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Managing Social Responsibility and EthicsBUS 206Erlan Bakiev, Ph. D. Zirve UniversitySpring 2012 Discuss what it means to be socially responsible and what factors influence that decision Explain green management and how organizations can go green Discuss the factors that lead to ethical and unethical behavior Describe managements role in encouraging ethical behavior Discuss current social responsibility and ethics issuesManaging Social Responsibility and EthicsLearning OutcomesFrom Obligation to Responsiveness to ResponsibilitySSocial Obligation - the obligation of a business to meet its economic and legal responsibilities and nothing more.SSocial Responsiveness - when a firm engages in social actions in response to some popular social need.SSocial Responsibility - a businesss intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society.The Classical ViewSManagements only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).SExpending the firms resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.The Socioeconomic ViewSManagements social responsibility goes beyond making profits to include protecting and improving societys welfare.SCorporations are not independent entities responsible only to stockholders.SFirms have a moral responsibility to larger society to become involved in social, legal, and political issues.S“To do the right thing”Exhibit 5-1: Arguments For and Against SocialResponsibilityGreen Management and SustainabilitySSocial Screening - applying social criteria (screens) to investment decisions.SGreen Management - managers consider the impact of their organization on the natural environment.How Organizations Go GreenSLegal (or Light Green) Approach - firms simply do what is legally required by obeying laws, rules, and regulations willingly and without legal challenge.SMarket Approach - firms respond to the preferences of their customers for environmentally friendly products.SStakeholder Approach - firms work to meet the environmental demands of multiple stakeholdersemployees, suppliers, and the community.SActivist Approach - firms look for ways to respect and preserve the environment and be actively socially responsible.Exhibit 5-2: Green ApproachesManagers and Ethical BehaviorSEthics - principles, values, and beliefs that define right and wrong behavior.SValues - basic convictions about what is right and wrong.Personality VariablesSEgo Strength - a personality measure of the strength of a persons convictions.SLocus of Control - a personality attribute that measures the degree to which people believe they control their own fate.Exhibit 5-3: Factors that Determine Ethical and Unethical BehaviorMoral DevelopmentSA measure of independence from outside influencesSLevels of Individual Moral DevelopmentSPreconventional levelSConventional levelSPrincipled levelSStage of moral development interact with:SIndividual characteristicsSThe organizations structural designSThe organizations cultureSThe intensity of the ethical issueExhibit 5-4: Stages of Moral DevelopmentStructural VariablesSOrganizational characteristics and mechanisms that guide and influence individual ethics SExamples include:SPerformance appraisal systemsSReward allocation systemsSBehaviors (ethical) of managersOrganizations CultureSValues-Based Management - an approach to managing in which managers establish and uphold an organizations shared values.SThe Purposes of Shared ValuesSGuiding managerial decisionsSShaping employee behaviorSInfluencing the direction of marketing effortsSBuilding team spiritSThe Bottom Line on Shared Corporate ValuesSAn organizations values are reflected in the decisions and actions of its employeesIssue IntensitySCharacteristics determine issue intensity or how important an ethical issue is to an individual: greatness of harm, consensus of wrong, probability of harm, immediacy of consequences, proximity to victim(s), and concentration of effect.Exhibit 5-5: Ethical IntensityEthics in an International ContextSEthical standards are not universalSSocial and cultural differences determine acceptable behaviors.SForeign Corrupt Practices ActSIt is illegal to corrupt a foreign official, yet “token” payments to officials are permissible when doing so is an accepted practice in that country.Exhibit 5-6: Ten Principles of the UN Global CompactEncouraging Ethical Behavior1.Hire individuals with high ethical standards.2.Establish codes of ethics and decision rules.3.Lead by example.4.Set realistic job goals and include ethics in performance appraisals.5.Provide ethics training.6.Conduct independent social audits.7.Provide support for individuals facing ethical dilemmas.Code of EthicsSCode of Ethics - a formal statement of an organizations primary values and the ethical rules it expects its employees to follow.Exhibit 5-7: Code of EthicsExhibit 5-7: Code of Ethics (cont.)The Value of Ethics TrainingSCan make a difference in ethical behaviorsSIncreases employee awareness of ethical issues in business decisionsSClarifies and reinforces the organizations standards of conductSHelps employees become more confident that they will have the organizations support when taking unpopular but ethically correct stancesExhibit 5-8: A Process for Addressing Ethical DilemmasPromoting Positive Social ChangeSWhistle-Blower - individuals who raise ethical concerns or issues to others.SSocial Entrepreneur - an individual or organization who seeks out opportunities to improve society by using practical, innovative, and sustainable approaches.Exhibit 5-9: Becoming an Ethical LeaderSBe a good role model by being ethical and honest.STell the truth always.SDont hide or manipulate information.SBe willing to admit your failures.SShare your personal values by regularly communicating them to employees.SStress the organizations or teams important shared values.SUse the reward system to hold everyone accountable to the values.Terms to KnowSSocial obligationSClassical viewSSocioeconomic viewSSocial responsivenessSSocial responsibilitySSocial screeningSGreen managementSEthicsSValuesSEgo strengthSLocus of controlSValues-based managementSCode of ethicsSWhistle-blowerSSocial entrepreneur
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