1. part Chapter © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 1 McGraw-Hill Demonstrating Ethical Behavior and Social Responsibility 1 Chapter 4

2. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 2 McGraw-Hill 1.Define ethics. 2.Understand the approaches and the process of making an ethical decision. 3.Distinguish between compliance-based and integrity-based ethics codes, and list the five steps in setting up a corporate ethics code. 4.Describe the indicators of corporate social responsibility. 5.Examine corporate responsibility to various stakeholders. 6.Describe how social responsibility can be measured. 7.Discuss ethics and social responsibility on a global level. Learning Objectives

3. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 3 McGraw-Hill Right vs. wrong Sources – religion and culture The Golden Rule Legality Ethics Defined

4. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 4 McGraw-Hill Guide to making the right decisions Five main approaches –Utilitarian –Rights –Fairness or justice –Common good –Virtue Personal Ethics

5. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5 McGraw-Hill Center for Applied Ethics – Eight principles: –Concern for the well-being of others. –Respect for the autonomy of others. –Trustworthiness and honesty. –Willing compliance with the law (with the exception of civil disobedience). –Basic justice; being fair. –Refusing to take unfair advantage. –Benevolence; doing good. –Preventing harm to others and the world around us. Personal Ethics

6. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 6 McGraw-Hill Five step process to ethical decision making: 1.Recognize an ethical issue. 2.Get the facts. 3.Evaluate alternative actions. 4.Act on your decision. 5.Reflect on your decision. Personal Ethics

7. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 7 McGraw-Hill Formal code of ethics: –Compliance-based –Integrity-based Five-step improvement process for America’s business ethics Sarbanes-Oxley Whistleblowers New penalties New overseeing agency Flaws of the act Corporate Ethics

8. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 8 McGraw-Hill Corporate philanthropy –Charity Corporate responsibility Corporate policy Corporate Social Responsibility Defined

9. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 9 McGraw-Hill Responsibility to Stakeholders Customers Importance of pleasing customers 3 out of 5 businesses fail Payoff for socially conscious behavior Trust Investors Insider trading Honest bookkeeping Doing the right thing

10. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 10 McGraw-Hill Responsibility to Stakeholders Employees Business’ responsibilities –Create jobs –Pension –Retain employees –Diversity Society and the Environment Create new wealth Promote social justice A public good

11. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 11 McGraw-Hill Profit motive Social audit 4 watchdogs: –Socially conscious investors –Environmentalists –Union officials –Customers Not enough to be ethical Measuring Social Responsibility

12. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 12 McGraw-Hill Ethical problems are not unique to the United States. Should everyone adhere to American ethical standard? Common global ethic Ethics and Social Responsibility Globally