part Chapter 4 Chapter Demonstrating Ethical Behavior and

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

2 Learning Objectives 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. Mc. Graw-Hill © 2009 The Mc. Graw-Hill Companies, Inc. All rights reserved.

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

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

5 Personal Ethics • Center for Applied Ethics – Eight principles: – – – – Mc. Graw-Hill 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. © 2009 The Mc. Graw-Hill Companies, Inc. All rights reserved.

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

7 Corporate Ethics • 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 Mc. Graw-Hill © 2009 The Mc. Graw-Hill Companies, Inc. All rights reserved.

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

9 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 Mc. Graw-Hill © 2009 The Mc. Graw-Hill Companies, Inc. All rights reserved.

10 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 Mc. Graw-Hill © 2009 The Mc. Graw-Hill Companies, Inc. All rights reserved.

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

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