HRD 3410 Test 1

What ethical issues are on the rise?

-Accounting fraud -Insider trading of stocks & bonds -Falsifying of organizational documents -Deceptive advertising -Defective products -Bribery -Employee theft

How to identify an ethical issue:

-An activity approved by most members of the organization in the industry is probably ethical -If the issue withstands open discussion between groups w/in and outside the organization it is probably ethical. -Covert discussion and destroyed or disguised documents indicate potential problems.

Social responsibility consists of the following responsibilities:

-Economic (satisfy investors) -Legal (obey the law) -Ethical (expected activities and behaviors) -Philanthropic (desired activities and behaviors)

Examples of stakeholders:

-Investors -Employees -Customers -Suppliers -Interest groups -Legal system -Community

Shareholder vs stakeholder

Shareholder model was founded in classic economic percepts including maximization of wealth for investors and owners. Stakeholder model adopts a broader view of the purpose of business that includes satisfying the corners of other stakeholders, from employees, suppliers and government regulators to communities and special interest groups.

Social responsibility

The obligation a business assumes to maximize its positive effect while minimizing its negative effect on surrounding society

Causes of unethical behavior:

-Meeting overly aggressive financial or business objectives -Meeting schedule pressures -Helping the organization survive -Rationalizing that others do it -Resisting compettiive threats -Saving jobs

Why study business ethics?

-Reports of unethical behavior are on the rise -Society's evaluation of right or wrong affects its ability to achieve its business goals -Studying business ethics is a response to FSGO and stakeholders demands for ethics initiates -Individual ethics is not enough -Studying business ethics helps identify ethical issues to key stakeholders.

Corporate governance

Accountability, oversight and control. Accountability refers to how closely workplace decisions are aligned with a firms stated strategic direction. Oversight provides a system of checks and balances that limits employees and manages opportunities to deviate. Control is the process of auditing and improving organizational decisions and actions.

Stakeholder model

Adopts a broader view of the purpose of business that includes satisfying the concerns of other stakeholders, from employees, suppliers and government regulators to communities and special interest groups

Passive bribery

An offense committed by the official who receives the bribe

Business Ethics

Comprises principles and standards that guide behavior in the world of business.

Secondary stakeholders

Do not typically engage in transactions w/ a company and are not essential for its survival (ex-media, trade associations and special interest groups)

1990's: Institutionalization of ethics

Federal Sentencing guidelines for organizations set the tone for ethical compliance. Preventative actions were taken against misconduct

Shareholder model

Founded in classic economic percepts, including the maximization of wealth for investors and owners

Corporate citizenship

Four interrelated dimensions of corporate citizenship: -Strong sustained economic performance -Rigorous compliance -Ethical actions beyond what is required by the law -Voluntary contributions that advance reputation and stakeholder commitment.

Honesty vs fairness

Honesty relates to truthfulness, integrity and trustworthiness Fairness relates to being just, equitable and impartial.

1980's: consolidation

Membership in ethics organizations increased, ethics centers provided publications, courses, and seminars, firms established ethics committees, defense industry initiatives emerged and became the foundation for the Federal Sentencing Guidelines for organizations.

21st century

Moved from legally based ethics initiatives to culturally or integrity based programs. -realization that ethics programs were beneficial -business worked close together/globally to establish standards of acceptable behavior.

Fiduciaries

Persons placed in positions of trust who use due care & loyalty in acting on the behalf of the best interests of the organization

Fraud

Purposeful communication that deceives, manipulates or conceals facts in order to create a false impression

What determines whether a specific behavior is ethical or unethical?

Stakeholders

Implementing a stakeholder perspective

Step 1: Assessing the corporate culture Step 2: Identifying stakeholder groups Step 3: Identifying stakeholder issues Step 4: Assessing organizational commitment to social responsibility Step 5: Identifying resources and determining urgency Step 6: Gaining stakeholder feedback

Ethics vs. Law and policies

The law is not always ethical and ethics do not constitute a law.

Active bribery

The person who promises of gives the bribe commits the offense

Bribery

The practice of offering something (usually money) in order to gain an illicit advantage

Before 1960:

Theological discussions of ethics emerged: catholic social ethics included a concern for mortality in business, workers rights and living wages.

Primary stakeholder

Those who continued association is absolutely necessary for a firms survival (ex-employees, customers, investors, governments and communities)

Stakeholders

Those who have a stake or claim in some aspect of a company products, operations, markets, industry and outcomes

Why study business ethics?

Unethical behavior is on the rise, society interpretation of right and wrong impacts businesses, individual ethics is not enough.

General interpretation of Enron

Unethical issues were skewed reports, losses were not being reported, & executives were embezzling funds. Skilling, Lay and Fastow were key players.

Corporate intelligence

the collection and analysis of information on markets, technologies, customers, and competitors as well as socioeconomic and external political trends

1970's

Business professors began to write about social responsibilities, philosophers became involved in ethics, businesses became more concern w/ public image, conferences were held and centers developed. Main issues were bribery, deceptive advertising, price collusion, product safety, environment.