Managing Ethics and Social Responsibilities

 What Is Ethics?

 To know right from wrong and to know when you’re practicing one instead of the other.
 Acting ethically in business means more than simply obeying applicable laws and
regulations.
 It also means being honest, doing no harm to others, competing fairly, and declining to
put your own interests above those of your company, its owners, and its workers.

Ethical Dilemmas
An ethical dilemma arises in a situation concerning right or wrong when values are in
conflict.
Criteria for Ethical Decision Making

 Normative ethics
 Four Approaches
 Utilitarian Approach- “Greatest good for the Greatest number” Jeremy Bentham and
John Stuart Mill
 Individualism Approach- Every person in an organization is morally responsible for his or
her own behavior, and any efforts to change that behavior should focus on the
individual.
 Moral-Rights Approach- The decision must respect and consider the fundamental
rights of an individual.
 Justice Approach- Treating people with fairness and dignity.

Three types of Justice

 Distributive Justice
  about fair allocation of available resources to all the employees in a corporation,
so that every employee has a fair share of resources to bring beneficial
outcomes.
 Procedural Justice
 Employees believe the processes used to make decisions are fair.
 Compensatory Justice
 the extent to which people are fairly compensated for their injuries by those who
have injured them.

Managerial Ethical Choices

 Several factors influence a manager’s ability to make ethical decisions. Individuals
bring specific personality and behavioral traits to the job.
Stage of Moral Development

 Pre-conventional
 concerned with external rewards and punishments and obey authority to avoid
detrimental personal consequences.
 Conventional
 people learn to conform to the expectations of good behavior as defined by colleagues,
family, friends, and society.
 Postconventional
 occurs when an individual develops their own set of ethics and morals to drive
their decisions and actions.
Corporate Social Responsibility
 It means distinguishing right from wrong and doing right.
Sustainability
 refers to economic development that generates wealth and meets the needs of the
current generation while saving the environment so future generations can meet their
needs as well.

Evaluating Corporate Social Responsibility

  Discretionary Responsibility – Be a good corporate citizen.
 Ethical Responsibility- Do what is right, harm no one.
 Legal Responsibility- Obey the Law.
 Economic Responsibility- Be profitable.

Code of Ethics
Principle-based statements- are designed to affect corporate culture; they defi ne fundamental
values and contain general language about company responsibilities, quality of products, and
treatment of employees.
Policy-based statements- generally outline the procedures to be used in specific ethical
situations. These situations include marketing practices, conflicts of interest, observance of
laws, proprietary information, political gifts, and equal opportunities.

Ethical Structure
 Ethics Committee
 A group of executives assigned to oversee the organization’s ethics by ruling on
questionable issues and disciplining violators.
 Chief Ethics Officer
 A company executive who oversees ethics and legal compliance.
 Ethics Training
 Training programs to help employees deal with ethical questions and values.