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JOHN R. SCHERMERHORN, JR.

MANAGEMENT
12th Edition
Chapter 3

Ethical Behavior and

Social Responsibility
2013 John Wiley & Sons, Inc. All rights reserved.

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Place
Slide
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Here 3 Study Questions
Planning
Ahead
Chapter
1. What is ethical behavior?
2. How do ethical dilemmas complicate the
workplace?
3. How can high ethical standards be maintained?
4. What is social responsibility and governance?

2013 John Wiley & Sons, Inc. All rights reserved.

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Chapter
3 Learning

1. What is ethical behavior?

1.
2.
3.

Laws and values as determinants of ethical behavior

Alternative views of ethics
Cultural issues in ethical behavior

2. Ethics in the workplace

1.
2.
3.

Ethical dilemmas at work

Influences on ethical decision making
Rationalizations for unethical behavior

2013 John Wiley & Sons, Inc. All rights reserved.

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Chapter
3 Learning
3. Maintaining High Ethical Standards
1.
2.
3.
4.

Ethics training
Codes of ethical conduct
Moral management
Whistleblower protection

4. Social Responsibility
1.
2.
3.
4.

Stakeholder management
Perspectives on corporate social responsibility
Evaluating corporate social performance
Corporate governance

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
1: What
Is Ethical Behavior?
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Ethics
Moral code of principles.
Set standards of good or bad or right or
wrong in ones conduct.

Ethical behavior
What is accepted as good and right in the context
of the governing moral code.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
1: What
Is Ethical Behavior?
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Law, values, and ethical behavior:
Legal behavior is not necessarily ethical behavior.
Personal values help determine individual ethical

behavior.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
1: What
Is Ethical Behavior?
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Law, values, and ethical behavior:
Values - underlying beliefs and attitudes that help

determine individual behavior

Terminal values - preferences about desired ends

Instrumental values preferences regarding the

means to desired ends

2013 John Wiley & Sons, Inc. All rights reserved.

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Figure 3.1: Four views of ethical behavior

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Takeaway
1:Text
What
Is Ethical Behavior?
Four alternative ethical views
Utilitarian
Delivers the greatest good to the most people

Individualism
Advances long-term self-interests

Moral rights
Maintains fundamental rights of all human beings

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
What
Is Ethical Behavior?
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Justice view of ethics
Fair and impartial treatment of people according to
legal rules and standards
Procedural justice policies and rules fairly applied
Distributive justice equal treatment for all people
Interactional justice people treated with dignity and
respect
Commutative justice fairness to all involved

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
What
Is Ethical Behavior?
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Cultural issues in ethical behavior:
Cultural relativism
Ethical behavior is always determined by cultural
context.

Moral absolutism
Behavior unacceptable in ones home environment
should not be acceptable anywhere else.

Ethical imperialism
Imposing ones ethical standards on others.

Management 12e/

2013 John Wiley & Sons, Inc. All rights reserved.

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The extremes of cultural relativism and ethical
imperialism in international business ethics.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
2: Ethics
in the Workplace
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An ethical dilemma
occurs when choices, although having potential
for personal and/or organizational benefit, may
be considered unethical.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
2: Ethics
in the Workplace
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Ethical dilemmas include:

Discrimination

Sexual harassment
Conflicts of interest

Product Safety
Organizational resources

2013 John Wiley & Sons, Inc. All rights reserved.

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Checklist
for Here
ethical dilemmas

Step 1 Recognize the ethical dilemma.

Step 2 Get the facts and identify your options.
Step 3 Test each option: Is it legal? Is it right? Is it beneficial?
Step 4 Decide which option to follow.
Step 5 Ask the Spotlight Questions: To double check your decision.
How would I feel if my family found out about my decision?
How would I feel if my decision was printed in the local paper or posted online?

Step 6 Take action

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
2: Ethics
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Herein the Workplace
Influences on Ethical Decision Making
Ethical framework
Provides personal rules or strategies for ethical
decision making
Includes personal values

Honesty
Fairness
Integrity
Self-respect

2013 John Wiley & Sons, Inc. All rights reserved.

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Kohlbergs
of individual
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Slidestages
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Here moral development

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Takeaway
2: Ethics
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Title Text
Herein the Workplace
Situational Context and Ethics Intensity
Will the situation pose an important ethic
challenge?

Magnitude of the situation

Risk of immediate harm
Proximity and concentration of harm
Social consensus

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
2: Ethics
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Herein the Workplace
Organizational Culture
What is considered ethical behavior within the
organizational context?
What are the expectations of management?
What are the expectations of co-workers?
Is there a code of ethics?

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
2: Ethics
in the Workplace
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Here
External environment
Government laws
and regulations

(Sarbanes/Oxley
Act of 2002)

Competitive
climate in an
industry

Societal norms
and values

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
2: Ethics
in the Workplace
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Ethical behavior can be rationalized by
convincing yourself that:
Behavior is not really illegal.
Behavior is really in everyones best interests.
Nobody will ever find out.
The organization will protect you.

2013 John Wiley & Sons, Inc. All rights reserved.

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3: Maintaining
High Ethical Standards
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Moral Management
Managers behave in one of three
ways

2013 John Wiley & Sons, Inc. All rights reserved.

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3: Maintaining
High Ethical Standards
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Slide Title
Text Here

Ethics training:
Structured programs that help participants to
understand ethical aspects of decision making.
Helps people incorporate high ethical standards
into daily life.
Helps people deal with ethical issues under
pressure.

2013 John Wiley & Sons, Inc. All rights reserved.

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3: Maintaining
High Ethical Standards
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Text Here

Codes of Ethical Conduct

Formal statement of an organizations values and
ethical principles regarding how to behave in
situations susceptible to the creation of ethical
dilemmas

2013 John Wiley & Sons, Inc. All rights reserved.

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3: Maintaining
High Ethical Standards
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Areas often covered by codes of ethics:

Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information

2013 John Wiley & Sons, Inc. All rights reserved.

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3: Maintaining
High Ethical Standards
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Whistleblowers
Expose misdeeds of others to:
Preserve ethical standards
Protect against wasteful, harmful, or illegal acts

Laws protecting whistleblowers vary

2013 John Wiley & Sons, Inc. All rights reserved.

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3: Maintaining
High Ethical Standards
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Barriers to whistleblowing include:

Strict chain of command
Strong work group identities
Ambiguous priorities

2013 John Wiley & Sons, Inc. All rights reserved.

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Here Responsibility
Takeaway
4: Social
Sustainability:
acting in ways that support a high quality of life
for present and future generations
Alternative energy
Recycling
Waste avoidance

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
4: Social
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Title Text
HereResponsibility
Corporate social responsibility and
governance:
Looks at ethical issues on the organization level.
Obligates organizations to act in ways that serve
both its own interests and the interests of society
at large.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
4: Social
Place Slide
Title Text
HereResponsibility
Stewardship
Taking personal responsibility to always respect
and protect the interests of society at large
Triple bottom line
3 Ps of organizational performance profit,
people, and planet

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
4: Social
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HereResponsibility
Stakeholder Management
Stakeholders: persons, groups, and other organizations directly
affected by the behavior of the organization and holding a
stake in its performance.
Stakeholder power: the capacity of the stakeholder to
positively or negatively affect the operations of the
organization.
Demand legitimacy: the validity and legitimacy of a
stakeholders interest in the organization.
Issue urgency: the extent to which a stakeholders concerns
need immediate attention.

2013 John Wiley & Sons, Inc. All rights reserved.

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Figure 3.4: The Many Stakeholders of
Organizations

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Here Responsibility
Takeaway
4: Social
Perspectives on social responsibility:
Classical view
Managements only responsibility is to maximize
profits.

Socioeconomic view
Management must be concerned for the broader
social welfare, not just profits.

2013 John Wiley & Sons, Inc. All rights reserved.

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Here Responsibility
Takeaway
4: Social

Perspectives on social responsibility:

Shared value view
Approaches business decisions with the understanding
that economic and social progress are interconnected
Virtuous circle-socially responsible behavior improves
financial performance which leads to more
responsible behavior

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
4: Social
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Title Text
HereResponsibility

Arguments against social

responsibility:

Arguments in favor of
social responsibility:

Reduced business
profits
Higher business costs
Dilution of business
purpose
Too much social power
for business
Lack of public
accountability

Adds long-run profits

Improved public image
Avoids more
government regulation
Businesses have
resources and ethical
obligation

2013 John Wiley & Sons, Inc. All rights reserved.

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Four strategies of corporate social responsibility
from obstructionist to proactive behavior.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
4: Social
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HereResponsibility
Corporate governance:
The oversight of the top management of an
organization by a board of directors.

Corporate governance involves:

Hiring, firing, and compensating the CEO.
Assessing strategy.
Verifying financial records.

2013 John Wiley & Sons, Inc. All rights reserved.

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Takeaway
4: Social
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HereResponsibility
How government influences organizations:
Businesses required by law to have boards of
directors that are elected by stockholders

2013 John Wiley & Sons, Inc. All rights reserved.

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Figure 3.6: Ethics Self-governance in Leadership
and the Managerial Role

2013 John Wiley & Sons, Inc. All rights reserved.

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