marketing manager course - chapter 03

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3
Chapter
Managing Social Responsibility and Ethics
Managing Social Responsibility and Ethics
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After reading this chapter, you should be able to:
zApply the four key ethical criteria that
managers and employees should use when
making business decisions.
zUnderstand why businesses establish codes of
ethics as a method of guiding employee
conduct.
zRecognize ways to encourage ethical behavior
in business.
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Learning Objectives(continued)
zMake ethical decisions in morally challenging
situations.
zValue corporate social responsibility.
zUnderstand the influence of various
stakeholders on a company’s priorities, policies,
plans, and goals.
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Ethics and social
Ethics and social
responsibility should be high
responsibility should be high
-
-

priority concerns of all
priority concerns of all
members of an organization,
members of an organization,
not just managers and
not just managers and
executives.
executives.
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What are Business Ethics?
zEthics are principles that explain what is right
or wrong, good or bad, and what is appropriate
or inappropriate in various settings
zBusiness ethics provide standards or guidelines
for the conduct and decision making of
employees and managers.
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What are Business Ethics? (continued)
zWithout a code of ethics:
¾There is no consensus regarding ethical principles
¾Different people will use different ethical criteria in
determining whether a practice or behavior is ethical
or unethical
zBusiness ethics are not the same things as
laws.
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Ethics Approaches
zPeople utilize different ethical value systems
zThese systems are based on:
¾Personal experiences

¾Religious background
¾Education
¾Family training
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Approaches for Ethical Decision Making
zUtilitarianism
¾A means of making decisions based on what is good for
the greatest number of people.
zIndividualism
¾The degree to which a society values personal goals,
autonomy, and privacy over group loyalty, commitment
to group norms, involvement in collective activities,
social cohesiveness, and intense socialization.
¾Individual self-interest should be promoted as long as it
does not harm others.
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Approaches for Ethical Decision Making
(continued)
zRights approach
¾A means of making decisions based on the belief
that each person has fundamental human rights that
should be respected and protected.
zJustice approach
¾An approach to decision making based on treating
all people fairly and consistently when making
business decisions.
9 Distributive Justice
9 Procedural Justice
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A company needs to ensure agreement about the relevant criteria on which

to judge the ethics of a business decision so that people do not base
decisions on personal value systems.
Code of Ethics
Code of Ethics
C orporate Credos
C orporate Credos
Ethical Policy Statem ents
Ethical Policy Statem ents
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Numerous companies have adopted ethical
policy statements that inform employees of
acceptable standards of conduct
zSt. Paul Companies
¾Employees may accept gifts of inexpensive pens or
appointment diaries, but not liquor, lavish
entertainment, travel, or clothing.
zEli Lilly and Company
¾Employees may not conduct business with a
company with which they or their relatives are
associated, unless Eli Lily has given specific
approval and authorization.
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Company Examples (continued)
zGeneral Dynamics Corporation
¾Employees may not use or share inside information
(that is not available to the general public) for
personal gain.
zJ.D. Edwards and Company
¾Profanity and racial and sexual slurs are prohibited.
¾Language should convey a loving, caring, and

sensitive attitude toward other people.
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Managing Ethics
Ethics Training
Ethics Training
Ethical Structures
Ethical Structures
Whistleblow er Policies
Whistleblow er Policies
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Ethics Training
zUsually contains three
elements:
¾Messages from top executives
emphasizing ethical business
practices
¾Discussion of Code of Ethics
¾Procedures for discussing or
reporting unethical behavior
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Ethical Structures
zEthical structures are the procedures and
divisions or departments within a company
that promotes and advocates ethical
behavior.
zTwo types of ethical structures:
¾Ethics Officer
¾Ethics Committee
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Whistleblower Policies Should Include the

Following Key Features
z The policy encourages reporting
unethical conduct.
z Meaningful procedure to deal fairly with
reported violations.
z Those who report violations are protected from
retaliation.
z Alternative reporting procedures.
z Anonymous reporting to an ethics officer/committee.
z Feedback to employees on ethics violations.
z Top management support and involvement.
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Eight Ways Mangers Can Influence the Ethical
Behavior of Associates
z Take actions that develop
trust.
z Act consistently.
z Be truthful and avoid
white lies and
manipulative actions.
z Demonstrate integrity.
z Meet with employees to
discuss and define what
is expected of them.
z Ensure employees are
treated equitably.
z Adhere to clear
standards that are seen
as just and reasonable.
z Respect employees.

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Four Examples of Ethical Dilemmas At Work
zPerformance
appraisal
zEmployee discipline
zOffice romance
zGiving gifts in the
workplace
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Performance Appraisals
z Formal evaluations of an employee’s
performance provided on a recurring basis
z To perform effective evaluations, the
supervisor should devote substantial time to
collecting accurate performance
information
z Rating are used for:
¾ Letting employees know which skills they have
mastered and which require improvement
¾ A basis for pay increases, future work
assignments, promotions, and sometimes layoffs
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Employee Discipline
zGuidelines for giving employee
discipline in a fair and impartial
way:
¾ Notify employees in advance of a
company’s work rules and the
consequences for violating them
¾ Investigate the facts of an employee’s

misconduct before applying discipline
¾ Be consistent in the response to rule
violations
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Office Romances
zSuggestions for ethical
employee conduct in a
romantic relationship in the
workplace:
¾Public displays of affection at
work should be eliminated
¾Employees should be prohibited
from dating people they directly
supervise
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Giving Gifts
z Ethical test of accepting gifts:
¾ Think about how a manager or co-worker
would perceive the gift and the person who
gave it
¾ If you feel uncomfortable explaining the gift,
the discomfort probably means it would be
ethically problematic
z The laws and ethics related to
giving gifts between parties as a
business practice are highly
diverse from culture to culture
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Social Responsibility
z Do corporations have a

responsibility to conduct their
affairs ethically?
z Should corporations be judged
by the same standards as
individuals?
z Should a business be concerned
with more than the pursuit of
profits for its shareholders?
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Benefits of Social Responsibility
Socially responsible companies:
z Are good corporate citizens to
the community and to the
environment.
z Policies can enhance the
image of a company as well as
its product brands from the
perspective of the consumers.
z Have fewer conflicts with
stakeholder groups who
disagree with the company
over how it uses its resources.
z Are more likely to influence
stakeholders to become loyal
customers and become
advocates of the company’s
products.
z Research shows that
corporate social responsibility
is related to higher financial

performance and the ability to
recruit better quality job
applicants.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.