Lecture 2

Ethics and Social

Responsibility

Chapter 3
Managing Ethics and Diversity

Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Learning Objectives
1. Illustrate how ethics help managers determine the
right way to behave
2. Explain why and how managers should behave
ethically and strive to create ethical organizational
cultures
3. Understand the two major forms of sexual
harassment and how they can be eliminated
4. Outline the main arguments for and against
corporate social responsibility

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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
Ethical Dilemma
Occurs when someone must decide whether or
not to pursue a course of action that, although
offering the potential of personal or
organizational benefit or both, may be considered
potential unethical
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Stakeholders and Ethics

Stakeholders are the people and groups that can
influence an organization and/or are affected by its
actions.
As stakeholders can directly benefit or be harmed by an
organizations actions, the ethics of the organization and
its managers are important to them.
Various stakeholders often have conflicting interests
Managers often have to juggle the interests of different
stakeholders.
Managerial decisions that may benefit some stakeholder
groups at the expense of others involve questions of
ethics
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Four Ethical Rules

Figure 3.2

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Four Ethical Rules

1. Utilitarian Rule
An ethical decision is one that produces the
greatest good for the greatest number of people
2. Moral Rights Rule
An ethical decision is one that best maintains and
protects the fundamental rights and privileges of
the people affected by it
3. Justice Rule
An ethical decision is one that distributes benefits
and harms among stakeholders in a fair, equitable,
or impartial way
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Four Ethical Rules (contd)

4. Practical Rule
Need to answer three questions below:
1. Does my decision fall within the acceptable
standards that apply in business today?
2. Am I willing to see the decision
communicated to all people and groups
affected by it?
3. Would the people with whom I have a
significant personal relationship approve of
the decision?

If the answer is Yes to all of the above, the

decision is probably an ethical decision

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Why Would Managers

Behave Unethically?
Because they put their personal interests above the
interests of other stakeholders
Because the harm done to stakeholders is indirect or
seems insignificant relative to the benefits that they
or their organizations will receive from the unethical
activity
Because they feel pressured by the situation they are
in

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Why Should Managers

Behave Ethically?
It can avoid the harm that unethical behaviour
inflicts on others
To avoid the potential loss of reputation
If they behave ethically, this can reduce the chance
of their subordinates to perform unethically

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Determinants of Ethics
Figure 3.4

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Ethical Organizational Cultures

Managers can ensure that important ethical values and
norms are key features of an organizations culture
Managers become ethical role models whose behaviour
is scrutinized by their subordinates
Appoint ethics officer who monitors an organizations
practices and procedures to be sure they are ethical
Strive to hire and promote people who have a strong
sense of personal ethics
Require managers to consider ethical aspects of
business decisions
Promote moral courage by not taking retribution against
employees who exercise moral courage, say no to
superiors, or complain about unethical actions.
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Forms of Sexual Harassment

Quid pro quo
Asking for or forcing an employee to perform
sexual favours in exchange for receiving some
reward or avoiding negative consequences.
Hostile work environment
Telling lewd jokes, displaying pornography, making
sexually oriented remarks about someones
personal appearance, and other sex-related
actions that make the work environment
unpleasant.
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Steps to Eradicate
Sexual Harassment
Develop and clearly communicate a sexual harassment
policy endorsed by top management
Examples of unacceptable behaviour
Report procedure
Discussion of disciplinary actions when needed
Commitment to education and training

Use a fair complaint procedure to investigate charges

of sexual harassment
Managed by neutral third party
Ensure prompt and thorough handling of complaints
Protect and fairly treat victims
Alleged harassers should be treated fairly

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Steps to Eradicate
Sexual Harassment (contd)
When it has been determined that sexual
harassment has taken place, take corrective action
as soon as possible
Depends on severity of the harassment
May include firing the harasser

Provide sexual harassment education and training to

all organizational members, including managers
Definition of sexual harassment
Company policy against it
How to report complaints and access hotline
Example of sexual harassment case
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Social Responsibility
A sense of obligation on the part of managers to
build certain social criteria into their decision
making.
When managers evaluate decisions, there should
be a presumption in favour of adopting courses
of action that enhance the welfare of society at
large.

Hill, C.W.L. & McShane, S.L. (2008) Principles of Management, International ed. New York: The McGraw-Hill Companies, Inc.
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Giving Back
Mark Benioff, CEO, Salesforce.com
1% of equity into public charity
1% of time (4 hours per month) per employee to
paid volunteerism
1% of profits to nonprofit organizations

Hill, C.W.L. & McShane, S.L. (2008) Principles of Management, International ed. New York: The McGraw-Hill Companies, Inc.
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Arguments For Social Responsibility

Right way for a business to behave
Need to give back to the society that helped
make their company
It can lead to better financial performance
Ignoring this may generate ill will and opposition

Hill, C.W.L. & McShane, S.L. (2008) Principles of Management, International ed. New York: The McGraw-Hill Companies, Inc.
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Arguments Against Social Responsibility:

The Friedman Doctrine
Rejects the idea that businesses should
undertake social expenditures beyond those
mandated by law
The firm should maximize its profits
If shareholders want to use proceeds for social
investments that should be their choice;
managers should not make that decision for
them
Hill, C.W.L. & McShane, S.L. (2008) Principles of Management, International ed. New York: The McGraw-Hill Companies, Inc.
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Reference
McGraw-Hill Education (2014). BUS10306
Management customized text, Chapter 2 and
Additional Notes 2.

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