ETHICS IN THE WORKPLACE Ethics Ethical Behavior Behavior conforming to individual beliefs and social norms about what s right and good Unethical Behavior Behavior conforming to individual beliefs and social norms about what is defined as wrong and bad Business Ethics The ethical or unethical behaviors by employees in the context of their jobs 2 1
BUSINESS AND MANAGERIAL ETHICS Managerial Ethics The standards of behavior that guide individual managers in their work Ethics affect a manager s behavior toward: employees the organization other economic agents customers, competitors, stockholders, suppliers, dealers, and unions Ethical Concerns Ambiguity (e.g., financial disclosure) Global variation in business practices (e.g., bribes) 2 2
ASSESSING ETHICAL BEHAVIOR Simple Steps in Applying Ethical Judgments Gather the relevant factual information Analyze the facts to determine the most appropriate moral values Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy 2 3
ASSESSING ETHICAL BEHAVIOR Ethical Norms and the Issues They Entail Utility: Does a particular act optimize the benefits to those who are affected by it? Do all relevant parties receive fair benefits? Rights: Does the act respect the rights of all individuals involved? Justice: Is the act consistent with what s fair? Caring: Is the act consistent with people s responsibilities to each other? 2 4
COMPANY PRACTICES AND BUSINESS ETHICS Encouraging Ethical Behavior Involves: Adopting written codes of conduct and establishing clear ethical positions for the conduct of business Having top management demonstrate its support of ethical standards Instituting programs to provide periodic ethics training Establishing ethical hotlines for reporting and discussion of unethical behavior and activities 2 5
FIGURE 2.2 CORE PRINCIPLES AND ORGANIZATIONAL VALUES 2 6
SOCIAL RESPONSIBILITY Social Responsibility The overall way in which a business attempts to balance its commitments to relevant groups and individuals (stakeholders) in its social environment Organizational Stakeholders 2 7
FIGURE 2.3 MAJOR CORPORATE STAKEHOLDERS 2 8
THE STAKEHOLDER MODEL OF RESPONSIBILITY Customers Employees Investors Suppliers Local and International Communities 2 9
AREAS OF SOCIAL RESPONSIBILITY Responsibility Toward the Environment Controlling air, water, and land pollution Properly disposing of toxic waste Engaging in recycling 2 10
AREAS OF SOCIAL RESPONSIBILITY (CONT D) Responsibility Toward Customers Involves providing quality products and pricing products fairly Consumerism Social activism dedicated to protecting the rights of consumers in their dealings with businesses Basic Consumer Rights To possess safe products To be informed about all relevant aspects of a product To be heard To choose what to buy To be educated about purchases To courteous service 2 11
CONSUMER RIGHTS (CONT D) Unfair Pricing Collusion: When two or more firms agree to collaborate on such wrongful acts as price fixing Price gouging: Responding to increased demand with overly steep (and often unwarranted) price increases Ethics in Advertising Truth in advertising Morally objectionable advertising 2 12
AREAS OF SOCIAL RESPONSIBILITY (CONT D) Responsibility Toward Employees Legal and social commitments to: not practice illegal discrimination provide a physically and socially safe workplace provide opportunities to balance work and life provide protection for whistleblowers (an employee who discovers and tries to put an end to a company s unethical, illegal, or socially irresponsible actions by publicizing them) Responsibility Toward Investors Proper financial management (no insider trading) Proper representation of finances 2 13
APPROACHES TO SOCIAL RESPONSIBILITY Obstructionist Stance Defensive Stance Accommodative Stance Proactive Stance 2 14
FIGURE 2.5 SPECTRUM OF APPROACHES TO CORPORATE SOCIAL RESPONSIBILITY 2 15
MANAGING SOCIAL RESPONSIBILITY PROGRAMS 1. Social responsibility must start at the top and be considered as a factor in strategic planning. 2. A committee of top managers must develop a plan detailing the level of management support. 3. One executive must be put in charge of the firm s agenda. 4. The organization must conduct occasional social audits systematic analyses of its success in using funds earmarked for its social responsibility goals. 2 16
SOCIAL RESPONSIBILITY AND THE SMALL BUSINESS Large Business versus Small Business Responses to Ethical Issues Differences are primarily differences of scale. More issues are questions of individual ethics. Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size. 2 17