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Ethics and Social Responsibility : 

Ethics and Social Responsibility McGraw-Hill/Irwin Contemporary Management, 5/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. chapter four

Learning Objectives : 

4-3 Learning Objectives Explain the relationship between ethics and the law Discuss why it is important to behave ethically Differentiate between the claims of the different stakeholder groups that are affected by managers and their companies actions

Learning Objectives : 

4-4 Learning Objectives Describe four rules that can be used to help companies and their managers act in ethical ways Identify the four main sources of managerial ethics Distinguish between the four main approaches toward social responsibility that a company can take

1.1 The Nature of Ethics : 

4-5 1.1 The Nature of Ethics Ethical (道德的) Dilemma quandary (困惑) people find themselves in when they have to decide if they should act in a way that might help another person even though doing so might go against their own self-interest also arises when a person has to decide between two courses of action, knowing that whichever they choose will result in harm to one person or group while possibly benefiting another. The dilemma here is to decide between ‘the lesser of two evils.’

1.1 The Nature of Ethics : 

4-6 1.1 The Nature of Ethics Ethics The inner-guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the “right” or appropriate way to behave (The study of good & evil, right & wrong, and just & unjust)

1.1 Dealing with Ethical Issues : 

4-7 1.1 Dealing with Ethical Issues There are no absolute or indisputable (無爭論之餘地的) rules or principles that can be developed to decide if an action is ethical or unethical

1.2 Ethics and the Law : 

4-8 1.2 Ethics and the Law Neither laws nor ethics are fixed principles Ethical beliefs lead to the development of laws and regulations to prevent certain behaviors or encourage others

1.2 Ethics and the Law : 

4-9 1.2 Ethics and the Law Laws can change or disappear as ethical beliefs change The Golden Rule: “Do unto others as you would have them do unto you” is a commonly used ethical or moral rule that continues to be useful.

1.3 Changes in Ethics Over Time : 

4-10 1.3 Changes in Ethics Over Time Managers must confront the need to decide what is appropriate and inappropriate as they use a company’s resources to produce goods and services e.g. marijuana大麻 use. People in many states are currently lobbying for a relaxation of the law against the use of marijuana for medical purposes and in June 2004, the Supreme Court agreed to hear the case on this subject.

2. Question? : 

4-11 2. Question? Who has a claim on a company’s resources? Employees Customers Suppliers Stakeholders

2. Stakeholders and Ethics : 

4-12 2. Stakeholders and Ethics Stakeholders (有權益關係者,持份者) people and groups affected by the way a company and its managers behave supply a company with its productive resources and have a claim on its resources

2. Stakeholders and Ethics : 

4-13 2. Stakeholders and Ethics When the law does not specify how companies should behave, managers must decide what is the right or ethical way to behave toward the people and groups affected by their actions

2. Types of Company Stakeholders : 

4-14 2. Types of Company Stakeholders

2.1 Stockholders : 

4-15 2.1 Stockholders Want to ensure that managers are behaving ethically and not risking investors’ capital by engaging in actions that could hurt the company’s reputation Want to maximize their return on investment (ROI)

2.2 Managers : 

4-16 2.2 Managers Responsible for using a company’s financial capital and human resources to increase its performance Have the right to expect a good return or reward by investing their human capital to improve a company’s performance Frequently juggle玩雜耍 multiple interests (among different stakeholders)

2.2 Managers : 

4-17 2.2 Managers Problem has been that in many companies corrupt managers focus not on building the company’s capital and stockholder’s wealth but on maximizing their own personal capital and wealth

2.2 Discussion Question: Managers : 

4-18 2.2 Discussion Question: Managers Is it ethical for managers to receive vast amounts of money from their companies? Yes No Sometimes Never

2.3 Employees : 

4-19 2.3 Employees Companies can act ethically toward employees by creating an occupational structure that fairly and equitably rewards employees for their contributions

2.4 Suppliers and Distributors : 

4-20 2.4 Suppliers and Distributors Suppliers expect to be paid fairly and promptly for their inputs Distributors expect to receive quality products at agreed-upon prices

2.4 Vendor Conduct : 

4-21 2.4 Vendor Conduct Gap’s Code of Vendor Conduct ^

2.5 Customers : 

4-22 2.5 Customers Most critical stakeholder Company must work to increase efficiency and effectiveness in order to create loyal customers and attract new ones

2.6 Community, Society, and Nation : 

4-23 2.6 Community, Society, and Nation Community Physical locations like towns or cities in which companies are located A community provides a company with the physical and social infrastructure that allows it to operate e.g. Choi Yuen Village fights against cross-border express rail link (高鐵 and 菜園村) A company contributes to the economy of the town or region through salaries, wages, and taxes

2.7 Ethical Decision Making : 

4-24 2.7 Ethical Decision Making Figure 4.3

2.7 Question? : 

4-25 2.7 Question? Which ethical decision rule produces the greatest good for the greatest number? Utilitarian Rule Moral Rights Rule Justice Rule Practical Rule

2.7.1 Ethical Decision Models : 

4-26 2.7.1 Ethical Decision Models Utilitarian Rule Decision that produces the greatest good for the greatest number (of people) How do you measure the benefits and harms that will be done to each stakeholder group? How do you evaluate the rights and importance of each group? Avatar

2.7 Effects of Ethical/Unethical Behavior : 

4-27 2.7 Effects of Ethical/Unethical Behavior Figure 4.4 ^

2.7.2 Ethical Decision Models : 

4-28 2.7.2 Ethical Decision Models Moral Rights rule Decision that best maintains and protects the fundamental or inalienable (不能讓與的) rights and privileges of the people affected by it (Each person has protections and entitlements that others have a duty to respect.) Justice rule Decision that distributes benefits and harms among people and groups in a fair, equitable, or impartial way

2.7.4 Ethical Decision Models : 

4-29 2.7.4 Ethical Decision Models Practical rule - Decision that a manager has no hesitation about communicating to people outside the company because the typical person would think it is acceptable

Slide 30: 

Practical rule (The Disclosure Rule) Tests of Ethics: What will my manager, supervisor, co-workers, or family think about what I plan to do? (The “Others’ Test”) If what I do is reported in a newspaper, or on TV, will I be proud of my actions? (The “Press Test”) 8-7

2.7.4 Practical Decision Model : 

4-31 2.7.4 Practical Decision Model Does my decision fall within the acceptable standards that apply in business today? Am I willing to see the decision communicated to all people and groups affected by it? Would the people with whom I have a significant personal relationship approve of the decision?

2.7 Group Discussion ([5]p.163 or [6]p.145) : 

4-32 2.7 Group Discussion ([5]p.163 or [6]p.145) Is Chewing Gum the “Right” Thing to Do? In the US the right to chew gum is taken for granted. Although it is often against the rules to chew gum in a high school classroom, church, and so on, it is legal to do so on the street. If you possess or chew gum on a street in Singapore, you can be arrested. Chewing gum has been made illegal in Singapore because those in power believe that it creates a disgusting mess on pavements and feel that people cannot be trusted to dispose of their gum properly and thus should have no right to use it.

2.7 Group Discussion : 

4-33 2.7 Group Discussion What makes chewing gum acceptable in the U.S. and unacceptable in Singapore? How can you chew gum on the street but not in church? How can you use ethical principles to decide when gum chewing is ethical or unethical, and if and when it should be made illegal?

2.8 Why should managers behave ethically? : 

4-34 2.8 Why should managers behave ethically? The relentless (不停的) pursuit of self-interest can lead to a collective disaster when one or more people start to profit from being unethical because this encourages other people to act in the same way

2.8. Trust and Reputation : 

4-35 2.8. Trust and Reputation Trust – willingness of one person or group to have faith or confidence in the goodwill of another person ^

2.8. Trust and Reputation : 

4-36 2.8. Trust and Reputation Reputation – esteem or high repute that individuals or organizations gain when they behave ethically ^

3. Determinants of Ethics : 

4-37 3. Determinants of Ethics Figure 4.5

3.1 Societal Ethics : 

4-38 3.1 Societal Ethics Standards that govern how members of a society should deal with one another in matters involving issues such as fairness, justice, poverty, and the rights of the individual People behave ethically because they have internalized certain values, beliefs, and norms

3.2 Occupational Ethics : 

4-39 3.2 Occupational Ethics Standards that govern how members of a profession, trade, or craft should conduct themselves when performing work-related activities Medical & legal ethics CPA, Engineering

3.3 Individual Ethics : 

4-40 3.3 Individual Ethics Personal standards and values that determine how people view their responsibilities to other people and groups How they should act in situations when their own self-interests are at stake

3.4 Organizational Ethics : 

4-41 3.4 Organizational Ethics Guiding practices and beliefs through which a particular company and its managers view their responsibility toward their stakeholders Top managers play a crucial role in determining a company’s ethics

4. Social Responsibility(or Corporate Social Responsibility, CSR) : 

4-42 4. Social Responsibility(or Corporate Social Responsibility, CSR) Video: CH04 CSR - Johnson & Johnson Credo (9:06) Or CH04 The_Living_JJ_Credo.mp4

4. Social Responsibility(or Corporate Social Responsibility, CSR) : 

4-43 4. Social Responsibility(or Corporate Social Responsibility, CSR) Way a company views its duty or obligation to make decisions that protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole (The duty of a corporation to create wealth in ways that avoid harm to, protect, or enhance societal assets) (Steiner and Steiner, 2009) It is believed that corporations have duties to perform beyond basic lawful requirements and no firm should stay away from the emerging global CSR system.

4.1 Approaches to Social Responsibility : 

4-44 4.1 Approaches to Social Responsibility Figure 4-6

4.1.1 Approaches to Social Responsibility : 

4-45 4.1.1 Approaches to Social Responsibility Obstructionist approach 妨礙者 – Companies choose not to behave in a social responsible way and behave unethically and illegality

4.1.2 Approaches to Social Responsibility : 

4-46 4.1.2 Approaches to Social Responsibility Defensive approach – companies and managers stay within the law and abide strictly with legal requirements but make no attempt to exercise social responsibility

4.1.3 Approaches to Social Responsibility : 

4-47 4.1.3 Approaches to Social Responsibility Accommodative approach – Companies behave legally and ethically and try to balance the interests of different stakeholders against one another so that the claims of stockholders are seen in relation to the claims of other stakeholders

4.1.4 Approaches to Social Responsibility : 

4-48 4.1.4 Approaches to Social Responsibility Proactive approach – Companies actively embrace socially responsible behavior, going out of their way to learn about the needs of different stakeholder groups and utilizing organizational resources to promote the interests of all stakeholders

4.2 Why Be Socially Responsible? : 

4-49 4.2 Why Be Socially Responsible? Demonstrating its social responsibility helps a company build a good reputation If all companies in a society act socially, the quality of life as a whole increases

4.3 Role of Organizational Culture : 

4-50 4.3 Role of Organizational Culture Ethical values and norms help organizational members: Resist self-interested action Realize they are part of something bigger than themselves

Johnson & Johnson Credo 信條(Video & p.159) : 

Johnson & Johnson Credo 信條(Video & p.159) Figure 4.7 When organizations develop an outstanding reputation, their employees often are less tempted to act in a self-interested or unethical manner.

4. Social Responsibility(or Corporate Social Responsibility, CSR) : 

4-52 4. Social Responsibility(or Corporate Social Responsibility, CSR) Video: CH04 - CSR – KFC Case.wmv (4:29)

4.3 Ethics Ombudsman 申訴專員 : 

4-53 4.3 Ethics Ombudsman 申訴專員 Responsible for communicating ethical standards to all employees Designing systems to monitor employees conformity to those standards Teaching managers and employees at all levels of the organization how to appropriately respond to ethical dilemmas ^

Johnson & Johnson Credo : 

4-54 Johnson & Johnson Credo Figure 4.7 Source: Johnson & Johnson Annual Report. ^

Movie Example: John Q : 

4-55 Movie Example: John Q What should be the ethical standard in communicating job status changes and healthcare changes to employees? ^

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