Welcome to AB140 Ethics and Social Responsibility Michael B. McKenna

Unit 8 Objectives Understand corporate social responsibility and diversity in the modern workplace Discuss the process of making ethical decisions Identify how companies influence their ethics environment

Ethics… It’s a big issue “It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience.” —Henry David Thoreau “Associate with men of good quality, if you esteem your own reputation; for it is better to be alone than in bad company.” —George Washington

Ethics…it’s a big issue A recent survey, more than 1/3 of U.S. adults have observed unethical conduct at work. Another survey, top justification for unethical behavior was “pressure to meet unrealistic goals and deadlines.”

The Nuts and Bolts of Ethics Read Sam Colt’s ethical dilemma on page 53. If you were Sam, what would you do?

Ethics -The system of rules that governs the ordering of values 3-6

It’s a Personal Issue Most of us believe we are ethical but most have unconscious biases that favor ourselves and their own group 3-7

It’s a Personal Issue Managers often: -Hire people who are like them -Think they are immune to conflicts of interest -Take more credit than they deserve -Blame others when they deserve some blame themselves 3-8

It’s a Personal Issue Is it ethical to: -Shop online during company time? -Using office equipment for personal use? -Read personal s while at work? 3-9

It’s a Personal Issue Besides lost productivity, employers are most concerned about: computer users introducing viruses leaking confidential information creating a hostile work environment by downloading inappropriate Web content 3-10

Ethics Ethical issue -Situation, problem, or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong Business ethics -The moral principles and standards that guide behavior in the world of business. 3-11

Ethical Systems Moral philosophy -Principles, rules, and values people use in deciding what is right or wrong Universalism -The ethical system stating that all people should uphold certain values that society needs to function. 3-12

Ethical Systems Egoism -An ethical system defining acceptable behavior as that which maximizes consequences for the individual Utilitarianism -An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers. 3-13

Ethical Systems Relativism -Philosophy that bases ethical behavior on the opinions and behaviors of relevant other people Virtue ethics -Classification of people based on their level of moral judgment. 3-14

Ethical Systems Kohlberg’s model of cognitive moral development -Perspective that what is moral comes from what a mature person with “good” moral character would deem right. 3-15

Ethical systems in action In the bolts-in-the-bridge example: Egoism would result in keeping quiet about the bolts’ defect rate. Utilitarianism would dictate a more thorough cost-benefit analysis and possibly the conclusion that the probability of a bridge collapse is so low compared to the utility of jobs, economic growth, and company growth that the defect rate is not worth mentioning.

Ethical systems in action (cont’d) In the bolts-in-the-bridge example: Relativism would result in Sam looking a company policy and general industry practice, and seek opinions from colleagues and perhaps trade journals and ethics codes. Virtue ethics would result in full disclosure about the product and risks, and perhaps suggestions for alternatives that would reduce the risk.

Business Ethics Ethical climate -In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong 3-18

Where are the Business Ethics? In a recent survey of 700 employees: -39% said their supervisors sometimes didn’t keep promises -24% said their supervisor had invaded their privacy -23% said their supervisor covered up his or her own mistakes by blaming someone else

Ethics Programs Compliance-based Integrity-based

Evaluate your Ethical duties 1.Would you be proud to see the action widely reported in newspapers? 2.Would it build a sense of community among those involved? 3.Would it generate the greatest social good? 4.Would you be willing to see others take the same action when you might be the victim?

Evaluate your Ethical duties (cont’d) 5.Does it harm the “least among us”? 6.Does it interfere with the right of all others to develop their skills to the fullest? As Richard Breeden, former chairman of the Securities and Exchange Commission, said, “It is not an adequate ethical standard to aspire to get through the day without being indicted.”

Ethical Decision Making Making ethical decisions takes: Moral awareness -realizing the issue has ethical implications Moral judgment -knowing what actions are morally defensible Moral character -the strength and persistence to act in accordance with your ethics despite the challenges 3-23

Courage Why might employees lack courage in ethical issues? -A belief that the company would not take corrective action -A fear that management would retaliate against the employee for speaking up -Doubt that the employee’s report would be kept confidential 3-24

Ethical Dilemmas YOU may face: Brands CEO pay Commercialism in schools Religion at work Sweatshops Wages

Corporate Social Responsibility Corporate social responsibility (CSR) -Obligation toward society assumed by business. 3-26

Corporate Social Responsibility Economic responsibilities -To produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors. Legal responsibilities -To obey local, state, federal, and relevant international laws 3-27

Corporate Social Responsibility Ethical responsibilities -Meeting other social expectations, not written as law. 3-28

Corporate Social Responsibility Philanthropic responsibilities -Additional behaviors and activities that society finds desirable and that the values of the business support. 3-29

Pyramid of Global Corporate Social Responsibility and Performance 3-30 Figure 3.3

You are international vice president of a multinational chemical corporation. Your company is the sole producer of an insecticide that will effectively combat a recent infestation of West African crops. The minister of agriculture in a small, developing African country has put in a large order for your product. Your insecticide is highly toxic and is banned in the United States. You inform the minister of the risks of using your product, but he insists on using it and claims it will be used “intelligently.” The president of your company believes you should fill the order, but decision is ultimately yours. What would you do?

The Ethics Environment Sarbanes-Oxley Act -An act passed into law by Congress in 2002 to establish strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence. - Requires that organizations have more independent board directors, not just company insiders, adhere strictly to accounting rules, and have senior managers personally sign off on financial results 3-32

Top executives are committed to promoting high levels of integrity without sacrificing the commitment to business results Established global standards for behavior to prevent ethical problems. Managers are expected to consider legal and ethical developments as they monitor the external environment. The GE example of an ethical climate

Managers are expected to consider legal and ethical developments as they monitor the external environment. The J & J Example

What is diversity?

Gender Age Religious affiliation Disability status Military experience Sexual orientation Educational level

Components of a Diversified Workforce Management: Bateman/Snell

How can you manage diversity?

Managing Diversity Involves recruiting, training, promoting, and utilizing to full advantage individuals with different backgrounds, beliefs, capabilities, and cultures Understanding and deeply valuing employee differences to build a more effective and profitable organization Valuing the connections that arise and develop between diverse employees.

Tomorrow’s workers The number of women, Asian Americans, African Americans, and Hispanic workers are growing faster than the number of white male workers Lower birth rates in the U.S. will result in a smaller labor force leading to outsourcing to firms in developing nations Median age of America’s workforce is increasing 70% of workers between the ages of 45 and 74 intend to work in retirement

Who is involved? Is it only verbal? What other means of sexual harassment might be used? What constitutes sexual harassment?

Two categories -Quid pro quo: submission to or rejection of sexual conduct is used as a basis for employment decision. -Hostile environment: when unwelcome sexual conduct “has the purpose or effect of unreasonably interfering with job performance or creating an intimidating, hostile, or offensive working environment.” Sexual Harassment is…

Assignments Review Discussion Assignment -Diversity and social responsibility Dropbox Assignment -The Sandwich Blitz location and a new county zoning ordinance. ‘ -Eight Steps toward Integrity’ Stratford Sherman outlines eight ways in which business leaders can manage a business organization with integrity. After reading the Sandwich Blitz scenario above, visit the Kaplan Library and read Sherman’s Eight Steps toward Integrity.

Questions?