Business Ethics

Business Management 12

Ms. Stewart

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What is business ethics?

Ethics – study of what is good and evil, rightand wrong, and just and unjust

Business ethics - a code of professional standards, containing aspects of fairness and duty to the profession and the general public

Discussions of business ethics frequentlyemphasize unclear situations

However, applying clear guidelines resolves the majority of them

Ethics and Managers

Managers act in different ways according to their own moral standards, values, personal experiences and the culture of the organization.

Surveys

International Survey of more than 300

companies worldwide – top ethical issues:

– Employee conflict of interest 91%,

– Inappropriate gifts 91%,

– Sexual Harassment 91%,

– Unauthorized Payments 85%

Surveys - Incidence of unethical behaviorsin areas (from a Wall Street Journal survey):

– Government: 66%

– Sales 51%

– Law 40%

– Media 38%

– Finance 33%

– Medicine 21%

– Banking 18%

– Manufacturing 14%

Common Examples

Individual values and the company:– Receiving or offering kickbacks– Stealing from the company– Padding expense accounts to obtainreimbursements for questionable businessexpenses– Divulging confidential information or trade secrets– Using company property and materials forpersonal use– Conflict of interest

Language of Ethical Lapse

Everybody else does it

– Not a valid choice – specially if law is being broken If we don’t do it, someone else will That’s the way it has always been done We’ll wait until the lawyers tell us it’s wrong

– What’s legal may not be ethical It doesn’t really hurt anyone The system is unfair

Individual Determinants

ReligionMoral PhilosophyCultural DifferencesEthical Philosophies

CODE OF ETHICS

A formal document that states an organization’s primary values and the ethical rules it expects managers and employees (operatives) to follow.

TO MAXIMIZE PROFITS?

TO PROTECT AND IMPROVE THE WELFARE OF SOCIETY?

What is the managers responsibility?

Social Responsibility

An organization’s obligation, to pursue long term goals that are good for society

Social Obligation

The obligation of an organization to meet its economic and legal responsibility and no more

Social Obstruction

Organizations do as little as possible to solve social or environmental problems.

Example: Pollution (the law is broken or a practice becomes unethical – often the problem is covered up or hidden) “Erin Brockovich”

Social Response

An organization meets its basic legal and ethical obligations and also goes beyond social and obligation in selected cases

Example: IBM will match employee contributions but have to be solicited first – not voluntary

Social Contribution

An organization views itself as a citizen in a society and proactively seeks opportunities to contribute to that society.

Example: Ronald McDonald House program run by McDonald’s Corp.