Business Ethics 1-3
Stakeholder model
*A broader view of the purpose of business *Includes satisfying concerns of stakeholders
Implementing a Stakeholder Perspective
*Assessing the corporate culture *Identifying stakeholder groups *Identifying stakeholder issues *Assessing organizational commitment to social responsibility *Identifying resources and determining urgency *Gaining stakeholder feedback
Examples of Stakeholders
*Customers *Investors *Employees *Suppliers *Government agencies *Communities
Many privacy issues in the business world
*Employee use of technology *Consumer privacy *Can be challenging for businesses today to meet the needs of consumers while protecting privacy
Discrimination
*Equal Employment Opportunity Commission (EEOC) *The Age Discrimination in Employment Act *Affirmative Action Programs
Shareholder model
*Founded in classic economic precepts *The maximization of wealth for investors and owners
Examples of Corporate Intelligence
*Hacking *Social engineering *Shoulder surfing *Password guessing *Dumpster diving *Whacking *Phone eavesdropping
The Reasons for Studying Business Ethics
*Having good individual values/morals is not enough to stop ethical misconduct *Ethics training helps provide collective agreement in diverse organizations *Business ethics decisions can be complicated *Studying business ethics helps identify ethical issues to key stakeholders
Stakeholder framework
*Helps identify internal and external stakeholders *Helps monitor and respond to needs, values, and expectations of stakeholder groups
The Federal Sentencing Guidelines for Organizations
*High level of oversight *Care in delegation of authority *Effective communication *Employee training *Systems to monitor, audit, and report misconduct *Consistent enforcement and continuous improvement
Three types of lies
*Joking without malice *Commission lying is creating a false perception with words that deceive the receiver *Omission lying is intentionally not informing channel members of problems relating to a product that affects awareness, intention, or behavior
Accounting fraud
*Misrepresentation of company's financial reports *Dramatic changes in accounting field *Increased competition and pressures to perform can create opportunities for misconduct *Accountants should abide by a strict code of ethics
Specific Issues
*Misuse of company resources *Abusive behavior *Harassment *Accounting fraud *Conflicts of interest *Defective products *Bribery *Employee theft
Sarbanes-Oxley Act
*Most extensive ethics reform *Increased accounting regulations
Three intelligence models
*Passive monitoring system for early warning *Tactical field support *Support dedicated to top management strategy
To Avoid Sexual Misconduct, a Firm Needs
*Statement of policy *Definition of sexual harassment *Non-retaliation policy *Specific procedures for prevention *Establish, enforce, and encourage victims to report *Establish a reporting procedure *Timely reporting requirements to the proper authorities
Four interrelated dimensions of corporate citizenship
*Strong sustained economic performance *Rigorous compliance *Ethical actions beyond what is legally required *Voluntary contributions to advance reputation and stakeholder commitment
Hostile work environment
*The conduct was unwelcome *The conduct was severe, pervasive, and regarded by claimant as hostile/offensive *The conduct was such that a reasonable person would find it hostile or offensive
Right vs. right values
1. Truth vs. loyalty 2. Individual vs. community 3. Short-term vs. long-term 4. Justice vs. mercy
Four levels of social responsibility
1.Economic 2.Legal 3.Ethical 4.Philanthropic
Ethics Contributes to
1.Employee Commitment 2.Investor Loyalty 3.Customer Satisfaction 4.Profits
Three activities
1.Generation of data about stakeholder groups 2.Distribution of the information throughout the firm 3.Organization's responsiveness to this intelligence
Dishonesty
A lack of integrity, incomplete disclosure, or an unwillingness to tell the truth
Dual Relationship
A personal, loving, and/or sexual relationship with someone with whom you share professional responsibilities
Sexual Harassment
A repeated, unwanted behavior of a sexual nature perpetrated upon an individual by another
Oversight
A system of checks and balances to minimize opportunities for misconduct
Dodd-Frank Wall Street Reform and Consumer Protection Act
Aimed at making the financial industry more transparent/responsible
Implied falsity
An advertising message that misleads, confuses, or deceives the public
Passive bribery
An offense committed by the official who receives the bribe
Social Responsibility
An organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact
Fraud
Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression
Secondary stakeholders
Are not essential to a company's survival i.e. Media, trade associations, and special interest groups
Interlocking directorate
Board members linked to more than one company
Literally false
Claims can be divided into tests prove and bald assertions
Business Ethics can be defined as
Comprises principles, values, and standards that guide behavior in the world of business
Puffery
Exaggerated advertising claims, blustering, and boasting
Conflicts of Interest
Exist when an individual must choose whether to advance his/her personal interests, those of the organization, or some other group
Board of Directors
Holds final responsibility for its firm's success, failure, and ethicality of actions
Accountability
How closely workplace decisions align with a firm's strategic direction
Intellectual Property Rights and Privacy
Involve the legal protection of intellectual properties i.e. *Books, movies, software *Can be difficult to enforce
Legal insider trading
Involves legally buying and selling stock in an insider's own company, but not all the time
Executive Compensation(Corporate Governance)
Many boards spend more time discussing compensation than ensuring integrity of financial reporting systems
The Challenge of Determining Ethical Issues in Business
Most ethical issues become visible through stakeholder concerns
Reciprocity
Occurs when an action that has an effect upon another is returned
FSGO reforms
Requires governing authorities to be informed of business ethics programs
Principles
Specific boundaries for behavior that are universal and absolute i.e. Freedom of speech, civil liberties
Demands for Accountability and Transparency
Stakeholders demand that boards are answerable for their actions and transparent
Illegal insider trading
The buying or selling of stocks by insiders who possess material that is not public
Corporate Intelligence
The collection and analysis of information on *Markets *Technologies *Customers and competitors *Socioeconomic and external political trends
Ethical culture
The component of corporate culture that captures the values and norms that an organization defines as appropriate
A Stakeholder Orientation
The degree to which a firm understands and addresses stakeholder demands
Corporate Citizenship
The extent to which businesses strategically meet their economic, legal, ethical, and philanthropic responsibilities
Financial Misconduct
The failure to understand and manage ethical risks was a key problem in the recent financial crisis
Corporate governance
The formal system of accountability and control of ethical and socially responsible behavior
Active bribery
The person who promises or gives the bribe commits the offense
Bribery
The practice of offering something in order to gain an illicit advantage
Control
The process of auditing and improving organizational decisions and actions
Marketing Fraud
The process of dishonestly creating, distributing, promoting, and pricing products
Fairness
The quality of being just, equitable, and impartial
Optimization
The tradeoff between equity and efficiency
Stakeholders
Those who have a stake or claim in some aspect of a company's products, operations, markets, industry, and outcomes
Primary stakeholders
Those whose continued association is necessary for a firm's survival i.e. Employees, customers, investors, governments, and communities
Honesty
Truthfulness or trustworthiness
Integrity
Uncompromising adherence to ethical values
Values
Used to develop socially enforced norms i.e. Integrity, accountability, trust
Consumer Fraud
When consumers attempt to deceive businesses for personal gain i.e. Price tag switching, item switching, or lying to obtain discounts
Ethics is
a part of decision making at all levels of work and management
Duplicity
involves a consumer duping a store
Collusion
involves an employee who helps a consumer commit fraud
Ethical issue
is a problem, situation, or opportunity that requires an individual or group to choose among actions
Ethical dilemma
is a problem, situation, or opportunity that requires an individual or group to chose among several wrong or unethical actions
Guile
is associated with a person who uses tricks to obtain an unfair advantage
Reputation
is one of an organization's greatest intangible assets with tangible value
Ethics deals with
questions of whether practices are acceptable
The ethical decision making process starts
when ethical issue awareness occurs and a discussion begins