Business Ethics and Social Responsibility

Objectives Explain the concepts of business ethics and social responsibility. Analyze and judge common ethical dilemmas in the workplace using case studies. Identify the factors that influence ethical and unethical business practices. Describe the stages in the development of ethical standards.

What are Business Ethics? The standards of conduct and rules based on moral principles governing how businesses and employees should conduct themselves. Social responsibility Balance between what’s right and what’s profitable Often no clear-cut choices Often shaped by the organization’s ethical climate

Wells Fargo Scandal Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses Bank employees opened over 1.5 million deposit accounts that may not have been authorized Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers' knowledge or consent

Martha Stewart There are several high profile investigations and arrests in the headlines Martha Stewart had a billion dollar empire when she made a decision to sell a stock based on an insider trading tip from her stock broker in 2004. Martha Stewart Article “She would never have felt the loss—she was coming up on a billion dollars, and by selling those shares she avoided a loss of $45,673—but she couldn’t resist the chance to daub at the blot on her investment record.” “She was sentenced to prison for five months… and became the very emblem of corporate greed.”

ENRON Corporate officers and traders charged with fraud, conspiracy and insider trading in 2001 ENRON was the Largest Corporate Fraud case in American history. ENRON executives’ and traders’ greed eliminated: 4,500 ENRON jobs 85,000 Arthur Anderson jobs Investors lost over 60 billion dollars within a few days; for many it meant losing their old-age security.

Unethical Business Practices Individuals can make unethical choices like: Conflict of Interest Bribery, gift-giving and receiving Invasion of privacy or confidentiality Dishonest hiring practices Insurance Fraud / Credit Card Fraud Internet Abuse Conflict of Interest: Situation in which a business decision may be influenced for personal gain.

On-the-Job Ethical Dilemmas Telling the truth and adhering to deeply felt ethical principles in business decisions. Situation in which a business decision may be influenced for personal gain. Business people expect employees to be loyal and truthful, but ethical conflicts may arise. Employee’s disclosure of illegal, immoral, or unethical practices in the organization.

How Organizations Shape Ethical Conduct Code of Ethics/Conduct: A formal set of guidelines for maintaining ethics in the workplace. Codes of Ethics cannot detail a solution for every ethical situation, so corporations provide training in ethical reasoning along with a Code of Ethics.

Ethical Environment Ethical Leadership: Executives must demonstrate ethical behavior in their actions. Ethical Action: Helping employees recognize and reason through ethical problems and turning them into ethical actions.

Social Responsibility The duty to do what is best for the good of society. 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. http://www.tide.com/en-US/loads-of-hope/index.jspx

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. Recycling: Reprocessing used materials for reuse. 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 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 (OSHA) 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 law. US Equal Employment Opportunity Commission (EEOC): Discrimination by Type protected by EEOC - Protects workers against many different types of discrimination. 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. Investors protected by regulation by the Securities and Exchange Commission and state regulations.

Case Studies We will go to the computer lab to look at three different Business Ethics Case Studies. You will use the website provided to read the case studies and answer the following questions: What is the ethical issue? What ethical action should be taken?

CSR Activity Corporate Social Responsibility Use the internet to find a company that is “Socially Responsible” like General Mills (Yoplait) or Proctor and Gamble (Tide) On the worksheet provided, give a brief overview of your company, and what programs they have participated in or implemented to be socially responsible corporate citizens.