Business Environ: Chapter 5
Explain the current perceptions of ethical behaviour
- There is increased pressure on businesspeople to make decisions in a society characterized by diverse value systems - There is a growing tendency for business decisions to be judged publicly by groups with different values and interests - The public's expectations regarding ethical behaviour have increased - Ethical business conduct may have *declined*
What is the THIRD step in the six-step process that can help improve business ethics?
A. The ethics code must be enforced. B. Ethical behaviour expectations start at the top and employees must act accordingly. C. There must be ethics training. Ans: C
Explain triple bottom line
AKA "TBL", "3BL", or "People, Planet, Profit" - At its broadest, TBL is used to capture the whole set of values, issues & processes that companies must address in order to minimize any harm resulting from their activities and to create economic, social and environmental value - "Triple bottom line" (TBL) is used as a framework for measuring and reporting corporate performance against *economic, social and environmental* parameters. - Such corporations focus on the economic value they add, but also on the environmental and social value they add - and destroy
Explain corporate social responsibility
AKA CSR The concern businesses have for the welfare of society and includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment, CSR goes well merely beyond being ethical. It is based on a commitment to integrity, fairness and respect.
Explain Sarbanes-Oxy Act
AKA SOX: Legislation established stronger standards to prevent misconduct and improve corporate governance parties. Offers protection to Canadian employees who work for a corporation on a U.S stock exchange. Does not include a provision to protect private-sector Canadian whistleblowers
Define corporate responsibility
Acting responsibly within company and toward society Dimensions of social responsibility that includes everything from hiring minority workers to making safe products.
What did Milton Friedman believe in?
Economist Milton Friedman believed that a business's only social responsibility was to make money for its owners and anything else was socialism
What responsibility with ethical behaviour is there to investors?
Eg. Insider trading - An unethical activity where insiders (person within a group or organization) private company information to further their own fortunes or those of their family and friends. - ethical behaviour is good for shareholder wealth; it doesn't subtract from the bottom line, but rather adds to it
Explain EG
Elections Canada launched an investigation after the 2011 federal election. Voters complained that they received phone calls on behalf of elections Canada directing them to the wrong poll stations.
What are some features of a compliance-based ethics code? (Comes from diagram)
Emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers. This is based on avoiding legal punishment. Ideal: Conform to outside standards (laws and regulations) Objective: Avoid criminal misconduct Leaders: Lawyers Methods: Edu, reduced employee discretion, controls and penalities
What is sustainable development?
Implementing a process that integrates environmental, economic, and social considerations into decision making This reinforces the world commission on environment and development's conclusion that development should be sustainable for the benefit of current and future generations.
Explain personal moral philosophy and ethical behaviour. What do they consist of?
- The values businesspeople use to make decisions have been acquired through family as well as through educational and religious institutions - Ethical values are situation specific and time oriented Consist of: - Moral idealism - Utilitarianism
Businesses should be managed ethically bc its the right thing to do... what are some other reasons?
to maintain a good reputation to keep existing customers to attract new customers to avoid lawsuits to reduce employee turnover to avoid government intervention to please customers, employees, and society
Which of the following is NOT part of a compliance-based ethics code?
A. Increased control over employee actions B. Shared accountability among employees C. Penalties for wrongdoers Ans: B
What are some socially responsible business activities?
*Community-related activities such as:* - Participating in local fundraising campaigns, donating employee time to various non-profit organizations & participating in urban planning & development *Employee-related activities:* - Establishing equal opportunity programs, offering flextime and other benefits, promoting job enrichment, ensuring job safety, & conducting employee development programs *Political activities*: - Taking a position on nuclear safety, gun control, pollution control, consumer protection, and other social issues & working more closely with local, provincial & federal gov't officials *Support for higher education, the arts and other non-profit social agencies* *Consumer activities:* - Ensuring product safety, creating truthful advertising, handling complaints promptly, setting fair prices & conducting extensive consumer edu programs
Explain ethical issues. What do they arise out of? Provide some examples
- *often arise out of a firm's relationship with its stakeholders* e.g., investors want financial decisions to boost sales, profits, and return on investment (ROI) e.g., customers expect products to be safe, reliable, and reasonably priced e.g., employees expect fair treatment in hiring, promotion, and compensation e.g., competitors expect fair and honest business practices
What other groups is there a responsibility to in relation to ethics?
- Employees - Society - The Environment
Explain international ethics & responsibility
- Many businesses are demanding socially responsible behaviour from their international suppliers by ensuring that suppliers do not violate domestic human rights and environmental standards
How can one's unethical behaviour be considered
- These are often judgement calls, depending on which side of the issue you are on. To clarify, one person's unethical behavior can be considered another person's business decision. DO NOT UNDERESTIMATE IMPACT OF CULTURAL VALUES. Different countries have different perspectives. Therefore not everyone thinks CSR is a good thing. - Research shows that good ethical reputations attract and retain better companies, draw more customers, and enjoy greater employee loyalty.
What are Six Steps to Improve Business Ethics?
1. Top management support 2. Expectations begin at the top 3. Ethics imbedded in training 4. Ethics office set up 5. External stakeholders informed 6. There must be enforcement
Explain bottom line
A measure of financial performance that refers to the final profit or loss that a company makes at the end of a given period of time
Define a social audit
A systematic evaluation of an organization's progress toward implementing programs that are socially responsible and responsive They look into things such as workplace issues, the environment, product safety, community relations and respecting the rights of local people
TOMS is a company that designs and sells shoes. With every pair of shoes purchased, TOMS donates a pair of shoes to a child in need. What corporate social responsibility dimension is this company BEST exhibiting?
A. Corporate policy B. Corporate philanthropy C. Corporate responsibility D. Corporate social initiative Ans: D - enhanced form of corporate philanthropy in that it is more directly related to the company's competencies
How can behaviour be corrected? What questions can be asked?
Although following the law is an important first step, ethical behavior requires more then that. Ethics reflect people's proper relations with one another. How should people treat others? What responsibility should they feel for others?
What are some sources for ethics?
Among sources from many different times and places, such as the bible, Aristotle's Ethics, William Shakespeare's King Lear, the Quran and the Analects of Confucius, you will find the following basic moral values: - Integrity, respect for human life, self-control, honesty, courage and self sacrifice are right. Cheating, cowardice and cruelty are wrong.
What is an ethical dilemma? What are some ethics check questions to consider?
An ethical dilemma refers to a situation where you must choose between *equally unsatisfactory alternatives* Some questions to consider: - Is It Legal?: Am I violating any law or company policy? - Is it balanced?: Would I want to be treated this way? - How will it make me feel about myself?: Would I be proud if my actions were public?
Explain the federal accountability act
Applies to approx. 400k govt employees. Lists a wide range of measures to help make the Canadian federal government more accountable and to increase transparency and oversight in government operations.
How can an employer help?
Create & review regularly a code of ethics
What do critics and defenders of CSR believe?
Critics of CSR: Believe that a manager's sole role is to compete and win in the marketplace Defenders of CSR: Believe that businesses owe their existence to the societies they serve
What should be known of both codes? (Comes from diagram)
Both codes have a concern for the law and use penalties as enforcement. Integrity-based ethics codes move beyond legal compliance to create a "do-it-right" climate that emphasizes core values such as honesty, fair play, good svc to customers, a commitment to diversity and involvement in the community. These values are ethically desirable, but not necessarily legally mandatory.
Define influence-peddling
Bribery scheme that took place in pakistan, japan and south korea
What are some features of integrity-based codes? (Comes from diagram)
Ethical standards are defined in the organization's guiding values, create an environment that supports ethically sound behavior, and stress shared accountability among employees. Ideal: Conform to outside standards (laws and regulations) and chosen internal standards Objective: Enable responsible employee conduct Leaders: Managers w/ aid of lawyers & others Methods: Edu, leadership, accountability, decision processes, controls & penalties
Is ethics caught more than taught?
Ethics is caught more than it is taught. That is, people learn their standards and values from observing what others do, not from hearing what they say. This is as true in business as it is at home. Organizational ethics begins at the top, and the leadership and example of strong managers can help instill corporate values in employees.
What are the factors that influence managerial ethics? Explain the diagram in order from left to right.
Factors that influence business ethics are analyzed from three different perspectives: individual factors, organizational factors, and environmental factors.If you work through the acetate factor-by-factor, this should allow for maximum participation and full coverage. Individual (box): - Values - Work background - Family status - Personality Organizational (box): - Top level management (Philosophy) - The Firm's reward system - Job dimension Environmental (box): - Competition - Economic conditions - Social/cultural institutions
Explain fair trade
Fair trade is a growing social movement dedicated to making sure that producers in developing countries are paid a fair price for the goods we consume In another way. It is a strategy for poverty alleviation and sustainable development with the purpose of creating opportunities for producers who have been disadvantaged or marginalized by the traditional economic model.
Whose value is dependent directly performance?
Foundations, universities, and other non-for-profit organizations own shares in publicly held companies, whose value is dependent directly on the performance of those companies.
What rights do the customers have?
Four basic rights: (1) the right to safety; (2) the right to be informed; (3) the right to choose; and (4) the right to be heard
Explain utilitarianism
Greatest good for the greatest number
What do corporate philanthropy include?
Includes charitable donations
What do corporate social initiatives include?
Includes enhanced forms of corporate philanthropy in that they are more directly related to the company's competencies Dimensions of social responsibility that includes enhanced forms of corporate philanthropy (the desire to promote the welfare of others, expressed in donations) that are more directly related to the company's competencies.
Explain moral idealism
Individual rights or duties are universal, regardless of the outcome
Define unethical financial reporting
Investors will buy stocks to see them plummet as the real factual information is made public.
Explain double bottom line
Is used in socially responsible enterprise and investment - In addition to financial profit or loss, the second bottom line measures performance in terms of positive social impact
What does legality refer to?
Legality is narrower. It refers to laws we have written to protect ourselves from fraud, theft, and violence. Many immoral and unethical facts fall well within our laws. Eg. Gossiping about your neighbor or sharing something told to you in confidence is unethical, but not illegal.
Define strategic approach/profit responsibility
One view of corporate responsibility: (Corporate responsibility to stakeholders) - Management's primary orientation should be toward the economic interests of its shareholders - As owners, shareholders have the right to expect management to work in their best interest, to optimize profits. - Adam Smith's notion of the invisible hand suggests the maximum social gain is realized when managers attend only to their shareholders interests.
Define pluralist approach/stakeholder responsibility
One view of corporate responsibility: Corporate responsibility to stakeholders) - Recognizes the special responsibility of management to maximize profits but not at the expense of employees, suppliers, and members of the community - Recognizes the moral responsibilities of management that apply to all human beings. - Managers do not have moral immunity when making managerial decisions. Corporations can maintain their economic viability only when they fulfill their moral responsibilities to society as a while. - When shareholders interests compete with those of the community, as they often do, managers must decide how to act using ethics and moral principles. GUIDING OF 21'ST CENTURY WILL BE SOME VERSION OF PLURALIST APPROACH.
Define corporate policy
Position on social and political issues Dimensions of social responsibility that refers to the position a firm takes on social and political issues.
In order to restore trust in the free-market system, what must be done?
Punish those who break the law. Introduce new laws making accounting records more transparent.
How must firms compete?
Regardless of the intensity of the competition or the shifting external business environment, firms must compete in an ethical manner
Define morals
Rules people develop as a result of cultural values and norms - Ethics consists of personal moral principles and values rather than societal prescriptions - Thus, morals may be considered the foundation of ethical behaviour
What are the 5 groups considered to be a type of watchdog group?
Socially-conscious investors Socially-conscious research organizations Environmentalists Union Officials Customers
Define laws
Society's values and standards that are enforceable in the courts - Standards that are legal may not always be ethical, and vice versa
What do some leaders think in relation to ethics?
Some managers think that ethics is a personal matter-either individuals have ethical principles or they don't. These managers feel that they are not responsible for an individual's misdeeds and that ethics has nothing to do with management.
Define business ethics
The application of moral standards to business
Explain ethics
The moral principles and values that govern the actions and decisions of an individual or group - an ethical decision or action is one that is "right" according to some standard of behaviour - ethical decisions are resolved through religious teachings, individual rights, legislation, and court decisions
Explain the 6 steps in establishing ethics programs?
Top management must adopt and unconditionally support an explicit corporate code of product. Employees must understand that expectations for ethical behavior begin at the top and that senior man agreement expects all employees to act accordingly. Managers and others must be trained to consider the ethical implications of all business decisions. An ethics office must be set up. Phone lines to the office should be established so that employees who don't necessarily want to be seen with an ethics office can inquire about ethical matters anonymously. Whistleblowers (people who report illegal or unethical behavior) must feel protected from retaliation as oftentimes this exposure can lead to great career and personal cost. Outsiders such as suppliers, subcontractors and distributors and customers must be told about the ethics program. Pressure to put aside ethical considerations often come from the outside, and it helps employees to resist such pressure when everyone knows what ethical standards are. The ethics code must be enforced.