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Transcript of Bus 100
Bus 100
Chapter 2BUSINESS ETHICS AND SOCIAL RESPONSIBILITY
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L E A R N I N G O B J E C T I V E SL E A R N I N G
O B J E C T I V E S
After reading this chapter, you should be able to:
1. Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace.
2. Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today.
3. Show how the concept of social responsibility applies both to environmental issues and to a firm’s relationships with customers, employees, and investors.
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L E A R N I N G O B J E C T I V E S (cont’d)
L E A R N I N G O B J E C T I V E S (cont’d)
After reading this chapter, you should be able to:
4. Identify four general approaches to social responsibility and describe the four steps that a firm must take to implement a social responsibility program.
5. Explain how issues of social responsibility and ethics affect small business.
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What’s in It for Me?
By understanding the material in this chapter, you’ll be better able to: Assess ethical and socially responsible
issues facing you as an employee and as a boss or business owner.
Understand the ethical and socially responsible actions of businesses you deal with as a consumer and as an investor.
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Ethics in the Workplace Ethics
Beliefs about what’s right and wrong or good and bad
Ethical Behavior
Behavior conforming to individual beliefs and social norms about what’s right and good
Unethical Behavior
Behavior conforming to individual beliefs and social norms about what is defined as wrong and bad
Business Ethics
The ethical or unethical behaviors by employees in the context of their jobs
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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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Business and Managerial Ethics Managerial Ethics
The standards of behavior that guide individual managers in their work
Ethics affect a manager’s behavior toward:employeesthe organizationother economic agents—customers,
competitors, stockholders, suppliers, dealers, and unions
Ethical Concerns Ambiguity (e.g., financial disclosure) Global variation in business practices (e.g.,
bribes)
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Assessing Ethical Behavior
Simple Steps in Applying Ethical Judgments
Gather the relevant factual information
Analyze the facts to determine the most appropriate moral values
Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy
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Assessing Ethical BehaviorEthical 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?
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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 discussion of unethical behavior and activities
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Core Principles and Organizational ValuesCore Principles and Organizational Values
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Social ResponsibilitySocial Responsibility
The overall way in which a business attempts to balance its commitments to relevant groups and individuals (stakeholders) in its social environment
Organizational Stakeholders Groups, individuals, and organizations
that are directly affected by the practices of an organization and, therefore, have a stake in its performance
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Major Corporate StakeholdersMajor Corporate Stakeholders
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The Stakeholder Model of Responsibility
Customers Businesses strive to treat customers fairly and honestly
Employees Businesses treat employees fairly, make them a part of the
team, and respect their dignity and basic human needs Investors
Businesses follow proper accounting procedures, provide information to shareholders about financial performance, and protect shareholder rights and investments
Suppliers Businesses emphasize mutually beneficial partnership
arrangements with suppliers Local and International Communities
Businesses try to be socially responsible
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Contemporary Social Consciousness
The Concept of Accountability The expectation of an expanded role for
business in protecting and enhancing the general welfare of society
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Areas of Social Responsibility
Responsibility Toward the Environment Controlling air, water, and land pollution Properly disposing of toxic waste Engaging in recycling
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Areas of Social Responsibility (cont’d)
Responsibility Toward Customers Involves providing quality products and pricing
products fairly Consumerism
Social activism dedicated to protecting the rights of consumers in their dealings with businesses
Basic Consumer Rights To possess safe products To be informed about all relevant aspects of a product To be heard To choose what to buy To be educated about purchases To courteous service
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Consumer Rights (cont’d)
Unfair Pricing Collusion: When two or more firms
agree to collaborate on such wrongful acts as price fixing
Price gouging: Responding to increased demand with overly steep (and often unwarranted) price increases
Ethics in Advertising Truth in advertising Morally objectionable advertising
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Areas of Social Responsibility (cont’d)
Responsibility Toward Employees Legal and social commitments to:
not practice illegal discriminationprovide a physically and socially safe workplaceprovide opportunities to balance work and lifeprovide protection for whistleblowers (an
employee who discovers and tries to put an end to a company’s unethical, illegal, or socially irresponsible actions by publicizing them)
Responsibility Toward Investors Proper financial management (no insider trading) Proper representation of finances
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Implementing Social Responsibility (SR) Programs
Arguments Against SR The cost of SR threatens profits. Business have too much control over which
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.
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Approaches to Social Responsibility
Obstructionist Stance A company does as little as possible and may
attempt to deny or cover up violationsDefensive 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
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Spectrum of Approaches to Corporate Social Responsibility
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.
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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.