CHAPTER 4
SOCIAL
RESPONSIBILITY AND
ETHICS IN
MANAGEMENT
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–1
Lecture Outline
• Organisational social responsibility
- Perspectives, stakeholders, managerial
responsibilities, does it pay?
• Organisational social responsiveness
• Being an ethical manager
- Types, guidelines, career issues
• Managing an ethical organisation
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–2
MANAGERIAL ETHICS
• Ethics
Standards of behaviour and moral
judgment differentiating right from wrong
• Managerial ethics
Standards of conduct and moral judgment
mangers use in their business
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
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ORGANISATIONAL SOCIAL
RESPONSIBILITY
‘The obligation of an organisation
to act to protect and improve
society’s welfare as well as its
own interests.’ p112
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–4
ORGANISATIONAL SOCIAL
RESPONSIBILITY
Major perspectives:
• Invisible hand
• Hand of government
• Hand of management
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–5
ORGANISATIONAL SOCIAL
RESPONSIBILITY
INVISIBLE HAND ARGUMENT
• A view holding that the entire social responsibility
of a corporation can be summed up as ‘make
profits and obey the law’.
• Corporate responsibility is guided by the ‘invisible
hand’ of free market forces
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–6
ORGANISATIONAL SOCIAL
RESPONSIBILITY
HAND OF GOVERNMENT PERSPECTIVE
• A view holding that the interests of society are best
served by having the law and the political process
guide the corporation’s activities.
• Law and political processes control organisations
on employee well-being, customer protection and
community issues e.g. the natural environment.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–7
ORGANISATIONAL SOCIAL
RESPONSIBILITY
Hand of Management perspective
Incorporates:
• Anti-freeloader argument
• Capacity argument
• Enlightened self-interest argument
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–8
ORGANISATIONAL SOCIAL
RESPONSIBILITY
HAND OF MANAGEMENT PERSPECTIVE
• A view stating that corporations and
their managers are expected to act in
ways that protect and improve
society’s welfare as well as make
profit.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–9
ORGANISATIONAL SOCIAL
RESPONSIBILITY
ANTI-FREELOADER ARGUMENT
• Holds that since businesses benefit from a
better society, they should bear part of the
costs by actively working to bring about
solutions to social problems.
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–10
ORGANISATIONAL SOCIAL
RESPONSIBILITY
CAPACITY ARGUMENT
• States that the private sector,
because of its considerable economic
resources, must make up for
government cutbacks in social
programs.
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–11
ORGANISATIONAL SOCIAL
RESPONSIBILITY
ENLIGHTENED SELF-INTEREST
ARGUMENT
• Holds that businesses exist at society’s
pleasure and that, for their own legitimacy
and survival, businesses should meet the
public’s expectations regarding social
responsibility.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–12
SOCIAL RESPONSIBILITIES OF
MANAGERS
• Economic and legal
Responsibility to make a profit and obey the law
(recognised by: invisible hand, hand of
government, hand of management).
• Ethical and discretionary
Ethical behaviour expected by society
(recognised by: hand of management).
Difficult to determine, identify
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–13
SOCIAL STAKEHOLDERS
•
•
•
•
•
•
Shareholders
Employees
Customers
Local community
General society
International community
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–14
SOCIAL STAKEHOLDERS
Employees
Shareholders
THE
ORGANISATION
Customers
International
community
Local community
Society (regional & national)
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–15
SOCIAL STAKEHOLDERS
DIVERSITY AS COMPETITIVE ADVANTAGE
• Attracting workers is costly, diversity may
help attract and retain workers
• Workforce that reflects customer base may
give insight into customer wants, needs,
preferences
• Innovations are more likely where diversity
exists
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–16
DOES SOCIAL RESPONSIBILITY
PAY?
• Evidence is mixed
• Strategically beneficial
• Likely, profit  socially responsible
management
• Shareholders are sensitive to the
extent that it affects profit
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–17
PROMOTING INNOVATION:
VANGUARD COMPANIES
Characteristically, they:
• try to satisfy all their stakeholders
• are committed to some higher purpose
(profits not the only end of corporate
efforts)
• value continuous learning
• aim high (dedicated to being best in all
they do)
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–18
ORGANISATIONAL SOCIAL
RESPONSIVENESS
‘A term referring to the development of
organisational decision processes where
managers anticipate, respond to and
manage areas of social responsibility.’
Two aspects:
• Monitoring social demands and expectations
• Internal social response mechanisms
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–19
MONITORING SOCIAL
DEMANDS/EXPECTATIONS
• Social forecasting
• Opinion surveys
• Social audits
• Issues management
• Social scanning
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–20
INTERNAL SOCIAL
RESPONSE MECHANISMS
• Individual executives
• Temporary task forces
• Permanent committees
• Permanent departments
• Combination approaches
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–21
BEING AN ETHICAL
MANAGER
The difficulties and concerns with
business ethics raise three important
issues about being a manager:
• Types of managerial ethics
• Ethical guidelines for managers
• Ethical career issues
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PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–22
TYPES OF MANAGERIAL
ETHICS
• Immoral management
Lacks ethical principles, concern for profit only
• Amoral management
Ignores, or is oblivious to, ethical issues
• Moral management
Conscious attention to ethical standards and
issues
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–23
ETHICAL GUIDELINES FOR
MANAGERS
• Obey the law.
• Tell the truth.
• Show respect for people.
• Stick to the Golden Rule.
• Above all, do no harm.
• Participation not paternalism.
• Responsibility requires action.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–24
FACTORS AFFECTING CSR
STAGES OF MORAL DEVELOPMENT
(Kohlberg, 1969)
• Level 1: Pre-conventional morality
(Punishment/reward)
• Level 2: Conventional morality (Good by/Good girl
- Authority orientation)
• Level 3: Post-conventional morality (Social
contracts/Ethical principles)
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–25
FACTORS AFFECTING CSR
Moral intensity of ethical issues (Jones 1991)
• Magnitude of consequences
• Social consensus
• Probability of effect
• Temporal immediacy
• Proximity
• Concentration of effect
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–26
FACTORS AFFECTING CSR
Individual values… four modes
• Practical - what worked in the past
• Moral - strong sense of right or wrong
• Gratifying - drive to feel good about
decisions
• Economic - focus on organisational
resources
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–27
ETHICAL CAREER ISSUES
• Assessing values and protecting yourself
–
–
–
Seek advice and support from trusted sources.
Take action to change what you see as not being
ethical.
Take actions to protect yourself.
• Anticipating ethical conflicts
–
–
–
Pre-employment checks: Is this an ethical company?
Is the industry marked by patterns of unethical
behaviour?
Avoid ethical compromises - they can escalate.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–28
MANAGING AN ETHICAL
ORGANISATION
Situational factors influencing
ethical behaviour:
• External factors
Extreme competitiveness, high/low opportunities
for success, dependency on other organisations
• Internal factors
Push for high performance, labour unrest,
delegation, quests for innovation
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–29
MECHANISMS FOR ETHICAL
MANAGEMENT
• Increasing awareness of diversity
• Top management commitment
• Codes of ethics
• Ethics committees
• Ethics audits
• Ethics hotlines
• Ethics training
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–30
LECTURE SUMMARY
• Organisational social responsibility defined
• Three major perspectives (Invisible hand, Hand of
•
•
•
•
government, Hand of management).
Management’s social responsibility: Six
stakeholder groups, links to organisational
success?
CSR: two processes - monitoring social
expectations; internal response mechanisms
Managers’ ethical standards: immoral, amoral and
moral; Ethical guidelines; Ethical career issues
Operating an ethical organisation: mechanisms to
facilitate ethical behaviour.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Management: A Pacific Rim Focus 5e by Bartol, Tein, Matthews, Sharma
Slides prepared by Rob Lawrence, Victoria University (Australia)
4–31