(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