Ethics Ethics Beliefs about what’s right and wrong Ethical Behavior Ethical behavior is characterized by: Honesty. Fairness. Equality. Rights of individual and groups of people. Unethical Behavior Vise versa.
Ethics, Contd. Sources of individual ethics: Childhood responses to adult behavior Influence of peers Experiences in adulthood Managerial ethics Behavior toward employees Behavior toward the organization Behavior toward other economic agents—customers, competitors, stockholders, and environment
Assessing Ethical Behavior Three-step model for applying ethical judgments to situations: gather relevant factual information determine the most appropriate moral values make an ethical judgment based on the rightness or wrongness of the proposed activity or policy
Four Ethical Norms Utility—does a particular act optimize what is best for those who are affected by it? Rights—does it respect the rights of the individual involved? Justice—is it consistent with what we regard as fair? Caring—is it consistent with people’s responsibilities to each other?
Business Ethics Business Ethics refer to the application of moral standards of right and wrong to business situations.
Factors Affecting Ethical BusinessBehavior Employees Personal values & ethics Social Factors Cultural norms Coworkers – peer pressure Opportunity Whether a business rejects or condones unethical behavior (look the other way).
Methods Companies Use to Encourage Ethical Conduct Top level management involvement Establish a written code of ethics Conduct ethics training programs Hire ethical people Whistle-blower hotline
Code of Ethics A Code of Ethics is a written guide to acceptable and ethical behavior. Outlining uniform policies, standards, and punishments for violations.
Social Responsibility Social responsibility is an obligation for businesses to consider society in its decision making and actions.
Stakeholder Model of SocialResponsibility Business is responsible to ALL stakeholders (employees, communities, environment, etc.)– not just stockholders. Business is part of society and can’t ignore social issues Business can create a more stable environment for long-term profitability by resolving social issues. Prevents government intervention, which could force businesses to do what they fail to do voluntarily Can be profitable and have public relations benefits. ―Green is good business‖
Spending for Social Responsibility AGAINST Companies are only responsible to stockholders, who want return on investment Corporate time, money, and talent should be used to maximize profits, not solve society’s problems Business should not be expected to solve social problems Social issues are responsibility of elected officials and the government
Methods companies use to develop a program of social responsibility includes: Commitment of top executives, policy Part of strategic planning Appointment of a director Social Audit
Areas of Social Responsibility Environment green -- house gases, water, packaging, sustainability, product modification EX: disposal of toxic waster, recycling; control of air, land & water pollution, Green Marketing Customers -- advertising, labeling, pricing EX: for consumers -- quality products at fair prices Employees – fair recruiting, hiring, training, promoting, compensation, termination, whistle blowers Investors – no abuse of resources, misrepresenting finances, excessive salaries, insider trading
Implementing Social ResponsibilityPrograms Approaches to Social Responsibility
Social Responsibility and the SmallBusiness Large Business versus Small Business Differences are primarily differences of scale More issues are questions of individual ethics Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size