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Bus106 wk4 ch4 ethics and social responsibility


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BUS106 Ethics and Social Responsibility - from UNDERSTANDING CANADIAN BUSINESS, 7th Cdn Edition (custom publication for Seneca) ; published by McGraw-Hill

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Bus106 wk4 ch4 ethics and social responsibility

  1. 1. Week 4, Chapter 4 Ethics and Social Responsibility
  2. 2. Agenda review exercises chapter 4 exercises
  3. 3. Learning Objectives Explain why legality is only one step in behaving ethically. Describe management’s role in setting ethical standards and distinguish between compliance-based and integrity-based ethics codes. List the six steps that can be considered when setting up a corporate ethics code. Define corporate social responsibility and examine corporate responsibility to various stakeholders. Discuss the responsibility that business has to customers, investors, employees, society, and the environment.
  4. 4. What is ethics?
  5. 5. Ethics is more than legality…it is “doing the right thing.” ethics is the standards of moral behaviour that is accepted by society right versus wrong) In a country like Canada, with so many diverse cultures, you might think it would be impossible to identify common standards of ethical behaviour.
  6. 6. Ethical behaviour should be exhibited in our daily lives, not just in a business environment. Young people learn from the behaviour of others. a strong relationship was found between academic dishonesty among undergraduate students and dishonesty later when these same students were in the working world
  7. 7. Ethics Begins with Each of Us We cannot expect society to become more moral and ethical unless we as individuals commit to becoming more moral and ethical ourselves.
  8. 8. Ethical Checklist There are no easy solutions to ethical dilemmas. Is it legal? Is it balanced? How will it make me feel about myself?
  9. 9. Erin Brockovich discovers a systematic cover-up of the industrial poisoning (hexavalent chromium) of the town of Hinkley's water supply that threatens the health of an entire community discovers a 1966 document that ties a conversation of a corporate executive in the San Francisco PG&E headquarters to the Hinkley station that knew the water was contaminated but didn't do anything about it and advised to keep it a secret from the Hinkley neighborhood Source:
  10. 10. Managing Businesses Ethically and Responsibly Organizational ethics begin at the top. The leadership and example of strong top managers can help instill corporate values in employees. Some managers think that ethics is a personal matter—that individuals either have ethical principles or they don’t.
  11. 11. Setting Corporate Ethical Standards - compliance-based and integrity-based (see Figure 4.5 page 91) Compliance-Based • Increasing control and penalizing wrongdoers Integrity-Based • Define guiding values • Support ethical behaviour • Shared accountability
  12. 12. Six Steps to Improve Ethics 1. Top management support 2. Expectations begin at the top 3. Ethics imbedded in training 4. Ethics office set up 5. External stakeholders informed 6. There must be enforcement Six Steps to Improve Ethics
  13. 13. Exercise: Develop a code of ethics for classroom behaviour
  14. 14. Sarbanes-Oxley Act (SOX) The major corporate and accounting scandals in the United Sates in the early 2000s (e.g., Enron, Tyco, Adelphia, and WorldCom) gave rise to the implementation of U.S. federal legislation known as the Sarbanes-Oxley Act (SOX). The legislation established stronger standards to prevent misconduct and improve corporate governance practices.
  15. 15. SOX applies to all publicly traded companies whose shares are listed on the stock exchanges under the jurisdiction of the U.S. Securities and Exchange Commission. Since many Canadian companies operate in the U.S., they must comply with SOX. There are also many Canadian companies in Canada (which are American subsidiaries) that must comply with SOX.
  16. 16. Whistleblowers: people who report illegal or unethical behaviour among employees. Whistleblowing Legislation in Canada Bill C-11: The Public Servants Protection Disclosure Act - there is no provision to protect private-sector whistleblowers
  17. 17. Corporate Social Responsibility (also known as corporate responsibility): the concern businesses have for the welfare of society. Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment—that is, everything that has to do with acting responsibly within society and toward employees.
  18. 18. Not everyone thinks that CSR is a good thing. Some critics of CSR believe that a manager’s sole role is to compete and win in the marketplace. CSR defenders, on the other hand, believe that businesses owe their existence to the societies they serve.
  19. 19. Corporate Philanthropy: charitable donations Strategic philanthropy involves companies making long-term commitments to one cause, such as the Canadian Tire Foundation for Families. Since the Canadian Tire Foundation for Families was launched in 1999, over $27 million has been donated to help people in the greatest need with the necessities of life. Image source:
  20. 20. Corporate social initiatives include enhanced forms of corporate philanthropy that are more directly related to the company’s competencies. “Our thoughts are with the victims and families that have been affected by flooding in Pakistan,” said Rick Waugh, Scotiabank President and Chief Executive Officer. “The suffering and property damage has affected many communities and rebuilding efforts will continue for many months. We are glad to play a role in that effort.” *donated $100,000
  21. 21. Corporate Responsibility in the 21st Century - There are two different views of corporate responsibility to stakeholders: The Strategic Approach • requires that management’s primary orientation be toward the economic interests of shareholders • as owners, shareholders have the right to expect management to work in their best interests; that is, to optimize profits The Pluralist Approach • recognizes the special responsibility of management to optimize profits, but not at the expense of employees, suppliers, and members of the community • corporations can maintain their economic viability only when they fulfill their moral responsibilities to society as a whole
  22. 22. Stakeholders Customers Investors EmployeesSociety Environment
  23. 23. Responsibility to Customers One responsibility of business is to satisfy customers by offering them goods and services of real value. This responsibility is not as easy to meet as it seems…more than half of new businesses fail—perhaps because their owners failed to please their customers.
  24. 24. Responsibility to Investors Ethical behaviour is good for shareholder wealth. It doesn’t subtract from the bottom line, but rather adds to it. On the other hand, unethical behaviour does cause financial damage. Image source:
  25. 25. Responsibility to Investors Insider Trading - involves insiders using private company information to further their own fortunes or those of their family and friends.
  26. 26. Ethics Programs Responsibility to Employees The factor that most influences a company’s effectiveness and financial performance is human resource management
  27. 27. One of business’s responsibilities to society is to create new wealth, which is disbursed to employees, suppliers, shareholders, and other stakeholders. If businesses don’t create wealth, who will?
  28. 28. Objectionable? Image source: "It's a provocative ad but it is provoking things that really are not what we want to have provoked. We don't need any more violence“ Kim Gandy, National Organization for Women
  29. 29. Responsibility to Society - Non-profit organizations (NPOs) play an important role in distributing the funds they receive from donors, governments, and even their own investments in billions of shares in publicly held companies as those stock prices increase, more funds are available to benefit society
  30. 30. Responsibility to the Environment Businesses are often criticized for their role in damaging the environment.
  31. 31. Ethical Decision Resolved Through: Religious Teachings Individual Rights Legislation Court Decisions WRONG RIGHT
  32. 32. Reaction to the New Social Responsibility Many companies have undertaken a social audit, a systematic evaluation of the company’s position and progress on social issues Shareholders and other stakeholders have actively encouraged companies to become proactive on social issues.
  33. 33. Social Auditing - systematic evaluation of an organization’s progress toward implementing programs that are socially responsible and responsive socially conscious investors – social responsibility investing (SRI) environmentalists union officials customers
  34. 34. Triple-Bottom Line (TBL, 3BL, or “People, Planet, Profit”) - used as a framework for measuring and reporting corporate performance against economic, social, and environmental parameters. Social EnvironmentEconomic Sustainable Viable
  35. 35. Interface Carpets - A Sustainability Champion Vision: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: people, process, product, place, and profits — by 2020 — and in doing so we will become restorative through the power of influence. Ray Anderson: believes that if Interface, a petro- intensive company, can get it right, it will never have to take another drop of oil from the earth.
  36. 36. International Ethics & Responsibility Ethics Not Unique To U.S. - Leaders Accountable Demand for Socially Responsible Behaviour Inter-American Convention Against Corruption Image source:
  37. 37. Doing business globally – what do you do when... You are forbidden to trade? – e.g., Cuba Ethical norms of the host country violate the laws of the home country? Social responsibility has whole new meaning Environmental practices differ from the home company?
  38. 38. Chapter Summary Explain why legality is only one step in behaving ethically. Describe management’s role in setting ethical standards and distinguish between compliance-based and integrity-based ethics codes. List the six steps that can be considered when setting up a corporate ethics code. Define corporate social responsibility and examine corporate responsibility to various stakeholders. Discuss the responsibility that business has to customers, investors, employees, society, and the environment.
  39. 39. 40 Homework