Corporate Responsibility And

Ethical Dilemma

Managerial Ethics

Agenda

Corporate Responsibilityo Evolution of Corporate Responsibilityo Types of Corporate Responsibilityo Areas of Responsibilityo The Crossroads

Ethical Dilemmao On-the-Job Dilemmao Factors Influencing Ethical Behavioro Some Exampleso Resolving the Dilemma

Corporate Responsibility

Definition: Corporate Responsibility, also known as Corporate Social Responsibility, is a form of corporate self-regulation integrated into a business model.

In other words: Corporate social responsibility is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.

EarlyEarly2020thth Century Century

MiddleMiddle2020thth Century Century

EarlyEarly2121stst Century Century

MaximizeMaximizeProfitsProfits

Provide JobsProvide Jobsand Pay Taxesand Pay Taxes

Balance EthicsBalance Ethicsand Profitsand Profits

Evolution of Corporate Responsibility

Types of Corporate ResponsibilityTypes of

ResponsibilitySocietal

ExpectationExplanations

Economic Required by society

Be profitable. Make sound strategic decisions. Provide adequate and attractive returns on investment.

Legal Required by society

Obey all laws and regulations. Fulfill all contractual obligations. Honor warranties and guarantees.

Ethical Expected by society

Avoid questionable practices Respond to spirit as well as letter of law. Assume law is floor of behavior and operate above minimum required. Do what is right, fair, and just.

Philanthropic Desired/expected by society

Be a good corporate citizen. Give back. Improve quality of life overall.

Area of Responsibility

Responsibilities to the General Public

Public Health Issues

Protecting the Environment

Developing the Quality of the Workforce

Corporate Philanthropy

Responsibilities to Customers

The Right to Be Safe:

The Right to Be Informed

The Right to Choose

The Right to Be Heard

Responsibilities to Employees

Workplace Safety

Quality-of-Life Issues

Ensuring Equal Opportunity on the Job

Sexual Harassment and Sexism

Responsibilities to Investors and the Financial Community

Obligation to make profits for shareholders.

Expectation of ethical and moral behavior.

Investors protected by regulation by the Securities and Exchange Commission and state regulations.

Acting Responsibility to Satisfy Society

Management’s acceptance of the obligation to consider profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance.

For example:

Contributions to the overall economy, job opportunities, and charitable contributions and service.

Measured through social audits.

• Arguments against :

o Higher business costs;

o Reduced business profits;

o Dilution of business purpose;

o Too much social involvement for business;

o Increased public accountability.

• Arguments for :

o Adds long-run profits;

o Better public image;

o Avoids more government regulation;

o Businesses have resources and ethical obligation;

o Better environment;

o Public wants it.

The Crossroads

Ethical Dilemma

A situation in which a person must decide whether or not to do something that, although beneficial to oneself or the organization, may be considered unethical and perhaps illegal.

Examples of Ethical Dilemmaso Should I conduct personal business on company time?o Should we spend more on pollution control?o Is it O.K. to give a friend a special rate?o If I find out that my boss took a bribe, should I tell someone?

On – the – Job Ethical Dilemma’s

Situation in which a business decision may be influenced for personal gain.

Telling the truth and adhering to deeply felt ethical principles in business decisions.

Businesspeople expect employees to be loyal and truthful, but ethical conflicts may arise.

Employee’s disclosure of illegal, immoral, or unethical practices in the organization.

Factors Influencing Ethical Managerial Behaviour

Some Examples

Company Allegation Action

KPMG2003

Establishing fake tax shelters for wealthy clients. Allowed $2.5 billion tax dollars to be evaded.

Paid $456 million to avoid indictment by DOJ.

Xerox2002

Applying inappropriate accounting manuveurs which caused them to overstate financial statements.

Paid $10 million penalty and restate financial statements in years 1997-2000.

Resolving Ethical Dilemma

Recognize the problem

Identify the source of conflict

Engage all involved parties and brainstorm the “ BEST ” course of action

Develop/modify the Code of Practice

Anticipate likely trouble spots

Thank You!!!