* * Chapter Four Demanding Ethical and Socially Responsible Behavior Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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* * Ethics is More Than Legality 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. LIFE AFTER SCANDAL LG1 4-3

4-4 Ethics More Than Legality Standards are Fundamental Ethics begins with each Ethics begins with each of us of us

* * Ethical Standards are Fundamental Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong. WHAT are ETHICS? LG1 4-5

Reasons to maintain ethics in Business To maintain good reputation To keep existing customers To attract new customers To avoid lawsuits To reduce employee turnover To avoid government intervention To please customers, employees, society And simply 4-6

To do the RIGHT thing 4-7

* * Enron: One executive is serving a 24 year sentence for accounting fraud while another was released in October Arthur Andersen: Convicted of tampering with witnesses, the company was dissolved and about 28,000 people lost their jobs. Tyco International: Two executives stole $600 million from the company and are scheduled to be released from prison in Adelphia Communication: Two executives were convicted of conspiracy, bank and securities fraud and given sentences of 15 and 20 years. WorldCom: Former CEO was convicted of fraud, conspiracy and false filings and sentenced to 25 years. PAYING the PRICE (Legal Briefcase) 4-8

* * Ethics Begins with Each of Us Plagiarizing from Internet materials is the most common form of cheating in schools today. ETHICS and YOU LG2 Studies found a strong relationship between academic dishonesty and dishonesty at work. 4-9

* * 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 DILEMMAS LG2 4-10

* * Managing Businesses Ethically and Responsibly 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 LG3 4-11

* * Setting Corporate Ethical Standards 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 among employees. ETHICS CODES LG4 4-12

4-13 Steps to Improve Business Ethics 1.Top management support 2.Employees’ understanding 3.Managers’ training 4.Ethics Office- whistle blower 5.Outsiders must be informed 6.Enforcement of ethics code

Corporate Social Responsibility Focuses on what an organisation does to influence the society in which it exists. –.

Milton Friedman’s Argument There is one and only one social responsibility of business: to use its resources and energy in activities design to increase its profits so long as it stays within the rules of the game….. engages in free competition, without deception and fraud.

The arena of social responsibility debates is shaped by Economic responsibility – be profitable Legal responsibility – obey the law Ethical responsibility – be ethical. Do what is right. Avoid harm. Discretionary responsibility: Contribute to the community and quality of life Corporate Social Performance

Millennium Development Goals In the year 2000, heads of state and government leaders from 189 countries agreed on eight development goals, known as the United Nations Millennium Development Goals. They are to be reached by 2015.

MDG Goals Goal 1 Eradicate extreme poverty and hunger Goal 2 Achieve universal primary education Goal 3 Promote gender equality and empower women Goal 4 Reduce child mortality Goal 5 Improve maternal health Goal 6 Combat HIV/AIDS, malaria and other diseases Goal 7 Ensure environmental sustainability Goal 8 Develop a global partnership for development

CSR at Grameenphone Our core strategy in this area is to be Bangladesh's partner in developing the country, particularly in its promise, as a United Nations Millennium Declaration signatory, to meet the eight targets known as the Millennium Development Goals by We have consolidated our social investment initiatives in four core areas related to the Millennium Development Goals namely, Poverty alleviation, Healthcare, Empowerment Education.

4-20 Corporate Social Responsibility Corporate philanthropy Corporate social initiatives Corporate responsibility Corporate policy

4-21 Stakeholders to whom businesses are responsible Responsibility to Customers – Right to safety – Right to be informed – Right to choose – Right to be heard Responsibility to Investors – insider trading Responsibility to Employees Responsibility to society and the environment

* * Social Auditing Social Audit -- A systematic evaluation of an organization’s progress toward implementing programs that are socially responsible and responsive. Four Types of Social Audit Watchdogs  Socially conscious investors  Environmentalists- Bangladesh Environmental Lawyers Association  Union officials- “ Garment Sromik Trade Union Kendro”.  Customers SOCIAL AUDITING LG5 4-22