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Chapter 04               Demanding               Ethical and                 Socially               Responsible           ...
Chapter Four                   LEARNING GOALS     1. Explain why obeying the law is only the first step in        behaving...
Chapter Four                   LEARNING GOALS     4. Distinguish between compliance-based and        integrity-based ethic...
Profile                  BLAKE MYCOSKIE                         TOMS Shoes      • While appearing on The        Amazing Ra...
Chapter Four                NAME that COMPANY     This company has a program it calls Social        Service Leave that all...
Ethics is MoreThan Legality        LIFE AFTER SCANDAL     LG1     • Scandals have shaken the real estate, mortgage       a...
COST of CORRUPTION                     (Legal Briefcase)• Madoff Investment Securities : Bernie Madoff  is serving 150 yea...
WHAT is a PONZI SCHEME?• A fraud by paying returns to  existing investors from funds  contributed by new investors.• New i...
Ethical Standardsare Fundamental                    WHAT are ETHICS?     LG1      • Ethics -- The standards of moral behav...
Ethical Standardsare Fundamental                    BASIC MORAL VALUES     LG1       Right:                           Wron...
Ethics Beginswith Each of Us   ETHICS and YOU     LG2     • Plagiarizing from Internet       materials is the most       c...
FACEBOOK or FAKEBOOK?                    (Making Ethical Decisions)• Facebook scams are becoming more prevalent.• Some sca...
Ethics Beginswith Each of Us                  FACING ETHICAL DILEMMAS     LG2     • Ask yourself these       questions:   ...
Ethics Beginswith Each of Us                    BRIBERY BAD BOYS                                           Five Open FCPA ...
ProgressAssessment   PROGRESS ASSESSMENT    • What are ethics?    • How do ethics differ from legality?    • When faced wi...
ManagingBusinessesEthically andResponsibly                ETHICS START at the TOP    LG3    • Organizational ethics begin ...
ManagingBusinessesEthically andResponsibly                FACTORS INFLUENCING    LG3          MANAGERIAL ETHICS           ...
SettingCorporateEthicalStandards                    ETHICS CODES    LG4    • An increasing number of companies have      a...
SettingCorporateEthical     HOW to IMPROVE AMERICA’SStandards    LG4         BUSINESS ETHICS    1. Top management must ado...
SettingCorporateEthical     HOW to IMPROVE AMERICA’SStandards    LG4         BUSINESS ETHICS    4. An ethics office must b...
SettingCorporateEthical         HOW to PREVENT UNETHICALStandards    LG4                 BEHAVIORS    1. Managers must com...
SettingCorporateEthical         HOW to PREVENT UNETHICALStandards    LG4                 BEHAVIORS    5. Discussions of et...
ProgressAssessment   PROGRESS ASSESSMENT    • What are compliance-based and integrity-based      ethics codes?    • What a...
CorporateSocialResponsibility      CORPORATE SOCIAL     LG5             RESPONSIBILITY     • Corporate Social Responsibili...
CorporateSocialResponsibility                 CORPORATE PHILANTHROPY     LG5           and SOCIAL INITIATIVES     • Corpor...
CorporateSocial             CORPORATE RESPONSIBILITYResponsibility     LG5            and POLICY     • Corporate Responsib...
CorporateSocialResponsibility   POSTIVE IMPACTS     LG5           of COMPANIES     • Xerox offers a Social Service Leave p...
CorporateSocialResponsibility                          HELPING HANDS     LG5                                       Most Ge...
CorporateSocialResponsibility                             GENEROUS GUYS     LG5                                     World’...
CorporateSocialResponsibility               LIFE AFTER TRAGEDY     LG5                                 Japan’s Post-Tsunam...
Responsibilityto Customers     PRESIDENT KENNEDY’S BASIC     LG5           RIGHTS of CONSUMERS       • The Right to Safety...
Responsibilityto Customers                 HOW DO CUSTOMERS KNOW?     LG5     • Over 70% of executives say       their pri...
Responsibilityto Customers               SOCIAL CUSTOMER CONTACT     LG5                      Do’s and Don’ts of Using Twi...
Responsibilityto Investors     INSIDER TRADING     LG5     • Insider Trading -- Insiders         using private company inf...
Responsibilityto Employees     RESPONSIBILITY to     LG5            EMPLOYEES     • Create jobs and provide a chance for u...
Responsibilityto Employees        AMERICA’S MOST ADMIRED     LG5                  COMPANIES       1.      Apple       2.  ...
Responsibilityto Employees         WHEN EMPLOYEES     LG5               are UPSET…     • Employee fraud costs U.S. busines...
Responsibilityto Society andthe Environment      SOCIETY and     LG5          the ENVIRONMENT     • Over one-third of work...
Responsibilityto Society andthe Environment   RESPONSIBILITY to the     LG5             ENVIRONMENT     • Environmental ef...
SUSTAINABLE or SUSPECT:          GREENWASHING                    (Thinking Green)• With public concern over the environmen...
Responsibilityto Society andthe Environment                  WORTHY CAUSES                                  What $1,000 an...
Social Auditing                        SOCIAL AUDITING     LG5     • Social Audit -- A systematic evaluation of an        ...
ProgressAssessment   PROGRESS ASSESSMENT    • What’s corporate social responsibility, and how      does it relate to each ...
InternationalEthics andSocialResponsibility                 INTERNATIONAL ETHICS    LG6     • Many businesses want sociall...
ETHICAL CULTURE CLASH                 (Reaching Beyond Our Borders)• Almost half of Motorola’s employees live  outside the...
ProgressAssessment   PROGRESS ASSESSMENT    • How are U.S. businesses demanding socially      responsible behavior from th...
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Chap004

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Chap004

  1. 1. Chapter 04 Demanding Ethical and Socially Responsible BehaviorMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. Chapter Four LEARNING GOALS 1. Explain why obeying the law is only the first step in behaving ethically. 2. Ask the three questions you need to answer when faced with a potentially unethical action. 3. Describe management’s role in setting ethical standards. 4-2
  3. 3. Chapter Four LEARNING GOALS 4. Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code. 5. Define corporate social responsibility and compare corporations’ responsibilities to various stakeholders. 6. Analyze the role of U.S. businesses in influencing ethical behavior and social responsibility in global markets. 4-3
  4. 4. Profile BLAKE MYCOSKIE TOMS Shoes • While appearing on The Amazing Race, Mycoskie saw how badly local children in Argentina needed shoes. • He founded TOMS in 2006. • TOMS gives a pair of shoes to a child in need for every pair sold. 4-4
  5. 5. Chapter Four NAME that COMPANY This company has a program it calls Social Service Leave that allows employees to take up to a year off to work for a nonprofit organization while earning their full salary and benefits, including job security. Name that company! 4-5
  6. 6. Ethics is MoreThan Legality LIFE AFTER SCANDAL 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. 4-6
  7. 7. COST of CORRUPTION (Legal Briefcase)• Madoff Investment Securities : Bernie Madoff is serving 150 years behind bars after running his exclusive wealth management firm as a gigantic Ponzi scheme.• Enron : Jeffery Skilling is serving a 24 year sentence for accounting fraud while Richard Causey, who pled guilty, will be released in October 2011. Former CEO, Kenneth Lay, died before sentencing.• WorldCom : Former CEO, Bernie Ebbers, was convicted of fraud, conspiracy and false filings and sentenced to 25 years. 4-7
  8. 8. WHAT is a PONZI SCHEME?• A fraud by paying returns to existing investors from funds contributed by new investors.• New investors are promised opportunities claimed to generate high returns with little or no risk.• Fraudsters focus on attracting new money to make promised payments. Source: Securities and Exchange Commission, www.sec.gov, accessed June 2011. 4-8
  9. 9. Ethical Standardsare Fundamental WHAT are ETHICS? LG1 • Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong. 4-9
  10. 10. Ethical Standardsare Fundamental BASIC MORAL VALUES LG1 Right: Wrong: • Integrity •Cheating • Respect for human life •Cowardice •Cruelty • Self-control • Honesty • Courage • Self-sacrifice 4-10
  11. 11. Ethics Beginswith Each of Us ETHICS and YOU 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. 4-11
  12. 12. FACEBOOK or FAKEBOOK? (Making Ethical Decisions)• Facebook scams are becoming more prevalent.• Some scammers pose as military servicemen and establish relationships with women, then request money for phone calls or trips home.• Surveys can generate money for scammers, but then some also teach others how to scam other users.• Do you think it’s ethical to create a fake account? Why? Why not? 4-12
  13. 13. Ethics Beginswith Each of Us FACING ETHICAL DILEMMAS LG2 • Ask yourself these questions: - Is it legal? - Is it balanced? - How will it make me feel about myself? 4-13
  14. 14. Ethics Beginswith Each of Us BRIBERY BAD BOYS Five Open FCPA Investigations LG2 Source: Forbes, May 24, 2010. 4-14
  15. 15. ProgressAssessment PROGRESS ASSESSMENT • What are ethics? • How do ethics differ from legality? • When faced with ethical dilemmas, what questions can you ask yourself that might help you make ethical decisions? 4-15
  16. 16. ManagingBusinessesEthically andResponsibly ETHICS START at the TOP LG3 • Organizational ethics begin at the top. • Managers can help instill corporate values in employees. • Trust between workers and managers must be based on fairness, honesty, openness and moral integrity. 4-16
  17. 17. ManagingBusinessesEthically andResponsibly FACTORS INFLUENCING LG3 MANAGERIAL ETHICS 4-17
  18. 18. SettingCorporateEthicalStandards ETHICS CODES 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. 4-18
  19. 19. SettingCorporateEthical HOW to IMPROVE AMERICA’SStandards LG4 BUSINESS ETHICS 1. Top management must adopt and unconditionally support an explicit corporate code of conduct. 2. Employees must understand that senior management expects all employees to act ethically. 3. Managers and others must be trained to consider the ethical implications of all business decisions. 4-19
  20. 20. SettingCorporateEthical HOW to IMPROVE AMERICA’SStandards LG4 BUSINESS ETHICS 4. An ethics office must be set up with which employees can communicate anonymously. Whistleblowers -- Insiders who report illegal or unethical behavior. 5. Involve outsiders such as suppliers, subcontractors, distributors and customers. 6. The ethics code must be enforced. 4-20
  21. 21. SettingCorporateEthical HOW to PREVENT UNETHICALStandards LG4 BEHAVIORS 1. Managers must communicate the organization’s vision on ethical behavior. 2. Organizations must have a code of ethics. 3. Policies have to be enforced regarding ethical offences. 4. Ethical responsibility must be taught to all employees. Source: James Gehrke, Magnify Leadership & Development, November 2008. 4-21
  22. 22. SettingCorporateEthical HOW to PREVENT UNETHICALStandards LG4 BEHAVIORS 5. Discussions of ethics must be included in the decision-making process. 6. Accountability must be taken seriously at all levels in the organization. 7. Organizations must act fast when a crisis occurs. 8. Employees must know they have to defend and maintain the company’s reputation. Source: James Gehrke, Magnify Leadership & Development, November 2008. 4-22
  23. 23. ProgressAssessment PROGRESS ASSESSMENT • What are compliance-based and integrity-based ethics codes? • What are the six steps to follow in establishing an effective ethics program in a business? 4-23
  24. 24. CorporateSocialResponsibility CORPORATE SOCIAL LG5 RESPONSIBILITY • Corporate Social Responsibility (CSR) -- The concern businesses have for the welfare of society. • CSR is based on a commitment to integrity, fairness, and respect. • CSR proponents argue that businesses owe their existence to the societies they serve and cannot exist in societies that fail. 4-24
  25. 25. CorporateSocialResponsibility CORPORATE PHILANTHROPY LG5 and SOCIAL INITIATIVES • Corporate Philanthropy -- Includes charitable donations. • Corporate Social Initiatives -- Include enhanced forms of corporate philanthropy. 4-25
  26. 26. CorporateSocial CORPORATE RESPONSIBILITYResponsibility LG5 and POLICY • Corporate Responsibility -- Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment. • Corporate Policy -- The position a firm takes on social and political issues. 4-26
  27. 27. CorporateSocialResponsibility POSTIVE IMPACTS LG5 of COMPANIES • Xerox offers a Social Service Leave program. • The recent recession caused 60% of companies to cut their philanthropic donations. However, now they’re more likely to give time and goods. • Two-thirds of MBA students surveyed reported they would take a lower salary to work for a socially responsible company. 4-27
  28. 28. CorporateSocialResponsibility HELPING HANDS LG5 Most Generous Celebrities Source: Parade Magazine, www.parade.com, July 8, 2010. 4-28
  29. 29. CorporateSocialResponsibility GENEROUS GUYS LG5 World’s Biggest Givers Source: Forbes, June 6, 2011. 4-29
  30. 30. CorporateSocialResponsibility LIFE AFTER TRAGEDY LG5 Japan’s Post-Tsunami Big Givers Source: Forbes, April 11, 2011. 4-30
  31. 31. Responsibilityto Customers PRESIDENT KENNEDY’S BASIC LG5 RIGHTS of CONSUMERS • The Right to Safety • The Right to be Informed • The Right to Choose • The Right to be Heard 4-31
  32. 32. Responsibilityto Customers HOW DO CUSTOMERS KNOW? LG5 • Over 70% of executives say their primary use of social media is to communicate CSR efforts. • Social media allows companies to reach a broad, diverse group and connect directly to them. • Now more than ever, it’s important for companies to live up to their expectations. 4-32
  33. 33. Responsibilityto Customers SOCIAL CUSTOMER CONTACT LG5 Do’s and Don’ts of Using Twitter for Business Source: Entrepreneur, September 2010. 4-33
  34. 34. Responsibilityto Investors INSIDER TRADING LG5 • Insider Trading -- Insiders using private company information to further their own fortunes or those of their family and friends. • Unethical behavior does financial damage to a company and investors are cheated. 4-34
  35. 35. Responsibilityto Employees RESPONSIBILITY to LG5 EMPLOYEES • Create jobs and provide a chance for upward mobility. • Treat employees with respect. • Offer salaries and benefits that help employees reach their personal goals. 4-35
  36. 36. Responsibilityto Employees AMERICA’S MOST ADMIRED LG5 COMPANIES 1. Apple 2. Google 3. Berkshire Hathaway 4. Southwest Airlines 5. Procter & Gamble 6. Coca-Cola 7. Amazon 8. FedEx 9. Microsoft 10. McDonald’s Source: Fortune, www.fortune.com, March 21, 2011. 4-36
  37. 37. Responsibilityto Employees WHEN EMPLOYEES LG5 are UPSET… • Employee fraud costs U.S. businesses about 5% of annual revenue and causes 30% of all business failures. • Disgruntled workers relieve frustration by: - Blaming mistakes on others. - Manipulating budgets and expenses. - Making commitments they intend to ignore. - Hoarding resources. - Doing the minimum. 4-37
  38. 38. Responsibilityto Society andthe Environment SOCIETY and LG5 the ENVIRONMENT • Over one-third of working Americans receive their salaries from nonprofits – who are dependent on funding from others. • The green movement emerged as concern about global warming increased. • Many companies are trying to minimize their carbon footprints – the amount of carbon released during an item’s production, distribution, consumption and disposal. 4-38
  39. 39. Responsibilityto Society andthe Environment RESPONSIBILITY to the LG5 ENVIRONMENT • Environmental efforts may increase costs, but can offer good opportunities. • The emerging renewable-energy and energy- efficiency industries account for 9 million U.S. jobs. • By 2030, as many as 40 million “Green” jobs will be created. 4-39
  40. 40. SUSTAINABLE or SUSPECT: GREENWASHING (Thinking Green)• With public concern over the environment, companies are finding greener ways of doing business.• Some companies are claiming they are more environmentally responsible than they actually are, a practice called “greenwashing.”• Websites such as Greener Choices and Greenwashing Index screen ads for greenwashing. 4-40
  41. 41. Responsibilityto Society andthe Environment WORTHY CAUSES What $1,000 and $10,000 Can Buy LG5 Source: Money, November 2010. 4-41
  42. 42. Social Auditing SOCIAL AUDITING LG5 • Social Audit -- A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs. • Five Types of Social Audit Watchdogs 1) Socially conscious investors 2) Socially conscious research organizations 3) Environmentalists 4) Union officials 5) Customers 4-42
  43. 43. ProgressAssessment PROGRESS ASSESSMENT • What’s corporate social responsibility, and how does it relate to each of a business’s major stakeholders? • What’s a social audit, and what kinds of activities does it monitor? 4-43
  44. 44. InternationalEthics andSocialResponsibility INTERNATIONAL ETHICS LG6 • Many businesses want socially responsible behavior from their international suppliers. • In the 1970s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business. • Partners in the Organization of American States signed the Inter-American Convention Against Corruption. 4-44
  45. 45. ETHICAL CULTURE CLASH (Reaching Beyond Our Borders)• Almost half of Motorola’s employees live outside the U.S.• A Motorola employee returns to his home country to work and the company reimburses living expenses so he can live in a safe area. The employee is trying to do the honorable thing for his family and the company is trying to keep the employee safe.• If the employee uses the money to help his family instead, is it right for the company to stop payment? 4-45
  46. 46. ProgressAssessment PROGRESS ASSESSMENT • How are U.S. businesses demanding socially responsible behavior from their international suppliers? • Why is it unlikely that there will be a single set of international rules governing multinational companies soon? 4-46

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