Practicing Ethical Behavior and Social Responsibility

1
Chapter 2

• Practicing Ethical Behavior and Social
  Responsibility

2
Ethical Behavior and Social Responsibility

• The importance of these issues are increasing in
  business life
• Social Responsibility the idea that business
  has certain obligations to society beyond the
  pursuit of profits.
• Ethics
• Ethics the principles and standards of moral
  behavior that are accepted by society as right
  versus wrong
• Business ethics the application of moral
  standards to business situations

3
Ethics in the workplace

• Companies are responsible to many people
  including Stakeholders groups to whom business
  has a responsibility (colleagues, employees,
  Supervisors, investors, etc.). Companies must
  keep these people in mind when deciding the
  ethics of a company.

4
Ethics in the workplace

• In business, besides obeying all laws and
  regulations, practicing good ethics means
• Competing Fairly and Honestly
• Communicating Truthfully
• Not Causing Harm to Others
• Investment scams
• cheating on expense accounts
• Insider trading
• Conflict of Interest

5
Factors Influencing Ethical Behavior

• Although many factors influence the ethical
  behavior of businesspeople, the following three
  have the most impact cultural differences,
  knowledge, and organizational behavior.
• Cultural Differences
• What may be considered unethical in one country
  may be an accepted practice in another culture.
• Knowledge
• A well-informed person is in a position to make
  better decision and avoid ethical problems.

6
Factors Influencing Ethical Behavior

• Organizational Behavior
• Organizations that strongly enforce company codes
  of conduct and provide ethics training help
  employees recognize and reason through ethical
  problems.
• Companies with strong ethical practices (ethics
  training, newsletters on ethics) set a good
  example for employees to follow.
• Code of ethics defines the values and
  principles that should be used to guide
  decisions.
• Companies can establish a system for reporting
  unethical or illegal actions at work.
• Whistle-blowing an employees disclosure to the
  media or government authorities of illegal,
  unethical, or harmful practices by the company.

7
How do You Make Ethical Decisions?

• Ask your self a series of questions to determine
  if a decision is ethical
• Is the decision legal? (Does it break any laws?)
• Is it balanced? (Is it fair to all concerned?)
• Can you live with it? (Does it make you feel good
  about yourself?)
• Is it feasible? (Will it actually work in the
  real world?)
• Does it respect stakeholders?
• Will outsiders approve? (Does it benefit
  community members, etc.?)
• Will supervisors approve? (Did management receive
  accurate information?)
• Will employees approve? (Will it affect employees
  positively?)
• Does it follow a philosophical approach?
• Is it a utilitarian decision? (Does it produce
  the greatest good for the greatest number of
  people?)
• Does it uphold individual, legal, and human
  rights? (Does it protect peoples own interests
• Does it uphold principles of justice? (Does it
  treat people fairly and impartially?)

8
How do You Make Ethical Decisions?

• Ethical situations can be divided into two
  general types
• ethical dilemma a situation in which one must
  choose between two conflicting but arguably valid
  sides.
• Example when a company must decide whether to
  continue operating a production facility that is
  suspected, but not proven, to be unsafe.
• ethical lapse a situation in which an
  individual makes a decision that is clearly wrong
• Example inflating prices for certain customers,
  hiring employees from competitors to gain trade
  secrets, selling technological secrets to
  unfriendly foreign governments, switching
  someones long distance service without their
  consent, slipping unauthorized charges into phone
  bills.

9
Social Responsibilities in Business

• Social responsibility the idea that business has
  certain obligations to society beyond the pursuit
  of profitsdeveloped in the early 20th century.
• Current climate indicates that ethics in business
  is important to consumers
• Many investors and managers now support a broader
  view of social responsibility
• Social responsibility can be balanced with an
  efficient business, and strong profits, but it is
  challenging for companies.

10
Businesss Efforts to Increase Social
Responsibility

• Responsibility to society and environment
  Businesses must often balance the needs of
  investors, society, and consumers.
• Responding to environmental issues demonstrates
  the careful balance business must attempt to
  maintain as they seek to please
• consumers (who want quality products)
• workers (who need safe surroundings and fair
  wages)
• society (which needs as little pollution as
• investors (who want lower costs, efficient
  production, high profits)