Class Notes (1,100,000)
CA (650,000)
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MGMT (100)
Lecture 11

MGMT 1000 Lecture 11: MGMT midterm 2 review


Department
Management
Course Code
MGMT 1000
Professor
Kathleen Rodenburg
Lecture
11

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MGMT!1000!Midterm!2!Review!–!Chapter!3!Review!Notes!!
Chapter!3!–!Conducting!Business!Ethically!and!Responsibly!!
Ethics!in!the!Workplace!
Ethics:!individual!standards!or!moral!values!regarding!what!is!right!and!wrong,!or!good!and!bad!
o Ethical!Behaviour!–!behaviour!that!conforms!to!individual!beliefs!and!social!norms!about!
what!is!right!and!good!
o Unethical!Behavior!–!Behaviour!that!individual!beliefs!and!social!norms!define!as!wrong!
and!bad!!
Business!ethics:!Ethical,!or!unethical!behaviour!by!a!manager!or!an!employee!of!an!organization!!
LO-1!Individual!Ethics!
- Ethics!vary!from!person!to!person,!since!ethics!are!based!on!individual!beliefs!and!social!
concepts!
- It!is!important!to!make!the!distinction!between!unethical!and!illegal!behaviour.!!
o Behaviour!may!be!ethical!and!legal!
o Behaviour!may!be!ethical!and!illegal!
o Behaviour!may!be!unethical!and!legal!
o Behaviour!may!be!unethical!and!illegal!
- It!is!complicated!to!make!ethical!judgements!because!practices!that!are!legal!in!one!country!
may!not!be!legal!in!another!country.!!
o In!some!cultures,!ethically!ambiguous!practices!are!hallmarks!of!business!activity!!
Individual!Values!and!Codes!!
- A!combination!of!factors!determines!the!ethical!views!of!individuals!in!a!business:!
o Parents!and!other!adults!influence!our!ethical!standards!at!an!early!age!
o Our!peers!and!the!media!also!shape!our!ethical!standards!!
o We!develop!morals!and!values!that!influences!our!behaviour!
- Differences!of!opinion!arise!about!what!is!ethical!and!unethical!because!ethics!are!defined!
personally!as!well!as!culturally!
o In!any!situation,!people!will!use!different!standards!of!ethics!to!argue!their!actions!as!
being!ethical!!
Managerial!Ethics!
Managerial!Ethics:!Standards!of!behaviour!that!guide!individual!managers!in!their!work!
o Managerial!work!can!be!classified!as!behaviour!in!three!broad!categories:!
Behaviour!Toward!Employees! !
- There!are!important!questions!with!regards!to!issues!like!hiring!and!firing,!wages!and!working!
conditions,!and!privacy!!
o In!Canada,!ethical!and!legal!guidelines!state!that!a!person!should!only!be!hired!or!fired!
because!of!their!ability/inability!to!perform!their!job!
o Ethical!debate!often!arises!when!the!topic!of!wages!and!working!conditions!is!explored!

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o Ethical!implications!are!seen!when!the!privacy!of!employees!must!be!protected!
§ Ex:!Personal!Information!Protection!and!Electronic!Documents!Act!(PIPEDA)!
requires!organizations!to!obtain!consent!before!using,!collecting,!or!disclosing!
individuals’!information!
Behaviour!Toward!the!Organization!!
- Ethical!issues!arise!with!respect!to!employee!behaviour!towards!employers!
Conflict!of!Interest:!Occurs!when!an!activity!benefits!the!employee!at!the!expense!of!the!
employer!
o Ex:!employee!accepts!a!gift!from!a!buyer!in!return!for!more!sales!
Behaviour!Towards!Other!Economic!Agents!
- Ethical!disputes!often!arise!in!the!relationship!between!a!company!and!its!customers,!
competitors,!stockholders,!suppliers,!dealers,!and!unions!
- Difficulties!also!arise!because!business!practices!vary!globally!
Assessing!Ethical!Behaviour!!
- It!is!possible!to!determine!whether!an!action!is!ethical!or!unethical!by!using!a!three-step!model!
to!systematically!apply!ethical!judgements!to!situations!that!may!arise!during!business!activity!
1. Gather!relevant!information!!
2. Determine!the!most!appropriate!moral!values:!!
v Utility:!Does!an!act!optimize!what!is!best!for!those!who!are!affected!by!it?!
v Rights:!Does!it!respect!rights!of!individuals!involved?!
v Justice:!Is!it!consistent!with!what!we!regard!to!be!fair?!
v Caring:!Is!it!consistent!with!people’s!responsibilities!to!each!other?!
3. Make!an!ethical!judgement!based!on!the!rightness!or!wrongness!of!the!proposed!activity!or!
policy!!
Encouraging!Ethical!Behaviour!in!Organizations!!
- Three!general!factors!have!been!identified!as!important!in!causing!individuals!to!behave!
unethically:!pressure,!opportunity,!rationalization!
o Pressure:!Employee!has!some!problem!that!cannot!be!solved!through!legitimate!means!
o Opportunity:!Employee!uses!his/her!position!in!organizations!to!solve!problems!
o Rationalization:!Employee!sees!him/her-self!as!an!ethical!person!caught!up!in!an!
unfortunate!situation!!
- To!reduce!unethical!behaviour,!employers!should:!demonstrate!top!management!commitment!
to!values!and!high!ethical!standards,!adopt!written!codes!of!ethics,!provide!ethics!training!to!
employees.!
Demonstrate!Top!Management!Commitment!to!Values!and!High!Ethical!Standards!
- It!is!crucial!for!organizations!to!demonstrate!serious!public!commitment!to!high!ethical!
standards!
- While!an!organization’s!business!strategies!and!practices!change!frequently,!it!is!important!to!
keep!their!core!values!and!principles!the!SAME!

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Adopt!Written!Code!of!Ethics!
- A!written!code!of!ethics!formally!acknowledges!that!a!company!intends!to!conduct!business!
ethically!
- Codes!of!ethics!increases!public!confidence,!improve!internal!operations,!and!helps!managers!
respond!to!problems!of!unethical!employee!behavior!
o If!codes!of!ethics!are!to!be!effective,!there!must!be!a!control!system!and!consistent!
enforcement!when!unethical!behaviour!occurs!
- Employees!then!know!their!managers!are!serious!about!ethical!conduct!
Provide!Ethics!Training!
- While!business!schools!can!help!in!the!training!of!identifying!unethical!behaviour,!most!analysts!
agree!companies!must!take!the!lead!in!educating!employees!about!ethics!
- More!firms!are!doing!ethics!training!where!managers!are!updated!on!relevant!laws!and!
regulations!and!the!importance!of!ethical!decision!making!
- Dealing!with!ethical!issues!is!no!simple!matter,!and!many!companies!–!especially!those!
operating!internationally!–!struggle!with!ethical!dilemmas!
o Ex:!Dangerous!working!conditions!in!factories!in!developing!countries!that!produce!
western!retailer!goods!
LO-2!Corporate!Social!Responsibility!!
Corporate!Social!Responsibility:!The!idea!that!a!business!should!balance!its!commitments!to!
individuals!and!groups!that!are!directly!affected!by!the!organizations!activities!
o Ex:!energy!efficiency;!fair!pay!for!workers;!pollution!control;!environmentally!
responsible,!etc.!!
Fair-Trade!Movement:!A!movement!designed!to!help!workers!in!developing!countries!receive!
fair!payments!for!their!work!!
LO-3!The!stakeholder!Model!of!Responsibility!
Organizational!Stakeholders:!Groups,!individuals,!and!organizations!that!are!directly!affected!by!
the!practices!of!an!organization!and!that!therefore!have!a!stake!in!its!performance!!
- As!companies!increase!emphasis!to!improve!social!responsibility,!there!has!been!a!move!to!go!
beyond!traditional!“financial”!measures!like!return!on!investment!!
o Social!Return!on!Investment!(SROI)!has!been!developed!to!help!companies!understand,!
manage,!and!communicate!their!social!values!to!stakeholders!!
- Most!companies!strive!to!be!socially!responsible!for!the!following!stakeholders:!customers,!
employees,!investors,!suppliers,!local!communities!!
Responsibility!Towards!Customers!!
- 3!Key!areas!regarding!social!responsibility!of!business!towards!customers:!consumer!rights;!
unfair!pricing;!ethics!in!advertising!
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