Chapter Two Business Ethics and Social Responsibility

Chapter TwoBusiness Ethicsand Social ResponsibilityComparison of Business Ethics and Social ResponsibilityBusiness Ethics: The principles and standards that define acceptable conduct in business.Social A business’s obligation to Responsibility: maximize its positive impact and minimize its negative impact on society.Ethical IssueAn identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.©FAST FACT:The most common types of observed misconduct are lying, withholding information, and abusive / intimidating behavior.Reasons for Not Reporting Observed Misconduct1. Fear of not being considered a team player2. Didn’t believe corrective action would be taken3. Feared retribution or retaliation from supervisor or management4. No one else cares about business ethics so why should I5. Didn’t trust organization to keep report confidentialSource: 1997 Society for Human Resource Management/EthicsResource Center Business Ethics Survey Report, p. 21.Ethical Issue CategoriesConflict of interestFairness and honestyCommunicationsBusiness relationshipsConflict of InterestOccurs when a person must choose whether to advance their own personal interest or those of others.Fairness and HonestyAre at the heart of business ethics and relate to the general values of decision makers.CommunicationsFalse and misleading advertising and deceptive personal-selling tactics anger customers and may cause a business to fail.Business RelationshipsBusinesspeople must be ethical toward their customers, suppliers, and others in their workplace.Questions to Consider in Determining Whether an Action is EthicalAre there any potential legal restrictions or violations that could result from the action?Question: If I do this will break any laws?Does your company have a specific code of ethics or a policy on the action?Question: If I do this will I go against the employee handbook?Questions to Consider in Determining Whether an Action is EthicalIs this activity customary in your industry? Are there any industry trade groups that provide guidelines or codes of conduct that address this issue?Question: If I do this will I violate any trade practices?Questions to Consider in Determining Whether an Action is EthicalWould this activity be accepted by your coworkers? Will your decision or action withstand open discussion with coworkers and managers and survive untarnished?Question: Will my action cause peer acceptance or rejection, or any peer pressure?Questions to Consider in Determining Whether an Action is EthicalHow does this activity fit with your own beliefs and values?Question: Will my action violate any of my personal ethics, religious beliefs, or social values?Three Factors that Influence Business EthicsIndividualStandardsandValuesManagers’andCoworkers’InfluenceOpportunity:Codes andComplianceRequirementsEthical/UnethicalChoicesin BusinessCodes of EthicsFormalized rules and standards that describe what a company expects of its employees.FAST FACTS: Written ethics standards are more often found in larger companies than smaller ones.WhistleblowingThe act of an employee exposing the employer’s wrongdoing to outsiders, such as the media or government regulatory agencies.The Facts on Business Ethics Today50% of employees surveyed reported that their organizations have an ethics officer or a phone line for ethics advice.84% reported that their organizations offer mandatory ethics training.54% reported that ethics training was useful at work.Source: Ethics Resource Center, 2000 National Business Ethics Survey: How Employees Perceive Ethics at Work.The Nature of Social ResponsibilityFour Dimensions:Economic – earn profitsLegal – comply with the lawEthical – not just “for profit” onlyVoluntary & Philanthropic – promote human welfare and goodwillThe Pyramid of Social ResponsibilityEthical Responsibilitiesbeing ethical; doing what is right, just,and fair; avoiding harmVoluntaryResponsibilitiesbeing a “good corporate citizen”;contributing to thecommunity and quality of lifeSource: Adapted from Archie B. Carroll, “The Pyramid of CorporateSocial Responsibility: Toward the Moral Management of Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42.Legal Responsibilitiesobeying the law (society’s codification of rightand wrong) Economic Responsibilitiesbeing profitableAmerica’s Best Corporate CitizensProcter & GambleHewlett-PackardFannie MaeMotorolaIBMSun MicrosystemsHerman MillerPolaroidSt. Paul Cos.Freddie Mac Source: Philip Johnansson, “The Best 100 Corporate Citizens,” Business Ethics, March/April 2001, p. 15.Arguments for Social Responsibility1. Business helped to create many of the social problems that exist today, so it should play a significant role in solving them, especially in the areas of pollution reduction and cleanup.2. Businesses should be more responsible because they have the financial and technical resources to help solve social problems.3. As members of society, businesses should do their fair share to help others. Arguments for Social ResponsibilitySocially responsible decision making by businesses can prevent increased government regulation.Social responsibility is necessary to ensure economic survival: If businesses want educated and healthy employees, customers with money to spend, and suppliers with quality goods and services in years to come, they must take steps to help solve the social and environmental problems that exist today.Arguments Against Social Responsibility1. It sidetracks managers from the primary goal of business–earning profits. Every dollar donated to social causes or otherwise spent on society's problems is a dollar less for owners and investors.2. Participation in social programs gives businesses greater power, perhaps at the expense of particular segments of society.Arguments Against Social Responsibility3. Some people question whether business has the expertise needed to assess and make decisions about social problems.4. Many people believe that social problems are the responsibility of government agencies and officials, who can be held accountable by voters.Social Responsibility IssuesOrganizational relationships with owners and stockholders – profit and ROIEmployee relations – provide a safe workplace, adequate pay, information about the company, listen to grievances, and treat employees fairly Consumer relations – respect the rights of customers and provide them with safe and satisfying productsSocial Responsibility IssuesEnvironmental issues animal rightspollutionglobal warmingCommunity relations – business’s responsibility to the general welfare of the community and society in which they operate John F. Kennedy’s 1962Consumer Bill of RightsThe right to safetyThe right to be informedThe right to chooseThe right to be heardFAST FACT:John F. Kennedy was the 35th President of the United States.The Ethics OfficerAn emerging trend in corporate AmericaProvides advice about ethics to employees and managementDistributes the company’s code of ethicsAnswers ethics questions anonymouslyTakes action on ethics violationsReviews and modifies the code of ethics as neededSolve the Dilemma1.What are some of the ethical issues involved in giving a customer an award for consumption behavior without notifying him/her first?2. Do you see this as a potential violation of privacy? Explain.3. How would you handle the situation if you were Barnard?Explore Your Career Options How do you explain the emergence of career opportunities in the field of business ethics and social responsibility?Additional Discussion Questions and Exercises1. What makes ethical decisions so difficult?2. Many organizations are primarily concerned with earning a profit or a return on their investment. Does this concern for owners and investors present an ethical dilemma for companies when weighing business decisions that favor employees and/or the general public?3. The right to be heard is one of the four rights in the consumer bill of rights. How are some corporations addressing this consumer concern?Additional Discussion Questions and Exercises4. Find examples of environmental issues in newspapers or business journals. Do these issues influence businesses?5. Imagine you are a salesperson. When does offering a gift, such as basketball tickets, become a bribe rather than just a sales practice?Chapter 2 Quiz1. Which of the following has the greatest effect on ethical behavior in organizations?a. authority of an employee’s superiorsb. an employee’s perception of the ethics of coworkers and managersc. an employee’s personal beliefs about what is right or wrongd. investors perceptions of ethics2. Copying someone else’s work and presenting it as your own isa. ethics.b. bribe.c. plagiarism.d. greenmail.Chapter 2 Quiz3. A code of ethics isa. a set of formalized rules and standards describing what the company expects of its employees.b. a government legislation enforced by government agencies.c. a set of principles that describe what a person believes is the right way to behave.d. the impact of a business’s activities on society.4. Which one of the following is NOT one of the four rights provided in John F. Kennedy’s consumer bill of rights? a. right to safetyb. right to be informedc. right to sued. right to chooseMultiple Choice Questions about the Video1. Milton Hershey had a library, a hotel, a museum, theaters, etc. built during the Great Depression mainly to a. keep his employees employed.b. diversify the activities of his company.c. involve employees in cultural activities.d. promote ethical behavior.2. Hershey’s commitment to the environment and its contributions to worthy causes are examples of a. its code of ethics.b. ethical issues.c. its economic responsibilities.d. social responsibility.