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7/27/2019 J0712 Pert03
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*Chapter Four
DemandingEthical and
SociallyResponsible
Behavior
Copyri ght © 2010 by the McGraw-Hil l Companies, Inc. All ri ghts reserved. McGraw-Hill/Irwin
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*Profile
• Chipotle is dedicated to producing quality foodwhich has led to current annual sales over $1billion.
STEVE ELLS Chipotle Mexican Grill
• Ells’ mission is to serve
“Food With Integrity.”
• Chipotle is the leading
restaurant buyer ofhumanely raised meats.
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*Ethics is More
Than Legality
• Scandals have shaken the realestate, mortgage and bankingindustries.
• How do we restore trust in thefree market system?
- Punish those who have broken the
law.- Make accounting records more
transparent.
- Consider what is ethical, not justwhat is legal.
LIFE AFTER SCANDAL
LG1
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*Ethical Standards
are Fundamental
• Ethics -- The standards of moral behavior.
Behaviors that are accepted by society as right
versus wrong.
WHAT are ETHICS?
LG1
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*Ethical Standards
are Fundamental
Right:
• Integrity
•
Respect for human life• Self control
• Honesty
• Courage
• Self-sacrifice
Wrong:
• Cheating
• Cowardice
• Cruelty
BASIC MORAL VALUES
LG1
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• Enron: One executive is serving a 24 year sentence foraccounting fraud while another will be released in October2011.
• Arthur Andersen: Convicted of tampering with witnesses,
the company was dissolved and about 28,000 people losttheir jobs.
• Tyco International: Two executives stole $600 million fromthe company and are scheduled to be released from prisonin 2030.
• Adelphia Communication: Two executives were convictedof conspiracy, bank and securities fraud and givensentences of 15 and 20 years.
• WorldCom: Former CEO was convicted of fraud,
conspiracy and false filings and sentenced to 25 years.
PAYING the PRICE (Legal Briefcase)
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*Ethics Begins
with Each of Us
• Plagiarizing from Internet materials is the mostcommon form of cheating in schools today.
ETHICS and YOU
LG2
• Studies found a strong
relationship between
academic dishonesty
and dishonesty at work.
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*Ethics Begins
with Each of Us
• Ask yourself these questions:
- Is it legal?- Is it balanced?
- How will it make me feel about myself?
FACING ETHICAL DILEMMAS
LG2
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• Every minute, people upload 10 hours of video toYouTube – not all is user-generated content.
• Viacom sued YouTube for $1 billion for allowing
episodes of its popular shows on the site.
• Viacom holds YouTube responsible for carrying the
illegal content, rather than the individuals who
uploaded it.• Who do you think should be accountable for the
copyright violations -- the website or those whouploaded the videos?
To TUBE or NOT to TUBE (Making Ethical Decisions)
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*Progress
Assessment
• What are ethics?
•
How do ethics differ from legality?
• When faced with ethical dilemmas, whatquestions can you ask yourself that might help
you make ethical decisions?
PROGRESS ASSESSMENT
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*Managing
Businesses
Ethically and
Responsibly
• Trust between workers andmanagers must be based on
fairness, honesty, opennessand moral integrity.
• Leadership can help instill
corporate values inemployees.
ETHICS START at the TOP
LG3
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*Managing
Businesses
Ethically and
Responsibly
FACTORS INFLUENCINGMANAGERIAL ETHICS
Individual Organizational Environmental
• Values
•
Work Background• Family Status
• Personality
• Top Level
ManagementPhilosophy
• Firm’s Reward
System
• Job Dimensions
• Competition
•
EconomicConditions
• Social/Cultural
Institutions
LG3
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* Setting
Corporate
Ethical
Standards
• An increasing number of companies haveadopted written codes of ethics.
•
Compliance-Based Ethics Code -- Emphasize preventing unlawful behavior by increasing control
and by penalizing wrongdoers.
• Integrity-Based Ethics Code -- Define the
organization’s guiding values, create an environment
that supports ethically sound behavior and stress a
shared accountability among employees.
ETHICS CODES
LG4
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* Setting
Corporate
Ethical
Standards
1. Top management must adopt and unconditionallysupport an explicit corporate code of conduct.
2. Employees must understand that seniormanagement expects all employees to actethically.
3. Managers and others must be trained to considerthe ethical implications of all business decisions.
(continued)
HOW to IMPROVE AMERICA’S
BUSINESS ETHICSLG4
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* Setting
Corporate
Ethical
Standards
4. An ethics office must be set up with whichemployees can communicate anonymously.Whistleblowers -- People who report illegal or
unethical behavior.
HOW to IMPROVE AMERICA’S
BUSINESS ETHICSLG4
5. Involve outsiders such as
suppliers, subcontractors,
distributors and customers.6. The ethics code must be
enforced.
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Source: James Gehrke, Magnify Leadership & Development, November 2008.
1. Managers must communicate the organization’s
vision on ethical behavior.
2. Organizations must have a code of ethics.
3. Policies have to be enforced regarding ethicaloffences.
4. Ethical responsibility must be taught to allemployees.
(continued)
HOW to PREVENT UNETHICALBEHAVIORS
LG4
Setting
Corporate
Ethical
Standards
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Source: James Gehrke, Magnify Leadership & Development, November 2008.
5. Discussions of ethics must be included in thedecision-making process.
6. Accountability must be taken seriously at alllevels in the organization.
7. Organizations must act fast when a crisis occurs.
8. Employees must know they have to defend andmaintain the company’s reputation.
HOW to PREVENT UNETHICALBEHAVIORS
LG4
Setting
Corporate
Ethical
Standards
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*Progress
Assessment
• What are compliance-based and integrity-basedethics codes?
• What are the six steps to follow in establishing aneffective ethics program in a business?
PROGRESS ASSESSMENT
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*Corporate
Social
Responsibility
• Corporate Social Responsibility (CSR) -- The
concern businesses have for the welfare of society.
•
CSR is based on a commitmentto integrity, fairness, andrespect.
• CSR proponents argue thatbusinesses owe their existenceto the societies they serve andcannot exist in societies that
fail.
CORPORATE SOCIALRESPONSIBILITY
LG5
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*Corporate
Social
Responsibility
• Corporate Philanthropy -- Includes charitable
donations.
• Corporate Social Initiatives -- Includes enhanced forms of corporate philanthropy.
CORPORATE PHILANTHROPYand SOCIAL INITIATIVES
LG5
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*Corporate
Social
Responsibility
• Corporate Responsibility -- Includes everything
from hiring minority workers to making safe products,
minimizing pollution, using energy wisely, and providing a safe work environment.
• Corporate Policy -- The position a firm takes on
social and political issues.
CORPORATE RESPONSIBILITYand POLICY
LG5
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*Corporate
Social
Responsibility
• Xerox offers a Social Service Leave program.
• Citizen Corps encourages volunteers to help
strengthen homeland security by helping in theircommunity.
• Two-thirds of MBA students surveyed reported
they would take a lower salary to work for asocially responsible company.
POSTIVE IMPACTSof COMPANIES
LG5
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Source: Wall Street Journal, www.online.wsj.com, June 23, 2008.
Corporate
Social
Responsibility
To WHOM MUCH HASBEEN GIVEN…
America’s Charitable Giving LG5
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Source: Parade Magazine, www.parade.com, September 14, 2008.
Corporate
Social
Responsibility HELPING HANDSMost Generous Celebrities*
LG5
Who? How Much?
Oprah Winfrey $50.2 Million
Herb Alpert $13 Million
Barbara Streisand $11 MillionPaul Newman $10 Million
Mel Gibson $9.9 Million
Angelina Jolie & Brad Pitt $8.4 Million
Michael Jordan $5 Million
Eric Lindros $5 Million
Lance Armstrong $5 Million
*Donations made in 2007
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Source: Conde Nast Portfolio, www.portfolio.com, January 2008.
1. California – 12.1%
2. New Jersey – 8.9%
3. Pennsylvania – 5.2%
4. Washington – 5%
5. New York – 5%
Corporate
Social
Responsibility WHO GIVES?
Five States Contribute More Thana Third of the Nation’s Donations LG5
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Source: Fast Company, www.fastcompany.com, May 2008.
Corporate
Social
Responsibility GENEROUS AMERICANS
Americans Donated $295,020,000,000 in 2006 LG5
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*Responsibility
to Customers
• The Right to Safety
•
The Right to be Informed
• The Right to Choose
• The Right to be Heard
PRESIDENT KENNEDY’S BASIC
RIGHTS of CONSUMERS LG5
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*Responsibility
to Investors
• Insider Trading -- Insiders using
private company information to
further their own fortunes or thoseof their family and friends.
• Unethical behavior does
financial damage to a companyand investors are cheated.
INSIDER TRADING
LG5
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*Responsibility
to Employees
• Create jobs and provide a chance for upwardmobility.
• Treat employees with respect.
• Offer salaries and benefits that help employeesreach their personal goals.
RESPONSIBILITY toEMPLOYEES
LG5
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Source: Fortune, www.fortune.com, March, 2009.
1. Apple2. Berkshire Hathaway3. Toyota
4. Google5. Johnson & Johnson6. Proctor & Gamble7. FedEx8. Southwest Airlines9. General Electric10. Microsoft
11. Wal-Mart12. Coca-Cola13. Walt Disney
14. Wells Fargo15. Goldman Sachs16. McDonald’s 17. IBM18. 3M19. Target20. J.P. Morgan Chase
Responsibility
to EmployeesAMERICA’S MOST ADMIRED
COMPANIESLG5
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*Responsibility
to Society and
the Environment
• Over one-third of working Americans receivetheir salaries from nonprofits – who aredependent on funding from others.
• The green movement emerged as concern aboutglobal warming increased.
•
Many companies are trying to minimize theircarbon footprints – the amount of carbonreleased during an item’s production, distribution,
consumption and disposal.
SOCIETY andthe ENVIRONMENT
LG5
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*Responsibility
to Society and
the Environment
• Environmental efforts may increase costs butcan offer good opportunities.
•
The emerging renewable-energy and energy-efficiency industries account for 8.5 million U.S. jobs.
RESPONSIBILITY to theENVIRONMENT
LG5
• By 2030, as many as 40million “Green” jobs will
be created.
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• With public concern over the environment,companies are finding greener ways of doingbusiness.
• Some companies are claiming they are moreenvironmentally responsible than they actuallyare, a practice called “greenwashing”.
• Web sites such as Greener Choices andGreenwashing Index screen ads forgreenwashing.
GREEN GREED (Thinking Green)
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*Social Auditing
• Social Audit -- A systematic evaluation of an
organization’s progress toward implementing
programs that are socially responsible and
responsive.
• Four Types of Social Audit Watchdogs
- Socially conscious investors
- Environmentalists
- Union officials
- Customers
SOCIAL AUDITING
LG5
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*Progress
Assessment
• What’s corporate social responsibility, and how
does it relate to each of a business’s major
stakeholders?
• What’s a social audit, and what kinds of activities
does it monitor?
PROGRESS ASSESSMENT
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* International
Ethics and
Social
Responsibility
• Many businesses want socially responsiblebehavior from their international suppliers.
• The Joint Initiative on Corporate Accountabilityand Workers’ Rights was designed to make
creating a single set of labor standards andinspecting factories easier.
•
In the 1970s, the Foreign Corrupt Practices Actcriminalized the act of paying foreignbusinesses or government leaders in order toget business.
INTERNATIONAL ETHICS
LG6
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Source: Forbes, www.forbes.com, March 24, 2008.
International
Ethics and
Social
Responsibility
GIVERS AROUND the WORLDShare of GDP
LG6
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• Almost half of Motorola’s employees live
outside the U.S.
• A Motorola employee returns to his home
country to work and the company reimbursesliving expenses so he can live in a safe area.The employee is trying to do the honorable thingfor his family and the company is trying to keep
the employee safe.• If the employee uses the money to help his
family instead, is it right for the company to stoppayment?
ETHICAL CULTURE CLASH(Reaching Beyond Our Borders)
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*Progress
Assessment
• How are U.S. businesses demanding sociallyresponsible behavior from their international
suppliers?
• Why is it unlikely that there will be a single set ofinternational rules governing multinational
companies soon?
PROGRESS ASSESSMENT
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