Bài giảng Principles of Management - Chapter 4 Stakeholders, Ethics, and Corporate Social Responsibility

Chapter 4Stakeholders, Ethics, and Corporate Social ResponsibilityMcGraw-Hill/IrwinPrinciples of Management © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.Learning ObjectivesIdentify stakeholders in an organization.Describe the most common types of ethical issues managers confront.Explain how managers can incorporate ethical factors into their decision making.Outline the main segments for and against corporate social responsibility.Explain what managers can do to behave in a socially responsible manner.StakeholdersThe FirmEmployeesLocal communitiesGeneral publicGovernmentCustomersDistributorsCreditorsSuppliersShareholdersEvaluating Stakeholders ClaimsIdentify StakeholdersIdentify stakeholders interests and concernsIdentify claims stakeholders place on the organizationWeight stakeholders by their importance to the firmIdentify actions to satisfy claims of various stakeholdersTake actions, starting with those that address the claims of the most important stakeholdersQuestion Identify and evaluate the stakeholder claims for your university.Business EthicsAccepted principles of right or wrong governing the conduct of businesspeople.Principles of right and wrong are codified into lawsTort lawContract lawIntellectual property lawAntitrust lawSecurities lawMany actions, although legal, may not seem ethicalAre We Ethical? 27 % 24 % 35 %Source: Fast Company, May 2005Ethics in Management Most issues arise due to potential conflict between the goals and the rights of stakeholders.Stakeholders have basic rights that should be respected, and it is unethical to violate those rights.Ethical Rights of StakeholdersShareholders – right to timely and accurate information about their investmentsCustomers – right to be fully informed about the products and services they purchaseEmployees – right to safe working conditions, fair compensation, and to be treated in a just mannerEthical Rights of Stakeholders (cont)Suppliers – right to expect contracts to be respected Competitors – right to expect that a firm will abide by the rules of competition and not violate antitrust lawsCommunities – right to expect companies will not violate the basic expectations of societyCorporate WrongdoersMartha Stewart – served five-months sentence for lying to government investigators about a suspicious stock sale. Her company’s sales sunk.Tyco International CEO, Dennis Kozlowski – became a poster boy for excess with $2 million birthday party. Charges – Stealing $600 million form the company and the shareholdersFormer CEO of Enron, Bernard Ebbers – Charges: conspiracy, securities fraud, making false regulatory filings, ring leader in an $11 billion accounting fraudSource: Business Week, January 10, 2005Ethical Issues of ManagersSelf-dealingInformation manipulationAnticompetitive behaviorOpportunistic ExploitationSubstandard working conditionsEnvironmental degradationCorruptionExamples of Self-dealingSenior managers who treat corporate funds as their own personal treasurySenior managers who use their control over the compensation committee of the board of directors to award themselves multimillion-dollar pay increases or stock option grants that are out of promotion with their contribution to the corporationInstances where individual managers award business contracts not to the most efficient supplier but to the one that provides the largest kickbackSelf DealingsLacrad International sold gospel music and religious sermons on CDs. The owner Rodney Dixon admitted to a judge that most of his business was a lie. The company’s revenue never exceeded $100,000 per year, however, he told lenders that revenues were in millions to get a $2.25 million loan for a corporate jet.Former Tyco International’s CEO Dennis Koslowski became a poster boy for excess with stories of his $2 million birthday party and $6,000 shower curtain during his last trial.Source: Fast Company, May 2005; Business Week, January 10, 2005CorruptionThe Foreign Corrupt Practices Act was enacted in 1977.What is considered gift in one country can be a bribe in another.Only 34 cases have gone to trial since the law was enacted. Most are settled out of court with fines and penalties.InVision Technologies allegedly bribed crooked officials in China, the Philippines, and Thailand.Source: San Jose Mercury News, March 13, 2005Roots of Unethical BehaviorUnethical behaviorImmoral leadershipUnrealistic performance goalsFailure to consider ethical issuesUnethical organization cultureEmployees with poor personal ethicsPhilosophical Approaches to Ethics (1)Utilitarian approach – the view that the moral worth of actions or practices is determined by their consequencesAn action is judged to be desirable if it leads to the best possible balance of good over bad consequencesCommitted to maximization of good, and the minimization of harmThe best decisions are those that produce the greatest good for the greatest number of peoplePhilosophical Approaches to Ethics (2)Rights theory – the view that human beings have fundamental rights and privilegesSomething that takes precedence over, or ‘trumps’ a collective goodFor example, since we have the right to free speech, we are also obligated to make sure we respect the free speech of othersCertain people or institutions are obligated to provide benefits or services that secure the rights of othersPhilosophical Approaches to Ethics (3)Justice theories – theories that focus on attaining a just distribution of economic goods and servicesA just distribution is one that is considered fair and equitableAll economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantageVeil of ignorance – everyone is imagined to be ignorant of all his or her particular characteristicsQuestion Jerry Jamesway, CEO, Jamesway International, believes that the best decisions are those that produce the greatest good for the greatest number of people. Jerry prescribes to which of these approaches to ethics?Opportunistic exploitationRights theoriesUtilitarianJustice theoriesBehaving EthicallyWhat managers can do to make sure that ethical issues are considered:Establish an ethics officerHave leaders promote ethical behaviorDevelop strong governance processesPromote moral courageConsider ethical aspects of business decisionsPromote an ethical organization cultureHire and promote ethical individualsEthical DecisionsIt is considered ethical when a businessperson can answer YES to each of the following questions:Does my decision fall within the accepted values or standards that typically apply in the organizational environment?Am I willing to see the decision communicated to all stakeholders affected by it?Would the people with whom I have significant personal relationship approve of the decision?UncertaintyNot all ethical dilemmas have a clean and obvious solutionIn these cases a premium is placed on the ability of managers to make sense out of complex messy situations and make balanced decisions that are as just as possible.Social ResponsibilityA sense of obligation on the part of managers to build certain social criteria into their decision making.When managers evaluate decisions, there should be a presumption in favor of adopting courses of action that enhance the welfare of society at large.Giving BackMark Benioff, CEO, Salesforce.com1% of equity into public charity1% of time (4 hours per month) per employee to paid volunteerism1% of profits to nonprofit organizationsSource: Newsweek, April 18, 2005Arguments for SRRight way for a business to behaveNeed to give back to the society that helped make their companyIt can lead to better financial performanceIgnoring this may generate ill will and oppositionGlobal Labor MonitoringNike, Patagonia, Gap and Five other companies have joined forces with six leading anti-sweatshop groups to devise a single set of labor standard with a common factory inspection system.Goal – To replace today’s overlapping hodgepodge of approaches with something that’s easier and cheaper to useSource: Business Week, May 23, 2005The Friedman DoctrineRejects the idea that businesses should undertake social expenditures beyond those mandated by law The firm should maximize its profitsIf shareholders want to use proceeds for social investments that should be there choice; managers should not make that decision for them