Chapter 2 Notes Business Ethics and Social Responsibility Concern for Ethical and Societal Issues Contemporary Ethical Environment business ethics standards of conduct and moral values involving right and wrong actions arising in the work environment social responsibility enhancement of society s welfare through philosophies policies procedure actions codes of conduct and ethical do the right thing Sarbanes Oxley Act 2002 established new rules for securities trading accounting practices company must publish code of ethics ethics compliance officers are responsible for conducting employee training programs that help spot potential fraud and abuse within a firm Many companies adopt a 3 pronged approach to ethics o Engage in philanthropy o Anticipate manage risks o Identify opportunities to create value do the right thing Development of Individual Ethics Stages of moral Ethical Development o o o 1 Preconventional individually is looking out for his own interests rules followed out of fear of punishment hope for reward 2 Conventional individual considers the interests of others in making decisions rules followed b c it is a part of belonging to the group 3 Postconventional individual follows personal principles considers personal group societal interests experiences person s family educational cultural religious backgrounds environment in the firm can help shape responses to different ethical situations On the Job Ethical Dilemmas many manufacturers use factories overseas to produce their goods faced criticism at home poor conditions businesses sometimes refuse to offer goods services from a particular country b c of civil rights abuses by that gov t Conflict of Interest Loyalty vs Truth Whistle Blowing conflict of interest an employee must make a decision about a business s welfare vs personal gain having integrity means adhering to ethical principles in business situations doing what you say you will do accepting responsibility for mistakes individuals may decide between loyalty to the company and truthfulness in business relationships some place the highest value on loyalty others avoid volunteering negative information but answer truthfully whistle blowing employee s disclosure of illegal immoral unethical practices committed by an org Sarbanes Oxley Act 2002 requires firms in private sector to provide procedures for anonymous reporting of accusations of fraud How Organizations Shape Ethical Conduct Ethical Awareness code of conduct formal statement that defines how the org expects employees to resolve ethical issues managers have the addt l responsibility of creating an atmosphere in the workplace that promotes ethical behavior each employee is responsible for behaving and reporting possible violations of the code many firms have instituted ethics training programs training can give employees an opportunity to practice applying ethical values to hypothetical situations goals set for the business as a whole and for individual depts can affect ethical behavior firm whose managers set unrealistic goals may find an increase in cheating lying Ethical Education Ethical Action Ethical Leadership important way for business leaders to model ethical behavior is to admit when they are wrong and correct mistakes damage from ethical misconduct can affect stakeholders customers investors public affected by a company Acting Responsibility to Satisfy Society social responsibility business s consideration of society s wellbeing and consumer satisfaction plus profits many factors contribute to an assessment of a firm s societal performance including providing equal employment opportunities respecting diversity responding to environmental concerns many corporations highlight charitable contributions and community service in their annual reports some firms measure social performance by conducting social audits formal procedures that identify and evaluate all activities that relate to social issues like conservation employment practices philanthropy Responsibilities to the General Public Public Health Issues that might contribute to these risks Protecting the Environment Heart disease diabetes and obesity have become major public health issues firms have tried eliminating ingredients finding ways to minimize pollution has become an important legal social issue Hit Miss feature describes a company with a creative twist on recycling using shipping containers to construct economical attractive new housing companies often use green marketing strategy that promotes environmentally safe products methods Developing Quality in the Workplace educated workforce provides the intellectual know how required to develop new technology improve productivity compete in the global market US business must assume more responsibility for enhancing the quality of its workforce Corporate Philanthropy corporate philanthropy act of an org making a contribution to the communities in which it earns profits includes donations of cash equipment volunteering corp philan can have many benefits beyond feel good including higher employee morale better company image improved customer relationships consumerism public demand that a business considers the wants needs of consumers when making decisions product liability responsibility of manufacturers for injuries damages caused by products consumers should have access to enough education and product information to make responsible buying decisions false advertising is a violation of the Wheeler Lea Act 1938 businesses that fail to comply face scrutiny by the FTC FDA eased prescription drug advertising on TV socially responsible firms attempt to preserve the right even if the reduce their own sales profits groups want to force down the rising price of prescription drugs by ensuring that consumers have the right opportunity to select cheaper generic brands consumers should be able to express legitimate complaints to appropriate parties blogs Responsibilities to Customers Right to be Safe Right to be Informed Right to Choose Right to be Heard Responsibilities to Employees Workplace Safety Quality of Life Issues OSHA is the main regulatory force that sets workplace safety and health standards Flexible work schedules paid time off family leave is offered to employees who need to deal with family matters Ensuring Equal Opportunity on the Job Civil Rights Act of 1964 outlawed many discriminatory practices Title VII of act prohibits discrimination Equal Employment Opportunity Commission EEOC
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