McGraw-Hill/Irwin 2010 Modified by Jackie Kroening 2011

BUSINESS ETHICS AND SOCIAL

RESPONSIBILITY

Chapter 17

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

What is Ethics * Ethics expresses the standards of

conduct and morals (right and wrong) in companies and societies.

Morality deals with how behavior should conform to cultural ideals of right and wrong.

Morality represents broadly based, mostly unwritten standards of behavior.

Ethics is more precise and is often based on written guidelines.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

What is Ethics

Ethical standards are different from law. Ethics violations are not always

punishable. It is difficult to pin down ethics violations

and what the penalties for such violations should be.

A common perception is ‘business’ and ‘ethics’ can hardly be used in the same sentence.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

What is Ethics

Misperceptions that affect understanding of ethics: All ethical problems have simple solutions

in which right and wrong are always obvious.

Ethics is simply a matter of complying with a set of rules or regulations.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

What is Ethics

Ethics and the Internet A sticky ethical issue is how to behave

ethically on the Internet? Companies track employee usage,

looking for personal misuse of company property.

The Internet has introduced enormous compliance issues.

Online merchants purchase confidential information about people’s buying habits.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

What is Ethics

Ethics and the Internet (cont.): Consumers resent personal

information being sold without consent.

Due to technology, people don’t know what the ethics issues are.

Another issue is copyright infringement.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Codes of Ethics

Some companies have developed specific ethical codes.

Codes of ethics are usually based on one of the following ethical approaches: Principles of justice Individual rights Utilitarianism Individualism The categorical imperative

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Codes of Ethics

* Principle of justice – All decisions should be consistent, unbiased, and based on fact.

Principle of individual rights – All decisions should respect basic human rights and the dignity of the individual.

Principle of utilitarianism – All decisions should do the greatest good for the largest number of people.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Codes of Ethics Principle of individualism – All primary

goals should achieve long-term self-interests.

Categorical imperative – A principle developed by Immanuel Kant, which asks, “What would the world—or my company—be like if everyone were to do this?”

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Rationalizing Unethical Behavior

Even people with a good knowledge of ethics can rationalize unethical behavior.

People with high self-esteem are less likely to seek the short-term gains of unethical behavior and not engage in rationalization.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

* Rationalizing Unethical Behavior

According to Saul Gellerman, unethical behavior starts with one of these four rationalizations: Unethical behavior is within ethical/legal limits. Because the chosen behavior will work best for

the individual/ company, the company would expect it.

Nobody will notice. As the behavior helps the company, it will protect

the person if he/she is caught.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Ethics in Context

An ethical issue is people acting insincerely with others to achieve their own ends.

Politics exists in any company; gaining political power isn’t an unethical behavior.

When people compromise on integrity to succeed at getting ahead, it crosses an ethical line.

A common view is that boss massaging is necessary for success.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

The Influence of Group Goals

When encountering someone in need of help, many people look the other way as their goals or group’s pressures override the need to help.

This creates conflict, as people are unable to transfer helping behavior they learn at home to the workplace.

Many people change their ethical standards between home and work.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Global Ethics Issues

A historical perspective The values and customs of other countries

are not inferior, primitive, or degraded. They have different origins, evolutions, and

applications through history. Discussion example: Acceptance of bribery

and kickbacks

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Global Ethics Issues

Three concepts to remember while doing business with foreign companies: Inner circle – Clique of trusted family/tribal

members/friends who are at the center of power/ influence.

Future favors – Based upon mutual obligation, and resulting in the exchange of favors; common in developing countries and also used in some industrialized countries.

Gift exchange – A strong tradition in many cultures in which giving gifts create a future obligation to the receiver.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Social Responsibility

* Social responsibility means putting ethical standards to work in all areas of the global community in which one lives.

It includes acting ethically with customers, co-workers, suppliers, competitors, and the community in which one lives.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Social Responsibility

Three accepted views of social responsibility: Traditional social responsibility – An

organization is responsible only to itself and to making a profit.

Stakeholder social responsibility – Companies are responsible to stakeholders.

Affirmative social responsibility – Companies are also responsible to the general public at large.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Social Responsibility

Difficult questions regarding social responsibility: What happens when a company can no longer

afford to support charities or organizations? How does a company choose to support specific

organizations while not helping others? Companies may also find that their acts of social

responsibility are misunderstood and resented.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Blowing the Whistle

Whistleblowing * Turning in or otherwise exposing people

who behave unethically in a company. The first law passed to protect

whistleblowers was the Lloyd–LaFollette Act of 1912.

The Whistleblower Protection Act was passed in 1989 and strengthened in 1994.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Blowing the Whistle

Strategies for a whistleblower: Secretly threatening the offender with blowing the

whistle unless the unethical action is stopped/corrected.

Anonymously blowing the whistle within the company, keeping one’s identity a secret.

Secretly threatening a responsible manager of blowing the whistle outside the company unless a change is made in the conduct.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Blowing the Whistle

Strategies for a whistleblower (cont.): Sabotaging the results of an unethical

behavior in some way. Publicly blowing the whistle within the

organization. Quietly refusing to carry out an unethical

plan. Secretly or publicly blowing the whistle

outside the company.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Blowing the Whistle

Top management is in an ideal position to create an ethical environment.

Management can create low ethical standards by the following mistakes: Favoritism. “Fudging” with the expense budget. Lying to or otherwise manipulating other

departments or offices within one’s company.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Strategies for Success Making ethical decisions: A quick

ethics test from Texas Instruments:1. Is it legal?

2. Is it consistent with the company’s stated values?

3. If you do it, will you feel bad?

4. How would it look in the newspapers?

5. Do you think it’s wrong?

6. If you’re not sure—ask.

7. If you don’t get a clear answer, keep asking until you do.

Parts taken from Human Relations 4ed Modified by Jackie Kroening 2011

Strategies for Success

Becoming culturally aware of ethical conduct:

1. Look closely at the situation.

2. Evaluate the intentions.

3. Explore your options.