1. Ethics & Social Responsibility
Business Analysis

2. Key Terms*
Ethical - Conforming to accepted professional standards of conduct.
Ethics - a set of moral principles or values.
Professional Ethics - the principles of conduct governing an individual or a group.
Morality - a system of rules that modifies our behavior.
Moral - conforming to a standard or right behavior.
Legal - conforming to or permitted by law or established rules.
Cost-benefit analysis - monetary analysis of expected costs and corresponding benefits of an action.

3. What Ethics Are Not
Being ethical is not a matter of following one’s feelings.
A person following his or her feelings may not do what is right.
Feelings frequently cause you to deviate from what is ethical.

4. What Ethics Are Not
If ethics were confined to religion, then ethics would apply only to religious people.
Religion can, however, set high ethical standards and can provide intense motivations for ethical behavior.

5. What Ethics Are Not
The law often incorporates ethical standards to which most citizens subscribe.
But laws, like feelings, can deviate from what is ethical.
Being ethical is not the same as doing “whatever our society accepts.”
In any society most people accept standards that are ethical, but standards of behavior in society can deviate from what is ethical.
Further, the lack of social consensus on many issues makes it impossible to equate ethics with whatever society accepts.

6. What Ethics are
Well-based standards of right and wrong that prescribe what humans ought to do.
Deciding what is right and wrong in a reasoned, impartial manner.
To involve ethics a decision must affect you or others in a significant way.

7. Ethics at Work
You take your personal ethics to work with you everyday.
Organizations also have values (organizational values) that direct the decisions they make—and that YOU are expected to join.

8. Professional Ethics
Standards of right and wrong set by a governing body of a society or organization.
Minimum standards of conduct.
Examples of Professional Groups of Affiliations:
American Institute of Certified Public Accountants (CPAs)
American Bar Association (Lawyers)
American Medical Association (Doctors)

9. Business Ethics
The application of moral standards to business situations—guided by:
Written policies
Unwritten standards
Examples set by top managers!!
Every individual in a corporation makes choices with moral implications!

10. Ethical Organizational Behavior
Organizations must follow laws and regulations as well as:
Compete Fairly & Honestly
Communicate Truthfully
Not Cause Harm to Others

11. Deciding Between Right and Wrong
Conflict of Interest- A choice that brings personal gain to someone/business while compromising a fundamental responsibility.
Reasoned Decisions
Acting in response to thought, reasoning out our actions
Not choosing on how we feel or allowing our emotions to guide our decisions.
People often reason right and wrong based on legality (law/religious texts)

12. Impartial Decisions The same ethical rules apply to everyone
If it is right for one person to do something in a certain situation, then it is right for everyone in the same or similar situation to do the same thing.
Ethics does not value one person or group of people more than another
We must balance our self-interests with the interests of others

13. Types of Ethical Decisions
Ethical Dilemma- Situation in which both sides of an issue can be supported with valid arguments.
No clear cut right and wrong
Ethical Lapse- A situation in which an individual makes a decision that is morally wrong, illegal, or unethical.
Doing the wrong thing

14. Ethical Business Behavior Influences
Cultural Differences
What does it mean for a business to do the “right thing” when doing business in other countries?
Knowledge
Ignorance is not an acceptable excuse—get informed!
Organizational Behaviors
Ethical awareness and communication of clear standards of behavior
Training, Codes of Conduct, Modeling

15. Determining What is Right
Apply “The Golden Rule”
Examine your intent
Ask these 4 questions:
Is the decision legal?
Is it balanced? (fair to all stakeholders)
Can I live with it (will I be ashamed if it is discussed on the news tonight?)
Is it feasible? (Can it actually work)

16. Code of Ethics
A written statement setting forth the principles that guide an organization’s decisions.
More than 80% of large companies have adopted a Code of Ethics.
The hard part is—it is difficult to include every situation that may arise.
CocaCola Code of Conduct.pdf

17. Code of Ethics Continued
In order for a code of ethics to be effective, it must be supported by:
A formal training program
Employee communications efforts
Employee commitment to follow it

18. Whistle Blowing Employees Disclosure of:
Illegal activities
Unethical behavior
Wasteful practices
Harmful practices
Potential Whistle Blower Costs:
Being fired or demoted
Suffering career setbacks
Financial strain
Emotional stress

19. Who are the stakeholders you are responsible to as a business person?
EMPLOYEES – treat fairly/safely
CUSTOMERS – safety and rights
STOCKHOLDERS/INVESTORS - profits
COMMUNITY – social responsibility
GOVERNMENT – pay taxes

20. Responsibility to Employees
Employers have a responsibility to their employees.
Discrimination
Denial of opportunities to individuals on the basis of some characteristic that has not bearing on their ability to perform a job.
EEOC –Equal Employment Opportunity Commission
Affirmative Action – 1960’s It was never LAW, just encouraged!
OSHA= Occupational Safety and Health Administration – Employees deserve safe working conditions!

21. Responsibility to Customers
A Movement called “Consumerism”
Started in 1960’s -- Movement put pressure on businesses to consider consumer needs and interests.
JFK introduced the consumers bill of rights:
The right to safe products —Consumer Safety Commission
Right to be informed –FDA, FTC & Agric., Dept responsible for labeling
The right to chose which products to buy—are we entitled to buy products that are dangerous? Tobacco?
The right to be heard –Toll-free numbers and websites for consumer info. and feedback

22. Investors Ways companies are unethical to investors:
Misrepresenting the investment- ”creative” accounting
Diverting earnings or Assets – insider trading
Overdoing quest for profits

23. Social Responsibility
Social Responsibility- The idea that businesses have certain responsibilities to their communities -- more than just making money.
Examples:
Green initiatives
Giving back

24. Social Responsibility - Continued
Businesses have a responsibility to protect and give back to the community where they make their money.
Contributing to schools
Contributing to United Way, etc.
Providing jobs for people in the local community
Purchasing supplies from local businesses (Ben & Jerry’s purchasing Vermont milk)
Following guidelines of the EPA (Environmental Protection Agency

25. Social Responsibility to the Environment
Three Big Types of Pollution
Air
Water
Land
Companies try to reduce pollution by:
High-temperature incineration
Recycling
Reuse waste in other industries
Other “green” efforts

26. What is Philanthropy?
Donating money, time, goods or services to charitable, humanitarian, or educational institutions.
Some companies donate billions of dollars in cash and products to charity each year
Microsoft—Bill Gates
General Electric
Wal-Mart

27. Social Audit
A systematic evaluation and reporting of the company’s social performance
Objective information about how the company’s activities affect its various stakeholders

28. What would you do video clips!