ethics and social responibilities

8/8/2019 Ethics and Social Responibilities

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ETHICS AND SOCIAL RESPONSIBILITIES IN

MANAGEMENT

By :- Anup Chauhan & Bhumika kapoor


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Social Responsibility

Definition:- Is an ethical or ideological theory, that an entity whether a govt.corporation or private organization has a big responsibility to society at large.

MNCs wants to lower the cost by locating in countries where human rights arenot a high priority. They justify by saying that they are bringing in jobs and

strengthening the local economy.

Are tobacco and alcoholic beverages companies socially responsible ?

What factors influence the decision of managers in these situations ?

Two Views of Social responsibilities:-

Social Responsibility

The Classical View Socio-Economic View


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Views of Social Responsibilities

The Classical View:-

Believes that managements only social responsibility is to maximizeprofits.

Milton Friedman, the economist and Nobel prize winner strongly

advocates this approach.

According to this view doing Social good adds to the cost of doing

business. This additional cost is compensated by:-

Increasing the price of the product.

Stockholders reduce their profit margins.

Those who believe in this view are also socially responsible but their

definition of social responsibility is different i.e. their extent of

responsibility is to maximize profits for Stock holders.


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Comparison of the views

The difference between the two perspectives is easy to understand as the

Classical view is based on maximizing profits whereas the socio

economic view goes beyond making profits to include protecting and

improving societys welfare.

Lesser Greater Social Responsibility

Stage 1

Owners and

Management

Stage 2

Employees

Stage 3

Constituents in the

specific environment

(Customer)

Stage 4

Broader Society


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Corporate Social Responsibility

Pyramid

Carrolls four part definition:-

Philanthropic

Responsibilities

Ethical

Responsibilities

Legal

Responsibilities

Economic

Responsibilities

Be a good

Corporate citizen

Be ethical

Obey the law

Be Profitable

Contribute resources to

communities; improve quality

of life.

Obligation to do what is right,

just and fair. Avoid harm.

Law is societys codification

of right and wrong. Play by

the rules of the game.

The foundation on which all

other rest.


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Obligations, Responsiveness,

Responsibility

Social Obligations.

Engages in social actions because of its obligations to meet economic andlegal responsibilities.

Social Responsiveness. Engages in social actions in response to some popular social need.

Social Responsibility.

Goes beyond social obligations and responsiveness and believes in getting

involved in actions which can improve the society as its the right thing todo.


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Example

Infosys:-

Indian IT giant with over 1,00,000 employees and presence in 22 countries.

Infosys as a socially responsible company aims at:-

Conservation of Resources.

Prevention of pollution. Adherence to all applicable legislations.

Organizing and contributing in welfare programs, especially for under

privileged children.

The primary purpose of corporate leadership is to create wealth legally and

ethically. This translates to bringing a high level of satisfaction to fiveconstituencies - customers, employees, investors, vendors and the society-at-large.

- N.R Narayana Murthy (Chairman of board and Chief mentor)


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Arguments For and Against Social

Responsibility

For:-

Public Expectations.

Long Term Profits.

Ethical Obligation.

Public Image.

Better Environment.

Less Govt. Regulations

Stakeholders Interest.

Against:-

Violation if profit

maximization.

Costs. Lack of necessary skills to

address social issues.

No direct lines of

accountability for social

actions.


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NATURE OF ETHICS

Ethics The inner-guiding moral principles,

values, and beliefs that people use to analyze or

interpret a situation and then decide what is the

right or appropriate way to behave.

Ethical Dilemma

quandary people find themselves in when

they have to decide if they should act in away that might help another person even

though doing so might go against their own

self-interest.


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Reasons to Behave Ethically

From Internal Customer point of view:-

Improves the atmosphere at work and helps motivating theemployees.

Ethic behavior of management sets a good example to the

employees.

Evokes a sense of pride for the company and improves its image in

the eyes of employees.

From External Customer point of view:- Improves the public image of the company adds to the overall

development of ethical behaviour in the society


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FACTORS THAT AFFECT ETHICS

The factors that affect ethics are as follows: Stage of moral development Individual characteristics

Structural variablesOrganizations culture

Issue intensity


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STAGE OF MORAL DEVELOPMENT

There are three levels of moral development PRECONVENTIONAL: Sticking to rules to avoid physical

punishment and following rules only when doing so is inyour immediate interest.

CONVENTIONAL: Living upto what is expected bypeople close to you and maintaining conventional order byfulfilling obligations to which you have agreed.

PRINCIPLED: Valuing rights of others and upholding

absolute values and rights regardless of the majoritysopinion and following self-chosen ethical principles even ifthey violate the law.


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INDIVIDUAL CHARACTERISTICS

Two personality variables influence an individuals actions. They are :

EGO STRENGTH: It is a personality measure of the strength of a personsconvictions . People who score high on ego strength are likely to resist impulses toact unethically and instead follow their convictions. That is, individuals high on egostrength are more likely to do what they think is right.

LOCUS OF CONTROL: It is a personality attribute that measures the degree towhich people believe they control their own fate. People with an internal locus ofcontrol believe that they control their own destinies ; those with an external locus

believe that what happens to them is due to luck or chance. Externals are less likelyto take personal responsibility for the consequences of their behavior and are morelikely to rely on external forces. Internals on the other hand are more likely to takeresponsibility for consequences and rely on their internal standards of right andwrong to guide their behavior. Employees with an internal locus of control are likelyto be more consistent in their moral judgments and actions than external ones.


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STRUCTURAL VARIABLES

An organizations structural design influences whether

employees behave ethically. Some structures provide strong

guidance , whereas others create ambiguity and uncertainty.

Structural designs that minimize ambiguity and uncertainty

through formal rules and regulations and those that

continuously remind employees of what is ethical are more

likely to encourage ethical behaviour. Other organizational

mechanisms that influence ethics include the use of goals ,

performance appraisal systems , and reward allocationprocedures.


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ORGANIZATIONS CULTURE

An organizational culture most likely to encourage

high ethical standards is one thats high in risk

tolerance, control and conflict tolerance. The

employees in such a culture are encouraged to beaggressive and innovative. If the culture is strong

and supports high ethical standards, it has a very

powerful and positive influence on their decision to

act ethically or unethically.


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ISSUE INTENSITY

The determinants of issue intensity are : Greatness of harm Consensus of wrong Probability of harm Immediacy of consequences Proximity to victims Concentration of effect The larger the number of people harmed ,the more agreement that the

action is wrong , the greater the likelihood that the action will cause harm, the more immediately that the consequences of the action will be felt,

the closer the person feels to the victim, and the more concentrated theeffect of the action on the victims , the greater the issue intensity. Themore intense an ethical issue is, the more the employees would behaveethically.


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