Chapter 4 Ethics and Social Responsibility. Learning Outcomes After reading this chapter, you should be able to: 1.Identify common kinds of workplace

Chapter 4

Ethics and Social Responsibility

Learning OutcomesAfter reading this chapter, you should beable to:1. Identify common kinds of workplace

deviance.2. Describe ethics guidelines and legislation in

North America.3. Describe what influences ethical decision

making.4. Explain what practical steps managers can

take to improve ethical decision making.5. Explain to whom organizations are socially

responsible.

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Learning OutcomesAfter reading this chapter, you should beable to:6. Explain for what organizations are socially

responsible.7. Explain how organizations can choose to

respond to societal demands for social responsibility.

8. Explain whether social responsibility hurts or helps an organization’s economic performance.


Ethical and Unethical Workplace Behaviour

• Ethics: set of moral principles or values that defines right and wrong for a person/group

• Ethical behaviour:behaviour that conforms to a society’s accepted principles of right and wrong



Ethics: Alarming Facts• 45 percent of employees reported having observed

misconduct in the workplace during the previous 12 months.

• 74 percent of employees surveyed believed that it was possible to damage a company’s reputation through social media.

• 53 percent believed that their social networking pages were none of their employers’ business.

• 50 percent of active social networkers believe it is acceptable to keep copies of confidential work documents for possible use in future jobs, compared with 15 percent of non-active social networkers.


Ethics: Alarming Facts

• 94 percent of respondents said it was either critical or important that the company they work for be ethical.

• 82 percent of a group of employees surveyed said, “They would work for less to be at a company that had ethical business practices, and more than a third left a job because they disagreed with the actions of fellow employees or managers.”


Workplace Deviance:

unethical behaviour that violates organizational norms about right and wrong

Production deviance:•unethical behaviour that hurts the quality and quantity of work produced

Property deviance:•unethical behaviour aimed at the organization’s property or products

Employee shrinkage:•employee theft of company merchandise

Types of Workplace Deviance


Political Deviance:

using one’s influence to harm others in the company

Personal aggression•hostile or aggressive behaviour toward others



International Code of Ethics for Canadian Business Principles

A. Concerning community participation and environmental protection, we will:

• strive within our sphere of influence to ensure a fair share of benefits to stakeholders impacted by our activities;

• ensure meaningful and transparent consultation with all stakeholders and attempt to integrate our corporate activities with local communities as good corporate citizens;

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International Code of Ethics for Canadian Business Principles (cont’d)

• ensure our activities are consistent with sound environmental management and conservation practices; and

• provide meaningful opportunities for technology cooperation, training, and capacity building within the host nation.

B. Concerning human rights, we will:•support and respect the protection of international human rights within our sphere of influence; and•not be complicit in human rights abuses.

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C. Concerning business conduct, we will:•not make illegal and improper payments and bribes and will refrain from participating in any corrupt business practices;•comply with all applicable laws and conduct business activities with integrity; and•ensure contractors’, suppliers’, and agents’ activities are consistent with these principles.

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D. Concerning employee rights and health and safety, we will:•ensure health and safety of workers is protected;•strive for social justice and respect freedom of association and expression in the workplace; and•ensure consistency with other universally accepted labour standards related to exploitation of child labour, forced labour, and non-discrimination in employment.

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Six Factors that Contribute to Ethical Intensity

Magnitude of consequencesSocial consensusProbability of effectTemporal immediacyConcentration of effect

Source: T.M. Jones, “Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model,” Academy of Management Review 16 (1991): 366–95.

3.13.1

Kohlberg’s Stages of Moral Development

Copyright © 2015 by Nelson Education Ltd. 4-153.23.2

Class Activity: Ethical Dilemmas

• You are consultant who has just received a USB key that has a copy of a proposal your competitor submitted. Should you copy it and use it to make your proposal that much better?

• In groups of four, what would the consultant do at each stage of moral development?


Beyond the Book

Principles of Ethical Decision Making

Principle of: You should never:long-term self-interest

do anything that is not in your or your organization’s long-term self-interest.

personal virtue 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.

religious injunctions

do anything that is not kind and that does not build a sense of community.


Principle of: You should never:

government requirements

take any action that violates the law, for the law represents the minimal moral standard.

utilitarian benefits

take any action that does not result in greater good for society.

individual rights take any action that infringes on others’ agreed-upon rights.

distributive justice

take any action that harms the least fortunate among us in some way.


Principles of Ethical Decision Making

3.33.3

Practical Steps to Ethical Decision Making

Ethical Decision Making 1. Hiring2. Code of Ethics3. Training4. Climate


1. Selecting and Hiring Ethical Employees


If you found a wallet containing $50, would you return it with the money?

4.14.1

Class Activity: Can Ethics Be Taught?

• If you can’t hire entirely ethical employees, can you teach someone who is unethical to act ethically in spite of him- or herself?

• Discuss as a class.


Beyond the Book

2. Code of Ethics

A. Communicate the code of ethics both inside and outside the company.

B. Develop practical ethical standards and procedures specific to business.

Canadian Tire Code of Conduct


http://corp.canadiantire.ca/EN/Investors/Governance/Pages/CodeofConduct.aspx

Class Activity: Code of Ethics

• In groups, write a code of ethics (five elements minimum) for the class.

• As groups, report to the class.• As a class, build a collective code of ethics.• Identify which type of deviance is targeted by

each element of the collective code.


Beyond the Book

Purchasing Managers Received Kickbacks

• Home Depot Inc. fired four purchasing managers for receiving kickbacks from product vendors.

• The managers received at least $1 million to stock and display vendors’ products.

• Home Depot is instituting a zero-tolerance policy on gifts offered by vendors.


Beyond the Book

3. Ethics Training

1. Develops employee awareness of ethics

2. Achieves credibility with employees

3. Teaches a practical model of ethical decision making



A Basic Model of Ethical Decision Making

1. Identify the problem. 2. Identify the constituents.

3. Diagnose the situation.

4. Analyze your options.

5. Make your choice.

6. Act.Source: L.A. Berger, “Train All Employees to Solve Ethical Dilemmas,” Best’s Review - Life Health Insurance Edition 95 (1995): 70–80. © A.M. Best Company - used with permission.

4. Ethical Climate

Managers:1. act ethically2. are active in company

ethics programs3. report potential ethics violations

by putting in place a reporting system that encourages managers and employees to report potential ethics violations


Ethical Culture• The Ethics Research Center cautions that when the

economic business environment improves, misconduct may rise unless a strong ethical culture is in place.

• To achieve such a culture, management must set the tone.

• Studies have found that the two major drivers of ethics culture are senior executives and supervisors.


Types of Retaliation Experienced as a Result of

Reported Misconduct (2011)


What Is Social Responsibility?

• A business’s obligation to pursue policies, make decisions, and take actions that benefit society

• McKinsey & Co. study:o Of 1,144 top global executives,

o79 percent said some responsibility … would fall on corporations

o3 percent believe they do a good job of dealing with issues


To Whom Are Organizations Socially Responsible?


ShareholderModel

ShareholderModel Maximize profitsMaximize profits

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Stakeholder Model

Primary Stakeholders

• Shareholders• Employees• Customers• Suppliers• Governments• Local communities

Secondary Stakeholders

• Media• Special interest

groups• Trade associations

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Organization’s Social Responsibilities

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Abide by principlesof right and wrong.

Obey laws andregulations.

Ethical?

Legal

Economic

Discretionary

Be profitable.

Serve a social role.

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Triple Bottom Line

“Bottom line”: profit-and-loss account

“People account”: a measure of how socially responsible a company has been throughout its operations

“Planet account”: a measure of how environmentally responsible a company has been


Responses to Demands for Social Responsibility


Social Responsibility and Economic Performance

Realities of Social Responsibility •Can cost a company•Sometimes it does pay•Does not guarantee profitability

Timberland’s Social & Environmental Performance

364-3688 Copyright © 2015 by Nelson Education Ltd.

Beyond the Book

http://blog.timberland.com/tag/green-index/



Does It Pay to Be Socially Responsible?

• There is a tradeoff between economic performance and being socially responsible.

• There is a small, positive relationship between economic performance and being socially responsible that strengthens with corporate reputation.


Documents

Chapter 4 Ethics and Social Responsibility. Learning Outcomes After reading this chapter, you should be able to: 1.Identify common kinds of workplace