Principle and Practice of Management MGT Ippt chap005
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Transcript of Principle and Practice of Management MGT Ippt chap005
Ethics, Corporate Responsibility,
and Sustainability
Chapter Five
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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Learning Objectives
LO1 Describe how different ethical perspectives guide decision making
LO2 Explain how companies influence their ethics environment
LO3 Outline a process for making ethical decisionsLO4 Summarize the important issues surrounding corporate
social responsibilityLO5 Discuss reasons for businesses’ growing interest in the
natural environmentLO6 Identify actions managers can take to manage with the
environment in mind
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Ethics
Ethics The system of rules
that governs the ordering of values
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Telling the Truth and Lying: Possible Outcomes
Table 5.1
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It’s a Personal Issue
Most of us think we are good decision makers, ethical, and unbiased.
But most people have unconscious biases that favor themselves and their own group.
Managers often: Hire people who are like them Think they are immune to conflicts of interest Take more credit than they deserve Blame others when they deserve some blame
themselves
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It’s a Personal Issue
If the employer pays for the computer and the time you spend sitting in front of it, is it ethical for you to use the computer to do tasks unrelated to your work?
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Ethics
Ethical issue Situation, problem, or opportunity in which an
individual must choose among several actions that must be evaluated as morally right or wrong
Business ethics The moral principles and standards that guide
behavior in the world of business.
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Ethical Systems
Moral philosophy Principles, rules, and values people use in
deciding what is right or wrongUniversalism
The ethical system stating that all people should uphold certain values that society needs to function.
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Caux Principles
Caux Principles Ethical principles established by international
executives based in Caux, Switzerland, in collaboration with business leaders from Japan, Europe, and the United States.
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Caux Principles
Kyosei living and working
together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competition
Human dignity concerns the value of
each person as an end, not a means to the fulfillment of others’ purposes
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Ethical Systems
Egoism An ethical system defining acceptable behavior
as that which maximizes consequences for the individual
Utilitarianism An ethical system stating that the greatest good
for the greatest number should be the overriding concern of decision makers.
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Ethical Systems
Relativism Philosophy that bases ethical behavior on the opinions
and behaviors of relevant other peopleVirtue ethics
Classification of people based on their level of moral judgment.
Kohlberg’s model of cognitive moral development Perspective that what is moral comes from what a
mature person with “good” moral character would deem right.
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Current Ethical Issues in Business
Table 5.2
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Business Ethics
Ethical climate In an organization,
the processes by which decisions are evaluated and made on the basis of right and wrong
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Danger Signs
1. Excessive emphasis on short-term revenues over longer-term considerations.
2. Failure to establish a written code of ethics.3. A desire for simple, “quick fix” solutions to ethical problems.4. An unwillingness to take an ethical stand that may impose
financial costs.5. Consideration of ethics solely as a legal issue or a public
relations tool6. Lack of clear procedures for handling ethical problems.7. Responding to the demands of shareholders at the expense
of other constituencies
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Danger Signs
Ethical leader One who is both a moral person and a moral
manager influencing others to behave ethically.
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Ethics Programs
Compliance-based ethics programs Company mechanisms typically designed by
corporate counsel to prevent, detect, and punish legal violations.
Integrity-based ethics programs Company mechanisms designed to instill in
people a personal responsibility for ethical behavior
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A Process for Ethical Decision Making
Figure 5.1
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Ethical Decision Making
Making ethical decisions takes: Moral awareness
realizing the issue has ethical implications Moral judgment
knowing what actions are morally defensible Moral character
the strength and persistence to act in accordance with your ethics despite the challenges
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Courage
Behaving ethically requires not just moral awareness and moral judgment but also moral character, including the courage to take actions consistent with your ethical decisions
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Corporate Social Responsibility
Corporate social responsibility (CSR) Obligation toward
society assumed by business.
Triple bottom line
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Corporate Social Responsibility
Economic responsibilities To produce goods and services that society wants
at a price that perpetuates the business and satisfies its obligations to investors.
Legal responsibilities To obey local, state, federal, and relevant
international laws
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Corporate Social Responsibility
Ethical responsibilities Meeting other social expectations, not written as
law.
Philanthropic responsibilities Additional behaviors and activities that society
finds desirable and that the values of the business support.
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Pyramid of Global Corporate SocialResponsibility and Performance
Figure 5.2
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Corporate Social Responsibility
Transcendent education An education with five higher goals that balance
self-interest with responsibility to others Empathy, generativity, mutuality, civil aspiration,
intolerance of ineffective humanity
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Contrasting Views
First - holds that managers act as agents for shareholders and, as such, are obligated to maximize the present value of the firmSecond - managers should be motivated by principled moral reasoning
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Reconciliation
Profit maximization and corporate social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can converge
Recent attention has also been centered on the possible competitive advantage of socially responsible actions
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Ecocentric Management
Ecocentric management Goal is the creation of sustainable economic
development and improvement of quality of life worldwide for all organizational stakeholders.
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Ecocentric Management
Sustainable growth Economic growth and development that meet
present needs without harming the needs of future generations
Life-cycle analysis (LCA) A process of analyzing all inputs and outputs,
though the entire “cradle-to-grave” life of a product, to determine total environmental impact