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

2. * * Ethical Standards are Fundamental Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong. WHAT are ETHICS? LG1 4-2

3. * * Ethical Standards are Fundamental Right: Integrity Respect for human life Self control Honesty Courage Self-sacrifice Wrong : Cheating Cowardice Cruelty BASIC MORAL VALUES LG1 4-3

4. * * 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. 4-4

5. * * 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 4-5

6. * * Every minute, people upload 10 hours of video to YouTube – not all is user-generated content. Viacom sued YouTube for $1 billion for allowing episodes of its popular shows on the site. Viacom holds YouTube responsible for carrying the illegal content, rather than the individuals who uploaded it. Who do you think should be accountable for the copyright violations -- the website or those who uploaded the videos? To TUBE or NOT to TUBE (Making Ethical Decisions) 4-6

7. * * 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 4-7

8. * * 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 4-8

9. * * Setting Corporate Ethical Standards 1. Top management must adopt and unconditionally support an explicit corporate code of conduct. 2. Employees must understand that senior management expects all employees to act ethically. 3. Managers and others must be trained to consider the ethical implications of all business decisions. (continued) SETTING CORPORATE ETHICAL STANDARDS LG4 4-9

10. * * Setting Corporate Ethical Standards 4. An ethics office must be set up with which employees can communicate anonymously. Whistleblowers -- People who report illegal or unethical behavior. SETTING CORPORATE ETHICAL STANDARDS LG4 5.Involve outsiders such as suppliers, subcontractors, distributors and customers. 6.The ethics code must be enforced. 4-10

11. * * Source: James Gehrke, Magnify Leadership & Development, November 2008. 1. Managers must communicate the organization’s vision on ethical behavior. 2. Organizations must have a code of ethics. 3. Policies have to be enforced regarding ethical offences. 4. Ethical responsibility must be taught to all employees. (continued) HOW to PREVENT UNETHICAL BEHAVIORS LG4 Setting Corporate Ethical Standards 4-11

12. * * Source: James Gehrke, Magnify Leadership & Development, November 2008. 5. Discussions of ethics must be included in the decision-making process. 6. Accountability must be taken seriously at all levels in the organization. 7. Organizations must act fast when a crisis occurs. 8. Employees must know they have to defend and maintain the company’s reputation. HOW to PREVENT UNETHICAL BEHAVIORS LG4 Setting Corporate Ethical Standards 4-12

13. * * Corporate Social Responsibility Corporate Social Responsibility (CSR) -- The concern businesses have for the welfare of society. CSR is based on a commitment to integrity, fairness, and respect. CSR proponents argue that businesses owe their existence to the societies they serve and cannot exist in societies that fail. CORPORATE SOCIAL RESPONSIBILITY LG5 4-13

14. * * Corporate Social Responsibility Corporate Philanthropy – The dimension of social responsibility that includes charitable donations. CORPORATE PHILANTHROPY LG5 4-14

15. * * Corporate Social Responsibility Corporate Social Initiatives – Includes enhanced forms of corporate philanthropy. They are more directly related to the company’s competencies. SOCIAL INITIATIVES LG5 4-15

16. * * Corporate Social Responsibility Corporate Responsibility -- Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment- essentially everything that has to do with acting responsibly within society. CORPORATE RESPONSIBILITY LG5 4-16

17. * * Corporate Social Responsibility The position a firm takes on social and political issues. For example, Patagonia’s corporate policy includes this statement:”A love of wild and beautiful places demands participation in the fight to save them, and to help reverse the steep decline in the overall environmental health of our planet. We donate our time, services and at least 1% of our sales to hundreds of grassroots environmental groups all over the world who work to help reverse the tide” CORPORATE POLICY LG5 4-17

18. * * Corporate Social Responsibility Xerox offers a Social Service Leave program.Social Service Leave Citizen Corps encourages volunteers to help strengthen homeland security by helping in their community. Two-thirds of MBA students surveyed reported they would take a lower salary to work for a socially responsible company. POSTIVE IMPACTS of COMPANIES LG5 4-18

19. * * Source: Parade Magazine, www.parade.com, September 14, 2008.www.parade.com Corporate Social Responsibility HELPING HANDS Most Generous Celebrities* LG5 Who?How Much? Oprah Winfrey$50.2 Million Herb Alpert$13 Million Barbara Streisand$11 Million Paul Newman$10 Million Mel Gibson$9.9 Million Angelina Jolie & Brad Pitt$8.4 Million Michael Jordan$5 Million Eric Lindros$5 Million Lance Armstrong$5 Million *Donations made in 2007 4-19

20. * * Responsibility to Employees Create jobs and provide a chance for upward mobility. Treat employees with respect. Offer salaries and benefits that help employees reach their personal goals. RESPONSIBILITY to EMPLOYEES LG5 4-20

21. * * Source: Fortune, www.fortune.com, March, 2009.www.fortune.com 1. Apple 2. Berkshire Hathaway 3. Toyota 4. Google 5. Johnson & Johnson 6. Proctor & Gamble 7. FedEx 8. Southwest Airlines 9. General Electric 10. Microsoft 11. Wal-Mart 12. Coca-Cola 13. Walt Disney 14. Wells Fargo 15. Goldman Sachs 16. McDonald’s 17. IBM 18. 3M 19. Target 20. J.P. Morgan Chase Responsibility to Employees AMERICA’S MOST ADMIRED COMPANIES LG5 4-21

22. * * Responsibility to Society and the Environment Over one-third of working Americans receive their salaries from nonprofits – who are dependent on funding from others. The green movement emerged as concern about global warming increased. Many companies are trying to minimize their carbon footprints – the amount of carbon released during an item’s production, distribution, consumption and disposal. SOCIETY and the ENVIRONMENT LG5 4-22

23. * * Responsibility to Society and the Environment Environmental efforts may increase costs but can offer good opportunities. The emerging renewable-energy and energy- efficiency industries account for 8.5 million U.S. jobs. RESPONSIBILITY to the ENVIRONMENT LG5 By 2030, as many as 40 million “Green” jobs will be created. 4-23

24. * * With public concern over the environment, companies are finding greener ways of doing business. Some companies are claiming they are more environmentally responsible than they actually are, a practice called “greenwashing”. Web sites such as Greener Choices and Greenwashing Index screen ads for greenwashing.Greener Choices Greenwashing Index GREEN GREED (Thinking Green) 4-24

25. * * 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  Union officials  Customers SOCIAL AUDITING LG5 4-25

26. * * International Ethics and Social Responsibility Many businesses want socially responsible behavior from their international suppliers. The Joint Initiative on Corporate Accountability and Workers’ Rights was designed to make creating a single set of labor standards and inspecting factories easier. In the 1970s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business. INTERNATIONAL ETHICS LG6 4-26

27. * * Almost half of Motorola’s employees live outside the U.S. A Motorola employee returns to his home country to work and the company reimburses living expenses so he can live in a safe area. The employee is trying to do the honorable thing for his family and the company is trying to keep the employee safe. If the employee uses the money to help his family instead, is it right for the company to stop payment? ETHICAL CULTURE CLASH (Reaching Beyond Our Borders) 4-27