1. Business Ethics and Social Responsibility
Chapter 2
Business Ethics and Social Responsibility

2. Learning Goals
Discuss how organizations shape ethical behavior.
Describe how businesses’ social responsibility is measured.
Summarize the responsibilities of business to the general public, customers, and employees.
Explain why investors are concerned with business ethics and social responsibility. 1
Explain the concepts of business ethics and social responsibility.
Describe the factors that influence business ethics.
List the stages in the development of ethical standards.
Identify common ethical dilemmas in the workplace. 5 2 6 3
Review and discuss the learning objectives with students. Gauge their awareness and their current opinions. 7 4 8

3. Concern for Ethical and Societal Issues Business Ethics
The standards of conduct and moral values governing actions and decisions in the work environment.
Social responsibility.
Balance between what’s right and what’s profitable.
Often no clear-cut choices.
Often shaped by the organization’s ethical climate.
Sarbanes-Oxley Act
2002 law that added oversight for the nation’s major companies and a special oversight board to regulate public accounting firms that audit the financial records of these corporations.
Highlight the difference between social responsibility and business ethics.

4. Johnson & Johnson Website
The Contemporary
Ethical Environment
High profile investigations and arrests in headlines.
Vast majority of businesses ethical.
New corporate officers charged with deterring wrongdoing and ensuring ethical standards.
Business ethics are in the spotlight in a unique way. Talk about the different scandals that students might be familiar with. Talk about how Sarbanes-Oxley is an act that is the result of corporate corruption by Enron.
Johnson & Johnson Website

5. Individuals Make A Difference
Individuals can make the difference in ethical expectations and behavior
Putting own interest ahead of the organization
Lying to employee
Misrepresenting hours
Safety violations
Internet Abuse
Technology is expanding unethical behavior
Executives, managers and employees are the individuals that create the ethical environment of an organization by their actions.

6. Development of Individual Ethics
An individual’s stage in moral and ethical development is determined by a huge number of factors. Experiences help shape responses to different
situations. A person’s family, educational, cultural, and religious backgrounds can also play a role, as can the environment within the firm. Ask students where their moral compass originates? Is it religion? Family? A combination of both?

7. 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.
Solving ethical decisions are not easy. They range from a decision to lie about a sick day to lying to customers and employees. Many businesses have been challenged with where they manufacture products. The text uses Gap as an example regarding sweatshops in India. Ethical dilemmas can fall into these four categories.
Businesspeople expect employees to be loyal and truthful, but ethical conflicts may arise.
Employee’s disclosure of illegal, immoral, or unethical practices in the organization.

8. How Organizations Shape Ethical Conduct
These four steps build the ethical environment in which ethical organizations operate. Organizations focus on these areas to question their actions as they relate to stakeholders.

9. Ethical Awareness
Code of Conduct Formal statement that defines how the organization expects and requires employees to resolve ethical questions.
Codes of ethics help guide the actions of executives, managers and employees. Click the link to view the credo of Johnson & Johnson that is included in the chapter. Notice that the company highlights this credo on their website to all.

10. Ethical Education
Codes of conduct cannot detail a solution for every ethical situation, so corporations provide training in ethical reasoning.
Codes of conduct cannot control ethical action alone. Many organizations have initiated training programs. Although it is questioned whether ethics can be taught, the training allows employees to practice the application of ethics to different scenarios.

11. Ethical Action
Helping employees recognize and reason through ethical problems and turning them into ethical actions.
Ethics happens when employees make ethical decisions. The guide that Texas Instrument uses helps employees think about their actions. Click the link to view the questions that Texas Insruments prints for employees. This information from the textbook is also included on the company website.

12. Executives must demonstrate ethical behavior in their actions.
Ethical Leadership
Executives must demonstrate ethical behavior in their actions.
Ethics becomes a core part of an organization when executives model ethical behavior and honest corrective action when necessary.

13. Acting Responsibly to Satisfy Society Social Responsibility
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.
Organizations measure through social audits.
Although profits and employment remain important, today many factors contribute to an assessment of a firm’s social performance, including providing equal employment opportunities; respecting the cultural diversity of employees; responding to environmental concerns; providing a safe, healthy workplace; and producing high-quality products that are safe to use.
A business is also judged by its interactions with the community. To demonstrate their social responsibility, many corporations highlight charitable contributions and community service in their annual reports and on their Web sites.

14. Areas of Responsibility
The responsibility of businesses has evolved to include four key areas. Businesses must balance their responsibility in all four areas. And these four areas require multiple areas of focus.

15. 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.
These are the areas of responsibility that businesses have to the public. Many argue that responsibility to the public includes corporate philanthropy.

16. 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.
These are all of the responsibilities that businesses have to customers. Consumerism is the public demand that a business
consider the wants and needs of its customers in making decisions. Consumerism has been a key requirement since prompted by John F. Kennedy in 1962.

17. Responsibilities to Employees
Workplace Safety. Monitored by 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.
Age Discrimination. Age Discrimination in Employment Act of protects workers age 40 or older.
Responsibilities to employees are imperative. There are numerous areas that businesses must consider. Click the highlighted links to view a few of the organizations that govern the rights of employees.

18. 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.
Many of the scandals that have shifted the thinking about ethics has been in the area of responsibility to investors. These points highlight the areas of responsibility to investors. The Securities and Exchange Commission develops regulation to protect investors. Click the highlighted link to view the SEC website.