D EMONSTRATING ETHICAL AND SOCIALRESPONSIBILITY

101- 3BUS LECTURE

ETHICS

, , Standards of moral behavior that is behavior which .is accepted by society as right versus wrong

E THICS AND LEGALITY

• A society gets in trouble when it considers ethics and legality . to be the same

• .Ethics and legality are two very different things• , Following the law is an important first step ethical behavior

.requires more than that• ’ . Ethics reflects people s proper relations with one another

? How should people treat others What responsibility should ?they feel for others

• : Legality is more narrow it refers to laws we have written to , , .protect ourselves from fraud theft and violence

• .Many immoral and unethical acts fall well within our laws

E THICS BEGINSWITH EACH ONE OFUS

• It is always healthy when discussing moral and ethical issues .to remember that ethical behavior begins with you and me

• We cannot expect society to become more moral and ethical unless we as individuals commit to becoming more moral

.and ethical ourselves• Sometimes the obvious solution from an ethical point of view

.has drawbacks from a personal or professional point of view• It can be very difficult to maintain a balance between ethics

and other goals such as pleasing stakeholders or advancing in your career.

• It is important to ask the following questions when faced with :an ethical dilemma

MAKING ETHICAL DECISIONS

?IS IT LEGAL

• Am I violating any law ?or comapny policy

• It is important to think about legal

implications of your.actions

• This is the most basic but important aspect

.of business

?IS IT BALANCED

• ?Am I acting fairly• Would I want to be

?treated this way• Will I win everything at

the expense of another?party

• - Win lose situations -often end up as lose

.lose situations

• Would I feel proud if my family or ?friends learned of my decision

• Would I be able to discuss the proposed situation or action with

?my immediate supervisor• How would I feel if my decision

were announced in the evening?news

• Decisions that go against our sense of right or wrong make us

. feel bad• - .It can destroy our self esteem• That is why ethical

businessperson does what is proper as well as what is

.profitable

HOWWILL IT MAKE ME FEEL ABOUT

?MYSELF

M AKING ETHICAL

DECISIONS

MANAGING BUSINESSES ETHICALLY AND RESPONSIBLY

A business should be managed ethically for many:reasons

• To maintain a good reputation• To keep existing customers•T o attract new customers• To avoid lawsuits•T o reduce employee turnover• To avoid government intervention• , , To please customers employees and society• To do the right thing

OVERVIEW OF JOHNSON &’ JOHNSON S CODE OF ETHICS

• - Our Customers We have a responsibility to provide- , high quality products they can trust offered at a fair.price

• - Our Employees We have a responsibility to treat , them with respect and dignity pay them fairly and help .them develop and thrive personally and professionally

• - Our Communities We have a responsibility to be , , good corporate citizens support good works

.encourage better health and protect the environment• - Our stockholders We have a responsibility to

.provide a fair return on their investment

- COMPLIANCE BASED ETHICS CODES

Ethical standards that emphasize preventing unlawful behavior by increasing control and by

. penalizing wrongdoers

- INTEGRITY BASED ETHICSCODES

’ Ethical standards that define the organization s , guiding values create an environment that

, supports ethically sound behavior and stress a .shared accountability among employees

6 STEP PROCESS TO IMPROVE BUSINESS ETHICS

1. Top management must adopt and support an .explicit corporate code of conduct

2. Employees must understand that epectations for ethical behavior begin at the top and that senior

management expects all employees to act.accordingly

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

4. A . n ethics office must be set up Employees .should be able to discuss matters annonymously

6 STEPS CONTINUED

5. , , Outsiders such as suppliers subcontractors, distributors and customers must be told about

. the ethics program Pressure to put aside ethical , considerations often comes from the outside and

it helps employees resist such pressure when .everyone knows what the ethical standards are

6. . The ethics code must be enforced It is important to back any ethics program with timely action if

. any rules are broken That is the best way to communicate to all employees that the code is

.serious

CORPORATE SOCIAL ( )RESPONSIBILITY CSR

• CSR is the concern businesses have for the welfare .of society

• I ’ t is based on a company s concern for the welfare , .of all its stakeholders not just the owners

• .CSR goes well beyond merely being ethical• I t is based on a commitment to such basic

, , .principles as integrity fairness and respect

SOCIAL PERFORMANCE HAS SEVERAL DIMENSIONS

• Corporate Philanthropy• Corporate Social Initiatives• Corporate Responsibility• Corporate Policy

CORP ORATE PHILANTHROPY

• Corporate philanthropy is a dimension of social .responsibility that includes charitable donations

• 80% of the business leaders surveyed in a recent study say that their companies participate in philanthropic

. activities• Strategic philanthropy involves companies making

- .long term commitments to one cause• - ’ Examples McDonald s founded Ronald McDonald

,Houses they provide houses for critically ill children . ’requiring treatment away from home Microsoft s Bill

&Melinda Gates Foundation ’ is America s largest . philanthropic foundation Many small businesses are

. also involved in generous giving

C ORPORATE SOCIAL INITIATIVES

• .Includes enhance forms of corporate philanthropy• C orporate social initiatives differ from traditional

philanthropy in that they are more directly related ’ . to the company s competencies

• : 2004 , Example After the tsunami disaster UPS and FedEx shipped emergency relief suppliesfor free

. from around the world Johnson and Johnson sent .medical supplies

C ORPORATE RESPONSIBILITY

• Includes everything from hiring minority workers , , to making safe products minimizing pollution

, using energy wisely and providing a safe work.environment

• , Therefore everything that has to do with acting .responsibly within a society

C ORPORATE POLICY

• Dimension of social responsibility that refers to the .position a firm takes on social and political issues

R ESPONSIBILITY TOCUSTOMERS

• One responsibility of business is to satisfy customers by offering them goods and services of

.real value• Companies should always be entirely honest with

.their customers• , Consumer behavior studies show that all else

, being equal a socially conscious company is likely to be viewed more favorably than less socially

.responsible companies• Customers do not want to do business with

.companies they do not trust

R ESPONSIBILITY TO INVESTORS

• .Ethical behavior is good for shareholder wealth• ’ , .It doesn t subtract from the bottom line it adds to it• , In contrast unethical behavior does cause financial

.damage• Many people believe that it makes financial as well as

moral sense to invest in companies that are planning .ahead to create a better environment

• By choosing to put their money into companies whose goods and services benefit the community and the

, environment investors can improve their own ’ .financial health while improving society s health

R ESPONSIBILITY TO EMPLOYEES

• Businesses have a responsibility to create jobs if they want .to grow

• , Once a company creates jobs it has an obligation to see that .the hard work and talent are fairly rewarded

• , , Employees need to see that their hard work goodwill and .talent will pay off

• , If a company treats their employees with respect they .usually will respect the company as well

• One way a company can demonstrate commitment and caring is to give employees salaries and benefits that help

.them reach their personal goals

R ESPONSIBILITY TO SOCIETY ANDENVIRONMENT

• ’ One of businesse s major responsibilities to society is to create .new wealth

• , As stock prices of businesses increase more funds are available .to benefit society

• Many companies believe that business has a role in building a .community that goes well beyond giving back

• T , heir social contributions include cleaning up the environment , , building community toilets providing computer lessons caring for

, .the elderly and suupporting children from low income families• Many businesses are taking responsibility for helping to make

.their own environment a better place• ’ , Environmrntal efforts may increase the company s costs but they

also may allow the company to charge higher prices or to increase .market share or both

S OCIAL AUDITING

• ’ A systematic evaluation of an organization s progress toward implementing programs that are

.socially responsible and responsive• Many social audit measure such things as

, workplace issues the en

I NTERNATIONAL ETHICS AND SOCIAL RESPONSIBILITY

• Ethical problems and issues of social responsibility .exists all over the world

• Government leaders are now being held to higher.standards

• Many businesses are demanding socially responsible behavior from their international

suppliers by making sure their suppliers do not violate human rights and environmental

.standards• Many comapnies have been criticized for

.exploiting workers in less developed countries

..QUESTIONS TO THINK ABOUT

• Is it always ethical for companies to demand compliance with the standards of their own

?countries• What about countries where child labor is an

accepted part of the society and families depend ’ ?on their children s salaries for survival

• What about foreign companies doing business in?Bangladesh

• Should they expect Bangladeshi companies to ?comply with their ethical standards