportunities. For community engagement, companies have come up with many ways to give back,
including fundraising, sponsorship, scholarships and investment in local public projects.
On a global social scale, a business needs to be aware of how its supply chain is being filled. Is child labor
going into your end product? Are people being paid fairly? Is the work environment safe? Many of the large
retailers have struggled with this as public outrage over tragedies like the Bangladesh factory collapse,
which have illustrated previously unaccounted for risks in sourcing from the lowest-cost supplier. (For more,
see: "Go Green With Socially Responsible Investing.")

The Economic Pillar

The economic pillar of sustainability is where most businesses feel they are on firm ground. To be
sustainable, a business must be profitable. That said, profit cannot trump the other two pillars. In fact, profit
at any cost is not at all what the economic pillar is about. Activities that fit under the economic pillar include
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compliance, proper governance and risk management. While these are already table stakes for most North
American companies, they are not globally.
Sometimes, this pillar is referred to as the governance pillar, referring to good corporate governance. This
means that boards of directors and management align with shareholders' interests as well as that of the
company's community, value chains, and end-user customers. With regard to governance, investors may
want to know that a company uses accurate and transparent accounting methods, and that stockholders are
given an opportunity to vote on important issues. They may also want assurances that companies
avoid conflicts of interest in their choice of board members, don't use political contributions to obtain unduly
favorable treatment and, of course, don't engage in illegal practices.
It is the inclusion of the economic pillar and profit that makes it possible for corporations to come on board
with sustainability strategies. The economic pillar provides a counterweight to extreme measures that
corporations are sometimes pushed to adopt, such as abandoning fossil fuels or chemical fertilizers instantly
rather than phasing in changes.

FOUR THEMES OF UN GLOBAL COMPACT PRINCIPLES

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FOUR PHASES IN TRANSITION TO A SUSTAINABLE ORGANISATION
1. From non‐responsiveness to compliance. Non‐responsive organisations are those who disregard the
impact of their actions on the environment, or on local communities with which they interact, or
on their own people. The impetus for such organisations to change is likely to come from sources
external to the organisation, such as media exposure, public protests or court action.

2. From compliance to sustainable efficiency. Efficiency gains are likely to come from poorly performing
units, pilot projects and capability improvement. Identification of leverage points and sharing of success are
central.

3. From efficiency to strategic proactivity. Strategic proactivity relates to the extension of sustainability
practice to products, and to suppliers and customers; to recruitment and internal development that
enhances sustainability capabilities; and to active engagement with community groups in the development of
new products and services.

4. From strategic proactivity to the sustaining corporation. The ‘sustaining’ corporation is characterised
by a shift in the values and behaviours of the corporation, collectively and individually, towards the
role of business in creating a sustainable society. There is an interaction with other organisations
within the sector, or in the supply chain, to promote the implementation of sustainability practice.
The authors note that incremental change has important benefits, such as internal capability development,
positive culture change and competence in the change process itself.

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PART B 1
Functions of Management

Planning
In management, planning is the process of setting performance objectives and determining what
actions should be taken to accomplish them. Through planning, a manager identifies desired work
results and the means to achieve them. For example, an organisation that views people as its most
important asset may plan to ensure staff retention. This would involve the setting of a measurable
objective in terms of reducing staff turnover, and determining measures to facilitate achieving this
objective over time.
Controlling
A key issue in how well plans are implemented is how well the organisation adapts to rapid change. In
today’s dynamic times, things do not always go as expected and plans must be modified and redefined
with the passage of time. The management function of controlling is the process of measuring work
performance, comparing results with objectives, and taking corrective action as needed. Through
controlling, managers maintain active contact with people in the course of their work, gather and interpret
reports on performance, and use this information to plan constructive action and change. Through
measurement management is able to track progress against objectives.
Organising
Even the best plans may fail without effective implementation. The implementation phase begins
with organising — the process of assigning tasks, allocating resources and arranging the coordinated
activities of individuals and groups to implement plans. Through organising, managers turn plans into
actions by defining jobs, assigning staff and supporting them with technology and other resources.
Leading
In management, leading is the process of arousing people’s enthusiasm to work hard and direct their

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efforts to fulfil plans and accomplish objectives. Through leading, managers build commitments to a
common vision, encourage activities that support goals, and influence others to do their best work on the
organisation’s behalf.

MANAGERIAL ACTIVITIES AND ROLES

Interpersonal contact
Interpersonal contact concerns the contact between the manager and the people in his environment. For example,
subordinates, other managers, the board of directors, the works council, customers and suppliers.

The following Mintzberg Managerial Roles are primarily concerned with interpersonal contact:

1. Figurehead

As head of a department or an organisation, a manager is expected to carry out ceremonial and/or symbolic duties.
A manager represents the company both internally and externally in all matters of formality.

He is a networker but he also serves as an exemplary role model. He is the one who addresses people celebrating
their anniversaries, attends business dinners and receptions.

2. Leader

In his leading role, the manager motivates and develops staff and fosters a positive work environment. He coaches
and supports staff, enters into (official) conversations with them, assesses them and offers education and training
courses.

3. Liason

A manager serves as an intermediary and a linking pin between the high and low levels. In addition, he develops and
maintains an external network.

As a networker he has external contacts and he brings the right parties together. This will ultimately result in a
positive contribution to the organization.

Information processing
According to Henry Mintzberg, the managerial role involves the processing of information which means that they
send, pass on and analyze information. Managers are linking pins; they are expected to exchange flows of vertical
information with their subordinates and horizontal flows of information with their fellow managers and the board of
directors. Further more, managers have the responsibility to filter and transmit information that is important for
both groups. The following Mintzberg Managerial Roles fall under process information:

4. Monitor

As a monitor the manager gathers all internal and external information that is relevant to the organization.
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He is also responsible for arranging, analyzing and assessing this information so that he can easily identify problems
and opportunities and identify changes.

5. Disseminator

As a disseminator the manager transmits factual information to his subordinates and to other people within the
organization.

This may be information that was obtained either internally or externally.

6. Spokesman

As a spokesman the manager represents the company and he communicates to the outside world on corporate
policies, performance and other relevant information for external parties.

Decision-making
Managers are responsible for decision-making and they can do this in different ways at different levels. The
leadership style is important in decision-making.

An authoritarian leader is sooner inclined to make decisions independently than a democratic leader. The following
Mintzberg Managerial Roles fall under decision-making:

7. Entrepreneur

As an entrepreneur, the manager designs and initiates changes and strategies.

8. Disturbance handler

In his managerial role as disturbance handler, the manager will always immediately respond to unexpected events
and operational breakdowns. He aims for usable solutions.

The problems may be internal or external, for example conflict situations or the scarcity of raw materials. .

9. Resource allocator

In his resource allocator role, the manager controls and authorizes the use of organizational resources.

He allocates finance, assigns employees, positions of power, machines, materials and other resources so that all
activities can be well-executed within the organization.

10. Negotiator

As a negotiator, the manager participates in negotiations with other organizations and individuals and he represents
the interests of the organization.

This may be in relation to his own staff as well as to third parties. For example salary negotiations or negotiations
with respect to procurement terms.

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THREE CLASSICAL APPROACHES TO MANAGEMENT

Scientific management
- The principal object of management should be to secure maximum prosperity for the employer, coupled
with the maximum prosperity for the employee’.
- He thought this problem could be corrected if workers were taught and then helped by supervisors to
always perform their jobs in the right way.
- four guiding action principles.
1. Develop for every job a ‘science’ that includes rules of motion, standardised work processes and
proper working conditions.
2. Carefully select workers with the right abilities for the job.
3. Carefully train workers to do the job and give them the proper incentives to cooperate with the job
‘science’.
4. Support workers by carefully planning their work and by smoothing the way as they go about their
jobs.

Administrative management
It identifies the following five ‘rules’ or ‘duties’ of management, which closely resemble the four functions
of management — planning, organising, leading and controlling — that we talk about today:
1. foresight — to complete a plan of action for the future
2. organisation — to provide and mobilise resources to implement the plan
3. command — to lead, select and evaluate workers to get the best work towards the plan
4. coordination — to fit diverse efforts together and ensure information is shared and problems solved
5. control — to make sure things happen according to plan and to take necessary corrective action.

Fayol believed that management could be taught. They include Fayol’s scalar chain principle (there should
be a clear and unbroken line of communication from the top to the bottom in the organisation), the unity of
command principle (each person should receive orders from only one boss), and the unity of direction
principle (one person should be in charge of all activities that have the same
performance objective).

Bureaucratic management
The defining characteristics of Weber’s bureaucratic management are as follows.
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• Clear division of labour. Jobs are well defined, and workers become highly skilled at performing
them.
• Clear hierarchy of authority. Authority and responsibility are well defined for each position, and each
position reports to a higher level one.
• Formal rules and procedures. Written guidelines direct behaviour and decisions in jobs, and written
files are kept for historical record.
• Impersonality. Rules and procedures are impartially and uniformly applied with no one receiving
preferential treatment.
• Careers based on merit. Workers are selected and promoted on ability and performance, and managers
are career employees of the organisation.

MASLOW’S HIERARCHY OF HUMAN NEEDS

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PART B 2

Self‐efficacy theory
• Closely related to both the expectancy and goal‐setting approaches to motivation
• social learning theory.
• self‐efficacy refers to a person’s belief that she or he is capable of performing a task.
• confidence, competence and ability.
• anything done to boost feelings of confidence, competence and ability among people at work is likely to
pay off with increased levels of motivation.
Self‐efficacy dynamics
• when people believe themselves to be capable, they will be more motivated to work hard at a task.
• it is a capability‐specific belief in one’s competency to perform a task.
• With respect to Vroom, a person with higher self‐efficacy will have higher expectancy that he or she can
achieve a high level of task performance; this increases motivation. With respect to Locke, self‐efficacy
links with a person’s willingness to set challenging performance goals.
• managers who help create feelings of self‐efficacy in others should be boosting their motivation to work.
Enhancing self‐efficacy
• enactive mastery — when a person gains confidence through positive experience. The more you work at
a task, so to speak, the more your experience builds and the more confident you become at doing it.
• vicarious modelling — basically, learning by observing others. When someone else is good at a task and
we are able to observe how they do it, we gain confidence in being able to do it ourselves.
• Verbal persuasion — when someone tells us or encourages us that we can perform the task. Hearing
others praise our efforts and link those efforts with performance successes is often very motivational.
• Emotional arousal — when we are highly stimulated or energised to perform well in a situation. A good
analogy for arousal is how athletes get ‘psyched up’ and highly motivated to perform in key
competitions.

Foundations of motivation

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Five incentive remuneration mechanisms
Pay for knowledge
• skills‐based pay
• pays workers according to the number of job‐relevant skills they master.
• common in self‐managing teams where part of the ‘self‐management’ includes responsibilities for the
training and certification of co‐workers in job skills.
Bonus pay
• Bonus pay plans provide one‐off or lump‐sum payments to employees based on the accomplishment of
specific performance targets or some other extraordinary contribution, such as an idea for work
improvement.
• They typically do not increase base salary or wages.
Profit sharing
• Profit‐sharing plans distribute to some or all employees a proportion of profits earned by the
organisation during a stated performance period.
• common in professions such as accounting and law and are becoming increasingly common elsewhere.
Gain sharing
• allowing groups of employees to share in any savings or ‘gains’ realised through their efforts to reduce
costs and increase productivity.
Employee share ownership
• Employee share ownership plans (ESOPs) involve employees in ownership through the purchase of
shares in the companies that employ them.
• formal ESOPs are often used as financing schemes to save jobs and prevent business closures, share
ownership by employees is an important performance incentive.

Hamel’s Wheel of Innovation and its five steps

1. Imagining — thinking about new possibilities; making discoveries by ingenuity or communication
with others; extending existing ways.
2. Designing — testing ideas in concept; discussing them with peers, customers, clients or technical
experts; building initial models, prototypes or samples.
3. Experimenting — examining practicality and financial value through experiments and feasibility
studies.
4. Assessing — identifying strengths and weaknesses, potential costs and benefits, and potential markets
or applications, and making constructive changes.
5. Scaling — gearing up and implementing new processes; putting to work what has been learned;
commercialising new products or services.

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Three phases of planned change

Unfreezing
In order for change to be successful, people must be ready for it. Planned change has little
chance for long‐term success unless people are open to doing things differently. Unfreezing is
the stage in which a situation is prepared for change, and felt needs for change are developed. It
can be facilitated in several ways: through environmental pressures for change, declining performance, the
recognition that problems or opportunities exist, and through the observation of behavioural models that
display alternative approaches. When handled well, conflict can be an important
unfreezing force in organisations. It often helps people break old habits and recognise alternative
ways of thinking.

Changing
In the changing phase, something new takes place in a system, and change is actually implemented.
This is the point at which managers initiate changes in organisational targets such as tasks, people,
culture, technology and structure. Ideally, all change is done in response to a good diagnosis of a
problem and a careful examination of alternatives. However, Lewin believes that many change
agents enter the changing phase prematurely, are too quick to change things, and end up creating
resistance to change. When managers implement change prematurely, there is an increased likelihood
of failure.

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Refreezing
The final stage in the planned‐change process is refreezing. Here, the manager is concerned about
stabilising the change and creating the conditions for its long‐term continuity. Refreezing is accomplished
by appropriate rewards for performance, positive reinforcement and necessary resource support. It is also
important to evaluate results carefully, provide feedback to the people involved, and
make any required modifications in the original change. When refreezing is done poorly, changes are
too easily forgotten or abandoned with the passage of time. When it is done well, change can be more
long‐lasting

Why employees resist change

• Fear of the unknown —not understanding what is happening or what comes next.
• Disrupted habits — feeling upset when old ways of doing things can’t be followed.
• Loss of confidence — feeling incapable of performing well under the new ways of doing things.
• Loss of control — feeling that things are being done to you rather than by or with you.
• Poor timing — feeling overwhelmed by the situation or that things are moving too fast.
• Work overload — not having the physical or psychic energy to commit to the change.
• Loss of face — feeling inadequate or humiliated because it appears that the ‘old’ ways weren’t ‘good’
ways.
• Lack of purpose — not seeing a reason for the change and/or not understanding its benefits.

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