Social responsibility

Chapter 5: Pichpisey CHHIMPheakvorn CHENGPhearnique LY

Social Responsibility and Ethics

• What is Social Responsibility?• Green Management and Sustainability• MANAGERS and Ethical Behavior • Encouraging Ethical Behavior • Social Responsibility and Ethics Issues in Today’s World • Case Application

Chapter Content

• From Obligations to Responsibility • Should Organizations Be Socially Involve?

What is Social Responsibility?

• Companies have large pay inequities, however, the difference is often not linked to employee performance, but to entitlement.

• Business facing an extremely changed economic environment offer employees reduce hours and early retirement package.

• Managers regularly face decision that have a dimension of social responsibility in area such as employees relation, philanthropy, product quality and safety, and doing business in country that devalue human rights.

What Is Social Responsibility?

• 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).

• Social obligation: the obligation of business to meet its economic and legal responsibilities and nothing more.• The organization does what

it is obligated to do.

From Obligations to Responsibility

• Socioeconomic view “ manager's responsibilities go beyond making profits to include protecting and improving society’s welfare.”• Corporations are not independent entities responsible only

to stakeholders. • Firms have a moral responsibility to larger society to

become involved in social, legal, and political issues.• “to do the right thing”


• Social Responsibility: a business intention, beyond its legal and economic obligations, to do the right things and act in a ways that are good for society.

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

• Social Responsiveness: when a firm engages in social actions in response to some popular social need.

• Managers are guided by social norms and values and make practical, market-oriented decisions about their actions.


*BOTH Social Responsiveness & Social Responsibility reflect the socioeconomic view.

For Against

• Public Expectation• Long-run profit• Ethical obligation• Public image• Better environment • Discouragement of further

governmental regulation • Balance responsibility and power• Stockholder interest• Possession of resources • Superiority of prevention over

cures

• Violation of profit maximization • Dilution of Purpose • Costs • Too much power • Lack of skills• Lack of accountability

Should Organizations Be Socially Involve?

• Social involvement affects a company’s economic performance:

Causation Negatively associated Looking at socially responsible

investing (SRI) funds

Should Organizations Be Socially Involve?

• How Organization Go Green• Evaluating Green Management Actions

GREEN Management and Sustainability

• Until the late 1960s, few people (organization) paid attention on environmental consequences of their decisions and actions.

• Some group were conserving natural resources “Please Don’t Litter”.

• However, a number of environmental disasters brought a new spirit of environmentalism to individual, group and organization.

• By then, managers have begun to consider the impact of their organization on the natural environment (Green management).

What is green management?

• Legal Approach: require legally they obey laws, rules and regulations.

• Market Approach: respond to environmental preference of customers.

• Stakeholder Approach: organization work to meet environmental demands of multiple stakeholders

• Activism Approach: protect earth's natural resources

How Organization Go Green

• More than 1,300 companies report their efforts in promoting environmental sustainability using guideline develop by Global Reporting Initiative (GRI).

• International Organization for Standardization (ISO) has develop more than 18,000 international standards. For instance: ISO 9000, ISO 14000.

• Announced each year at the renowned World Electronic Forum in Davos, Switzerland.

• A business become greener they often release detailed reports on their environmental performance.

• On the other hand, they can show the commitment of being green is through pursuing standard develop by ISO.

• Using the global 100 list of the most sustainable corporations in the world.

Evaluating Green Management Actions

• Factors That Determine Ethical and Unethical behavior

• Ethics in an International Context

Managers and Ethical Behavior

Bernard Madoff, a financier who stole billion of dollars from his clients. British government installed monitoring chips in trash bins. Is it ethical for someone to use company car for private use? How about using company email for personal business? And using company phone to make private call? What if manager command the employees to work on emergency

situation? And the company’s policy will not compensate over time working?

Discussing Scenarios

Ethics are the principles, values, and beliefs that define right and wrong decisions and behaviors.

Decisions of the manager:Consider about the processWho will be affected by the result

What do we mean by Ethics?

People’s behavior is influenced by: Their stage of moral

development Individuals’ characteristics Organization’s structural

design Organization’s culture Intensity of ethical issue.

Factors That Determine Ethical And Unethical Behavior

• Research divides moral development into three levels:o Preconvention level: choice between right or

wrong is based on personal consequence from outside source, such as physical punishment, reward, or exchange of favor.

o Conventional level: ethical decisions rely on the expected standard or the expectations of others.

o Principled level: individual defines moral values apart from the authority of the groups to which they belong.

Stage Of Moral Development

Stages Of Moral Development

• There are two individual characteristics:

Value

Personality

Individual Characteristics

Value is the basic belief about what is right and wrong.

Value development is based on what we see and hear from parents, teachers, friends and others.

Employees in the same organization often have different values.

Personal Values

• There are two personality variables that influence individual action:

Ego strength: a personality measure of the strength of a person’s conviction.

Locus of control: a personality attribute that measure the degree to which people believe they control their own fate.• Internal locus• External locus

Personality

• The structures that influence ethical choices include:

Company’s goal

Performance

Reward allocation

Organization’s structure

• Employees in such a culture are encouraged to be aggressive and

innovation.

• They are aware that unethical practices will be discovered and feel

free to openly challenge expectation they consider to be

unrealistic

Organization’s Culture

Issue Intensity

• Although some common moral beliefs exist, social and cultural differences between countries are important factors that determine ethical and unethical behavior.

Ethics In An International Context

• Employee Selection • Codes of Ethics decision Rules • Leadership • Job Goals and Performance Appraisal • Ethics Training • Independence social Audits • Protective Mechanisms

Encouraging Ethical Behavior

• Interview, tests, background check, and experiences should be viewed as an opportunity to learn about individual’s level of moral development, personal values, ego strength, and locus of control.

• However, a carefully designed selection process is necessary.

Employee Selection

Codes of ethics is a formal statement of an organization’s primary values and the ethical rules that expect employees to follow.

Codes of ethics should be specific enough to show employees the spirit in which they’re supposed to do things, yet it is loose enough to allow for freedom of judgment.

Codes of Ethics

• Strong management skills are needed.

• Reward and punishment are used in the process.

Leadership

Realistic goal is very important.

Employees will work under

stress and go nowhere fast

when there’s no clear goal.

Job goals

How can ethics be taught?

Ethics Training

The fear of being caught can be

an important deterrent to

unethical behavior.

An effective ethics program

needs independent social

audits.

Independent Social Audits

Protective mechanism are one way of looking at how people distance themselves from a full awareness of unpleasant thoughts, feelings and behaviors.

Employees who face ethical dilemmas need protective mechanism so they can do what is right without fear of reprimand.

Protective Mechanisms

• Managing Ethical Lapses and Social Irresponsibility

• Social Entrepreneurship • Business Promoting Positive Social Change

Social responsibility and Ethics Issue in Today’s World

• Studies conducted by the Center of Academic Integrity show 26% of colleges and university business major admitted to “Serious cheating” on exam and 54% admitted to cheating on written assignments. A survey by Students in Free Enterprise found that only 19% would report a classmate who cheated.

• Organization may have difficulty upholding high ethical standards when their future employees so readily accept unethical behavior. What can manager do?

Managing Ethical Lapses and Social Irresponsibility

• Ethical Leadership

– Ex. CEO of Dial Corporation got a call from CEO of competitor Colgate Palmolive, who told him he had a copy of Dial’s strategic marketing plan that had come from a former Dial salesperson who recently had joined Colgate-Palmolive. However, he had not looked at it, has no intention to and he will return it. In addition, he will deal appropriately with the new salesperson himself.


How manager can provide ethical leadership– Be a good role model by being ethical and honest• Tell the truth always• Don’t hide or manipulate information• Be willing to admit your failure

– Share your personal values by regularly communicating them to employees– Stress the organization’s or team’s important shared values– Use the reward system to hold everyone accountable to the values


• Protection of Employee who raise Ethical Issue– Whistle-blower: individual who raise ethical concerns or issue to

other • Important for manager to assure employees who raise ethical

concern or issue that they will face no personal or career risk. • 3 ways:– Set up toll-free ethics hotlines–Create a culture where bad news can be heard and acted on before it’s

too late–Offer legal protection and any manager who retaliates against an

employee for reporting violation faces a stiff penalty


• Social Entrepreneur: individual or organization who seeks out opportunities to improve society by using practical, innovative and sustainable approaches

• Although many organization has committed to doing business ethically and responsibility there is more they can do like:– Collaborating with public groups or non-profit organization to address a

social issue. (EX: PATH)– provide expertise where need. (EX: Agsquared)– Involve in nurturing individuals who passionately and unwaveringly believe

they have an idea that could make the world a better place and simply need the organizational support to pursue it. (EX: Cellcard Lab)

Social Entrepreneurship

• Corporate Philanthropy is the act of a corporation or business promoting the welfare of others, generally via charitable donations of funds or timee Philanthropy – Many companies donate money to various cause that employees and

customer care about – Funded their own foundation to support various social issue– Example: Google’s foundation, DotOrg has about 2$ million in assests that

it will use to support five areas: developing system to help predict and prevent disease pandemics, empowering the poor with information about public services, creating jobs by investing in small and midsized business in the developing world, accelerating the commercialization of plug-in cars, and making renewable energy cheaper than coal

Business Promoting Positive Social Change

• Employees volunteering effort– Dow Corning sent a small team of employees to rural India helping women

“examine stitchery and figure out prices for garment to be sold in local market

– Molson-Coors’ 11 members executive team spent a full day at their annual team-building retreat building a house in Las Vegas with Habitat for Humanity

– PricewaterhosueCoopers employees renovate an abandoned school ini Newark.

– Every Wachovia employee is gent six paid days off from work each year to volunteer in his or her community.

Business Promoting Positive Social Change

• The Wellness Foundation launched by Nerio Alessadri, founder of Italian wellness company Technogym.

• Technogym is the official supplier of gym equipment for the Olympic Games as well as for major luxury hotel chain in the world such as the Mandarin Oriental and Four Seasons.

• Goals: promoting a novel style of living in society, grounded in a perfect balance between physical, mental, and social component.

• Address the problem of sedentary lifestyle which is responsible for harmful effects such as an increase in the number of chronic pathologies, a huge deficit in government’s health budget and work absenteeism rough promoting scientific research, education, and tangible projects and by encouraging people of all generation to engage in regular physical activity.

Case Application: A Novel Wellness Culture

• How can Techogym balance being socially responsible and focused on profit?

• Would you describe Nerio Alessandri’s approach as social obligation, social responsiveness or social responsibility? Explain

• It’s time to think like a manager. Corporate social responsibility is wonderful, though often criticized as purely rhetorical and laden with subtle profit goals. How can a manger emphasize genuineness of corporate social responsibilities and activities in society?

• Do you think the Wellness Foundation can boost Technogym’s turnover? Why or why not?

Case Application (con’t)

Environment

Social responsibility