ADMS 3660 Business Ethics Notes

Ch 1- Business and Society Relationship

-aside from corporate wrongdoing, many common issues include

-corporate abuse of the environment, toxic waste disposal

-sweatshop conditions, sexual harassment in the workplace

-corporate power, minority rights

-drug testing, insider trading, whistle blowing, product liability crises

-lack of concern for the welfare of consumers (eg. Fast food industries)

Business and Society

Business- the collection of private, commercially oriented orgs, ranging in diff sizes

-big businesses are more widely known in the public eye

-people in our society often associate size with power

-when referring business in relation to society, all different business sizes must be kept in mind

Society- a community, nation or broad grouping of people that have common traditions and values

-is composed of numerous interest groups, formalized orgs, and a variety of institutions

Society as the Macroenvironment

Macroenvironment- the total env outside a firm; is the societal context in which the organization resides

-composed of four segments

Social environment- focuses on demographics, lifestyles, social values of the society

Economic env- nature and direction of the economy in which business operates

Eg. GNP, inflation, unemployment rates, global trade

Political env- processes by which laws get passed and officials get elected

Technological env- total set of tech-based advancements taking place in society

Our Pluralistic Society

Pluralism- the diffusion of power among society’s many groups and organizations

-a pluralistic society is one in which there is wide decentralization and diversity of power concentration

-the power is dispersed among many individuals

Strengths- prevents power from being concentrated in the hands of a few

-maximizes freedom of expression and action

-no single group will dominate

Weaknesses- diverse institutions pursue own self-interests; no central direction to unify these pursuits

-there is confusion as to which orgs best serve which functions

-conflicts among groups when they each try to pursue their own objectives

-the system isn’t very efficient

Business and Multiple Publics, Systems, and Stakeholders

-when we speak of business and society relationships, we usually refer either to particular segments, or

to business and some system in our society

Our Special-Interest Society

Def’n- the idea of pluralism to an extreme in which thousands of special interest groups each pursues its

own limited agenda

-specialization on the part of interest groups representing all sectors of society

-including consumers, communities, natural environment, the government

-these groups have increasingly become active, committed, intense and diverse

-each of these groups have been able to attract many members, thus increasing revenues

-at the same time, they also increase the complexity for businesses to operate with them

Business Criticism and Corporate Response

Factors in the Social Environment

Societal Beliefs Regarding Success in Business

-the belief that material success is derived from some kind of dishonesty

-tv has suggested that in order to succeed, one has to engage in some kind of dishonesty, manipulation

-essentially, to get ahead, one needs to step on other people

Affluence and Education

-as a society becomes more affluent and better educated, there are also higher expectations

Affluence- the level of wealth, disposable income, standard of living of society

-reflects both economic welfare and social elements

Education- how much one receives in their environment

-the combo of affluence and education forms the underpinning for a climate where societal criticism of

businesses arises

Awareness through the Media

-newspapers, magazines, television

-through tv, the audience gets a variety of info that contributes to a climate of business criticism

Straight News and Investigative News Programs

-straight news shows that often portray businesses in a negative spotlight/bias

-journalists see it differently though, they say that when asked, businesses ignore qtns&downplay issues

Prime-Time TV Programs

-business people are often cast as evil and greedy

-is also shown through movies as well

Commercials

-are a double edged sword; in SR they may sell more products, but if products are promoted in a

deceptive way, then LR they will lose credibility

-the media therefore should be seen as only one major factor that contributes to the env in which the

business now finds itself

Revolution of Rising Expectations

Def’n- belief that each succeeding generation has a standard of living higher than the one before

Social problem- the gap b/n a society’s expectations of social conditions and the actual social realities

-the nature of rising expectations is such that they outpace the responsiveness of businesses, thus

creating a predicament that is conducive to criticism

Entitlement Mentality

Def’n- the general belief that someone is owed something because they’re a member of society

-the current context of workplace has contributed to making the issue of entitlement more prominent

Rights Movement

Def’n- comes from the revolution of rising expectations, entitlement mentality, and more

-activism for rights of other groups, like blacks, women, ethnic minorities, disabled

Criticisms: Use and Abuse of Power

-common issue that runs through all complaints is the use and abuse of power

-the reason that Canadians are less trusting of companies is they feel mistreated and ignored as both

citizens and consumers

-some points of friction include CEO pay, high gas and drug prices, poor airline service

Business power- ability or capacity to produce an effect or to bring influence to people

-in the context of business criticism, power is perceived as being abused

Levels of Power

Macro level corporate system

Intermediate level groups of corps that act in concert in an effort to produce a desired effect

-could be to raise prices, control markets

Micro levellevel of the individual firm; any one major corporation

Individual levelindividual corporate leader that exerts power; one person

-as one analyzes corporate power, they should keep in mind the diff levels of power

Spheres of Power

-economic power, political power are most common

-social and cultural; power over the individual; technological; environmental

Balance of Power and Responsibility

-the power/responsibility relationship is the foundation for CSR

Iron law of Responsibility- in the LR, those who do not use power in a manger which society considers

responsible will lose it

-when power is out of balance a variety of forces come to bear on business to be more responsible;

including governmental actions

Business Response: Concern and Changing Social Contract

-social env is also seen as a collection of conditions, events, that reflect how people think and behave

Social contract- two way understandings that characterizes the r/n between business and society

-social contract has been changing to reflect society’s expectations of business

Social contract can be articulated through:

-laws and regulations that the society has established

-shared understandings to each group’s expectations of the other

-creates more confusion and room for misunderstandings though

Ch 6- Business Ethics Fundamentals

The Public’s Opinion of Business Ethics

-there is just a fine line between a business exec and somebody who lies

Gallup Poll Ranks Business Ethics

-the poll surveys public opinion of social and political issues

-quizzes the public on its perceptions about the ethics of business execs

-honesty and ethics of business execs aren’t thought to be highly ranked

-those lower are real estate agents, salespeople, stockbrokers

-nurses are highly ranked

-business execs ranks in the middle

Are the Media Reporting Ethics More Vigorously

-the media are reporting ethical issues more frequently

-ethics questions among all institutions are subjects of growing and sustaining interest

Is It Society that is Actually Changing

-illegal corp activities can be traced to changes that have taken place in society, and to the unwillingness

of many in business to adjust to these changes

-what has changed are the contexts in which decisions are made, the demands that are being made, and

the nature of what’s considered proper corporate conduct

Business Ethics: What Does it Really Mean?

Ethics- deals with what is good and bad and with moral duty and obligation

-is a set of moral principles or values

-moral conduct refers to the principles of right and wrong in behaviour

Business ethics- good and bad, or right and wrong practices within a business context

-fairness, justice, equity

Descriptive ethics- characterizes the morality of people, culture, society

-compares moral codes, systems, beliefs, values, practices

-focuses on “what is” the prevailing set of ethical standards

-some people adopt the view that since everybody is doing it, it’s acceptable

Normative ethics- justifying a coherent moral system of thinking and judging

-justifies basic moral principles that are intended to guide behaviour

-focuses on “what should be”

Conventional Approach to Business Ethics

Def’n- compares a decision with prevailing norms of acceptability

-challenge is answering whose norms to use, and what norms are prevailing

-legitimate norms emanate from family, friends, religious, local community, one’s employer, law

Ethics and the Law

-both law and ethics have to do with what’s appropriate, but law reflects society’s codified ethics

Making Ethical Judgments

Three key elements compose this decision:

1) Observe the decision, action or practice committed

2) Compare the practice with prevailing norms of acceptability

3) Recognize that value judgments are being made by someone as to what really happened, and what

the acceptable norms are

-aka 2 diff people could look at the same behaviour but interpret diff things

Determinations of what’s ethical require judgments to be made on:

-what the true nature of the practice is

-what society’s prevailing norms are

-what value judgments are being made by someone about the practice

Ethical relativism- we pick and choose which source of norms we wish to use based on what will justify

our actions

Ethics, Economics, and Law: A Venn Model

-in ethical decision making, the focus is on ethical expectations, economics and law

-it must be balanced against each other to make wise decisions

4 Important Ethics Questions

-the questions are asked at five diff levels; individual, organization, industry or profession, societal,

global or international level

What Is?

-what is actually going on in an ethical sense in business or in a specific decision

-is a factual, scientific or descriptive question

-helps us understand the reality of the ethical behaviour

-what are your personal ethics; org’s; industry’s; society’s; global

What Ought to Be?

-rightness, fairness, or the justice of a decision

-often viewed in terms of what management should do in an ethical sense in a given situation

How Do We Get from What Is to What Ought To Be?

-bridging the gap between where we are and where we should be

-we may find that from a practical point of view, we can’t achieve the goals

-managerial decision making and strategy come into play

-identify the problem, identify where we want to be, and then closing the gap

What is Our Motivation?

-sometimes it reveals some manipulative or self-centred move

Three Models of Management Ethics

Immoral Management

Def’n- holds that management’s motives are selfish and it cares only about its own, or the co’s gains

-management’s goals are profitability and organizational success at any price

-regards legal standards as barriers that management must avoid to accomplish what it wants

Moral Management

Def’n- conforms to the highest standards of ethical behaviour

-strive sot be ethical in terms of professional standards of conduct, motives, goals

-aspires to succeed, but only within the confines of sound ethical precepts

-fairness, justice, respect for rights

-moral management pursues its objectives of profitability, legality, and ethics as required and desirable

-the law is viewed as a minimal standard of ethical behaviour, because moral management strives to

operate above the law

Operating Strategy of Moral Management

-live by sound ethical standards

-will the action be fair to all stakeholders as well as to the organization

Integrity Strategy- ethics as the driving force of an organization

-provides a common frame to unify diff functions, lines of business, employee groups

-helps define what an org is and what it stands for

-moral leadership is also related to moral management

-they have a passion to do right, be morally proactive, consider all stakeholders

-strong ethical character

-obsession with fairness

-undertake decision making

-not all orgs in moral management have done so all along though

-the companies arrive at this position as lawsuits/gov regulations rise, consumers expect more

Amoral Management

-is not just the middle position between immoral and moral management;

Intentional amoral management- managers do not factor ethical considerations into their decisions

-neither moral nor immoral

Unintentional amoral management- managers don’t think about business activity in ethical terms

-are inattentive that their decisions may have negative effects on others

-managers are well intentioned but are too insensitive to consider the effects of their behaviour

on others

Operating Strategy of Amoral

-permit free rein within the unspoken but understood tenets of the free enterprise system

-key question is can we make money with this action

Compliance strategy- focused on obedience to the law as its driving force

-oriented toward compliance with regulatory and criminal law

*Fig 6.7 for summary of moral, immoral, amoral

Two Hypotheses Regarding the Moral Management Models

Population hypothesisdistribution of the three models might approximate a normal curve

-amoral in the middle, other two on ends

Individual hypothesisthe three models may operate at various times and under diff circumstances

Eg. The avg manager may be amoral most of the time, but be moral/immoral for 1 circumstance

Amoral Management as a Serious Organizational Problem

-managers driven by the profitability ethos regards economic success as the exclusive barometer of

organizational and personal achievement

Making Moral Management Actionable

-senior management should lead the transition from amoral to moral management by business ethics

training, codes of conduct, mission and vision statements, ethics officers

Developing Moral Judgment

Kohlberg’s levels of moral development- how we as individuals develop morally

Levels of Moral Development

Level 1: Preconventional Level

-focus is mainly on self

Reaction to punishment stageavoidance of pain, scolding is usually needed

Seeking of rewards stagepraise or something tangible

-they learn to behave according to the consequences

Level 2: Conventional Level

-there are others whose ideas are to be considered

-the importance of conforming to the conventional norms of society

Good boy/nice girl morality stagethere are some rewards for living up to what is expected

Law and order morality stageindividual recognizes there are certain norms in society that are

expected to function in an orderly fashion

-individual sees they are part of a larger system

Level 3: Postconventional, Autonomous, or Principled Level

-indiv develops a notion of right & wrong that is more mature than the conventionally articulated notion

-moral principles are self accepted, because they now perceive them as “right”

Social contract orientationright action is thought of in terms of general individual rights and standards

agreed by society

Universal ethical principle orientationindiv uses conscience with self chosen ethical principles that are

anticipated to be universal

Feminist Views of Kohlberg’s Research

-Carol Gilligan argues that women see themselves to be part of a network of relationships with family

and friends and thus are more focused on relationship maintenance when they confront moral issues

-women move in and out of three moral levels:

-self is the sole object of concern

-desire is to establish connectives and participate in social life

-women recognize their own needs and the needs of others, those with whom they have r/n

Sources of a Manager’s Values

-values are the individual’s concepts of the worth or importance of certain ideas

-one’s values shape one’s ethics

Religious Valuesethics is the big of religion that tells us how we should behave

Philosophical valuesreason can provide us with principles/morals in the same way it gives us

principles of other things like mathematics

Cultural Valuessocietal norms from everyday living has had an impact on the manager’s thinking

-music, movies, television

Legal valueslegal system reps the codification of what the society considers right and wrong

Professional valuesemanates from professional orgs that rep diff jobs and positions

-articulates the ethical consensus of the leaders of those professions

Sources Internal to the Organization

-when an individual goes to work for an org, they learn that to survive, certain norms must be

perpetuated and revered

-respect for the authority structure

-loyalty; conformity; performance; results

Elements of Moral Judgments

There are 6 major elements that are essential to making moral judgments

Moral Imagination

-ability to perceive that a web of competing economic relationships is at the same time a web of moral

or ethical relationships

-means not only becoming sensitive to ethical issues in business decision making but also developing the

perspective of searching out subtle places where ppl are likely to be affected by decision making of mgrs

Moral Identification and Ordering

-ability to discern the relevance of moral factors introduced into a decision making situation

-ability to see moral issues as issues that can be dealt with

Moral Evaluation

-practical phase of moral judgment entails essential skills like consistency and coherence

-develop the ability to identify what the likely moral as well as economic outcomes of a decision will be

-integrate the concern for others into org’l goals and purposes

Tolerance of Moral Disagreement and Ambiguity

-must be accepted because it is a natural part of ethics discussions

-is an extension of a managerial talent present in all decision making situations

Integrating of Managerial and Moral Competence

-the scandals that major corps face occur as a result of many decisions made at diff points in time

-managers are learning that there is a huge corporate price to pay for their amorality

A Sense of Moral Obligation

-requires the intuitive or learned understanding that moral fibers are the integral components that hold

systems together

-moral manager has a sense of moral obligation and integrity that is the glue that holds together the

decision making process

Ch 7- Personal and Organizational Ethics

Levels at Which Ethical Issues may be Addressed

Personal Levelpersonal lives; outside the work context

Organizational levelroles as managers or employees

-these issues may bring consequences for the co’s reputation and success in the community

Industry levelstock brokerage, real estate, insurance, financial services, cars, telemarketing

-any profession by which the individual is a member

Societal and Int’l levelsbecomes hard for the manager to have direct effect on business ethics here

-managers acting in concert through their companies can bring high standards of change though

-the manager’s greatest impact can be felt through what they do personally, or as a member of

the management team

Personal and Managerial Ethics

-entails making decisions, confronting the individual with a conflict of interest situation

-individual often has to choose between their interests, and the interest of somebody else

-the question often asked in this situation is “What shall I do in this situation”

-there is the conventional approach, principles approach, ethical tests approach

Principles Approach to Ethics

-based on the idea that managers make decisions based on a more solid foundation than conventional

-managers can improve their ethical decision making if they factor into their proposed actions a

consideration of certain principles or concepts of ethics

Principle of Utilitarianism

Utilitarianism- we should always act to produce the greatest ratio of good and evil to everyone

-greatest good for the greatest number

-forces us to think about the general welfare

-proposes a standard outside of self interest

-also makes us think in stakeholder terms; what would produce the greatest good in our decision,

considering stakeholders

Disadv- ignores actions that may be actually wrong

-by focusing on the consequences of a decision, the decision itself may be ignored

-may come into conflict with the idea of justice

-some say the increase in total good isn’t good because it ignores the distribution of the good

-it is also hard to formulate satisfactory rules for decision making

-doesn’t handle the issue of rights very well

Principle of Rights

-utilitarianism implies that certain actions are morally right, when they can actually violate somebody

else’s rights

Moral rights- important claims or entitlements

-there are also legal rights as well

Principle of Rights- rights cannot be overridden by utility

-it can only be overridden by another, more important right

-principle of right expresses morality from the POV of the individual

-utilitarianism expresses morality in terms of the group as a whole

Principle of Justice

Def’n- the fair treatment of each person

Distributive justice- distribution of benefits and burdens

Compensatory justice- compensating someone for a past injustice

Procedural justice- fair decision making procedures

-John Rawls talks about a comprehensive principle of justice, based on the idea that what we need is a

fair method by which we choose the principles through which conflicts will be resolved

-he says each person has an equal right to the most extensive basic liberties

-everybody is essentially to be treated equally

-also that inequalities are arranged so they are to everyone’s adv and attached to positions open to all

Principle of Caring

-this principle is critical of the traditional views mentioned above

-they embrace a masculine approach

-traditional ethics focuses too much on the individual self

-feminist theory views the person as essentially relational, not individualistic

-emphasizes caring as opposed to justice or rights

-focused entirely on people, and is essentially personal

-caring people could lead to a caring org that offers new possibilities

Virtue Ethics

Def’n- focuses on the individual becoming imbued with virtues

-is centre dint he heart of the person; the manager

-action oriented principles focus on doing; virtue ethics focuses on being

-it emphasizes character development

-we are lacking this today because we have failed to teach the young principles of good character

-corporate well being will demand character, and bus leaders are necessary for teaching character back

Golden Rule

Def’n- strong principle of ethical living and decision making

-do unto others as you would have them do unto you

-if you want to be treated fairly, treat others fairly

-we are not to make an exception of ourselves

-however, there is no single principle that is recommended to be always used

Reconciling Ethical Conflicts

-three common concerns must be addressed in conflict situations:

Obligationsverbal/written contract to which we have agreed

Idealsgoal, principle, virtue

Effectson stakeholders of our actions

Shaw and Berry say that when two or more moral obligations conflict,

-choose the stronger one

-honour the more important one

-when the effects are mixed, choose the action that produces the greater good/less harm

Ethical Tests Approach

-more practical in orientation and do not require the depth of moral thinking that principles do

Test of Common Sensedoes the action about to take place really make sense

-has limitations though; can conclude they would not actually get caught

Test of one’s best selfis the action compatible with your concept of yourself at your best

-isn’t helpful to those who don’t hold themselves in high esteem

Test of making something publichow would you feel if others knew you were doing this

-has to do with whether your action can withstand public disclosure

Test of ventilationexpose your proposed action to others and get their thoughts on it

-seek others’ views first

Test of the purified ideaare you taking the action just because somebody else with more authority or

knowledge says it is right

-just because somebody superior says it’s right doesn’t mean it is

Gag testa manager’s signal if an action is worthy or not is if they gag at the hearing of it

Managing Organizational Ethics

-to manage ethics, a manager must realize the org’s ethical climate is part of its overall corporate culture

Factors Affecting the Org’s Moral Climate

-to create an ethical climate, they must understand the factors that influence whether or not other

employees behave ethically

-there are factors in terms of their influence to unethical behaviour;

-behaviour of superiors, one’s peers, industry/prof’l ethical practices, personal financial need

Pressures Exerted on Subordinates by Superiors

-managers were asked to what extent they agreed with the phrase “Managers today feel under pressure

to compromise personal standards to achieve company goals”

-lower management felt it most

-the lower a manager is, the more the manager feels pressure toward unethical conduct

-employees frequently find themselves making compromises as a result of the need to conform to their

superiors’ wishes and the expectation of loyalty

Other Behaviours of Superiors and/or Peers

-amoral decision making; managers who fail to factor ethical considerations into their actions

-unethical acts; some managers are simply not ethical

-acceptance of legality as a standard of behaviour; some think if they abide by the law, they are simply

doing the most they ought to be

-bottom line mentality and the expectations of loyalty and conformity; little value on doing what is right

-absence of ethical leadership; management never assumes a leadership role

-objectives/evaluation systems that overemphasize profits- setting unrealistic goals

-insensitivity toward how subordinates perceive pressure to meet goals; management must be vigilant

of the expectations they’re making on employees

-inadequate formal ethics policies; lacking controls for monitoring/compliance/clear code of conduct

Improving the Organization’s Ethical Climate

*Fig 7.5 for best practices for creating an ethical organization climate

Top Management Leadership (Moral Management)

-the moral tone of an org is set by top management

-management has to set an example for all the others to follow

-a manager’s reputation for ethical leadership is founded on two pillars;

-perceptions of the manager as a moral person, and as a moral manager

-being a moral person is composed of three things; trait, behaviours, decision making

-moral managers recognize the importance of putting ethics at the forefront of their ethical agenda

-they engage in role modeling, they communicate about ethics and values, and use rewards and also

discipline effectively

-they should create clear and concise policies

-select for employment only those whose traits are in check with corporate standards

-promote people on the basis of performance and ethical conduct and beliefs

-company employees must feel the obligation to report irregularities in ethics

Effective Communication

-both written and verbal forms

-candour requires a manager be sincere and honest in communication transactions

-requires the manager to be fair and free from prejudice

-fidelity means the communicator should be faithful to detail

-confidentiality means the manager must exercise care in deciding what info they disclose to others

Ethics Programs and Ethics Officers

-ethics officers are in charge of implementing ethics initiatives of the organization

-they have helped to reduce penalties

-there are also codes of conduct, ethics hotlines, ethics training, audits

Setting Realistic Objectives

-a manager may innocently create a condition leading to unethical behaviour on a subordinate’s part

-top mgmt must establish sales that are realistic, so they can be achieved with current bus practices

Ethical Decision Making Processes

-process of stating the problem, analyzing it, identify possible courses of action, evaluating them, and

then deciding on the best alternative and implementing it

5 main points about the nature of ethics and decision making:

-most ethical decisions have consequences; they’re followed by effects that impact both within

and outside the organization

-they have multiple alternatives

-they have mixed outcomes

-they have uncertain consequences

-they have personal implications

*Fig 7.6 for ethical decision making process

-individual is asked to identify the action, to subject the course of action to the ethics screen

-the ethics screen consists of several select standards against which the proposed course of

action is to be compared

-another approach is to ask and answer a series of simple questions

Ethics Checkis it legal; is it balanced; how will it make me feel about myself

Ethics Quick Testis a seven part test

Codes of Conduct

-top management has the responsibility for establishing standards of behaviour and communicating

them to all managers and employees

-code of ethics are used, aka codes of conduct

-there are benefits that bus orgs receive as a result of a code of ethics;

-legal protection, pride, consumer goodwill

-improved loss prevention, product quality, productivity

-common topics discussed in corporate codes:

-conflicts of interest, discrimination, sexual harassment

-receiving or giving gifts

-employee theft, proper use of company assets

-when codes are implemented strongly in the culture, reports of unethical employee behaviour is lower

-study of corporate codes by Mark Schwartz revealed there are diff ways in which employees perceive

codes of conduct, and he broke them down into 8:

Rule Bookclarifies what is expected Smoke detectoremployees try to convince others

Signpostleads employees to consult other individuals

Mirror; Shield Fire alarmemployees contact the proper authority figures

Magnifying glasssuggests a note of caution to be more careful

Disciplining Violators of Ethics Standards

-the moral manager consistently rewards ethical conduct and disciplines unethical conduct

-management ahs to communicate to all that unethical behaviour will not be tolerated

Whistle-Blowing Mechanisms and “Hotlines”

-people do not know how to react when they observe a questionable practice

-employees may phone in their inquiries about the company’s ethics code

Disadv; it may do harm; many of the reported wrongdoings are false accusations many times

Business Ethics Training

-instruction in business ethics should be made a part of business school education, management

training, executive development programs, and seminars

-purposes are to increase the manager’s sensitivity to ethical problems

-encourage critical evaluation

-increase awareness of organizational realities, and societal realities

-improve understanding of the importance of public image

Ethics Audits and Self Assessments

Ethics audits- approaches by which a company may assess its ethical climate or programs

-intended to carefully review ethics programs, codes of conduct, hotlines, training programs

-can include management’s activity, communication efforts, incentive and reward systems

-if management takes specific steps as suggested, many behaviours have a greater chance of being in

line with leadership’s ethical standards

-thus ethics can be positively supervised

Ch 2- Corporate Citizenship

The Corporate Social Responsibility Concept

-requires the individual to consider their acts in terms of a whole social system, holds themselves

responsibly for the effects of their acts anywhere in the system

-the commitment to social responsibility by businesses has led to increased corporate responsiveness to

stakeholders and improved social performance

Corporate Citizenship Concepts:

CSRemphasizes obligation, accountability

CSResponsivenessaction, activity

CSPerformanceoutcomes, results

Historical Perspective on CSR

-Adam Smith’s concept of invisible hand holds that a society could best determine its needs and wants

through the marketplace

Modification of the Economic Model

-modification of the classical economic model was seen in philanthropy; contributions to charity

Community obligations- are to improve, beautify and uplift

Paternalism

Evolving Viewpoints of CSR

it seriously considers the impact of the company’s actions on society

is the obligation of decision makers to take actions which protect the welfare of society as a whole

along with their own interests

implies that a corporation doesn’t just have economic and legal obligations, but also responsibilities

to society that extends those obligations

relates to achieving outcomes from organizational decisions concerning specific issues which have

beneficial rather than adverse effects upon pertinent corporate stakeholders

Carroll’s Four-Part Definition of CSR

-the social responsibility of business encompasses the economic, legal, ethical and discretionary

expectations that society has of organizations at a point in time

Economic Responsibilities- produces goods and services that society wants and to sell them at fair

prices; attention to revenues, costs, strategic decision making

Legal Responsibilities- the laws under which business is expected to operate

Ethical Responsibilities- activities that are expected by societal members even though they’re not in law

-full scope of norms and standards that reflect a belief of what consumers regard as fair/just

Philanthropic Responsibilities- voluntary decisions of a business to engage in social activities

-not required by law, and not generally expected of business

-corporate giving, product and service donations, partnerships with local government

-difference between ethical responsibilities and philanthropic responsibilities is that philanthropic aren’t

expected in a moral or ethical sense

Pyramid of CSR Fig 2.3

-the socially responsible should strive to make a profit; obey the law; be ethical; and a good corp citizen

Arguments Against and For CSR

Arguments Against CSR

-management has one responsibility only, to maximize the profits of owners/shareholders

-social issues should be resolved by the workings of the free market system

-if the free market can’t solve the social problem, then the government should

-business isn’t equipped to handle social activities; managers are oriented toward finance & operations

-if managers were to pursue CSR, it would dilute the business’s primary purpose

-businesses have enough power; engaging in CSR would only give them more

-encouraging them to assume social responsibilities would only place them in a position of international

balance of payments

Arguments for CSR

-is in the LR self-interest of a business to be socially responsible

-it’s the business’ fault that today’s social issues exist anyways

-if businesses are to exist in the future, then they need to take actions now to ensure their LT position

-to ward off future gov intervention and regulation

-it is more practical and less costly to behave this way than to react when issues have developed

-because the public supports it

Corporate Social Responsiveness

-is the action oriented variant of CSR

Ackerman and Bauer’s Point of View

-criticized CSR; says that responding to social demands is more than deciding what to do

-they think social responsiveness is a more apt description of what is essential in the social arena

-responsibility implies having assumed an obligation

-responsiveness connotes an action-oriented condition

Sethi’s Three-Stage Schema

Social obligationcorporate behaviour in response to market forces/legal constraints

Social responsibilitybringing corporate behaviour up to a level where it is congruent with the

prevailing social norms

Social responsivenesslong run role in a dynamic social system

Frederick’s CSR1, CSR2, CSR3

-CSR is CSR1; social responsiveness CSR2

-social responsiveness is the capacity of a corporation to respond to social pressures

-CSR3 is corporate social rectitude

-the moral correctness of actions taken and policies formulated

Epstein’s Process View

-discusses corporate social responsiveness within the corporate social policy process

-focuses on the individual and organizational processes for evaluating the firm’s capacity to anticipate,

respond to, and manage issues

Other Views of Responsiveness

Ian Wilsonfour business strategies that include reaction, defence, accommodation, proaction

Terry McAdamfour social responsibility philosophies

- Fight all the Way -Do only what it required

-Be progressive -Lead the industry

Davis and Blomstromalternative responses to societal pressures that include withdrawal, public

relations approach, legal approach, bargaining, problem solving

James Postthree major social responsiveness categories; adaptive, proactive, interactive

Corporate Social Performance (CSP)

-intended to suggest that what really matters is what companies are able to accomplish

-needs to identify a particular philosophy, pattern, mode of responsiveness, identify stakeholder issues

-particular issues are of varying concern to businesses, depending on the industry in which they exist

Carroll’s CSP Model

Social responsibility categorieseconomic, legal, ethical, discretionary

Philosophy of social responsivenessreaction, defence, accommodation, proaction

Social issues involvedconsumerism, environment, discrimination

Usefulness of the CSP Model to Academics and Managers

Academics; aid to perceiving the distinction among the concepts of CSR that have appeared in literature

Managers; helps in understanding that social responsibility isn’t separate from economic performance

-integrates economic concerns into a social performance framework

-places ethical and philanthropic expectations into a rational economic framework

Wartick and Cochran’s CSP Extensions

-proposed that the dimension of social issues matured from an identification of the social issue

categories in which companies must take action known as social issues management

-issues identification, issues analysis, response development

-proposes that the three dimensions be thought of as depicting principles, processes, policies

Wood’s Reformulated CSP Model

-to think of social responsiveness as a set of processes rather than as a single process

-think of Wartick’s policies as entailing outcomes of corporate and managerial actions

-proposes that each 3 components (principles, processes, outcomes) are composed of specific elements

Swanson’s Reorientation of CSP

-links corporate social performance to the personally held values and ethics of executive managers

-organizations can impact society through economizing (efficiently converting inputs into outputs) and

ecologizing (forging community-minded collaborations)

Corporate Citizenship

-there isn’t one distinct meaning

-serves a variety of stakeholders well

-shared moral and ethical principles

-integrating individuals into the communities in which they work

-balances all stakeholders’ claims

-embraces the four faces of corporate citizenship; economic, legal, ethical, philanthropic

-functions through which business intentionally interacts with NPO, citizen groups, other stakeholders

-works to improve employee relations; customer relationships; bus performance; co’s marketing efforts

Social Performance and Financial Performance

-whether or not there is a r/n b/n a firm’s social responsibility or financial performance

-the appropriate performance criteria are subject to debate

Perspective 1built on the belief that socially responsibly firms are more financially profitable

Perspective 2a firm’s financial performance is a driver of its social performance

-when cos are enjoying financial success, we see higher levels of social performance

Perspective 3interactive r/n among social performance, financial performance, corp reputation

-since they are so interrelated, it is hard to identify which factor is driving the process

A Multiple Bottom Line Perspective

-there is only one bottom line; a corporate bottom line that addresses the shareholders’ or owners’

investments in the firm

-alternative view is that the firm has multiple bottom lines that benefit from CSP

-CSP can’t be fully comprehended unless we also consider that its impacts on stakeholders are noted,

measured and considered

Socially Conscious or Ethical Investing

-this movement began in the 1970s

-social investing had matured into a comprehensive investing approach with social and environmental

screens, shareholder activism, and community investment

-no clear evidence that returns from socially conscious funds will equal or exceed the returns from funds

that aren’t so carefully screened

-socially conscious funds are valued most highly by the investors who really care about the special

performance of companies

3 main reasons why there is an increase in social/ethical investing:

-more reliable research on CSP than in the past

-investment firms using social criteria have established a solid track record

-socially conscious generation in the 60s are now making investment decisions

Ch 3- Stakeholder Approach to Business, Society, Ethics

Origins of the Stakeholder Concept

What is a Stake?

Stake- interest of a share in an undertaking; it is also a claim

-in between the two extremes is a “right” to do something

Stakeholder- individual or group that has 1+ various kinds of stakes in a business

-as stakeholders may be affected by the actions of the business, stakeholders may also affect

the org’s actions, decisions

-any individual or group who can affect or is affected by the actions of the org

Who are Business’s Stakeholders?

-shareholders, employees, customers

-competitors, suppliers, the community, special interest groups, media, society

-natural environment, nonhuman species, future generations

ProductionManagerialStakeholder Views

Production view- owners thought of stakeholders as individuals that supplied resources, or bought

products or services

Managerial view-separation of ownership from control, interaction with major constituent groups

Stakeholder view- firm and its multilateral relationships with constituent or stakeholder group

-management must perceive its stakeholders as those that management thinks have some stake in the

firm but also the groups that themselves think they have a stake in the firm

Primary and Secondary Stakeholders

Primary social stakeholders:

-shareholders, investors

-employees, managers, customers

-local communities, suppliers, business partners

-direct stake in the org

Secondary social stakeholders:

-government and regulators, civic institutions

-social pressure groups, media and academic commentators, trade bodies, competitors

-can be extremely influential, but their stake is representational of the public and indirect

Primary nonsocial stakeholders:

-natural environment, future generations, nonhuman species

Secondary nonsocial stakeholders:

-environmental pressure groups

-animal welfare organizations

Core, Strategic, Environmental Stakeholders

Core stakeholders- specific subset of strategic stakeholders that are essential for the survival of the org

Strategic- vital to the org and the set of threats/opportunities it faces

Environmental- others in the org’s environment that aren’t core or strategic

-whether stakeholders were core, strategic or environmental would depend on their characteristics, like

legitimacy, power, or urgency

Legitimacy, Power, Urgency: A Typology of Stakeholder Attributes

Legitimacy- the perceived appropriateness of a stakeholder’s claim to a stake

-owners, employees, customers have a high degree of legitimacy due to their direct

relationships with a company

Power- the ability to produce an effect; to get something done that otherwise wouldn’t get done

-power means the stakeholder could affect the business (PETA)

Urgency- degree to which the stakeholder claim on the bus calls for the business’s immediate attention

Strategic, Multifudiciary, Synthesis Views

Kenneth Goodpaster distinguished among:

Strategic approachviews stakeholders as factors to be taken into consideration and managed while

the firm is pursuing profits for its shareholders

-sees stakeholders as instruments that may facilitate/impede the firm’s pursuit of its strategic objectives

Multifudiciary approachholds that management has a responsibility to stakeholders just as it has the

responsibility to shareholders

Stakeholder synthesis approachnew approach that Goodpaster recommends

-business does have moral responsibilities to stakeholders, but is also expected to be implemented

within a context of ethical responsibility

3 Values to the Stakeholder Model

Donaldson and Preston have articulated three values:

Descriptiveprovides language and concepts to describe the corporation or organization

Instrumentaluseful in establishing the connections between the practice of stakeholder management

and achievement of corporate performance goals

Normativestakeholders are identified by their interest in the organization whether or not the org has

any interest in them

-is often thought of as the moral/ethical view because it places a focus on how stakeholders

should be regarded

Questions in Stakeholder Management

1) Who are our Stakeholders

-must identify not only generic stakeholder groups, but also the subgroups

-a generic group could be employees, shareholders, environmental groups, consumers

-within those groups there may be subgroups as well

2) What are our Stakeholders’ Stakes

-different specific interests, concerns, perceptions of rights, expectations

3) What opportunities and Challenges Do Our Stakeholders Present to the Firm?

-the opportunities are to build good working relationships with the stakeholders

-challenges present themselves in a way that the firm must handle the stakeholders well or be hurt in

some way; either financially or by reputation in the community

-emphasis is placed larger on challenges than it is on opportunities

-the challenges normally arise because stakeholders think their needs aren’t being met

-in terms of potential for threat, managers need to consider the stakeholder’s relative power and its

relevance to a particular issue confronting the org

-in terms of potential for cooperation, the firm needs to be sensitive to the possibility of joining forces

with other stakeholders

4) What Responsibilities Does the Firm Have to its Stakeholders?

-what economic, legal, ethical, philanthropic responsibilities does mgmt have to each stakeholder

-the most pressing threats present themselves as legal and ethical questions

5) What Strategies or Actions Should Management Take?

-do we deal directly or indirectly with stakeholders

-do we take the offence or the defence in dealing with stakeholders

-do we accommodate, negotiate, manipulate, or resist stakeholder overtures

-do we employ a combo of the above or just a single action

*Fig 3.8 for the diff stakeholder types*

Stakeholder type 1supportive; high on potential for cooperation, low on potential for threat

Stakeholder type 2marginal; low on both

Stakeholder type 3nonsupportive; low on potential for cooperation, high on potential for threat

Stakeholder type 4mixed blessing; high on both

-managers should attempt to satisfy minimally the needs of marginal stakeholders

-satisfy maximally the needs of supportive and mixed blessing stakeholders

Effective Stakeholder Management

-one major criticism is the complexity and time consuming nature of identifying, assessing, responding

to stakeholder claims

-some managers continue to think in shareholder terms because it is easier

-but thinking in stakeholder term increases is most consistent, though it takes more time

Stakeholder Management Capability

-it resides at one of three levels of increasing sophistication

Level 1: Rational Level

-a low level of SMC; most orgs have at least identified who their stakeholders are, but not all have

analyzed the nature of the stakes or the stakeholders’ power

Level 2: Process Level

-orgs implement organizational processes to scan the env and receive relevant info about stakeholders

-the info is then used for decision making purposes

-issues management or crisis management approaches are also used here

Level 3: Transactional Level

-highest and most developed; managers engage in transactions

-aka the communication level; interactiveness, genuineness, satisfaction, resource adequacy

-Steven F. Walker and Jeff Marr argue that cos should compete on the basis of intangible assets

Stakeholder Corporation

-development of loyal relationships with customers, employees, shareholders willbecome one of the

most important determinants of commercial viability and business success

Stakeholder symbiosis- idea that recognizes all stakeholders depend on each other for their success and

financial well being

Stakeholder Power: Four Gates of Engagement

-Walker and Marr assessed the commitment level of each stakeholder group

-each successful stakeholder relationship passes through four stages

Awareness gate 1; to know that something or someone exists

-there are often hidden stakeholders who may not be aware of the firm though

Knowledgeknowledge among stakeholders addresses not only p&s but also about corporate character

-refers to the co’s values, integrity, culture, practices

Admirationstakeholders must come to trust the firm

-loyalty and commitment

Actioncompany can build partnerships that benefit both of you

-getting referrals from customers, employees, investors

-main implication of the four gates is the need to effectively manage communications with stakeholders

of all types

Principles of Stakeholder Management

-to provide managers with guiding precepts regarding how stakeholders should be treated

*Fig 3.9 for the principles*

-focus is on acknowledge, monitor, listen, communicate, adopt, recognize, work, acknowledge conflicts

Ch 15- Employee Stakeholders and Workplace Issues

The New Social Contract

-the work force of today is more mobile, less loyal, more diverse

-fewer employees feel their employer is committed to them; trust is declining

-many have lost faith in the system as a consequence of feeling mistreated and ignored

-today’s employees are seeking competitive pay and benefits coupled with opportunities for

professional growth

Social contract- set of reciprocal understandings regarding each party’s role and responsibilities

-pay based on longevity and status has been replaced with rewards based on performance

-three main forces drive the collapse of the old social contract:

-global competition

-advancements in technology

-deregulation (of transportation, telecommunications)

-the new social contract places on employees more responsibility for their own success

-job security and compensation depend more on what the employee is contributing to the org

-companies are expected to provide learning opportunities, and honest communication

Employee Rights Movement

Private property- holds that individuals and private orgs are free to use their property as they desire

Meaning of Employee Rights

Def’n- legitimate privileges obtained by workers through group membership that protect them in

specific ways from the prevailing system of governance

-guarantees fair treatment in the workplace

-serves to provide workers with either desired outcomes or protection from unwanted outcomes

Statutory rights- rights provided by the law

-includes protection from discrimination, pay equity, occupational health and safety

Contractual rights- rights deriving from contracts based on oral or written statements

Implied contract- employer’s promise of some kind of job security

-employers should take the necessary precautions to reduce implied contract lawsuits:

-train managers to conduct hiring procedures properly

-insert clear statements in employment offers regarding employment/termination conditions

-provide employee handbooks, employee applications, letters of employment

-obtain written confirmation that employees have read all the documents

The Right not to be Fired without Cause

-in the US, the employment-at-will doctrine allowed an employer to terminate an employment

relationship at any time for any reason without notice

-in Canada, the employer must provide reasonable notice, as well as grounds for termination

Just cause- grounds for terminating an individual’s employment under this cause

Some activities that constitute just cause include

Serious misconducttheft, assault, dishonesty

Habitual neglect of dutyfailure to improve over reasonable job requirements

Conduct incompatible with the employee’s responsibilitiesactivities that compete with the

employer’s business

Willful disobedience

-when employers terminate on the basis of just cause, it is their responsibility to prove the existence of

it; it has to have already existed, not inferred

Precautions to minimize risk of wrongful dismissal lawsuits

Don’t make promises of permanent employment

Document disciplinary actions

Conduct an investigationdone prior to any termination

Provide a termination letter and settlement offerindicate that employee is beign dismissed,

state the effective date of dismissal, set out reasons for termination

Conduct a termination meetinginform them of the termination, reasons

-employee shouldn’t sign a settlement offer during the meeting, but be given some time

to review the offer and seek legal advice

Constructive dismissal- when employer ∆s terms of employment that adversely impacts the employee

-employers restricting their operations may have to consider altering the terms of employment for

certain employees

Management’s Response to Employees’ Job Claims

Stay on the right side of the lawknow the law and obey it

Investigate any complaints fullyemployee complaints about company activities should be checked out

Deal in good faith with employeesemployees win court cases when it’s determined that the

companies have acted in bad faith

When firing someone, make sure it is for a good reason make sure the reason is supported by sound

records and documentation as proof

Reasonable Notice vs. Just Cause

-“just cause” exists in restricted situations; when an employee has engaged in significant misconduct

-the Labor Standards Code indicate the minimal notice periods and standards that must be provided

-length of employment, performance record for eg must be taken into account

-while some employers retain the employee during the notice period, more commonly, employers will

pay a salary instead of giving the notice

-this is due to the fact that office morale may be affected during the notice period; they may

slack, not perform to the best of their ability, etc

The Right to Due Process and Fair Treatment

Due process- the right to receive an impartial review of one’s complaints

-the right of employees to have decisions that adversely affect them be reviewed by objective

third parties

-every employee has a right to a public hearing before being demoted, transferred, fired

A Due Process System

Employee constitutionalism- a set of clearly defined rights, and a means of protecting employees from

discharge, demotion

Main requirements of a due-process system:

-must follow rules; must be effective

-must be sufficiently visible that potential violators are aware of it

-must be institutionalized, perceived as equitable, easy to use, apply to all employees

Alternative Dispute Resolution (ADR)

Common Approaches

Open-door policy- senior level exec that leaves the door open for those who think they’ve been treated

unfairly to walk in and talk whenever they want

-assigning an HR department

From an employee’s standpoint, issues with this are that the process is closed

-one person is reviewing what happened

-there is a tendency for one manager to support another manager’s decisions

Hearing procedure- employees to be represented by a lawyer to decide the outcome based on evidence

Ombudsperson

Def’n- one who investigates reported complaints and helps to achieve equitable settlements

-to ensure fair treatment of employees

-the person reports directly to the president, who is the only one that can reverse the person’s decisions

-managers may feel threatened when employees go to the ombudsperson, who must be willing to anger

execs in order to get the job don

Peer Review Panel

-employee is to talk first with the manager, and then HR manager, and then a higher exec

-if employee is still not satisfied, they are entitled to request a peer review board

-consists of two randomly chosen peers of the aggrieved employee, along with one disinterested exec

from a different position

-the success of this depends on having the clear support of top management for fair treatment, and

being seen as a permanent fixture

-ADR is growing more though; this is money saved by avoiding expensive litigation

Freedom of Expression in the Workplace

-employee may sometimes find themselves balancing obligations of loyalty to the employer with the

right to free expression of opinions

-individuals involved in a labour dispute may legally picket not only outside the employer’s premises, but

at other locations as well (known as secondary picketing)

-most whistle blowers’ stories lack happy endings though; are often negative outcomes

-they may lose their jobs, endure more stress, encounter harassment

Whistle-Blowing

Def’n- one who exposes what they consider to be unconscionable practices of their own org

-one who reports to an outside party some wrongdoing

-the disclosure by org members of illegal, immoral, practices under the control of their employers

4 key elements in the whistle-blowing process:

-the whistle blower -the act/complaint

-the party to whom the report is made -the org against which the complaint is made

-the emerging view of employee responsibility holds that the employee has a duty not only to the

employer, but also to the public

Consequences of Whistle-Blowing

-whistle-blowers are seldom rewarded; most often they encounter negative experiences

Eg. Criticism of work; less desirable work assignments

-pressure to drop charges, heavier workloads, lost perks, exclusion from meetings

Government’s Protection of Whistle-Blower

-Environmental Protection Act, Labour Code, Competition Law

-some support for whistle-blower rights in the provincial section

-no comprehensive protection plan for whistle blowers in Canada

-Sarbanes Oxley permits an employee of a publicly traded company to sue the company if the employee

suffers retaliation as a result of providing info regarding corporate violations

-New Brunswick is the only province that offers protection of rights of whistle blowers in private sector

Government efforts should:

-allow whistle blowers to report anonymously

-establish independent enforcement agencies to examine reports of whistle blowers

-empower enforcement agencies to fully protect whistle blowers

-permit the right to appeal any enforcement agency’s decisions to court

-reward whistle blowers accordingly

There are some forms of speech that shouldn’t be protected though:

-employees shouldn’t have the right to make personal accusations

-they should not be entitled to make accusations that don’t reflect a conviction that wrong is

being done

-shouldn’t be entitled to object t6op discharge if management can demonstrate violation of a

code of conduct was the reason for its actions

Management Responsiveness to Potential Whistle-Blowing Situations

company should assure employees the org won’t interfere with their basic political freedoms

org’s grievance procedures should be streamlined so employees can obtain direct hearings

org’s concept of social responsibility should be reviewed

org should communicate respect for the consciences of employees

-whistle blowing can be averted if management listens and be responsive to employees’ concerns

Companies should engage in the following to be responsive to employees:

-listen

-delve into why the employee is pursuing the complaint

-look for solutions that will addre4ss the interests of both objector and company

-attempt to establish an equitable means of judging future actions

Four key components of a model whistle-blower policy:

Shout it from the rooftops: encourages employees to bring forward wrongdoing

Face the fear: directing complaints to someone outside the wb’s chain of command

Get right on it: immediately investigate it

Go public: show the public that complaints are taken seriously

Ch 16- Employee Stakeholders: Privacy, Safety, and Health

Right to Privacy in the Workplace

-the increase in workplace monitoring has led to new ethical considerations

-privacy includes the right to be left alone, the right to autonomy

-claim of individuals/groups to determine when, how and to what extent info about them can be

communicated to others

-info is stored in federal agencies, provincial agencies, local departments and businesses

-Canadians are protected by 2 federal privacy laws;

-Privacy Act and PIPEDA

-Privacy Act places limits on the collection, use and disclosure of personal info

-allows Canadians to correct personal info as needed

-PIPEDA applied to the commercial activities and employment relationships

Three main issues that are important of data collecting:

Collection and Use of Employee Information by Employers

-personal info includes any factual or subjective info

-controlling a person’s personal info means controlling the collection and use of that info

-PIPEDA is aimed at controlling employers’ behaviour with regard to the collection of the data

PIPEDA requires that companies must obtain consent for use of info, except for specific circumstances;

-companies can use personal info only for the purpose that they gave consent to

-companies must limit the collection/use of info to purposes that the person would deem

appropriate for use

-individuals have a right to access the personal info

-businesses must conform to the law

The individual must be aware of the fact that the company is using their personal info

-the purpose behind data collection

-the recipients of the personal info, and the nature of the privacy controls

Steps in developing a system:

Appoint a compliance teamdetermine who is responsible for ensuring compliance

Assess existing privacy policiesensure policies are in compliance with PIPEDA

Adopt a privacy code or privacyit will become the org’s public statement about its privacy standards

Conduct a personal info practices auditwhat prsonal info is collected, how it’s used, how long it’s kept

Assess purposes for use and disclosureensure the info is for reasonable use

Assess existing info on fileindividuals have the right to access their personal info

Identify when, where, what kinds of consents are requiredinstruments for obtaining consent must be

designed, as well as the form of consent (express, opt-out, implied consent)

Assess collateral collection and uses of personal inforequired to ensure uses are reasonable and

necessary to achieve the purpose

Implement organizational protocolspolicies to oversee approvals for all info collection

Plan for regular compliance auditsassess how the org is conforming to policies

-companies need to be careful not to misuse the information collected

-the employer need to understand that the info collected isn’t a commodity to be exchanged or sold

-employees should know what info is being stored, and have the chance to correct any info

Testing of Employees

Integrity Testing: aka honesty tests

-done to stem employee theft, to avoid negligent hiring suits

-to screen employees in a cost effective way, to replace polygraphs

-the questions asked usually require simple yes or no answers

-the tests are inexpensive, quick to administer, and easy to grade

Drug Testing

-businesses are reluctant to conduct drug tests due to invasion of moral issue/privacy

-inaccuracy of these tests, negative impact on employee morale

-tests only show the use of it, not abuse

-is costly; management, employee and unions oppose this

-the Canadian Human Rights Commission banned all drug testing on employees, though random alcohol

testing is still allowed

-employees that are substance abusers create higher financial burdens in compensation claims,

accidents, negligence in their work

Arguments for Drug Testingemployers have the right to protect their own employees

-they are responsible to the general public in providing safe workplaces

Arguments against Drug Testinginvasion of privacy, and the accuracy of the drug tests

-do employers have a right to know if they employees use drugs

Guidelines for Drug Testing

-management shouldn’t discipline someone for refusing to take a drug test

-the tests should only be used when there is a legit suspicion of abuse

-focus of the test should be placed on-the-job performance only

-if an employee’s status is going to be affected by the outcome of a drug test, the confirmatory test

should be conducted

-privacy of the employee is to be respected

Monitoring Employees on the Job

Employee monitoring includes recording phone calls, voice mail, reading computer files, taping them

-Internet is often looked at; e-mails

-monitoring is an invasion of privacy, and also unfair treatment

-can cause stress and tension, low morale, job insecurity

-in response to alleged employee crimes, employers have placed cameras in pinholes in walls, LD

cameras for overseas operations, and video evidence

Policy Guidelines on the Issue of Privacy

Steps that management may consider taking to be responsive to employee stakeholders:

Prepare a privacy impact statementanalyze the implications to which all systems are subjected

Construct a comprehensive privacy planensure privacy controls are integrated at the beginning

Train employees who handle personal infoso they’re aware of the importance of protecting privacy

Make privacy a part of social responsibility programsmake employees aware of it

Chief Privacy Officer (CPO)- responsible for monitoring, protecting the private info held by firms

Workplace Health and Safety

Occupational injury- any cut, fracture, sprain, amputation from a workplace incident

-worker’s involvement in this can be direct or indirect

Occupational illness- any condition caused by the work environment

-varies from acute to chronic

Role of the Government

-enforce occupational health and safety legislation

-conduct workplace inspections

-disseminate health and safety info

-promote training, education and research

-resolve workpalce disputes regarding occupational health and safety

-the CCOHS is a federal dpt corp that enhances workplace health and safety through supporting efforts

to eliminate work related illnesses and injuries

-it gives info and advice that promotes safe working environments

-Bill C-45 imposes criminal liability on corps that fail to take reasonable measures to protect employee

and public safety

The org can be held criminally liable:

-as a consequence of actions by senior officers who oversee day to day operations but who may

not be directors

-exec officers who intentionally commit crimes to benefit the org

-those who are aware of offences but don’t take action to stop them

-those who show a lack of care that constitutes criminal negligence

Role of the Employer

-establish a joint health and safety committee

-take appropriate precautions to ensure the workplace is safe

-train employees, supply personal protective equipment

-report all critical injuries to the proper gov department

-appoint a supervisor to ensure safe working conditions

-communicate to employees the health and safety requirements

-maintain records, document and annual summary of work

-employers must report to the Worker’s Compensation Board

-employees injured at work can receive benefits in the form of a cash payout or wage loss payments

Role and Rights of Employees

-work in compliance with occupational health and safety acts and regulations

-use personal protective equipment

-report workpalce hazards and dangers

-work in a manner as required by the employer

Occupational Health and Safety Act outlines 3 main rights of all employees to a safe workplace:

-right to refuse unsafe or hazardous work

-right to participate in the workplace health and safety activities

-right to know, or the right to be informed about work place safety

Workplace Hazardous Materials Information System (WHMIS) requires employers to:

-label containers of hazardous materials

-provide MSDSs with additional info

-provide education so employees understand the hazards

Workplace Violence

-there has been increased gov legislation

-employers are to write a report on the incident, describing what action and what change will occur

Promoting Health and Safety in the Workplace

-joint safety and health committees

-lifestyle info; flexible working hours; employee involvement initiatives

-active lifestyle programs; work-life balance initiatives; self directed work teams

Safety Programs

-maintain an employee-management safety committee with reps from management, each dpt,

employee representatives to investigate accidents and helping publicize the importance of safety

-leads to higher motivation to conform with the safety rules

-is a good idea for management to encourage employees to participate

-employees can involve by helping set safety standards, safety training

-assist with design of programs, establish safety incentives, participate in investigations

-employee handbooks should be given or placed somewhere everybody can access it

Employee Assistance Programs

-EAPS help with alcohol and drug abuse problems, as well as financial/emotional stress

-aging, legal problems, emotional, social difficulties

-aka broad brush EAP

-they should be a part of a comprehensive company plan to promote wellness

Family-Friendly Workplace

-they look out for the mental and psychological health of their employees

-there is an increase in corporate support for families in the workplace

-these programs bring issues of resentment developing among childless couples, family feuds at work

-due to these programs, it shows a change in the corporate culture

Ch 17- Employee Discrimination and Employment Equity

Challenges in the Labour Pool

Designated groups- women, Aboriginals, visible minorities, people with disabilities

Women

-they have both lower status and lower pay

-they’re underrepresented in semiprofessional occupations, management and board positions,

supervisors in crafts and sales and service personnel

-stereotyping and preconceptions of women’s roles and abilities

-they hit the glass ceiling, and do not get accepted into the exec level culture

-there are extreme barriers for them to career advancement

Aboriginal or First Nations People

-underrepresented in the work force

-they face a huge educational challenge, big dropout rates

-employment is limited due to the small number of opportunities near their reserves

Individuals with Disabilities

-higher unemployment rate compared to the national average

-attitudinal barriers, physical demands, inadequate access to the technical and human support systems

Visible Minorities

-culturally biased aptitude tests, lack of recognition or foreign credentials, high language requirements

-foreign born visible minorities experience the greatest difficulty finding desirable work

Discrimination

Legal Protection

Canadian Charter of Rights and Freedoms

-aim is to balance individual and collective rights

Fundamental rights of all Canadians include

-freedom of speech, press, assembly, association, religion

-democratic rights

-right to move freely from province to province for residence or employment

-legal, equality, language rights

Canadian Human Rights Act

-ensures equality of opportunity and freedom from discrimination in the fed jurisdiction

-includes race, colour, ethnic origin, religion, age

-it protects the rights of Canadians but applies to a specific class or organizations; all fed gov dpts, Crown

corporations, businesses and industries under fed jurisdiction, insurance and communications cos

Canadian Human Rights Commission

-prohibits employment discrimination in federally regulated businesses, like race, religion, sex, age,

ethnic origin, marital status, handicap

-examines allegations of discrimination to establish greater equality

-it provides effective and timely mans for resolving complaints

-promotes knowledge of human rights, and helps reduce barriers in equality

-to file a complaint, the complainant must complete a written report first

-the CHRC rep assesses the facts and determines whether the claim is legitimate

-investigator gathers more facts and a report is submitted to the CHRC to recommend either

substantiation or nonsubstantiation

-if substantiated, the parties attempt to settle the matter, and if they can’t a human rights

tribunal may be appointed

-the tribunal has the power to seek damages for the victim

Expanded Meanings of Discrimination

Direct Discrimination or Disparate Treatment

Disparate treatment- unequal treatment due to race, colour, sex

Indirect Discrimination: Adverse Effect or Disparate Impact

-all groups are to be treated equally, without regard for colour, sex or other traits

-employers may be justified in discriminatory policies if based on a bona fide occupational qualification

-any policy viewed as discriminatory must pass three criteria to support it is a bona fide occup’l rqmt

-it must be rationally related to the requirements of job performance

-must be created in good faith

-reasonable necessary in order to accomplish a valid purpose

-BFOR is permissible if the employer can prove this “discrimination” is necessary for business operations

Systemic Discrimination

-occurs when problems of discrimination are embedded in institutional policies and practices

-thought the practice may apply to everyone, they create a distinction between groups of individuals

which disadvantage one group based on shared personal characteristics

To assess whether organizational policies harbor systemic barriers:

-is it job related -is it consistently applied

-is it valid -does it have a disparate impact

-is it a business requirement -does it conform to human rights

Eg. Workplace environment that doesn’t expressly discourage sexual harassment

-job descriptions that undervalue the work of positions traditionally held by women

-physical access that restricts those who are mobility impaired

Issues in Workplace Discrimination

Sex Discrimination

Moving into Professional/Managerial Positions

-male CEOs blamed glass ceiling on women’s lack of experience and time

-female execs disagreed, saying the exclusionary corporate culture is the reason why they don’t advance

Sexual Harassment

Quid pro quo harassment- type of sexual harassment where something is given/received for sthg else

Hostile work env harassment- employee perceives a hostile work env by uninvited sexually oriented

behaviours being present in the workplace

Corporate Responses to Sexual Harassment

-letters from CEO, workshops, training as to what constitutes sexual harassment

-worker orientation programs, films, role playing exercises, sexual harassment audits

-they may choose to educate employees more, reissue written policy

-make employees aware, update training programs, get input from women employees

Age and Religious Discrimination

-involves older workers being laid off to save money because younger workers can be paid less

-many companies require workers to sign waivers of their right to sue in order to receive severance pkgs

Reasonable accommodation- adapting employment policies so that no individual is denied benefits,

disadvantaged with respect to employment opportunities

-includes reallocating tasks, redesigning job duties, revising work schedules

-human rights tribunals across Canada require employers to demonstrate fleexibi.ity in accommodating

the needs of employee

Employment Equity

Def’n- treatment of employees in a fair and nonbiased manner

-some objectives include eliminating employment barriers for the four designated groups

-redressing past discrimination in employment opportunities

-improve access for the designated groups

-to foster a climate of equity, to implement positive policies

Legal Basis of the Employment Equity Act

-identify and removing systemic barriers that affect the four designated groups

-Employment Equity Act achieves equality in the workplace

-the act governs private sector employers under federal jurisdiction

-it requires employers and Crown corps that have 100+ employees and are regulated under the Canada

Labour Code to implement employment equity

Employment Equity Planning in the Organization

Step 1: Senior Management Commitment

-the business leader can issue written policies to describe the org’s commitment to employment equity

-explain what employment equity is, reason for the program, implications for current/future employees

-info sessions, workpalce posters, departmental or group meetings, newsletters, employee handbooks

Step 2: Data Collection and Analysis

-assessment of employment practices and policies

-permits employers to gather data on members of designated groups with the consent of employees

Step 3: Employment Systems Review

-personnel activities like recruitment, hiring, training, development, promotion, job classification,

discipline, termination

Step 4: Establishment of a Work Plan

-concrete goals like numerical goals with time frames

-programs aimed at achieving the estimated goals

-planned changes in hiring, training, promotion

-methods of monitoring and evaluating the program implementation

Step 5: Implementation

-success of plan implementation depends on the clear definitions of roles and responsibilities, training

and effective communication

-plan strategies may be altered or terminated when the results aren’t achieved

Step 6: Evaluation, Monitoring, Revision

-progress reports are provided to all members to communicate plan initiatives and outcomes

Advocates and Opponents of Employment Equity

Preferential treatment- whenever an injustice is done, just compensation or reparation is owed to the

injured party or parties

-underlying rationale for this is compensatory justice

Reverse discrimination- when any preference is given to minorities, women or other groups,

discrimination may occur against those in the majority

-employment equity has practical business value in customer relations, especially for makers of

consumer goods and providers

-the diversity programs constitute a competitive advantage or used as competitive weapons

Pay Equity

Def’n- refers to two diff issues; the legislation and the principles behind it

-objective of pay legislation is to eliminate the wage gap b/n men and women

-pay equity refers to the equal pay for equal work;

-and equal pay for work of equal value or comparable worth

-workers doing the same job should receive the same pay

-male and female workers must be paid the same wage rate for jobs of a similar nature even though

they may have different titles (nurse’s aide and orderly)

-workers should receive the same pay if those diff jobs have equal inherent worth

-comparisons are based on the amount and type of skill, effort, responsibility needed

Ch 16- Employee Stakeholders: Privacy, Safety, and Health

Right to Privacy in the Workplace

-the increase in workplace monitoring has led to new ethical considerations

-privacy includes the right to be left alone, the right to autonomy

-claim of individuals/groups to determine when, how and to what extent info about them can be

communicated to others

-info is stored in federal agencies, provincial agencies, local departments and businesses

-Canadians are protected by 2 federal privacy laws;

-Privacy Act and PIPEDA

-Privacy Act places limits on the collection, use and disclosure of personal info

-allows Canadians to correct personal info as needed

-PIPEDA applied to the commercial activities and employment relationships

Three main issues that are important of data collecting:

Collection and Use of Employee Information by Employers

-personal info includes any factual or subjective info

-controlling a person’s personal info means controlling the collection and use of that info

-PIPEDA is aimed at controlling employers’ behaviour with regard to the collection of the data

PIPEDA requires that companies must obtain consent for use of info, except for specific circumstances;

-companies can use personal info only for the purpose that they gave consent to

-companies must limit the collection/use of info to purposes that the person would deem

appropriate for use

-individuals have a right to access the personal info

-businesses must conform to the law

The individual must be aware of the fact that the company is using their personal info

-the purpose behind data collection

-the recipients of the personal info, and the nature of the privacy controls

Steps in developing a system:

Appoint a compliance teamdetermine who is responsible for ensuring compliance

Assess existing privacy policiesensure policies are in compliance with PIPEDA

Adopt a privacy code or privacyit will become the org’s public statement about its privacy standards

Conduct a personal info practices auditwhat prsonal info is collected, how it’s used, how long it’s kept

Assess purposes for use and disclosureensure the info is for reasonable use

Assess existing info on fileindividuals have the right to access their personal info

Identify when, where, what kinds of consents are requiredinstruments for obtaining consent must be

designed, as well as the form of consent (express, opt-out, implied consent)

Assess collateral collection and uses of personal inforequired to ensure uses are reasonable and

necessary to achieve the purpose

Implement organizational protocolspolicies to oversee approvals for all info collection

Plan for regular compliance auditsassess how the org is conforming to policies

-companies need to be careful not to misuse the information collected

-the employer need to understand that the info collected isn’t a commodity to be exchanged or sold

-employees should know what info is being stored, and have the chance to correct any info

Testing of Employees

Integrity Testing: aka honesty tests

-done to stem employee theft, to avoid negligent hiring suits

-to screen employees in a cost effective way, to replace polygraphs

-the questions asked usually require simple yes or no answers

-the tests are inexpensive, quick to administer, and easy to grade

Drug Testing

-businesses are reluctant to conduct drug tests due to invasion of moral issue/privacy

-inaccuracy of these tests, negative impact on employee morale

-tests only show the use of it, not abuse

-is costly; management, employee and unions oppose this

-the Canadian Human Rights Commission banned all drug testing on employees, though random alcohol

testing is still allowed

-employees that are substance abusers create higher financial burdens in compensation claims,

accidents, negligence in their work

Arguments for Drug Testingemployers have the right to protect their own employees

-they are responsible to the general public in providing safe workplaces

Arguments against Drug Testinginvasion of privacy, and the accuracy of the drug tests

-do employers have a right to know if they employees use drugs

Guidelines for Drug Testing

-management shouldn’t discipline someone for refusing to take a drug test

-the tests should only be used when there is a legit suspicion of abuse

-focus of the test should be placed on-the-job performance only

-if an employee’s status is going to be affected by the outcome of a drug test, the confirmatory test

should be conducted

-privacy of the employee is to be respected

Monitoring Employees on the Job

Employee monitoring includes recording phone calls, voice mail, reading computer files, taping them

-Internet is often looked at; e-mails

-monitoring is an invasion of privacy, and also unfair treatment

-can cause stress and tension, low morale, job insecurity

-in response to alleged employee crimes, employers have placed cameras in pinholes in walls, LD

cameras for overseas operations, and video evidence

Policy Guidelines on the Issue of Privacy

Steps that management may consider taking to be responsive to employee stakeholders:

Prepare a privacy impact statementanalyze the implications to which all systems are subjected

Construct a comprehensive privacy planensure privacy controls are integrated at the beginning

Train employees who handle personal infoso they’re aware of the importance of protecting privacy

Make privacy a part of social responsibility programsmake employees aware of it

Chief Privacy Officer (CPO)- responsible for monitoring, protecting the private info held by firms

Workplace Health and Safety

Occupational injury- any cut, fracture, sprain, amputation from a workplace incident

-worker’s involvement in this can be direct or indirect

Occupational illness- any condition caused by the work environment

-varies from acute to chronic

Role of the Government

-enforce occupational health and safety legislation

-conduct workplace inspections

-disseminate health and safety info

-promote training, education and research

-resolve workpalce disputes regarding occupational health and safety

-the CCOHS is a federal dpt corp that enhances workplace health and safety through supporting efforts

to eliminate work related illnesses and injuries

-it gives info and advice that promotes safe working environments

-Bill C-45 imposes criminal liability on corps that fail to take reasonable measures to protect employee

and public safety

The org can be held criminally liable:

-as a consequence of actions by senior officers who oversee day to day operations but who may

not be directors

-exec officers who intentionally commit crimes to benefit the org

-those who are aware of offences but don’t take action to stop them

-those who show a lack of care that constitutes criminal negligence

Role of the Employer

-establish a joint health and safety committee

-take appropriate precautions to ensure the workplace is safe

-train employees, supply personal protective equipment

-report all critical injuries to the proper gov department

-appoint a supervisor to ensure safe working conditions

-communicate to employees the health and safety requirements

-maintain records, document and annual summary of work

-employers must report to the Worker’s Compensation Board

-employees injured at work can receive benefits in the form of a cash payout or wage loss payments

Role and Rights of Employees

-work in compliance with occupational health and safety acts and regulations

-use personal protective equipment

-report workpalce hazards and dangers

-work in a manner as required by the employer

Occupational Health and Safety Act outlines 3 main rights of all employees to a safe workplace:

-right to refuse unsafe or hazardous work

-right to participate in the workplace health and safety activities

-right to know, or the right to be informed about work place safety

Workplace Hazardous Materials Information System (WHMIS) requires employers to:

-label containers of hazardous materials

-provide MSDSs with additional info

-provide education so employees understand the hazards

Workplace Violence

-there has been increased gov legislation

-employers are to write a report on the incident, describing what action and what change will occur

Promoting Health and Safety in the Workplace

-joint safety and health committees

-lifestyle info; flexible working hours; employee involvement initiatives

-active lifestyle programs; work-life balance initiatives; self directed work teams

Safety Programs

-maintain an employee-management safety committee with reps from management, each dpt,

employee representatives to investigate accidents and helping publicize the importance of safety

-leads to higher motivation to conform with the safety rules

-is a good idea for management to encourage employees to participate

-employees can involve by helping set safety standards, safety training

-assist with design of programs, establish safety incentives, participate in investigations

-employee handbooks should be given or placed somewhere everybody can access it

Employee Assistance Programs

-EAPS help with alcohol and drug abuse problems, as well as financial/emotional stress

-aging, legal problems, emotional, social difficulties

-aka broad brush EAP

-they should be a part of a comprehensive company plan to promote wellness

Family-Friendly Workplace

-they look out for the mental and psychological health of their employees

-there is an increase in corporate support for families in the workplace

-these programs bring issues of resentment developing among childless couples, family feuds at work

-due to these programs, it shows a change in the corporate culture

Ch 17- Employee Discrimination and Employment Equity

Challenges in the Labour Pool

Designated groups- women, Aboriginals, visible minorities, people with disabilities

Women

-they have both lower status and lower pay

-they’re underrepresented in semiprofessional occupations, management and board positions,

supervisors in crafts and sales and service personnel

-stereotyping and preconceptions of women’s roles and abilities

-they hit the glass ceiling, and do not get accepted into the exec level culture

-there are extreme barriers for them to career advancement

Aboriginal or First Nations People

-underrepresented in the work force

-they face a huge educational challenge, big dropout rates

-employment is limited due to the small number of opportunities near their reserves

Individuals with Disabilities

-higher unemployment rate compared to the national average

-attitudinal barriers, physical demands, inadequate access to the technical and human support systems

Visible Minorities

-culturally biased aptitude tests, lack of recognition or foreign credentials, high language requirements

-foreign born visible minorities experience the greatest difficulty finding desirable work

Discrimination

Legal Protection

Canadian Charter of Rights and Freedoms

-aim is to balance individual and collective rights

Fundamental rights of all Canadians include

-freedom of speech, press, assembly, association, religion

-democratic rights

-right to move freely from province to province for residence or employment

-legal, equality, language rights

Canadian Human Rights Act

-ensures equality of opportunity and freedom from discrimination in the fed jurisdiction

-includes race, colour, ethnic origin, religion, age

-it protects the rights of Canadians but applies to a specific class or organizations; all fed gov dpts, Crown

corporations, businesses and industries under fed jurisdiction, insurance and communications cos

Canadian Human Rights Commission

-prohibits employment discrimination in federally regulated businesses, like race, religion, sex, age,

ethnic origin, marital status, handicap

-examines allegations of discrimination to establish greater equality

-it provides effective and timely mans for resolving complaints

-promotes knowledge of human rights, and helps reduce barriers in equality

-to file a complaint, the complainant must complete a written report first

-the CHRC rep assesses the facts and determines whether the claim is legitimate

-investigator gathers more facts and a report is submitted to the CHRC to recommend either

substantiation or nonsubstantiation

-if substantiated, the parties attempt to settle the matter, and if they can’t a human rights

tribunal may be appointed

-the tribunal has the power to seek damages for the victim

Expanded Meanings of Discrimination

Direct Discrimination or Disparate Treatment

Disparate treatment- unequal treatment due to race, colour, sex

Indirect Discrimination: Adverse Effect or Disparate Impact

-all groups are to be treated equally, without regard for colour, sex or other traits

-employers may be justified in discriminatory policies if based on a bona fide occupational qualification

-any policy viewed as discriminatory must pass three criteria to support it is a bona fide occup’l rqmt

-it must be rationally related to the requirements of job performance

-must be created in good faith

-reasonable necessary in order to accomplish a valid purpose

-BFOR is permissible if the employer can prove this “discrimination” is necessary for business operations

Systemic Discrimination

-occurs when problems of discrimination are embedded in institutional policies and practices

-thought the practice may apply to everyone, they create a distinction between groups of individuals

which disadvantage one group based on shared personal characteristics

To assess whether organizational policies harbor systemic barriers:

-is it job related -is it consistently applied

-is it valid -does it have a disparate impact

-is it a business requirement -does it conform to human rights

Eg. Workplace environment that doesn’t expressly discourage sexual harassment

-job descriptions that undervalue the work of positions traditionally held by women

-physical access that restricts those who are mobility impaired

Issues in Workplace Discrimination

Sex Discrimination

Moving into Professional/Managerial Positions

-male CEOs blamed glass ceiling on women’s lack of experience and time

-female execs disagreed, saying the exclusionary corporate culture is the reason why they don’t advance

Sexual Harassment

Quid pro quo harassment- type of sexual harassment where something is given/received for sthg else

Hostile work env harassment- employee perceives a hostile work env by uninvited sexually oriented

behaviours being present in the workplace

Corporate Responses to Sexual Harassment

-letters from CEO, workshops, training as to what constitutes sexual harassment

-worker orientation programs, films, role playing exercises, sexual harassment audits

-they may choose to educate employees more, reissue written policy

-make employees aware, update training programs, get input from women employees

Age and Religious Discrimination

-involves older workers being laid off to save money because younger workers can be paid less

-many companies require workers to sign waivers of their right to sue in order to receive severance pkgs

Reasonable accommodation- adapting employment policies so that no individual is denied benefits,

disadvantaged with respect to employment opportunities

-includes reallocating tasks, redesigning job duties, revising work schedules

-human rights tribunals across Canada require employers to demonstrate fleexibi.ity in accommodating

the needs of employee

Employment Equity

Def’n- treatment of employees in a fair and nonbiased manner

-some objectives include eliminating employment barriers for the four designated groups

-redressing past discrimination in employment opportunities

-improve access for the designated groups

-to foster a climate of equity, to implement positive policies

Legal Basis of the Employment Equity Act

-identify and removing systemic barriers that affect the four designated groups

-Employment Equity Act achieves equality in the workplace

-the act governs private sector employers under federal jurisdiction

-it requires employers and Crown corps that have 100+ employees and are regulated under the Canada

Labour Code to implement employment equity

Employment Equity Planning in the Organization

Step 1: Senior Management Commitment

-the business leader can issue written policies to describe the org’s commitment to employment equity

-explain what employment equity is, reason for the program, implications for current/future employees

-info sessions, workpalce posters, departmental or group meetings, newsletters, employee handbooks

Step 2: Data Collection and Analysis

-assessment of employment practices and policies

-permits employers to gather data on members of designated groups with the consent of employees

Step 3: Employment Systems Review

-personnel activities like recruitment, hiring, training, development, promotion, job classification,

discipline, termination

Step 4: Establishment of a Work Plan

-concrete goals like numerical goals with time frames

-programs aimed at achieving the estimated goals

-planned changes in hiring, training, promotion

-methods of monitoring and evaluating the program implementation

Step 5: Implementation

-success of plan implementation depends on the clear definitions of roles and responsibilities, training

and effective communication

-plan strategies may be altered or terminated when the results aren’t achieved

Step 6: Evaluation, Monitoring, Revision

-progress reports are provided to all members to communicate plan initiatives and outcomes

Advocates and Opponents of Employment Equity

Preferential treatment- whenever an injustice is done, just compensation or reparation is owed to the

injured party or parties

-underlying rationale for this is compensatory justice

Reverse discrimination- when any preference is given to minorities, women or other groups,

discrimination may occur against those in the majority

-employment equity has practical business value in customer relations, especially for makers of

consumer goods and providers

-the diversity programs constitute a competitive advantage or used as competitive weapons

Pay Equity

Def’n- refers to two diff issues; the legislation and the principles behind it

-objective of pay legislation is to eliminate the wage gap b/n men and women

-pay equity refers to the equal pay for equal work;

-and equal pay for work of equal value or comparable worth

-workers doing the same job should receive the same pay

-male and female workers must be paid the same wage rate for jobs of a similar nature even though

they may have different titles (nurse’s aide and orderly)

-workers should receive the same pay if those diff jobs have equal inherent worth

-comparisons are based on the amount and type of skill, effort, responsibility needed

Ch 12- Consumer Stakeholders: Product and Service Issues

2 Central Issues: Quality and Safety

Issue of Quality

-rise in family income means demands are higher

-no one has extra time to wait at home for service people to show up

-Internet, global competitiveness contribute to this

-to increase value, firms try to give higher quality than their competitors for the same price, offer the

same quality at a lower price, or some combo of both

-quality includes service, as well as products

Eight critical dimensions of product or service quality:

Performanceproduct’s primary operating characteristics

Featuressupplement their basic functioning

Reliabilityprobability of a product malfunctioning

Conformanceextent to which the product or service meets established standards

Durabilityproduct life

Serviceabilityspeed, ease of repair

Aestheticslooks, feels, tastes

Perceived qualityhow they think the product performs

Contractual theory- contract between the firm and the customer

Due care theory- relative vulnerability of the customer

-customers must depend on the firm providing the product or service to live up to the claims

Social costs view-if a product causes harm, the firm should pay the costs of any injurt even if the firm

met the terms of the contract

Issue of Safety

-manufacturers today are held responsible for all products placed on the market

-the challenge is to make products as safe as possible, while making them adorable and useful

-the rise in gmos in food and living near toxic land, food scares

-charges can be based on one or more allegations

-may be charged that the prod was improperly manufactured

-if the product was manufactured properly, its design could have been defective in the

alternative designs or devices

-producer failed to provide satisfactory instructions and warnings

-producer failed to foresee a reasonable misuse of the prod and warn against it

Product Liability

-anyone in the value chain of a product is liable for harm caused to the user if the product as sold was

unreasonably dangerous because of its defective condition

-applies to anyone involved in the design, manufacture, or sale

-product liability in Canada is governed by contract law and negligence law

-in addition to proving strict liability, the plaintiff must also prove the product’s defect arose due to the

defendant’s negligence as well

Absolute liability- the manufacturer is liable for damages even if it didn’t have a way of knowing the

product might have caused a problem later

-it frequently involves cases involving chemicals or drugs

-firm could be held liable for side effects or health problems years later as well

Delayed manifestation cases/market share liability- situations where delayed reactions to products

appear years later

Product Tampering and Product Extortion

-tainted pills, wrong product information, tampered best before dates

Health Canada

-it is a federal gov dpt that acts in cooperation with provincial bodies to protect the health of Canadians

-administers the FDA and gives warnings on foods, drugs, medical devices

-info and policies on GM foods, nutrition labeling

-monitors health and safety risks related to the sale and sue of drug products, devices, pesticides

-administers the Product Safety Programme (PSP) by researching, assessing safety hazards associated

with consumer products, cosmetics, new chemical substances, products of biotechnology

-promotes safe use of products through raising consumer awareness

-chemical hazards, flammability hazards, mechanical hazards

Food and Drug Safety Administration in Canada

Healthy Environments and Consumer Safety Breach (HECS)

-promotes safe living, working, recreational environments

-reduce health risks posed by environmental factors

-promote initiatives to reduce and prevent the harm caused by tobacco

-regulate tobacco and controlled substance

Health Products and Food Branch (HPFB) minimizes health risk factors to Canadians while maximizing

the safety provided by the regulatory system for health products

-promotes conditions that enable Cdns to make healthy choices

Canadian Food Inspection Agency (CFIA)

-protects consumers by contributing to food safety, protection of plants, health of animals in Canada

-inspects meat processing facilities, inspecting borders for foreign pests and diseases, conducting food

investigations and recalls

US Food and Drug Administration(FDA)

-goals are the same as Health Canada, as well as to promote public health by reviewing clinical research

-ensure foods are safe, wholesome, sanitary, properly labeled

Business’s Response to Consumer Stakeholders

Consumer Affairs Offices

Basic Missionheigten management responsiveness to consumer stakeholders

-two key roles: role of consumer advocate in the co, and the role of consumer specialist making

managerial recommendations that mesh well with consumers and the co

Essential Functionsestablish a comprehensive, complete, accurate database that assess consumer

satisfaction and dissatisfaction, like billing, repair services

Audit the company’s programs

Recommend specific consumer programs, policies

Establish programs to ensure effective communication

Four principal factors that determine the success or failure of consumer affairs offices

-office should be located close to the chief executive

-have access to all relevant info in the company about consumers

-info about consumers should be quantified

-managers should be skilled in designing performance measurement tools to evaluate what people

throughout the company are doing

Product Safety Offices

-three factors to the need for greater org in handling the product safety issue

-products today may be made of exotic materials

-there is also the subtlety of hazards that can be generated during product use

-there are coordination problems in manufacturing organizations that can inhibit communications

among departments

Levels at Which to Locate Product Safety Offices

-divisional and corporate level

-division such as manufacturing, quality control, packaging

-at the corporate level, the product safety officer would most likely servie in a liaison role with the

divisions; supervision of safety education

Other Functions of a Product Safety Office

-helping to enforce financial and nonfinancial rewards

-helping with product safety litigation

-regulatory liaison

-product safety committees

-periodic safety audits

-contingency plan for product recalls

Total Quality Management Programs

TQM- all of the functions of the business are blended into a holistic, integrated philosophy built around

the concept of quality, teamwork, productivity

-premise is the customer is the final judge of quality

-customer expectations are converted to standards and specifications

Six Sigma

-body of methodologies and techniques

-statistical measure of variation from the mean; higher values of sigma mean fewer defects

-3.4 defects per million

-represents a philosophy that stresses the importance of customers as well as careful measurement

Ch 11- Consumer Stakeholders: Info Issues and Responses

CRM- the ability of an org to effectively identify, acquire, foster and retain loyal profitable customers

-in practice though, there is a lot of talk and not enough action

The Paradox of the Customer Revolution

-putting the customer first is no longer sufficient; tech advances have allowed them to not only demand

what they want, but they also expect to get it

-they have a wide range of choices to choose from

-companies have evolved to serve customers on a one to one basis

The Consumer Movement

Consumer’s Magna Carta- consists of the four basic consumer rights:

Right to safety

Right to be informed related to marketing and advertising function

-what a product is, how it is to be used

Right to choosethe assurance that competition is working effectively

Right to be heardeffectively communicating to business their desires

Consumerism- social movement seeking to augment the rights & powers of buyers in relation to sellers

-a set of activities of ind consumer orgs and consumer activists designed to protect the consumer

Product info- includes advertising, packaging, labeling

Product Information Issues

-companies want to portray their products in the most positive light, so they may sometimes paint a

positive portrait that can easily cross the line into misinformation regarding the prod’s attributes

-thus Consumers Union exists to protect the consumers’ interests

-there are also online editions of Consumer Reports

-in Canada, the Competition Act is intended to prohibit false or misleading advertising

Advertising Issues

-opinions are diverse as to whether advertising is beneficial or detrimental as a business function

-advertising heavily can help attract shoppers to retail stores, giving the they-must-be-doing-something-

right logic

-the advertising can promote efficiency

-it can stimulate competition and make info that consumers use in comparison buying

Clear information- direct and straightforward

Accurate information- communicates full truths

Adequate information- gives potential purchasers with enough info to make the best choice

-most consumers today expect that business advertises to persuade them to buy their products

Advertising Abuses

Ambiguous advertising- something about the product/service isn’t made clear

Weasel words- words that are vague; that cos could use for defense as not misleading

Eg. “Help”, “Big”

Concealed facts- the practice of not telling the whole truth

Exaggerated claims- claims that can’t be substantiated by any kind of evidence

Puffery- hyperbole that refers to the use of general superlatives

-making it seem bigger than it actually is (breakfast of champions)

-exaggerated product claims to induce people to buy things that do them no good;

-it results in the loss of advertising efficiency

-drives out good advertising

-results in consumers losing faith in the system

Psychological appeal- persuading on the basis of human emotions rather than reason

Specific Controversial Advertising Issues (7)

Comparative advertising- comparing a firm’s product with the product of a competitor

Exploitive advertising- the notion of employing offensive images in advertisements

Eg. Benetton, Calvin Klein

Advertising to children- on weekend mornings, weekday afternoons

-the bulk of food advertising on children’s TV is fast food, candy, soft drinks

-more than 2/3 of Internet sites targeted at children rely on advertising for their revenue

-the Media Awareness Network works with MNET to promote media and Internet education by

producing online programs and resources that discusses the ethics of marketing toys to children

Advertising of Alcoholic Beverages- 1996 CRTC revised regulations governing the advertising of alcoholic

beverages in Canada

-ads can’t be directed at those under the legal drinking age

-thy can’t influence nondrinkers

-can’t imply that alcohol is essential to the enjoyment of an activity

-can’t establish the product as a status symbol

-the hard liquor industry is now turning to the Internet, using games to attract consumers

-in Canada, tobacco cos must abide by the Tobacco Act, regulating the manufacture, sale,

labeling and promotion of tobacco products

Health and Environmental Claims- advertising and labeling practices that entail product claims related to

health and environmental safety

-diet products are often offenders in this category, containing more bad ingredients than the

ones that they’re promoting

-Consumer Packaging and Labeling Act and the Competition Act reflect that those who make

environmental claims are responsible for ensuring the claims are accurate

-claims that are ambiguous shouldn’t be used

-they should indicate whether they’re related to the product of the packaging materials

Ad creep- is the way advertising can increasingly be found everywhere one looks

-it generates more ad creep because people become number to messages in traditional places

so unique new venues are sought, to get the consumer’s attention

Warranties

Def’n- essential when marketing by mail

-if companies siply offer complete satisfaction with no fine print, the warranty problem isn’t an issue

The Competition Bureau

-two major activities of the Competition Bureau are

-to maintain free and fair competition in the economy;

-to protect consumers from unfair or misleading practices

-it is responsible for administration of the Competition Act, Consumer Packaging and Labeling Act

-promotes and maintains fair competition so Cdns can gain from lower prices

-aimed at creating equity in the marketplace, including consumers and producers

-informs companies of what they can and can’t do under competition law

-promotes greater competition in the business sector

-seeks to rectify anticompetitive activities; prosecutes those who violate the Competition Act

-it monitors advertising; if it decides an ad is false/misleading, it may order the advertiser to withdraw

the ad or give them a fine to pay

Self regulation- control of business conduct by the business itself rather than by the gov

Types of Self-Regulation

Self discipline- firm controls its own advertising

Pure self regulation- the industry controls advertising

Co-opted self-regulation- the industry involves nonindustry people in the development of norms

Negotiated self-regulation- industry negotiates the development of norms with some outside body

Mandated self regulation- industry is ordered by the gov to develop, use and enforce norms

-Advertising Standards Canada (ASC) maintains community confidence in advertising

Ch 9- Ethical Issues in the Global Arena

Transnational economy- if business expects to establish and maintain leadership in one country, it must

strive to hold a leadership position in all developed markets

The New, New World of International Business

Concepts of Global Business

Internationalization- process by which firms increase their awareness of the influence of international

activities on their future and conduct transactions with firms from other countries

Eg. Export, joint venture, acquisition

Globalization- economic integration of the globe of national economies into one economy (free trade)

Backlash Against Globalization

-extreme rightists, environmentalists insist on saving the poor people of developing countries from

economic development

-they’re special interest groups committed to halting the expansion of global trade

-the globalists advocate open markets with private firms moving freely across the globe

-antiglobalists protest the expansion and greed of corporate global enterprises

MNCs and the Global Environment

-MNC- a business that has direct investments in at least two diff countries

-they control assets operated in 2+ countries

-are global companies when they operate in many countries around the world

-most MNCs have headquarters in developed countries; the home country

Changed Scope and Nature of US-Based MNCs

Less developed countries (LDC)-is a challenge when MNCs when they operate in here

-are likely to be criticized for American imperialism in struggling economies by antiglobalists

Underlying Challenges of Operating in a Multinational Environment

Corporate Legitimacy

-it must fulfill its social responsibilities; economic, legal, ethical, philanthropic

-differences b/n the values of managers who live in the two countries could post legitimacy problems

-interests of MNC and those of the host country may conflict

-while the MNC looks to optimize globally, host countries optimize locally

-MNCs have difficulty achieving legitimacy because it is a reaction to the conflicts between the interests

of the firm and those of the host country that place the MNC in a no-win situation

Differing Philosophies Between MNCs and Host Countries

-philosophy of Western industrialized nations focus on growth, efficiency, specialization, free trade

-LDCs focus on equitable income distribution, increased economic self-determination

MNC-Host Country Challenges

Facing Cultural Differences

-MNC’s inability to cope with the foreign cultural environment

Business and Government Differences

-interaction of the business and gov sectors

-government’s influence

-it isn’t uncommon for conflicts to arise between host country governments and MNCs in relation to

control over operations in the host country and the division of profits, regulation of tech transfer

Management and Control of Global Corporations

-organizational structure and design, human resource management

Eg. Where a firm has licenses in Country A, joint ventures in B, countertrades in C

Exploration of Global Markets

-expansion into new foreign markets

-developing Third World Markets

Ethical Issues in the Global Business Environment

-production and operations, marketing, finance, management

-fair treatment of stakeholders; employees, customers, community, competitors

-product safety, plant safety, advertising practices, HR management, environmental problems

Questionable Marketing and Plant Safety Practices

Questionable Marketing: Infant Formula Controversy

-Nestle supplying Africa with infant formula, giving them a needle to stop breast-feeding

-caused mothers to over-dilute the formula, thus babies die

Plant Safety and the Bhopal Tragedy

-gas leak killed more than 2000 people and injured 200 000 others

-due to the fact that people of developing countries are unaware of dangers of the new tech

Sweatshops and Labour Abuses

-sweatshops are characterized with child labour, low pay, poor working conditions, worker abuse, health

and safety violations

-the Ethical Trading Action Group (ETAG) is an anti-sweatshop coalition

-Union of Needletrades, Industrial and Textile Employees (UNITE) fights sweatshops

-Maquila Solidarity Network (MSN) is also an anti-sweatshop movement in Toronto

Corruption, Bribery, Questionable Payments

-bribes often include huge sums of money

Arguments for and Against Bribery

Fornecessary for profits

-everybody does it

-is accepted practice in many countries

-bribes are forms of commissions for conducting business between cultures

Againstbribes are wrong; illegal in NA

-one shouldn’t have to compromise their beliefs

- managers shouldn’t deal with corrupt govs

-once these demands start, they don’t stop

-one should take a stand for honesty

-those that receive bribes are the only ones who benefit

-bribes create dependence on corrupt individuals

-bribes deceive shareholders and pass on costs to customers

Legislation

-Foreign Corrupt Practices Act (FCPA) makes it a criminal offence for an American corp to offer or give

payments to get or maintain business

-specifies a series of fines and prison terms

Grease payments- payments to officials to get them to do what they’re supposed to anyways

-are not illegal, but bribing is

Bribery Trends: The Growing Anticorruption Movement

Transparency Internationalis the world’s foremost anticorruption lobby

-Corruption Perception Index to rank countries

OECD Antibribery Initiativesagreed to ban int’l bribery and to ask each member to introduce laws

-makes it a crime to offer, compromise, or give a bribe to a foreign public official to obtain

international business deals

Improving Global Business Ethics

Balancing and Reconciling the Business Ethics Traditions of Home and Host Countries

-ethical imperialism; MNC should continue to follow its home country’s ethical standards even while

operating in another country

-cultural relativism; foreign direct investors such as MNCs following the host country’s ethical standards

Typology of Global Types

Foreign Country Typeconforms to local customs and ethics of the host country

Empire Typeapplies its domestic or home country standards without making any serious adaptations

to the host country

Interconnection Typethe companies regard the international sphere as differing significantly from the

domestic sphere

Global Typethese firms view the domestic or home standards as not relevant/applicable

Integrative Social Contract Theory (ISCT)

-is an approach to navigating cross-national cultural differences

Hypernorms- transcultural values

-they rep values that are acceptable to all cultures and organizations

Consistent norms- are more culturally specific

Moral free space- norms that are inconsistent with at least some other legitimate norms existing in

other economic cultures

Illegitimate norms- norms that are incompatible with hypernorms

-only the interconnection type satisfies ISCT by acknowledging both universal moral limits and the ability

of communities to set moral standards of their own

Four Actions for Improving International Business Ethics

Global Codes of Conduct

Corporate global codesownership and investment, corporate facilities, relationships with employees,

product quality, sharing of technology, accounting, financial records, diff bus practices

Global codes and standards set by int’l orgsint’l orgs have developed global codes that they aspire

companies to adopt and abide by

Ethics and Global Strategy

-the ethical dimensions of multinational corporate activity should be considered into top level strategy

formulation and implementation

Suspension of Activities

-a MNC may sometimes encounter unbridgeable gaps between ethical values of its home&host country

-MNC should consider suspending activities in the host country

Ethical Impact Statements

-periodically assess the company’s impacts

-social audit so they can identify, analyze the effect of an org’s operations on society

-ethical impact statements attempt to assess the underlying moral justifications for corp actions

Fundamental International Rights

The right to freedom of physical movement

The right to ownership of property

The right to freedom from torture

The right to a fair trial

The right to nondiscriminatory treatment

The right to physical security

The right to freedom of speech and association

The right to minimal education

The right to political participation

The right to subsistence

Seven Moral Guidelines

MNCs should do no intentional, direct harm

MNCs should produce more good than bad

MNCs should contribute to the host country’s development

MNCs should respect the human rights

MNCs should pay their fair share of taxes

MNCs should respect the local culture and work with it, not against it

MNCs should cooperate with the local government