Ethics and Social Responsibilty in the Workplace

Social
Ethics Responsibility
Obligation of a
Beliefs about right
business to contribute
and wrong
to society

© 2009 Pearson Education, Inc.

ETHICS: MURKIER THAN YOU THINK

© 2009 South-Western, a division of Cengage Learning

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UNIVERSAL ETHICAL STANDARDS

Developed by Character
Counts, a nonpartisan
organization of educators,
community leaders, and
ethicists.

© 2009 South-Western, a division of Cengage Learning

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 ETHICS AND THE INDIVIDUAL

A. Framework for Ethical Decisions

A. 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?

© 2009 South-Western, a division of Cengage Learning

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 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?

© 2009 Pearson Education, Inc.

 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 Creating Jobs that Work

CUSTOMERS Value, Honesty and Communication

INVESTORS Fair Stewardship and Full Disclosure

COMMUNITY Business and the Greater Good

ENVIRONMENT Sustainable Development

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 RESPONSIBILITY TO EMPLOYEES:
CREATING JOBS THAT WORK

A. Meet Legal Standards

B. Workplace Safety
C. Minimum Wage/Overtime
Requirements
D. Value Employees
E. Provide Work/Life Balance

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 DOES IT PAY TO PAY MORE?

Costco Wal-Mart’s
Sam’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
© 2009 South-Western, a division of Cengage Learning
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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 – APPLE COMPUTERS:

Deliberately designing products
to fail in order to shorten
the time between consumer
repurchases
• 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.

© 2009 South-Western, a division of Cengage Learning

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 RESPONSIBILITY TO INVESTORS

FAIR STEWARDSHIP AND FULL DISCLOSURE

A. Legal Requirements
A. Sarbanes-Oxley
B. Responsible use of Corporate
Dollars
A. Honesty
C. Is Optimism or Pessimism Socially
Responsible?

© 2009 South-Western, a division of Cengage Learning

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 RESPONSIBILITY TO COMMUNITY

Cause-related Marketing –
partnerships between businesses
and nonprofit organizations,
designed to spike sales for the
company and raise money Corporate Responsibility -
for the nonprofit. The actions of the business
rather than donations of
Corporate Philanthropy - money and time.
business donations to
nonprofit groups, including
both money and time.

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RESPONSIBILITY TO ENVIRONMENT

Green Marketing –
marketing environmental
products and practices
to gain a competitive edge.

© 2009 South-Western, a division of Cengage Learning

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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

© 2009 South-Western, a division of Cengage Learning

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 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.

© 2009 Pearson Education, Inc.

 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

© 2009 Pearson Education, Inc.

FIGURE 2.4: Spectrum of Approaches to
Corporate Social Responsibility

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 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.

© 2009 Pearson Education, Inc.

 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

© 2009 Pearson Education, Inc.

 Key Terms

accommodative stance proactive stance

business ethics social audit
collusion social responsibility
consumerism unethical behavior
defensive stance whistleblower
ethical behavior
ethics
insider trading
managerial ethics
obstructionist stance
organizational stakeholders

© 2009 Pearson Education, Inc.