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Ch 3 Notes.docx

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Valerie Irie

Chapter 3: Social Factors Definitions Ethics • Individual standards/beliefs regarding what is right and wrong or good and bad Business or Managerial Ethics • Standards of behaviour that guide individual managers in their work • Still personal, but you apply them in a professional business setting/organization Categories Of Ethical Behaviour - Behaviour toward employees o Hiring and firing, wages, working conditions, privacy and respect - Behaviour toward the organization o Conflict of interest, confidentiality and honesty - Behaviour toward other economic agents o Relationship with customers, competitors, stockholders, suppliers, dealers and unions Assessing ethical behaviour 1. Determine if an ethical dilemma 2. Gather facts 3. Analyze situation a. Utilitarian approach – greatest good for greatest # of people b. Rights approach – rights cannot be taken away (rights of every individual matter) c. Fairness/justice approach – equitable distribution of burdens and rewards d. Caring approach – responsibilities for one another 4. Making judgement managerial mission statement/ hiring criteria core value role modeling statement code of ethics booklets & goals and evaluation conduct/ethics training criteria employee rewards systems protection mechanisms Hiring Criteria - Background checks, etc Managerial Role Managing - Manager sets tone, are role models for other employees Mission Statement/Core Values Statement - Shows what a company cares about - Go on record what company believes in Code Of Conduct - Takes rules to more detailed level - What you can and can’t do - Helping define broader regions (ex. Respect) Ethic Booklets/Training - Keep it fresh, keep ethics as a focus of working Set Goals - Set employee goals high to push people to achieve goals - Must be careful that goals are attainable in a fair manner Reward Systems - What you reward, how you reward people - Important not just to reward results, but also how they met their targets o Working together, working for good of company, how they achieved the goals Employee Protection Mechanisms - Have something in place in case somebody associated with company doesn’t follow the corporate ethics/rules - Whistle-blower Quick Test (Ethics) - Is the action legal? - Does it comply with our values? - If you do it, will you feel bad? - How will it look in the newspaper? - If you know it’s wrong, don’t do it! - If you’re not sure, ask Stakeholders - Individuals, groups and other orgs who have an interest in the actions of an org and who have the ability to influence it. - Groups or individuals who can significantly affect or are significantly affected by and org’s activities - Stakeholder’s importance depends on situation and the issue o Affect willingness and opportunity to act - Challenge: stakeholders may have varying and conflicting expectations of an org Business-Stakeholder Connection - Stakeholders provide business with the capacity to operate… o Owners and creditors: capital o Customers: purchases o Employees: human resources o BOD (board of directors): leadership o Natural environment: natural resources - Stakeholders have expectations of the business… o Owners and creditors: ROI (return on investment) o Customers: quality, choice, communication, safety, respect o Employees: fair pay, meaningful work, safety, fair treatment, training o BOD: responsible management o Natural environment: responsible stewardship - Therefore business must recognize its responsibility to address stakeholder expectations Why Manage Stakeholders? to cope with to keep pace with to improve ability to environmental societal change in which to avoid adverse actions predict/control the turbulence and stakeholders want a by stakeholders external environment uncertainty voice to improve the to promote higher levels to promote higher entry percentage of successful of operating efficiency to promote more barriers leading to more new product/service and organizational favourable favourable competitive introductions flexibility legislation/regulation environment to promote higher levels to potentially improve towith societal valuess of trust profitability (moral and philosophical to increase media power basis) Cope With Environmental Turbulence/Uncertainty - Can help with external analysis Keep Pace With Societal Changes - Avoid crisis management o Strikes, bad press Improve % Of Successful New Products - Use stakeholders to help improve products with feedback Promote Favourable Legislation - Want to be seen in most favourable view by gov’t - Make laws that favour you - Try and get them to favour domestic companies with favourable legislation Potentially Improve Profitability - Use all factors to try and impact profitability in the LONG TERM - Favourable legislation, no strikes, bad press, etc. . Align Company Values With Societies Values - Connect with stakeholders, what happing and changing o Have a more diverse base o Hopefully reflective of consumer base How Are Stakeholders Best Managed? 1. Identify key organizational stakeholders a. Identify most important/pivotal stakeholder at a certain time 2. Diagnose them along 2 critical dimensions of potential for threat and potential for cooperation 3. Formulate appropriate strategies both to enhance or change current relationships with those try stakeholders and to improve the org’s overall situation 4. Effectively implement these strategies - This is a continues loop – stop and evaluate, then go back and start again Marginal – no high potential threat or cooperation Supportive – if ignored, will leave you Non-Supportive – high on threat, low on cooperation = competitors, special interest group - Want to reduce the power that they have over you - Calm them down, neutralize situation Mixed Blessing – high potential to go either way - Employees with specific skill set, high in demand o Could stay and benefit you, or leave and hurt you - Special interest groups - Customers How are stakeholders best managed? Consider Strategic Importance: STAKEHOLDERS WITH LOW STRATEGIC IMPORTANCE: • Buffering – satisfy needs and/or demands of stakeholders STAKEHOLDERS WITH HIGH STRATEGIC IMPORTANCE: Corporate Social Responsibility • way in which a business tries to balance its commitments to its organizational stakeholders • how a business addresses ethical conduct at the organizational level – “collective code” • what does the organization do to society, and what does it do for society? • Two opposing views – focus only on profits (investors) vs. actively consider other stakeholders • goes back to ethics components • as an organization, sending a message back to the rest of the world • maximize profit back to investors and allow them to do with it what they want (ie. Charity, personal gain, etc) • OR believe that profit could still be made while contributing to other stakeholders Areas of Social Responsibility • responsibility towards the natural environment • responsibility towards society • responsibility towards customers • responsibility towards employees • responsibility towards investors Responsibility towards Natural Environment History of Business & Sustainability • 1987: Bruntland definition of sustainable development: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” • 1994: J. Elkington extended concept of ‘sustainable development’ to ‘Triple Bottom Line’ – equity, environment and economy – people, planet and profit – government regulations and social pressures increased leading to ‘corporate greening’ measures – pre 1987, ideal was to grow and expand to the best of humanities ability with no regards to the future – post 1987, ch
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