McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. Business Ethics and Social Responsibility 2 2

2-2

2-3 Business Ethics and Social Responsibility Business Ethics: –The principles and standards that define acceptable conduct in business Social Responsibility: –A business’s obligation to maximize its positive impact and minimize its negative impact on society

2-4 Recognizing an Ethical Issue An ethical issue is an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical. Did You Know? The most common types of observed misconduct are lying, withholding information, and abusive/ intimidating behavior.

2-5 Reasons For Not Reporting Observed Misconduct 1.Didn’t believe corrective action would be taken 2.Feared retribution or retaliation from supervisor or management 3.Feared they wouldn’t remain anonymous 4.Thought someone else would report the misconduct 5.Didn’t know who to contact Source: 2005 Ethics Resource Center- National Business Ethics Survey Report, p. 29.

2-6 Misconduct Observed in the Workplace

2-7 Ethical Issue Categories Conflict of interest Fairness and honesty Communications Business relationships

2-8 Conflict of Interest Occurs when a person must choose whether to advance their own personal interest or those of others

2-9 Fairness and Honesty The heart of business ethics –General values of decision makers

2-10 Communications False and misleading advertising and deceptive personal-selling tactics anger customers and may cause a business to fail.

2-11 Business Relationships Businesspeople must be ethical toward their customers, suppliers, and others in their workplace.

2-12 Questions to Consider in Determining Whether an Action is Ethical Are there any potential legal restrictions or violations that could result from the action? –Question: If I do this will it break any laws? Does your company have a specific code of ethics or a policy on the action? –Question: If I do this will I go against the employee handbook?

2-13 Questions to Consider in Determining Whether an Action is Ethical Is this activity customary in your industry? Are there any industry trade groups that provide guidelines or codes of conduct that address this issue? –Question: If I do this will I violate any trade practices?

2-14 Questions to Consider in Determining Whether an Action is Ethical Would this activity be accepted by your coworkers? Will your decision or action withstand open discussion with coworkers and managers and survive untarnished? –Question: Will my action cause peer acceptance or rejection, or any peer pressure?

2-15 Questions to Consider in Determining Whether an Action is Ethical How does this activity fit with your own beliefs and values? –Question: Will my action violate any of my personal ethics, religious beliefs, or social values?

2-16 Three Factors that Influence Business Ethics Individual Standards and Values Managers’ and Coworkers’ Influence Opportunity: Codes and Compliance Requirements Ethical/Unethical Choices in Business

2-17 Codes of Ethics Formalized rules and standards that describe what a company expects of its employees Did You Know? Written ethics standards are more often found in larger companies than smaller ones.

2-18 Whistleblowing The act of an employee exposing the employer’s wrongdoing to outsiders –The media –Government regulatory agencies

2-19 The Facts on Business Ethics Today Of employees surveyed: –86% reported that their organizations have written standards of conduct –69% reported that their organizations offer mandatory ethics training –65% reported that their organizations have a place where they can seek ethics advice Source: 2005 Ethics Resource Center- National Business Ethics Survey: How Employees Perceive Ethics at Work.p

2-20 The Nature of Social Responsibility Four Dimensions: –Economic – earn profits –Legal – comply with the law –Ethical Not just “for profit” only –Voluntary & Philanthropic Promote human welfare and goodwill

2-21 The Pyramid of Social Responsibility Ethical Responsibilities being ethical; doing what is right, just, and fair; avoiding harm Voluntary Responsibilities being a “good corporate citizen;” contributing to the community and quality of life Source: Adapted from Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42. Legal Responsibilities obeying the law (society’s codification of right and wrong) Economic Responsibilities being profitable

2-22 Best Corporate Citizens 1.Green Mountain Coffee 2.Hewlett-Packard 3.Advanced Micro Devices 4.Motorola 5.Agilent Technologies 6.Timberland 7.Salesforce.com 8.Cisco Systems 9.Dell 10.Texas Instruments 11.Intel 12.Johnson and Johnson 13.NIKE 14.General Mills 15.Pitney Bowes 16.Wells Fargo 17.Starbucks 18.Wainright Bank & Trust 19.St. Paul Travelers 20.Ecolab Source: Philip Johansson, “The Best 100 Corporate Citizens,” Business Ethics, March/April 2006, p. 22.

2-23 Arguments for Social Responsibility 1.Business helped to create many of the social problems that exist today, so it should play a significant role in solving them 2.Businesses should be more responsible because they have the financial and technical resources to help solve social problems 3.As members of society, businesses should do their fair share to help others

2-24 Arguments for Social Responsibility 4.Socially responsible decision making by businesses can prevent increased government regulation 5.Social responsibility is necessary to ensure economic survival –Businesses must take steps to help solve the social and environmental problems that exist today

2-25 Arguments Against Social Responsibility 1.Managers are sidetracked from the primary goal of business –Earning profits 2.Participation in social programs gives businesses greater power, perhaps at the expense of particular segments of society

2-26 Arguments Against Social Responsibility 3.Some people question whether business has the expertise needed to assess and make decisions about social problems 4.Many people believe that social problems are the responsibility of government agencies and officials

2-27 Social Responsibility Issues Organizational relationships with owners and stockholders: –Profit and ROI Employee relations: –Providing a safe workplace, adequate pay, information about the company, listening to grievances, and treating employees fairly Consumer relations: –Respecting the rights of customers and providing them with safe and satisfying products

2-28 Social Responsibility Issues Environmental issues: –Animal rights –Pollution –Global warming Community relations: –Responsibility to the general welfare of the community Did You Know? In one year, Americans generated 230 million tons of trash and recycled 23.5 percent of it.

2-29 John F. Kennedy’s 1962 Consumer Bill of Rights The right to safety The right to be informed The right to choose The right to be heard Did You Know? John F. Kennedy was the 35th President of the United States.

2-30 Responsibility of the Ethics Officer Provide advice about ethics to employees and management Distribute the company’s code of ethics Create and maintain an anonymous, confidential service to answer questions about ethical issues Take action on ethics violations Review and modify the code of ethics as needed

2-31 Solve the Dilemma 1.What are some of the ethical issues involved in giving a customer an award for consumption behavior without notifying him/her first? 2.Do you see this as a potential violation of privacy? Explain. 3.How would you handle the situation if you were Barnard?

2-32 Explore Your Career Options How do you explain the emergence of career opportunities in the field of business ethics and social responsibility?

2-33 Additional Discussion Questions and Exercises 1.What makes ethical decisions so difficult? 2.Many organizations are primarily concerned with earning a profit or a return on their investment. –Does this concern for owners and investors present an ethical dilemma for companies when weighing business decisions that favor employees and/or the general public? 3.The right to be heard is one of the four rights in the consumer bill of rights. –How are some corporations addressing this consumer concern?

2-34 Additional Discussion Questions and Exercises 4.Find examples of environmental issues in newspapers or business journals. –Do these issues influence businesses? 5.Imagine you are a salesperson. When does offering a gift, such as basketball tickets, become a bribe rather than just a sales practice?

2-35 Chapter 2 Quiz 1.Which of the following has the greatest effect on ethical behavior in organizations? a.authority of an employee’s superiors b.an employee’s perception of the ethics of coworkers and managers c.an employee’s personal beliefs about what is right or wrong d.investors perceptions of ethics 2.Copying someone else’s work and presenting it as your own is: a.ethics b.bribe c.plagiarism d.greenmail

2-36 Chapter 2 Quiz 3.A code of ethics is: a.a set of formalized rules and standards describing what the company expects of its employees. b.a government legislation enforced by government agencies. c.a set of principles that describe what a person believes is the right way to behave. d.the impact of a business’s activities on society. 4.Which one of the following is NOT one of the four rights provided in John F. Kennedy’s consumer bill of rights? a.right to safety b.right to be inform c.right to sue d.right to choose

2-37 Multiple Choice Questions about the Video 1.What is interesting about Greystone Bakeries? a.It is based in Alaska b.It is a franchise c.It only sells one type of cookie d.It supplies Ben and Jerry’s with 11,000 pounds of brownies per day 2.Which of the following is NOT provided by Eileen Fisher? a.Onsite yoga and massage b.A car after one year of working for the company c.$1,000 education benefit per year d.After 5 years at the company $5,000 towards a vacation