Management Chapter 4 Homework Free Choice Free Choice Pertains Behavior About

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CHAPTER 4

MANAGING ETHICS AND SOCIAL RESPONSIBILITY

CHAPTER OUTLINE

Are You Ready to Be a Manager?

I. What Is Managerial Ethics?

II. Ethical Management Today

III. Ethical Dilemmas: What Would You Do?

IV. Criteria for Ethical Decision Making

V. Manager Ethical Choices

VI. What Is Corporate Social Responsibility?

A. Organizational Stakeholders

ANNOTATED LEARNING OBJECTIVES

After studying this chapter, students should be able to:

1. Define ethics and explain how ethical behavior relates to behavior governed by law and free

choice.

Ethics is difficult to define in a precise way. In a general sense, ethics is the code of moral

2. Discuss why ethics is important for managers and identify recent events that call for a

renewed commitment to ethical management.

The pervasiveness of ethical lapses during the first decade of this century has been astounding.

Although public confidence in business managers in particular is at an all-time low, politics,

3. Explain the utilitarian, individualism, moral-rights, justice, virtue ethics, and practical

approaches for evaluating ethical behavior.

The utilitarian approach holds that moral behaviors produce the greatest good for the greatest

number. In this approach, a decision maker is expected to consider the effect of each decision

The justice approach holds that moral decisions must be based on standards of equity, fairness,

and impartiality. Three types of justice are of concern to managers. Distributive justice requires

4. Describe the factors that shape a manager’s ethical decision making, including levels of

moral development.

Individual managers bring specific personality and behavioral traits to the job. Personal needs,

family influence, and religious background all shape a manager’s value system. Specific

personality characteristics, such as ego strength, self-confidence, and a strong sense of

5. Identify important stakeholders for an organization and discuss how managers balance the

interests of various stakeholders.

6. Explain the philosophy of sustainability and why organizations are embracing it.

Sustainability refers to economic development that generates wealth and meets the needs of the

current generation while saving the environment so future generations can meet their needs as

7. Define corporate social responsibility and how to evaluate it along economic, legal, ethical,

and discretionary criteria.

Social responsibility is management’s obligation to make choices and take actions that will

contribute to the welfare and interests of society as well as to the welfare and interests of the

organization. It means being a good corporate citizen. Social responsibility can be evaluated

8. Discuss how ethical organizations are created through ethical leadership and organizational

structures and systems.

Management is responsible for creating and sustaining conditions in which people are likely to

behave themselves. Managers must take active steps to ensure that the company stays on an

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LECTURE OUTLINE

Are You Ready to Be a Manager?

This questionnaire helps students determine their approaches to ethical behavior.

New Manager Self-Test: Will You Be a Courageous Manager?

Young managers are soon confronted with situations that will test the strength of their moral

INTRODUCTION

Determining what is right can be difficult for managers. Thus, ethics always has been a concern.

Recent widespread moral lapses and corporate financial scandals, however, bring the topic to the

forefront and pressure managers in large and small companies alike to put ethics near the top of

I. WHAT IS MANAGERIAL ETHICS?

INSTRUCTOR’S NOTES___________________________________________________________

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A. Ethics is the code of moral principles and values that govern the behaviors of a person or

group with respect to what is right or wrong.

1. Ethics sets standards as to what is good or bad in conduct and decision making.

3. Human behavior falls into three domains.

a. Codified law. Values and standards are written into the legal system and are

enforceable in the courts. Lawmakers have ruled that people and corporations

Exhibit 4.1: Three Domains of Human Action

II. ETHICAL MANAGEMENT TODAY

The pervasiveness of ethical lapses during the first decade of this century has been astounding.

Although public confidence in business managers in particular is at an all-time low, politics,

sports, and non-profit organizations have also been affected. In the business world, the names of

once-revered corporations have become synonymous with greed, deceit, irresponsibility, and

lack of moral conscience. Managers carry a tremendous responsibility for setting the ethical

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Exhibit 4.2: Examples of Unethical and Illegal Organizational Behavior

Benchmarking: Triodos Bank

The Netherlands’ Triodos Bank began in 1980 with Peter Blom as one of the founding five

employees. It has become a model for what a bank can do and how to sustain itself even in the

midst of a global financial meltdown. The Dutch bank now has branches in four countries and

III. ETHICAL DILEMMAS: WHAT WOULD YOU DO?

INSTRUCTOR’S NOTES___________________________________________________________

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A. An ethical dilemma arises in a situation concerning right or wrong when values are in

B. Several ethical dilemmas are presented that might be faced by managers, as well as a

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Discussion Question #1: Dr. Martin Luther King, Jr., said, “As long as there is poverty in the

IV. CRITERIA FOR ETHICAL DECISION MAKING

INSTRUCTOR’S NOTES___________________________________________________________

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Managers faced with tough ethical choices often benefit from a normative strategy based on

norms and values to guide their decision making. Normative ethics is based on norms and

values. Four normative approaches describe values for guiding ethical decision making.

A. The utilitarian approach holds that moral behavior produces the greatest good for the

1. The right to privacy. Individuals can choose to do as they please away from work

and have control of information about their private life.

D. The justice approach holds that moral decisions must be based on standards of equity,

fairness, and impartiality. Three types of justice are of concern to managers.

1. Distributive justice requires that different treatment of people not be based on

3. Compensatory justice argues that the party responsible should compensate

E. Virtue Ethics Approach

1. The virtue ethics approach says that moral behavior stems from personal virtues. If

F. Practical Approach

1. The practical approach sidesteps debates about what is right, good, or just and bases

V. MANAGER ETHICAL CHOICES

INSTRUCTOR’S NOTES___________________________________________________________

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Ethical or unethical business practices usually reflect the values, attitudes, beliefs, and behavior

patterns of the organizational culture. Ethics is as much an organizational issue as a personal

issue.

A. The manager brings specific personality and behavioral traits to the job. Personal needs,

family influence, and religious background all shape a manager’s value system.

B. Personality characteristics, such as ego strength, self-confidence, and a strong sense of

independence may enable managers to make ethical choices despite personal risks. The

manager’s level or stage of moral development is an important personal trait in making

ethical decisions.

1. Preconventional level. At this level a manager is concerned with external rewards

2. Conventional level. At this level managers learn to conform to expectations of good

3. Postconventional level (also called principled level). At this level individuals develop

Exhibit 4.3: Three Levels of Personal Moral Development

C. The great majority of managers operate at the conventional level. A few managers have

not advanced beyond the preconventional level. Only about 20 percent of American

adults reach the principled level of moral development.

Discussion Question #3: Imagine yourself in a situation of being encouraged to inflate your

expense account. What factors do you think would influence your choice? Explain.

VI. WHAT IS CORPORATE SOCIAL RESPONSIBILITY?

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INSTRUCTOR’S NOTES___________________________________________________________

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Corporate social responsibility (CSR) is management’s obligation to make choices and take

Spotlight on Ethics: How to Challenge the Boss on Ethical Issues

Many of today’s top executives put a renewed emphasis on ethics in light of serious ethical

lapses that tarnished the reputations and hurt the performance of previously respected and

successful companies. Yet keeping an organization in line is an ongoing challenge, and it

requires that people at all levels be willing to stand up for what they think is right. Following

these guidelines can increase the odds of being heard and having one’s opinions seriously

considered by the boss or other senior managers.

Do your research. Use facts and figures and develop an alternative policy or course of

action. Prepare for questions you might be asked.

New Manager Self-Test: Self and Others

Managers differ on how they view human nature and the tactics they use to get things done

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A. Organizational Stakeholders

1. A stakeholder is any group within or outside the organization that has a stake in the

3. Stakeholders can also have a tremendous effect on the organization’s performance

Exhibit 4.4: Major Stakeholders Relevant to Monsanto Company

Spotlight on Ethics: Interface

The carpet business contributes significantly to the destruction of our natural environment

through its massive consumption of fossil fuels, heavy use of water, and tons of debris going into

landfills. Several years ago, Ray Anderson decided to do something about it. He declared that

Discussion Question #4: Is it socially responsible for organizations to undertake political

activity or join with others in a trade association to influence the government? Discuss.

B. The Green Movement

1. “Going green” has become a new business imperative, driven by shifting social

attitudes, new governmental policies, climate changes, and the information

VII. EVALUATING CORPORATE SOCIAL RESPONSIBILITY