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.