MGMT309 CHAPTER 4 TEXTBOOK READING The Ethical and Social Environment Individual Ethics in Organizations We define ethics as an individuals personal beliefs about whether a behavior action or decision is right or wrong Ethical Behavior is behavior that conforms to generally accepted social norms Unethical Behavior is behavior that doesn t conform to generally accepted social norms Managerial Ethics standards of behavior that guide individual managers in their work o Ethics can affect managerial work in any number of ways Three Areas of Special Concern for managers How an Organization Treats its Employees important area of managerial ethics is treatment of employees Hiring firing wages working conditions employee privacy respect How Employees Treat the Organization numerous ethical issues can stem from how employees treat the organization ESPECIALLY in regard to Conflicts of interest secrecy and confidentiality and honesty How Employees and the Organization Treat Other Economic Agents Primary agents of interest include customers competitors stockholders suppliers dealers and unions The interactions b t the organization and these agents that may be subject to ethical ambiguity include advertising and promotions financial disclosures ordering purchasing shipping solicitations bargaining negotiation other business relationships READ ABOUT CONFLICTS OF INTEREST and BRIBES ON PG93 Ethics in an Organizational Context actions of peer managers and top managers as well as the organization s culture all contribute to the ethical context of the organization o Organizational practices may strongly influence the ethical standards of employees o If managers become aware of unethical practices and allow them to continue they contribute to an organization culture that says such activity is permitted o The organizations environment also contributes to the context for ethical behavior in a highly competitive or regulated industry for example a manager may feel more pressure to achieve high performance When managers feel pressure to meet goals or lower costs they may explore a variety of alternatives to help achieve these ends and in some cases the alternative they choose may be unethical or even illegal Managing Ethical Behavior o Any effort to enhance ethical behavior must begin with Top Management Top Managers establish the organizations culture and define what will and will not be acceptable behavior Citi Bank and Xerox also have ethics training programs for their managers o Creating Ethics Codes Code of Ethics A formal written statement of the values and ethical standards that guide a firms actions o Applying Moral Judgment 3 step model for apply ethical judgments to situations that may arise during the course of business activities 1 Gather the relevant factual information 2 Determine the most appropriate moral values 3 Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy o Maintaining Organizational Justice Organizational Justice the perceptions of people in an organization regarding fairness Four Basic Forms of Organizational Justice 1 Distributive Justice refers to peoples perceptions of the fairness with which rewards and other valued outcomes are distributed within the organization takes a more holistic view of reward distribution than simply a comparison between one person and another perceptions of distributive justice affect individual satisfaction with various workrelated outcomes such as pay work assignments recognition and opportunities for advancement 2 Procedural Justice individual perceptions of the fairness used to determine various outcomes For Instance suppose an employee s performance is evaluated by someone very familiar with the job being performed o The evaluator clearly explains the basis for the evaluation and then discusses how that evaluation will translate in other outcomes such as promotions and pay increases 3 Interpersonal Justice relates to the degree of fairness people see in how they are treated by others in their organization Perceptions of Interpersonal Justice will most affect how individuals feel about those with whom they interact and communicate Interpersonal justice people reciprocate by treating other with respect and openness in an ethical manner Interpersonal Injustice people reciprocate by being less respectful than they probably should be 4 Informational Justice refers to the perceived fairness of information used to arrive at decisions If someone feels like another manager made a decision based on relatively complete and accurate information and that the information was appropriately processed and considered the person will likely experience informational justice even if they don t completely agree with the decision Emerging Ethical Issues in Organizations Ranging from business to sports to politics or the entertainment industry ethical scandals have become almost commonplace in today s world Ethical Leadership o Sarbanes Oxley Act a law passed in 2002 that requires CEOS and CFOS to personally vouch for the truthfulness and fairness of their firms financial disclosure Ethical Issues in Corporate Governance o WorldComs board approved a personal loan to the firms CEO for 366 Million when there was little evidence that he could repay it Ethical Issues in Information Technology o Individual rights to privacy o Online privacy has become a hot topic as companies sort out the ethical and management issues Social Responsibility and Organizations Social Responsibility the set of obligations an organization has to protect and enhance the societal context in which it functions Areas of Social Responsibility o Organizational Stakeholders person or organization who is directly affected by the practices of an organization and has a stake in its performance o Most companies that strive to be responsible to their stakeholders concentrate first and foremost on three main groups Customers Employees Investors THEN they select other stakeholders that are particularly relevant or important to the organization and attempt to address their needs and expectations as well o The Natural Environment 2nd critical area of social responsibility not long ago many organizations indiscriminately dumped sewage waste products from production and trash intro streams and rivers into the air and on vacant land When Shell Oil first explored the Amazon River Basin for potential drilling sites in the late 1980s its crews ripped down trees and