BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,

BUSN

4 Business Ethics & Social Responsibility: Doing Well by Doing Good

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Business Ethics and Social Responsibility:Doing Well by Doing Good

• What is ethics? Business ethics?

• What are the universal ethical standards?

• What is an ethical dilemma?

• How does ethics relate to the individual and the organization?

• What is social responsibility and its impact on stakeholders?

• What is the role of social responsibility in the global arena?

• How do companies evaluate their efforts to be socially responsible? 2

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Ethics & Social Responsibility: A Close Relationship

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ETHICSBeliefs about

right and wrong

SOCIAL RESPONSIBILITY

The obligation of a business to contribute to society

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Defining Ethics: Murkier Than You’d Think

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Universal Ethical Standards

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Developed by Character Counts,

a nonpartisan organization of

educators, community leaders,

and ethicists.

Source: The Six Pillars of Character, Josephson Institute website, http://josephsoninstitute.org/MED/MED-2sixpillars.html, accessed February 2, 2009

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Business Ethics: Not an Oxymoron

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Ethical Dilemma

Negative Consequences

Two unfavorable options

Ethical Lapse

Clear misconduct

most challenging business decisions seem to arise when values are

in conflict

Business Ethics – the application of right and wrong in the workplace.

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Ethics: Multiple Touchpoints

Individuals must make their own

ethical choices

BUT

The organization can have a significant influence on decisions

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Ethics and the Individual: The Power of One

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Framework for Ethical Decisions:1. Do you understand the

dimensions of the problem?

2. Who would benefit? Who would suffer?

3. Are the alternative solutions legal? Are they fair?

4. Does your decision make you comfortable?

5. Could you defend your decision on the nightly news?

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Ethics and the Organization: It Takes a Village

• Ethical influence starts at the top.

• Actions matter more than words.

• The appearance of shaky ethics can be deeply

damaging

“CEOs in particular must communicate their personal commitment to high ethical standards

and consistently drive the message down to employees through their actions.”

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Creating and Maintaining and Ethical Organization

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• Organizational Culture• Role of Top Management• Code of Ethics

1. Executive Buy-in

2. Clear expectations

3. Integrated approach

4. Global and local

5. Whistleblower support

6. Reporting and Enforcement

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Ethics at Work: How would you judge the actions of these business leaders?

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Stanley O’Neal began as Merrill Lynch began racking up losses that led to its collapse, he announced his “retirement.”

Sanjay Kumar of Computer Associates was convicted of massive accounting fraud in 2006.

Martha Stewart was convicted of obstructing justice in a $40,000 well timed stock sale.

Sherron Watkins, former vice president of Enron reported the accounting Irregularities that led to the discovery of corporate fraud.

Pierre Omidyar, the founder of eBay has given away over $100 million to Tufts University Micro Finance Fund.

Whole Foods CEO, John Mackey posted thousands of comments on Yahoo Finance, hyping his company and attacking Wild Oats, which he was planning to purchase.

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Capitalism with a Conscience

• The gains in wealth, healthcare, education, and technology have not been evenly spread

• Half of the world’s population lives on less than $2.00 per day

• 94% of the world’s earnings go to 40% of the people

• Bill Gates has called for a new approach to economics: creative capitalism

• Nobel Peace prize winner Muhammad Yunus recognizes the power of business to solve societal issues

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Defining Social Responsibility: Making the World a Better Place

Nearly 80% of Americans consider corporate citizenship when making

investment and purchasing decisions.

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Social Responsibility is the obligation of a business to contribute to society.

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The Spectrum of Social Responsibility

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Social Responsibility at Work: How would you judge the actions of these firms?

1. Clorox introduced a line of “99% natural cleaning” products called Green Works. The Sierra Club endorsed the product line. Clorox makes annual contributions to the Sierra Club

2. Tapping the potential of their fans, MTV has drawn millions of young people to the polls for the 2008 presidential election

3. As obesity among kids grows, Kraft Foods pledged to stop advertising unhealthy yet profitable foods

4. After receiving $45 billion in taxpayer bailout funds, Bank of America sponsored a five-day carnival-like event outside the 2009 Super Bowl.

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The Stakeholder Approach: Responsibility to Whom?

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Stakeholders are any

groups that have a stake

or a personal interest in the

performance and actions

of an organization.

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The Stakeholder Approach: Responsibility to Whom?

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EMPLOYEES

INVESTORS

COMMUNITY

ENVIRONMENT

CUSTOMERS

Creating Jobs that Work

Sustainable Development

Value, Honesty and Communication

Fair Stewardship and Full Disclosure

Business and the Greater Good

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• Meet Legal Standards• Workplace Safety• Minimum Wage/Overtime

Requirements• Value Employees• Provide Work/Life Balance

Responsibility to Employees: Creating Jobs that Work

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CONSUMERISM:

• The Right to Be Safe

• The Right to Be Informed

• The Right to Choose

• The Right to be Heard

Responsibility to Customers: Value, Honesty and Communication

Planned Obsolescence – Deliberately designing products to fail in order to shorten

the time between consumer repurchases

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Apple Angst

• Apple introduced the iPhone on June 9, 2007 to rave reviews despite $599 price tag

• Apple dropped the price to $200 to increase customers

• Customers were livid!

• CEO, Steve Jobs apologized and gave customers $100 store credit

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Responsibility to Investors: Fair Stewardship and Full Disclosure

• Legal Requirements

Sarbanes-Oxley

• Responsible use of Corporate Dollars

Honesty

• Is Optimism or Pessimism Socially Responsible?

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Corporate Philanthropy - business donations to

nonprofit groups, including both money and time

Corporate Responsibility -

actions of the business rather than donations of

money and time

Cause-related Marketing – partnerships between businesses

and nonprofit organizations, designed to spike sales for the

company and raise money for the nonprofit

Responsibility to Community: Business and the Greater Good

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Sustainable DevelopmentBeyond federal, state and local laws:

doing business to meet the needs of this generation without harming the ability of future generations

Carbon FootprintAmount of harmful greenhouse gases a

firm emits

Green MarketingMarketing environmental products and

practices for competitive advantage

Responsibility to the Environment: Sustainable Development

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Ethics and Social Responsibility in the Global Arena: A House of Mirrors?

Corruption is part of the culture in many countries

Bribes or Gifts

Labor issues in host countries can be complicated

Living WageChild Labor

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Monitoring Ethics and Social Responsibility: Who is Minding the Store?

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SOCIAL AUDIT

A systematic evaluation of how well a firm is meeting its

ethics and social responsibility objectives.

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Looking Back

• What is ethics? Business ethics?

• What are the universal ethical standards?

• What is an ethical dilemma?

• How does ethics relate to the individual and the organization?

• What is social responsibility and its impact on stakeholders?

• What is the role of social responsibility in the global arena?

• How do companies evaluate their efforts to be socially responsible? 26

Documents

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,