2 Being Ethical and Socially Responsible Copyright 2017
2 Being Ethical and Socially Responsible Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Business Ethics and Social Responsibility: A Close Relationship ETHICS Beliefs about right and wrong SOCIAL RESPONSIBILITY The obligation of a business to contribute to society (businesses concern for welfare of society) Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Business Ethics §Ethics • The study of right and wrong and of the morality of the choices individuals make • An ethical decision is one that is “right” according to some standard of behavior §What’s Ethical? • Different standards for different people, cultures, countries, etc. • Gray areas? • More than just following the law • Fundamental standards (respect for life, honesty, integrity, etc. ) §Business ethics • The application of moral standards to business situations §Good ethics is good business! • The application of moral standards to business situations Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Ethical Issues § Fairness and honesty • Businesspeople are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others • Follow the “Golden Rule” – treat other people how you want to be treated § Organizational relationships • A businessperson should put the welfare of others and that of the organization above his or her own personal welfare § Conflict of interest • Issues arise when a businessperson takes advantage of a situation for personal gain rather than for the employer’s interest § Communications • Business communications that are false, misleading, or deceptive are both illegal and unethical Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Factors Affecting Ethical Behavior Three general sets of factors appear to influence the standards of behavior in an organization. • Individual factors • Individual knowledge of an issue • Personal values and beliefs • Personal goals • Social factors • Business Climate (managers, co-workers) • Cultural norms, attitudes and beliefs • Religion • Significant others • Co. Enforcement • Code of Ethics • Co. Policies (ex. Use of the Internet) • Opportunity • Presence of opportunity Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Ethics Start at the Top • Organizational ethics begin at the top. • Managers can help instill corporate values in employees. • Trust between workers and managers must be based on fairness, honesty, openness and moral integrity. Individuals must make their own ethical choices BUT The organization can have a significant influence on decisions Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Encouraging Ethical Behavior §External to a specific organization • Governmental legislation and regulations • Sarbanes-Oxley Act of 2002 • IFA (International Factoring Assoc. ), TIA (Trans. Intermediaries Assoc) • A written guide to acceptable and ethical behavior as defined by an organization; it outlines policies, standards, and punishments for violations • Trade association guidelines §Within an organization • Developing a Code of ethics • Organizational environment • • Reward ethical behavior Reduce opportunity Ethics officer Leadership & Communication Discipline unethical behavior Provide a forum for reporting Employee training Ethics Officer §Whistle-blowing • Informing the press or government officials about unethical practices within one’s organization Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Facing an Ethical Dilemma? • Ask yourself these questions: - Is it legal? - Is it balanced? - How will it make me feel about myself? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Guidelines for Making Ethical Decisions Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Social Responsibility § Social Responsibility is the recognition that business activities have an impact on society and the consideration of that impact in business decision making § Social responsibility costs money § How socially responsible a firm acts may affect the decisions of customers to do or continue to do business with the firm Consider: • How is it different from ethics? • Why is it good business? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Corporate Citizenship § Corporate citizenship is adopting a strategic approach to fulfilling economic, ethical, environmental, and social responsibilities Consider: How many of the social programs in the text were you familiar with before you read the chapter? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Evolution of Social Responsibility in Business § In the first quarter of the 20 th century, there were very few government protections for workers or consumers § Early 1900 s: caveat emptor—“let the buyer beware” § The collapse of the stock market lead to mounting pressure for the government to help with the economy and social conditions § As government involvement has increased, so has everyone’s awareness of the social responsibility of business Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Two Views of Social Responsibility: Economic and Socioeconomic Models Socioeconomic model (Actively Contribute) • • Business should emphasize not only profits but also the impact of its decisions on society. The corporation is a creation of society and it must act as any responsible citizen would. Firms take pride in their social responsibility obligations. It is in the best interest of firms to take the initiative in social responsibility matters. Economic model (Passive Contribution) • • Society will benefit most when business is left alone to produce and market profitable products that society needs. Managerial attitude: social responsibility is someone else’s job; the firm’s primary responsibility is to make a profit for its shareholders. Firms are assumed to fulfill their social responsibility indirectly by paying the taxes that are used to meet the needs of society. Social responsibility is the problem of government, environmental groups, and charitable foundations. Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Two Views of Social Responsibility Economic Model Emphasis Socioeconomic Model Emphasis Production Quality of life Exploitation of natural resources Conservation of natural resources Internal, market-based decisions Market-based decisions with some community controls Economic return Balance of economic return and social return Firm’s or manager’s interest Firm’s and community’s interests Minor role for government Active government Consider: Is there a middle ground? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Pros and Cons of Social Responsibility § § Pros As a part of society, business can’t ignore social problems Business has the means to tackle social problems Addressing social problems can create a more stable environment Socially-responsible decision making prevents government intervention § § Cons Businesses are primarily responsible to shareholders Corporate time, money and talent should be used to create profit Individual businesses can’t be expected to solve problems affecting society in general Social issues are the problem of government officials elected for that purpose Consider: Why is there no consensus on the importance of social responsibility in business? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Major Federal Legislation: 1960– 1994 Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Major Federal Legislation: 1977– 2010 Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Think About Employment Practices Consider: • How have employment practices changed since the mid 20 th century? • How has the workforce changed? • What laws exist to protect workers? • What abuses are still problematic? Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 | 18
Employment Practices § A number of anti-discrimination laws were passed in the 1960 s and 1970 s but abuses still exist • Disparity in income levels for whites, blacks, Hispanics, and Asians • Lower incomes and higher unemployment rates for Native Americans, handicapped persons, and women Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Affirmative Action Programs § A plan designed to increase the number of minority employees at all levels of an organization § Written plans are required for employers with federal contracts of more than $50, 000 per year § Problems arise from the use of quotas and charges of reverse discrimination Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Equal Employment Opportunity Commission (EEOC) § The EEOC is a government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it • Created by Congress to help solve the problem of employers who still discriminate against workers • Threat of legal action has caused some corporations to amend their hiring and promotional policies § Discrepancies between men’s and women’s salaries still exist Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Programs to Reduce Sexual Harassment and Abusive Behavior § Bullying in the workplace is repeated work sabotage; verbal abuse; and/or abusive conduct that is threatening, humiliating, or intimidating § Bullying with sexual overtones is sexual harassment—unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a physical nature § Sexual harassment is illegal Companies need formal policies that define and prohibit unacceptable abusive conduct as well as an organizational culture that models good behavior. Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Implementing a Program of Social Responsibility § Developing a program of social responsibility: • • Secure the commitment of top executives Plan the program Appoint a director to implement the plan Prepare a social audit—A comprehensive report of what the organization has done and is doing with regard to social issues that affect it Copyright © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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