Acting Ethically and Socially Responsible

Legal and Ethical

-boycotts of businesses -consumer-friendly policies -employee fringe benefits -diversity policies (including affirmative action)

Illegal and Unethical

-embezzlement -consumer fraud -sexual harassment -cash payments to avoid taxes -bribes

Legal but Unethical

-making low-quality products that break easily -canceling a company retirement plan -avoiding taxes on U.S. revenues by using offshore banks -charging a very high price for brand-name drugs when inexpensive generic versions are available

The company did not reward ethical behavior

An employee reported being overpaid in her quarterly sales bonus, but was not acknowledged for her honesty

Ethics

Are principles of right and wrong that influence behavior. They help instruct how people deal with and treat one another. Some ethical standards are nearly universal, such as the belief that killing is never justified, except for self-defense. Other ethical standards are culturally based, varying according to what a particular culture considers right or wrong.

Laws

Are rules of conduct or action formally recognized as binding or enforced by a controlling authority, such as police officers and the court system. In our society, laws are based on ethical considerations and values. However, what is ethical may not always be legal and vice versa

Cultural Norms

Are the ethics, values, attitudes, and behaviors that are deemed to be normal or typical in a given culture. For example, in the United States a cultural norm is that we shake hands when formally meeting someone

The two kinds of Ethical Codes

A code of ethics is a set of ethical standards to help guide an organization's actions. Most ethical codes state top management's expectations for employees offering guidance on how to treat customers, suppliers, and competitors. Ethical codes may be either compliance-based or integrity-based

The company did not provide regular ethics training

Employees were confused about which behaviors were acceptable in the office, which led to complaints about harassment and offensive jokes

The Difference between Issues of Legality and Ethics

Factors that make a given behavior a matter of Legality: - whether the behavior contradicts a rule formally recognized as binding - whether the behavior is enforced by controlling authorities such as police offers or the court system Factors that make a given behavior a matter of ethics: - whether the behavior reflects how most ppl would like to be treated - whether the behavior conforms to cultural beliefs regarding right and wrong

The importance of an Anonymous system for reporting unethical behavior

Imagine you uncovered your supervisor's wrongdoings and then confronted your supervisor or reported this information to someone outside the organization. There is a good chance your supervisor and/or organization will not be pleased. Therefore, it is important to have an anonymous system to protect you from repercussions when you report unethical behavior.

Recruiters did not stress the company's commitment to ethics when hiring

In this example, we have an electronics manufacturer that prides itself on its ethical standards. Job candidates are screened based on their past behaviors, top managers work hard to set a good example for employees, and the company has rewards in place for employees who live up to the company's ethical codes. After an exceptionally busy year, however, customers begin to complain that customer service representatives no longer respond to product failures.

Code of Ethics

Is a set of ethical standards to help guide an organization's actions. Most ethical codes state top management's expectations for employees offering guidance on how to treat customers, suppliers, and competitors.

Whistleblower

Sometimes a company develops an ethical climate the hard way— by having its having its illegal and/or unethical behaviors exposed by someone. A whistleblower is the term for the person who reports organizational misconduct to the government or the public.

The Sarbanes-Oxley Act of 2002

The Sarbanes Oxley Act of 2002, often known simply as SOX or SarbOx, was established to give whistleblowers protection from retaliation. In the past, many whistleblowers were fired for reporting the wrongdoings of their employers. The provisions of the SOX have established protections for whistleblowers, record-keeping requirements for public companies, and penalties for noncompliance.

Compliance-Based Ethical Code

This type of code attempts to prevent criminal misconduct by increasing control and by punishing violators. For instance, many companies ask employees to sign nondisclosure agreements (NDAs) in which the signers acknowledge that they can be fired and even sued if they leak confidential information

Integrity-Based Ethical Code

This type of code seeks to foster responsible employee conduct by creating an environment that supports ethically desirable behavior. This approach stresses a culture of fair play, honesty, and diversity. It also emphasizes shared accountability among employees

Steps Top Managers Must Take to Establish an Ethical Climate

To foster high ethical standards, a company must have top managers who support a strong ethical climate, hire ethical employees, and institute a code of ethics as well as implement training programs in ethics -There are 4 steps that top managers can take to establish an ethical climate 1. set an Ethical Example 2. Create an Ethical Hiring Culture 3. Create Ethical Codes and Training Programs 4. Reward Ethical Behavior

How Large Organizations Implement ethics Programs

To reinforce their ethics codes, many companies provide ethics training, often presenting employees with ethical dilemmas they may eventually encounter. Large companies have an ethics officer who integrates the organization's ethics and values initiatives, compliance activities, and business practices into the company's decision-making processes

Managers did not set an ethical example for employees

Top managers in an accounting firm charged their personal meals and trips to the company credit card. Later on, several employees were indicted in a scheme to falsify the financial records of one of the company's clients

Illegal but ethical

-paying more despite union contract limits -selling raw milk for human consumption across state lines -taking usable items from corporate dumpsters and donating them

Values

Are the relatively permanent and deeply held underlying beliefs and attitudes that help determine people's behavior. Values are the underpinnings for ethical systems