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Business Essentials, 7th EditionEbert/Griffin

© 2009 Pearson Education, Inc.

Business Ethics and Social Responsibility

Instructor Lecture PowerPointsPowerPoint Presentation prepared by Carol Vollmer Pope Alverno College

Ethics and Social Responsibilty in the Workplace

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Ethics

Beliefs about right and wrong

Social Responsibility

Obligation of a business to contribute

to society

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ETHICS: MURKIER THAN YOU THINK

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UNIVERSAL ETHICAL STANDARDS

Developed by Character Counts, a nonpartisan

organization of educators, community leaders, and

ethicists.

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ETHICS AND THE INDIVIDUAL

A. Framework for Ethical DecisionsA. Do you understand the

dimensions of the problem?B. Who would benefit? Who would

suffer?C. Are the alternative solutions

legal? Are they fair?D. Does your decision make you

comfortable?E. Could you defend your decision

on the nightly news?

Individual Values and Codes

• Sources of Personal Codes of Ethics– Childhood responses to adult behavior– Influence of peers– Experiences in adulthood– Developed morals and values

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Personal Ethics• Simple Steps in Applying Ethical Judgments

Is the action legal?Does it comply with our values?If you do it, will you feel bad?How will it look in the newspaper?If you know it's wrong, don't do it!If you're not sure, ask.Keep asking until you get an answer.

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?

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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 discussing unethical behavior and activities

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SOCIAL RESPONSIBILITY

Responsibility to Whom? Stakeholders are any

groups that have a stake –

or a personal interest - in the

performance and actions

of an organization.

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RESPONSIBILITY TO……

EMPLOYEES

INVESTORS

COMMUNITY

ENVIRONMENT

CUSTOMERS

Creating Jobs that Work

Sustainable Development

Value, Honesty and Communication

Fair Stewardship and Full Disclosure

Business and the Greater Good

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RESPONSIBILITY TO EMPLOYEES: CREATING JOBS THAT WORK

A. Meet Legal StandardsB. Workplace SafetyC. Minimum Wage/Overtime

RequirementsD. Value EmployeesE. Provide Work/Life Balance

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DOES IT PAY TO PAY MORE?

Costco Wal-Mart’sSam’s Club

Average hourly wage $15.97 $11.52

Annual health costs per worker $5,735 $3,500

Covered by health plan 82% 47%

Employee turnover 6%/yr 21%/yr

Labor and overhead costs 9.8% of sales 17% of sales

Profits per employee $13,647 $11,039

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RESPONSIBILITY TO CUSTOMERS

CONSUMERISM:

• The Right to Be Safe

• The Right to Be Informed

• The Right to Choose

• The Right to be Heard

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ROTTEN APPLE?

Planned Obsolescence –

Deliberately designing products to fail in order to shorten

the time between consumer repurchases

APPLE COMPUTERS:

• iPods had irreplaceable battery.

• Batteries died after 18 months.

• Customers were encouraged to purchase new iPods

• Two customers posted high profile protest movies online.

• APPLE announced replacement program.

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RESPONSIBILITY TO INVESTORS

A. Legal RequirementsA. Sarbanes-Oxley

B. Responsible use of Corporate DollarsA. Honesty

C. Is Optimism or Pessimism Socially Responsible?

FAIR STEWARDSHIP AND FULL DISCLOSURE

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RESPONSIBILITY TO COMMUNITY

Corporate Philanthropy - business donations to

nonprofit groups, including both money and time.

Corporate Responsibility - The actions of the business

rather than donations of money and time.

Cause-related Marketing – partnerships between businesses

and nonprofit organizations, designed to spike sales for the

company and raise money for the nonprofit.

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RESPONSIBILITY TO ENVIRONMENT

Green Marketing – marketing environmental products and practices

to gain a competitive edge.

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RESPONSIBILITY TO ENVIRONMENT

A. Responsibility to environment is a part of responsibility to community

A. Reducing the amount of trash is more important than recycling

A. Although consumers support green marketing, they may not be willing to sacrifice quality

Implementing Social Responsibility (SR) Programs

• Arguments Against SR– The cost of SR threatens profits.– Business has too much control over which SR issues would

be addressed and how SR issues would be addressed.– Business lacks expertise in SR matters.

• Arguments for SR– SR should take precedence over profits.– Corporations as citizens should help others.– Corporations have the resources to help.– Corporations should solve problems they create.

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Approaches to Social Responsibility

• Obstructionist Stance– A company does as little as possible and may attempt to

deny or cover up violations• Defensive Stance

– A company does everything required of it legally but no more

• Accommodative Stance– A company meets its legal and ethical requirements and

also goes further in certain cases• Proactive Stance

– A company actively seeks to contribute to the well-being of groups and individuals in its social environment

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FIGURE 2.4: Spectrum of Approaches to Corporate Social Responsibility

© 2009 Pearson Education, Inc.

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.

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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

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Key Terms

accommodative stance business ethics collusion consumerism defensive stance ethical behavior ethics insider trading managerial ethics obstructionist stance organizational stakeholders

proactive stance social audit social responsibility unethical behavior whistleblower

© 2009 Pearson Education, Inc.