Chapter 2. Business Ethics and Social Responsibility
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1 Chapter 2 Business Ethics and Social Responsibility
2 Learning Objectives 1 Explain the concern for ethical and societal issues. 4 Describe how businesses can act responsibly to satisfy society. 2 3 Describe the contemporary ethical environment. Discuss how organizations shape ethical conduct. 5 Explain the ethical responsibilities of businesses to investors and the financial community.
3 Concern for Ethical and Societal Issues Business Ethics The standards of conduct and moral values governing actions and decisions in the work environment. Social responsibility Balance between what s right and what s profitable Often no clear-cut choices Often shaped by the organization s ethical climate
4 The Contemporary Ethical Environment High-profile investigations and arrests in headlines. Vast majority of businesses are ethical. New corporate officers charged with deterring wrongdoing and ensuring ethical standards. See how Walmart highlights corporate responsibility on its website.
5 Business Approach to Ethics and Social Responsibility Sarbanes-Oxley Act A 2002 law that added oversight for the nation s major companies and a special oversight board to regulate public accounting firms that audit the financial records of these corporations. Engage in traditional corporate philanthropy, which involves giving to worthy causes. Anticipate and manage risks. Identify opportunities to create value by doing the right thing.
6 Individuals Make a Difference Individuals can make the difference in ethical expectations and behavior. Putting own interest ahead of the organization Lying to employee Misrepresenting hours Safety violations Internet abuse Technology is expanding unethical behavior.
7 Development of Individual Ethics
8 On-the-Job Ethical Dilemmas Situation in which a business decision may be influenced for personal gain. Telling the truth and adhering to deeply felt ethical principles in business decisions. Employee s disclosure of illegal, immoral, or unethical practices in the organization. Businesspeople expect employees to be loyal and truthful, but ethical conflicts may arise.
9 How Organizations Shape Ethical Conduct
10 Ethical Awareness Code of Conduct: Formal statement that defines how the organization expects and requires employees to resolve ethical questions.
11 Ethical Education Codes of conduct cannot detail a solution for every ethical situation, so corporations provide training in ethical reasoning.
12 Ethical Action Helping employees recognize and reason through ethical problems and turning them into ethical actions. TI Ethics Quick Test
13 Ethical Leadership Executives must demonstrate ethical behavior in their actions. use clear, explicit language rather than euphemisms for corrupt behavior encourage behavior that generates and fosters ethical values practice moral absolutism, insisting on doing right even if it proves financially costly
14 Acting Responsibly to Satisfy Society Social Responsibility Management s consideration of profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm s performance. Contributions to the overall economy, job opportunities, and charitable contributions and service. Organizations measure through social audits.
15 Areas of Responsibility
16 Responsibilities to the General Public Public Health Issues. What to do about inherently dangerous products such as alcohol, tobacco, vaccines, and steroids. Protecting the Environment. Using resources efficiently, minimizing pollution. Green marketing Sustainability Developing the Quality of the Workforce. Enhancing quality of the overall workforce through education and diversity initiatives. Corporate Philanthropy. Cash contributions, donations of equipment and products, and supporting the volunteer efforts of company employees.
17 Responsibilities to Customers CONSUMERISM The Right to Be Safe. Safe operation of products, avoiding product liability. The Right to Be Informed. Avoiding false or misleading advertising and providing effective customer service. The Right to Choose. Ability of consumers to choose the products and services they want. The Right to Be Heard. Ability of consumers to express legitimate complaints to the appropriate parties.
18 Responsibilities to Employees Workplace Safety. Monitored by Occupational Safety and Health Administration. Quality-of-Life Issues. Balancing work and family through flexible work schedules, subsidized child care, and regulation such as the Family and Medical Leave Act of Ensuring Equal Opportunity on the Job. Providing equal opportunities to all employees without discrimination; many aspects regulated by the Equal Employment Opportunity Commission. Age Discrimination. Age Discrimination in Employment Act of 1968 protects workers age 40 or older. Sexual Harassment and Sexism. Avoiding unwelcome actions of a sexual nature; equal pay for equal work without regard to gender.
19 Responsibilities to Investors and the Financial Community Obligation to make profits for shareholders. Expectation of ethical and moral behavior. Protection of investors by the Securities and Exchange Commission and state regulations.
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