CHAPTER TWO CHAPTER TWO ACHIEVING BUSINESS SUCCESS BY ACHIEVING BUSINESS SUCCESS BY DEMONSTRATING ETHICAL DEMONSTRATING ETHICAL BEHAVIOR AND SOCIAL BEHAVIOR AND SOCIAL RESPONSIBILITY RESPONSIBILITY

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CHAPTER TWO CHAPTER TWO ACHIEVING BUSINESS SUCCESS BY ACHIEVING BUSINESS SUCCESS BY

DEMONSTRATING ETHICAL DEMONSTRATING ETHICAL BEHAVIOR AND SOCIAL BEHAVIOR AND SOCIAL

RESPONSIBILITY RESPONSIBILITY

Text by Profs. Gene Boone & David Kurtz Text by Profs. Gene Boone & David Kurtz

Multimedia Presentation by Multimedia Presentation by

Prof. Milton Pressley Prof. Milton Pressley

The University of New Orleans The University of New Orleans

milton.pressley@uno.edu milton.pressley@uno.edu

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• Explain the concepts of business ethics and Explain the concepts of business ethics and social responsibility

social responsibility

• Describe the factors that influence business Describe the factors that influence business ethics

ethics

• List the stages in the development of ethical List the stages in the development of ethical standards

standards

• Identify common ethical dilemmas in the Identify common ethical dilemmas in the workplace

workplace

• Discuss how organizations shape ethical Discuss how organizations shape ethical behavior

behavior

LEARNING GOALS

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• Relate the ways government regulation Relate the ways government regulation affects business ethics and social

affects business ethics and social responsibility

responsibility

• Describe how businesses’ social Describe how businesses’ social responsibility is measured

responsibility is measured

• Summarize the responsibilities of business Summarize the responsibilities of business to the general public, customers, and

to the general public, customers, and employees

employees

• Explain why investors and the financial Explain why investors and the financial community are concerned with business community are concerned with business

ethics and social responsibility ethics and social responsibility

LEARNING GOALS

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CONCERN FOR ETHICAL AND CONCERN FOR ETHICAL AND

SOCIETAL ISSUES SOCIETAL ISSUES

CONCERN FOR ETHICAL AND CONCERN FOR ETHICAL AND

SOCIETAL ISSUES SOCIETAL ISSUES

• Business ethics: Business ethics: standards standards of business conduct and

of business conduct and moral values

moral values

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Figure 2.1:

Forces Shaping Business Ethics and Social

Responsibility

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INDIVIDUAL BUSINESS ETHICS INDIVIDUAL BUSINESS ETHICS INDIVIDUAL BUSINESS ETHICS INDIVIDUAL BUSINESS ETHICS

• Development of Development of Individual Ethics Individual Ethics

Figure 2.2:

Stages of Moral and Ethical

Development

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Figure 2.3: Common Business Ethical Challenges

On-the-Job Ethical Dilemmas

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On-the-Job Ethical Dilemmas On-the-Job Ethical Dilemmas On-the-Job Ethical Dilemmas On-the-Job Ethical Dilemmas

•

Conflict of interest: Conflict of interest:

situation in situation in which a business decision may be which a business decision may be

influenced by the potential for influenced by the potential for

personal gain personal gain

•

Honesty and IntegrityHonesty and Integrity

•

^Honest^Honest employee tells the truth employee tells the truth

•

Employee with Employee with integrityintegrity adheres to adheres to deeply felt ethical principals in

deeply felt ethical principals in business situations

business situations

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On-the-Job Ethical Dilemmas On-the-Job Ethical Dilemmas On-the-Job Ethical Dilemmas On-the-Job Ethical Dilemmas

• Loyalty Versus Truth Loyalty Versus Truth

•

Unfavorable Truth can cause ethical Unfavorable Truth can cause ethical conflict

conflict

•

If so, employees may have to decide If so, employees may have to decide between loyalty and truthfulness

between loyalty and truthfulness

• Whistle-Blowing: Whistle-Blowing: employee’s employee’s disclosure to the media or

disclosure to the media or

government authorities of illegal, government authorities of illegal, immoral, or unethical practices of immoral, or unethical practices of

the organization

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HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT ETHICAL CONDUCT

HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT ETHICAL CONDUCT

Figure 2.4:

Structure of an Ethical

Environment

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HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT ETHICAL CONDUCT

HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT ETHICAL CONDUCT

• Ethical Awareness Ethical Awareness

• Code of Conduct: Code of Conduct: formal statement formal statement that defines how the organization

that defines how the organization expects and requires employees to expects and requires employees to

resolve ethical questions resolve ethical questions

•

Ethical ReasoningEthical Reasoning

• Sorting through several options to Sorting through several options to arrive at suitable decision

arrive at suitable decision

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HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT ETHICAL CONDUCT

HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT ETHICAL CONDUCT

•

Ethical ActionEthical Action

• Providing structures and Providing structures and

approaches that allow decisions to approaches that allow decisions to

be turned into ethical actions be turned into ethical actions

•

Ethical LeadershipEthical Leadership

• Ethical behavior demonstrated by Ethical behavior demonstrated by executives – especially in extreme executives – especially in extreme

or emergency situations or emergency situations

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CONTROLLING BUSINESS CONTROLLING BUSINESS

BEHAVIOR THROUGH BEHAVIOR THROUGH

GOVERNMENT REGULATION GOVERNMENT REGULATION CONTROLLING BUSINESS

CONTROLLING BUSINESS BEHAVIOR THROUGH

BEHAVIOR THROUGH

GOVERNMENT REGULATION GOVERNMENT REGULATION

• Not all companies voluntarily Not all companies voluntarily behave ethically and responsibly behave ethically and responsibly

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Click to view entire table Click to view entire table 

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•

Regulated industry:

Industry in which competition is either

limited or eliminated, and government monitoring substitutes for market control

Regulation of Competition

CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION THROUGH GOVERNMENT REGULATION CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION

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•

Many laws enacted during past 40 years

•

Federal and states

regulate businesses and practices

Consumer Protection

CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION THROUGH GOVERNMENT REGULATION CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION

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•

Deregulation:

regulatory trend toward elimination of legal

restraints on competition

•

Has created considerable controversy

•

Latest industry

undergoing deregulation is the electric utility

industry

Consumer Protection Deregulation

CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION THROUGH GOVERNMENT REGULATION CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION

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• Internet remains a frontier for regulation

• Regulation of Web-based business is difficult since the Internet is a borderless market

• Regulation will require global cooperation

• Children’s On-line Privacy Protection Act attempts to protect the privacy of

children Regulation of

Competition Consumer Protection Deregulation

Government Regulation of Cyberspace

CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION THROUGH GOVERNMENT REGULATION CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR

THROUGH GOVERNMENT REGULATION

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

• Social Responsibility: Social Responsibility:

management’s acceptance of the management’s acceptance of the

obligation to consider profit, obligation to consider profit,

consumer satisfaction, and societal consumer satisfaction, and societal

well-being of equal value in well-being of equal value in

evaluating the firm’s performance evaluating the firm’s performance

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Figure 2.5 Figure 2.5

Anheuser-Busch:

Encouraging Encouraging

Responsible Sales of Responsible Sales of

Alcoholic Beverages Alcoholic Beverages Figure 2.5

Figure 2.5

Anheuser-Busch:

Encouraging Encouraging

Responsible Sales of Responsible Sales of Alcoholic Beverages Alcoholic Beverages

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This Ad from Philip Morris Gives Teens This Ad from Philip Morris Gives Teens Reasons Why They Should NOT Smoke Reasons Why They Should NOT Smoke

Philip Philip Morris Morris

““Teens, Don’t Teens, Don’t Smoke!”

Smoke!”

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Social Audits:Social Audits:

formal formal

procedures that identify and procedures that identify and

evaluate all company evaluate all company

activities relate to social activities relate to social

issues such as conservation, issues such as conservation,

employment practices, employment practices,

environmental protection, environmental protection,

and philanthropy

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

Figure 2.6 Responsibilities

of Business

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

Responsibilities to the General Public Responsibilities to

the General Public

•

Corporate Corporate

philanthropy:

corporate support of corporate support of charitable and social charitable and social

causes and causes and

organizations that work organizations that work

toward the greater toward the greater

public good public good

• Corporations giving Corporations giving

back to the communities back to the communities in which they earn

in which they earn profits

profits

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Figure 2.7 Business

Responsibilities to the General Public

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

• Public Health Issues Public Health Issues

•

One of the most One of the most complex issues complex issues facing business facing business

•

What should What should

businesses do about businesses do about

products that are products that are

inherently dangerous inherently dangerous

• TobaccoTobacco

• AlcoholAlcohol

• HandgunsHandguns Responsibilities to

the General Public Responsibilities to

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Protecting the Protecting the Environment

Environment

• Minimizing pollution Minimizing pollution and other environmental and other environmental

damage is an important damage is an important

economic, legal, and economic, legal, and

social issue social issue

• Recycling: Recycling:

reprocessing of used reprocessing of used

materials for reuse materials for reuse Responsibilities to

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Figure 2.8 FTC Guidelines for Environmental Claims in Green Marketing

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Developing the Quality Developing the Quality of the Workforce:

of the Workforce:

• Country’s true wealth Country’s true wealth lies in its people

lies in its people

• Educated, skilled Educated, skilled

workforce provides the workforce provides the intellectual know-how intellectual know-how required to compete required to compete globally

globally

• U.S. firms must assume U.S. firms must assume more responsibility for more responsibility for enhancing workforce enhancing workforce quality

quality Responsibilities to

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Figure 2.9 Figure 2.9

Wemedia.com and Wemedia.com and

HotJobs.com:

Partnering to Partnering to

Encourage Hiring Encourage Hiring

People with People with

Disabilities Disabilities Figure 2.9 Figure 2.9

Wemedia.com and Wemedia.com and HotJobs.com:

HotJobs.com:

Partnering to Partnering to

Encourage Hiring Encourage Hiring People with

People with Disabilities Disabilities

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Corporate Corporate

Philanthropy:

Philanthropy: act of act of an organization giving an organization giving something back to the something back to the communities in which communities in which it earns profits

it earns profits

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Business have a social Business have a social and ethical

and ethical

responsibility to treat responsibility to treat

customers fairly and to customers fairly and to

not harm them not harm them

•

Consumerism: public Consumerism: public demand that a business demand that a business consider the wants and consider the wants and

needs of its customers in needs of its customers in

making decisions making decisions

Customers

Responsibilities to Customers

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Figure 2.10: Consumer Rights*

*These frequently quoted consumer rights were first stated by President John F. Kennedy in 1962

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Right to Be SafeRight to Be Safe

• Consumers should feel Consumers should feel assured that what they assured that what they purchase will not harm purchase will not harm them in normal use

them in normal use

•

Right to Be InformedRight to Be Informed

• Consumers should have Consumers should have enough access to

enough access to

education and product education and product information to make information to make responsible buying responsible buying decisions

decisions Responsibilities to

Customers

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Figure 2.11: Wacky Warning Labels*

*Product liability lawsuits have caused firms to become more careful about

including warnings on products including a few who may have gone overboard, as demonstrated by these actual product warning labels

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

The Right to ChooseThe Right to Choose

• To select which goods To select which goods and services they want and services they want

and need to purchase and need to purchase

•

The Right to Be HeardThe Right to Be Heard

• Should be able to Should be able to express legitimate express legitimate

complaints to complaints to

appropriate parties appropriate parties Responsibilities to

Customers

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

• Responsibilities to Responsibilities to Employees

Employees

•

Workplace Safety is Workplace Safety is much improved over much improved over

the last century the last century

•

However, much However, much remains to be done remains to be done

Customers

Responsibilities to Employees

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Figure 2.12 Rates of Workplace Injuries and Illnesses

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

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• Quality of Life Quality of Life Issues

Issues

•

Balancing work and Balancing work and family

family

responsibilities responsibilities

• Ensuring Equal Ensuring Equal

Opportunity on the Opportunity on the Job Job

•

Challenges of an Challenges of an

increasingly diverse increasingly diverse

workforce workforce

Customers

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

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•

Sexual Harassment and Sexual Harassment and Sexism

Sexism

• Sexual Harassment:Sexual Harassment:

inappropriate actions of inappropriate actions of

a sexual nature in the a sexual nature in the

workplace workplace

• Sexism:Sexism: discrimination discrimination against members of

against members of either sex

either sex Responsibilities to

Customers

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO

SATISFY SOCIETY SATISFY SOCIETY

•

Fundamental Goal of Fundamental Goal of any business is to make any business is to make a profit

a profit

•

But,business must But,business must

behave ethically as well behave ethically as well as legally

as legally

Customers

Investors & the Financial Community

Investors & the

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WHAT’S AHEAD WHAT’S AHEAD WHAT’S AHEAD WHAT’S AHEAD

•

Discussion of the broad Discussion of the broad

economic issues influencing economic issues influencing businesses around the globe businesses around the globe

that pose both challenges and that pose both challenges and

opportunities opportunities

• Supply and demandSupply and demand

• UnemploymentUnemployment

• InflationInflation

• Government monetary policiesGovernment monetary policies