1. Responsibility, Ethics, & Social Responsibility
Title slide. No notes. 1 1

2. Learning Objectives
Explain the development of personal codes of ethics
Explain why ethics are important in the workplace
Distinguish social responsibility from ethics
Explain how a firm’s ethics affects environmental policy and the relationships that a firm has with its customers, employees and investors
Identify three general approaches to social responsibility
These learning objectives are based upon those at the beginning of the chapter. For a review of learning objectives, see the summary at the end of the chapter, as well as the list of key terms.
Objectives: p.125
Summary: p
Key Terms: p. 149 2 2

3. What is Ethical Behaviour?
“ethics”: standards or moral values which dictate what is right and what is wrong, or good or bad
are culturally-based and formed based upon society’s expectations
vary by person, and by situation
everyone develops their own “code of ethics”
Discussed on page 126.
This introduction to ethics provides some basic definitions and stresses that what constitutes ethical behaviour is to a great extent open to discussion.
Activities:
Analysis Questions: #2, page 149. 4 4

4. Influences on Ethical Behaviour
Family
Experiences
Personal Code of
Ethics
Discussed on pages
The discussion in the text demonstrates the key determinants of individual ethics. Care must be taken to put the lesson in the context of the situation facing the individual making ethical decisions.
Activities:
Concluding Case 5-1: Problems at the Better Business Bureau,
p. 151.
Peer Group 5 5

5. Company Policies on Business Ethics
Canadians are becoming suspect of businesses
In 1990, 45% felt that businesses are unprincipled, compared to 20% in 1980
Companies are creating codes of ethics to guide employees in day-to-day business decisions
Top management must provide ethical guidelines, and set an example, for all employees
Discussed on pages
Additional Notes:
In Canada, 66% of large firms have written ethics policies
In the USA, 90% of large firms have written ethics policies
Activities:
Application Exercises: #9, p. 149.
Concluding Case #5-1: Problems at the Better Business Bureau, p. 151.
Exploring the Net, p. 150. 6 6

6. Are there any ETHICS in business?
No! Class over!
“Ethics is for suckers” “If you believe in that bunk, they’ll walk all over you”
“Where did you grow up -- on a farm?”

7. That’s all you need to know!
Serious Green = ETHICS
That’s all you need to know!

8. WHY STUDY ETHICS?
By giving reasons for its judgments and prohibitions, its central purpose is to secure valid principles of conduct and values that can be instrumental in guiding actions and producing good character.
Looks very good on a resume!

9. “I’m a good person” “Being good - that’s ethical”
“Looking out for your fellow man, that’s ethics”
“You know, do one to others - or was it do others first?”

10. The Environments of Business
factors that affect an organization, and the situations within which the organization functions
External Environment
all factors such as laws, competition, technology, social-cultural norms and trends, and ecology, that are outside the organization and that may affect it

11. Business Ethics Defined
Ethics: the study of right & wrong and the morality of choices that individuals make.
An ethical decision or action is one that is “right” according to some standard of behaviour.
Business Ethics: the application of moral standards to business.

12. Ethical Issues:
these often arise out of a business’s relationship with:
investors, customers, employees, creditors, competitors
e..g. investors want financial decisions to boost sales, profits, and ROI (return on investment).
customers expect expect products to be safe, reliable, reasonably prices
employees expect fair treatment in hiring, promotion, compensation
creditors expect “on time” payments
competitors expect fair & honest business practices

13. How Do You Know if it is Ethical?
Expense accounts padding?
Sexual harassment or kidding?
errors in work- tell supervisor or not ?
personal calls on company phones?
theft by fellow workers:
tell supervisor, ignore, confront?

14. Doing the “RIGHT” thing:
Choosing the “ethical thing to do” is a personal responsibility.
For each situation: What are the ethical issues? How do YOU feel? What are the consequences of your decision?
Other people: how will your actions affect others?
Take Action: doing nothing is NOT an ethical choice! You MUST use your ethics!

15. Social Responsibility
A business’s collective code of ethics towards:
the environment
its customers
its employees
its investors
Discussed on page 129
Care should be taken to clarify how every action taken by a business can be perceived as socially responsible or not. All stakeholders must be treated equally where ethical behaviour is concerned. Care to treat one sector responsibly is not effective if other stakeholders are suffering.
Activities:
Review Questions: #2, p.149 7 7

16. Influences on Business Social Responsibility
Towards the
Environment
Responsibility
Responsibility
Towards
Towards
Consumers
Social Responsibility
Employees
Influences on Business Social Responsibility
Discussed on page This is a reproduction of Figure 5-3 on page 130.
The ethical climate of a firm depends to a great extent on the ethics of individual employees.
Activities:
Review Questions: #2, p.149
Responsibility
Towards Investors 8 8

17. Environment Responsibility Issues
Air Pollution
Water Pollution
Land Pollution
Toxic Waste
Acid Rain
Discussed on pages This is a list slide. Each topic is discussed separately on the slides which follow.
All of the environmental issues listed above occur due to emissions from automobiles and/or manufacturing plants. Much of Canada’s pollution is a result of America’s businesses.
Legislation has been introduced to force clean up in some industries. In other cases, special interest groups are working to protect the environment against exploitation. However, in some industries the cost of the technology to clean up emissions is so great that it would force businesses out of business. This in itself is an ethical quandary.
Review Questions: #2, p. 149. 9 9

18. Air Pollution
unsuitable air quality which can affect the health of all people, with immediate effects on those who have pre-existing medical conditions or allergies
created due to chemical emissions created in the manufacturing of products and the operation of motor vehicles
legislation has been directed to controlling or eliminating polluting practices
Discussed on page
Trends were discussed on the list slide, slide 5-9.
Activities:
Review Questions: #2, p.149. 10 10

19. Acid Rain
contaminated rainfall created by emissions of sulphur by power and manufacturing plants located in the midwest
affects eastern Canada and the United States
can seriously damage forests and streams
can be controlled by existing technology but at tremendous cost to business
costs could force a firm into losses, or outright bankruptcy
Discussed on page
See the list slide (Slide 5-9) for comments.
Activities:
Review Questions: #2, p. 149. 11 11

20. Water Pollution
water contamination due to years of release of toxic chemicals into lakes, rivers and streams
chief offenders are businesses such as pulp and paper plants, and municipalities who dump raw sewage
is being curbed by legislation, education, and affordable new technology
Discussed on page 131.
See the list slide (Slide 5-9) for comments.
Activities:
Review Questions: #2, p. 149. 12 12

21. Land Pollution
contamination of grounds and soil due to dumping of toxic waste and mishandling of landfills
key issues today include curbing polluting practices and restoring contaminated lands
new developments include:
emphasis on recycling
new forms of solid waste disposal
changes in forestry practices
Discussed on page
See the list slide (Slide 5-9) for comments.
Activities:
Review Questions: #2, p. 149. 13 13

22. Toxic Waste
release of toxic chemicals or radioactive byproducts of the manufacturing process
contaminates land, air and water
such substances cannot be rendered harmless and must be carefully stored
pressure on businesses to “clean up” can come from many sources (Greenpeace, banks refusing financing, consumer and social interest groups)
Discussed on page 132.
See the list slide (Slide 5-9) for comments.
Activities:
Review Questions: #2, p. 149. 14 14

23. Customer Responsibility Issues
Rights of Consumers
Unfair Pricing
Discussed on page 132.
This is a list slide. Each of the items listed appear separately on slides which follow.
Companies have two key areas which require interaction with customers. These areas are pricing and product. Responsibility to customers is concerned with the fair and ethical treatment of buyers in each of these areas.
Activities:
Review Questions: #3, p. 149. 15 15

24. Consumer Rights Issues
influenced by consumerism: a social movement that seeks to protect and expand the rights of consumers in their dealings with businesses
consumers have the:
right to safe products
right to be informed
right to be heard
right to choose what they want to buy with free competition
Discussed on page 132.
See the list slide (#5-15) for notes.
Activities:
Review Questions: #3, p. 149. 16 16

25. Unfair Pricing Issues
illegal pricing practices may occur due to the intentional (and also illegal) limiting of competition
collusion is the practice of a group of companies conspiring to fix prices
collusion results in inflated prices and a lack of competition which negatively affects consumers
Discussed on page 132.
See the list slide (#5-15) for notes.
Activities:
Review Questions: #3, p. 149.
Concluding Case #5-2: Industrial Espionage, p.152. 17 17

26. Employee Responsibility Issues
Human resource management issues
Social responsibility issues
Privacy issues
Encouraging ethical behaviour
Discussed on page This is a list slide. Each of these topics is discussed on a later slide.
Activities:
Analysis Questions: #6, p. 149. 18 18

27. Human Resource Management Issues
Recruiting
Hiring
Training
Promoting
Compensating
Fair treatment of all employees without discrimination based upon sex, race or other factors
Discussed on page 135.
See the list slide (#5-18) for notes.
Activities:
Analysis Questions: #3, p. 149. 19 19

28. Social Responsibility Towards Employees
safe workplaces
socially and emotionally- not abuse or harassment
physically - safe work environment
Discussed on page 135.
See the list slide (#5-18) for notes.
Activities:
Analysis Questions: #6, p. 149. 20 20

29. Privacy of Employees
determining how much control is acceptable in the workplace
drug testing
video monitoring
employees may not be aware that they are being monitored, or they may not know when they will be monitored, which increases job stress
Discussed on page 135.
See the list slide (#5-18) for notes.
Activities:
Analysis Questions: #6, p. 149. 21 21

30. Encouraging Ethical Employee Behaviour
top management support for ethical behaviour is critical
“whistle-blowers” are employees who report unethical behaviour
the company should support its “whistle blowers” rather than threatening them with dismissal or other form of penalty
Discussed on page 135.
See the list slide (#5-18) for notes.
Activities:
Analysis Questions: #6, p. 149. 22 22

31. Responsibility Towards Investors
Improper Financial Management
Kiting Cheques
Insider Trading
Misrepresentation of Finances
Discussed on pages 136 to This is a list slide. Each topic is discussed separately on the slides which follow.
Ownership and management of a corporation are separate from each other. Usually this is a good thing, allowing businesses to hire the expertise needed to provide a handsome return on investment to the owners. However, when the managers are unethical they can do more harm than good to the organization and those who own it.
Activities:
Assign a student, or a group of students, to monitor the local newspaper for one month. Ask them to clip out articles describing financial misrepresentation. After the one-month monitoring period is over, have students select one of the stories to present to the class. Following the presentation, have the students in the class do a post-mortem of the situation to determine what ethical violations occurred and what could have been done to prevent them. 23 23

32. Improper Financial Management
doing a poor job of managing the financial resources of a company
may involve payment of high salaries, lavish expense accounts and similar practices which results in perks for management with little or no control over how money is spent
may be legally unpunishable because no law has been broken
it may be difficult to replace management because unrest in the firm may devalue its stock
Discussed on page 136.
See list slide for comments and activities (Slide #5-23). 24 24

33. Cheque Kiting
an illegal practice of writing cheques against money which has not yet arrived in the bank account
a creative “cheque kiter” can write cheques from account to account with very little money to back it up
the assumption is that the money will arrive before the cheque needs to clear
becoming difficult to do with modern-day computerized banking
Discussed on page 136.
Cheque kiting s not the same as post-dating a cheque, whereby the cheque is dated for the day the money will actually arrive in the account (post-dating is not illegal as the bank will hold the cheque until the processing date). It is important that students understand the difference.
See list slide for activities (Slide #5-23). 25 25

34. Insider Trading
using confidential (non-public) information to gain from the sale of stock
involves gaining knowledge of inside information about the company to prior to making the purchase
may also involve the collusion of various investors buying and selling stock at the appropriate time in order to make huge profits
Discussed on page 137.
The only way the perpetrators know when the time is right for purchase or sale is through information they are not allowed to have, which other investors have no legal access to.
See list slide for activities (Slide #5-23). 26 26

35. Misrepresenting Financial Information
companies must conform to accounting guidelines called “Generally Accepted Accounting Principles” (GAAP)
failure to follow GAAP in order to inflate expected profit figures can mislead investors
Discussed on page 137.
See list slide for activities (Slide #5-23). 27 27

36. Social Responsibility Goals Vary
there is no one way for firms to approach social responsibility
some feel that the investors’ needs should be met before the needs of society, employees or customers
many feel that because large corporations are so powerful they have an obligation to serve society first
Discussed on pages
Research has demonstrated that firms with strong ethical goals are more
profitable than firms without such goals.
Activities:
“Building Your Business” , p. 149. 28 28

37. Approaches to Social Responsibility
social-obligation approach
social-reaction approach
social-response approach
Discussed on pages
Social responsible behaviour is as hard to classify as ethical behaviour. The material in the text does an excellent job of demonstrating various “degrees” of social responsibility and the effects that the degrees have on the social mandate of an organization.
Activities:
Review Questions: #4, p.149.
Analysis Questions: #8, p.149. 29 29

38. Social-Obligation Approach
a company simply meets the requirements of the law and standard business practices
is consistent with the argument that profits should not be spent on social programs
example:
tobacco companies did not include health warnings on cigarette packs until required to by law
Discussed on pages
See the list slide for comments (Slide 5-29).
Activities:
Review Questions: #4, p. 149.
Analysis Questions: #8, p.149. 30 30

39. Social-Responsibility Approach
a company will go beyond basic legal and business requirements if called upon to do so, but not of their own accord
example:
matching employee contributions to social programs or charities
Discussed on pages
See the list slide for comments (Slide 5-29).
Activities:
Review Questions: #4, p. 149.
Analysis Questions: #8, p.149. 31 31

40. Social-Response Approach
in addition to meeting basic legal and business requirements, companies proactively seek opportunities to contribute in a meaningful way to society
examples:
McDonald’s support of children’s hospitals
Tim Hortons’ camps for underpriveleged children
Discussed on pages
See the list slide for comments (Slide 5-29).
Activities:
Review Questions: #4, p. 149.
Analysis Questions: #8, p.149. 32 32

41. Managing Social Responsibility Programs
Social Audit
Managing Social Responsibility Programs
Appointment of a
Director
Strategic Planning
Discussed on pages This is list slide. Each item is discussed separately on the slides which follow.
This slide duplicates the diagram in Figure 5-4.
The model in the diagram makes an excellent point of demonstrating that without top management support a firm cannot aspire to a social responsibility program.
Activities:
Application Exercises: #9, p.149.
Top Management
Support 33 33

42. Step 1: Top Management Support
Support of top management is essential to move the workplace towards adopting a social responsibility program
Top managers must develop a policy statement outlining their commitment to more ethical behaviour
Discussed on pages 140.
See the list slide for comments (Slide #5-33).
Activities:
Application Exercises: #9, p.149. 34 34

43. Step 2: Strategic Planning
A committee of top managers must develop a plan which describes the level of company support which will be given to meeting goals of social responsibility
Examples:
percent of sales revenues to go to social causes
promise to train chronically unemployed people
Discussed on pages 140.
See the list slide for comments (Slide #5-33).
Activities:
Application Exercises: #9, p.149. 35 35

44. Step 3: Appoint a Director
an executive-level administrator must be appointed to oversee the social program that the firm has created
this may be achieved through a partial time work commitment on the part of existing top managers
Discussed on pages 140.
See the list slide for comments (Slide #5-33).
Activities:
Application Exercises: #9, p.149. 36 36

45. Step 4: The Social Audit
a systematic analysis of how the firm is using funds designated specifically to fund its social initiatives
also addresses the effectiveness of the monies that have been spent
Discussed on pages 141.
See the list slide for comments (Slide #5-33).
Activities:
Application Exercises: #9, p.149. 37 37

46. Small Business Ethics
a small business does not have the same impact on society if it acts in an irresponsible way
many entrepreneurs decide to conduct themselves in a socially responsible manner because they feel it is important to contribute to society
individual entrepreneurs make independent decisions
Discussed on page 141.
The structure and focus of a small business make it difficult to follow the social responsibility model. Many times, the small business consists of too few employees. Their personal codes of ethics will likely be the basis of the small business’s ethical and social orientations.
Activities:
Assign the students to a major non-profit, charitable organization. Ask the students to identify major sponsors. Then, have the students identify which of the benefactors are small businesses and not large corporations. Based on this analysis, do the students feel that small businesses are socially responsible? 38 38

47. How Your Employer Can Help:
A company should establish clear standards of conduct.
A system must be in place to investigate alleged violations and to ensure that all employees/managers comply with company policies.
Ethical compliance is a problem.
63% in a survey felt pressured to compromise their standards to achieve business goals. 42% witnessed ethics violations.

48. Ethics: Fairness and Honesty:
Business persons are expected to refrain from knowingly:
deceiving, misrepresenting, or intimidating others.
Oil companies seem to have an image problem in regard to pricing.
Banks too seem to be perceived as being “fee hungry” with some “hidden” charges.

49. “Organizational Relationships”
A business employee is expected to keep the firm’s business confidential and to honour obligations.
unethical behaviour may involve:
taking credit for the work of others
not meeting obligations
pressuring others to behave unethically

50. Conflict of Interest
In business: taking advantage of a business situation to place one’s personal interests ahead of the firm.
e.g. acceptance of “Business Gifts”
acceptance may prejudice the decision making process in favour of a supplier who provided gifts
Communications: false or misleading advertising- especially those aimed at children or those involving “health-related” products.

51. Factors Affecting Ethical Behaviour
Can a person with strong moral values make ethically questionable decisions in a business setting?
what affects a person’s decision-making process in a business setting?
3 general sets of factors appear to influence behaviour:
individual & social factors and opportunity

52. Factors Affecting Workplace Behaviour
Workplace behaviour to some extent determined by the “norms” of one’s culture.
e.g. in some countries the standard practice for customs agents to receive gifts for doing their job- in other countries the same actions would be viewed as unacceptable and unethical
personal phone calls on company time &expense- is it “OK” because everyone “does it”? A person’s “moral values” can affect one’s perception of what is moral and ethical in the workplace.

53. Opportunity:
is the amount of freedom an employee has to behave unethically if he/she makes that choice.
Company “Policies & Procedures” reduce the “opportunities for unethical behaviour.
e.g. Fast food restaurant- one person takes order/receives payment while another person fills the order
when violations are dealt with consistently and firmly, opportunities for unethical behaviour are reduced

54. Encouraging Ethical Behaviour:
Can BUSINESS be made more ethical?
clearly the answer is “YES”.
individual firms, trade associations , and governments can establish written guidelines.
trade associations exist for the benefit of their members- can they be self-regulating/
“Code of Ethics”:
written guide to what constitutes “proper” behaviour
employees MUST recognize why the code exists and top-management MUST support and follow the “code” themselves. An “Ethics Officer” may be considered.

55. Whistle Blowing:
Informing government or the press about ethics violations by employees who want to act ethically but unethical practices are so ingrained in an organization that the employee feels they have no choice but to “blow the whistle”
e.g. Canadian Red Cross and the “Tainted Blood Scandal” of recent years.
what of whistle-blowing employees?
loss of their jobs?
anonymous organizational “hot lines” to report ethics violations?

56. Guidelines for Making Ethical Decisions:
1. Listen & Learn:
recognize the problem and listen until you are sure you understand others in the group.
2. Identify the ethical issues:
how are co-workers and consumers affected?
why do others hold the views they do?
3. Create and Analyze Options:
ask everyone involved for ideas & opinions:
which option is best and why?
which options may address the issues you feel are potential ethics problems?

57. Guidelines for Making Ethical Decisions (con’t):
4. Best Option from YOUR point-of-view
test against established criteria
respect, understanding, caring, fairness, honesty, openness.
5. Explain your decision/resolve differences:
may require “neutral” arbitration from a trusted manager.
or: take “time out” to reconsider, consult, exchange written proposals before a decision is reached.

58. The Workplace of Tomorrow
External environment will become a greater consideration
Media inquiry, government regulation, and public expectations become more important
organizational behaviour under closer scrutiny than ever before
minor decisions may build or destroy reputation
As companies expand globally, ethics are tested by local environments