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Ray Kroc, Founder, McDonald’s
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Individual codes of ethics and the importance of ethics in the workplace
Key terms
Social responsibility in business
Environmental issues and stakeholder relationships
Approaches and implementation
Implications for small business
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Ethics: Right and wrong, good and bad, in actions that affect others. shaped by personal values and morals
Ethical Behavior: Conforming to generally accepted ethical norms.
Business ethics: Ethical or unethical behaviors of managers and employers of an organization.
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Identify examples of ethical and unethical business practices.
Ethical Business Practices : Examples: Donating a percentage of profits to charity and community causes (Ben & Jerry’s donates 7-
1/2% of pre-tax profits, and Levi Strauss donates 2.4% of pre-tax profits to a variety of causes), encouraging employees to engage in volunteer work using paid work-release time (Walt Disney’s
VoluntEARS program), recycling (McDonald’s has a far-reaching environmental protection program).
Unethical Business Practices
: Examples: Forwarding “marketing research” results to sales people, excessive violence in video games, and of course all forms of illegal behavior (e.g. deliberately selling cigarettes to minors).
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How can a business maintain a competitive edge and still help others succeed?
Cooperation – identify the sources of competitiveness, provide assistance.
when does a gift become a bribe?), and the differences in tipping practices (tips are expected for virtually every service in
Jamaica.
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Regarding a particular act…
Utility: Does it optimize what is best for those who are affected by it?
Rights: Does it respect the rights of the individuals involved?
Justice: Is it consistent with what we regard as fair?
Caring: Is it consistent with people’s responsibilities to each other?
Is it OK to submit an illegitimate receipt in place of a lost legitimate receipt?
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Best Approach: Open, Honest, Responsive!
The Coca Cola Scare Case\panic
The Tylenol Scare Case
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How Much Privacy Does Your Employer
Owe You?
Email
Internet
Cellular Phones
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If you are setting Internet usage policies for their own companies, where would they set limits? Why?
Discussion topics: productivity, company values, and protection of proprietary information. Is it ever OK to surf the web for personal reasons (e.g. shopping)? When? Why?
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1.
2.
3.
4.
5.
We have trust and respect for individuals.
We focus on a high level of achievement and contribution.
We conduct our business with uncompromising integrity.
We achieve our common objectives through teamwork.
We encourage flexibility and innovation.
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Adopting Written Codes
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Instituting Ethics Programs
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1.
2.
3.
4.
: What are the benefits of a formal code of ethics? Why does it make a difference?
Can increase public confidence
May help deflect\turn aside potential government regulation.
Provides consistent standards of ethical conduct (increasingly important in a multinational/multicultural environment)
Can help managers respond to unethical or illegal behavior on the part of employees or other stakeholders
Discussion: What would you want to know about a company’s code of ethics before you accepted an offer of employment?
(Possibilities include policies on social responsibility and the environment, policies on Internet and email use, attitudes toward employees and other stakeholders, etc.)
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Core Principles &
Organizational
Values
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Stakeholders: Groups, individuals, and organizations that are directly affected by the practices of an organization
Employees Investors
Customers CORPORATION
Local
Communities
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Suppliers
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It refers to the way in which a business tries to balance its commitments to certain groups and individuals in its social environment.
Customers : Treat customers fairly and honestly (Examples of companies with excellent reputations in this area: L.L. Bean,
Nordstrom, Dell Computer Corporation)
Employees : Treat employees fairly, with respect for their dignity and basic human needs (Examples of companies with excellent reputations in this area: 3M, Southwest Airlines)
Investors : Manage financial resources honestly and openly
Suppliers : Seek mutually beneficial partnerships
Local Communities : Minimize damage and maximize contributions to local communities
Discussion: Who are the major stakeholders at your school? How does the school prioritize these stakeholders? What are your thoughts about this prioritization?
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Contemporary Social
Consciousness
Era of Social Activism
The Great Depression
Entrepreneurial Era
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Entrepreneurial Era : In the late 1800s, big business began to flourish, but labor strife, predatory business practices, and environmental degradation were rampant\out of control.
The Great Depression : The collapse of business and banking institutions in the 1930s, combined with widespread job loss, led to a redefinition of the role of business to include protecting and enhancing the general welfare of society.
The Era of Social Activism : Social unrest in the 1960s and 1970s led to laws that further expanded the role of business in promoting general welfare.
Contemporary Social Consciousness : Through the economic expansion of the 1990s, many firms have begun to integrate socially conscious thinking into their production and marketing plans. In many industries, this approach has manifested itself in environmentally friendly products.
Another emerging example is the extension of employment benefits to domestic partners.
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Encompasses three main areas:
1.
Air pollution
2.
Water pollution
3.
Land pollution
Toxic\deadly waste
Recycling
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Consumer Rights
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Unfair Pricing
Ethics in Advertising
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Consumerism is social activism dedicated to protecting consumers in their dealings with business. First proposed by John F. Kennedy, consumer rights include:
The right to safe products
The right to be informed about all relevant aspects of a product
The right to be heard
The right to choose what to buy
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Unfair Pricing : Pricing is considered unfair if it interferes with competition. Two possibilities:
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Price fixing : Two or more firms agreeing to hold prices at a predetermined level.
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Price gouging\scoring : Responding to increased demand with overly steep price increases. Analysts were amazed that price gouging was not more widespread in NY in the wake of the 9/11 attacks.
Ethics in Advertising : Examples of shady practices: tobacco ads targeted toward young people, sexually suggestive ads featuring children.
» Discussion: identifying other examples of ads that are ethically shaky.
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Legal & Social
Commitments
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Whistle-blowers
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Legal and social commitments : Legally, companies are required to refrain from discrimination against any worker based on race, gender, religion, nationality or other irrelevant factors. Ethically, many people feel that companies should ensure that the workplace is physically and socially safe.
How far should companies extend themselves to help employees who are laid off?
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Improper financial management : Offenses are typically unethical, rather than illegal. Examples include excessive salaries, and lavish or frivolous perks (e.g. regular corporate “retreats” to exotic island resorts).
Check kiting :
Illegal practice of writing checks against money that has not yet arrived at the bank on which it is drawn.
Insider trading :
Illegal practice of using confidential information to gain from the purchase or sale of stocks.
Misrepresentation of finances :
Typically, this takes the form of overly optimistic projections of earnings.
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Lowest
Level of Social Responsibility
Highest
Obstructionist
Stance
Defensive
Stance
Accommodative
Stance
Proactive
Stance
Actively Avoids
Responsibility
Does Legal
Minimum
Responds to
Requests
Actively Seeks
Opportunities to
Contribute
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Obstructionist stance : Approach to social responsibility that involves doing as little as possible and may involve attempts to deny or cover up violations (e.g. PG&E’s water contamination and cover-up).
Defensive stance : Approach to social responsibility by which a company meets only minimum legal requirements (e.g. tobacco companies that use warning labels in the U.S., but not abroad where they aren’t required to do so).
Accommodative stance : Approach to social responsibility by which a company only exceeds minimum legal requirements if asked to do so by specific stakeholder groups .
Proactive stance : Approach to social responsibility by which a company actively seeks opportunities to contribute to its social environment, often through a foundation .
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Social Responsibility
Social Audit
Appointment of Director
Strategic Planning
Top-Management Support
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Top management support : Top management support is the keystone of a successful social responsibility program.
Strategic Planning : A committee of top managers must detail the level of support and set specific priorities.
Appointment of a Director : One executive must be in charge of the program, with responsibility for monitoring the program and ensuring that its implementation is consistent with the firm’s strategic plan.
Social Audits : The organization must periodically analyze the success of the program to ensure that it meets its goals efficiently and effectively.
Social Responsibility : The result of a well-managed program.
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Do small businesses face different issues with regard to ethics and social responsibility?
Discussion: What are some of the things that small businesses can do to be socially responsible? Are the costs and benefits different than they are for large businesses? If so, how?
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What basic factors should be considered in any ethical decision? students should address the circumstances of each issue, legal implications, personal codes of ethics, and the effect of the decision on others. They should also refer to the four ethical considerations discussed in the chapter (utility, rights, justice, caring).
Who are an organization’s stakeholders? Who are the major stakeholders with whom most businesses must be concerned?
Stakeholders include customers, employees, investors, suppliers, and the firm’s local communities. Most businesses should be concerned with all stakeholders groups, although areas of emphasis may differ for individual businesses.
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1.
2.
3.
4.
What are the four basic approaches to social responsibility?
Obstructionist: Does as little as possible to promote social responsibility
Defensive: Meets minimal legal requirements regarding social responsibility
Accommodative: Exceeds minimum requirements only by special request
Proactive: Actively seeks opportunities to contribute to the social environment
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Discuss how individuals develop their personal codes of ethics.
Explain why ethics matter in the workplace.
Distinguish social responsibility from ethics.
Show how social responsibility applies to environmental issues and to relationships with customers, employees, and investors.
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