Chapter 4Demanding Ethical and Socially Responsible

Behavior

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

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Ethics&

Social Responsibility

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Ethics

• Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong.

WHAT are ETHICS?

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Ethics

Doing What Is Right…

Ethics

As You Know It To Be Right.

Right:• Integrity

• Respect for human life

• Self control

• Honesty

• Courage

• Self-sacrifice

Wrong:•Cheating•Cowardice•Cruelty

BASIC MORAL VALUES

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Ethics

Ethics Begins With Each of Us

Stem From Individual

More Than Legality

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Ethical Dilemma

a situation requiring a choice between equally undesirable alternatives.

Ethics Begins with Each of Us

• Ask yourself these questions:

- Is it legal?

- Is it balanced?

- How will it make me feel about myself?

FACING ETHICAL DILEMMASLG2

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Texas InstrumentsThe 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

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• 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

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• Trust between workers and managers must be based on fairness, honesty, openness and moral integrity.

• Leadership can help instill corporate values in employees.

ETHICS START at the TOP

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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.

(continued)

HOW to IMPROVE AMERICA’S BUSINESS ETHICS

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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.

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Social Responsibility

Social Responsibility

Social responsibility is management’s obligation to make choices and take actions that contribute to the welfare and interests of society as well as to those of the organization.

CORPORATE SOCIAL RESPONSIBILITY

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• 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

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

HELPING HANDSMost Generous Celebrities

Who? For?

George Clooney United Way; UN Messenger of Peace

Angelina Jolie & Brad Pitt Make it Right Foundation; UN

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

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Source: Forbes, June 6, 2011.

GENEROUS GUYSWorld’s Biggest Givers

Who? How Much? What For?

Bill Gates $28B Malaria, public health, education

Warren Buffett $8.3B Gates Foundation

George Soros $8B Human rights, democracy

Gordon Moore $6.8B Environment

Carlos Slim $4B Education, healthcare

Eli Broad $2.6B Education, arts

Azim Premji $2.1B Education

James Stowers $2B Genetic research

Michael Bloomberg $1.8B Antismoking, transportation

Li Ka-Shing $1.6B Education, healthcare

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RESPONSIBILITY to CONSUMERS

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• 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

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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

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• 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

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RESPONSIBILITY to EMPLOYEES

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• 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

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Source: Fortune, www.fortune.com, March 21, 2011.

1. Apple

2. Google

3. Berkshire Hathaway

4. Southwest Airlines

5. Procter & Gamble

6. Coca-Cola

7. Amazon

8. FedEx

9. Microsoft

10. McDonald’s

AMERICA’S MOST ADMIRED COMPANIES

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RESPONSIBILITY to the ENVIRONMENT

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• 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.

RESPONSIBILITY to the ENVIRONMENT

• By 2030, as many as 40 million “Green” jobs will be created.

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• Social Audit -- A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs.

• Five Types of Social Audit Watchdogs1) Socially conscious investors

2) Socially conscious research organizations

3) Environmentalists

4) Union officials

5) Customers

SOCIAL AUDITING

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• 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

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Social Responsibility

Bottom Line:

Should Companies Have?

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Companies are citizens in the communities in which they reside,

therefore,

They do have a Social Responsibility

The Majority View

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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

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Social Responsibility

To Sum It Up:

Doing Good vs. Doing Well