Chapter 4 Demanding Ethical and Socially Responsible Behavior Ethics is More Than Legality Danger with writing new laws people may begin to think that any behavior that is within the law is also acceptable Behaving ethically requires more than law o Ethics reflects people s proper relationships with one another Ethics standards of moral behavior that is behavior accepted by society as right versus Enron frauding their numbers Ethical Standards are Fundamental wrong o Requirements are usually much wider o GM followed legal standards but not ethics Common statements of basic moral values o Right integrity respect for human life self control honesty courage and self sacrifice o Wrong cheating cowardice and cruelty o Golden Rule Do unto others as you would have them do unto you Ethics Begins with Each of Us Employees report frequently violating safety standards and goofing off Plagiarizing material from the Internet is the most common form of cheating in schools today There is a strong relationship between academic dishonestly among undergraduates and dishonesty at work When facing an ethical dilemma ask yourself these questions o Is my proposed action legal o Is it balanced o How will it make me feel about myself Managing Businesses Ethically and Responsibly People learn their standards and values from observing what others do not what they say Trust and cooperation between workers and managers must be based on fairness honesty openness and moral integrity A business should be managed ethically for many reasons o To maintain a good reputation o To keep existing customers and attract new ones o To avoid lawsuits o To reduce employee turnover o To avoid govt intervention in the form of new laws and regulations controlling business activities o To please customers employees and society Setting Corporate Ethical Standards CEO sets the standards Two types of ethical codes o Compliance based ethics codes emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers Chapter 4 Demanding Ethical and Socially Responsible Behavior o Integrity based ethics codes define the organization s guiding values create an environment that supports ethically sound behavior and stress a shared accountability among employees Six steps many believe can improve US Business ethics o Top management must adopt and unconditionally support an explicit corporate code of conduct business decisions anonymously o Employees must understand that expectations for ethical behavior begin at the top o Managers and others must be trained to consider the ethical implications of all o An ethics office must be set up with which employees can communicate Whistleblowers insiders who report illegal or unethical behavior must feel protected from retaliation Not protected in corporal America o Outsiders must be told about the ethics program suppliers subcontractors distributers customers o The ethics code must be enforced with timely action if any rules are broken Select an ethics officer to set a positive tone communicate effectively and relate well to employees at every level If chances of getting caught changed would fraud change IRS gives money to people that report fraud in businesses Corporate Social Responsibility Corporate social responsibility CRS the concern businesses have for the welfare of society not just for the owners o Should companies use this if it will decrease net profits o Based on a commitment to integrity fairness and respect The social performance of a company has several dimensions 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 Many companies allow employees to give part time help to social agencies Responsibility to Consumers President JFK proposed four basic rights of consumers o The right to safety o The right to be informed o The right to choose o The right to be heard A socially conscious company is likely to be viewed more favorably than others Chapter 4 Demanding Ethical and Socially Responsible Behavior To raise awareness of their social responsibility efforts many companies use social media Be honest to customers tell all aspects of product o Negative side effects Responsibility to Investors Unethical behavior does financial damage shareholders are cheated Many investors believe it makes financial and moral sense to invest in companies that plan ahead to create a better environment Insider trading an unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends o After the insider trader cases were made public in the early 2000s the SEC adopted a new rule called Regulation FD fair disclosure requires companies that release any information to share it with everybody not just a few select people Gains and losses are reflected in stock prices and dividends Accounting Irregularities someone is messing up numbers time to get out of company SEC Regulation FD Full Disclosure companies must release any information about company activities to everyone including customers and insiders at the same time nothing in advance What most influences a company s effectiveness and financial performance is responsible Responsibility to Employees human resource management One way a company can demonstrate commitment and caring is to give employees salaries and benefits that help them reach their personal goals The loss of employee commitment confidence and trust in the company and its management can be costly Responsibility to Society and the Environment More than a third of US workers receive salaries from nonprofit organizations that receive funding from others that in turn receive their money from businesses Businesses are partly responsible for promoting social justice o Social contributions cleaning up the environment building community toilets providing computer lessons caring for the elderly and supporting children from low income families Climate change carbon footprint the amount of carbon released during production distribution consumption and disposal o No specific
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