Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Lecture Notes
Chapter 12
Promoting Organizational Citizenship
Organizational Ethics: A Practical Approach (3rd ed.)
The Organization as Citizen
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•Organizations wield more power than ever before
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•Societal expectations of organizations have also increased
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•Organizational citizenship = acknowledge obligations to society and
use in.uence to improve society
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•Components of Organizational Citizenship
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•A stakeholder focus
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•Corporate Social Responsibility (CSR)
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•Sustainability
Stakeholder Focus
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•Traditional approach:
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Executives act as agents of owners (agency theory)
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•Sole obligation is to stockholders
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•Stakeholder theory
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•Organizations have an ethical obligation to all groups that have
an interest or “stake” in the organization
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•Stakeholder management questions
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• Who are our stakeholders?
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• What are our stakeholders’ stakes?
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• What opportunities and challenges do our stakeholders
present?
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• What responsibilities does the firm have to its
stakeholders?
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• What strategies or actions should management take to
best handle stakeholder challenges and opportunities?
Stakeholder Focus
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•Issues management: Identifying and responding to changing social
and ethical conditions
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•Issues management process
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•Scan the environment
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•Identify the issue
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•Determine the issue’s signiticance and likely impact
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Respond to issues with high probability (likelihood of happening)
and magnitude (signi6cant impact)
Corporate Social Responsibility (CSR)
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•Definition: Active effort to improve society
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•CSR Pyramid
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•Economic responsibilities: profitability
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•Legal responsibilities: obey laws and regulations
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•Ethical responsibilities: live up to values and standards of society
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•Philanthropic responsibilities: give back to the community
Corporate Social Responsibility (CSR)
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•The Domains of CSR:
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•Human resources: The development and protection of people
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•Community, cultural, and societal involvement and philanthropy
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•Environmental protection, waste reduction, and sustainability
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•Product, consumer, and service contributions and protections
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•CSR Stakeholder Actions:
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Serve the needs of stakeholder groups
Sustainability
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•Definition: doing business in a way that preserves the natural
environment for future generations
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•Characteristics
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•Meet current needs but not at the expense of future generations
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•Long term perspective
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•Demands constant improvement
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•Can boost pro6ts
Stages of Corporate Citizenship
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•Stage 1: Elementary
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oDon’t understand corporate citizenship
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oFocus on compliance with the law
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oCredibility threatened
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•Stage 2: Engaged
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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oAwakened to the need for social responsibility
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oTwo-way communication with stakeholders; CSR effort
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oNeed to develop capacity
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•Stage 3: Innovative
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oDevelop creative ways to improve and measure social
performance
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oCollect data but need to make effective use of the
information
Stages of Corporate Citizenship
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•Stage 4: Integrated
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•A more uni6ed approach
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•Citizenship integrated throughout the organization
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•Need to deepen commitment
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•Stage 5: Transformation
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• Citizenship is central to mission and reputation
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• Create new markets
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• Partner with other organizations
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
Promoting organizational citizenship: Adopting a stewardship Mindset
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•Stewardship = acting on behalf of others
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•Serve the interests of the organization and stakeholders
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•Characteristics of organizational stewards
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•Intrinsically motivated
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•Identify with the mission of the organization
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•Rely on personal power
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•High level of concern for organization and others
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•Establish covenantal relationships based on commitment to
others and shared values
Promoting Organizational Citizenship: Measuring Citizenship
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•“You get what you measure”
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•Triple bottom line : financial data, social and environmental
responsibilities (pro6t, people, planet)
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•Standardized audits (Social Accountability 8000, Global Reporting
Initiative)
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•External audits (Forbes, Dow Jones Sustainability Index, Charity
navigator)
Craig E. Johnson, Organizational Ethics, Third Edition
Instructor Resource
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•Best corporate reporting practices address:
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•Strategy, risk and opportunity
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•Materiality—social/environmental issues
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•Targets and indicators
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•Supplies and value chain
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•Stakeholder engagement
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•Governance of CR
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•Transparency and balance—setbacks as well as achievements