Table 2.1 Inducements ad contributions of organizational stakeholders
Stakeholder Contribution to the Inducement to contribute
organization
Inside
Shareholders Money and capital Dividends and stock
appreciation
Managers Skills and expertise Salaries, bonuses, status
and power
Workforce Skills and expertise Wages, bonuses, stable
employment and
promotion
Outside
Customers Revenue from purchase Quality and price of
of goods and services goods and services
Suppliers High-quality inputs Revenue from purchase
of inputs
Government Rules governing good Fair and free competition
business practice
Unions Free and fair collective Equitable share of
bargaining inducements
Community Social and economic Revenue, taxes and
infrastructure employment
General public Customer loyalty and National pride
reputation
Figure 2.1 the top management hierarchy
Ownership Shareholders
↓
Trusteeship Executive ←Board of Salary committee
committee directors →
↓
Chair of board of
directors
↓
Corporate Chief executive
management officer (CEO)
↓
President or Chief
Operating Officer
(COO)
↓
Executive Vice
Presidents
↓
Senior Vice
Presidents and
Vice Presidents
↓
Divisional General Managers
, management or divisional
managers
↓
Functional Functional
management managers
Table 2.2 Utilitarian, moral rights and justice models of ethics.
1) Utilitarian model: An ethical decision is one that produces the greatest
good for the greatest number of people.
- Managerial implications. Managers should compare and contrast
alternative courses of action based on the benefits and costs of these
alternatives for different organizational stakeholder groups. They should
choose the course of action that provides the most benefits to
stakeholders. For example, managers should locate a new
manufacturing plant at the place that will most benefit its stakeholders.
- Problems for managers. How do managers decide on the relative
importance of each stakeholder group? How are managers to measure
precisely the benefits and harms to each stakeholder group? For
example, how do managers choose among the interests of
stockholders, workers and customers?
2) Moral rights model: An ethical decision is a decision that best maintains
and protects the fundamental rights and privileges of the people affected
by it. For example, ethical decisions protect people’s rights to freedom, life
and safety, privacy, free speech and freedom of conscience.
- Managerial implications. Managers should compare and contrast
alternative courses of action based on the effect of these alternatives
on stakeholders’ rights. They should choose the course of action that
best protects stakeholders’ rights. For example, decisions that would
involve significant harm to the safety or health of employees or
customers are unethical.
- Problems for managers. If a decision will protect the rights of some
stakeholders and hurt the rights of others, how do managers choose
which stakeholder rights to protect? For example, in deciding whether it
is ethical to snoop on an employee, does an employee’s right to privacy
outweigh an organization’s right to protect its property or the safety of
other employees?
3) Justice model: An ethical decision is a decision that distributes benefits and
harms among stakeholders in a fair, equitable, or impartial way.
- Managerial implications. Managers should compare and contrast
alternative courses of action based on the degree to which the action
will promote a fair distribution of outcomes. For example, employees
who are similar in their level of skill, performance, or responsibility
should receive the same kind of pay. The allocation of outcomes should
not be based arbitrary differences such as gender, race or religion.
- Problems for managers. Managers must learn not to discriminate
against people because of observable differences in their appearance
or behavior. Managers must also learn how to use fair procedures to
determine how to distribute outcomes to organizational members. For
example, managers must not give people they like bigger raises than
Stakeholder Contribution to the Inducement to contribute
organization
Inside
Shareholders Money and capital Dividends and stock
appreciation
Managers Skills and expertise Salaries, bonuses, status
and power
Workforce Skills and expertise Wages, bonuses, stable
employment and
promotion
Outside
Customers Revenue from purchase Quality and price of
of goods and services goods and services
Suppliers High-quality inputs Revenue from purchase
of inputs
Government Rules governing good Fair and free competition
business practice
Unions Free and fair collective Equitable share of
bargaining inducements
Community Social and economic Revenue, taxes and
infrastructure employment
General public Customer loyalty and National pride
reputation
Figure 2.1 the top management hierarchy
Ownership Shareholders
↓
Trusteeship Executive ←Board of Salary committee
committee directors →
↓
Chair of board of
directors
↓
Corporate Chief executive
management officer (CEO)
↓
President or Chief
Operating Officer
(COO)
↓
Executive Vice
Presidents
↓
Senior Vice
Presidents and
Vice Presidents
↓
Divisional General Managers
, management or divisional
managers
↓
Functional Functional
management managers
Table 2.2 Utilitarian, moral rights and justice models of ethics.
1) Utilitarian model: An ethical decision is one that produces the greatest
good for the greatest number of people.
- Managerial implications. Managers should compare and contrast
alternative courses of action based on the benefits and costs of these
alternatives for different organizational stakeholder groups. They should
choose the course of action that provides the most benefits to
stakeholders. For example, managers should locate a new
manufacturing plant at the place that will most benefit its stakeholders.
- Problems for managers. How do managers decide on the relative
importance of each stakeholder group? How are managers to measure
precisely the benefits and harms to each stakeholder group? For
example, how do managers choose among the interests of
stockholders, workers and customers?
2) Moral rights model: An ethical decision is a decision that best maintains
and protects the fundamental rights and privileges of the people affected
by it. For example, ethical decisions protect people’s rights to freedom, life
and safety, privacy, free speech and freedom of conscience.
- Managerial implications. Managers should compare and contrast
alternative courses of action based on the effect of these alternatives
on stakeholders’ rights. They should choose the course of action that
best protects stakeholders’ rights. For example, decisions that would
involve significant harm to the safety or health of employees or
customers are unethical.
- Problems for managers. If a decision will protect the rights of some
stakeholders and hurt the rights of others, how do managers choose
which stakeholder rights to protect? For example, in deciding whether it
is ethical to snoop on an employee, does an employee’s right to privacy
outweigh an organization’s right to protect its property or the safety of
other employees?
3) Justice model: An ethical decision is a decision that distributes benefits and
harms among stakeholders in a fair, equitable, or impartial way.
- Managerial implications. Managers should compare and contrast
alternative courses of action based on the degree to which the action
will promote a fair distribution of outcomes. For example, employees
who are similar in their level of skill, performance, or responsibility
should receive the same kind of pay. The allocation of outcomes should
not be based arbitrary differences such as gender, race or religion.
- Problems for managers. Managers must learn not to discriminate
against people because of observable differences in their appearance
or behavior. Managers must also learn how to use fair procedures to
determine how to distribute outcomes to organizational members. For
example, managers must not give people they like bigger raises than
