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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