ETHICS AND SOCIAL RESPONSIBILITY

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ETHICS AND SOCIAL RESPONSIBILITY

• By Mrs. Belen Apostol

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(No Transcript)
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Ethics

• Ethics refers to the study of morals and moral
  choices of human being.
• The behavior of individuals and groups which are
  governed by standards, rules, and codes of
  conduct consist of the subjects covered by
  ethics.

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What is Business Ethics?

• The moral principles defining right and wrong
  behavior of businesspersons and their agents
• It implores them to adhere to certain ethical
  conduct when dealing with anybody especially
  those affected by their business activities.

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The Need for Ethical Behavior

• Ethical behavior is needed to make the playing
  field free and orderly. If the business person
  does not adhere to ethical principles, public
  opinion may pressure the government to act. It
  may turn out, later, that the business person
  will be in a worse situation then when no law is
  passed to force him to act ethically.

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Areas of Concern for Business Ethics

• Ethics covers all areas encompassed by business
  transactions. The ethical conduct of a business
  person may be measured against how the following
  are adhered to
• 1.Laws and regulations
• promulgated by the
• government and
• 2. Specific ethical
• conduct not yet passed into law

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Laws and regulations requiring ethical behavior

• Product safety and quality
• Fair employment practices
• Fair marketing and selling practices
• The use of confidential information for personal
  gain
• Community involvement
• Bribery and
• Illegal payments to foreign governments to obtain
  business.

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Product safety and quality
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Fair employment practices
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Fair marketing and selling practices
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The use of confidential information for personal
gain
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Community involvement
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Bribery
Illegal payments to foreign governments to obtain
business.
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Current Issues in Ethics

• Owners of food stalls serving spoiled food to
  customers
• Business owners making fictitious insurance
  claims
• School awarding diplomas to undeserving persons
• A contractor bribing a government official to
  manipulate the bidding of contracts
• A drug manufacturer making false claims regarding
  the efficacy of his product and
• A television station copying the format of a
  rival stations show.

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Coverage of Company Sponsored Ethics Program

• A very important listing of problem areas which
  may be used as a basis for formulating company
  policies on ethical conduct is as follows
• Drug and alcohol abuse
• Employee theft
• Conflict of interest
• Quality control
• Misuse of proprietary information

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Coverage of Company Sponsored Ethics Program

• Abuse of expense accounts
• Plant closings and layoffs
• Misuse of company assets
• Environmental pollution
• Methods of gathering competitors information
• Inaccuracy of books and records
• Receiving excessive gifts and entertainment
• False or misleading advertising

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The Improvement of Ethical Performance

• Improvement in the ethical conduct of business
  and those involved in it may be made through any
  of the following ways
• Ethics training
• Ethical advocates
• Ethical codes and
• Whistle blowing.

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Ethics Training

• Learning takes two forms
• Through formal classroom instruction, and
• Through actual hands-on experience and
  observation

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Ethical Advocates

• An ethical advocate is a person who is
  knowledgeable about business ethics, employed by
  the company, and acts as the companys
  conscience. He sits at the board of directors and
  sees to it that every policy adapted conforms to
  ethical standards.

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Ethical Codes

• A code of ethics is a formal document that
  provides clear direction to management and
  employees in the performance of their duties.

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Whistle-Blowing

• There are instances when employees
• are helpless that they cannot implement the
  right ethical conduct required in specific
  situations. When almost everybody from top to
  lower management acts outside of ethical norms,
  the employee who feels he must do something that
  resorts to reporting the perceived unethical
  practice to outsiders such as the press,
  government agencies like the ombudsman and the
  Presidential Anti-Graft commission, or public
• interest groups.

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What is Social Responsibility

• Social responsibility refers to the concern of
  business for the welfare of the society.
• that the firm must perform its function without
  harming the community
• improve the quality of life
• produce goods or services that will not adversely
  affect any component of the society
• make profits but not to the public detriment of
  society.

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Interested Groups

• There are various groups with interests that are
  different from one another. These interests must
  be properly considered by the business firm it
  will have to be successful.

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Owners

• The interest of the owners (the sole
  proprietor, the partners, or stockholders) is
  expected to be of highest priority.

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Consumers

• Consumers, like any other group, have rights.
  The basic rights of consumers include those
  concerning representation, information, a healthy
  environment, safety, basic goods and services,
  choice, consumer education and redress.

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Employees

• Among the specific points of interest in caring
  about employees are
• Health and safety
• Appropriate salaries and employee benefits
• Right to speak out
• Right to privacy and
• Right to job security except when discipline is
  concerned. (security of tenure)

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Minority Groups

• Management must avoid treating them outright as
  inferior so as not to affect their employment and
  promotion chances.

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Women

• The view that management must have is to regard
  women as a force with potentials to lead as
  much as to follow

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Older People

• Older people have distinct needs that must be the
  concern of business. Many of them are highly
  qualified and able to perform special tasks which
  younger persons cannot do.

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The Handicapped

• The firms management must be responsible for
  removing hazards and obstacles which prevent them
  from doing their jobs effectively.

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The Community at large

• There are business activities that may affect any
  of the widely diverse interest of people. The
  modern manager must have multiple abilities and
  an open mind if he wants to succeed in his
  endeavor.

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Benefits and costs of Social Actions

• Benefits
• Improved employee satisfaction and motivation
• Company becomes more aware of changing consumer
  tastes and preferences
• Greater demand for the companys products or
  services

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Benefits and costs of Social Actions

• Preference by investors to buy the firms stocks
  and
• Elimination of possible legislative controls on
  business activities.

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Benefits and costs of Social Actions

• Costs
• The money spent in direct support of social
  projects
• Reduction of competitive power and
• The private provision of social services and
  programs may later on, be also regulated by the
  government.

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Social Responsibility Strategies

• The approaches are expressed in four basic
  social responsibility strategies as follows
• Reaction strategy
• Defense strategy
• Accommodation strategy, and
• Proactive strategy

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Reaction Strategy

• The company allows a condition or potential
  problems to go unresolved until the public finds
  out about it. When a problem is brought before
  the company, the firms reacts by denying
  responsibility, then attempts to resolve the
  problem, deal with its consequences, then
  continue doing business to minimize the negative
  impact.

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Defense Strategy

• The company tries to minimize or avoid additional
  obligations. Among the tactics used are legal
  maneuvering and seeking the support of groups
  that prefer the companys way of doing business.

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Accommodation Strategy

• This is done when special interest groups are
  taking the side of the opposition, or when the
  business perceives that if it does not react, a
  law will be passed by Congress to ensure
  compliance. This means that the company is forced
  to accept its economic, legal, and ethical
  responsibilities.

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Proactive Strategy

• the firm goes beyond what is legally and
  ethically required. There are a number of
  companies using the proactive strategy. This is
  undertaken through sponsorship of cultural shows
  offered free to the public, scholarship to
  financially-handicapped but deserving students,
  providing financial support to the upkeep of
  endangered animal species, and many other similar
  concerns.

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Social Audits

• A social audit refers to the systematic
  examination of all the activities achieving
  social goals such as employment of the
  handicapped and those belonging to the cultural
  minorities, adaption of anti-pollution campaign,
  improvement of working conditions, community
  development, donations to worthy causes, and
  various consumer issues.

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Social Audits

• A social audit may be done through the
  preparation of the following
• A summary of program areas, such as consumer
  affairs, as well as the reasons for undertaking
  certain social activities and not others.
• A report of specific programs and the priorities
  for each set of activities.

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Social Audits

• 3. A listing of objectives for each priority
  activity and a description of how the
  organization is striving to reach the objective.
• 4. A summary report of the costs of each program
  area and activity to the company
• 5. A summary using quantitative measures,
  whenever possible, of the extent of achievement
  of each social objective.

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• Thank you for listening!