Ch 5 - Ethics + CSR Flashcards
What is ethics?
code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong`
What are the 3 categories of behaviour? How do these relate on a scale?
1) Codified law: values and standards written into the legal system and enforceable in the courts
2) Free choice: behavior not covered by law and for which an individual has complete freedom
3) Ethics: standards of conduct based on shared principles and values about moral conduct
scale of amount of explicit control:
HIGH ——————————-> LOW
codified law > ethics > free choice
Have ethical issues been a problem recently? What causes unethical behaviour? What must managers do?
lots of ethics issues lately in many businesses, especially with new technology
causes:
- Personal ego
- Greed
- Pressure to increase profit
- Desire to appear successful
**lately has been an overemphasis on shareholders (at the cost of cust, empl, etc)
managers need to be aware of their own actions as THEY SET THE ETHICAL CLIMATE
What are the 4 types of ethical manager behaviour?
a) displays honesty and integrity
b) communicates and enforces ethical standards with behaviour
c) is fair in decisions and distribution of rewards
d) kind, compassionate, concern for needs and feelings of others
How does ethics/CSR tie into success for the business?
- people prefer to work for ethical companies (so you get better choice of employeees)
- majority of cust would switch brands to a more ethical/socialy resp company
- cust willing to pay more for prod from ethical brands
What is an ethical dilemma? What is a moral agent?
=situation concerning right or wrong when values are in conflict, right and wrong cannot be clearly defined
moral agent = individual who must make an ethical choice in an organization
What are the main frameworks for ethical decision making?
a) Utilitarian approach: greatest good for the greatest number (John Stuart Mill + Jeremy Bentham)
b) Individualism approach: promote the individual’s best long-term interests (bc ppl learn to accomodate others in their own longterm interest)
c) Moral-rights approach: humans have fundamental rights and liberties that cannot be taken away by an individual’s decision, so moral decision maintains the rights of those affected
d) Justice approach: moral decisions must be based on standards of equity, fairness, and impartiality (**equitable, not equal!)
What are the subcategories under the justice approach?
- Distributive justice: different treatment of people cannot be based on arbitrary characteristics (ex: who you like more) **ok to apply standards, but need to be consistent and rational
- Procedural justice: rules must be administered fairly (ex: hear everyone’s side, impartial judgement)
- Compensatory justice: individuals should be compensated for the cost of their injuries by the party responsible
A coworker’s spouse is setting up a home business. You see the coworker, who is also a friend, taking office supplies such as paper and copier ink from your company’s supply room. It’s not much, but clearly against company rules. You decide to tell your supervisor. What approach have you just taken to resolve this ethical dilemma?
a) Utilitarian
b) Procedural justice
c) Compensatory justice
d) Individualism
b) procedural justice
bc applied in consistent way!
What is the practical approach to ethical decision makign? What criteria must be met for a decision to be considered ethical under this method?
= bases decisions on prevailing standards, society, and all stakeholders (ignores debates about what is right, good, or just)
criteria:
- acceptable by the professional community (either established group or just peer group)
- would not hesitate to publicize decision on the evening news
- would typically feel comfortable explaining to family and friends
What did one business ethics expert suggest as questions to ask oneself in the face of an ethical dilemma?
- What’s in it for me?
- What decision would lead to the greatest good for the greatest number?
- What rules, policies, or social norms apply?
- What are my obligations to others?
- What will be the long-term impact for myself and important stakeholders?
What impact does management and leadership have on ethics of hte organization? How does each individual influence the organization?
=> studies shown that unethical corp culture and pressure from superiors can induce empl to behave unethically
individuals:
- bring their own personality and traits to org
- value systems influenced by personal needs, family influence, religious background
- personality characteristics such as ego, self-confidence, and independence may enable managers to make ethical choices in the face of outside pressures
What are the stages of moral development?
- Preconventional = follow rules to avoid punishment, acts in own interest = self interest
- Conventional = lives up to expecctations of others, fulfills duties and obligations of social system upholds laws = societal expectations
- Postconventional = follows self chosen principles of justice and right, aware that ppl have diff values, seeks creative solutions to ethical dilemmas, balances concern for ind with concern for common good = internal values
What are the leadership styles of each stage of moral dev? Employee behaviour at each?
Leader Style:
Pre: Autocratic/coercive (“do it or you’re fired”)
Conv: Guiding/encouraging, team oriented
Post: Transforming, or servant leadership
Employee Behavior:
Pre: Task accomplishment (ex: kids)
Conv: Work-group collaboration
Post: Empowered employees, full participation
What are the benefits of being at higher levels of moral development as a manger? How many people reach the postconventional level?
higher level
= have an influence on their followers
= stand out as ethical role model whose behavior and communications attracted followers’ attention
20% of adults reach postconventional!
What is servant leadership? What is a giving culture (vs taking)? Does this influence success?
= managers focus on needs of followers and encourage others to think for themselves (make subordinates the best they can be)
giving culture = people help each other, share information, and collaborate
(vs taking = ppl only focused on self-interets, use others to get own success)
success:
- giving cultures lead to greater effectiveness
- harvard study showed that best predictor of teams effectiveness was amount of help the members gave each other
What is coroprate social responsibility?
CSR: management’s obligation to make choices and take actions that will contribute to the welfare and interests of society, not just the organization
What are main measurements of CSR?
ESG dimensions = environment, social, governance
1) Environment (e.g., water use, fuel management)
2) Social capital (e.g., customer privacy, community development)
3) Human capital (e.g., diversity opportunities, compensation and benefits)
4) Business innovation (e.g., product societal value, quality and safety)
5) Leadership and governance (e.g., business ethics, executive compensation)
What was the older main focus for corporations? What has it shifted to now? What are main parts of this new focus?
old focus = shareholders are king, everything we do must be to serve them
now = STAKEHOLDERS are focus
–> main parts: shareholders yes but also customers, employees, supply chain, community ** all those affected by org’s actions
What is stakeholder mapping? Goal?
= a systematic way to identify the expectations, needs, importance, and power of stakeholders
–> goal is better understanding so org can align actions to best accomodate desires of all stakeholders
What is the green movement? Where did this come from? What is greenwashing? Example of greenwashing?
recent shift toward more env focused actions from organizations and society in general
came from:
- shift in social attitudes
- influence of social media and internet
Greenwashing: company tries to portray itself as more environmentally minded than it actually is
ex: Volkswagen who promoted cars as very env friendly but actually just were designed to reduce emissions during tests to appear better than they were
What is the conept of sustainabliity?
= ability to generate wealth with environmental responsibility and social stewardship, thereby meeting the current and future needs of stakeholders while preserving the environment and society
**environmental and social concerns are addressed at every strategic decision
What is the triple bottom line? What are some examples of each part?
= measurement of an organization’s social performance, its environmental performance, and its financial performance (3Ps: people planet profit)
people: fair labor practices, diversity, supplier relationships, treatment of employees, contributions to the community
planet: carbon emissions, recycling, reducing waste, sustainable energy
profit: money money money
What is a benefit corporation? What is the point of being defined this way? How do it?
= a for-profit organization whose stated purpose includes:
– Creating a material positive impact on society
– Requiring the consideration of the impact of all decisions on stakeholders and env.
– Voluntarily holding itself to high standards of accountability and transparency
point: helps with legal bc when mgers make decisions to help env/etc rather than profit, shareholders/company owners could take legal action against mgmt to maximize profits
how: company must include in its charter specifically what it is doing to aid the public and society
What is B Lab? What impact do they have on other businesses?
has its own nonlegal framework for certifying businesses as B Corporations = measurement of a good biz that isnt based just on profit
impact: Being a Certified B Corporation means
a company meets B Lab’s standards of verified overall:
- social and environmental performance
- public transparency
- legal accountability
** shows that the org voluntarily does things to benefit society
What are the two parts to build an ethical organization?
1) Values-oriented approach = directly targets individuals’ internal desire to be ethical (promote and encourage the ppl doing good things!)
2) Structure-oriented approach = Ethical structures represent the systems, positions, and programs a company can undertake to implement ethical behavior
What constitutes the values oriented approach to building an ethical org?
a) Ethical Leadership = managers are models of honesty and trustworthiness, are fair in all interactions, and behave ethically (both professional and personal)
b) Volunteerism = actively giving time and skills to a volunteer or charitable organization
c) Code of Ethics = formal statement of the company’s values concerning ethics and social issues
– principle statements: define fundamental values, etc
– policy statements: define procedures in different ethical situations (in order to follow principles)
d) Ethics Committee = a group of executives (sometimes lower employees too) appointed to oversee company ethics
What constitutes the structure oriented approach to building an ethical org?
a) Chief Ethics Officer = oversees all aspects of ethics and legal compliance (initiate ethics training, communicate expecations, etc)
b) Ethics Hotline = confidential place for employees to report and seek guidance
c) Ethics Training = learn about topics such as maintaining a respectful workplace, protecting resources and information of org, avoiding conflicts of interest, following org laws and regulations
d) Support for Whistle-Blowers = view it as a benefit to org and encourage empl to do it, too often being a whistle-blower ruins one’s career which stops empl from talking and encourages unethical behaviour
