Chapter 4 Demanding Ethical and Socially Responsible Behavior Ethics is More Than Legality Ethics reflects people s proper relationships with one another Legality refers to laws we have written to protect ourselves from fraud theft and violence Ethics standards of moral behavior that is behavior accepted by society as Ethical dilemmas choose between equally unsatisfactory alternatives ask right versus wrong yourself o 1 Is my proposed action legal o 2 Is it balanced have a win win attitude o 3 How will it make me feel about myself Managing Businesses Ethically and Responsibly Unethical employee conduct is connected to leadership s failure to establish ethical standards and culture Incentives and overly ambitious goals can lead to unethical actions Compliance based ethics codes ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers Integrity based ethics codes ethical standards that define the organizations guiding values create an environment that supports ethically sound behavior and stress a shared accountability among employees One can improve business ethics by o 1 Top management must adopt and support a code of conduct o 2 Employees must understand that expectations for ethical behavior begin at the top and that senior management expects all employees to act accordingly o 3 Managers and others must be trained to consider the ethical implications of all business decisions o 4 An ethics office must be set up where employees can communicate anonymously Whistleblowers insiders who report illegal or unethical behavior Sarbanes Oxley Act protects whistleblowers o 5 Outsiders must be told about the ethics program o 6 The ethics code must be enforced with timely action if any rules are broken Corporate Social Responsibility of society Corporate Social Responsibility CSR a business s concern for the welfare o Those against CSR believe a manager s role is to compete win in the marketplace doing anything else could lead to socialism o Those for CSR believe that businesses owe their existence to the societies they serve cannot succeed in societies that fail Social performance of a company o Corporate philanthropy the dimension of social responsibility that includes charitable donations o Corporate social initiatives enhanced forms of corporate philanthropy directly related to the company s competencies o Corporate responsibility the dimension of social responsibility that includes everything from hiring minority workers to making safe products o Corporate policy the dimension of social responsibility that refers to the position a firm takes on social and political issues o President Bush sign an executive order establishing USA Freedom Corps to oversee Citizen Corps a program designed to strengthen homeland security efforts through the help of volunteers Basic rights of consumers that companies must follow to succeed the right to safety the right to be informed the right to choose and the right to be heard Insider trading an unethical activity in which insiders use private company information to further their own fortunes or those of their family friends o Regulation FD if a company releases information it must be to everyone not only a select few try to reduce insider trading Businesses must care about employees give them salaries and benefits Businesses partly responsible for promoting social justice Lowering environment costs can add value to a business Social audit is a systematic evaluation of an organization s progress toward implementing socially responsible and responsive programs hard to establish procedures for measuring a firm s activities and their effects on society Watchdogs that monitor companies ethical social responsibility programs o 1 Socially conscious investors o 2 Environmentalists o 3 Union officials hunt down violations and force companies to comply to avoid negative publicity o 4 Customers make buying decisions based on their social conscience International Ethics and Social Responsibility Top leaders are now being held to higher standards more strict Many US businesses demand socially responsible behavior from their international suppliers Inter American Convention Against Corruption International Organization for Standardization ISO plans to publish a standard on social responsibility with guidelines on product manufacturing fair pay rates appropriate employee treatment and hiring practices advisory rules only the formation of a single set of international rules governing multinational corporations is unlikely in the near future
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