Chapter 3
Ethics and Social Responsibility
How do Ethics play out at work?
- The impact of ethics and lack thereof are becoming
commonplace in the news, telling tales of greed and
personal failure
- This has led to a negative view towards executives
- It is tempting to say that any behavior that is legal is also
ethical but this is not necessarily true; the “letter of the
law” does not always translate into ethical behavior
- Ethics is defined as the code of moral principles that set
standards of good or bad, right or wrong, often referred
to as ethical behavior
Ethical Behavior is values driven
- The difficulty becomes what ethical behavior truly is;
making personal phone calls on company time, calling in
sick to go on vacation; these aren’t illegal, but are they
wrong?
- The bigger issue becomes when people are asked to do
something that violates their personal beliefs; for some
people it isn’t an issue of legal vs. illegal, but rather right
vs. wrong; this is dependent on people’s values
- Values can differ; terminal values focus on the end results
while instrumental values focus on the process and vary
greatly between individuals
- This explains why people have different approaches to
similar situations
What is considered ethical varies
- There are 4 different views about ethics:
1. Utilitarian view: considers ethical behavior to be that
which delivers the greatest good to the greatest # of
people. An example would be a plant manager laying off
30% of their staff in order to save the company from
going bankrupt
2. Individualism view- this view focuses on the long-term
advancement of self-interests. An example would be not
cheating on a test because you realize that the long-term
penalty (getting caught) is not worth the short-term
advancement (getting a good grade)
3. Justice view- this view considers a behavior ethical when
people are treated impartially and fairly, according to
legal rules and standards. There are 4 components to the
justice view
i)
Procedural justice- involves the fair administration
of policies and rules
ii) Distributive justice- focuses on treating people the
same, regardless of personal characteristics
iii) Interactional justice- focuses on treating everyone
with dignity and respect
iv) Commutative justice- focuses on the fairness of
exchanges and transactions
4. Moral Rights view- considers behavior to be ethical when
it respects and protects the fundamental rights of people.
This view believes that all people have rights to life,
liberty and fair treatment. This protects individual rights
but doesn’t guarantee that the outcomes will be beneficial
to the broader society. Also, different countries have
different laws that may not meet our expectations
What is considered ethical varies across cultures
- For example, child labour
- While we frown upon its use, for people in the countries
that participate in child labour it is useful and necessary
- Many times, the corporate view is, when in Rome, do as
the Romans, an example of cultural relativism
- The opposite view of cultural relativism is moral
absolutism; ethical standards should apply universally,
across all cultures
- This can lead to ethical imperialism; the suggestion that
one cultures views are right, and one is wrong
Ethical Dilemmas arise from personal ethics
What would you do in this situation? You have just graduated
from university and have accepted a job offer. Before you start
this job, you receive another (and better) job offer. What do
you do?
- This creates an ethical dilemma, a situation where offers
potential benefits but may be unethical
- Some examples of unethical behavior that may create
ethical dilemmas at work:
1. Discrimination: denying someone a job because of their
race, religion, gender
2. Sexual harassment: making someone uncomfortable
because of inappropriate comments or actions
3. Conflicts of interest: taking bribes, kickbacks, huge gifts
etc. for preferential treatment
4. Customer confidence: giving someone private
information regarding customer activities
5. Organizational resources: using company literature to
promote personal views, abusing expense accounts etc.
- Most managers claim that their bosses create ethical
dilemmas; they know their bosses misuse company funds,
harass workers or hold them accountable for
unrealistically high performance goals
People Rationalize Unethical Behavior
1. It’s not really illegal- implies behavior is acceptable,
especially in ambiguous situations
2. It’s in everyone’s best interests- this suggests that just
because someone may benefit from the behavior, it is ok
3. No one will ever know about it- This implies that
something is wrong only if it is discovered
4. The organization will stand behind me- This is
misperceived loyalty, or, I only did what I was ordered to
do
How can we maintain high standards of ethical conduct?
- Personal character and moral development influence
ethical decision making
- Character shouldn’t stay at home when we go to workbecomes difficult when the message is “does this or lose
your job”
- Ethical frameworks need to be created- well thought out
personal rules and strategies for ethical decision making
- Your moral development is also important; there are 3
parts to it:
i)
Pre-conventional stage: the individual is selfcentred; moral thinking is limited to issues of
punishment and personal interest
ii) Conventional stage: attention broadens to worry
more about social concerns
iii)
Post-conventional stage: a personal is strongly
driven by core principles and personal beliefs;
someone may be willing to break from social norms
to keep their principles, eg. like legally paying for
downloaded music
Protection of whistleblowers can improve ethical conduct
- Whistleblowers are people who expose misconduct or
organizations and their members
- They take significant career risks and are often not
protected by law
- Many people refuse to expose misconduct; they fear
confidentiality, and losing their job
- Managers as positive role models can prevent this from
happening
- They shape their organizations standards and moral tone
- Managers fall into one of 3 categories based on this:
i)
The immoral manager: the manager who chooses to
act unethically
ii) The amoral manager: a manager who acts
unethically but is unaware they are doing so
iii) The moral manager: considers ethical behavior as
one of their goals
Formal Codes of ethics set standards for good ethics
For example, Gap Inc. code of vendor conduct:
1. Discrimination: factories shall employ workers on the
basis of their ability to do the job
2. Forced labour: factories shall not use any prison,
indentured or forced labour
3. Working conditions: factories must treat all workers with
respect and dignity
4. Freedom of association: factories must not interfere with
workers who wish to lawfully and peacefully associate,
organize or bargain collectively
Social Responsibilities of Organizations
- Stakeholders are greatly affected by the performance of
the company
- Stakeholder: people and institutions most directly
affected by an organization’s performance
- This creates CSR, corporate social responsibility; the
obligation of an organization to serve its own interests
and those of its stakeholders
- Stakeholders are worried about the triple bottom line:
organizational performance, including social, financial
and environmental criteria
- This can also be referred to as the 3Ps: profit, people and
planet
- The classical view of CSR is that management’s only
responsibility is to maximize profits
- The socio-economic view is that management should be
concerned for the broader social welfare instead of only
profits
- This view is believed to created a virtuous circle:
improved social welfare can better for both finances and
society (good image leads to better sales)
Sustainability is an important social goal
1. Sustainable business: the focus is on sustainability; can
you conduct business in a way that future generations
ability to do the same thing is not impacted? Can your
business operate to meet the needs of your customers
while improving environmental conditions?
2. Sustainable development: how much environmental or
natural capital do you use? Can this business last?
3. Human sustainability: Human resources also need to be
protected; do people want to work for your company?