BOM 120
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Is the concern businesses have for the welfare
of society.
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There are 3 categories to by which we can
judge the social performance of a company.
1) Corporate philanthropy
2) Corporate responsibility
3) Corporate policy
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Includes:
Charitable donations to non-profit groups of
all kinds.
Amounts to billions of dollars in charitable
donations each year.
Strategic philanthropy: involves companies
making long-term commitments to one
cause.
(For example: Ronald McDonald House.)
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Is all encompassing because it includes:
Hiring minority workers
Making safe products
Minimizing pollution
Using energy wisely
Providing a safe work environment.
It scrutinizes the actions a company takes
that could affect others.
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Refers to the position a company takes on
social and political issues and internal
business ethics.
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For example, it is the corporate policy of
companies like Xerox, IBM and Wells Fargo to
promote Social Service Leave for their
employees.
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Allows employees to leave for up to a year to
work for a non-profit organization.
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While on Social Leave, employees get full
salaries and benefits, including job security.
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Customers: one responsibility of business is
to satisfy customers by offering them goods
and services of real value.
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One of the surest ways of failing to please
customers is by not being totally honest with
them.
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For example, in 1988 a consumer magazine
reported that the Suzuki Samurai was likely
to roll over if a driver swerved violently in an
emergency.
When Suzuki executives denied there was a
problem, sales plummeted.
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The payoff for socially conscious behaviour
could result in new business as customers
switch from rival companies simply because
they admire the company’s social efforts.
Consumer studies show that socially
conscious companies are more likely to
viewed favourably than less socially
responsible competitors.
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Ethical behaviour is good for shareholder
wealth.
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Many people believe that it makes financial
as well as moral sense to invest in companies
that are planning ahead to make.
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Businesses have several responsibilities to
employees. These include:
Creating jobs – it has been said that the best
social program in the world is a job.
Fair compensation
Hope for a better future through upward
mobility.
Respect and integrity.
Pension plans and health benefits.
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Given that the cost of replacing an employee
is approximately 150% of their annual
salaries, retaining workers is good for
business as well as for morale.
When employees feel they have been
mistreated, they often strike back.
Getting even is one of the most powerful
incentives for good people to do bad things.
It makes good sense for a company to be
socially responsible to its employees.
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One of business’s major responsibilities to
society is to create new wealth.
They are also partially responsible for
promoting social justice.
For its own well being, business depends on
its employees being active in politics, church
groups, arts, charities, etc…
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Businesses are also clearly taking responsibility
for helping make their own environment a better
place.
Environmental efforts may increase a company’s
costs, but they also might allow the company to
charge higher prices or increase market share
Environmental quality is a public good.
Everyone gets to enjoy it regardless of who pays
for it.
The trick is for companies to find the right public
good that will appeal to their target market.
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Formerly a member of the Fortune 500 and
the 6th largest energy company in the world.
Reported annual revenue in 2000 = 100
billion.
With the help of its accounting firm, Arthur
Anderson, overstated shareholder equity by
1.2 billion dollars.
They had devised a vast web of fake investors
and partnerships to hide Enron’s massive
debt.
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In 2001, the company declared bankruptcy,
the largest company in the U.S. to do so, at
that point.
Stock prices dropped from $90 to $1 in a
matter of months.
Both Enron and Arthur Anderson were forced
to close, putting thousands out of work.
CEO’s of both companies were sentenced to
prison terms.
Stockholders lost billions.
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http://www.youtube.com/watch?v=CFk4ivlvv
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http://www.youtube.com/watch?v=Uxd9AeX
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The downfall of Enron led to the creation of
the Sarbanes-Oxley act.
Also known as the Corporate and Criminal
Fraud Accountability Act, was passed in the
United States in 2002.
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SOX requires all public corporations to
provide a system that allows employees to
submit concerns regarding accounting and
auditing issues both confidentially and
anonymously.
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Bill C-11 was passed in November 2005.
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It provides for significant powers to investigate
wrongdoing; it contains clear legal prohibition of
reprisal against those who make good-faith
allegations of wrongdoing; and it proposes
measures to protect the identity of persons
making disclosures.
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http://www2.parl.gc.ca/Sites/LOP/LegislativeSu
mmaries/Bills_ls.asp?Parl=38&Ses=1&ls=c11#dp
romotingethicalpractices
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Every scenario is different.
Take time to reflect on your actions.
http://www.youtube.com/watch?v=lnz0kojLv8&feature=related