bus 101 Chap004

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bus 101 Chap004

  1. 1. * Four Chapter * Demanding Ethical and Socially Responsible Behavior McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. 4-2
  3. 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. 4. Ethics • More Than Legality • Standards are •Ethics begins with each of us 4-4 Fundamental
  5. 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. 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
  7. 7. To do the RIGHT thing 4-7
  8. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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