Understanding business 11th by mchugh nickels CHAPTER 4

Demanding Ethical and Socially Responsible BehaviorCHAPTER 4... This information is provided to TI employees on a business-card size mini-pamphlet to carry with FACING ETHICAL DILEMMAS

Demanding Ethical and Socially Responsible Behavior

CHAPTER 4

Ethics

LIFE AFTER SCANDAL

• Scandals have shaken the real estate, mortgage

and banking industries

• How do we restore trust in the free market

system?

- Punish those who have broken the law

- Make accounting records more transparent.

- Consider what is ethical, not just what is legal.

• Ethics The standards of moral behavior

Behaviors that are accepted by society as right

versus wrong.

WHAT are ETHICS?

Doing What Is Right…

ETHICS

It To Be Right.

As You Know

ETHICS

Ethics Begins With Each

of Us

Stem From Individual

More Than Legality

ETHICS

a situation requiring a choice between equally undesirable alternatives.

ETHICS

Ethical Dilemma

FACING ETHICAL DILEMMAS

• Ask yourself these

questions:

- Is it legal?

- Is it balanced?

- How will it make me

feel about myself?

The TI Ethics Quick Test

- 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.

- Keep asking until you get an answer.

For copies of the card or further information, contact the TI Ethics Office at 1-800-33-ETHIC

(This information is provided to TI employees on

a business-card size mini-pamphlet to carry with

FACING ETHICAL DILEMMAS

ETHICS and YOU

• Plagiarizing from online

materials is the most

common form of cheating

TEST PREP

• What are ethics?

• How do ethics differ from legality?

• When faced with ethical dilemmas, what

questions can you ask yourself that might help

you make ethical decisions?

ETHICS START at the TOP

• Organizational ethics begin at

the top

• Managers can help instill

corporate values in

employees

• Trust between workers and

managers must be based on

fairness, honesty, openness

and moral integrity

FACTORS INFLUENCING

MANAGERIAL ETHICS

ETHICS CODES

• An increasing number of companies have

adopted written codes of ethics

• Compliance-Based Ethics Code Emphasize

preventing unlawful behavior by increasing control

and by penalizing wrongdoers.

• Integrity-Based Ethics Code Define the

organization’s guiding values, create an environment that supports ethically sound behavior and stress a

shared accountability.

HOW to IMPROVE AMERICA’S

BUSINESS ETHICS

1 Top management must adopt and

unconditionally support an explicit corporate

code of conduct

2 Employees must understand that senior

management expects all employees to act

ethically

3 Managers and others must be trained to consider the ethical implications of all business decisions

4 An ethics office must be set up with which

employees can communicate anonymously

Whistleblowers Insiders who report illegal or

TEST PREP

• What are compliance-based and integrity-based ethics codes?

• What are the six steps to follow in establishing

an effective ethics program in a business?

Corporate Social

Responsibility (CSR) is

management’s obligation

to make choices and take

the welfare and interests

of society as well as to

those of the organization .

CORPORATE SOCIAL

RESPONSIBILITY

CORPORATE SOCIAL

RESPONSIBILITY

• CSR is based on a commitment to integrity,

fairness, and respect

• CSR proponents argue that businesses owe their

existence to the societies they serve

CORPORATE RESPONSIBILITY

and POLICY

• Corporate Responsibility Includes everything

from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and

providing a safe work environment.

• Corporate Policy The position a firm takes on

social and political issues.

POSTIVE IMPACTS

of COMPANIES

• Xerox offers a Social Service Leave program.

• More and more companies are encouraging

employees to volunteer while on company time

• The majority of MBA students surveyed reported

they would take a lower salary to work for a

socially responsible company

HELPING HANDS

Most Generous Celebrities

GENEROUS GUYS

World’s Biggest Givers in 2013

PRESIDENT KENNEDY’S BASIC

RIGHTS of CONSUMERS

• The Right to Safety

• The Right to be Informed

• The Right to Choose

• The Right to be Heard

■ 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.

■ Consumer Product Safety Commission

■ www.cpsc.gov

RESPONSIBILITES TO CUSTOMERS

INSIDER TRADING

• Insider Trading Insiders

using private company

information to further their own

fortunes or those of their family

• Create jobs and provide a chance for upward

• Offer salaries and

benefits that help

employees reach

their personal

goals.

AMERICA’S MOST ADMIRED

WHEN EMPLOYEES

are UPSET…

• Employee fraud costs U.S businesses about

5% of annual revenue and causes 30% of all

business failures.

• Disgruntled workers relieve frustration by:

- Blaming mistakes on others.

- Manipulating budgets and expenses.

- Making commitments they intend to ignore.

- Hoarding resources.

- Doing the minimum.

SOCIETY and the ENVIRONMENT

• Over one-third of working Americans receive

their salaries from nonprofits – who are

dependent on funding from others

• The green movement emerged as concern about

global warming increased

• Many companies are trying to minimize their

carbon footprints – the amount of carbon

released during an item’s production, distribution, consumption and disposal

• Environmental efforts may increase costs, but

can offer good opportunities

• The emerging renewable-energy and

energy-efficiency industries account for 9 million U.S

jobs

SOCIAL AUDITING

• Social Audit A systematic evaluation of an

organization’s progress toward implementing socially responsible and responsive programs.

• Five Types of Watchdogs

1) Socially conscious investors 2) Socially conscious research

organizations 3) Environmentalists 4) Union officials

5) Customers

TEST PREP

• What is corporate social responsibility, and how

does it relate to each of a business’s major

stakeholders?

• What is a social audit, and what kinds of activities

does it monitor?

INTERNATIONAL ETHICS

• Many businesses want socially responsible

behavior from their international suppliers

• In the 1970s, the Foreign Corrupt Practices Act

criminalized the act of paying foreign businesses

or government leaders in order to get business

• Partners in the Organization of American States

signed the Inter-American Convention Against

Corruption

Bottom Line:

Should Companies Have?

Social Responsibility

Companies are citizens in the

communities in which they reside,

therefore, They do have a Social Responsibility

The Majority View

Milton Friedman

profit, not on social responsibility

responsibility get distracted from their real

purpose

An Economist’s View

To Sum It Up:

Doing Good vs Doing Well

CORPORATE SOCIAL

RESPONSIBILITY

TEST PREP

• How are U.S businesses demanding socially

responsible behavior from their international

suppliers?

• Why is it unlikely that there will be a single set of

international rules governing multinational

companies soon?