MGMT 374 Week 1 Lecture PowerPoint

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  • Increased awareness of ethical issues in the following industries: Accounting fraud Insider trading of stocks and bonds Falsifying of organizational documents Deceptive advertising Defective products Bribery Employee theft
  • Due to the need for professional experience and understanding the complexities of the legal environment. Even a person with good personal ethics will need business ethics training to confront complex ethical situations in the workplace.
  • MGMT 374 Week 1 Lecture PowerPoint

    1. 1. <ul><li>The Importance of Business Ethics </li></ul>C H A P T E R 1
    2. 2. Why Study Business Ethics? <ul><li>Business decisions under great scrutiny </li></ul><ul><ul><li>Global financial crisis created diminished stakeholder trust </li></ul></ul><ul><li>Deals with questions about whether practices are acceptable </li></ul><ul><li>No universally-accepted approach for resolving issues </li></ul>Source: © Jack Hollingsworth/Corbis
    3. 3. Business Ethics <ul><li>Comprises principles, values, and standards that guide behavior in the world of business </li></ul><ul><li>Principles : Specific boundaries for behavior that are universal and absolute </li></ul><ul><ul><li>Freedom of speech, civil liberties </li></ul></ul><ul><li>Values : Used to develop socially enforced norms </li></ul><ul><ul><li>Integrity, accountability, trust </li></ul></ul>
    4. 4. Americans’ Trust in Business (% of respondents who say they trust the following business categories a great deal)
    5. 5. A Crisis in Business Ethics <ul><li>Consumer trust of businesses is declining </li></ul><ul><li>No sector is exempt from ethical misconduct </li></ul><ul><li>Stakeholders determine what is ethical/unethical </li></ul><ul><ul><li>Investors </li></ul></ul><ul><ul><li>Employees </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Interest groups </li></ul></ul><ul><ul><li>Legal system </li></ul></ul><ul><ul><li>Community </li></ul></ul>Source: Stockbyte
    6. 6. Why Study Business Ethics? <ul><li>Reports of unethical behavior are on the rise </li></ul><ul><li>Society’s evaluation of right or wrong affects its ability to achieve its business goals </li></ul><ul><li>Studying business ethics is a response to Sarbanes-Oxley, FSGO, and stakeholder demands for ethics initiatives </li></ul><ul><li>Individual ethics alone is not sufficient </li></ul><ul><li>Studying business ethics helps identify ethical issues to key stakeholders </li></ul>
    7. 7. A Timeline of Ethical and Socially Responsible Concerns
    8. 8. Before 1960: Ethics in Business <ul><li>Theological discussions of ethics emerged </li></ul><ul><ul><li>Catholic social ethics included a concern for morality in business, workers’ rights and living wages </li></ul></ul><ul><ul><li>Protestants developed ethics courses in their seminaries and schools of theology </li></ul></ul><ul><ul><ul><li>The Protestant work ethic encouraged hard work </li></ul></ul></ul>
    9. 9. The 1960s: The Rise of Social Issues in Business <ul><li>Societal social consciousness emerged </li></ul><ul><ul><li>Anti-business sentiment rose </li></ul></ul><ul><li>JFK’s Consumer Bill of Rights- A new era of consumerism </li></ul><ul><ul><li>Right to safety , to be informed , to choose , and to be heard </li></ul></ul><ul><li>Consumer protection groups fought for consumer protection legislation </li></ul><ul><ul><li>Ralph Nader </li></ul></ul>Source: Hisham Ibrahim
    10. 10. The 1970s: Business Ethics as an Emerging Field <ul><li>Business professors began to write about social responsibility </li></ul><ul><ul><li>An organization’s obligation to maximize positive impact and minimize negative impact on stakeholders </li></ul></ul><ul><li>Philosophers became involved </li></ul><ul><li>Businesses became concerned with public image </li></ul><ul><li>Conferences were held and centers developed </li></ul><ul><li>Issues: </li></ul><ul><ul><li>Bribery – Product safety </li></ul></ul><ul><ul><li>Deceptive advertising – Environment </li></ul></ul><ul><ul><li>Price collusion </li></ul></ul>
    11. 11. The 1980s: Consolidation <ul><li>Membership in business ethics organizations increased </li></ul><ul><li>Ethics centers provided: </li></ul><ul><ul><li>Publications, courses, conferences and seminars </li></ul></ul><ul><li>Firms established ethics committees </li></ul><ul><li>Defense Industry Initiative on Business Ethics and Conduct (DII) emerged </li></ul><ul><ul><li>Foundation for the Federal Sentencing Guidelines for Organizations </li></ul></ul><ul><li>Corporate support for ethics </li></ul>
    12. 12. The 1990s: Institutionalization of Business Ethics <ul><li>The Federal Sentencing Guidelines for Organizations (FSGO) </li></ul><ul><ul><li>Set tone for compliance </li></ul></ul><ul><li>Preventative actions against misconduct </li></ul><ul><ul><li>A company could avoid/minimize potential penalties </li></ul></ul>
    13. 13. The Federal Sentencing Guidelines for Organizations <ul><li>Standards and procedures capable of detecting and preventing misconduct </li></ul><ul><li>High level oversight </li></ul><ul><li>Care in delegation of authority </li></ul><ul><li>Effective communication (training) </li></ul><ul><li>Systems to monitor, audit, and report misconduct </li></ul><ul><li>Consistent enforcement </li></ul><ul><li>Continuous improvement </li></ul>
    14. 14. The 21st Century: A New Focus <ul><li>Continued issues with corporate non-compliance </li></ul><ul><ul><li>Growing public/political demand for improved ethical standards </li></ul></ul><ul><li>Sarbanes-Oxley Act (2002) </li></ul><ul><ul><li>Most extensive ethics reform </li></ul></ul><ul><ul><li>Increased accounting regulations </li></ul></ul><ul><li>FSGO reform (2004) </li></ul><ul><ul><li>Requires governing authorities to be well-informed regarding business ethics programs </li></ul></ul><ul><li>Firm’s greatest danger is not discovering misconduct early </li></ul><ul><li>Basic assumptions of capitalism being debated </li></ul><ul><ul><li>Fears in the wake of global recession and financial meltdown </li></ul></ul>
    15. 15. Organizational and Global Ethical Culture <ul><ul><li>Ethical culture describes the component of corporate culture that captures the values and norms that an organization defines as appropriate conduct </li></ul></ul><ul><ul><ul><li>Creates shared values </li></ul></ul></ul><ul><li>Goal is to: </li></ul><ul><ul><ul><li>Minimize need for enforced compliance </li></ul></ul></ul><ul><ul><ul><li>Maximize utilization of principles/ ethical reasoning </li></ul></ul></ul>Source: Triangle Images
    16. 16. Prevalence of Misconduct by Industry
    17. 17. Ethics Contributes to Employee Commitment <ul><li>Comes from employees who believe their future is tied to the organization’s </li></ul><ul><li>Are willing to make personal sacrifices for the organization </li></ul><ul><ul><li>The more dedication on the part of the company, the greater the employee dedication </li></ul></ul><ul><ul><li>Concerns include a safe work environment, competitive salaries and benefit packages, and fulfillment of contractual obligations </li></ul></ul>
    18. 18. Ethics Contributes to Investor Loyalty <ul><li>Companies perceived by their employees as having a high level of honesty and integrity are more profitable than companies with a low level of honesty and integrity </li></ul><ul><li>Ethical climates in organizations provide platform for: </li></ul><ul><ul><li>Efficiency </li></ul></ul><ul><ul><li>Productivity </li></ul></ul><ul><ul><li>Profitability </li></ul></ul>
    19. 19. Ethics Contributes to Customer Satisfaction <ul><li>Consumers respond positively to socially concerned businesses </li></ul><ul><ul><li>Being good can be extremely profitable </li></ul></ul><ul><li>Customer satisfaction dictates business success </li></ul><ul><li>A strong organizational ethical climate places customers’ interests first </li></ul><ul><li>Research shows a strong relationship between ethical behavior and customer satisfaction </li></ul>
    20. 20. Ethics Contributes to Profits <ul><li>Corporate concern for ethical conduct is being integrated with strategic planning </li></ul><ul><ul><li>Maximize profitability </li></ul></ul><ul><li>Corporate citizenship is positively associated with: </li></ul><ul><ul><li>Return on investment and assets </li></ul></ul><ul><ul><li>Sales growth </li></ul></ul><ul><li>Studies have found a positive relationship between citizenship and performance </li></ul>Source: PhotoLink

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