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 a business should be managed ethically to maintain a good reputation keep existing customers and attract new ones avoid lawsuits reduce employee turnover please customers employees and society simply do the right thing III Managing Businesses Ethically and Responsibly majority of CEOs surveyed attributed unethical employee conduct to leadership s failure to establish ethical standards and culture avoid gov t intervention in the form of new laws regulations controlling business activities Overly ambitious goals and incentives can create an environment in which unethical actions can occur IV 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 and stress a shared accountability among employees 2 Employees must understand that expectations for ethical behavior begin at the top and senior management expects all employees to act accordingly Six Steps to Improve U S Business Ethics 1 Top management must adopt support an explicit corporate code of conduct 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 enforcement 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 Dodd Frank Wall Street Reform and Consumer Protection Act allows corporate whistleblowers who provide information that leads to a successful 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 product manufacturing fair pay rates appropriate employee treatment and hiring practices