Any organization that is engaged in making a product or providing a service for a profit
Human beings and the social structures they collectively create
Business and Society are?
The external environment of business is?
Dynamic and ever changing
A successful business must meet both its?
Economic and social objectives
The purpose of the firm is not to make a profit, but to?
Create value for all its stakeholders
General Systems Theory?
Business and society together form an interactive social system
A stakeholder refers to?
Persons or groups that affect, or are affected by, an organization's decisions, policies, and operations
A stake is?
An interest in - or claim to - a business enterprise
A stockholder is?
A type of stakeholder, but not all stakeholders are stockholders!
All "stakeholder" groups must be?
Taken into account
Stakeholder groups can be divided in to two categories?
Marker and Nonmarket
Those that engage in economic transactions with the company as it carries out its primary purpose of providing society with goods and services
Nonmarket stakeholders are?
People or groups who—although they do not engage in direct economic exchange with the firm—are affected by or can affect its actions
Market stakeholders a.k.a.?
Nonmarket stakeholders a.k.a.?
Process conducted by managers to identify relevant stakeholders and analyze their interest and power
Stakeholder Analysis' 4 Questions?
1. Who are the relevant stakeholders?
2. What are the interests/needs of each stakeholder? (The power of WIIFM!)
3. What is the power of each stakeholder?
4. How/what coalitions and alliances are likely to form?
Stakeholder power is?
The ability of a group to use resources to make an event happen or to secure a desired outcome
The focus an organization places on a particular stakeholder is?
Largely determined by each group's type of power, as well as legitimacy and urgency
4 types of stakeholder power?
1. Voting power
2. Economic power
3. Political power
4. Legal power
Stages in stakeholder engagement?
Inactive, Reactive, Proactive, Interactive
Companies ignore stakeholder concerns
Companies act only when forced to do so
Companies try to anticipate stakeholder concerns
Companies actively engage with stakeholders in an ongoing relationship of mutual respect, openness, and trust
Stakeholder Engagement and Dialogue?
Strategy used by organizations at higher stages of engagement (Meetings between corporate representatives and representatives of their stakeholder groups to discuss issues of mutual concern)
Steps in dialogue
1. Each group describes their core issues & concerns
2. Together groups reach common definition of problem/s
3. Together groups invent innovative solutions that involve mutual gain
4. Together establish procedures for implementing solutions
Benefits of Stakeholder Engagement and Dialogue?
Helps organizations learn about/understand societal expectations, Generates creative solutions to problems, Helps win support for implementing solutions, neutralizes critics, Improves reputation for taking constructive action, good faith effort
Active management of an organization's external relations
Organizations External Relations?
Government - Regulatory Agencies - Customers - Investors - Suppliers - Community
Opinions, attitudes, and beliefs about what constitutes reasonable business behavior and Alignment of what stakeholders expect and what an organization is doing is critical for accuracy of business operations, trust
Failure to understand stakeholder concerns and respond appropriately will?
Cause the performance-expectations gap to grow and Larger the gap, the greater the risk of stakeholder backlash or loss of faith in organizational value and business practices
Current Public Affairs Management?
This must be a global strategy functioning at the highest levels of organizational management
Boundary Spanning Departments?
Those departments within an organization that reach across the organization's boundary line to interact with groups and people in society
Management of Public Issues?
A structured and systematic process to aid organizations in identifying, monitoring, and selecting public issues that warrant organizational action
The process of gathering, analyzing, and managing external information about the organization's competitors that can affect the organization's plans, decisions and operations
Provides managers with the information about external issues and trends that enables an organization to develop a strategy that minimizes threats and takes advantage of new opportunities
The acquisition of information gained from analyzing the multiple environments affecting organizations ⇒ strategic radar screens
Issue Identification, Issue Analysis, Option Generation, Evaluation and Selection, Program Implementation and Assessment of Results and Continuous Improvement
Anticipating emerging concerns, or "horizon" issues
Evaluating the issue; coming to an understanding of how it will evolve and how it will affect the organization
Option Generation, Evaluation and Selection?
Evaluating action options, involves complex judgments taking into account qualitative factors like organization reputation
Once option is chosen, must design and implement it
Assessment of Results and Continuous Improvement?
Must assess results of the program and made adjustments as needed
Corporate Social Responsibility (CSR)?
Emerged as a critical concept for organizations to understand, support, and integrate in their strategic and tactical business operations. Relates to an organization's impact on society and goes beyond doing what is ethical
Focus is on proactive decisions & behaviors towards?
Workplace, Customers, Local Community, Environmental Preservation, Global Outreach
An organization should be held accountable for ?
Any of its actions that affect people, their communities, and their environment
The world's largest 200 organizations account for?
More than 25% of the world's economic activity
Iron Law of Responsibility?
In the long run, those who do not use power in ways society considers responsible will lose it
Early 20th century businesses came under attack for ?
Being too powerful
Industrialists (Andrew Carnegie, Henry Ford) started?
Philanthropic efforts for educational and cultural institutions and programs to support employee social and health needs
View permeated that business leaders had a responsibility beyond ?
Just making a profit ⇒ Charity Principle
Around 1920s the charitable needs of communities began to shift from?
A small group of wealthy philanthropists to businesses themselves
The Stewardship Principle?
Broader concept of organizations as trustees who work in the public interest
Three Key Responsibilities of Corporate Social Responsibility?
Economic responsibilities, Social responsibilities, Legal responsibilities
A successful organization is one which finds ways to?
Meet each of its critical responsibilities and develops strategies that cross over and benefit more than one area
Economic and social goals come together in organizations that practice ?
Enlightened self-interest Means?
Organizational leadership can see it is in the company's self-interest in the long term to provide true value to its customers, behave responsibly, and set a good example
Organizations clearly demonstrating CSR have shown?
Stronger customer loyalty, stronger performance and profits
A set of principles an individual uses to determine whether an action is good or bad
Ethics varies across individuals
Ethics and legal compliance are?
Not the same
Ethical decision making follows the?
Antecedent - Behavior - Consequence
Ethical behavior in organizations affects every facet of operations such as?
Investor/Shareholder interaction, Client/customer services, Workforce/employee treatment, Supplier and contractor dealings, Public relations/image
Laws are ?
Society's attempt to formalize ethical standards, Written to capture public's wishes about what constitutes right and wrong behavior
Ethical concepts are more?
Complex than laws because they often apply to areas not covered by laws
Ethical organizations are more?
Successful than unethical organizations
Sales, revenue, competitive strength
Retention of workforce talent?
Emerging generations of employees value social responsibility
Positive public image and reputation?
Minimize or prevent harm, Compliant with legal guidelines, audits, response, disciplinary action
Ethical organizations have?
Financial performance, Retention of workforce talent, Positive public image and reputation, Consumer loyalty and Investor interest and confidence
The goal for the organization is to ?
Strive towards a balance of meeting business goals while eliminating any negative impact of business decisions and actions
Common Organizational Problems?
Abuse, harassment or intimidation-Dishonesty, theft-Safety violations-Misrepresentation of the organization or individuals-Lack of attention to errors, defects, damage control
Common causes of Ethical Challenges in Organizations?
Personal gain & selfish interest
- Conflict of interest - Following orders/directive from superiors -Pressure to comply with demands, need to conform with majority perspective -Lack of information needed to make more ethical decision - Insufficient time to weigh all alternatives before acting
Egoism, Social Group Relativism, Cultural Relativism and Utilitarianism
How does action relate to me Potentially problematic if predominant theory in use
Social Group Relativism?
How does action relate to the norms of my social group?
How does action relate to culture and laws? Legality and ethics should be aligned?
How does action relate to everyone affected by it? Costs vs. benefits- Democratic decisions
How does action relate to my duty as a person of integrity? Justice and fairness
Ethical decision-making incorporates ?
ethical theories, moral reasoning and a systematic approach for answering questions
Ethical Decision making questions regard?
Honesty, Fairness, Goodwill, Legality
Other organizational decision-making processes?
Identification of problem - Generate ideas, solutions, alternatives - Weigh all options - Implement and evaluate
Code of Ethics?
Broad ethical vision & objectives
Code of Conduct?
Explanation of acceptable behaviors for specific situations
Acceptable behaviors for specific situations?
Minimize ethical ambiguities, clarify organizational position on various areas
- Serve as a set of guidelines for communication and decision making within the organization - Establish legal obligations for the ethical behavior within certain professions (e.g., finance)
Six Universal Moral Values?
Trustworthiness, Respect, Responsibility, Fairness, Caring. Citizenship
Code of Conduct Content?
Designed to expand upon the moral principles identified in the Code of Ethics
Behavioral expectations pertaining to legal and ethical situations?
Conflicts of Interest - Corporate Opportunities -Confidentiality
Fair Dealing - Protection and Proper Use of Assets - Compliance with Laws, Rules, and Regulations - Encouraging the Reporting of Illegal or Unethical Behavior
Integration of various program/policy components is critical to ?
Effective ethics design
Six-element comprehensive ethics program integrates?
Written codes, policies, and disciplinary protocol-Training programs and information resources-Ethics Officers/Advisors and contact information-Anonymous hotline/reporting procedure-Evaluation systems - audits, program improvements
Those working in organizations with a comprehensive program are?
More likely to report ethical misconduct and More likely to be satisfied with any investigation and response to ethical misconduct
A questionable or unjust payment often to a government official to ensure or facilitate a business transaction
Understanding among employees of what is/is not acceptable ethical behavior
Senior management support for ?
Implementation, communication, and ongoing evaluation
Targeted training for all relevant constituents?
Employees, Clients, Suppliers, Investors