1. Ethics and Social Responsibility Slides by Professor Tim Richardson of the School of Marketing and eBusiness, Seneca College and the Dept. of Management, University of Toronto (UTSC) © 2010 McGraw-Hill Ryerson Limited

2. Chapter 5 Slide 2 Learning Objectives 1.Explain why legality is only one step in behaving ethically. 2.Describe management’s role in setting ethical standards and distinguish between compliance-based and integrity- based ethics codes. 3.List the six steps that can be considered when setting up a corporate ethics code. 4.Define corporate social responsibility and examine corporate responsibility to various stakeholders. 5.Discuss the responsibility that business has to customers, investors, employees, society, and the environment.

3. Chapter 5 Slide 3 Ethics Ethics is more than legality. It is not just obeying the law; it is “doing the right thing.”

4. Chapter 5 Slide 4 Ethics Canadian ethical breaches WestJet Airlines Ltd. spying on Air Canada the Atlantic Lottery Corporation had concerns of retailers stealing winning tickets from customers Research In Motion (RIM) Stock Option Scandal Federal Government Sponsorship Scandal Hollinger International Inc./Conrad Black

5. Chapter 5 Slide 5 Ethical Checklist  Is It Legal?  Is It Balanced?  How Will It Make Me Feel About Myself? There are no easy solutions to ethical dilemmas.

6. Chapter 5 Slide 6 Managing Businesses Ethically and Responsibly Organizational ethics begin at the top. The leadership and example of strong top managers can help instill corporate values in employees. Some managers think that ethics is a personal matter—that individuals either have ethical principles or they don’t.

7. Chapter 5 Slide 7 Setting Corporate Ethical Standards Compliance-based ethics codes emphasize preventing unlawful behaviour by increasing control and by penalizing wrongdoers. Integrity-based ethics codes are ethical standards that define the organization’s guiding values, create an environment that supports ethically sound behaviour, and stress a shared accountability among employees.

8. Chapter 5 Slide 8 Setting Corporate Ethical Standards Whistleblowers: people who report illegal or unethical behaviour among employees. Whistleblowing Legislation in Canada – Bill C-11: The Public Servants Protection Disclosure Act – there is no provision to protect private-sector whistleblowers

9. Chapter 5 Slide 9 Six Steps to Improve Ethics 1.Top management support 2.Expectations begin at the top 3.Ethics imbedded in training 4.Ethics office set up 5.External stakeholders informed 6.There must be enforcement

10. Chapter 5 Slide 10 Responsibility Defined Corporate Social Responsibility (also known as corporate responsibility): the concern businesses have for the welfare of society. includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment—that is, everything that has to do with acting responsibly within society and toward employees.

11. Chapter 5 Slide 11 Responsibility Defined Corporate Philanthropy: charitable donations Strategic philanthropy involves companies making long-term commitments to one cause, such as the Canadian Tire Foundation for Families. Tim Horton Children’s Foundation is a private organization that is supported by Tim Horton’s. Every year, thousands of children from economically challenged homes participate in camps that are run by the Foundation.

12. Chapter 5 Slide 12 Responsibility Defined Corporate social initiatives include enhanced forms of corporate philanthropy that are more directly related to the company’s competencies. For example, as part of the 2004 Asian tsunami disaster relief, UPS and FedEx shipped emergency relief supplies for free from all over the world and Johnson & Johnson sent medical supplies.

13. Chapter 5 Slide 13 Responsibility Defined Corporate Policy: position on social and political issues

14. Chapter 5 Slide 14 Responsibility to Customers One responsibility of business is to satisfy customers by offering them goods and services of real value. This responsibility is not as easy to meet as it seems. more than half of new businesses fail— perhaps because their owners failed to please their customers.

15. Chapter 5 Slide 15 Responsibility to Investors Ethical behaviour is good for shareholder wealth. It doesn’t subtract from the bottom line, but rather adds to it. On the other hand, unethical behaviour does cause financial damage.

16. Chapter 5 Slide 16 Responsibility to Investors Insider Trading involves insiders using private company information to further their own fortunes or those of their family and friends.

17. Chapter 5 Slide 17 Responsibility to Employees Businesses have several responsibilities to employees. First, they have a responsibility to create jobs if they want to grow. It’s been said that the best social program in the world is a job. Once a company creates jobs, it has an obligation to ensure that hard work and talent are fairly rewarded.

18. Chapter 5 Slide 18 Responsibility to Employees Employees need realistic hope of a better future, which comes only through a chance for upward mobility. the factor that most influences a company’s effectiveness and financial performance is human resource management. If a company treats employees with respect, they usually will respect the company as well. That respect can make a huge difference in a company’s bottom line.

19. Chapter 5 Slide 19 Responsibility to Society One of business’s responsibilities to society is to create new wealth, which is disbursed to employees, suppliers, shareholders, and other stakeholders. if businesses don’t create wealth, who will? Non-profit organizations (NPOs)

20. Chapter 5 Slide 20 Responsibility to Society NPOs Non-profit organizations (NPOs) play an important role in distributing the funds they receive from donors, governments, and even their own investments in billions of shares in publicly held companies. As those stock prices increase, more funds are available to benefit society.

21. Chapter 5 Slide 21 Responsibility to the Environment Businesses are often criticized for their role in damaging the environment.

22. Chapter 5 Slide 22 Ethical Decision Resolved Through: Religious Teachings Individual Rights Legislation Court Decisions

23. Chapter 5 Slide 23 Triple Bottom Line The triple bottom line (TBL) focuses not just on the economic value corporations add, but also on the environmental and social value they add – and destroy. Triple bottom line is used as a framework for measuring and reporting corporate performance against economic, social, and environmental parameters. http://www.sustainability.com/

24. Chapter 5 Slide 24 Interface Carpets A Sustainability Champion Vision: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: people, process, product, place, and profits — by 2020 — and in doing so we will become restorative through the power of influence. Ray Anderson: believes that if Interface, a petro-intensive company, can get it right, it will never have to take another drop of oil from the earth. http://www.interfaceinc.com/

25. Chapter 5 Slide 25 Reaction to the New Social Responsibility Many companies have undertaken a social audit, a systematic evaluation of the company’s position and progress on social issues Shareholders and other stakeholders have actively encouraged companies to become proactive on social issues.

26. Chapter 5 Slide 26 New Philanthropy Source: Business Week, Dec. 2, 2002 Donor Estimated Total Given (in millions) Causes Bill Gates $25.6 Health & Education Gordon Moore $6.6 Conservation & Education James Stowers $1.5 Biomedical Research Eli Broad $1.045 Education & Arts Walton Family$.75Education

27. Chapter 5 Slide 27 International Ethics & Responsibility Ethics Not Unique To U.S. - Leaders Accountable Demand for Socially Responsible Behaviour Inter-American Convention Against Corruption

28. The Legal/Ethical Grid ethical but illegal unethical and illegal legal and ethical legal but unethical Legal EthicalUnethical Illegal