DREXEL BUSN 102 - Ethics Is More Than Legality

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I. Ethics Is More Than Legality A. Ethical Standards Are Fundamental - ethics: standards of moral behavior, that is behavior accepted by society as right versus wrong. - Golden Rule: Do unto others as you would have them do unto you.II. Ethics Begins with Each of Us- When facing ethical dilemmas, ask: 1. Is my proposed action legal? 2. Is it balanced? 3. How will it make me feel about myself?III. Managing Businesses Ethically and Responsibly- majority of CEOs surveyed attributed unethical employee conduct to leadership's failure to establish ethical standards and culture.- a business should be managed ethically to: *maintain a good reputation *keep existing customers and attract new ones *avoid lawsuits *reduce employee turnover *avoid gov't intervention in the form of new laws & regulations controlling business activities *please customers, employees, and society *simply do the right thing - Overly ambitious goals and incentives can create an environment in which unethical actions can occurIV. Setting Corporate Ethical Standards- 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 organization's guiding values, create an environment that supports ethically sound behavior, andstress a shared accountability among employees.Six Steps to Improve U.S. Business Ethics:1. Top management must adopt & support an explicit corporate code of conduct.2. Employees must understand that expectations for ethical behavior begin at the top and senior management expects all employees to act accordingly.3. Managers & others must bet rained to consider the ethical implications of all business decisions.4. Ethics office must be set up with which employees can communicate anonymously - whistleblowers: insiders who report illegal or unethical behavior) *must feel protected *Sarbanes-Oxley Act *Dodd-Frank Wall Street Reform and Consumer Protection Act allows corporate whistleblowers who provide information that leads to a successfulenforcement action to collect 10-30% of the total penalty for violations that exceed $1 million.5. Outsiders must be told about the this program.6. The this code must be enforced with timely action if any rules are broken.V. Corporate Social Responsibility- corporate social responsibility: a business's concern for the welfare of society. *companies with good ethical reputations attract & retain better employees, draw more customers, and enjoy greater employee loyalty.The dimensions of the social performance of a company:- Corporate philanthropy: the dimension of social responsibility that includes charitable donations.- corporate social initiatives: enhances forms of corporate philanthropy directly related to the company's competencies.- corporate responsibility: the dimension of social responsibility that includes everything from hiring minority workers to making safe products.- corporate policy: the dimension of social responsibility that refers to the position a firm takes on social and political issues. A. Responsibility to Customers - JFK proposed 4 basic rights of consumers:*the right to safety *the right to be informed *the right to choose *the right to be heard B. Responsibility to Investors - insider trading: an unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends. - Regulation FD (fair disclosure): requires companies to tell everybody or nobody. C. Responsibility to Employees - Employee fraud costs U.S. businesses about 5% of annual revenue and causes 30% of all business failures. D. Responsibility to Society and the Environment - the green movement E. Social Auditing - social audit: a systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs. - Groups that monitor how well companies enforce their ethical and social responsibility policies: 1. Socially conscious investors- insist that a company extend its own high standards to its suppliers. 2. Social conscious research organizations- analyze and report on corporate social responsibility efforts. 3. Environmentalists- apply pressure by naming companies that don't abide by environmentalists' standards. 4. Union officials- hunt down violations & force companies to comply to avoid negative publicity. 5. Customers- make buying decisions based on their social conscience.VI. International Ethics and Social Responsibility- Foreign Corrupt Practices Act criminalized the act of paying foreign business or government leaders to get business.- partners in the Organization of American States signed the Inter-American Convention Against Corruption- the International Organization for Standardization (ISO) plans to publish a standard on social responsibility called ISO 26000, with guidelines on productmanufacturing, fair pay rates, appropriate employee treatment, and hiring


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DREXEL BUSN 102 - Ethics Is More Than Legality

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