3. LIFE AFTER SCANDAL
*
Ethics is More
Than Legality
LG1
*
• Scandals have shaken the real
estate, mortgage and banking
industries.
• How do we restore trust in the
free market system?
-
Punish those who have broken the
law.
Make accounting records more
transparent.
Consider what is ethical, not just
what is legal.
4-3
4. Ethics
• More Than Legality
• Standards are
•Ethics begins with each
of us
4-4
Fundamental
5. WHAT are ETHICS?
*
Ethical Standards
are Fundamental
LG1
*
• Ethics -- The standards of moral behavior.
Behaviors that are accepted by society as right
versus wrong.
4-5
6. Reasons to maintain ethics in Business
•
•
•
•
•
•
•
4-6
To maintain good reputation
To keep existing customers
To attract new customers
To avoid lawsuits
To reduce employee turnover
To avoid government intervention
To please customers, employees, society
And simply
8. *
PAYING the PRICE
(Legal Briefcase)
• Enron: One executive is serving a 24 year sentence for
accounting fraud while another was released in October
2011.
• Arthur Andersen: Convicted of tampering with witnesses,
the company was dissolved and about 28,000 people lost
their jobs.
• Tyco International: Two executives stole $600 million
from the company and are scheduled to be released from
prison in 2030.
• Adelphia Communication: Two executives were
convicted of conspiracy, bank and securities fraud and
given sentences of 15 and 20 years.
• WorldCom: Former CEO was convicted of fraud,
conspiracy and false filings and sentenced to 25 years.
*
4-8
9. ETHICS and YOU
*
Ethics Begins
with Each of Us
LG2
*
• Plagiarizing from Internet materials is the most
common form of cheating in schools today.
• Studies found a strong
relationship between
academic dishonesty
and dishonesty at work.
4-9
10. *
FACING ETHICAL DILEMMAS
Ethics Begins
with Each of Us
LG2
*
• Ask yourself these questions:
- Is it legal?
- Is it balanced?
- How will it make me feel about myself?
4-10
11. ETHICS START at the TOP
*
Managing
Businesses
Ethically and
Responsibly
LG3
*
• Trust between workers and
managers must be based on
fairness, honesty, openness
and moral integrity.
• Leadership can help instill
corporate values in
employees.
4-11
12. ETHICS CODES
* Setting
Corporate
Ethical
Standards
LG4
• An increasing number of companies have
adopted written codes of ethics.
*
• Compliance-Based Ethics Code -Emphasize preventing unlawful behavior by
increasing control and by penalizing wrongdoers.
• 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.
4-12
13. Steps to Improve
Business Ethics
1. Top management support
2. Employees’ understanding
3. Managers’ training
4. Ethics Office- whistle blower
5. Outsiders must be informed
6. Enforcement of ethics code with
timely action
4-13
14. Corporate Social
Responsibility
4-14
• Corporate Social Responsibility:
A business's concern for the
welfare of society.
• Corporate philanthropy:The
dimension of soclal
responsibility that includes
charitable donations. ex: The Bill
& Melinda Gates Foundation
15. • Corporate social initiatives: Enhanced forms of
corporate philanthropy directly related to the
Company’s competencies.
• Corporate responsibility: includes everything
from hiring minority, make safe products,
minimizing pollution, using energy wisely, and
providing a safe work environment
• Corporate policy: refers to the position a firm
takes on social and political issues.
16. Stakeholders to whom
businesses are responsible
• Responsibility to Customers
– Right to safety
– Right to be informed
– Right to choose
– Right to be heard
• Responsibility to Investors – insider trading
• Responsibility to Employees
• Responsibility to society and the environment
4-16
17. SOCIAL AUDITING
*
Social Auditing
LG5
*
• Social Audit -- A systematic evaluation of an
organization’s progress toward implementing
programs that are socially responsible and
responsive.
• Four Types of Social Audit Watchdogs
-
Socially conscious investors
-
Environmentalists
-
Union officials
-
Customers
4-17
