* * Chapter Four Demanding Ethical and Socially Responsible Behavior Copyright © 2010 by the McGraw-Hill Companies, Inc. A...
LIFE AFTER SCANDAL * * Ethics is More Than Legality <ul><li>Scandals have shaken the real estate, mortgage and banking ind...
WHAT are ETHICS? * * Ethical Standards are Fundamental <ul><li>Ethics --  The standards of moral behavior. Behaviors that ...
BASIC MORAL VALUES * * Ethical Standards are Fundamental <ul><ul><li>Right: </li></ul></ul><ul><ul><ul><li>Integrity  </li...
PAYING the PRICE (Legal Briefcase) * * <ul><ul><ul><li>Enron : One executive is serving a 24 year sentence for accounting ...
ETHICS and YOU * * Ethics Begins with Each of Us <ul><ul><ul><li>Plagiarizing from Internet materials is the most common f...
FACING ETHICAL DILEMMAS * * Ethics Begins with Each of Us <ul><ul><ul><li>Ask yourself these questions: </li></ul></ul></u...
ETHICS START at the TOP * * Managing Businesses Ethically and Responsibly <ul><ul><ul><li>Trust between workers and manage...
FACTORS INFLUENCING MANAGERIAL ETHICS * * Managing Businesses Ethically and Responsibly LG3 4- Individual Organizational E...
ETHICS CODES * * Setting Corporate Ethical Standards <ul><ul><ul><li>An increasing number of companies have adopted writte...
HOW to IMPROVE AMERICA’S  BUSINESS ETHICS * * Setting Corporate Ethical Standards <ul><ul><li>Top management must adopt an...
HOW to IMPROVE AMERICA’S  BUSINESS ETHICS * * Setting Corporate Ethical Standards <ul><ul><li>An ethics office must be set...
HOW to PREVENT UNETHICAL BEHAVIORS * * Source: James Gehrke, Magnify Leadership & Development, November 2008. <ul><li>Mana...
HOW to PREVENT UNETHICAL BEHAVIORS * * Source: James Gehrke, Magnify Leadership & Development, November 2008. <ul><li>Disc...
CORPORATE SOCIAL RESPONSIBILITY * * Corporate  Social Responsibility <ul><li>Corporate Social Responsibility (CSR) --  The...
CORPORATE PHILANTHROPY  and SOCIAL INITIATIVES * * Corporate  Social Responsibility <ul><li>Corporate Philanthropy --  Inc...
CORPORATE RESPONSIBILITY  and POLICY * * Corporate  Social Responsibility <ul><li>Corporate Responsibility --  Includes ev...
To WHOM MUCH HAS  BEEN GIVEN… America’s Charitable Giving * * Source: Wall Street Journal,  www.wsj.com , June 23, 2008. C...
PRESIDENT KENNEDY’S BASIC RIGHTS of CONSUMERS * * Responsibility  to Customers <ul><ul><li>The Right to Safety </li></ul><...
INSIDER TRADING * * Responsibility  to Investors <ul><li>Insider Trading --  Insiders using private company information to...
RESPONSIBILITY to  EMPLOYEES * * Responsibility  to Employees <ul><li>Create jobs and provide a chance for upward mobility...
SOCIAL AUDITING * * Social Auditing <ul><li>Social Audit --  A systematic evaluation of an organization’s progress toward ...
What do the watchdogs do? <ul><li>Investors – insist on high stds to suppliers </li></ul><ul><li>Environmentalists – they ...
INTERNATIONAL ETHICS * * International Ethics and  Social Responsibility <ul><li>Many businesses want socially responsible...
PROFESSIONAL ETHICS <ul><li>1.  HONESTY </li></ul><ul><li>2.  INTEGRITY </li></ul><ul><li>3.  FAIRNESS </li></ul><ul><li>4...
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Intro to Bus 110 MW - Chap004

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  • See Learning Goal 1: Explain why obeying the law is only the first step in behaving ethically.
  • See Learning Goal 1: Explain why obeying the law is only the first step in behaving ethically. The reputation of American businesses have been under assault due to numerous scandals over the past twenty years. Use this slide to help students understand that a person can obey the law and still be behaving unethically. Following the law is only the first step in being ethical. Ethics are standards of moral behavior and are accepted by society as right versus wrong.
  • See Learning Goal 1: Explain why obeying the law is only the first step in behaving ethically.
  • See Learning Goal 1: Explain why obeying the law is only the first step in behaving ethically.
  • See Learning Goal 1: Explain why obeying the law is only the first step in behaving ethically. Studies have shown that dishonesty at school often leads to dishonesty at work.
  • See Learning Goal 2: Ask the three questions to answer when faced with a potentially unethical action. When facing an ethical dilemma it is important that you ask these three basic questions: Is it legal? Is it balanced? How will it make me feel about myself? Asking and answering these three questions will prevent many people from making unethical decisions.
  • See Learning Goal 3: Describe management’s role in setting ethical standards. Organizational ethics begins at the top. Leadership helps to instill corporate values in employees, so like many aspects of business ethical behavior practiced and modeled by managers and executives will often trickle down to the employees at large.
  • See Learning Goal 3: Describe management’s role in setting ethical standards. Factors Influencing Managerial Ethics Before you put this slide up, you may want to ask the students: What factors influence managerial ethics? Ethics begins with the individual but is influenced by the organization and the environment in which the business operates. To bring the discussion to the present, you may ask: How can the firm’s reward system impact ethical behavior? How did these reward systems at large banks and other financial institutions exacerbate the financial crisis in this country? (Students should be able to discuss this point. Excessive risk taking imperiled all of the stakeholders of various financial institutions as well as the world economy.)
  • See Learning Goal 4: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 4: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 4: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 2: Ask the three questions to answer when faced with a potentially unethical action. Ways to Prevent Unethical Behavior Before you put this slide up, you may want to ask the students: What is management’s role in preventing unethical behaviors? What can be done to deter unethical behaviors on the part of employees? Increasing the penalty and educating employees are among the top methods for deterring unethical behaviors, according to the CMO Ethics Poll. (Source: CMO Magazine, October 2004) Thirty percent of the respondents in a poll suggested adding new laws to deter unethical behaviors. Ask the students: If ethics is more than legality, would new laws help? (Students should be able to argue this point. Although ethics is more than legality, if something is against the law, people may deter from such behavior. However, it should be pointed out that ethics should be the way of life, i.e., it needs to be ingrained in the employees through culture and role modeling by managers and executives.)
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code. CSR is based on a commitment to such basic principles as integrity, fairness and respect. Many for-profit companies have philanthropic endeavors as a part of their mission. Communities often depend on companies to help with social programs that make the lives of people in the community better. It stands to reason that businesses that strengthen their communities, as proponents of CSR argue, will grow stronger as their communities improve.
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code. America’s Charitable Giving For the first time charitable giving exceed $300 billion in this country. What percentage of the $300 billion was contributed by individuals, businesses and foundations? (Individuals contributed 82.3%, businesses 5.1% and foundations 12.6%) (Source: http://nonprofit.about.com/od/trendsissuesstatistics/a/giving2008.htm) Religious organizations continue to receive the biggest share of donations accounting for 33.4% of the total giving. Here is the breakdown for what types of organizations receive these donations: Religion, $102.32 billion, 33.4% Education, $43.32 billion, 12.1% Human services, $29.64 billion, 9.7% Health, $23.15 billion, 7.6% Public-Society benefit (United Way etc), $22.65 billion, 7.4% Arts, culture and humanities, $13.67 billion, 4.5% International affairs, $13.22 billion, 4.3% Environment and animals, $6.96 billion, 2.3% Foundations, $27.73 billion, 9.1% Unallocated giving, $23.67, 7.7%
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 5: Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
  • See Learning Goal 6: Analyze the role of U.S. businesses in influencing ethical behavior and social responsibility in global markets.
  • Intro to Bus 110 MW - Chap004

    1. 1. * * Chapter Four Demanding Ethical and Socially Responsible Behavior Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
    2. 2. LIFE AFTER SCANDAL * * Ethics is More Than Legality <ul><li>Scandals have shaken the real estate, mortgage and banking industries. </li></ul><ul><li>How do we restore trust in the free market system? </li></ul><ul><ul><li>Punish those who have broken the law. </li></ul></ul><ul><ul><li>Make accounting records more transparent. </li></ul></ul><ul><ul><li>Consider what is ethical, not just what is legal. </li></ul></ul>LG1 4-
    3. 3. WHAT are ETHICS? * * Ethical Standards are Fundamental <ul><li>Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong. </li></ul>LG1 4-
    4. 4. BASIC MORAL VALUES * * Ethical Standards are Fundamental <ul><ul><li>Right: </li></ul></ul><ul><ul><ul><li>Integrity </li></ul></ul></ul><ul><ul><ul><li>Respect for human life </li></ul></ul></ul><ul><ul><ul><li>Self control </li></ul></ul></ul><ul><ul><ul><li>Honesty </li></ul></ul></ul><ul><ul><ul><li>Courage </li></ul></ul></ul><ul><ul><ul><li>Self-sacrifice </li></ul></ul></ul><ul><li>Wrong : </li></ul><ul><ul><li>Cheating </li></ul></ul><ul><ul><li>Cowardice </li></ul></ul><ul><ul><li>Cruelty </li></ul></ul>LG1 4-
    5. 5. PAYING the PRICE (Legal Briefcase) * * <ul><ul><ul><li>Enron : One executive is serving a 24 year sentence for accounting fraud while another will be released in October 2011. </li></ul></ul></ul><ul><ul><ul><li>Arthur Andersen : Convicted of tampering with witnesses, the company was dissolved and about 28,000 people lost their jobs. </li></ul></ul></ul><ul><ul><ul><li>Tyco International : Two executives stole $600 million from the company and are scheduled to be released from prison in 2030. </li></ul></ul></ul><ul><ul><ul><li>Adelphia Communication : Two executives were convicted of conspiracy, bank and securities fraud and given sentences of 15 and 20 years. </li></ul></ul></ul><ul><ul><ul><li>WorldCom : Former CEO was convicted of fraud, conspiracy and false filings and sentenced to 25 years. </li></ul></ul></ul>4-
    6. 6. ETHICS and YOU * * Ethics Begins with Each of Us <ul><ul><ul><li>Plagiarizing from Internet materials is the most common form of cheating in schools today. </li></ul></ul></ul>LG2 <ul><ul><ul><li>Studies found a strong relationship between academic dishonesty and dishonesty at work. </li></ul></ul></ul>4-
    7. 7. FACING ETHICAL DILEMMAS * * Ethics Begins with Each of Us <ul><ul><ul><li>Ask yourself these questions: </li></ul></ul></ul><ul><ul><ul><ul><li>Is it legal? </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Is it balanced? </li></ul></ul></ul></ul><ul><ul><ul><ul><li>How will it make me feel about myself? </li></ul></ul></ul></ul>LG2 4-
    8. 8. ETHICS START at the TOP * * Managing Businesses Ethically and Responsibly <ul><ul><ul><li>Trust between workers and managers must be based on fairness, honesty, openness and moral integrity. </li></ul></ul></ul><ul><ul><ul><li>Leadership can help instill corporate values in employees. </li></ul></ul></ul>LG3 4-
    9. 9. FACTORS INFLUENCING MANAGERIAL ETHICS * * Managing Businesses Ethically and Responsibly LG3 4- Individual Organizational Environmental <ul><li>Values </li></ul><ul><li>Work Background </li></ul><ul><li>Family Status </li></ul><ul><li>Personality </li></ul><ul><li>Top Level Management Philosophy </li></ul><ul><li>Firm’s Reward System </li></ul><ul><li>Job Dimensions </li></ul><ul><li>Competition </li></ul><ul><li>Economic Conditions </li></ul><ul><li>Social/Cultural Institutions </li></ul>
    10. 10. ETHICS CODES * * Setting Corporate Ethical Standards <ul><ul><ul><li>An increasing number of companies have adopted written codes of ethics. </li></ul></ul></ul><ul><li>Compliance-Based Ethics Code -- Emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers. </li></ul><ul><li>Integrity-Based Ethics Code -- Define the organization’s guiding values, create an environment that supports ethically sound behavior and stress a shared accountability among employees. </li></ul>LG4 4-
    11. 11. HOW to IMPROVE AMERICA’S BUSINESS ETHICS * * Setting Corporate Ethical Standards <ul><ul><li>Top management must adopt and unconditionally support an explicit corporate code of conduct. </li></ul></ul><ul><ul><li>Employees must understand that senior management expects all employees to act ethically. </li></ul></ul><ul><ul><li>Managers and others must be trained to consider the ethical implications of all business decisions. </li></ul></ul><ul><ul><li>(continued) </li></ul></ul>LG4 4-
    12. 12. HOW to IMPROVE AMERICA’S BUSINESS ETHICS * * Setting Corporate Ethical Standards <ul><ul><li>An ethics office must be set up with which employees can communicate anonymously. Whistleblowers -- People who report illegal or unethical behavior. </li></ul></ul>LG4 <ul><li>Involve outsiders such as suppliers, subcontractors, distributors and customers. </li></ul><ul><li>The ethics code must be enforced. </li></ul>4-
    13. 13. HOW to PREVENT UNETHICAL BEHAVIORS * * Source: James Gehrke, Magnify Leadership & Development, November 2008. <ul><li>Managers must communicate the organization’s vision on ethical behavior. </li></ul><ul><li>Organizations must have a code of ethics. </li></ul><ul><li>Policies have to be enforced regarding ethical offences. </li></ul><ul><li>Ethical responsibility must be taught to all employees. </li></ul><ul><li>(continued) </li></ul>LG4 Setting Corporate Ethical Standards 4-
    14. 14. HOW to PREVENT UNETHICAL BEHAVIORS * * Source: James Gehrke, Magnify Leadership & Development, November 2008. <ul><li>Discussions of ethics must be included in the decision-making process. </li></ul><ul><li>Accountability must be taken seriously at all levels in the organization. </li></ul><ul><li>Organizations must act fast when a crisis occurs. </li></ul><ul><li>Employees must know they have to defend and maintain the company’s reputation. </li></ul>LG4 Setting Corporate Ethical Standards 4-
    15. 15. CORPORATE SOCIAL RESPONSIBILITY * * Corporate Social Responsibility <ul><li>Corporate Social Responsibility (CSR) -- The concern businesses have for the welfare of society. </li></ul><ul><ul><li>CSR is based on a commitment to integrity, fairness, and respect. </li></ul></ul><ul><ul><li>CSR proponents argue that businesses owe their existence to the societies they serve and cannot exist in societies that fail. </li></ul></ul>LG5 4-
    16. 16. CORPORATE PHILANTHROPY and SOCIAL INITIATIVES * * Corporate Social Responsibility <ul><li>Corporate Philanthropy -- Includes charitable donations. </li></ul><ul><li>Corporate Social Initiatives -- Includes enhanced forms of corporate philanthropy. </li></ul>LG5 4-
    17. 17. CORPORATE RESPONSIBILITY and POLICY * * Corporate Social Responsibility <ul><li>Corporate Responsibility -- Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment. </li></ul><ul><li>Corporate Policy -- The position a firm takes on social and political issues. </li></ul>LG5 4-
    18. 18. To WHOM MUCH HAS BEEN GIVEN… America’s Charitable Giving * * Source: Wall Street Journal, www.wsj.com , June 23, 2008. Corporate Social Responsibility LG5 4-
    19. 19. PRESIDENT KENNEDY’S BASIC RIGHTS of CONSUMERS * * Responsibility to Customers <ul><ul><li>The Right to Safety </li></ul></ul><ul><ul><li>The Right to be Informed </li></ul></ul><ul><ul><li>The Right to Choose </li></ul></ul><ul><ul><li>The Right to be Heard </li></ul></ul>LG5 4-
    20. 20. INSIDER TRADING * * Responsibility to Investors <ul><li>Insider Trading -- Insiders using private company information to further their own fortunes or those of their family and friends. </li></ul><ul><li>Unethical behavior does financial damage to a company and investors are cheated. </li></ul>LG5 4-
    21. 21. RESPONSIBILITY to EMPLOYEES * * Responsibility to Employees <ul><li>Create jobs and provide a chance for upward mobility. </li></ul><ul><li>Treat employees with respect. </li></ul><ul><li>Offer salaries and benefits that help employees reach their personal goals. </li></ul>LG5 4-
    22. 22. SOCIAL AUDITING * * Social Auditing <ul><li>Social Audit -- A systematic evaluation of an organization’s progress toward implementing programs that are socially responsible and responsive. </li></ul><ul><ul><li>Four Types of Social Audit Watchdogs </li></ul></ul><ul><ul><ul><li>Socially conscious investors </li></ul></ul></ul><ul><ul><ul><li>Environmentalists </li></ul></ul></ul><ul><ul><ul><li>Union officials </li></ul></ul></ul><ul><ul><ul><li>Customers </li></ul></ul></ul>LG5 4-
    23. 23. What do the watchdogs do? <ul><li>Investors – insist on high stds to suppliers </li></ul><ul><li>Environmentalists – they name companies that do not comply with preset standards </li></ul><ul><li>Union officials – hunt violations and force compliance to avoid public scrutiny </li></ul><ul><li>Customers – make buying decisions based on social conscience </li></ul>
    24. 24. INTERNATIONAL ETHICS * * International Ethics and Social Responsibility <ul><li>Many businesses want socially responsible behavior from their international suppliers. </li></ul><ul><li>The Joint Initiative on Corporate Accountability and Workers’ Rights was designed to make creating a single set of labor standards and inspecting factories easier. </li></ul><ul><li>In the 1970s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business. </li></ul>LG6 4-
    25. 25. PROFESSIONAL ETHICS <ul><li>1. HONESTY </li></ul><ul><li>2. INTEGRITY </li></ul><ul><li>3. FAIRNESS </li></ul><ul><li>4. PURSUIT OF EXCELLENCE </li></ul><ul><li>5. ACCOUNTABILITY </li></ul>
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