Ethical behavior doing what is right as opposed to wrong- reflects personal values/ beliefs
Stakeholders: various groups and individuals who affect and are affected by a business
Ethics: branch of philosophy studies/ creates theories about nature of right and wrong, duty, obligation and virtue
Social responsibility: how organization responds to needs of many elements in society
Benefits to moral management
companies avoid damaging fallout from unethical behavior on their reputation
dealing with stakeholders much easier for company having solid ethical foundation
easier to attract and retain quality workers
positive impact on comp bottom line
impact on company ability to provide value to customers
ethical leaders approach organization responsibilities with added dimensions of thought/ action
link ethical behavior to organization outcomes/ incorporating social responsibility into decisions
it's all about doing the right thing by these stakeholders- not pleasing everyone
Ethical perspective
Business ethics- fundamental values/ behavioral standards to make decisions with stakeholders
Three levels of ethical standards The Law- (narrowest level) defines non/ permissible actions. Establishes minimum standard of behavior. serve as the “acid test” for making decisions Organization Policies/ procedures- (broader def.-beyond law) serves as decision guidelines Morality- (1-2 don't cover) Broadest but most fundamental differences that shape a person's character.
Moral Management- establishes moral tone for the entire operation/ influence individual behavior
Immoral Management- motivated by selfish reasons (greed: achieving personal/ organization success at any cost) go around laws/ moral standards without concern for others
Amoral Management- goal to earn profit. Don't purposely violate laws/ moral standards. Neglect to consider impact on others. Not socially responsible
Moral Management- strive for success with legal/ ethical boundaries. Hold values
Benefits of moral management
Two goals of making profit and holding high ethical standards
To make a difference in society, your business must do well first
operating a business you can trust are most important in company reputation
Benefits: (investment in the company's future than just a cost of business) avoiding damaging fallout from unethical behavior on reputation solid ethical framework that deals with stakeholders easier easy to retain quality workers/ strong employee commitment positive impact on bottom line/ outperform competitors ethically/ finances ability to provide value for its customers
Establishing an ethical framework
STEP 1: identify the personal/ moral/ ethical principles that shape all business decisions (understanding their personal values in business situations)
STEP 2: Recognize ethical dimensions involved in dilemma/ decisions (consider ethical forces of honesty/ fairness/ community respect/ trust to evaluate situation)
STEP 3: Identify the key stakeholders involved/ determine how it will effect them (choosing which groups to satisfy or alienate/ Triple Bottom Line to measure business performance by evaluating impact on profit/ people/ planet)
STEP 4: Generate alternative choices and distinguish un/ethical responses (evaluating codes of conduct/ morality/ justice/ outcomes/ intuition/ public justice)
STEP 5: Choose the best ethical response and implement it (find choice consistent with company goals, culture, value system
Why Ethical Lapses Occur (significant loss of public trust if discovered)
Unethical employee- corrupt individuals that make bad decisions for the company
An unethical or- failing to realize that an ethical behavior exists/ mental defense mechanism
Moral blindness- failing to realize that an ethical behavior exists/ mental defense mechanism
Competitive pressures- sacrifice ethical standards to reduce fear of losing profit/ job
Opportunity Pressures- temptation of getting ahead with greater reward/ small penalty
Globalization of Business- No ethical behaviors apply in the international arena/ laws
Establishing/ maintaining ethical standards
The utilitarian principle- chose the option that offers greatest good for more people
Kant's categorical imperative- act as if action was universal law/ rule of behavior
The professional ethic- Take actions that professional colleges would deem proper
The golden rule- treat others like you would like them to treat you
The TV test- would you feel comfortable explaining actions on national tv/ family (test)
Ten Ethical Principles (honesty/ integrity/ promise-keeping/ fidelity/ fairness/ caring and respect for others/ responsible citizenship/ pursuit of excellence/ accountability)
Maintaining ethical standards (create environment that encourages ethical behavior)
Set the tone- character of organization/ setting an examples and values to influence behavior
Create a company credo- statement that defines company values/ ethical responsibilities to stakeholders. General guidance in ethical issues. What it stands for/ why is it important
Establish high standards of behavior- emphasize importance of ethics. Non-negotiable
Involve employees in establishing standards- encourage feedback/ increase compliance
Create a culture that emphasizes 2-way communication- reliable reporting system through channels
Eliminate undiscussables- acceptable for employees to question what happens above them
Develop a code of ethics- written statement of standards the company expects from all
Enforce through policies- set policies/ demonstrate consequences/ accountability
Recruit/ promote ethical employees- ethical commitment/ consciousness/ competency
Conduct ethics training- slow down/ seek advice/ evaluate issue/ avoid quick decisions
Reward ethical conduct- if rewarded, then they will continue this behavior
Separate related job duties- basic organization to hold people accountable
Performance periodic ethical audits- sends employees signals of the seriousness of it
Social Entrepreneurship (to create social value)- fastest type of entrepreneur growing in the world
create innovative solutions to society most vexing problems (Change agents for society)
finding resources to tackle challenging problems confronting global economy (pollution)
seek solutions for social problems that are not met by the market or government
motivated by creating social benefit rather than commercial success
tackle social problems by taking full advantage of natural market forces
develop solutions from cleaning environment to improving work conditions
Social Responsibility
recognizing the interdependence of business and society. Both influence the other
select causes consistent with core values/ employee and stakeholder interests
price- performance relationship becomes second best. Expects social response
Ways to be Responsible: recycle, support local causes/ fundraisers, community service, reduce energy use, grant programs, partner with local schools
Business responsibility to environment
becoming sensitive to impact of products/ processes/ packaging on planet
lowering operational costs/ attract environment conscious customers/ gain competitive edge
Reduce (amount of energy/ materials used) Reuse (whatever) Recycle (materials)
avoiding pollution/ using resources effectively/ eliminate hazardous materials
Business responsibility to employees
heart of increase in productivity/ passion in customer service- winning competitive advantage
Tactics: listen, ask, feedback, truth, expectations, rewards, trust
Cultural diversity in the workplace
mix of generations, cultures, backgrounds provide opportunities/ challenges
blend of perspectives/ skills/ talents/ ideas employees have to offer
molding workers with high beliefs/ backgrounds, biases into unified team takes time/ commitment (stereotypes/ biases/ prejudices create barriers)
The SPLENDID approach to diversity
Study issues related to diversity (laws)
Plan for diversity hiring/ achieve goals. recognize local pop.
Lead by communicating visions and goals to everyone
Encourage employees to embrace the diversity plan
Notice how the competitors are progressing towards diversity
Discuss the message that the plan is vital to their business
Inclusion of employees to achieve diversity/ break barriers
Dedication and persistence in implementing plans
Business needs to: assess your company's diversity needs, learn to recognize/ correct own stereotypes/ avoid invalid assumptions/ diversify management team/ concentrate on communication/ diversity as core value/ adjust company to workers
Drug testing: includes a written substance abuse policy, detection training (questionable excuses), employee education program, drug testing program, employee assistance program (benefit to reduce addiction problems in workplace)
Sexual harassment (unwelcome sexual advances that are verbal or physical)
Quid-pro-quo: granting benefits for sexual favors (managers to employees)
Hostile environment: abusive/ intimidating/ offensive/ hostile environment requires a pattern of offensive behavior to make it an unfit environment
Harassment by nonemployees: employer held liable for third parties (customers/ sales rep/ others) if they have ability to stop behavior
Liable if tangible employment action is taken (fail to fire)
Not liable if no action taken (sexual advances without knowledge)
Best weapons against harassment is education/ policy/ procedure
Privacy: monitoring productivity vs. invasion of privacy
track speed, accuracy and productivity
Business need to: establish clear policy for monitoring communications/ create guidelines for proper use of technology/ monitor in moderation
Businesses responsibility to customers: build long term relationships/ customer bill of rights
Right to safety: safe, quality, products/ services. Warning labels
Right to know: info to make decisions about price, quality, features
Right to be heard: channels of comm. address complaints. evaluates company
Right to education: access to material to give them an informed purchace decision
Right to choice: promotes free trade and competition in the market
Business responsibility to investors: provide attractive return
earning profit is first responsibility, then meeting ethical/ social responsibility
investors invest more on the company track record/ reputation/ future equity investment
responsibility to report financial performance accurately/ timely fashion
Business responsibility to the community: providing jobs/ creating wealth
volunteer, participate in projects, promote clean community
choosing right cause to resonate with customers/ employees/ owners
meaningful partnerships enhance rep, employee loyalty, strengthen ties, sell more
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