Chapter. 4: Business Ethics and Social Responsibility

Lesson 4.3B: Ethics and Organization. It Takes A Village.

- Each person is responsible for their own actions (actions matter far more than words) - Its a ladder; setting ethical standards start at the top (C Umbrella) and walks down the ladder

Responsibility to Employees: Creating Jobs that Work

- Employers must comply with laws that include equal opportunity, workplace safety, minimum wage and overtime requirements, etc. -Employers must create a workplace environment that respects the dignity and value of each employee -Best Employers: Respond to ongoing to employee for balance between work and personal life

Ethics. and The Individual. The Power of One

- Ethical choices begin with. ethical individuals - Other factors. (i.e., needs, family, culture and religion) influence our system - Personality traits also play a big role (personal empathy is a strong predictor of an ethical relationship)

Lesson 4.5: Ethics and Social Responsibility in the Global Arena: A House of Mirrors

- Globalization has made ethics and social responsbility even more complex and challenged for companies at EVERY LEVEL - Bribery and Corruption are the MOST CHALLENGING - OTHER CHALLENGING ISSUES include responsibility to workers abroad -Companies should establish codes of conduct for vendors by setting clear rights, wages, safety and environmental impact - Codes of conduct work best with monitoring enforcement, and commitment to finding solutions for all parties involved

Sarbanes-Oxyley Act

- Limiting conflict of interest issues by stopping consulting services that accounting firms can provide for the companies they audit - Requires financial officers and CEOs personally certify the validity of their financial statements

Lesson 4.6: Monitoring Ethics and Social Responsibility: Who is minding the store?

- Many firms monitor themselves Social Audit: Evaluation of how well a firm is meeting its ethics and social responsibility objective s - Establishing goals is another point for social audit but the next step is to determine how to measure the achievement of these goals and this can be hard - Measure success by evaluating double bottom line; one that accounts for financial indictators (earnings) and one that accounts for social responsibility like community involvement - Other groups also watch to keep them on a good track - The threat of government legislation keeps companies motivated to self-regulate

Responsibility to Environment

- Most crucial element to the responsibility of community - Businesses are huge consumer of natural resources - The government sets minimum standards for environmental production at the federal, state and local levels - Many companies are trying to create innovative ways to build their businesses while protecting the environment -Weaving environmentalism throughout the business decision making process - Sustainable development = Long term cost savings Economic crisis may even push forward environmentally friendly programs

planned obsolescence

- The strategy of deliberately designing products to fail in order to shorten the time between purchases - Making a product that does not have a longevity in order for repurchase - Thins consumer wallets and abuses consumer trust - Apologies are good, but won't always renew sales; Think Apple with new versions of IOS

Lesson 4.3C: Creating and Maintaining and Ethical Organization

- To establish a ethical culture, ethical words must be backed up with documented practices, processes and procedures, all understood around the globe When there is more management commitment, employees will tend to be more fully engaged; more engaged = less risky behaviors and are more likely to report what others do

Lesson 4.1: Laws and Regulations

- Used to establish and enforce ethical norms that apply to everyone within our society - Provide basic standards of behavior - Your actions can be completely legal, but unethical - Your actions can be illegal, yet. still ethical GOAL: Legal and Ethical

Lesson 4.1B: Universal Ethical Standards & Six Core Values

-Ethical standards vary depending on the situation and how it relates to them Universal Ethical Standards -Norms that apply to everyone across a broad spectrum of situation Six Core Values (Founded by Character Counts Organization - Trustworthiness - Respect - Responsibility - Fairness - Caring - Citizenship

Green Marketing

-Marketing environmental products and practices to gain a competitive edge - Challenge: Vast majority won't sacrifice price, performance or convenince to actually buy those products - Green marketing can be quite consistent with profitability

Guidelines... The Framework for reaching ethical decisions

1. Do you fully understand each dimension of the problem 2.. Who would benefit? Who would suffer? 3. Are the other solutions legal? Are they fair? 4. Does your decision make you comfortable at a "gut feel" level? - Often times workers do what's right for the company or right for their career, rather than what's simply right

Code of Ethics

A formal document that would guide. the employees in making the right decisions in various professional situations; worthless if it doesn't reflect living principles Effective code of ethics: Flows directly from ethical corporate values and leads directly to ongoing communication, training and action How to bring a good code of ethics to life: - Get senior management priority to keep promises and lead - Have exceptions - Integrate ethics into staff training - Ensure - Build and maintain a clear report for ethical concerns - Establish whistle-blower protection (people who report illegal or unethical behavior) - Enforce the code of ethics

Carbon Footprint

A lot of companies have started to reduce this The amount of harmful greenhouse gases that a firm emits throughout its operations, both directly and indirectly Goal: Carbon Neutral (Emit zero gases or very little) Business leaders have began to see their carbon footprint and begin to reduce it Track three different types of emissions Scope 1: Corporate Operations Scope 2: Emissons from purchased electricity, heat and steam Scope 3: More complex to track -- out of companies control - Employee commutes - Supplier emissions - Product use-emissions

Lesson 4.4A: The Stakeholder Approach: Responsibility to Whom? - The stakeholder approach

Any groups that have personal interest in the performance and actions of an organization -- Each stakeholder has different levels of interest (i.e., government in pharmacy vs. government in art studio) - Organziations identity stakeholder for business and are high profits in decision making Goal: To balance needs and priorities as effectively as possible Corestakeholders: - Employees - Customers - Investors - Broader Community

Responsibility to Community: Business and the Greater Good

Businesses can contribute to society in two main ways - Philanthropy & Responsibility - Corporate Philanthropy: All business donations to nonprofit groups (i.e., money, products and employee time) - Cause-Related Marketing: Partnership between businesses and nonprofit organizations designed to spike sales for company and raise money for the nonprofit - These dollars are NOT TAXED, but do build company's brands - Corporate Responsibility - Focuses on the actions of the business rather than donations of money and time

Lesson 4.3 : Ethics. Multiple Touchpoints.

Each person must make his or her own ethical choices; an organization can have a big influence on the. quality of those decisions

Overview

Ethics and Social Responsibility are very similar, but not the same These. two areas are completely different; they have a dynamic interactive relationship that plays a big. role in building a profitable, vibrant, all around successful business

Responsibility to Investors: Fair Stewardship and Full Disclosure

Goal of Investors: Make money; to create ongoing stream of profits - Although companies need to maintain long-term earnings to all stakeholders, may have to do some business to create some success - Investors Duties: - Meet legal requirements - Be honest - Spend money wisely

Responsibility to Customers: Value, Honesty and Communication

Goal: To deliver consumer value by providing quality products at fair prices - Honesty + Communication Consumerism: - A widely accepted social movement - Consumer rights. Should be the starting point - Business Requirements - The Right to Be Safe - The Right to Be Informed - The Right to Choose: Freedom of Choice - The Right to be Heard Delivering quality products to customers is another top priority to consumers

Lesson 4.1: Ethics. Laws and Regulations. What is ethics?

Set of beliefs about right and wrong, good or bad -- Business Ethics: The application of ethical standards in a business setting - Individual ethics stems into who you are as a person - Other factors stem in shaping your ethics (i.e., family, culture and social group) - The countries legal system is a catalyst for examining ethical standards

Lesson 4.2: Business Ethics. Not An Oxymoron

The application of right and wrong, good and and in a business setting

Lesson 4.4: Defining Social Responsibility. Make the world a better a place.

The obligation of a business to contribute to society in someway, somehow - The most socially responsible firms feature policies that just don't focus on money makers, or generating a profit, but rather, all of its stakeholders (i.e., the community, customers, employees, etc.) - How socially responsible a firm is sets the tone for the organization and influences decisions of individuals How can a business contribute to society against trying to boost profits? - Depends on business values, mission, resources and management and philosophy and. leads into position on social responsibility

Ethical Dilemmas

situations that do not have a clear right or wrong answer; you must choose because. values are in conflict