Ethics and Corporate Responsibility

Chapter 3June 11, 2012

Learning Objectives

LO1 Describe how different ethical perspectives guide decision making

LO2 Explain how companies influence their ethics environmentLO3 Summarize the important issues surrounding corporate

social responsibility

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What is “ethics?”

Ethics

• Ethics– The system of rules that governs the ordering of values

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CEO Quotes

• "Ethics has to do with what my feelings tell me is right or wrong.”

• "Ethics has to do with my religious beliefs.”• "Being ethical is doing what the law requires.”• "Ethics consists of the standards of behavior our

society accepts.”• "I don't know what the word means."

CEO Quotes

• "Ethics has to do with what my feelings tell me is right or wrong.”

CEO Quotes

• "Ethics has to do with what my feelings tell me is right or wrong.”

• "Ethics has to do with my religious beliefs.”

CEO Quotes

• "Ethics has to do with what my feelings tell me is right or wrong.“

• "Ethics has to do with my religious beliefs.“• "Being ethical is doing what the law requires.“

CEO Quotes

• "Ethics has to do with what my feelings tell me is right or wrong.”

• "Ethics has to do with my religious beliefs.”• "Being ethical is doing what the law requires.”• "Ethics consists of the standards of behavior our

society accepts.”

Social Darwinism

• Social evolution• Natural selection• Unnatural acts

CEO Quotes

• "Ethics has to do with what my feelings tell me is right or wrong.”

• "Ethics has to do with my religious beliefs.”• "Being ethical is doing what the law requires.”• "Ethics consists of the standards of behavior our

society accepts.”• “Ethical behavior is following the code of your

industry/profession.”

Perhaps Shakespeare was correct….

• divorcedeli.com• Merry Christmas and Happy New Year

What do you think?

• what do you think?

What do you think?

• Jimmy Johnson

Still further down…..

$50 Billion Ponzi Scheme

It’s a Personal Issue

• “I am ethical! You, on the other hand…..”• Have you ever………….– taken pens, staples, printer paper from work and

used it at home?– listened to a coworker tell a joke that insults [fill in

the blank!] and said nothing?– not told the complete truth about a mistake made

at work?– shopped online while at work?– checked your Facebook page?– Checked the ball scores from last night? 3-17

…and if you have, then you are……

Cost of time

• 100 employees @$15 an hour• Wastes 30 minutes a day - $7.50• 250 work days X 100 X $7.50 =

$187,500 annually!!

Bottom line

• Ethical issue– Situation, problem, or opportunity in which an

individual must choose among several actions that must be evaluated as morally right or wrong

• Business ethics– The moral principles and standards that guide behavior

in the world of business.

• Refer you to the great quote by Thoreau in your text:

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It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience

How do you react?

• Moral philosophy– Principles, rules, and values people use in deciding

what is right or wrong

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Ethical Systems

• Universalism– The ethical system stating that all people should

uphold certain values that society needs to function

– Caux Principles for Business• Human dignity• Kyosei

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Ethical Systems

• Golden Rule

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Ethical Systems

• Egoism– Ayn Rand

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me

youyou

you

Sales

me

you

you

you

Ethical Systems

• Egoism– Ayn Rand

• Utilitarianism

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MARTIN NIEMÖLLER: "FIRST THEY CAME FOR THE SOCIALISTS..."

• First they came for the Socialists, and I did not speak out -- Because I was not a Socialist.

• Then they came for the Trade Unionists, and I did not speak out -- Because I was not a Trade Unionist.

• Then they came for the Jews, and I did not speak out -- Because I was not a Jew.

• Then they came for me -- and there was no one left to speak for me.

Ethical Systems

• Egoism– Ayn Rand

• Utilitarianism• Relativism– It all depends

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Ethical Systems

• Egoism– Ayn Rand

• Utilitarianism• Relativism– It all depends

• Virtue ethics

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Kohlberg’s Model of Cognitive Moral Development

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Fun Exercise• Heinz’s wife is dying. The druggist in town has

discovered the cure. It cost him $200 to make but offers it to Heinz for $2,000. Heinz asks everyone he knows for money but can only come up with $1,000. He promises to pay the rest later. The druggist says no: he wants to make money from his discovery. That night Heinz breaks into the shop and takes the medicine.

• Was Heinz right? Why or why not?

• where are you????

1. Don’t allow personal gains to outweigh the good of the organization2. Recognize all perspectives when making an ethical decision3. Respect people and their rights4. Keep promises and honor contracts5. Use feelings to help decide morale dilemmas6. Get all the facts7. Treat all people fairly

8. Know who you are and what your personal values9. Know what your company is and its cultural values10. Always challenge your decision to be in line with your values, beliefs and morals11. Never compromise your integrity12. Make sure unjust decisions can be appealed13. Don’t choose the easiest answer (don’t just go for a quick fix)14. Consider the risk of setting & trying to achieve overly ambitious goals

15. Communicate that all employees have a responsibility to keep the company’s moral & ethical standards in check

16. When in doubt, don’t17. When possible seek the input of effected individuals at a moral crossroads

Business Ethics

• Ethical climate

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How to create the right climate?

• Codes of ethics– J&J in text

• Compliance-based ethics programs• Integrity-based ethics programs• Ethical leaders

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The Business Costs of Ethical Failure

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Corporate Social Responsibility• Obligation toward society assumed by business.

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Do businesses really have a social responsibility?

• First view – holds that managers act as agents for

shareholders and, as such, are obligated to maximize the present value of the firm

– “The Social Responsibility of Business is to Increase its Profits”

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Do businesses really have a social responsibility?

• Second view – managers should be motivated by principled

moral reasoning

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You can do good and do well

• Profit maximization and CSR = oil and water?????

• Key is the “reputation”

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So what the heck do I do????

• Darn if I know• Have a mirror?• Remember Bob