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Nickels_12e_UB_PPT_Student_Ch04.pptxChapter 4
Demanding Ethical and Socially Responsible Behavior
©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
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Learning Objectives
LO 4-1 Explain why obeying the law is only the first step in behaving ethically.
LO 4-2 Ask the three questions you need to answer when faced with a potentially unethical action.
LO 4-3 Describe management’s role in setting ethical standards.
LO 4-4 Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.
LO 4-5 Define corporate social responsibility and compare corporations’ responsibilities to various stakeholders.
LO 4-6 Analyze the role of U.S. businesses in influencing ethical behavior and social responsibility in global markets.
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Ethics Is More than Legality 1 of 2
LO 4-1
Life after Scandal
Scandals have shaken the real estate, mortgage, and banking industries.
How do we restore trust in the free market system?
Punish those who have broken the law.
Make accounting records more transparent.
Consider what is ethical, not just what is legal.
Ethical Standards are Fundamental
Ethics — Standards of moral behavior; that is, behavior accepted by society as right versus wrong.
Few Americans have moral absolutes.
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Ethics Is More than Legality 2 of 2
LO 4-1
Basic Moral Values
Right:
Integrity
Respect for human life
Self-control
Honesty
Courage
Self-sacrifice
Wrong:
Cheating
Cowardice
Cruelty
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Ethics Begins with Each of Us
LO 4-2
Plagiarizing from online materials is the most common form of cheating in schools today.
Studies found a strong relationship between academic dishonesty and dishonesty at work.
When facing ethical dilemmas, ask yourself these questions:
Is my proposed action legal?
Is it balanced?
How will it make me feel about myself?
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Managing Businesses Ethically and Responsibly
LO 4-3
Ethics Start at the Top
Managers can help instill corporate values in employees.
Trust between workers and managers must be based on fairness, honesty, openness, and moral integrity.
Overly ambitious goals and incentives can create an environment in which unethical actions can occur
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Setting Corporate Ethical Standards 1 of 3
LO 4-4
An increasing number of companies have adopted written codes of ethics.
Compliance-based ethics code
Emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers.
Integrity-based ethics code
Define the organization’s guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees.
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Figure 4.2 Overview of the Hershey Company’s Code of Ethics
LO 4-4
Jump to long description in appendix
Hershey’s Kiss photo: © Richard Watkins/Alamy
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Figure 4.3 Strategies for Ethics Management
LO 4-4
| Blank | Features of compliance-based ethics codes | Features of integrity-based ethics codes |
| Ideal | Conform to outside standards (laws and regulations) | Conform to outside standards (laws and regulations) and chosen internal standards |
| Objective | Avoid criminal misconduct | Enable responsible employee conduct |
| Leaders | Lawyers | Managers with aid of lawyers and others |
| Methods | Education, reduced employee discretion, controls, penalties | Education, leadership, accountability, decision processes, controls, and penalties |
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Setting Corporate Ethical Standards 2 of 3
LO 4-4
How to improve U.S. business ethics
Top management must adopt and unconditionally support an explicit corporate code of conduct.
Employees must understand that senior management expects all employees to act ethically.
Managers and others must be trained to consider the ethical implications of all business decisions.
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Setting Corporate Ethical Standards 3 of 3
LO 4-4
How to improve U.S. business ethics continued
An ethics office must be set up with which employees can communicate anonymously. Whistleblowers -- Insiders who report illegal or unethical behavior.
Involve outsiders such as suppliers, subcontractors, distributors and customers.
The ethics code must be enforced.
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Corporate Social Responsibility 1 of 9
LO 4-5
Corporate social responsibility (CSR) — A business’s concern for the welfare of society.
CSR is based on a commitment to integrity, fairness, and respect.
CSR proponents argue that businesses owe their existence to the societies they serve and cannot exist in societies that fail.
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Corporate Social Responsibility 2 of 9
LO 4-5
Corporate philanthropy — Includes charitable donations.
Corporate social initiatives — Include enhanced forms of corporate philanthropy directly related to the company’s competencies.
Corporate responsibility — Includes everything from hiring minority workers to making safe products.
Corporate policy — The position a firm takes on social and political issues.
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Corporate Social Responsibility 3 of 9
LO 4-5
Positive Impacts of Companies
Xerox offers a Social Service Leave program.
More and more companies are encouraging employees to volunteer while on company time.
The majority of MBA students surveyed reported they would take a lower salary to work for a socially responsible company.
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Corporate Social Responsibility 4 of 9
LO 4-5
Responsibility to Customers
President Kennedy’s basic rights of consumers
The right to safety
The right to be informed
The right to choose
The right to be heard
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Corporate Social Responsibility 5 of 9
LO 4-5
Responsibility to Customers continued
How do customers know about companies’ social efforts?
The primary use of social media is to communicate CSR efforts.
Social media allows companies to reach a broad, diverse group and connect directly to them.
Now more than ever, it’s important for companies to live up to their expectations.
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Corporate Social Responsibility 6 of 9
LO 4-5
Responsibility to Investors
Insider trading — An unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends.
Unethical behavior does financial damage to a company and investors are cheated.
Responsibility to Employees
Create jobs and provide a chance for upward mobility.
Treat employees with respect.
Offer salaries and benefits that help employees reach their personal goals.
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Corporate Social Responsibility 7 of 9
LO 4-5
Responsibility to Employees continued
Employee fraud costs U.S. businesses about 5% of annual revenue.
Disgruntled workers relieve frustration by:
Blaming mistakes on others
Not accepting responsibility
Manipulating budgets and expenses
Making commitments they intend to ignore
Hoarding resources
Doing the minimum
Making results look better than they are
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Corporate Social Responsibility 8 of 9
LO 4-5
Responsibility to Society and the Environment
Over one-third of working Americans receive their salaries from nonprofits who are dependent on funding from others.
The green movement emerged as concern about climate change increased.
Many companies are trying to minimize their carbon footprints—the amount of carbon released during an item’s production, distribution, consumption, and disposal.
Environmental efforts may increase costs, but can offer good opportunities.
The emerging renewable-energy and energy-efficiency industries account for 9 million U.S. jobs.
By 2030, as many as 40 million “green” jobs will be created.
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Corporate Social Responsibility 9 of 9
LO 4-5
Social Auditing
Social audit — A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs.
Five types of watchdogs
Socially conscious investors
Socially conscious research organizations
Environmentalists
Union officials
Customers
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International Ethics and Social Responsibility
LO 4-6
Many businesses want socially responsible behavior from their international suppliers.
In the 1970s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business.
Partners in the Organization of American States signed the Inter-American Convention Against Corruption.
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Appendix of Long Image Descriptions
©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
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Appendix 1 Figure 4.2 Overview of the Hershey Company’s Code of Ethics
Code of Ethics
We have each made a commitment to operate ethically and to lead with integrity. This commitment is embedded in the Hershey values. Our Code of Ethical Business Conduct (“Code”) shows us how to uphold this commitment as we interact with the various groups that have a stake in our Company’s success.
Our Commitment To Consumers: We maintain the trust consumers place in our brands, providing the best products on the market and adhering to honest marketing practices.
Our Commitment To The Marketplace: We deal fairly with our business partners, competitors and suppliers, acting ethically and upholding the law in everything we do.
Our Commitment To Stockholders: We act honestly and transparently at all times, maintaining the trust our stockholders have placed in us.
Our Commitment To The Global Community: We comply with all global trade laws, protecting our natural resources and supporting the communities where we live, work and do business.
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