Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2.1

Chapter 2Managerial Ethics

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-2

Learning Outcomes Define social responsibility and ethics List at least six main arguments for at at

least four main arguments against businesses being socially responsible

Explain the importance of demonstrating social responsibility in today’s business world

(continued)

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-3

Learning Objectives (continued) Describe the concerns people have

about business ethics Explain the relationship between social

responsibility and managerial ethics Identify the seven factors that influence

ethical behaviour Describe ways an organization can

improve ethical behaviour

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-4

Society’s Expectations from Organizations and Managers Managers regularly make decisions

about issues with a social dimension In competitive environment,

organizations cannot afford to be seen as socially irresponsible

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-5

Arguments Supporting Businesses Being Socially Responsible

Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further government regulation Balance of responsibility and power Shareholder interests Possession of resources Superiority of prevention over cures

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-6

Arguments Against Businesses Being Socially Responsible

Violation of profit maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability Lack of broad public support

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-7

Demonstrating Social Responsibility Social responsibility Social obligation Social responsiveness

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-8

Relationship Between Social Responsibility and Economic Performance Research studies show positive

relationship General public perception that

companies who behave in a socially responsible way have better business performance

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-9

Managers Becoming More Socially Responsible It is the collective behaviour and actions

of managers that make a company socially responsible

Managers who make the right decisions are described as being or behaving ethically

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-10

Managerial Ethics

Ethics Rules and principles that define right

and wrong conduct Three Views of Ethics

Utilitarian view - ethical decisions are made on the basis of their outcomes or consequences

(continued)

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-11

Managerial Ethics (continued)

Three Views of Ethics (continued) Rights view - respects and protects

individual liberties and privileges Theory of justice view - managers

impose and enforce rules fairly and impartially

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-12

Moral Development Is a measure of an individual’s

independence as his/her moral judgment becomes less and less dependent on outside influences

Stages start with making a choice between right and wrong based on personal consequences (continued)

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-13

Moral Development (continued)

As development evolves, moral judgment is less dependent on outside factors

Individuals with highly-developed moral development can make clear distinctions to define moral principles separate from any authority

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-14

Values Basic convictions about what is right

and wrong Influence ethical behaviour Values are developed in early years

Organizational Factors That Affect Ethical And Unethical Behaviour

ModeratorsEthical/Unethical

Behaviour

OrganizationalCulture

StructuralVariables

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc.

03 Pearson Education Canada Inc.FOM 2.15

Determinants Of Issue Intensity (Exhibit 2.3)

FOM 2.16Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc.

ation Canada Inc.

Source: Management, Seventh Canadian Edition, by Stephen P. Robbins, Mary Coulter, and Robin Stuart-Kotze, page 113. Copyright © 2003. Reprinted by permission of Pearson Education Canada Inc.

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-17

Businesses Improving Ethical Behaviour Strong emphasis on corporate

governance Companies refocusing efforts on

business ethics New legislation to hold boards of

directors more accountable

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-18

Managers Improving Ethical Behaviour

Hire individuals with high ethical standards

Establish codes of ethics and decision rules

Lead by example

(continued)

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-19

Managers Improving Ethical Behaviour (continued)

Delineate job goals and performance review mechanisms

Provide ethics training Conduct social audits Provide support to individuals facing

ethical dilemmas

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-20

Code of Ethics Formal statement of an organization’s

primary values and ethical rules it expects employees to follow

Usually written Must state in detail acceptable

behaviours and actions

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-21

Management Responsibility Relating to Codes of Ethics If possible, develop codes with active

involvement of everyone in the organization

All levels of management must support and continually reaffirm the importance

Consistently discipline those who break the code

Set an example by behaviour and action

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. FOM 2-22

Concluding Remarks More and more organizations are

appearing in newspaper headlines about ethical conduct

Survey of employees shows workplace pressures are leading to more people considering acting unethically

Concerns about social responsibility are growing