Social Responsibilities and Managerial Ethics.

1. SS PPM(2010-2012)
3–1
Social
Responsibility and
Managerial Ethics

2. WHAT IS SOCIAL RESPONSIBILITY?
 The Classical View
 Management’s only social responsibility is to maximize profits (create a
financial return) by operating the business in the best interests of the
stockholders (owners of the corporation).
 Expending the firm’s resources on doing “social good” unjustifiably
increases costs that lower profits to the owners and raises prices to
consumers.
3–2

3. WHAT IS SOCIAL RESPONSIBILITY? (CONT’D)
 The Socioeconomic View
Management’s social responsibility goes beyond making profits to
include protecting and improving society’s welfare.
Corporations are not independent entities responsible only to
stockholders.
Firms have a moral responsibility to larger society to become involved
in social, legal, and political issues.
“To do the right thing”
3–3

4. TO WHOM IS MANAGEMENT RESPONSIBLE?
3–4

5. ARGUMENTS' FOR AND AGAINST SOCIAL
RESPONSIBILITY
3–5
• For
Public expectations
Long-run profits
Ethical obligation
Public image
Better environment
Discouragement of further
governmental regulation
Balance of responsibility and
power
Stockholder interests
Possession of resources
Superiority of prevention
over cure
• Against
Violation of profit
maximization
Dilution of purpose
Costs
Too much power
Lack of skills
Lack of accountability

6. FROM OBLIGATION TO RESPONSIVENESS TO
RESPONSIBILITY
Social Obligation
 The obligation of a business to meet its economic and legal
responsibilities and nothing more.
Social Responsiveness
 When a firm engages in social actions in response to some
popular social need.
Social Responsibility
 A business’s intention, beyond its legal and economic
obligations, to do the right things and act in ways that are
good for society.
3–6

7. SOCIAL RESPONSIBILITY VERSUS SOCIAL RESPONSIVENESS
3–7
Social Responsibility Social Responsiveness
Major consideration Ethical Pragmatic
Focus Ends Means
Emphasis Obligation Responses
Decision framework Long term Medium and short term

8. DOES SOCIAL RESPONSIBILITY PAY?
Studies appear to show a positive relationship between social
involvement and the economic performance of firms.
Difficulties in defining and measuring “social
responsibility” and “economic performance raise issues
of validity and causation in the studies.
A general conclusion is that a firm’s social actions do not harm
its long-term performance.
3–8

9. SOCIAL RESPONSIBILITY
1. Toward owners and Investors
2. Towards employees
3. Towards Customers
4. Towards Supplier
5. Towards Government
6. Towards Community and Society
3–9

10. SOCIAL RESPONSIBILITY CONTD…
1.Towards Owners and
Investors
 Fair Return
 Capital Appreciation
 Optimum Utilization of
Resources
 Safety of Investment
 Proper Communication with
the investors.
2. Towards Employees
 Reasonable wages and full
employment
 Security of job
 Good working conditions
 Welfare facilities
 Avenues for growth and
development.
3–10

11. CONTD…..
3.Towards Customer
 To produce goods which are
satisfying to customer
 To make right quality of
goods ,available to the right
people at right time and at
reasonable price
 To provide prompt adequate
and courteous services
 To follow fair trade practices.
4.Towards supplier
 Timely payment
 Management should create
healthy relations with suppliers
 Term and conditions regarding
supplier should be made
regularly.
3–11

12. CONTD..
5.Towards Government
 Follow the policies and
directions issued
 Pay the taxes and other
duties on time
 Not encourage
monopoly and
concentration of
economic power.
6.Towards society and
community
 Create employment
opportunities
 Efficient use of resources
 Improvement of local
environment
3–12

13. REPUTED FIRM ???
For a firm to be reputed:
1. Customer should feel satisfied with the products
2. Employee should feel satisfied with working of the organisation
3. Share holders should feel satisfied with the financial
performance of the organisation
4. Supplier should feel satisfied with the dealings of company.
5. Govt. should feel satisfied that the organisation contributing to
national economy.
6. Community should feel that the organisation has assisted in its
well beings.
3–13

14. MANAGERIAL ETHICS
5–14
By Sadhana Singh
Lecturer

15. INTRODUCTION
 Values have gone down
 Morals have been destroying
 Society is Stinking
 Corruption in public life has reached to the
shocking level.
Such statements have been making newspaper headlines with
frustrating regularly in recent times. Over the past 15 years, over
two third of the 500 Fortune companies have been involved in
some from of unethical behavior.
Even most of the Indian companies too have been questioned on
grounds of unethical behavior.
5–15

16. CONTD..
 Issue of Warrants to promoters.
 Buying at inflated price in foreign soils.
 Hiking equity raising sentimental issues
regarding takeover.
 Switching of shares to favor relatives and
friends
 Inflating profit figures with active support from
auditors,etc.
5–16

17. MANAGERIAL ETHICS
 Ethics Defined
 Principles, values, and beliefs that define what is
right and wrong behavior.
 Its person’s own attitude and beliefs concerning
good behavior.
 Ethics reside within individuals and such are defined
separately by each individual in his own way.
3–17

18. MEANING
 Ethics are principles of personal and professional
conduct.
 Ethics is broader than what is define by law, customs
and public opinion .
 Ethical behavior may differ from society to society.
 Ethical standards are ideals of human conduct.
5–18

19. MANAGERIAL ETHICS
 Business ethics deal with applications of moral
principles to business problems.
 The purpose of business ethics is to guide the efforts of
managers in discharging their duties to the satisfaction
of various stakeholders.
 Those guide the thinking and the conduct of managers
with respect to what is good or bad; right or wrong.
© 2007 Prentice Hall, Inc. All rights
reserved.
5–19

20. EXAMPLES OF ETHICS
 Business ethics deal with applications of
moral principles to business problems.
 The purpose of business ethics is to
guide the efforts of managers in
discharging their duties to the
satisfaction of various stakeholders.
 Those guide the thinking and the conduct
of managers with respect to what is good
or bad; right or wrong.
5–20

21. 5–21
Determinants of Ethics
1.Family ,schools and religion
2.Peers ,Colleagues and superiors.
3.Experiences in life.
4.Values and morals
5.Threatening situations
6.Organizational demands
7.Legislation
8.Government rules and regulation
9.Industry and company ethical codes
of behavior
10.Social pressure.

22. HOW MANAGERS CAN IMPROVE ETHICAL
BEHAVIOR IN AN ORGANIZATION
1. Hire individuals with high ethical standards.
2. Establish codes of ethics and decision rules.
3. Lead by example.
4. Set realistic job goals and include ethics in performance
appraisals.
5. Provide ethics training.
6. Conduct independent social audits.
7. Provide support for individuals facing ethical dilemmas.
5–22

23. ETHICAL GUIDELINES FOR MANAGERS
1. Obey the law
2. Tell the truth Telling the truth is important
in building trust with relevant
stakeholders.
3. Show respect for people.
4. Stick to the golden rule.
5–23

24. NEED AND IMPORTANCE
1. Environmental pressure
2. Enlightened self interest
3. Moral Consciousness
4. Legal Requirement.
5–24