Business Ethics and Social Responsibility: Doing Well by Doing Good

1. Business Ethics and Social Responsibility:Doing Well by Doing Good What is ethics? Business ethics? What are the universal ethical standards? What is an ethical dilemma? How does ethics relate to the individual and the organization? What is social responsibility and its impact on stakeholders? What is the role of social responsibility in the global arena? How do companies evaluate their efforts to be socially responsible? 1

2. Definition of Ethics • 1. ( used with a singular or plural verb ) a system of moral principles: the ethics of a culture. • 2. the rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.: medical ethics; Christian ethics. • 3. moral principles, as of an individual: His ethics forbade betrayal of a confidence. • 4. ( usually used with a singular verb ) that branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions.

3. Definition of Legal laws. • A body of rules of conduct of binding legal force and effect, prescribed, recognized, and enforced by controlling authority. • In U.S. law, the word law refers to any rule that if broken subjects a party to criminal punishment or civil liability. Laws in the United States are made by federal, state, and local legislatures, judges, the president, state governors, and administrative agencies. • Law in the United States is a mosaic of statutes, treaties, case law, Administrative Agency regulations, executive orders, and local laws. U.S. law can be bewildering because the laws of the various jurisdictions—federal, state, and local—are sometimes in conflict. Moreover, U.S. law is not static. New laws are regularly introduced, old laws are repealed, and existing laws are modified, so the precise definition of a particular law may be different in the future from what it is today.

4. Universal Ethical Standards Developed by Character Counts, a nonpartisan organization of educators, community leaders, and ethicists. Source: The Six Pillars of Character, Josephson Institute website, http://josephsoninstitute.org/MED/MED-2sixpillars.html, accessed February 2, 2009

5. Ethics & Social Responsibility: A Close Relationship ETHICS Beliefs about right and wrong SOCIAL RESPONSIBILITY The obligation of a business to contribute to society

6. Defining Ethics: Murkier Than You’d Think

7. http://humanresources.about.com/od/businessethics/a/integrity.htm why business integrity....http://www.goodcharacter.com/dilemma/dilemma.html Examples Ethics quiz…. http://www.businessknowhow.com/growth/ethics-survey.htm • Illinois State’s Standards of Professional Behavior and Ethical Conduct http://business.illinoisstate.edu/search/?site=isu_collection&client=default_frontend&clientID=COB&as_sitesearch=business.illinoisstate.edu&output=xml_no_dtd&filter=p&oe=UTF8&q=ethics

8. AT TARGET Superstores… Store Managers to annual training for Standards of Professional Conduct and Ethical Behavior • Basic Philosophy or three rules that govern an ethical situation: • Is it legal? Not legal, not ethical. • Is it reality? Are the numbers produced real or made up? • Does it “look good” to those around you?

9. Business Ethics: Not an Oxymoron most challenging business decisions seem to arise when values are in conflict • Ethical Dilemma • Negative Consequences • Two unfavorable options • Ethical Lapse • Clear misconduct Business Ethics – the application of right and wrong in the workplace.

10. Ethics: Multiple Touchpoints Individuals must make their own ethical choices BUT The organization can have a significant influence on decisions

11. Ethics and the Individual: The Power of One • Framework for Ethical Decisions: • Do you understand the dimensions of the problem? • Who would benefit? Who would suffer? • Are the alternative solutions legal? Are they fair? • Does your decision make you comfortable? • Could you defend your decision on the nightly news?

12. Ethics and the Organization: It Takes a Village • Ethical influence starts at the top. • Actions matter more than words. • The appearance of shaky ethics can be deeply damaging “CEOs in particular must communicate their personal commitment to high ethical standards and consistently drive the message down to employees through their actions.”

13. Creating and Maintaining and Ethical Organization • Organizational Culture • Role of Top Management • Code of Ethics • Executive Buy-in • Clear expectations • Integrated approach • Global and local • Whistleblower support • Reporting and Enforcement

14. Ethics at Work: How would you judge the actions of these business leaders? Sherron Watkins, former vice president of Enron reported the accounting Irregularities that led to the discovery of corporate fraud. Stanley O’Neal began as Merrill Lynch began racking up losses that led to its collapse, he announced his “retirement.” Martha Stewart was convicted of obstructing justice in a $40,000 well timed stock sale. Whole Foods CEO, John Mackey posted thousands of comments on Yahoo Finance, hyping his company and attacking Wild Oats, which he was planning to purchase. Sanjay Kumar of Computer Associates was convicted of massive accounting fraud in 2006. Pierre Omidyar, the founder of eBay has given away over $100 million to Tufts University Micro Finance Fund.

15. The Spectrum of Social Responsibility

16. Social Responsibility at Work: How would you judge the actions of these firms? • Clorox introduced a line of “99% natural cleaning” products called Green Works. The Sierra Club endorsed the product line. Clorox makes annual contributions to the Sierra Club • Tapping the potential of their fans, MTV has drawn millions of young people to the polls for the 2008 presidential election • As obesity among kids grows, Kraft Foods pledged to stop advertising unhealthy yet profitable foods • After receiving $45 billion in taxpayer bailout funds, Bank of America sponsored a five-day carnival-like event outside the 2009 Super Bowl.

17. The Stakeholder Approach: Responsibility to Whom? Stakeholders are any groups that have a stake or a personal interest in the performance and actions of an organization.

18. The Stakeholder Approach: Responsibility to Whom? EMPLOYEES Creating Jobs that Work CUSTOMERS Value, Honesty and Communication INVESTORS Fair Stewardship and Full Disclosure COMMUNITY Business and the Greater Good ENVIRONMENT Sustainable Development

19. Responsibility to Employees: Creating Jobs that Work • Meet Legal Standards • Workplace Safety • Minimum Wage/Overtime Requirements • Value Employees • Provide Work/Life Balance

20. Responsibility to Customers: Value, Honesty and Communication • CONSUMERISM: • The Right to Be Safe • The Right to Be Informed • The Right to Choose • The Right to be Heard Planned Obsolescence – Deliberately designing products to fail in order to shorten the time between consumer repurchases

21. Apple Angst • Apple introduced the iPhone on June 9, 2007 to rave reviews despite $599 price tag • Apple dropped the price to $200 to increase customers • Customers were livid! • CEO, Steve Jobs apologized and gave customers $100 store credit

22. Ethics and Social Responsibility in the Global Arena: A House of Mirrors? Corruption is part of the culture in many countries • Bribes or Gifts Labor issues in host countries can be complicated • Living Wage • Child Labor

23. Monitoring Ethics and Social Responsibility: Who is Minding the Store? SOCIAL AUDIT A systematic evaluation of how well a firm is meeting its ethics and social responsibility objectives.

24. Looking Back What is ethics? Business ethics? What are the universal ethical standards? What is an ethical dilemma? How does ethics relate to the individual and the organization? What is social responsibility and its impact on stakeholders? What is the role of social responsibility in the global arena? How do companies evaluate their efforts to be socially responsible? 24