Business Ethics 1-3

Stakeholder model

*A broader view of the purpose of business *Includes satisfying concerns of stakeholders

Implementing a Stakeholder Perspective

*Assessing the corporate culture *Identifying stakeholder groups *Identifying stakeholder issues *Assessing organizational commitment to social responsibility *Identifying resources and determining urgency *Gaining stakeholder feedback

Examples of Stakeholders

*Customers *Investors *Employees *Suppliers *Government agencies *Communities

Many privacy issues in the business world

*Employee use of technology *Consumer privacy *Can be challenging for businesses today to meet the needs of consumers while protecting privacy

Discrimination

*Equal Employment Opportunity Commission (EEOC) *The Age Discrimination in Employment Act *Affirmative Action Programs

Shareholder model

*Founded in classic economic precepts *The maximization of wealth for investors and owners

Examples of Corporate Intelligence

*Hacking *Social engineering *Shoulder surfing *Password guessing *Dumpster diving *Whacking *Phone eavesdropping

The Reasons for Studying Business Ethics

*Having good individual values/morals is not enough to stop ethical misconduct *Ethics training helps provide collective agreement in diverse organizations *Business ethics decisions can be complicated *Studying business ethics helps identify ethical issues to key stakeholders

Stakeholder framework

*Helps identify internal and external stakeholders *Helps monitor and respond to needs, values, and expectations of stakeholder groups

The Federal Sentencing Guidelines for Organizations

*High level of oversight *Care in delegation of authority *Effective communication *Employee training *Systems to monitor, audit, and report misconduct *Consistent enforcement and continuous improvement

Three types of lies

*Joking without malice *Commission lying is creating a false perception with words that deceive the receiver *Omission lying is intentionally not informing channel members of problems relating to a product that affects awareness, intention, or behavior

Accounting fraud

*Misrepresentation of company's financial reports *Dramatic changes in accounting field *Increased competition and pressures to perform can create opportunities for misconduct *Accountants should abide by a strict code of ethics

Specific Issues

*Misuse of company resources *Abusive behavior *Harassment *Accounting fraud *Conflicts of interest *Defective products *Bribery *Employee theft

Sarbanes-Oxley Act

*Most extensive ethics reform *Increased accounting regulations

Three intelligence models

*Passive monitoring system for early warning *Tactical field support *Support dedicated to top management strategy

To Avoid Sexual Misconduct, a Firm Needs

*Statement of policy *Definition of sexual harassment *Non-retaliation policy *Specific procedures for prevention *Establish, enforce, and encourage victims to report *Establish a reporting procedure *Timely reporting requirements to the proper authorities

Four interrelated dimensions of corporate citizenship

*Strong sustained economic performance *Rigorous compliance *Ethical actions beyond what is legally required *Voluntary contributions to advance reputation and stakeholder commitment

Hostile work environment

*The conduct was unwelcome *The conduct was severe, pervasive, and regarded by claimant as hostile/offensive *The conduct was such that a reasonable person would find it hostile or offensive

Right vs. right values

1. Truth vs. loyalty 2. Individual vs. community 3. Short-term vs. long-term 4. Justice vs. mercy

Four levels of social responsibility

1.Economic 2.Legal 3.Ethical 4.Philanthropic

Ethics Contributes to

1.Employee Commitment 2.Investor Loyalty 3.Customer Satisfaction 4.Profits

Three activities

1.Generation of data about stakeholder groups 2.Distribution of the information throughout the firm 3.Organization's responsiveness to this intelligence

Dishonesty

A lack of integrity, incomplete disclosure, or an unwillingness to tell the truth

Dual Relationship

A personal, loving, and/or sexual relationship with someone with whom you share professional responsibilities

Sexual Harassment

A repeated, unwanted behavior of a sexual nature perpetrated upon an individual by another

Oversight

A system of checks and balances to minimize opportunities for misconduct

Dodd-Frank Wall Street Reform and Consumer Protection Act

Aimed at making the financial industry more transparent/responsible

Implied falsity

An advertising message that misleads, confuses, or deceives the public

Passive bribery

An offense committed by the official who receives the bribe

Social Responsibility

An organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact

Fraud

Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression

Secondary stakeholders

Are not essential to a company's survival i.e. Media, trade associations, and special interest groups

Interlocking directorate

Board members linked to more than one company

Literally false

Claims can be divided into tests prove and bald assertions

Business Ethics can be defined as

Comprises principles, values, and standards that guide behavior in the world of business

Puffery

Exaggerated advertising claims, blustering, and boasting

Conflicts of Interest

Exist when an individual must choose whether to advance his/her personal interests, those of the organization, or some other group

Board of Directors

Holds final responsibility for its firm's success, failure, and ethicality of actions

Accountability

How closely workplace decisions align with a firm's strategic direction

Intellectual Property Rights and Privacy

Involve the legal protection of intellectual properties i.e. *Books, movies, software *Can be difficult to enforce

Legal insider trading

Involves legally buying and selling stock in an insider's own company, but not all the time

Executive Compensation(Corporate Governance)

Many boards spend more time discussing compensation than ensuring integrity of financial reporting systems

The Challenge of Determining Ethical Issues in Business

Most ethical issues become visible through stakeholder concerns

Reciprocity

Occurs when an action that has an effect upon another is returned

FSGO reforms

Requires governing authorities to be informed of business ethics programs

Principles

Specific boundaries for behavior that are universal and absolute i.e. Freedom of speech, civil liberties

Demands for Accountability and Transparency

Stakeholders demand that boards are answerable for their actions and transparent

Illegal insider trading

The buying or selling of stocks by insiders who possess material that is not public

Corporate Intelligence

The collection and analysis of information on *Markets *Technologies *Customers and competitors *Socioeconomic and external political trends

Ethical culture

The component of corporate culture that captures the values and norms that an organization defines as appropriate

A Stakeholder Orientation

The degree to which a firm understands and addresses stakeholder demands

Corporate Citizenship

The extent to which businesses strategically meet their economic, legal, ethical, and philanthropic responsibilities

Financial Misconduct

The failure to understand and manage ethical risks was a key problem in the recent financial crisis

Corporate governance

The formal system of accountability and control of ethical and socially responsible behavior

Active bribery

The person who promises or gives the bribe commits the offense

Bribery

The practice of offering something in order to gain an illicit advantage

Control

The process of auditing and improving organizational decisions and actions

Marketing Fraud

The process of dishonestly creating, distributing, promoting, and pricing products

Fairness

The quality of being just, equitable, and impartial

Optimization

The tradeoff between equity and efficiency

Stakeholders

Those who have a stake or claim in some aspect of a company's products, operations, markets, industry, and outcomes

Primary stakeholders

Those whose continued association is necessary for a firm's survival i.e. Employees, customers, investors, governments, and communities

Honesty

Truthfulness or trustworthiness

Integrity

Uncompromising adherence to ethical values

Values

Used to develop socially enforced norms i.e. Integrity, accountability, trust

Consumer Fraud

When consumers attempt to deceive businesses for personal gain i.e. Price tag switching, item switching, or lying to obtain discounts

Ethics is

a part of decision making at all levels of work and management

Duplicity

involves a consumer duping a store

Collusion

involves an employee who helps a consumer commit fraud

Ethical issue

is a problem, situation, or opportunity that requires an individual or group to choose among actions

Ethical dilemma

is a problem, situation, or opportunity that requires an individual or group to chose among several wrong or unethical actions

Guile

is associated with a person who uses tricks to obtain an unfair advantage

Reputation

is one of an organization's greatest intangible assets with tangible value

Ethics deals with

questions of whether practices are acceptable

The ethical decision making process starts

when ethical issue awareness occurs and a discussion begins