Chapter 3: Ethics and Social Responsibility P a g e | 1
Effective Management 7th Edition
Chapter 3: Ethics and Social Responsibility
Pedagogy Map
This chapter begins with the learning outcome summaries and terms covered in the chapter, followed by a
set of lesson plans for you to use to deliver the content in Chapter 3.
Lesson Plan for Lecture (for large sections)
Lesson Plan for Group Work (for smaller classes)
Assignments with Teaching Tips and Solutions
What Would You Do Case Assignment American Express
Highlighted Assignments Key Points
What Would You Do? American Express is considering not hiring smokers in an
effort to stem rising medical costs.
Management Team Decision As a hotel management team, students must decide how to
respond to local governments plan to limit development of
exclusive beachfront property.
Practice Being a Manager This exercise offers students the opportunity to consider how
they might apply ethical judgment as a manager in an
investment firm.
Self-Assessment Measures antisocial behavior, orderliness/diligence, and
Additional Assignments Key Points
Develop Your Career Potential Students examine a non-profit organization of their choosing.
Managers often receive solicitations for donations and so
need to know how to conduct that kind of research.
Learning Outcomes
3-1 Discuss how the nature of management jobs creates the possibility for ethical abuses.
Ethics is the set of moral principles or values that define right and wrong. Ethical behavior occurs when
3-2 Describe the U.S. Sentencing Commission Guidelines for Organizations, and explain how
they both encourage ethical behavior and punish unethical behavior by businesses.
Under the U.S. Sentencing Commission Guidelines, companies can be prosecuted and fined up to $300
3-3 Describe what influences ethical decision making.
Two factors influence ethical decisions: the ethical intensity of the decision and the moral development of
3-4 Explain what practical steps managers can take to improve ethical decision making.
Employers can increase their chances of hiring ethical employees by administering overt integrity tests
and personality-based integrity tests to all job applicants. Most large companies now have corporate codes
3-5 Explain to whom organizations are socially responsible.
Social responsibility is a businesss obligation to benefit society. To whom are organizations socially
responsible? According to the shareholder model, the only social responsibility that organizations have is
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3-6 Explain for what organizations are socially responsible.
Companies can best benefit their stakeholders by fulfilling their economic, legal, ethical, and
3-7 Explain how organizations can choose to respond to societal demands for social
responsibility.
3-8 Explain whether social responsibility hurts or helps an organization’s economic
performance.
Does it pay to be socially responsible? Studies show that there is generally no trade-off between social
responsibility and economic performance. In most circumstances, there is generally a small positive
Terms
accommodative strategy
concentration of effect
conventional level of moral development
defensive strategy
discretionary responsibility
economic responsibility
preconventional level of moral development
primary stakeholder
proactive strategy
probability of effect
proximity of effect
reactive strategy
Chapter 3: Ethics and Social Responsibility P a g e | 4
Lesson Plan for Lecture
Pre-Class Prep for You: Pre-Class Prep for Your Students:
Review chapter and determine what points to
cover.
Bring PPT slides.
Read Chapter 3, bring book.
Warm Up Begin Chapter 3 by asking students to define ethics in their own words. Capture the
various definitions on the board. Then, ask students to describe some deviant behavior
that theyve seen at their own jobs or at school. (Be sure to insist they not disclose the
names of people, companies, etc.!)
Content
Delivery
Lecture slides: Make note of where you stop so you can pick up at the next class
meeting. Slides have teaching notes on them to help you as you lecture.
Topics PowerPoint Slides Activities
3-1 Ethics and the Nature
of Management Jobs
1: Ethics and Social
Responsibility
2: What Would You Do?
3-2 U.S. Sentencing
3-2a Who, What, and Why?
3-2b Determining the
Punishment
5: U.S. Sentencing
6: U.S. Sentencing
Commission Guidelines
for Organizations
7: Who, What, and Why?
3-3a Ethical Intensity of the
Decision
3-3b Moral Development
13: Ethical Intensity
14: Factors of Ethical
Intensity
handling the Addessi case
at IBM.
Chapter 3: Ethics and Social Responsibility P a g e | 5
15: Kohlbergs Stages of
Give students a
3-4 Practical Steps to
Ethical Decision Making
3-4b Codes of Ethics
3-4d Ethical Climate
16: Practical Steps to
Ethical Decision Making
19: Ethics Training
Ethical Decision Making
Ask students, Can ethics
be taught? Or, If you
someone who is unethical
him- or herself?
3-5 To Whom Are
Organizations Socially
Responsible?
3-6 For What Are
Organizations Socially
Responsible?
3-7 Responses to Demands
for Social Responsibility
3-8 Social Responsibility
and Economic
Performance
23: Social Responsibility
24: To Whom Are
Organizations Socially
Responsible?
27: For What are
Organizations Socially
Responsible?
28: Responses to
Demands for Social
31: Social Responsibility
and Economic
Performance
Push students to consider
whether companies can
reconcile oppositional
social responsibility
Conclusion Assignments:
Chapter 3: Ethics and Social Responsibility P a g e | 6
and
1. Sustainability is a hot topic in the debate surround corporate social
question 3 with what actually happened.
2. If you have finished covering Chapter 3, assign students to review Chapter 3 and
read the next chapter on your syllabus.
Remind students about any upcoming events.
Lesson Plan for Group Work
Pre-Class Prep for You: Pre-Class Prep for Your Students:
Review material to cover and modify the
lesson plan to meet your needs.
Set the classroom up so that small groups
of four to five students can sit together.
Bring book.
Warm Up Begin Chapter 3 by asking students to define ethics in their own words. Capture the
Content
Delivery
Lecture on What Is Ethical and Unethical Workplace Behavior (Sections 3-1 and 3-2).
Break for group activity:
“USSC Guidelines”
Divide the class into small groups of four to five students. Using a case that was
recently in the press, give students the basic facts in the case and have them decide a
level for the offense, base fine, and culpability score. When each groups has a
suggested answer, come back together as a class to share results. If you have the
information from the case available, share with students the actual outcome of the
case and compare their ideas about the penalties with the ultimate decision of the
USSC.
Break for the following activity (activity involves a follow-up described in the
Assignments section below):
“Campus Cheating”
Divide the class into small groups of three to four students. Tell each group to come
Lecture on Practical Steps to Ethical Decision Making (Section 3-4).
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Break for the following activity:
“Code of Ethics”
Divide the class into groups of four to five students. Allow 5 7 minutes for groups to
write a code of ethics (five elements minimum) for the class. As groups report to the
Segue into presenting the content on Social Responsibility (SR) (Sections 3-5, 3-6, and
3-7).
Ask students What is Social Responsibility? Students may have a distinct or limited
view of SR, such as environmentally sound practices or donating time to community
outreach. Push them to expand their thinking of corporate social responsibility to include
things like buying existing facilities for company operations rather than building new,
allowing workers to telecommute (less use of energy for transportation), using electronic
invoicing and bill-pay options to reduce paper consumption and transportation costs, and
so forth. In short, push them to think beyond environmentalism, which in many ways has
become a synonym for SR.
Finish by lecturing on SR and Economic Performance (Section 3-8).
Ask students if they would be willing to pay more for products made by socially
responsible companies to create a stronger connection between SR and economic results.
Start pushing students to think in terms of how much more. Perhaps give them a string
of examples, such as:
Pay $14 gallon for gas as a way to reduce demand for petroleum (current gas
Conclusion
and
Preview
Assignments:
1. As an assignment, have students conduct the poll they created in class on campus
for a couple of days. Groups will need to get together on their own time to
2. If you have finished covering Chapter 3, assign students to review Chapter 3 and
read the next chapter on your syllabus.
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Assignments with Teaching Tips and Solutions
What Would You Do Case Assignment
What Really Happened? Solution
AMERICAN EXPRESS
In the case, you learned that American Express was considering a policy of not hiring smokers, a practice
followed by 6,000 companies nationwide. In fact, this case is not about American Express, but is a
composite of facts and details pulled together from many companies. Costs are a primary consideration
Well, with the meeting just a month away, you’ve got to prepare for the Board of Directors’ questions.
For example, on what basis should the company decide whether or whether not to hire smokers? Next, is
Ethics is the set of moral principles or values that defines right and wrong for a person or group.
Accordingly, ethical decision making is generally viewed as making choices about right and wrong.
Likewise, ethical behavior occurs when people follow accepted principles of right and wrong.
Furthermore, ethics, ethical behavior, and ethical decision making all examine choices from an individual
perspective or from the affect that behaviors or decisions have on other individuals.
By contrast, social responsibility is a businesss obligation to pursue policies, make decisions, and take
actions that benefit society. So, while ethics focuses on whats right and wrong for individuals, social
responsibility focuses on what produces the most benefit to society. These are generally very different
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Note the difference, however, when we return to an ethical perspective that focuses on individual choices
or the impact of policies on individuals. For instance, Ellen Vargyas, chief counsel for the American
Legacy Foundation, an anti-smoking non-profit group, says We want to be very supportive of smokers,
and the best thing we can do is help them quit, not condition employment on whether they quit. Smokers
are not the enemy. Now, instead of focusing on benefits to society, the focus is on the impact or costs to
individuals.
So, is not hiring smokers an issue of ethics or social responsibility? Is it an issue where we put individuals
or society first?
Finally, given that it so much cheaper to not hire smokers, the board will want to know whether it’s
ethical to, or whether not hiring smokers is a form of discrimination.
Our first question examined how different ethical principles can lead to very different ethical actions or
decisions. The question of whether not hiring smokers is most closely related to the principle of
individual rights that holds that you should never take an action that infringes on others agreed-upon
rights. If you view smoking as an individual right, youre likely to believe that not hiring smokers is a
form of discrimination.
More specifically, smokism, discriminating against people because they smoke, is defined as the
prejudice, discrimination or denial of justice and fair treatment by individuals or institutions against
people who smoke a tobacco related product. Not hiring smokers would clearly be smokism. For
example, Milind Shah, a senior fellow at the American Civil Liberties Union says, Employers should
only worry about what people do on duty; these sorts of things [like smoking] are none of a company’s
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Management Team Decision
ENVIRONMENT AND BUSINESS IN ST. TROPEZ
Purpose
With ever-increasing concerns about environmental issues, companies can no longer go about doing
business without thinking about the impact they have on nature. In this case, students are asked to weigh a
difficult decision that is motivated by a concern to protect delicate beachfront land from further
development.
Setting It Up
You can introduce this case by reminding students that while every company has a certain social
responsibility, the specific steps taken in response to those responsibilities can and do vary greatly
between companies. Ask your students which of the four approaches to fulfilling social responsibility
they feel makes the most business sense.
Scenario
There are few places in the world like St. Tropez, a city on the French Rivierapristine beaches, perfect
weather all year round, and a string of ultra-luxurious, star-studded hotels. But if the mayor of St. Tropez
has his way, this ultimate vacation spot will soon look a lot different.
Mayor Roland Brunos administration is highly concerned that the hotels, and all of their beachfront
facilities, present a serious environmental threat. They want to protect rare plant species that grow in the
sands, and prevent dunes from being worn down by constant foot traffic. According to the mayors chief
of staff, We all want to be here for the long term. Thats why we need to make sure theres a sustainable
equilibrium between the environment and the community. Under the mayors plan, the amount of
beaches allowed for business use would decrease by 10 percent, and an entire section of the popular
Questions
1. How would you respond to the mayors plan? Would you support its concern to protect the
environment even if it meant the closure of your hotel? Would you oppose it and risk being perceived
as uninterested in fulfilling social responsibility?
Students responses will vary.
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2. Can you come up with a scenario where the hotel could stay in business and still address the mayors
offices environmental concerns?
3. In cases such as this, how would you justify the decision to fulfill the responsibility and face certain
loss? How would you justify the decision to ignore the responsibility for the sake of staying in
business?
The response to this question depends on whether students believe that the hotel company should
Practice Being a Manager
DISCERNING UNETHICAL BEHAVIOR
Exercise Overview and Objective
This exercise offers students a scenario for analysis and response. The scenario involves a newly hired
portfolio manager who is hired to manage a remarkably successful mutual fund (Pioneer Fund). Over the
course of the first month on the job, this manager senses that Pioneer Fund employees may be engaged in
some impropriety. At the same time, the manager is aware that this is a successful group. If the manager
makes hasty accusations that are proven false or overdone, it will likely roil the group and get the
manager fired. The objective of this exercise is to improve students skill in analyzing a situation
involving ethics and responsibility issues. The exercise should also provide an opportunity to discuss the
tensions that are common to such situations.
Preparation
At least one session prior, you should assign Steps 1 3 of the exercise. These steps require students to
study the situation, reflect on possible approaches and scenarios, and to develop a plan of action
(including anticipating responses of Pioneer Fund employees). Encourage students to use this exercise as
a valuable professional practice experience. This exercise is best viewed as an opportunity to practice
In-Class Use
Students should be assigned to small discussion groups in a manner that best facilitates engagement and
vigorous discussion. If you know students well enough at this point in the class, you may want to assign
groups that include individuals who are likely to have different viewpoints on the problem and its
resolution. Otherwise, simply assign diverse groups and encourage full participation.