I.
What is Social Responsibility
1.
From
Obligations to Responsiveness to Responsibility
·
Social obligation is when a firm engages in social actions
because of its obligation to meet certain economic and legal responsibilities.
The organization does what it’s obligated to do and nothing more.
·
Social responsibility, says that management’s only social
responsibility is to maximize profits. The most outspoken advocate of this
approach is economist and Nobel laureate Milton Friedman.
·
Socioeconomic view, says that managers’ social responsibilities
go beyond making profits to include protecting and improving society’s welfare.
This view is based on the belief that corporations are not independent entities
responsible only to stockholders, but have an obligation to the larger society.
·
Social responsiveness is when a company engages in social actions in
response to some popular social need. Managers are guided by social norms and
values and make practical, market-oriented decisions about their actions.
·
Social responsibility is a business’s intention, beyond its legal and
economic obligations, to do the right things and act in ways that are good for
society. A business obeys the law and cares for its stockholders, but adds an
ethical imperative to do those things that make society better and not to do
those that make it worse.
2.
Should
Organizations Be Socially Involved?
Socially
responsible investing (SRI) funds, which provide a way for individual investors
to support socially responsible companies. Typically, these funds use some type
of social screening; that is, they apply
social and environmental criteria to investment decisions. For instance, SRI
funds usually will not invest in companies involved in liquor, gambling, tobacco,
nuclear power, weapons, price fixing, fraud, or in companies that have poor product
safety, employee relations, and environmental track records.
II.
Green Management and Sustainability
A
number of environmental disasters brought a new spirit of environmentalism to individuals,
groups, and organizations. Increasingly, managers have begun to consider the
impact of their organization on the natural environment, which we call green management.
1.
How
Organization Go Green
One
model uses the terms shades of green to
describe the different environmental approaches that organizations may take.
a.
Legal (or light green) approach, which illustrates social obligation,
organizations exhibit little environmental sensitivity. They obey laws, rules,
and regulations without legal challenge and that’s the extent of their being
green.
b.
Market approach, respond to environmental preferences of
customers. Whatever customers demand in terms of environmentally friendly
products will be what the organization provides.
c.
Stakeholder approach, an organization works to meet the
environmental demands of multiple stakeholders such as employees, suppliers, or
community.
d.
Activist (or dark green) approach, looks for ways to protect the earth’s natural
resources. The activist approach reflects the highest degree of environmental
sensitivity and illustrates social responsibility.
2.
Evaluating
Green Management Actions
As
businesses become “greener,” they often release detailed reports on their
environmental performance. Almost 6,000 companies around the globe voluntarily
report their efforts in promoting environmental sustainability using the
guidelines developed by the Global Reporting Initiative (GRI). Another way organizations
show their commitment to being green is through pursuing standards developed by
the nongovernmental International Organization for Standardization (ISO). One
final way to evaluate a company’s green actions is to use the Global 100 list
of the most sustainable corporations in the world.
III.
Managers and Ethical Behavior
Ethics is the principles, values, and beliefs that
define right and wrong decisions and behavior. Many decisions managers make require
them to consider both the process and who’s affected by the result.
1.
Factors
That Determine Ethical and Unethical Behavior
a.
Stage of
Moral Development
·
The preconvention level, a person’s choice between right and wrong is
based on personal consequences from outside sources, such as physical
punishment, reward, or exchange of favors.
·
The conventional level, ethical decisions rely on maintaining
expected standards and living up to the expectations of others.
·
The principled level, individuals define moral values apart from
the authority of the groups to which they belong or society in general.
b.
Individual
Characteristics
Values is basic convictions about what is right
and wrong. Our values develop from a young age based on what we see and hear
from parents, teachers, friends, and others. Two personality variables have
been found to influence an individual’s actions according to his or her beliefs
about what is right or wrong:
·
Ego strength measures the strength of a person’s convictions. People with high ego
strength are likely to resist impulses to act unethically and instead follow their
convictions.
·
Locus of control is the degree to which people believe they
control their own fate. People with an internal locus of control believe they
control their own destinies.
c.
Structural
Variables
An
organization’s structural design can influence whether employees behave
ethically. Those structures that minimize ambiguity and uncertainty with formal
rules and regulations and those that continuously remind employees of what is
ethical are more likely to encourage ethical behavior. Other structural
variables that influence ethical choices include goals, performance appraisal
systems, and reward allocation procedures.
d.
Organization’s
Culture
Consists
of the shared organizational values. These values reflect what the organization
stands for and what it believes in as well as create an environment that
influences employee behavior ethically or unethically. Because shared values
can be powerful influences, many organizations are using values-based management, in which the organization’s values guide
employees in the way they do their jobs.
e.
Issue
Intensity
Six
characteristics determine issue intensity or how important an ethical issue is
to an individual: greatness of harm, consensus of wrong, probability of harm,
immediacy of consequences, proximity to victim(s), and concentration of effect.
2.
Ethics
in an International Context
Are
ethical standards universal? Although some common moral beliefs exist, social and
cultural differences between countries are important factors that determine ethical
and unethical behavior. In the case of payments to influence foreign officials
or politicians, U.S. managers are guided by the Foreign Corrupt Practices Act
(FCPA), which makes it illegal to knowingly corrupt a foreign official.
However, even this law doesn’t always reduce ethical dilemmas to black and
white.
IV.
Encouraging Ethical Behavior
1.
Employee
Selection
The
selection process (interviews, tests, background checks, and so forth) should
be viewed as an opportunity to learn about an individual’s level of moral
development, personal values, ego strength, and locus of control.
2.
Codes
of Ethics and Decision Rules
Uncertainty
about what is and is not ethical can be a problem for employees. A code of ethics, a formal statement of an
organization’s values and the ethical rules it expects employees to follow, is
a popular choice for reducing that ambiguity.
3.
Leadership
at the Top
Doing business ethically requires a
commitment from managers at all levels, but especially the top level. Why?
Because:
·
They’re
the ones who uphold the shared values and set the cultural tone.
·
They’re
role models in terms of both words and actions.
·
What they
do is far more important than what they say.
4.
Job
Goals and performance Appraisal
Under
the stress of unrealistic goals, otherwise ethical employees may feel they have
no choice but to do whatever is necessary to meet those goals. Also, goal achievement
is usually a key issue in performance appraisal. If performance appraisals
focus only on economic goals, ends will begin to justify means. To encourage
ethical behavior, both ends and means should be evaluated.
5.
Ethics
Training
More
organizations are setting up seminars, workshops, and similar ethics training
programs to encourage ethical behavior.
6.
Independent
Social Audits
The
fear of being caught can be an important deterrent to unethical behavior.
Independent social audits, which evaluate decisions and management practices in
terms of the organization’s code of ethics, increase that likelihood.
7.
Protective
Mechanisms
Employees
who face ethical dilemmas need protective mechanisms so they can do
what’s right without fear of
reprimand. An organization might designate ethical counselors for employees
facing an ethics dilemma.
V.
Social Responsibility and Ethics Issues in
Today’s World
1.
Managing
Ethical Lapses and Social Irresponsibility
a.
Ethical Leadership
Managers
must provide ethical leadership. As we said earlier, what managers do has a
strong influence on employees’ decisions whether to behave ethically.
b.
Protection of Employees Who Raise Ethical
Issues
It’s
important for managers to assure employees who raise ethical concerns or issues
that they will face no personal or career risks. These individuals, often
called whistle-blowers, can be a key part of
any company’s ethics program.
2.
Social
Entrepreneurship
Social
entrepreneur is an individual
or organization who seeks out opportunities to improve society by using
practical, innovative, and sustainable approaches. Social entrepreneurs want to
make the world a better place and have a driving passion to make that happen.
3.
Businesses
Promoting Positive Social Change
a.
Corporate Philanthropy
Can
be an effective way for companies to address societal problems.
b.
Employee Volunteering Efforts
Another
popular way for businesses to be involved in promoting social change. Many
businesses have found that such efforts not only benefit communities, but enhance
employees’ work efforts and motivation.
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