Chapter 4a demanding ethical and socially responsible behavior

• Integrity-Based Ethics Code -- Define the organization’s guiding values, create an environment that supports ethically sound behavior and stress a shared accountability among employe

Demanding Ethical and Socially Responsible

Behavior

Copyright © 2010 by the McGraw-Hill Companies, Inc All rights reserved McGraw-Hill/Irwin

&

Social Responsibility

Ethics

• Ethics The standards of moral behavior

Behaviors that are accepted by society as right

versus wrong.

WHAT are ETHICS?

Ethics

Doing What Is Right…

As You Know It To Be Right.

 Ethics Begins With Each

of Us

 Stem From Individual

 More Than Legality

Ethical Dilemma

a situation requiring a choice between

equally undesirable alternatives.

FACING ETHICAL DILEMMAS

LG2

Texas Instruments

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 them.)

• An increasing number of companies have

adopted written codes of ethics

ETHICS CODES

• 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 among employees.

ETHICS CODES

4-15

• Trust between workers and

managers must be based on

fairness, honesty, openness

and moral integrity

• Leadership can help instill

corporate values in

employees

E

T H I C S

S T A R T

a t

t h e

T O P

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

4 An ethics office must be set up with which

employees can communicate anonymously

Whistleblowers People who report illegal or

unethical behavior.

HOW to IMPROVE AMERICA’S

BUSINESS ETHICS, cont.

5 Involve outsiders such as

suppliers, subcontractors,

distributors and customers

6 The ethics code must be

enforced

Social Responsibility

Social Responsibility

Social responsibility is

management’s obligation to

make choices and take actions

and interests of society as well

as to those of the

organization .

CORPORATE SOCIAL

RESPONSIBILITY

4-25

• 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.

• Corporate Philanthropy Includes charitable

donations.

CORPORATE RESPONSIBILITY

and POLICY

Source: Parade Magazine, www.parade.com , July 8, 2010.

Ben Affleck UN Madonna Raising Malawi Michael J Fox Michael J Fox Foundation for

Parkinson’s Research Alicia Keys Keep a Child Alive;

Frum Tha Ground Up Sir Elton John Elton John AIDS Foundation Matt Damon GreenDimes; H2O Africa;

Running the Sahara Oprah Winfrey Angel Network

4-28

GENEROUS GUYS

World’s Biggest Givers

RESPONSIBILITY to CONSUMERS

4-31

• The Right to Safety

• The Right to be Informed

• The Right to Choose

• The Right to be Heard

PRESIDENT KENNEDY’S BASIC

RIGHTS of CONSUMERS

Responsibilities to Customers

 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

RESPONSIBILITY TO INVESTORS

• Insider Trading Insiders using

private company information to

further their own fortunes or those

of their family and friends.

• Unethical behavior does

financial damage to a company

and investors are cheated.

RESPONSIBILITY TO INVESTORS

4-37

RESPONSIBILITY to

EMPLOYEES

• Create jobs and provide a chance for upward

mobility.

• Treat employees with respect.

• Offer salaries and benefits that help employees reach their personal goals.

RESPONSIBILITY to

EMPLOYEES

4-39

RESPONSIBILITY to the

ENVIRONMENT

4-42

• Environmental efforts may increase costs but

can offer good opportunities

• The emerging renewable-energy and

energy-efficiency industries account for 8.5 million U.S jobs

• Social Audit A systematic evaluation of an

organization’s progress toward implementing

socially responsible and responsive programs.

• Five Types of Social Audit Watchdogs

1) Socially conscious investors

2) Socially conscious research organizations

• 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

INTERNATIONAL ETHICS

Companies are citizens in the

communities in which they reside,

therefore, They do have a Social Responsibility

The Majority View

Milton Friedman

– Argues that firms need to focus on making a

profit, not on social responsibility

– Claims that firms that focus on social

responsibility get distracted from their real

purpose

An Economist’s View

Social Responsibility

To Sum It Up:

Doing Good vs Doing Well