SOCIAL RESPONSIBILITY AND BUSINESS ETHICS HUMAN RESOURCES: SOCIAL RESPONSIBILITY AND BUSINESS ETHICS

Chapter Objectives Describe changing attitudes toward social responsibility and business ethics. Describe concept of corporate social responsibility. Explain attempts at legislating social responsibility. Explain what is meant by stakeholder analysis and the social contract. Understand the model of ethics and describe human resource ethics. Understand the importance of a code of ethics and describe ethics and the HR manager.

Changing Attitudes Toward Social Responsibility and Business Ethics It includes……. Foundations Religious organizations Community Development (Source: Social Investment Forum)

Changing Attitudes Toward Social Responsibility and Business Ethics To meet society’s expectations, managers will need to be more socially responsible. Most of 500 largest U.S. corporations now have a code of ethics.

Corporate Social Responsibility (CSR) Defined The implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. Simple Terms: How a company behaves towards society

Corporate Social Responsibility What is Rule 14? When in doubt, do what’s right!

Corporate Social Responsibility Companies leading the charge Patagonia (1% of net sales for socially and environmentally initiatives) Norm Thompson Keen Footwear Timberland Footwear Nike

Legislating Ethics and Social Responsibility Procurement Integrity Act of 1988 --passed after reports of military contracts for $500 toilet seats Federal Sentencing Guidelines for Organizations (FSGO) --softer punishments for companies that have an ethic program in place

Stakeholder Analysis and the Social Contract Worker Adjustment and Retraining Notification Act of 1988 --firms employing 100 or more to give 60 -days notice when a plant is closing or layoffs off affecting 50 or more 90 days notice

Legislating Ethics and Social Responsibility (Continued) Corporate and Auditing Accountability, Responsibility and Transparency Act --known as Sarbanes Oxley Act, primary focus is to redress accounting and financial reporting abuses in light of recent corporate scandals --provides a whistle-blower protection

Legislating Ethics and Social Responsibility What is new in corporations: 90% have written ethics program Hired an Ethics Officer --Collaborate with Management --Implement strategies to reinforce conduct --Work with employees across all levels to determine the right course of action Holding professionals accountable

Stakeholder Analysis and the Social Contract Organizations, profit and non profit have large number of stakeholders

The Social Contract Individuals The Organization Other Organizations Government social contract—Set of written and unwritten rules and assumptions about acceptable interrelationships among the various elements of society.   Obligations to Individuals—Organizations have certain obligations to their employees. Obligations to Other Organizations—Managers must be concerned with relationships involving other organizations--both organizations that are like their own, such as competitors, and very different ones. Obligations to Government—Government is an important party to the social contract for every kind of organization. Obligations to Society in General—Businesses operate by public consent with the basic purpose of satisfying the needs of society. Society

The Social Contract Organizational Stakeholder --individual or group whose interests are affected by organizational activities Social Contract --set of written and unwritten rules and assumptions about acceptable interrelationships among various elements of society - hiring minorities Obligations to Individuals --certain obligations to organization’s employees- Voting and Jury Duty

The Social Contract Obligations to Other Organizations --managers must be concerned with relationships with other organizations, both like their own (such as competitors) and very different ones Obligations to Government --expect to work with government agencies

The Social Contract Businesses are expected to help Society Meet Eliminate poverty Quality health-care Standards of having a clean environment Job opportunities Improve the quality of working life Save livable communities

Social Audit Systematic assessment of a company’s activities in terms of its social impact

Social Audit Three Types Inventory of activities --Minority employment and training Compilation of social expenditures --Corporate giving's Social Impact --Involvement in selected communities

Ethics What is Ethics? --Discipline of dealing with what is good and bad, or right and wrong, or with moral duty and obligation Sources of Ethical Guidance --a number of sources to determine what is right or wrong, good or bad, moral or immoral

Ethics Type I Ethics --strength of relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct Type II Ethics --strength of relationship between what one believes and how one behaves

A MODEL OF ETHICS Sources of ethical guidance Our beliefs about what is right or wrong Lead to Determine Our actions Type I Ethics Type II Ethics sources of ethical guidance—One might use a number of sources to determine what is right or wrong, good or bad, moral or immoral. Type I ethics: Strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct. Type II ethics: Strength of the relationship between what one believes and how one behaves.

Human Resource Ethics The application of ethical principles to human resource relationships and activities A Code of Ethics --establishes the rules by which the organizations lives

Human Resource Ethics Code of Ethics --Easy to talk the talk but harder to execute Must breathe it Train its people Communicate the code --Topics for Code of Ethics Business conduct and Fair competition Workplace and HR issues

Human Resource Ethics Reinforcing the Code of Ethics --Committee is established w/ Legal HR, Corporate Compliance Corporate Communication External Affairs Training and Development Baldrige National Quality Award are changing criteria

Ethics and HR Manager The Role Restore trust in the organization Help instill ethical practices in cultural SHRM Code of Ethics As HR professionals, we are responsible for adding value to the organizations we serve and contributing to the ethical success of those organizations

Ethics and HR Manager Surveys of HR and Trust HR effective= 62% believe the company is trustworthy HR ineffective= 8% believe company is not trustworthy 79% HR Executives= blow the whistle over legal violation 83% HR Executives= take strong action against legal violation

Ethics and HR Manager What Can HR Do?

Ethics and HR Management Two Areas Impact on Corporate Ethics 2 areas where HR can have a major impact on ethics Corporate Governance Executive Compensation

Ethics and HR Manager Corporate Governance Enforce polices and implementation methods to ensure executive integrity and effectiveness Employees should know what is ethical and unethical

Executive Compensation Ethics and HR Manager Executive Compensation HR can provide the greatness impact in this area HR should make sure that the compensation committee has relevant data for decision making

Ethics Case Study Read HRM Incident 1: An Ethical Flaw Discuss and answer questions related to case study