Chapter Two

1. ChapterTwo Business Ethicsand Social Responsibility

2. Comparison of Business Ethics and Social Responsibility Business Ethics: The principles and standards that define acceptable conduct in business. SocialA business’s obligation toResponsibility:maximize its positive impact and minimize its negative impact on society.

3. Ethical Issue 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. FAST FACT: The most common types of observed misconduct are lying, withholding information, and abusive / intimidating behavior. ©

4. Reasons for Not Reporting Observed Misconduct 1. Fear of not being considered a team player 2. Didn’t believe corrective action would be taken 3. Feared retribution or retaliation from supervisor or management 4. No one else cares about business ethics so why should I 5. Didn’t trust organization to keep report confidential Source: 1997 Society for Human Resource Management/EthicsResource Center Business Ethics Survey Report, p. 21.

5. Ethical Issue Categories • Conflict of interest • Fairness and honesty • Communications • Business relationships

6. Conflict of Interest • Occurs when a person must choose whether to advance their own personal interest or those of others.

7. Fairness and Honesty • Are at the heart of business ethics and relate to the general values of decision makers.

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

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

10. 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 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?

11. 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?

12. 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?

13. 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?

14. IndividualStandardsandValues Managers’andCoworkers’Influence Opportunity:Codes andComplianceRequirements Ethical/UnethicalChoicesin Business Three Factors that Influence Business Ethics

15. Codes of Ethics • Formalized rules and standards that describe what a company expects of its employees. FAST FACTS: Written ethics standards are more often found in larger companies than smaller ones.

16. Whistleblowing • The act of an employee exposing the employer’s wrongdoing to outsiders, such as the media or government regulatory agencies.

17. The Facts on Business Ethics Today • 50% of employees surveyed reported that their organizations have an ethics officer or a phone line for ethics advice. • 84% reported that their organizations offer mandatory ethics training. • 54% reported that ethics training was useful at work. • Source: Ethics Resource Center, 2000 National Business Ethics Survey: How Employees Perceive Ethics at Work.

18. 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

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

20. America’s Best Corporate Citizens • Procter & Gamble • Hewlett-Packard • Fannie Mae • Motorola • IBM • Sun Microsystems • Herman Miller • Polaroid • St. Paul Cos. • Freddie Mac Source: Philip Johnansson, “The Best 100 Corporate Citizens,” Business Ethics, March/April 2001, p. 15.

21. Arguments for Social Responsibility 1. Business helped to create many of the social problems that exist today, so it should play a significant role in solving them, especially in the areas of pollution reduction and cleanup. 2. Businesses should be more responsible because they have the financial and technical resources to help solve social problems. 3. As members of society, businesses should do their fair share to help others.

22. Arguments for Social Responsibility • Socially responsible decision making by businesses can prevent increased government regulation. • Social responsibility is necessary to ensure economic survival: If businesses want educated and healthy employees, customers with money to spend, and suppliers with quality goods and services in years to come, they must take steps to help solve the social and environmental problems that exist today.

23. Arguments Against Social Responsibility 1. It sidetracks managers from the primary goal of business–earning profits. Every dollar donated to social causes or otherwise spent on society's problems is a dollar less for owners and investors. 2. Participation in social programs gives businesses greater power, perhaps at the expense of particular segments of society.

24. Arguments Against Social Responsibility 3. Some people question whether business has the expertise needed to assess and make decisions about social problems. 4. Many people believe that social problems are the responsibility of government agencies and officials, who can be held accountable by voters.

25. Social Responsibility Issues • Organizational relationships with owners and stockholders – profit and ROI • Employee relations – provide a safe workplace, adequate pay, information about the company, listen to grievances, and treat employees fairly • Consumer relations – respect the rights of customers and provide them with safe and satisfying products

26. Social Responsibility Issues • Environmental issues • animal rights • pollution • global warming • Community relations – business’s responsibility to the general welfare of the community and society in which they operate

27. John F. Kennedy’s 1962Consumer Bill of Rights • The right to safety • The right to be informed • The right to choose • The right to be heard FAST FACT: John F. Kennedy was the 35th President of the United States.

28. The Ethics OfficerAn emerging trend in corporate America • Provides advice about ethics to employees and management • Distributes the company’s code of ethics • Answers ethics questions anonymously • Takes action on ethics violations • Reviews and modifies the code of ethics as needed

29. Solve the Dilemma 1.What are some of the ethical issues involved in giving a customer an award for consumption behavior without notifying him/her first? 2. Do you see this as a potential violation of privacy? Explain. 3. How would you handle the situation if you were Barnard?

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

31. Additional Discussion Questions and Exercises 1. What makes ethical decisions so difficult? 2. 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? 3. 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?

32. Additional Discussion Questions and Exercises 4. Find examples of environmental issues in newspapers or business journals. Do these issues influence businesses? 5. Imagine you are a salesperson. When does offering a gift, such as basketball tickets, become a bribe rather than just a sales practice?

33. Chapter 2 Quiz 1. Which of the following has the greatest effect on ethical behavior in organizations?a. authority of an employee’s superiorsb. an employee’s perception of the ethics of coworkers and managersc. an employee’s personal beliefs about what is right or wrongd. investors perceptions of ethics 2. Copying someone else’s work and presenting it as your own isa. ethics.b. bribe.c. plagiarism.d. greenmail.

34. Chapter 2 Quiz 3. A code of ethics isa. a set of formalized rules and standards describing what the company expects of its employees.b. a government legislation enforced by government agencies.c. a set of principles that describe what a person believes is the right way to behave.d. the impact of a business’s activities on society. 4. Which one of the following is NOT one of the four rights provided in John F. Kennedy’s consumer bill of rights? a. right to safetyb. right to be informedc. right to sued. right to choose

35. Multiple Choice Questions about the Video 1. Milton Hershey had a library, a hotel, a museum, theaters, etc. built during the Great Depression mainly to a. keep his employees employed.b. diversify the activities of his company.c. involve employees in cultural activities.d. promote ethical behavior. 2. Hershey’s commitment to the environment and its contributions to worthy causes are examples of a. its code of ethics.b. ethical issues.c. its economic responsibilities.d. social responsibility.