Is it an act of social responsibility if: • A business enterprise pays their taxes? – What if the taxes they pay are “the minimum” that they can pay? • A business enterprise complies with, or conducts business in accordance with, government regulations? – Is it social responsibility or legal compliance? • A business enterprise lays off employees because their profits don’t meet (analyst’s &/or shareholder’s) expectations? Ways of Viewing Business & Society Economic Need Business Natural Environment B S Society Envir. Opposing Views: Shareholders • Inc. Cost & Dec. profits • Move away from bus. purpose • Bus. lacks accountability • Bus. is a Private Enterprise • Bus. manager’s are elected officials vs Stakeholders • Inc. profit in long run • Inc. Public Image • Dec. Regulations imposed • Bus. has the resources • Society & Business are one, not two Organization as Sub-system of Society Society Organiz. Society Should business management: • Only consider their fiduciary responsibilities to the stockholders of the enterprise, letting the “invisible hand” attend to the public good? Or should they give equal weight/attention to promoting the public good? Why? OR • Take as an equal consideration the social consequences of their decisions? Why? Rights & Responsibility Rights Organization Society Responsibilities Responsibility to Stakeholders • Principle of Corporate Rights – An organization and its managers may not violate the legitimate rights of others to determine their own future. • Principle of Corporate Effects – An organization and its manager are responsible for the effects of their actions on others. Central Issue Why be “Socially Responsible”? Benefits for Being Socially Responsible • Since the organization is part of society, if society wins, the organization wins • Retention of socially responsible people • Ease of recruiting • Minimizes government intervention • Tax incentives for employees to contribute • Solidifies relationships with Social Responsibility Strategies Proac tivity Pos. Neg. Social Leadership Accomodative Defensive Obstructionist None Maximal Commitment to Corporate Social Responsibility Ethics & Management • Can the management or an organization seek profit maximization and to serve the public good at the same time? Why/How? • Can organizations be unethical or is it simply an issue of unethical employees? • What makes an act/behavior/decision “unethical”? What would you do? You are the new general manager of an old manufacturing facility that is the sole employer of a small rural town. Soon after you take the position, you discover that the facility is polluting the river that runs through the town -potentially causing long term health problems. This has been going on for quite awhile, and you suspect that the local EPA inspector has been taking payoffs from your company to keep it quiet. The company will not invest in fixing the facility because it is so old. Being Ethical: • Is not about following the law • Is not about following whatever society accepts as OK • Is not about the individual in isolation • Is about being in relationship with other living things/beings—collective interaction (the social), the inter-subjective/interpersonal realm of life—It is about the WE. • Is about following well-based standards (grounded in moral beliefs) of right and wrong – About Goodness, Justness, Rightness, Reciprocity, Fairness Ethical Approaches Consequence Focused Ethical action is one where the alternative that provides the greatest good for the greatest number (e.g. cost-benefit analysis & differentiating between those who count and those who don’t) is preferred. Rights Focused Ethical action is one that respects the moral rights of everyone—actions are wrong to the extent that they violate the rights of individuals. E.g. right to privacy, to truth, to not be injured, to free speech etc. Accordingly, we each have an obligation to uphold the rights of others. More Ethical Approaches Integrity/Virtue Focused Assumes there are certain ideals toward which we strive which provide for the full development of our humanity. E.g. honesty, courage, compassion, integrity, fairness…etc. By acting in accordance with these we promote our development as well as that of the community. Justice Focused Ethical actions must be fair—equals treated equally; un-equals treated un-equally. Common-Good Focused Ethical action is focused on the good of the society— individuals good is inextricably linked to that of society. Focus on social policies, systems and Making Sound Ethical Decisions • Understand the situation and the dilemma – Get all relevant facts from multiple perspectives • Identify all stakeholders (direct and indirect) • Establish who have the greater stake &/or special needs • • • • – Identify the competing/conflicting rights & values Develop several alternative courses of action – Consequences, Rights, Justice, Integrity/Virtue, Common Good Evaluate & compare the alternatives Choose the most appropriate (the most “right”) alternative – Check your inner (intuitive) sense of the course chosen – If you were the one most burdened by the choice, how would you feel about the choice and its rationale? – Put it to the “front page test” Take action and follow up Example: Nutritional Foods • What is the situation? The dilemma ? – What are the relevant facts from multiple perspectives • Who are the stakeholders (direct and indirect) • Who has the greater stake &/or special needs • • • • – What are the competing/conflicting rights & values What are the alternative courses of action – Consequences, Rights, Justice, Integrity/Virtue, Common Good How does each compare? Which alternative is “best”? Why this choice? – Check your inner (intuitive) sense of the course chosen – If you were the one most burdened by the choice, how would you feel about the choice and its rationale? – Put it to the “front page test” What now? What should your follow-up action be? Group Exercise: Develop a rationale for your decision and prepare to explain it to the class • The Case of the Plant Relocation • The Case of the Employee’s Right to Know – How similar to Enron? • The Case of the Million Dollar Decision What is it about each of the following that would cause unethical behavior? • • • • • • • • Imbalance between work and family Poor internal communications Poor leadership Excessive work hours/load Pressure to meet sales, budget or profit goals Personal financial worries Insufficient resources or management support No recognition of achievements Strategies to Organizational Ethics • Compliance Based – Formal Codes of Conduct – Ethics Training (e.g. decision making) • Integrity Based – Values & Vision – Ethics Education & Training