(MGMT) Chapter 4: Ethics and Corporate Responsibility
Sarbanes-Oxley Act is meant to...
improve and maintain investor confidence
4 reasons why people lie
1.) conflicting expectations - not addressing underlying conflict 2.) negotiating - short-term gain 3.) keeping a confidence - lie of omission 4.) reporting your own performance within an organization
7 elements to a climate conducive to unethical behavior:
1.) excessive emphasis on short term revenues over long term considerations 2.) failure to establish a written code of ethics 3.) desire for a simple "quick fix" 4.) unwillingness to take ethical stand that may impose financial assets 5.) consideration of ethics solely as a legal issue or a public relations tool 6.) lack of clear procedures for handling ethical problems 7.) responsiveness to demands of shareholders at expense of other constituencies
4 aspects of Ethics Codes
1.) they help create a strong ethical structure and culture, promote positive image 2.) they must be carefully written and tailored to each specific company's philosophies 3.) they address shareholders, customers, suppliers and contractors, political activity, technology 4.) they are drawn up by legal departments
what are 5 major ethical systems?
1.) universalism 2.) egoism 3.) utilitarianism 4.) relativism 5.) virtue ethics
transcendent education
5 higher goals that balance self-interest with responsibility to others
egoism is similar to...
Adam Smith's Invisible Hand in business
the Caux Roundtable created
Caux Principles of Business
guanxi
Chinese term for personal relationship
Kohlberg's Model of Cognitive Moral Development
Pre conventional, conventional, post conventional
society's rules provide...
a moral minimum
philanthropic responsibilities
additional behaviors that society finds desirable
level 2 costs
administrative and audit, legal and investigative, remedial education, corrective actions, government oversight
universalism
all individuals should uphold values that society needs to function
life cycle analysis
analyzing all inputs and outputs through the entire "cradle-to-grave" life of a product, determine total environmental impact
relativism
bases ethical behavior on opinions and behaviors of relevant other people
managers should ________ AND _________
be ethical people; lead others to behave ethically
examples of values...
being honest, keeping promises, pursuing excellence, showing loyalty, being fair, acting with integrity, respecting others, being a responsible citizen
mutuality
common victory
being ethical can give an organization...
competitive advantage
level 3 costs
consumer defection, loss of reputation, employee cynicism, lost employee morale, employee turnover, government cynicism, government regulation
virtue ethics goes beyond..
conventional rules of society
integrate social responsibility with...
corporate strategy
compliance-based ethics programs
designed by corporate council to prevent, detect, and punish legal violations
integrity-based ethics program
designed to instill in people a personal responsibility for ethical behavior
ethics committees
develop policies, evaluate actions, investigate violations
relativism acknowledges existence of...
different ethical viewpoints
transcendent education includes...
empathy, generosity, mutuality, civil aspiration, intolerance of ineffective humanity
corporate and social responsibility includes...
equal opportunity, pollution control, energy and natural resource conservation, consumer and worker protection
maintain positive ethical climate by...
establishing global standards for behavior preventing ethical problems
fundamental sources of risk are...
excessive production of hazards and ecologically unsustainable consumption of natural resources
managers shape behavior...
formally and informally with money, approval, good job assignment, and work environment
ecocentric management
goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders
level 1 costs
government fines and penalties
utilitarianism
greatest good for the greatest number of people
aim of ethics
identify rules that should govern people's behavior and goods that are worth seeking
6 examples of ethical dilemmas
in-your-face marketing, CEO pay, commercialism in schools, religion at work, sweatshops, wages
egoism
individual self interest is the actual motive of all conscious action
maintaining positive ethical climate is more difficult for...
international corporations
Caux Roundtable
international executives based in Caux, Switzerland worked with business leaders in Japan, Europe, and the US
ethics officers or ombudspersons
investigate allegations and provide education
to make Ethics Codes effective, apply the following principles
involve those who have to live with the code in writing it focus on real-life situations that employees can relate to keep it short and simple, easy to understand and remember write about values and shared beliefs set the tone at the top of hierarchal structure
moral judgement
knowing what actions are morally defensible
generosity
learn how to give
pre conventional
make decisions based on immediate self interest
post conventional (principled)
make decisions based on self-chosen ethical principles
conventional
make decisions that conform to expectations of groups
organizations have a responsibility to...
meet social obligations beyond earning profits within legal and ethical constraints
ethical responsibilities
meeting societal expectations not written as law
ethical leader
moral person AND moral manager influencing others to behave ethically
business ethics
moral principles and standards that guide behavior in business
ethics
moral principles and standards that guide the behavior of an individual or group
legal responsibilities
obey local, state, federal, and international laws
corporate and social responsibility
obligation towards society assumed by a business
companies deliberately incorporate environmental values into competitive strategies BECAUSE
philosophical reasons, satisfy consumer demand, react to competitor's actions, meet requests from customers and suppliers, comply with guidelines, create competitive advantage
values
principles of conduct
moral philosophy
principles, rules, and values that people use in deciding what is right or wrong
ethical climate
process by which decisions are evaluated and made on the basis of right and wrong
economic responsibilities
produce goods and services that society wants at a price that perpetuates the business and satisfies obligations to investors
moral awareness
realizing issue has moral implications
the biggest impact of the Sarbanes-Oxley Act is...
requires companies to provide reports to financial statement users regarding the effectiveness of internal controls over financial recording process
examples of universalism
rules against murder, deceit, torture, oppression
"light of day" ethical framework
seeing your decision and it's consequences displayed to the public fear of exposure
stakeholders include...
shareholders, employees, customers, suppliers, competitors, society, government
ethical issue
situation, problem, opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong
intolerance of ineffective humanity
speaking out against unethical actions
norms
standards of acceptable behavior
moral character
strength and persistence to act in accordance with your ethics despite the challenges
Sarbanes-Oxley Act
strict accounting and reporting rules
subjectivity can lead to a...
suboptimal set of consequences
ethical behavior is assessed by...
superiors, peers, subordinates
whistleblowing
telling others, inside and outside an organization, about wrongdoing
if everyone follows egoism, according to proponents, ...
the well-being of society as a whole should increase
shareholder model
theory that managers are agents of shareholders whose primary objective is to maximize profits
stakeholder model
theory that managers are obligated to look beyond profitability to help organizations succeed by interacting with groups that have stake in the organization
civil aspiration
think in terms of positive contribution
5 core ethical values
truthfulness, responsibility, fairness, respect, compassion
what are the Caux Principles of Business?
two basic ethical principles kyosei - living and working together for the common good human dignity - value each person as an end, not as a means to fulfillment
ethical decisions are guided by...
underlying values of an individual
virtue ethics
what is moral comes from what a mature person with "good" moral character would deem "right"
Sarbanes-Oxley act protects
whistleblowers
what has a profound influence on why people commit unethical acts?
work environment