1. Human Resource Management Chapter 2 Business Ethics and Corporate Social Responsibility
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2. Developing an Ethical Culture At Tyco International
Changing Tyco’s corporate image has to rank as one of toughest jobs in recent history
Framework for managing that accountability had to be established
By 2006, scandal left by Tyco’s now-jailed former CEO, had been cleaned up
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3. Ethics
Discipline of dealing with what is good and bad, or right and wrong, or with moral duty and obligation
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4. Unethical Examples
Enron, Arthur Andersen, WorldCom, Global Crossing, Adelphia Communications, Tyco International, and others
Ruthless self-interest that motivates the leaders of some large corporations has been revealed
To have served on the Enron board literally has become a badge of shame
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5. Many Example of Unethical Corporate Behavior
Headlines have exposed the far-from-ethical exploits of Enron, Arthur Andersen, WorldCom, Global Crossing, Adelphia Communications, Tyco International, and others
Enron’s stated values, respect, integrity, communication, and excellence, were once proudly etched on Enron’s paperweights
Ruthless self-interest that motivated the leaders of some large corporations has been revealed
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6. Not Just Corporations
Virtually no occupation has not had its own painful ethical crises in recent years
Even so, business ethics scandals continue to be headline news stories today. Lying on resumes, obstruction of justice, destruction of records, stock price manipulation, cutting corners to meet Wall Street’s expectations, fraud, waste, and abuse, unfortunately, are occurring all too often when those in business go ethically wrong
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7. Trends & Innovation: One Person’s Ethical Stand
Everyone is not as ethical as Leonard Roberts
Quit over promises made at Arby’s
Another ethical problem at Shoney’s
Said “You cannot fake it. You must stand up for what is right regardless. You cannot maintain your integrity 90 percent and be a leader. It’s got to be one hundred percent.”
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8. Sources of ethical guidance Our beliefs about what is right or wrong
A MODEL OF ETHICS
Sources of ethical guidance
Our beliefs about what is right or wrong
Lead to
Determine
Our actions
Type I Ethics
Type II Ethics
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9. Sources of Ethical Guidance
Number of sources to determine what is right or wrong, good or bad, moral or immoral
Bible and other holy books
Conscience
Significant others
Codes of Ethics
Sources of ethical guidance should lead to our beliefs or convictions about what is right or wrong
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10. Type I Ethics
Strength of relationship between what individual or organization believes to be moral and correct and what available sources of guidance suggest is morally correct
Example: HR manager believes it is acceptable not to hire minorities, despite fact that almost everyone condemns this practice
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11. Type II Ethics
Strength of relationship between what one believes and how one behaves
Example: Manager knows it is wrong to discriminate, but does so anyway
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12. Legislating Ethics Procurement Integrity Act
Federal Sentencing Guidelines for Organizations (FSGO)
Corporate and Auditing Accountability, Responsibility and Transparency Act
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13. Procurement Integrity Act of 1988
Prohibits release of source selection and contractor bid or proposal information
Restrictions on former employees
Passed after reports of military contracts for $500 toilet seats
Also $5,000 hammer
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14. Federal Sentencing Guidelines for Organizations (FSGO) of 1992
Outlined effective ethics training program
Promised softer punishments for wayward corporations that had ethics programs in place
Executives needed to be proactive
Organizations responded by creating ethics officer positions, installing ethics hotlines, and developing codes of conduct
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15. Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002
Known as Sarbanes Oxley Act, primary focus to redress accounting and financial reporting abuses in light of recent corporate scandals
Criminalized many corporate acts
Whistle-blower protections
Prohibits loans to executives and directors
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16. HR and Sarbanes Oxley Act
Nonretaliation provisions
HR professional must understand where Act’s corporate mandates intersect with existing HR policies and practices so they can fit them together with corporate compliance efforts
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17. Human Resource Ethics
Application of ethical principles to HR relationships and activities
Code of Ethics – Many companies have a code of ethics
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18. Code of Ethics
Statement of values adopted by company, its employees and directors and sets official tone of top management regarding expected behavior
Code of ethics establishes rules by which organization lives and becomes part of organization’s corporate culture
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19. Ethics Officer Larger firms appoint ethics officer
Keeps code on front burner for employees
Ethics committee often established
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20. Baldrige National Quality Award
Increased emphasis on ethics in leadership
Criteria: Senior leaders should serve as role models to rest of organization
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21. Human Resource Ethics
Application of ethical principles to HR relationships and activities
Some ethical lapses of recent years occurred in HR management
Some believe HR should have questioned salaries, stock options, and related perks received by some corporate executives
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22. Ethics and HR Management
2 areas where HR can have a major impact on ethics
* Corporate Governance
* Executive Compensation
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23. Professionalization Of Human Resource Management
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24. Profession A vocation characterized by existence of:
Common body of knowledge
Procedure for certifying members of profession
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25. HR Professional Groups
Society for Human Resource Management - Largest national professional organization for HR management individuals
American Society for Training and Development - Largest specialized professional organization in human resources
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26. HR Professional Groups (Cont.)
WorldatWork - Managerial and HR professionals responsible for establishment, execution, administration or application of compensation practices and policies
Human Resource Certification Institute - Recognize HR professionals through certification program
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27. Corporate Social Responsibility
Implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect interests of groups other than themselves.
When corporation behaves as if it has a conscience
How company as a whole behaves toward society
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28. Who Determines?
Organization’s top executives usually determine corporation’s approach to social responsibility
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29. Stakeholder Analysis and Social Contract
Most organizations have large number of stakeholders
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30. Organizational Stakeholder
Individual or group whose interests are affected by organizational activities
Society is increasingly holding corporate boards of directors and management accountable for putting the interest of stakeholders first
Some of the stakeholders for Crown Metal Products, a fictitious manufacturer, are identified
Only a few, identified by bold arrows, are viewed as constituencies
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31. STAKEHOLDERS OF CROWN METAL PRODUCTS
Stanley Crow (Sole stockholder)
Employees and Managers
Charitable Organizations
Unemployed Workers (Potential employees)
Neighbors
Guaranty Bank (Lender)
Customers
Crown Metal Products
Competitors
Suppliers
Other Banks in Area (Prospective lenders)
Local Government Agencies
Local Businesses
U.S. Government
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32. Social Contract
Set of written and unwritten rules and assumptions about acceptable interrelationships among various elements of society
Embedded in customs of society
Social contract often involves quid pro quo
Concerns relationships with individuals, government, other organizations, and society
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33. The Social Contract Individuals Other Organizations The Organization
Government
Society
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34. Obligations to Individuals
Certain obligations to employees
Expect fair day’s pay for fair day’s work, and perhaps much more
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35. Obligations to Other Organizations
Must be concerned with relationships involving other organizations
Commercial businesses are expected to compete with one another on honorable basis
Charities such as United Way expect support from business
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36. Traditional View of Social Responsibility
Businesses best meets obligations through pursuit of their own interests
Some companies view social contract mainly in terms of the company’s interests
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37. Obligations to Government
Under auspices of government, companies have license to do business, along with patent rights, and trademarks
Expected to recognize need for order rather than anarchy
Expected to work with guidelines of governmental organizations such as Equal Employment Opportunity Commission and Office of Federal Contract Compliance Programs
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38. Obligations to Society in General
Traditional view of business responsibility has been businesses should produce and distribute goods and services in return for profit
Businesses operate by public consent with basic purpose of satisfying needs of society
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39. Sir Thomas More
Said in the 16th century, “If virtue were profitable, common sense would make us good and greed would make us saintly.” Moore knew virtue is not profitable, so people must make hard choices from time to time.
Corporate strategists are being held to a higher standard than just pursuing their own interests, or even those of stockholders; they must consider the interests of other groups too.
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40. Social Audit
Systematic assessment of a company’s activities in terms of its social impact
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41. Possible Types of Social Audits
Simple inventory of activities
Compilation of socially relevant expenditures
Determination of social impact
The ideal social audit would involve determining the true benefits to society of any socially-oriented business activity
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42. Steps for Establishing and Implementing Corporate Social Responsibility (CSR) Program
Person assigned responsibility for program; structure developed
Review of what company is present doing regarding CSR determined
Shareholders expectations and perspectives determined
Write policy statements covering CSR areas such as environmental, social and community issues
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43. CSR Steps (Continued)
5. Develop set of corporate objectives and action plan to implement policies
Create company quantitative and qualitative targets and performance indicators over a 2-5 year period, along with measurement, monitoring and auditing mechanisms
Communicate direction of CSR to stakeholders and fund managers
Determine progress of CSR program
Report progress of CSR program
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44. A Global Perspective: When In Rome, Do As the Romans Does Not Work Today
The old adage once accepted in many quarters,” When in Rome, do as the Romans do,” has become unacceptable.
New CEO challenge is to act like an ethical leader for society as a whole
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