Ethics and Social Responsibility Ethics the set of moral principals or values that defines right and wrong for a person or group LO1 Workplace deviance right and wrong Ethical Behavior conforms to a society s accepted principles of Workplace deviance unethical behavior that violates organizational norms about right and wrong o Production deviance hurts the quality and quantity of work o Property deviance unethical behavior aimed at company o Employee shrinkage company merchandise by employees o Political deviance using ones influence to harm others in o Personal aggression hostile or aggressive behavior produced property or products the company towards others LO2 U S sentencing commission guidelines for organizations Companies can be prosecuted and punished even if management doesn t know about he unethical behavior All businesses subject to guidelines Encourage companies to take steps to prevent white collar crime Determining the punishment o Compute the base fine by determining what level of offense has occurred 1 38 o Judge determines culpability score 05 4 0 o Multiply base fine by culpability score to determine fine LO3 Influences on ethical decision making Ethical intensity degree of concern people have about an ethical Six factors taken into account when determining the ethical issue intensity of an action o Magnitude of consequences the total harm or benefit derived from an ethical decision o Social consensus agreement on whether behavior is bad or good o Probability of effect chance that something will happen then harm others o Temporal immediacy time between an act and the consequences the act produces o Proximity of effect the social psychological cultural or physical distance between a decision maker and those affected by his or her decisions o Concentration of effect the total harm or benefit that an act produces on the average person Kohlberg s stages of moral development o Preconventional level of moral development people decide based on selfish reasons Stage 1 punishment and obedience Stage 2 instrumental exchange o Conventional level of moral development make decisions that conform to societal expectations Stage 3 good boy nice girl Stage 4 Law and Order o Postconventional level of moral development use internalized ethical principles to solve ethical dilemmas Stage 5 social contract Stage 6 universal principal Principals of ethical decision making o Principal of long term self interest an ethical principal that holds that you should never take an action that is not in you or your organization long tern self interest o Principal of personal virtue an ethical principle that holds that you should never do anything that is not honest open and truthful and that you would not be glad to see reported in the newspapers or on tv o Principal of religious injunctions an ethical principle that holds that you should never take any action that is not kind and that does not build a sense of community o Principle of government requirements an ethical principle that hold that you should never take any action that violates the law for the law represents the moral standard o Principle of utilitarian benefits an ethical principle that holds that you should never take any action that does not result in greater good for society o Principle of individual rights an ethical principle that hold that you should never take any action that infringes on others agreed upon rights o Principle of distributive justice ethical principle that holds that you should never take any action that harms the least fortunate among us the poor the uneducated the unemployed LO4 Practical steps to ethical decision making Overt integrity tests estimate job applicants honesty by directly asking them what they think or feel about theft or about punishment of unethical behaviors Personality based integrity tests indirectly estimate job applications dishonesty by measuring psychological traits such as dependability and conscientiousness Code of ethics o Must communicate its code inside and outside the company o Develop practical ethical standards and procedures specific to the company s line of business The Kew Gardens Principals to help identify decision making criteria for responding to ethical situations o Need o Proximity o Capability o Last resort Ethics training o Managers must sponsor and be involved in ethics and compliance training o Develop employees awareness of ethics o Achieve credibility with employees o Teach employees a practical model of ethical decision making Basic model of ethical decision making o Identify the problem o Identify the constituents o Diagnose the situation o Analyze your options o Make your choice o Act Ethical climate o Managers to act ethically themselves o Top management to be active in and committed to the company ethics program o Put in place a reporting system that encourages managers and employees to report potential ethics violations Whistleblowing reporting others ethics violations Social responsibility a business s obligation to pursue policies make decisions and take actions that benefit society LO5 To whom are organizations socially responsible Shareholder model holds that they only social responsibility that businesses have it to maximize profits Milton Friedman view satisfy owners aka shareholders o SR diverts time and money away from maximizing profits o Organizations cannot act effectively as moral agents for all company shareholders Stakeholder model managements most important responsibility is not just maximizing profits but the firms long term survival which is achieved by satisfy not just the shareholders but the interests of multiple corporate stakeholders persons or groups who are interested in and affected by the organizations actions o Primary stakeholders groups on which the organization depends for its long term survival shareholders employees customers suppliers governments local communities o Secondary stakeholders the media and special interest groups can influence or be influenced by a company LO6 For what are organizations socially responsible for Benefit stakeholders by fulfilling their economic legal ethical and discretionary responsibilities Economic responsibility the expectation that a company will make a profit by producing a product or service valued by society Legal responsibility a company s social responsibility to obey society s laws and regulations as it tries to meet its economic Ethical responsibility a company s social
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