Chapter 2 from Intro to Business (ethnics)

Organization Leadership and Culture

can go a long way toward defining the social responsibility stance an organization and its members will adopt. Ethical leadership often sets the tone for the entire organization.

Direct Regulation

The government most often directly influences organizations through regulation, the establishment of laws and rules that dictate what organizations can and cannot do. This regulation usually evolves from social beliefs about how businesses should conduct themselves. Another approach that governments can use to regulate business practices is through legislation.

Accommodative Stance

The organization meets its legal and ethical requirements but will also go further in certain cases, such as if it can be convinced that given programs are worthy of its support

Contemporary Social Consciousness

Views toward social responsibility continue to evolve as managers work to meet the needs of various stakeholders in their business practices.

Business ethics

refers to ethical or unethical behaviors by employees in the context of their jobs

Indirect Regulation

Other forms of regulation are indirect. For example, the government can indirectly influence the social responsibility of organizations through its tax codes. In effect, the government can influence how organizations spend their social responsibility dollars by providing greater or lesser tax incentives.

supplier

Partnership arrangements with suppliers can enhance market image and firm reputation.

Land Pollution

Proper toxic waste disposal and recycling programs are allowing companies to help restore land quality and to prevent further contamination. Recycling is another controversial area in land pollution. Recycling, the reconversion of waste materials into useful products, has become an issue not only for municipal and state governments but also for many companies engaged in high waste activities.

Legal and Social Commitments

Recruiting, hiring, training, promoting, and compensating are the basis for social responsibility toward employees; a company that provides its employees with equal opportunities without regard to race, sex, or other irrelevant factors is meeting both its legal and its social responsibilities. A whistle-blower is an employee who discovers and tries to end a company's unethical, illegal, or irresponsible actions by publicizing them. Most organizations now have whistleblower policies to protect whistleblowers from retaliation.

Ambiguity, the Law, and the Real World

Societies adopt formal laws that reflect ethical standards, however, real-world situations are sometimes difficult to interpret.

utility

Does a particular act optimize the benefits to those who are affected by it?

Defensive Stance

Organizations will do everything that is required of them legally but nothing more.

Assessing Ethical Behavior

A simple process that is often recommended when making ethical decisions is for the person to (1) gather relevant information, (2) analyze the facts to determine the most appropriate moral values, and (3) make an ethical decision based on the rightness or wrongness of the proposed activity or policy. Although ethical judgments are not always easy to make or even always agreed upon, this process does at least give a good starting point for an ethical decision making process.

customers

Critical factors include charging fair prices, honoring warranties, and standing behind product quality.

Adopting Written Codes

Almost all major corporations have written codes of ethics.

The Government and Social Responsibility

An especially important element of social responsibility is the relationship between business and government.

Personal Contacts

Because many corporate executives and political leaders travel in the same social circles, personal contacts and networks offer one method of influence.

Unfair Pricing

Collusion occurs when two or more firms agree to collaborate on wrongful acts, such as price fixing; price gouging occurs when firms respond to increased demand with overly steep price increases.

Behavior toward the Organization.

Conflict of interest, confidentiality, and honesty are ethical issues.

Consumer Rights

Consumerism is social activism dedicated to protecting the rights of consumers in their dealings with businesses.

Ethics in Advertising

Consumers deserve to be given product information that is truthful and can be proven, as well as information that is not morally objectionable.

local and international communities

Contributing to local and global programs has a positive impact on the community.

Instituting Ethics Programs

Ethical responses can be learned through experience; companies must take the responsibility for educating employees. More and more companies, like Boeing and Exxon Mobil, require managers to go through regular ethics training to remind them of the importance of ethical decision making and to update them on current laws and regulations.

Behavior toward Other Economic Agents

Ethics also comes into play in the relationship between the firm and a number of primary agents of interests, such as customers, suppliers, competitors, stockholders, dealers, and unions. In 2009, Bernard Madoff's Ponzi scheme (investment scam) cost hundreds of clients their life savings as he led them to believe that their investments were safe. Cultural norms may indicate that behavior in one country is ethical, while in another country it is unethical.

Individual Ethics

Ethics are based on individual beliefs and social concepts; thus, they vary by person, situation, and culture.

Favors

Finally, organizations sometimes rely on favors and other influence tactics to gain support. Although these favors may be legal, they are still subject to criticism.

Obstructionist Stance

Organizations do as little as possible to solve social or environmental problems, have little regard for ethical conduct, and will go to great lengths to deny or cover up wrongdoing.

Proactive Stance

Firms that adopt this approach take to heart the arguments in favor of social responsibility, view themselves as citizens in a society, indicate sincere commitment to improve general social welfare, and surpass the accommodative stance by proactively seeking opportunities to contribute.

Misrepresentation of finances

In maintaining and reporting its financial status, every corporation must conform to generally accepted accounting principles

Water Pollution

Increased awareness of chemical and waste dumping and the resulting dangers has led to improved water quality in many areas of the country.

Individual Values and Codes

Individuals' personal codes of ethics are determined by a combination of factors, beginning in childhood.

Improper Financial Management

Insider trading occurs when someone uses confidential information to benefit from the purchase or sale of stocks. Misrepresentation of finances is where unethical managers project profits that they do not expect to get or hide losses and expenses incurred to boost paper profits.

caring

Is it consistent with people's responsibilities to each other?

justice

Is it consistent with what's fair?

investors

Managers must follow proper accounting procedures, provide appropriate information to shareholders, and manage the organization to protect shareholder rights and investments.

Social Responsibility and the Small Business

Many big-business responses to ethical and social responsibility issues apply to small businesses; differences are primarily differences of scale. Small business owners are faced by the same ethical dilemmas as the large companies that we more frequently read about. It is important that small companies develop ethical policies and procedures like their larger counterparts. Small businesses can often get advice from trade organizations or state governments to help them develop ethical codes of practices.

Company Practices and Business Ethics

Many companies set up codes of conduct and develop clear ethical positions on how the firm and its employees will conduct business. The single most effective step a company can take is to demonstrate top management support of ethical standards.

The Stakeholder Model of Responsibility

Most companies strive to be ethically responsible to five main groups: customers, employees, inventors, supplier, local and international communities.

Managing Social Responsibility

The demands for social responsibility placed on contemporary organizations by an increasingly sophisticated and educated public are stronger than ever.

utility, rights, justice, caring

This are the Ethical norms that include...

Behavior toward Employees.

This category covers hiring and firing, wages and working conditions, and privacy and respect.

Evaluating Social Responsibility

To make sure their efforts are producing the desired benefits, any business that is serious about social responsibility must apply the concept of control to social responsibility. Many organizations now require all employees to read their guidelines or code of ethics and then sign a statement agreeing to abide by it.

employees

Treating workers fairly, making them a part of the team, and respecting their dignity promote a company's reputation.

Air Pollution

Under new laws, many companies must install special devices to limit pollutants they expel into the air.

Ethics

are beliefs about wrong and right or bad and good

Political Action Committees

are special organizations created to solicit money and then distribute it to political candidates.

Managerial ethics

are the standards of behavior that guide individual managers in their work

ethical behavior

conforms to individual beliefs and social norms about what is right and good

Philanthropic Giving

is the awarding of funds or gifts to charities or other worthy causes.

Ethical Compliance

is the extent to which the members of the organization follow basic ethical (and legal) standards of behavior.

rights

Does it respect the rights of all individuals involved?

How Governments Influence Organizations

The government (national, state, or local) attempts to shape social responsibility practices through both direct and indirect channels. Direct influence most frequently is manifested through regulation, whereas indirect influence can take a number of forms, most notably taxation policies

Whistle-Blowing

is the disclosure by an employee of illegal or unethical conduct on the part of others within the organization. How an organization responds to this practice often illustrates its stance on social responsibility.

Legal Compliance

is the extent to which the organization conforms to local, state, federal, and international laws. Keep in mind, in some instances, perfectly legal accounting practices have still resulted in deception and other problems.

conflict of interest

occurs when an activity may benefit the individual to the detriment of the organization. Many organizations have policies that forbid buyers and other personnel from accepting gifts from suppliers or customers, thus avoiding even the appearance of bribery. Padding expense accounts, and taking office supplies for personal use are examples of problems in the honesty area

Lobbying: Lobbying

or the use of persons or groups to formally represent an organization or group of organizations before political bodies, is also an effective way to influence the government

Social responsibility

refers to the overall way in which a business itself tries to balance its commitments to relevant groups and individuals in its social environment.