CH-5 Ethics, Corporate Responsibility, and Sustainability – Management: Leading and Collaborating in a Competitive World : Chapter Notes

Chapter 5 Ethics, Corporate Responsibility, and Sustainability LEARNING OBJECTIVES 1 Describe how different ethical perspectives guide decision making. 2 Explain how companies influence their ethics environment. 3 Outline a process for making ethical decisions. 4 Summarize the important issues surrounding corporate social responsibility. 5 Discuss reasons for businesses’ growing interest in the natural environment. 6 Identify actions managers can take to manage with the environment in mind. CHAPTER OUTLINE Ethics Ethical Systems Business Ethics The Ethics Environment Ethical Decision Making Courage Corporate Social Responsibility Contrasting Views Reconciliation The Natural Environment and Sustainability A Risk Society Ecocentric Management Environmental Agendas for the Future CHAPTER RESOURCES Experiential Exercises 5.1. Measuring Your Ethical Work Behavior 5.2. Ethical Stance Cases Ma Earth Skin Care Tries to Stay Natural Social Enterprise A College Built by and for the Poor Lecturettes 5.1. The Ethics Imperative 5.2. The Social Responsibility Debate KEY STUDENT QUESTIONS Students see ethics from both an “insider” and an “outsider” perspective. As “insiders,” students are faced with ethical dilemmas at work, and they want to know how to resolve their ethical dilemmas. As “outsiders,” students see the unethical actions taken by business leaders today, and they want to know how to prevent such things from occurring. They also want to know what impact ethical/unethical actions can have on corporations. 1. “What are the options you have when confronting ethical issues?” 1a. “What should you do when your manager/CEO is behaving unethically?” 2. “Why is ethical decision-making important in the business environment?” 2a. “What impact do ethical/non-ethical decisions have on businesses?” All of these questions are answered in the text, but you will want to reinforce the pragmatic, practical side to textbook answers in your lecture. Some suggested responses are given below. Question 1. When discussing the options people have when confronting ethical issues, let students know that the more they understand their own values, the clearer the appropriate course of action will be. A more simplistic (and perhaps more practical) approach to ethical decision-making is to: 1) Evaluate the situation from your perspective; 2) Evaluate the situation from the perspective of as many other people involved in it as possible; and 3) Ask yourself if your mother (or the person you respect most in the world) would be happy with what you are planning to do. Question 1a. The reality of this dilemma is a power differential and a possible lack of information. Again, one thing to stress is that the situation might look different from different perspectives, and before any action is taken, it is important to get complete information. So, the first thing you have to do in this situation is to talk to the manager and find out why he/she is doing something that looks unethical to you. If you are still convinced that the manager is behaving unethically, it is up to you to make one of four choices: 1) Live with it; 2) Confront the manager directly; 3) Confront the manager’s supervisor; or 4) Leave the situation. One important thing to convey to students about this situation is why they should only go to the supervisor or the supervisor’s manager (in the case of the CEO, the Board of Directors) directly. It is critical to let students know that they can’t “end run” someone above them in the corporation. For questions 2a and 2b, ask students to answer their own questions. Most of them will be able to name organizations where a lapse in ethics led to a corporate downfall—consider, for instance, Tyco, Enron or Worldcom! CLASS ROADMAP POWERPOINTS Slide 1 Ethics, Corporate Responsibility, and Sustainability Slide 2 Learning Objectives Slide 3 Learning Objectives Slide 4 Ethics Slide 5 It’s a Personal Issue Slide 6 Telling the Truth and Lying: Possible Outcomes MANAGEMENT IN ACTION How Can Ginni Rometty Ensure that IBM Does Well while Doing Good? As chief executive of IBM, Ginni Rometty works in the shadow of her widely admired predecessor, Sam Palmisano. Palmisano refreshed IBM culture with a “values jam,” during which employees helped to define corporate values and a mission to help clients and build relationships based on trust and personal responsibility. It was also under Palmisano that IBM began using its “Smarter Planet” tagline, suggesting a concern for global development and responsibility, addressed with guidance from IBM’s talented consultants. The changes Rometty has advocated for have not come easy. IBM’s sales revenue has declined even as profit margins have increased. Nevertheless, the case shows that there is money to be paid in caring about cities, the business community, and the planet. I. INTRODUCTION A. It’s a big issue •Ethics: the system of rules that governs the ordering of values. B. It’s a personal issue •Ethical Issue: situation, problem or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong. •Business Ethics: comprise the moral principles and standards that guide behavior in the business world Example 5.1 Business ethics INSEAD, an international business school, believes screening for ethics reinforces their stance on ethical behavior. When making decisions as to whom they will admit, each student must pass through two separate interviews with alumni of the school. The results of these interviews along with their standardized test results determine whether or not they will be admitted. Multiple Generations at Work Millennials Are Bullish on Business According to research, Millennials on average may be less trusting than older generational cohorts. Surveyed in 2007 and 2012, members of four generations were asked if they could generally trust others. Only 19 percent of Millennials agreed compared with 31 percent of Gen Xers, 40 percent of Boomers and 37 percent of Silents. II. ETHICS POWERPOINTS Slide 7 Ethical Issues and Business Ethics Slide 8 Ethical Systems Slide 9 Caux Principles Slide 10 Egoism and Utilitarianism Slide 11 Relativism and Virtue Ethics Slide 12 Kohlberg Slide 13 Current Ethical Issues in Business Slide 14 The Ethics Environment Slide 15 Ethical Climate and Leadership Slide 16 Danger Signs Slide 17 Ethics Programs Slide 18 Exhibit 5.6 A Process for Ethical Decision Making Slide 19 Ethical Decision Making LO 1: Describe how different ethical perspectives guide decision-making •Ethical systems 1. Moral philosophy refers to the principles, rules, and values people use in deciding what is right or wrong. 2. Universalism is the ethical system upholding certain values regardless of the immediate result. 3. The Caux Principles are global, universal, ethical principles of business, created by a group of international executives. They are based on principles of working together for the common good and human dignity. 4. Egoism is an ethical system defining acceptable behavior as that which maximizes consequences for the individual. 5. Utilitarianism directly seeks the greatest good for the greatest number of people 6. Relativism bases ethical behavior on the opinions and behaviors of relevant other people. 7. Virtue ethics is a perspective that what is moral must also come from what a mature person with “good” moral character would deem right. 8. Kohlberg’s model of cognitive moral development classifies people based on their level of moral judgment Example 5.2 Egoism Egoism is shown in the actions taken by John Milne, the president and chief financial officer of United Rentals. When he was approached by the Securities and Exchange Commission to answer questions about accounting practices, he responded that “his lawyers had advised him that it would be ‘careless for him to meet with the board’s special committee to discuss complex matters that occurred several years ago’ unless ‘mutually agreeable circumstances’ can be reached.” Unfortunately, what Mr. Milne thought would be best for him resulted in the loss of his job, which shows that misplaced egoism can sometimes backfire. LO 2: Explain how companies influence the ethics environment •Business Ethics 1. Questions of ethics in business have been prominent in the news in recent years. Insider trading, illegal campaign contributions, bribery, famous court cases and other scandals have created a perception that business leaders use illegal means to gain competitive advantage, increase profits, or improve their personal positions. Shareholders tended to ignore fraudulent financial reporting, as long as profits and market share didn’t suffer. 2. Most business leaders believe they uphold ethical standards in business practices, and they deal with a wide range of ethical issues every day. (Exhibit 5.3 and 5.4) •The Ethics Environment 1. Sarbanes-Oxley Act. a. Passed by Congress in 2002, this act establishes an array of strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence. b. Law requires that companies and their auditors provide reports to financial statement users about the effectiveness of internal controls over financial reporting procedures. 2. Ethical climate refers to the processes by which decisions are evaluated and made on the basis of right and wrong. 3. Danger signs that a company is morally lax (Exhibit 5.5): a. excessive emphasis on short-term revenues over long-term considerations b. failure to establish a written code of ethics c. a desire for simple, “quick fix” solutions to ethical problems d. an unwillingness to take an ethical stand that may impose financial costs e. consideration of ethics solely as a legal issue or a public relations tool f. lack of procedures for handling ethical problems g. responding to the demands of shareholders at the expense of constituencies 4. Corporate ethical standards: organizations must be explicit regarding their standards and expectations. a. Ethical leaders are both moral people and moral managers, who influence others to behave ethically. 5. Effective ethics codes: (Example, Exhibit 5.6) a. Involve those who have to live with it in writing the statement. b. Focus on real-life situations that employees can relate to. c. Keep it short and easily understood and remembered. d. Write about values and shared beliefs that are important and that people can really believe in. e. Set the tone at the top. Teaching Tip To help students understand the difficulty of putting an ethical program into place, break them up into small groups, and have each group develop a training outline for a school-related ethics program. For example, one group might develop a program for writing papers, another for taking tests, another for classroom behavior, another for on-campus behavior, etc. Make sure that student programs address all of the components of ethics programs described above. 6. Ethics programs a. Compliance based vs. integrity based i) Compliance-based ethics programs: company mechanisms designed by corporate counsel to prevent, detect, and punish legal violations ii) Integrity-based ethics programs: company mechanisms designed to instill in people a personal responsibility for ethical behavior. b. Effective ethics programs include: i) formal ethics codes ii) ethics committees to develop policies iii) evaluation of actions iv) ethics officers or ombudspersons to investigate allegations v) ethics training programs vi) disciplinary processes Example 5.3 Ethics programs Alyson Pitman Giles is president and CEO of CMC Healthcare System and Catholic Medical Center and Chairman of the American College of Healthcare Executives (ACHE). To reinforce the ACHE’s Code of Ethics, Alyson personally speaks with all staff (including new employees). She feels if you use the notice of ethics as a guiding principle in your organization, it impacts behavior and decision making, as well as discourages people from doing things that are unfair, dishonest or immoral. CONNECT Case Analysis: Danger Signs of Unethical Behavior SUMMARY The ethical climate of an organization refers to the process by which decisions are evaluated and made on the basis of right and wrong. To create a culture that encourages ethical behavior, managers must be more than ethical people; they also should lead others to behave ethically. This exercise presents the case of Louisa and her observations of permissible behaviors within her organization. Louisa is proud that her company always talks about ethics in all of its advertising. The culture of the company is pretty laid back, and no real procedures exist. Her boss is also relaxed; in fact, she didn't even seem to care when Louisa took some note pads home from the copy room. Louisa notices how she can mix vacations into her work trips. Also, as long as she makes the quarterly numbers, she can do whatever she wants with her expense account. Louisa was happy when she heard the company was helping a woman, who may have claimed sexual harassment, to get another job with a vendor. ACTIVITY Students are presented a series of multiple-choice questions to answer after reading the case. CLASS DISCUSSION IDEAS Create a class discussion that will explore why Louisa perceives the actions she describes as ethical. If the company wishes to live up to its ethical projection, what must management change? CONNECT Click and Drag: Ethics and Moral Philosophies (An alternative keyboard navigable version is also available.) SUMMARY Ethics scholars point to various major ethical systems as guides. These major ethical systems underlie personal moral choices and ethical decisions in business. In this exercise, students read a scenario in which managers, Bob, Yolanda, Andrew and Elizabeth, are discussing how individuals are taking office supplies from the company storage room. ACTIVITY Students respond to questions concerning the characters ethical perspectives and moral philosophy. CLASS DISCUSSION IDEAS The exercises can be extended by asking students for other examples of relativism, virtue ethics, egoism, and utilitarianism. An extended discussion regarding what approach is “best” may also flow from the exercise. LO 3: Outline a process for making ethical decisions D. Ethical decision making 1. Ethical decision-making requires: a. moral awareness (realizing the issue has ethical implications) b. moral judgment (knowing what actions are morally defensible) c. moral character (having the strength and persistence to act in accordance with your ethics despite the challenges.) 2. Understand all moral standards 3. Recognize all moral impacts a. benefits to some b. harms to others c. rights exercised d. rights denied 4. Define complete moral problem 5. Determine the economic outcomes 6. Consider the legal requirements 7. Evaluate the ethical duties 8. Propose convincing moral solution CONNECT The Ethical Decision-Making Process SUMMARY Making ethical decisions takes moral awareness, moral judgment, and moral character. This exercise explores the process of making ethical decisions. Students put stages of ethical decision-making in the order they should be completed. ACTIVITY After viewing the video, students are directed to answer a series of multiple-choice questions. CLASS DISCUSSION IDEAS A class discussion can be built around why the steps are ordered as they are. Or students can apply the model to another issue with ethical consequences. CONNECT ISeeIt! Animated Video: Ethical Decision Tree SUMMARY In order to better understand how ethical decision making works, we can utilize an ethical decision-making tree, which branches based on questions affiliated with a particular challenge. ACTIVITY The exercise presents a four-minute animated video working through an ethical decision tree. The video is reinforced with a brief series of multiple-choice questions. CLASS DISCUSSION IDEAS Have students work through the decision tree for a particular problem. Example 5.4 Ethical decision making Worth Abbey, a Benedictine monastery in England, is the focus of a hit TV series, and the setting for a new training program in business ethics based on the rule of St. Benedict, a 5th-century monk. Typical participants are senior managers charged by their company “to make the business ethical.” They come thinking ethics is either commandments or opinion. They find out ethics is a decision-making skill. Some of the Benedictine tips for business leaders are: • Take personal responsibility. The rule says: ‘Faithfully put advice into practice.’ • Subordinate yourself to bigger principles. The rule says: ‘Give up your own will.’ • Exercise self-management. The rule says: ‘Remember to whom you are accountable.’ • Create trust in the organization. The rule says: ‘Be a living example.’ • Keep morale high. The rule says: ‘Adapt to each monk’s character and intellect.’ •E. Courage 1. Courage plays a role in the moral awareness needed to identify something as unethical, the moral judgment to consider potential consequences, and the moral character to take the ethical action 2. Whistleblowing occurs when employees tell others within or outside the organization of wrongdoing. CONNECT Manager’s Hot Seat: Ethics SUMMARY This 11-minute Hot Seat video presents an ethical dilemma at a Wall Street trading company. There has been an offer to invest $4 million with the firm, but in order to process the investment before year’s end, some procedural steps would need to be abbreviated, skipped, or ignored. ACTIVITY After viewing the video, students are directed to answer a series of multiple-choice questions. CLASS DISCUSSION IDEAS A class discussion can revolve around “taking shortcuts” in business. If an organization wants to be ethical, what systems need to be put in place? CONNECT Self-Assessment: Assessing Your Ethical Decision-Making Skills SUMMARY Making ethical decisions is a complex business. It may not always be clear what the ethical implications of a situation are and there are often pressures that are difficult to resist. Students can use this exercise to assess their ethical decision-making skills. ACTIVITY The three basic decision-making tools that are provided to all Lockheed Martin employees are presented and are used to respond to the 10 assessment items. After they submit their assignments, students receive an overall score and feedback. CLASS DISCUSSION IDEAS Ask students if they think the Lockheed Martin approach can be effective in any organization. Management in Action Progress Report The State of Ethics at IBM In meeting its standards for trust, IBM has one advantage: the public sees the technology industry as the one most likely to do what is right for society. Ginni Rometty, CEO of IBM, recently reinforced how important it is to protect people’s privacy and security. • Besides the measures described, how else can IBM promote ethical conduct by its employees? IBM can establish global standards for behavior and consider those standards as they monitor the external environment. Managers should watch for danger signs, such as the excessive emphasis on short-term financial performance and pressure for quick fixes. There should be clear procedures for handling ethical problems, as well as a code of ethics. • In a company operating where bribing government officials is expected, how can employees find the moral courage to forgo bribery, at the risk of losing a big sale? Answers will vary; answering this question is a way for students to begin thinking about the personal challenges of ethical conduct. Possible ideas for building moral courage include practicing ethical decision-making for routine situations, associating with ethical people, and setting high standards for oneself. Students may note that organizations can do much to promote moral courage by rewarding ethical conduct, even when it carries a short-term financial cost. III. CORPORATE SOCIAL RESPONSIBILITY POWERPOINTS Slide 20 Corporate Social Responsibility Slide 21 Exhibit 5.7 Pyramid of Global Corporate Social Responsibility… Slide 22 Contrasting Views LO 4: Summarize the important issues surrounding corporate social responsibility •Corporate social responsibility is the obligation toward society assumed by business. •Triple bottom line refers to an organization’s economic, social, and environmental performance. •Some companies refer to their corporate social responsibility activities as “sustainability.” •Types of corporate social responsibility include (Figure 5.8) o Economic responsibilities involve producing goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors. o Legal responsibilities obey local, state, federal, and relevant international laws. o Ethical responsibilities meet other social expectations, not written as law. o Philanthropic responsibilities are additional behaviors and activities that society finds desirable and that the values of the business support. Example 5.5 Philanthropic responsibilities Most students will be familiar with the company, TOMS, whose well-known “one for one” mission is aimed at donating a pair of shoes to a child in need for every pair of shoes purchased. TOMS sight initiative works in the same way, in that for every pair of glasses purchased, funding is provided to a “giving partner” to restore or save the sight of one individual in need. However, students might be less familiar with other aspects of TOMS’ CSR efforts. For example, shoes are made with sustainable and vegan materials and shoeboxes are printed with soy ink. Shoes are made in China, Ethiopia, and Argentina, and efforts are made to ensure that slavery and human trafficking laws are enforced. TOMS’ flagship store in California is incorporating environmentally-friendly practices into the store and its operations. Lastly, TOMS invests in employees and includes a number of company oversight experts to improve sustainability. •A transcendent education has five higher goals that balance self-interest with responsibility to others 1. empathy 2. generativity 3. mutuality 4. civil aspiration 5. intolerance of ineffective humanity A. Contrasting views 1. It holds that manager’s act as agents for shareholders and, as such, are obligated to maximize the present value of the firm. 2. Managers should be motivated by principled moral reasoning. B. Reconciliation 1. Early attention to corporate social responsibility focused on alleged wrongdoing and how to control it. 2. More recently, attention has focused on the possible competitive advantage of socially responsible actions. 3. The real relationship between corporate social performance and corporate financial performance is highly complex, but evidence indicates that overall, social responsibility is associated with better financial performance. CONNECT Self-Assessment: Corporate Responsibility and Human Resource Management SUMMARY This self-assessment helps students to identify attitudes of managers toward Corporate Social Responsibility (CSR) and to recognize their own general attitude toward CSR. Research on CST and corporate performance indicates an increased importance attached to corporate image on consumer behavior, corporate financial performance, and investment. While the benefits of CSR to HRM seem feasible, most organizations do not formally use CSR to match applicants’ attitudes or dispositions regarding salient issues as a hiring tool. The lack of research in this area may be caused by the lack of measurement tools that assess the compatibility of applicants’ attitudes or preferences regarding CSR and the corporate positions on the same CSR issues. ACTIVITY In this exercise, after a brief concept review, students are presented 15 questions. The first 10 questions are adaptations from a popular Corporate Social Responsibility (CSR) instrument intended to elicit the attitudes of managers to CSR. The last five relate to general attitude toward CSR. CLASS DISCUSSION IDEAS A class discussion could center around the exploration of whether HRM decisions should have a higher level of ethical expectations than others. Can a company truly live a CSR approach without first considering their employee stakeholders? Is it ethical to screen candidates based upon their views on CSR? CONNECT Video Case: A Bakery with a Conscience SUMMARY Corporate social responsibility reflects the social imperatives and the social consequences of business success and consists broadly of policies and practices that reflect business responsibility for some of the wider societal good. The precise policies and practices underlying this responsibility lie at the discretion of the corporation. The three-minute video presents the case of Dancing Deer Baking Company. This company considers that it has a responsibility to meet social obligations beyond earning profits within legal and ethical constraints. ACTIVITY After viewing the video, students are directed to answer a series of multiple-choice questions that explore need to act with integrity in the business environment. CLASS DISCUSSION IDEAS The questions can be extended by asking if Dancing Deer Bakery’s approach would work for larger firms. Another extension may be centered around questioning if the actions such as those featured in the case can be justified to the firm’s financial stakeholders. CONNECT Manager’s Hot Seat: Whistleblowing SUMMARY This seven-minute video presents a dilemma concerning whistleblowing. An employee at a hospital management company filed a report with his supervisor on patient injury and death possibly caused by staff errors. The supervisor has been told by her superiors not to release the report until after an investor meeting in one month’s time, and the employee threatens to leak the report directly to the media. ACTIVITY After viewing the video, students are directed to answer a series of multiple-choice questions. CLASS DISCUSSION IDEAS Is the employee being unreasonable with his demand? Can the supervisor’s request for delay be ethically justified? Will there be a “cost” to the employee if he goes to the press? All these questions would make good class discussions. IV. THE NATURAL ENVIRONMENT AND SUSTAINABILITY POWERPOINTS Slide 23 Social Enterprise Slide 24 Ecocentric Management and Sustainable Growth Slide 25 Life-cycle analysis (LCA) Slide 26 Management in Action Slide 27 Management in Action- Questions Slide 28 In Review LO 5: Discuss reasons for businesses’ growing interest in the natural environment. A. A risk society A risk society is one in which the creation and distribution of wealth generate by-products that can cause injury, loss, or danger to people and the environment. LO 6: Identify actions managers can take to manage with the environment in mind. B. Ecocentric management has as its goals the creation of sustainable economic development and improvement of the quality of life worldwide for all organizational stakeholders. 1. Sustainable growth meets present needs without harming the needs of future generations. 2. Life-cycle analysis (LCA) is a process of analyzing all of the inputs and outputs of a product, “cradle-to-grave” to determine the total environmental impact of the product. 3. Carbon footprints are the output of carbon dioxide and other greenhouse gases. C. Environmental Agendas for the Future 1. In the past, companies were oblivious to their negative environmental impact. Today, many companies are striving for low impact, and some are striving for positive impact. 2. In the future, collaborative efforts will be essential, such as the energy industry and environmentalists working together rather than against one another. Example 5.6 Environmental actions If you work in an office environment, chances are good that you’ve encountered one of Teknion’s products. This Toronto, Canada-based operation delivers office furniture systems globally. What’s different about Teknion is their commitment to the environment, which won them the 2007 Globe Award for Environmental Excellence. As described on their website, Teknion started their environmental efforts by increasing their understanding of ISO 14001 environmental specifications. They created a “Green Team” to implement the Environmental Management System specified by ISO, and they became one of the first furniture manufacturers to be ISO 14001 certified. But Teknion went further, and also implemented the guidelines set by LEEd® (Leadership in Energy and Environmental design), the U.S. Green Building Council’s voluntary rating and certification program for developing high-performance, sustainable, green-built environments. Every year, Teknion sponsors “Green Week,” during which they tell their employees about what the company has done for the environment in the past year, and what it plans to do in the upcoming year. Management in Action Onward IBM Takes Responsibility IBM builds trust with the public by publishing its values and policies online, as well as an annual Corporate Responsibility Report. IBM describes itself as socially responsible in that it applies its expertise to social problems and empowers employees and others to serve their communities. In addition, the company says, “We integrate corporate citizenship and social responsibility into every aspect of our company.” • Is IBM’s commitment to corporate social responsibility good for IBM as a business? Explain. Students may disagree (giving reasons), but the text makes the case that being responsible can be good for business. IBM’s socially responsible conduct not only helps communities but also showcases the company’s problem-solving capabilities. They position the company as an expert at tackling difficult projects. •Improving energy-efficiency saves IBM millions of dollars, but recycling its used electronics requires hiring hundreds of people. Is the recycling program justified? Why or why not? Answers will vary. There is a moral argument for recycling as a way of taking responsibility for the company’s impact on the environment. From a purely business standpoint, recycling also could stabilize or reduce the cost of resources used by IBM over the long term. Between these extremes, IBM could benefit from the positive reputation of being concerned about the impact of its products on the environment and perhaps could help to create a political climate in which companies are not regulated as much because they take responsibility on their own. Some students may argue that the recycling program is not justified unless it adds to the company’s profits or value to shareholders. Teaching Tip Most companies’ corporate social responsibility efforts are made highly visible on their websites. During a break or before the discussion of CSR, ask students to look up examples of what their favorite company is doing to be socially responsible. There will likely be common trends among many companies (e.g., reducing waste, Habitat for Humanity) but ask students to point out any examples that stand out as being a unique or impressive CSR initiative. BOTTOM LINE What are some costs of treating employees unethically? Possible costs include retaliation (poor work, absences, lawsuits) by employees who feel hurt and angry, as well as high rates of employee turnover, requiring costs to recruit and train replacements. Mistreated employees also might complain publicly, embarrassing the company and possibly hurting sales. Historically, unhappy employees have sometimes formed unions, and unionized workers earn higher pay, on average than nonunionized workers. Think of a product you recently purchased. How could its packaging have been more environmentally friendly? Answers will vary. Students could consider ways to reduce the amount of packaging or even to replace it altogether with, say, just a tag attached to the product. They could also consider ways of replacing non-renewable packaging materials with renewable or recycled ones. SOCIAL ENTERPRISE A College Built by and for the Poor An extraordinary effort began over 40 years ago. India’s Barefoot College is an educational organization working in 1,300 villages across nearly 80 of the world’s least developed countries in Asia, Africa, the Pacific islands, and South America. Its mission is to improve rural lives and communities through learning-by-doing training programs in health care, women’s empowerment, solar energy, water, and land development that are designed and built by and for the poor. Barefoot College is based on the guiding principles of service and sustainability espoused by Mahatma Gandhi, along with a commitment to equality, shared decision making, and self-reliance. Its projects have brought artificial light to more than half a million people and provide clean water and solar energy for cooking and heating to thousands of communities Questions: 1. In what ways do you think Barefoot College’s mission and goals demonstrate a utilitarian philosophy of ethics? While answers will vary, students may contrast egotism to utilitarian approaches to ethics. The plan is intended to do good on a wide scale. 2. Which of Barefoot College’s guiding principles have you observed in environments in which you have worked or volunteered? Choose a principle you might not have observed and explain how would you go about incorporating it into your current or a recent workplace. Student responses will vary; however, all should refer to one of the ethical principles discussed in the chapter. LECTURETTES LECTURETTE 5.1: The Ethics Imperative THE NATURE OF ETHICS 1. Today, it seems that there is a higher ethical standard by which all behaviors must be judged. More than ever before, society appears to apply the “ethics test” to all manners of human behavior. Ethical behavior is seen as an essential ingredient in the effort to improve the quality of life. 2. At the same time, there is a depressing perception that our people—especially our young people—are actually headed towards unethical or, at best, ethically neutral behavior 3. The media seems focused on unethical behavior in government, business, and daily living. The results of a Harris Poll released in 2000 state two-thirds of Americans give Corporate America credit for the prosperity of recent years. At the same time, nearly three-quarters believe that business is too powerful, and controls too many aspects of their lives. Slightly less than half think that what’s good for business is good for most Americans. And two-thirds think that big profits are more important to big companies than safe, reliable products. 4. One can make a good case in support of the latter proposition, noting that unethical behavior in all walks of life has always been with us, but we simply expect more from today’s leaders. 5. When defining ethical business behavior, corporate executives usually turn to codes of ethics that describe a corporate commitment to constituency groups, or shareholders, rather than prescribed ethical conduct for specific situations. 6. In an effort to make business ethics more useful, critics suggest that the following dimensions and boundaries of ethical should be applied. Business ethics should be applied ethics, with specifics, not generalizations. Business ethics should deal with relationships, wherein validity depends on mutual acceptance. Business ethics should be institutionalized and supported by procedures and rules for administering and implementing them. Business ethics should provide a common denominator of understanding. 7. Managers need more than a code of ethics—they need a value system that continuously strives to clarify ethical behavior. A FRAMEWORK OF CRITICAL ETHICAL ISSUES 1. Business codes of ethics need some sort of framework within which they can be developed and implemented. Such an ethical framework must be consistent with and emerging from a base of ethical propositions for the manager of the future. Thus, the ethical manager or the ethical organization must first develop an acceptable body of ethical propositions. For example, the study could begin with the 14 ethical propositions offered, such as the following: In the conduct of day-to-day business ethical conflicts and choices are inherent in business decision-making. Ethical behavior must exist on a plane above the law, which merely specifies the lowest common denominator of acceptable behavior. There is no single, universal standard of ethical behavior that a manager can use to make specific decisions. The determinants of ethical behavior are diverse and often conflicting. Individual values constitute the ultimate guide for ethical behavior. As the application of ethical standards moves from the general to the specific, agreement as to what constitutes ethical behavior diminishes. Top management is responsible for setting the moral tone of an organization. It is perceived by managers that the lower their organization rank, the greater is the pressure to act unethically. Individual managers tend to perceive themselves to be more ethical than their peers. In order for codes of ethics to be effective, they should contain meaningful and clearly stated provisions with sanctions for noncompliance that are both enforceable and enforced universally. Employees need a non-punitive mechanism for reporting ethical abuses in the organization. If codes of ethics are to be effective, the organization should appoint a senior manager to be responsible for acting as the organization’s ethical advocate. The preceding ethical propositions are recommended for contemporary managers to improve their decision-making abilities and long run organization performance. LECTURETTE 5.2: The Social Responsibility Debate INTRODUCTION Should a business firm use its resources to engage in programs to promote what that business firm perceives to be the public good? Students should already have some awareness that this role of business in the area of social responsibility has spawned a long-time, on-going debate. Strong arguments are made to support the notion that firms (1) should and (2) should not expend company resources in pursuit of social welfare activities that fall outside the scope of the firm’s business. Below are some of the more popular pro and con positions regarding the social responsibility of business. ARGUMENTS IN SUPPORT OF COMPANY SOCIAL RESPONSIBILITY PROGRAMS Business is unavoidably involved in social issues in its daily operations. Social responsible actions are the ethical things to do. The “Iron Law of Responsibility” holds that society can alter or revoke a business charter, so the business can increase its chances of survival by socially responsible actions that will increase the viability of the business system. Prevention is better than a cure, so business should solve problems before they become severe. Social responsibility will improve the environment for all concerned, especially in the long run. Investing in society is in the best interests of the business enterprise. Improving society is in the best interests of the stockholders to whom the business has a clear responsibility. Since business has resources available, it stands to reason that business should try to solve social problems. Business possesses a great deal of social power, so business needs to balance that power with responsible behavior. Societal expectations demand social responsibility on the part of business. Socially responsible behavior will improve the public image of the business enterprise. Socially responsible behavior can preclude unnecessary and costly governmental regulation and intervention into the practices of business. Government can’t pass laws that will cover every social situation, and laws often fail to achieve their purposes, so business needs to meet social needs on a voluntary basis. Socially responsible behavior can be profitable. The opportunity to be socially responsible should be viewed as a managerial challenge. A strategy for management is to develop a socioeconomic plan of action to satisfy stakeholders for the long-run success of a business entity. ARGUMENTS IN OPPOSITION TO COMPANY SOCIAL RESPONSIBILITY PROGRAMS If businesses are allowed to engage in social programs, the public will lose control of society. In general, business involvement in social programs does not have broad public support. There is no acceptable way to measure the success of social programs. Businesses lack the skills for dealing effectively with social programs. Businesses already have vast amounts of power, and their involvement in social programs would increase that power even more. Socially responsibility programs on the part of business could lead to unwanted business-government collusion, as business plus government equals monopolist power. Businesses that use their resources for the public good dilute the purpose of business. Social action by the firm is in conflict with its responsibility to stockholders. Social responsibility programs are costly and would result in higher prices charged to consumers. Price increases resulting from expenditures on social programs would weaken the nation’s balance of payments. Ethical practices should be ignored, and profit maximization or bottom line management should be the primary focus of management. Instructor Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945