Study Question 1: What is ethical behavior?

1. Ethics Code of moral principles. Set standards of “good” and “bad” as opposed to “right” and “wrong.” Ethical behavior What is accepted as good and right in the context of the governing moral code. Study Question 1: What is ethical behavior? Management Fundamentals - Chapter 3

2. Law, values, and ethical behavior: Legal behavior is not necessarily ethical behavior. Personal values help determine individual ethical behavior. Terminal values Instrumental values Study Question 1: What is ethical behavior? Management Fundamentals - Chapter 3

3. Study Question 1: What is ethical behavior? Utilitarian view of ethics — greatest good to the greatest number of people. Individualism view of ethics — primary commitment is to one’s long-term self-interests. Moral-rights view of ethics — respects and protects the fundamental rights of all people. Justice view of ethics — fair and impartial treatment of people according to legal rules and standards. Management Fundamentals - Chapter 3

4. Figure 3.1 Four views of ethical behavior. Management Fundamentals - Chapter 3

5. Cultural issues in ethical behavior: Cultural relativism Ethical behavior is always determined by cultural context. Cultural universalism Behavior that is unacceptable in one’s home environment should not be acceptable anywhere else. Study Question 1: What is ethical behavior? Management Fundamentals - Chapter 3

6. Figure 3.2 The extremes of cultural relativism and ethical imperialism in international business ethics. Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,” Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62. Management Fundamentals - Chapter 3

7. Study Question 1: What is ethical behavior? How international businesses can respect core or universal values: Respect for human dignity Create culture that values employees, customers, and suppliers. Keep a safe workplace. Produce safe products and services. Respect for basic rights Protect rights of employees, customers, and communities. Avoid anything that threatening safety, health, education, and living standards. Be good citizens Support social institutions, including economic and educational systems. Work with local government and institutions to protect environment. Management Fundamentals - Chapter 3

8. An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical. Ethical dilemmas include: Discrimination Sexual harassment Conflicts of interest Customer confidence Organizational resources Study Question 2: How do ethical dilemmas complicate the workplace? Management Fundamentals - Chapter 3

9. Study Question 2: How do ethical dilemmas complicate the workplace? Ethical behavior can be rationalized by convincing yourself that: Behavior is not really illegal. Behavior is really in everyone’s best interests. Nobody will ever find out. The organization will “protect” you. Management Fundamentals - Chapter 3

10. Factors influencing ethical behavior include: The person Family influences, religious values, personal standards, and personal needs. The organization Supervisory behavior, peer group norms and behavior, and policy statements and written rules. The environment Government laws and regulations, societal norms and values, and competitive climate in an industry. Study Question 2: How do ethical dilemmas complicate the workplace? Management Fundamentals - Chapter 3

11. Figure 3.3 Factors influencing ethical managerial behavior—the person, organization, and environment. Management Fundamentals - Chapter 3

12. Study Question 3: How can high ethical standards be maintained? Checklist for dealing with ethical dilemmas Step 1. Recognize the ethical dilemma Step 2: Get the facts Step 3. Identify your options Step 4. Test each option: Is it legal? Is it right? Is it beneficial? Step 5. Decide which option to follow Step 6. Double-check decision by asking the “spotlight” questions: “How would I feel if my family found out about my decision?” “How would I feel about this if my decision were printed in the local newspaper?” Step 7. Take action. Management Fundamentals - Chapter 3

13. Ethics training: Structured programs that help participants to understand ethical aspects of decision making. Helps people incorporate high ethical standards into daily life. Helps people deal with ethical issues under pressure. Study Question 3: How can high ethical standards be maintained? Management Fundamentals - Chapter 3

14. Whistleblowers Expose misdeeds of others to: Preserve ethical standards Protect against wasteful, harmful, or illegal acts Jeffrey Wigand on 60 minutes http://www.youtube.com/watch?v=hkTk4HKf9XI Laws protecting whistleblowers vary Study Question 3: How can high ethical standards be maintained? Management Fundamentals - Chapter 3

15. Study Question 3: How can high ethical standards be maintained? Barriers to whistleblowing include: Strict chain of command Strong work group identities Ambiguous priorities Organizational methods for overcoming whistleblowing barriers: Ethics staff units who serve as ethics advocates Moral quality circles Management Fundamentals - Chapter 3

16. Study Question 3: How can high ethical standards be maintained? Ethical role models: Top managers serve as ethical role models. All managers can influence the ethical behavior of people who work for and with them. Excessive pressure can foster unethical behavior. Managers should be realistic in setting performance goals for others. Management Fundamentals - Chapter 3

17. Codes of ethics: Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas. Areas often covered by codes of ethics: Bribes and kickbacks Political contributions Honesty of books or records Customer/supplier relationships Confidentiality of corporate information Study Question 3: How can high ethical standards be maintained? Management Fundamentals - Chapter 3

18. Study Question 4: What is corporate social responsibility? Corporate social responsibility: Looks at ethical issues on the organization level. Obligates organizations to act in ways that serve both its own interests and the interests of society at large. Management Fundamentals - Chapter 3

19. Study Question 4: What is corporate social responsibility? Organizational stakeholders Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance. Typical organizational stakeholders Employees Customers Suppliers Owners Competitors Regulators Interest groups Management Fundamentals - Chapter 3

20. Figure 3.4 Multiple stakeholders in the environment of an organization. Management Fundamentals - Chapter 3

21. Study Question 4: What is corporate social responsibility? Beliefs that guide socially responsible business practices: People do their best with a balance of work and family life. Organizations perform best in healthy communities. Organizations gain by respecting the natural environment. Organizations must be managed and led for long-term success. Organizations must protect their reputations. Management Fundamentals - Chapter 3

22. Study Question 4: What is corporate social responsibility? Perspectives on corporate social responsibility: Classical view— Management’s only responsibility is to maximize profits. Socioeconomic view— Management must be concerned for the broader social welfare, not just profits. Management Fundamentals - Chapter 3

23. Study Question 4: What is corporate social responsibility? Arguments against social responsibility: Reduced business profits Higher business costs Dilution of business purpose Too much social power for business Lack of public accountability Arguments in favor of social responsibility: Adds long-run profits Improved public image Avoids more government regulation Businesses have resources and ethical obligation Management Fundamentals - Chapter 3

24. Study Question 4: What is corporate social responsibility? Criteria for evaluating corporate social performance: Is the organization’s … Economic responsibility met? Legal responsibility met? Ethical responsibility met? Discretionary responsibility met? Management Fundamentals - Chapter 3

25. Study Question 4: What is corporate social responsibility? Strategies for pursuing social responsibility: Obstructionist — meets economic responsibilities. Defensive — meets economic and legal responsibilities. Accommodative — meets economic, legal, and ethical responsibilities. Proactive — meets economic, legal, ethical, and discretionary responsibilities. Management Fundamentals - Chapter 3

26. Study Question 5: How do organizations and governments work together in society? How government influences organizations: Common areas of government regulation of business affairs: Occupational safety and health Fair labor practices Consumer protection Environmental protection Management Fundamentals - Chapter 3

27. Study Question 5: How do organizations and governments work together in society? How organizations influence governments: Personal contacts and networks Public relations campaigns Lobbying Political action committees Sometimes by illegal acts, such as bribery or illegal financial contributions to political campaigns Management Fundamentals - Chapter 3

28. Study Question 5: How do organizations and governments work together in society? Corporate governance: The oversight of the top management of an organization by a board of directors. Corporate governance involves: Hiring, firing, and compensating the CEO. Assessing strategy. Verifying financial records. Management Fundamentals - Chapter 3