This document summarizes the key topics and learning objectives covered in Chapter 2 of the 13th edition of the textbook "Human Resource Management". The chapter discusses business ethics and corporate social responsibility. It covers defining ethics and sources of ethical guidance, legislating ethics through various acts, creating an ethical culture and code of ethics, the importance of ethics training, and defining and approaches to corporate social responsibility including sustainability and social audits. It also notes challenges to corporate social responsibility succeeding globally.

1. Human Resource
Management
13th
Edition
Chapter 2
Business Ethics and Corporate
Social Responsibility
2-1Copyright © [2014] Pearson Education

2. Learning Objectives
• Explain the purpose of paying for
whistleblowers.
• Define ethics and describe sources of ethical
guidance.
• Discuss attempts at legislating ethics.
• Explain the importance of creating an ethical
culture, describe a code of ethics, and support
the importance of linking pay to ethical behavior.
• Explain human resource ethics and describe
ethics training.
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3. Learning Objectives (Cont.)
• Describe the concept of corporate social
responsibility.
• Explain why everyone is not on board with
regard to corporate social responsibility.
• Explain corporate sustainability.
• Describe a social audit.
• Describe possible difficulties for corporate social
responsibility to succeed in the global
environment.
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4. HRM in Action: Pay for
Whistleblowing
• Whistleblower: Someone who
engages in a “protected activity”
• Dobb-Frank Act requires SEC to
give an award to qualified
whistleblowers (10-30% of total)
• Act improves whistleblowers’
protection from retaliation
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5. Ethics
Discipline of dealing with:
–What is good and bad
–What is right and wrong
–Moral duty and obligation
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6. Ethics Examples
• Nearly every industry has experienced a painful ethical
crisis in recent years
• Business ethics scandals continue make headlines
• Examples:
– Lying on résumés
– Obstruction of justice
– Destruction of records
– Stock price manipulation
– Cutting corners to meet Wall Street’s expectations
– Fraud, waste, and abuse
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7. Sources of Ethical Guidance
• Lead to our beliefs or convictions
about what is right or wrong
• Examples:
–Bible and other holy books
–Conscience
–Significant others
–Code of ethics
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8. Legislating Ethics
• Procurement Integrity Act
• Federal Sentencing Guidelines for
Organizations (FSGO)
• Corporate and Auditing Accountability,
Responsibility, and Transparence Act
• Dodd-Frank Wall Street Reform and
Consumer Protection Act
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9. Procurement Integrity Act of 1988
• Prohibits release of source selection and
contractor bid or proposal information
• Places restrictions on former employees
• Passed after reports of military contracts
for:
– $500 toilet seats
– $5,000 hammer
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10. Federal Sentencing Guidelines for
Organizations (FSGO) of 1992
• Outlined effective ethics training program
• Promised softer punishments for wayward
corporations that had ethics programs in place
• Executives needed to be proactive
• Created:
– Ethics officer positions
– Ethics hotlines
– Codes of conduct
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11. Corporate and Auditing Accountability,
Responsibility, and Transparence Act of 2002
• Known as Sarbanes-Oxley Act
• Primary focus was to redress accounting
and financial reporting abuses
• Criminalized many corporate acts
• Established whistleblower protections
• Prohibited loans to executives and
directors
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12. Bechtel v Competitive
Technologies Inc., 2003
• Supreme Court case involving wrongful
termination under Sarbanes-Oxley Act’s
whistleblower protection rule
• Court ruled that the company violated
Act by firing two employees, and
ordered them reinstated
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13. Dodd-Frank Wall Street Reform
and Consumer Protection Act
• Act brought on by worst financial
crisis since Great Depression
• Executive compensation played
major role in financial services sector
as well as in capital markets following
the collapse of investment service
firms
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14. Creating an Ethical Culture
• Way for firm to create and sustain an
ethical culture is to audit ethics
• Climate at the top is fundamental to
company's ethical culture
• Firms with weak ethical cultures
experience 10 times more misconduct
than companies with strong ethical
cultures
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15. Code of Ethics
• Statement of values adopted by:
– Company
– Its employees
– Directors
• Sets official tone of top management regarding
expected behavior
• Establishes rules by which organization operates
• Becomes part of organization’s corporate culture
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16. Ethics Officer
• Larger firms appoint ethics officer
• Keeps code on front burner for
employees
• Ethics committee often established
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17. Malcolm Baldrige National Quality
Award
• Increased emphasis on ethics in
leadership
• Criteria: Senior leaders should serve as
role models for the rest of the
organization
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18. Linking Pay to Ethical Behavior
• Few companies have made ethics and
compliance a process for determining
how employees are compensated
• Only about 1 in 6 companies ties
incentives to ethical performance
• More work needs to be done
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19. Human Resource Ethics
• Application of ethical principles to HR
relationships and activities
• HR has a great deal to do with
establishing an organization’s
conscience
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20. Ethics Training
• FSGO outlined effective ethics
training program to educate
employees in company’s standards
and procedures
• Ethics training should be for everyone
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21. Corporate Social Responsibility
(CSR)
• CSR: Implied, enforced, or felt obligation
of managers, acting in their official
capacities, to serve or protect interests of
groups other than themselves
• Corporation behaves as if it has a
conscience
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22. Who Determines CSR?
Organization’s top executives usually
determine corporation’s approach to
corporate social responsibility
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23. Trends & Innovations: Not Everyone Is
on Board with Corporate Social
Responsibility
• Some have challenged the concept
by saying that doing well is doing
good
• Milton Friedman--Only social
responsibility of business is to
increase profits
• BP promoted themselves as being
eco-friendly
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24. Corporate Sustainability
• Evolved from the more traditional view of
corporate social responsibility
• Expanded to include the social,
economic, environmental, and cultural
systems needed to support an
organization
• Strives to use the best business
practices
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25. Social Audit
Systematic assessment of a company’s
activities in terms of their social impact
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26. Possible Types of Social Audits
• Simple inventory of activities
• Compilation of socially relevant
expenditures
• Determination of social impact
• Ideal social audit: Involve determining
true benefits to society of any socially
oriented business activity
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27. A Global Perspective: Can Corporate Social
Responsibility Succeed in the Global
Environment?
• Some global firms are questioning the
wisdom of being socially responsible
• Adherence to CSR issues has declined
• First 15 years of CSR efforts has not
produced the desired results
• Significant changes will have to be made
• Reputation management?
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