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Business Ethics and Social Responsibility Business Ethics: The principles and standards that define acceptable conduct in business Social Responsibility: A business’s obligation to maximize its positive impact and minimize its negative impact on society 2-

Business Ethics:

The principles and standards that define acceptable conduct in business

Social Responsibility:

A business’s obligation to maximize its positive impact and minimize its negative impact on society

Recognizing an Ethical Issue An ethical issue is an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical. 2- Did You Know? The most common types of observed misconduct are lying, withholding information, and abusive/ intimidating behavior.

An ethical issue is an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.

Reasons For Not Reporting Observed Misconduct Didn’t believe corrective action would be taken Feared retribution or retaliation from supervisor or management Feared they wouldn’t remain anonymous Thought someone else would report the misconduct Didn’t know who to contact 2- Source: 2005 Ethics Resource Center- National Business Ethics Survey Report, p. 29.

Didn’t believe corrective action would be taken

Feared retribution or retaliation from supervisor or management

Feared they wouldn’t remain anonymous

Thought someone else would report the misconduct

Didn’t know who to contact

Misconduct Observed in the Workplace 2-

Ethical Issue Categories Conflict of interest Fairness and honesty Communications Business relationships 2-

Conflict of interest

Fairness and honesty

Communications

Business relationships

Conflict of Interest Occurs when a person must choose whether to advance their own personal interest or those of others 2-

Occurs when a person must choose whether to advance their own personal interest or those of others

Fairness and Honesty The heart of business ethics General values of decision makers 2-

The heart of business ethics

General values of decision makers

Communications False and misleading advertising and deceptive personal-selling tactics anger customers and may cause a business to fail. 2-

False and misleading advertising and deceptive personal-selling tactics anger customers and may cause a business to fail.

Business Relationships Businesspeople must be ethical toward their customers, suppliers, and others in their workplace. 2-

Businesspeople must be ethical toward their customers, suppliers, and others in their workplace.

Questions to Consider in Determining Whether an Action is Ethical Are there any potential legal restrictions or violations that could result from the action? Question: If I do this will it break any laws? Does your company have a specific code of ethics or a policy on the action? Question: If I do this will I go against the employee handbook? 2-

Are there any potential legal restrictions or violations that could result from the action?

Question: If I do this will it break any laws?

Does your company have a specific code of ethics or a policy on the action?

Question: If I do this will I go against the employee handbook?

Questions to Consider in Determining Whether an Action is Ethical Is this activity customary in your industry? Are there any industry trade groups that provide guidelines or codes of conduct that address this issue? Question: If I do this will I violate any trade practices? 2-

Is this activity customary in your industry?

Are there any industry trade groups that provide guidelines or codes of conduct that address this issue?

Question: If I do this will I violate any trade practices?

Questions to Consider in Determining Whether an Action is Ethical Would this activity be accepted by your coworkers? Will your decision or action withstand open discussion with coworkers and managers and survive untarnished? Question: Will my action cause peer acceptance or rejection, or any peer pressure? 2-

Would this activity be accepted by your coworkers?

Will your decision or action withstand open discussion with coworkers and managers and survive untarnished?

Question: Will my action cause peer acceptance or rejection, or any peer pressure?

Questions to Consider in Determining Whether an Action is Ethical How does this activity fit with your own beliefs and values? Question: Will my action violate any of my personal ethics, religious beliefs, or social values? 2-

How does this activity fit with your own beliefs and values?

Question: Will my action violate any of my personal ethics, religious beliefs, or social values?

Three Factors that Influence Business Ethics 2- Individual Standards and Values Managers’ and Coworkers’ Influence Opportunity: Codes and Compliance Requirements Ethical/Unethical Choices in Business

Codes of Ethics Formalized rules and standards that describe what a company expects of its employees 2- Did You Know? Written ethics standards are more often found in larger companies than smaller ones.

Formalized rules and standards that describe what a company expects of its employees

Whistleblowing The act of an employee exposing the employer’s wrongdoing to outsiders The media Government regulatory agencies 2-

The act of an employee exposing the employer’s wrongdoing to outsiders

The media

Government regulatory agencies

The Facts on Business Ethics Today Of employees surveyed: 86% reported that their organizations have written standards of conduct 69% reported that their organizations offer mandatory ethics training 65% reported that their organizations have a place where they can seek ethics advice 2- Source: 2005 Ethics Resource Center- National Business Ethics Survey: How Employees Perceive Ethics at Work.p.12-14.

Of employees surveyed:

86% reported that their organizations have written standards of conduct

69% reported that their organizations offer mandatory ethics training

65% reported that their organizations have a place where they can seek ethics advice

The Nature of Social Responsibility Four Dimensions: Economic – earn profits Legal – comply with the law Ethical Not just “for profit” only Voluntary & Philanthropic Promote human welfare and goodwill 2-

Four Dimensions:

Economic – earn profits

Legal – comply with the law

Ethical

Not just “for profit” only

Voluntary & Philanthropic

Promote human welfare and goodwill

The Pyramid of Social Responsibility 2- Ethical Responsibilities being ethical; doing what is right, just, and fair; avoiding harm Voluntary Responsibilities being a “good corporate citizen;” contributing to the community and quality of life Source: Adapted from Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42. Legal Responsibilities obeying the law (society’s codification of right and wrong) Economic Responsibilities being profitable

Best Corporate Citizens Green Mountain Coffee Hewlett-Packard Advanced Micro Devices Motorola Agilent Technologies Timberland Salesforce.com Cisco Systems Dell Texas Instruments Intel Johnson and Johnson NIKE General Mills Pitney Bowes Wells Fargo Starbucks Wainright Bank & Trust St. Paul Travelers Ecolab 2- Source: Philip Johansson, “The Best 100 Corporate Citizens,” Business Ethics, March/April 2006, p. 22.

Green Mountain Coffee

Hewlett-Packard

Advanced Micro Devices

Motorola

Agilent Technologies

Timberland

Salesforce.com

Cisco Systems

Dell

Texas Instruments

Intel

Johnson and Johnson

NIKE

General Mills

Pitney Bowes

Wells Fargo

Starbucks

Wainright Bank & Trust

St. Paul Travelers

Ecolab

Arguments for Social Responsibility Business helped to create many of the social problems that exist today, so it should play a significant role in solving them Businesses should be more responsible because they have the financial and technical resources to help solve social problems As members of society, businesses should do their fair share to help others 2-

Business helped to create many of the social problems that exist today, so it should play a significant role in solving them

Businesses should be more responsible because they have the financial and technical resources to help solve social problems

As members of society, businesses should do their fair share to help others

Arguments for Social Responsibility Socially responsible decision making by businesses can prevent increased government regulation Social responsibility is necessary to ensure economic survival Businesses must take steps to help solve the social and environmental problems that exist today 2-

Socially responsible decision making by businesses can prevent increased government regulation

Social responsibility is necessary to ensure economic survival

Businesses must take steps to help solve the social and environmental problems that exist today

Arguments Against Social Responsibility Managers are sidetracked from the primary goal of business Earning profits Participation in social programs gives businesses greater power, perhaps at the expense of particular segments of society 2-

Managers are sidetracked from the primary goal of business

Earning profits

Participation in social programs gives businesses greater power, perhaps at the expense of particular segments of society

Arguments Against Social Responsibility Some people question whether business has the expertise needed to assess and make decisions about social problems Many people believe that social problems are the responsibility of government agencies and officials 2-

Some people question whether business has the expertise needed to assess and make decisions about social problems

Many people believe that social problems are the responsibility of government agencies and officials

Social Responsibility Issues Organizational relationships with owners and stockholders: Profit and ROI Employee relations: Providing a safe workplace, adequate pay, information about the company, listening to grievances, and treating employees fairly Consumer relations: Respecting the rights of customers and providing them with safe and satisfying products 2-

Organizational relationships with owners and stockholders:

Profit and ROI

Employee relations:

Providing a safe workplace, adequate pay, information about the company, listening to grievances, and treating employees fairly

Consumer relations:

Respecting the rights of customers and providing them with safe and satisfying products

Social Responsibility Issues Environmental issues: Animal rights Pollution Global warming Community relations: Responsibility to the general welfare of the community 2- Did You Know? In one year, Americans generated 230 million tons of trash and recycled 23.5 percent of it.

Environmental issues:

Animal rights

Pollution

Global warming

Community relations:

Responsibility to the general welfare of the community

John F. Kennedy’s 1962 Consumer Bill of Rights The right to safety The right to be informed The right to choose The right to be heard 2- Did You Know? John F. Kennedy was the 35th President of the United States.

The right to safety

The right to be informed

The right to choose

The right to be heard

Responsibility of the Ethics Officer Provide advice about ethics to employees and management Distribute the company’s code of ethics Create and maintain an anonymous, confidential service to answer questions about ethical issues Take action on ethics violations Review and modify the code of ethics as needed 2-

Provide advice about ethics to employees and management

Distribute the company’s code of ethics

Create and maintain an anonymous, confidential service to answer questions about ethical issues

Take action on ethics violations

Review and modify the code of ethics as needed

Solve the Dilemma What are some of the ethical issues involved in giving a customer an award for consumption behavior without notifying him/her first? Do you see this as a potential violation of privacy? Explain. How would you handle the situation if you were Barnard? 2-

What are some of the ethical issues involved in giving a customer an award for consumption behavior without notifying him/her first?

Do you see this as a potential violation of privacy? Explain.

How would you handle the situation if you were Barnard?

Explore Your Career Options How do you explain the emergence of career opportunities in the field of business ethics and social responsibility? 2-

How do you explain the emergence of career opportunities in the field of business ethics and social responsibility?

Additional Discussion Questions and Exercises What makes ethical decisions so difficult? Many organizations are primarily concerned with earning a profit or a return on their investment. Does this concern for owners and investors present an ethical dilemma for companies when weighing business decisions that favor employees and/or the general public? The right to be heard is one of the four rights in the consumer bill of rights. How are some corporations addressing this consumer concern? 2-

What makes ethical decisions so difficult?

Many organizations are primarily concerned with earning a profit or a return on their investment.

Does this concern for owners and investors present an ethical dilemma for companies when weighing business decisions that favor employees and/or the general public?

The right to be heard is one of the four rights in the consumer bill of rights.

How are some corporations addressing this consumer concern?

Additional Discussion Questions and Exercises Find examples of environmental issues in newspapers or business journals. Do these issues influence businesses? Imagine you are a salesperson. When does offering a gift, such as basketball tickets, become a bribe rather than just a sales practice? 2-

Find examples of environmental issues in newspapers or business journals.

Do these issues influence businesses?

Imagine you are a salesperson. When does offering a gift, such as basketball tickets, become a bribe rather than just a sales practice?

Chapter 2 Quiz Which of the following has the greatest effect on ethical behavior in organizations? authority of an employee’s superiors an employee’s perception of the ethics of coworkers and managers an employee’s personal beliefs about what is right or wrong investors perceptions of ethics Copying someone else’s work and presenting it as your own is: ethics bribe plagiarism greenmail 2-

Which of the following has the greatest effect on ethical behavior in organizations?

authority of an employee’s superiors

an employee’s perception of the ethics of coworkers and managers

an employee’s personal beliefs about what is right or wrong

investors perceptions of ethics

Copying someone else’s work and presenting it as your own is:

ethics

bribe

plagiarism

greenmail

Chapter 2 Quiz A code of ethics is: a set of formalized rules and standards describing what the company expects of its employees. a government legislation enforced by government agencies. a set of principles that describe what a person believes is the right way to behave. the impact of a business’s activities on society. Which one of the following is NOT one of the four rights provided in John F. Kennedy’s consumer bill of rights? right to safety right to be inform right to sue right to choose 2-

A code of ethics is:

a set of formalized rules and standards describing what the company expects of its employees.

a government legislation enforced by government agencies.

a set of principles that describe what a person believes is the right way to behave.

the impact of a business’s activities on society.

Which one of the following is NOT one of the four rights provided in John F. Kennedy’s consumer bill of rights?

right to safety

right to be inform

right to sue

right to choose

Multiple Choice Questions about the Video What is interesting about Greystone Bakeries? It is based in Alaska It is a franchise It only sells one type of cookie It supplies Ben and Jerry’s with 11,000 pounds of brownies per day Which of the following is NOT provided by Eileen Fisher? Onsite yoga and massage A car after one year of working for the company $1,000 education benefit per year After 5 years at the company $5,000 towards a vacation 2-

What is interesting about Greystone Bakeries?

It is based in Alaska

It is a franchise

It only sells one type of cookie

It supplies Ben and Jerry’s with 11,000 pounds of brownies per day

Which of the following is NOT provided by Eileen Fisher?

Onsite yoga and massage

A car after one year of working for the company

$1,000 education benefit per year

After 5 years at the company $5,000 towards a vacation