Business Ethics and Social Responsibility
http://www.wileybusinessupdates.com
Chapter
2
Explain the concepts of business ethics and social responsibility
Describe the factors that influence business ethics.
List the stages in the development of ethical standards and discuss how organizations shape ethical behavior.
1
Learning Goals
Describe how businesses’ social responsibility is measured and summarize the responsibilities of business to the general public, customers, and employees.
Explain why investors and the financial community are concerned with business ethics and social responsibility.
2
3
4
5
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
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.
Concern for Ethical and Societal Issues
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.
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.
See how Walmart highlights corporate responsibility on its website.
Business Approach to Ethics and Social Responsibility
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.
Individuals Make a Difference
Development of Individual Ethics
On-the-Job Ethical Dilemmas
Situation in which a
business decision
may be influenced
for personal gain.
Employee’s
disclosure of
illegal, immoral,
or unethical
practices in the
organization.
Telling the truth and
adhering to deeply
felt ethical principles
in business
decisions.
Businesspeople
expect employees
to be loyal and
truthful, but
ethical conflicts
may arise.
How Organizations Shape Ethical Conduct
Ethical Awareness
Code of Conduct:
Formal statement that
defines how the
organization expects
and requires employees
to resolve ethical
questions.
Ethical Education
Codes of conduct cannot
detail a solution for
every ethical situation,
so corporations provide
training in ethical
reasoning.
Ethical Action
Helping employees
recognize and reason
through ethical
problems and turning
them into ethical
actions.
TI Ethics Quick Test
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
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.
Areas of Responsibility
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.
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.
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 1993.
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.
Responsibilities to Investors
Obligation to make profits for shareholders.
Expectation of ethical and moral behavior.
Protection of investors by the Securities and Exchange Commission and state regulations.