Demanding Ethical and Socially Responsible Behavior Mc GrawHillIrwin

Ethics & Social Responsibility 4 -2

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WHAT are ETHICS? • Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong. 4 -4

Ethics Doing What Is Right… As You Know It To Be Right. 4 -5

BASIC MORAL VALUES Right: • Integrity • Respect for human life • Self control Wrong: • Cheating • Cowardice • Cruelty • Honesty • Courage • Self-sacrifice 4 -6

Ethics ØEthics Begins With Each of Us ØStem From Individual ØMore Than Legality 4 -7

Ethical Dilemma A situation requiring a choice between equally undesirable alternatives. 4 -9

Ethics Begins with Each of Us FACING ETHICAL DILEMMAS LG 2 • Ask yourself these questions: - Is it legal? - Is it balanced? - How will it make me feel about myself? 4 -10

Ethics Begins with Each of Us ETHICS and YOU • Plagiarizing from Internet materials is the most common form of cheating in schools today. • Studies found a strong relationship between academic dishonesty and dishonesty at work. 4 -11

ETHICS START at the TOP • Trust between workers and managers must be based on fairness, honesty, openness and moral integrity. • Leadership can help instill corporate values in employees. 4 -12

ETHICS CODES • An increasing number of companies have adopted written codes of ethics. 4 -13

Texas Instruments The TI Ethics Quick Test - Is the action legal? - Does it comply with our values? - If you do it, will you feel bad? - How will it look in the newspaper? - If you know it's wrong, don't do it! - If you're not sure, ask. - Keep asking until you get an answer. For copies of the card or further information, contact the TI Ethics Office at 1 -800 -33 -ETHIC. (This information is provided to TI employees on a business-card size minipamphlet to carry with them. )

ETHICS CODES • Compliance-Based Ethics Code -- Emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers. • Integrity-Based Ethics Code -- Define the organization’s guiding values, create an environment that supports ethically sound behavior and stress a shared accountability among employees. 4 -15

HOW to IMPROVE AMERICA’S BUSINESS ETHICS 1. Top management must adopt and unconditionally support an explicit corporate code of conduct. 2. Employees must understand that senior management expects all employees to act ethically. 3. Managers and others must be trained to consider the ethical implications of all business decisions. (continued) 4 -16

HOW to IMPROVE AMERICA’S BUSINESS ETHICS, cont. 4. An ethics office must be set up with which employees can communicate anonymously. Whistleblowers -- People who report illegal or unethical behavior. 5. Involve outsiders such as suppliers, subcontractors, distributors and customers. 6. The ethics code must be enforced. 4 -17

HOW to PREVENT UNETHICAL BEHAVIORS * Setting Corporate Ethical Standards LG 4 * 1. Managers must communicate the organization’s vision on ethical behavior. 2. Organizations must have a code of ethics. 3. Policies have to be enforced regarding ethical offences. 4. Ethical responsibility must be taught to all employees. Source: James Gehrke, Magnify Leadership & Development, November 2008. (continued) 4 -18

HOW to PREVENT UNETHICAL BEHAVIORS * Setting Corporate Ethical Standards LG 4 * 5. Discussions of ethics must be included in the decision-making process. 6. Accountability must be taken seriously at all levels in the organization. 7. Organizations must act fast when a crisis occurs. 8. Employees must know they have to defend and maintain the company’s reputation. Source: James Gehrke, Magnify Leadership & Development, November 2008. 4 -19

Social Responsibility 4 -20

Social Responsibility Social responsibility is management’s obligation to make choices and take actions that contribute to the welfare and interests of society as well as to those of the organization.

CORPORATE SOCIAL RESPONSIBILITY *Corporate Social Responsibility LG 5 * • Corporate Social Responsibility (CSR) -- The concern businesses have for the welfare of society. • CSR is based on a commitment to integrity, fairness, and respect. • CSR proponents argue that businesses owe their existence to the societies they serve and cannot exist in societies that fail. 4 -22

CORPORATE RESPONSIBILITY and POLICY • Corporate Responsibility -- Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment. • Corporate Policy -- The position a firm takes on social and political issues. • Corporate Philanthropy -- Includes charitable donations. 4 -23

POSTIVE IMPACTS of COMPANIES • Xerox offers a Social Service Leave program. • Citizen Corps encourages volunteers to help strengthen homeland security by helping in their community. • Two-thirds of MBA students surveyed reported they would take a lower salary to work for a socially responsible company. 4 -24

HELPING HANDS – Most Generous Celebrities Who? For? Taylor Swift Nashville Symphony and Centrepoint homeless. One Direction Helping African and UK’s living in severe poverty or injustice, & cancer research. Beyonce London’s charity concert for women’s rights: ‘Chime For Change’ Paul Walker Founded: Reach Out World. Wide (ROWW) Macklemore & Ryan Lewis Adopting a culture of acceptance. Sandra Bullock Mothers Who Make a Difference Award and People’s Choice Award: “Favorite Humanitarian” for ongoing efforts in disaster relief & education. Kerry Washington President Obama’s President’s Committee on the Arts & Humanities, advocating nationally for arts education in low-income areas Ian Somerhadler Ian Somerhalder Foundation “to empower, educate, and collaborate with people and projects to positively impact the planet and its creatures. ” Ryan Seacrest The Ryan Seacrest Foundation to give kids in hospitals a chance to feel like a star for day. www. dosomething. org 2013 4 -25

GENEROUS GUYS World’s Biggest Givers Who? How Much? What For? Bill Gates $28 B Malaria, public health, education Warren Buffett $8. 3 B Gates Foundation George Soros $8 B Human rights, democracy Gordon Moore $6. 8 B Environment Carlos Slim $4 B Education, healthcare Eli Broad $2. 6 B Education, arts Azim Premji $2. 1 B Education James Stowers $2 B Genetic research Michael Bloomberg $1. 8 B Antismoking, transportation Li Ka-Shing $1. 6 B Education, healthcare Source: Forbes, June 6, 2011. 4 -26

RESPONSIBILITY to CONSUMERS 4 -27

PRESIDENT KENNEDY’S BASIC RIGHTS of CONSUMERS • The Right to Safety • The Right to be Informed • The Right to Choose • The Right to be Heard 4 -28

Responsibilities to Customers The Right to Be Safe operation of products, avoiding product liability. The Right to Be Informed. Avoiding false or misleading advertising and providing effective customer service. The Right to Choose. Ability of consumers to choose the products and services they want. The Right to Be Heard. Ability of consumers to express legitimate complaints to the appropriate parties. Consumer Product Safety Commission www. cpsc. gov

RESPONSIBILITY TO INVESTORS 4 -32

RESPONSIBILITY TO INVESTORS • Insider Trading -- Insiders using private company information to further their own fortunes or those of their family and friends. • Unethical behavior does financial damage to a company and investors are cheated. 4 -33

RESPONSIBILITY to EMPLOYEES 4 -34

RESPONSIBILITY to EMPLOYEES • Create jobs and provide a chance for upward mobility. • Treat employees with respect. • Offer salaries and benefits that help employees reach their personal goals. 4 -35

AMERICA’S MOST ADMIRED COMPANIES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Apple Google Berkshire Hathaway Southwest Airlines Procter & Gamble Coca-Cola Amazon Fed. Ex Microsoft Mc. Donald’s Source: Fortune, www. fortune. com, March 21, 2011. 4 -36

RESPONSIBILITY to the ENVIRONMENT 4 -38

RESPONSIBILITY to the ENVIRONMENT • Environmental efforts may increase costs but can offer good opportunities. • The emerging renewable-energy and energyefficiency industries account for 8. 5 million U. S. jobs. • By 2030, as many as 40 million “Green” jobs will be created. 4 -40

SOCIAL AUDITING • Social Audit -- A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs. • Five Types of Social Audit Watchdogs 1) 2) 3) 4) 5) Socially conscious investors Socially conscious research organizations Environmentalists Union officials Customers 4 -43

INTERNATIONAL ETHICS • Many businesses want socially responsible behavior from their international suppliers. • In the 1970 s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business. • Partners in the Organization of American States signed the Inter-American Convention Against Corruption. 4 -44

Social Responsibility Bottom Line: Should Companies Have? 4 -45

The Majority View Companies are citizens in the communities in which they reside, therefore, They do have a Social Responsibility! 4 -46

An Economist’s View Milton Friedman – Argues that firms need to focus on making a profit, not on social responsibility, and – Claims that firms that focus on social responsibility get distracted from their real purpose. 4 -47

Social Responsibility To Sum It Up: Doing Good vs. Doing Well 4 -48