Ethics in business
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This document discusses various topics related to business ethics including: 1. The legal/ethical grid which outlines different categories of actions from legal/ethical to illegal/unethical. 2. Factors that influence managerial ethics such as individual values, organizational culture, and external environment. 3. Examples of fines paid by companies for unethical actions such as obstruction of justice and issuing misleading information. 4. Surveys showing low levels of trust in corporations from the general public and employees.
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Ethics in business
- 2. The Legal Ethical Grid Ethical but Illegal Unethical And Illegal Legal And Ethical Legal But Unethical Legal Ethical Unethical Illegal
- 3. Factors Influencing Managerial Ethics IndividualIndividual OrganizationalOrganizational EnvironmentalEnvironmental oValuesValues oWorkWork BackgroundBackground oFamily StatusFamily Status oPersonalityPersonality oTop Level Mgmt.Top Level Mgmt. PhilosophyPhilosophy oThe Firm’s RewardThe Firm’s Reward SystemSystem oJob DimensionsJob Dimensions oCompetitionCompetition oEconomicEconomic ConditionsConditions oSocial/CulturalSocial/Cultural InstitutionsInstitutions
- 4. Fines & Reasons Company Fine Reason Arthur Andersen $500,000 Obstruction of Justice Shredding Enron Documents Citigroup $5,000,000 Analyst Issued Misleading Information Merrill Lynch $100,000,000 Conflict of Interest Between Investment Bank & Research Dept. Credit Suisse First Boston $100,000,000 IPO Shares Unfairly Distributed Source: Business Week, Nov. 4, 2002
- 5. Crisis of Trust All Corporations Fair Amount 41% Only A Little 35% Not At All 13% A Great Deal 10% No Opinion 1% Your Employer A Lot 50% Only Somewhat 39% Not At All 8% No Opinion 3% Source: USA Today/CNN/Gallup Poll, Jan. 25-27, 2002
- 6. Ethical Decision Resolved Through: Religious Teachings Individual Rights Legislation Court Decisions
- 7. Codes of Ethics Compliance-Based Increasing control and penalizing wrongdoers Integrity-Based Define guiding values Support ethical behaviour Shared accountability
- 8. 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
- 9. Responsibility Defined Corporate Social Responsibility -the concern businesses have for the welfare of society Corporate Philanthropy – charitable donations Corporate Responsibility – acting responsibly within society Corporate Policy –position on social and political issues
- 10. 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
- 11. Conundrums of Doing Business Globally What do you do when: You are forbidden to trade – 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
Editor's Notes
- 1. Factors that influence business ethics are analyzed from three different perspectives: individual factors, organizational factors, and environmental factors.If you work through the acetate factor-by-factor, this should allow for maximum participation and full coverage. 2. Ask students which of these factors tends to predominate in terms of overall managerial behavior. Also students can be queried if these factors change noticeably over time. 3. An interesting question to pose to students is what factors most dominate their attitudes concerning ethical behavior. We’ve tried this in our classes and have received some very interesting responses. Let us know by e-mail what your students have to say.