8 th edition Steven P. Robbins Mary Coulter. Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–2 From Obligation to Responsiveness to Responsibility

8th editionSteven P. Robbins

Mary Coulter

Copyright © 2005 Prentice Hall, Inc. All rights reserved. 5–2

From Obligation to Responsiveness to Responsibility

• Decisions of a manager may directly or indirectly affect the society.

• Social responsibility has been described in different ways by different people – profit making only, going beyond profit making, any discretionary corporate activity intended to enhance social welfare and improving social or environmental conditions.


• The Classical View

Management’s only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).

Spending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.

However, the most outspoken advocate of this view, Milton Friedman, is not against social responsibility but his interpretation of social responsibility is to maximize profits for stockholders.


• The Socioeconomic View

Management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare.

Corporations are not independent entities responsible only to stockholders but to stakeholders as well.

Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.

“To do the right thing”

Companies must balance between obligation to shareholders and obligations to the public.


• Social Obligation The obligation of a business to meet its economic and legal

responsibilities and nothing more. The organization does what it is obligated to do and nothing else.

• Social Responsiveness It means that a company engages in social actions in response to

some popular social need. Managers in these companies are guided by social norms and

values and make practical, market-oriented decisions about their actions.

• Social Responsibility

A socially responsible company goes beyond what it is obligated to do or chooses to do because of some popular social need and does what it can to help improve society because it’s the right thing to do.

It is a business’s intention that goes beyond its legal and economic obligations, to do the right things and act in ways that are good for society.

This definition assumes that a business obeys the law and cares for its stockholders, and concentrates on doing things that make the society better and not worse.

A socially responsible organization does what is right because it feels it has an ethical responsibility to do so.

Source: http://money.cnn.com/magazines/fortune/mostadmired/2011/best_worst/worst4.html

Rank Company1 Statoil

2 Ferrovial

3 Walt Disney

4 Edison

5 ENI

6 Whole Foods Market

7 Total

8* Hochtief

8* Nestlé

10* NextEra Energy

10* Weyerhaeuser

World’s Best Companies in terms of Social Responsibility

http://money.cnn.com/magazines/fortune/mostadmired/2011/best_worst/worst4.html

http://money.cnn.com/magazines/fortune/mostadmired/2011/snapshots/6406.html










Where does Bangladesh stand in terms of CSR?

CSR is not a new concept in the context of Bangladesh.

Being a part of the global market, it is difficult to ignore CSR standard specifically in

the export sector.

By now, many CSR dimensions are practised in Bangladesh.

Although consumer rights movement, enforcement of government regulations and a

structured view regarding the economic importance of CSR are not yet so widespread

in the corporate world in Bangladesh, companies have gradually been attaching more

importance to CSR in the local market as well.

Because of global competitiveness and demand, the CSR practices and standards

have to be gradually implemented in Bangladesh. But it has a long way to go.Source:http://www.thefinancialexpress-bd.com/2010/01/06/88734.html

A CSR INITIATIVE IN BANGLADESH....

Renata, DBL, Nestle BD receive StanChart-FE CSR Award 2010-11

Source: http://www.thefinancialexpress-bd.com/more.php?news_id=121960&date=2012-03-02

A view of the 4th Standard Chartered - Financial Express CSR Award giving ceremony


Green Management

• The recognition of the close link between an organization’s decision and activities and its impact on the natural environment.

Global environmental problems facing managers: Air, water, and soil pollution from toxic wastes Global warming from greenhouse gas emissions Natural resource depletion

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Recognition for environmental concern by Viyellatex Bangladesh

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Another Green effort of Viyellatex Bangladesh

Bangladesh's RMG industry will see one of the first of its kind, Green Factory to be constructed on the outskirts of Gazipur, Dhaka. The factory will be LEED (Leadership in Energy and Environmental Design) Gold Category certified by the United States Green Building Council (USGBC). The project is scheduled to be completed by the end of 2012.

Additional info at The Daily Star, bangladesheconomy.wordpress.com & www.fibre2fashion.com

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ETHICS

The rules and principles that define right and wrong conduct.

• Managers must consider the outcome of their decisions and actions.

• To better understand the implication of ethics on managerial decision making, we have to look at the factors that determine ethical and unethical behavior.

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REALITIES OF ETHICS......

Source: http://ethisphere.com/wme/

CompanyGap Inc

Ford Motor Company

National Australia Bank

Intel Corporation

Colgate-Palmolive Company

General Electric Co.

American Express

Kellogg Company

L’ORÉAL

Time Warner Inc.

Tata Steel Ltd


Factors That Determine Ethical and Unethical Behavior

• Whether someone behaves ethically or unethically when faced with an ethical dilemma is influenced by several things:

• (I) his/her stage of moral development(i) Preconventional level(ii) Conventional level(iii) Principled/Postconventional level

• (II) individual characteristics

• (III) the organization’s structural design

• (IV) the organization’s culture

• (V) the intensity of the ethical issue


Exhibit 5.7Exhibit 5.7

Factors That Affect Ethical and Unethical Behavior

Stage of Moral Development


Research shows that there are three levels of moral development, each having two stages.

At each successive stage, an individual’s moral judgement becomes less dependent on outside influences and more internalized.

Level 1: a person’s choice between right and wrong is based on personal consequences from outside sources, such as punishment, reward, etc.

Level 2: ethical decisions rely on maintaining expected standards and living up to the expectations of others.

Stage of Moral Development (contd)


Level 3: individuals define moral values apart from the authority groups to which they belong.


Factors That Affect Employee Ethics (cont’d)• Moral Development

Research Conclusions: People proceed through the stages of moral

development sequentially. There is no guarantee of continued moral development. Most adults are in Stage 4.


Individual Characteristics

• Personality VariablesEgo strength

A personality measure of the strength of a person’s convictions

Locus of Control A personality attribute that measures the degree to

which people believe they control their own life/fate. Internal locus: the belief that you control your destiny. External locus: the belief that what happens to you is

due to luck or chance.


Structural Variables

• Organizational characteristics and mechanisms that guide and influence individual ethics:GoalsPerformance appraisal systemsReward allocation systems

• Good structural design minimizes ambiguity and uncertainty and fosters ethical behavior.


Exhibit 5.9Exhibit 5.9

Determinants of Issue Intensity

Organizational culture


Organizational culture reflects what the organization stands for and what it believes in, and they create an environment that influences employee behavior ethically or unethically.

Encouraging Ethical Behavior

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Managers can do a number of things if they are serious about encouraging ethical behaviors.

By themselves, such actions won’t have much of an impact.

However, a comprehensive ethics program can potentially improve an organization’s ethical environment.

Some specific ways to encourage ethical behavior and create a comprehensive ethics program are:

(i)Employee selection(ii)Codes of ethics and decision rules(iii)Top management’s leadership(iv)Job goals and performance appraisal(v)Ethics training – can ethics be taught?(vi)Independent social audits – evaluate decisions and management practices in terms of the organization’s code of ethics(vii)Protective mechanisms


Ethical Leadership• Managers must provide a good role model by:

Being ethical and honest at all times.Telling the truth; don’t hide or manipulate information.Admitting failure and not trying to cover it up.Communicating shared ethical values to employees

through symbols, stories, and slogans.Rewarding employees who behave ethically and

punish those who do not.Protecting employees (whistleblowers) who bring to

light unethical behaviors or raise ethical issues.

Documents

8 th edition Steven P. Robbins Mary Coulter. Copyright © 2005 Prentice Hall, Inc. All rights reserved.5–2 From Obligation to Responsiveness to Responsibility