BUSINESS ETHICS

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Legality is only a first step Questions to ask: When faced with a potentially unethical action. Management’s role Compliance/Integrity based codes Corporate social responsibility A definition and stakeholders

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BUSINESS ETHICS: 

BUSINESS ETHICS Gihan Aboueleish

Self Grading of Test: 

Add up all the numbers you circled. What was your grade? 10? 15? 30? 40? …………………………………………….. The lower the score, the more questionable are your ethical principles regarding business activities. 10 is the lowest … 40 is the highest. Consider why you answered as you did. Self Grading of Test 2 Business Ethics - Gihan Aboueleish

Learning Objectives: 

Legality is only a first step Questions to ask: When faced with a potentially unethical action. Management’s role Compliance/Integrity based codes Corporate social responsibility A definition and stakeholders Learning Objectives 3 Business Ethics - Gihan Aboueleish

Ethics: 

More Than Legality Standards are Fundamental Stem From Individual Ethics 4 Business Ethics - Gihan Aboueleish

The Legal Ethical Grid: 

The Legal Ethical Grid Ethical but Illegal Unethical And Illegal Legal And Ethical Legal But Unethical Legal Ethical Unethical Illegal 5 Business Ethics - Gihan Aboueleish

PowerPoint Presentation: 

6 Business Ethics - Gihan Aboueleish

Business Ethics and Social Responsibility: 

Business Ethics: The principles and standards that define acceptable conduct in business Social Responsibility: A business’s obligation to maximize its positive impact and minimize its negative impact on society Business Ethics and Social Responsibility 7 Business Ethics - Gihan Aboueleish

Recognizing an Ethical Issue: 

An ethical issue is an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical. Recognizing an Ethical Issue Did You Know? The most common types of observed misconduct are lying, withholding information, and abusive/ behavior. 8 Business Ethics - Gihan Aboueleish

Reasons For Not Reporting Observed Misconduct: 

Didn’t believe corrective action would be taken Feared retribution or retaliation from supervisor or management Feared they wouldn’t remain anonymous Thought someone else would report the misconduct Didn’t know who to contact Reasons For Not Reporting Observed Misconduct 9 Business Ethics - Gihan Aboueleish

Misconduct Observed in the Workplace: 

Misconduct Observed in the Workplace 10 Business Ethics - Gihan Aboueleish

Ethical Issue Categories: 

Ethical Issue Categories Conflict of interest Fairness and honesty Communications Business relationships 11 Business Ethics - Gihan Aboueleish

Conflict of Interest: 

Conflict of Interest Occurs when a person must choose whether to advance their own personal interest or those of others 12 Business Ethics - Gihan Aboueleish

Fairness and Honesty: 

Fairness and Honesty The heart of business ethics General values of decision makers 13 Business Ethics - Gihan Aboueleish

Communications: 

Communications False and misleading advertising and deceptive personal-selling tactics anger customers and may cause a business to fail. 14 Business Ethics - Gihan Aboueleish

Business Relationships: 

Business people must be ethical toward their customers, suppliers, and others in their workplace. Business Relationships 15 Business Ethics - Gihan Aboueleish

Questions to Consider in Determining Whether an Action is Ethical: 

Are there any potential legal restrictions or violations that could result from the action? Question: If I do this will it break any laws? Does your company have a specific code of ethics or a policy on the action? Question: If I do this will I go against the employee handbook? Questions to Consider in Determining Whether an Action is Ethical 16 Business Ethics - Gihan Aboueleish

Questions to Consider in Determining Whether an Action is Ethical: 

Is this activity customary in your industry? Are there any industry trade groups that provide guidelines or codes of conduct that address this issue? Question: If I do this will I violate any trade practices? Questions to Consider in Determining Whether an Action is Ethical 17 Business Ethics - Gihan Aboueleish

Questions to Consider in Determining Whether an Action is Ethical: 

Would this activity be accepted by your coworkers? Will your decision or action withstand open discussion with coworkers and managers and survive untarnished? Question: Will my action cause peer acceptance or rejection, or any peer pressure? Questions to Consider in Determining Whether an Action is Ethical 18 Business Ethics - Gihan Aboueleish

Questions to Consider in Determining Whether an Action is Ethical: 

How does this activity fit with your own beliefs and values? Question: Will my action violate any of my personal ethics, religious beliefs, or social values? Questions to Consider in Determining Whether an Action is Ethical 19 Business Ethics - Gihan Aboueleish

Three Factors that Influence Business Ethics: 

Three Factors that Influence Business Ethics Individual Standards and Values Managers’ and Coworkers’ Influence Opportunity: Codes and Compliance Requirements Ethical/Unethical Choices in Business 20 Business Ethics - Gihan Aboueleish

Codes of Ethics: 

Formalized rules and standards that describe what a company expects of its employees Codes of Ethics Did You Know? Written ethics standards are more often found in larger companies than smaller ones. 21 Business Ethics - Gihan Aboueleish

Whistleblowing: 

The act of an employee exposing the employer’s wrongdoing to outsiders The media Government regulatory agencies Whistleblowing 22 Business Ethics - Gihan Aboueleish

The Nature of Social Responsibility: 

Four Dimensions: Economic – earn profits Legal – comply with the law Ethical Not just “for profit” only Voluntary & Charity Promote human welfare and goodwill The Nature of Social Responsibility 23 Business Ethics - Gihan Aboueleish

The Pyramid of Social Responsibility: 

The Pyramid of Social Responsibility Ethical Responsibilities being ethical; doing what is right, just, and fair; avoiding harm Voluntary Responsibilities being a “good corporate citizen;” contributing to the community and quality of life Legal Responsibilities obeying the law (society’s codification of right and wrong) Economic Responsibilities being profitable 24 Business Ethics - Gihan Aboueleish

Best Corporate Citizens: 

Green Mountain Coffee Hewlett-Packard Advanced Micro Devices Motorola Agilent Technologies Timberland Salesforce.com Cisco Systems Dell Texas Instruments Intel Johnson and Johnson NIKE General Mills Pitney Bowes Wells Fargo Starbucks Wainright Bank & Trust St. Paul Travelers Ecolab Best Corporate Citizens 25 Business Ethics - Gihan Aboueleish

Arguments for Social Responsibility: 

Business helped to create many of the social problems that exist today, so it should play a significant role in solving them Businesses should be more responsible because they have the financial and technical resources to help solve social problem Arguments for Social Responsibility 26 Business Ethics - Gihan Aboueleish

Arguments for Social Responsibility: 

Social responsibility is necessary to ensure economic survival Businesses must take steps to help solve the social and environmental problems that exist today Arguments for Social Responsibility 27 Business Ethics - Gihan Aboueleish

Arguments Against Social Responsibility: 

Participation in social programs gives businesses greater power, perhaps at the expense of particular segments of society. Many people believe that social problems are the responsibility of government agencies and officials Arguments Against Social Responsibility 28 Business Ethics - Gihan Aboueleish

Social Responsibility Issues: 

Organizational relationships with owners and stockholders: Profit and ROI Employee relations: Providing a safe workplace, adequate pay, information about the company, listening to grievances, and treating employees fairly Consumer relations: Respecting the rights of customers and providing them with safe and satisfying products Social Responsibility Issues 29 Business Ethics - Gihan Aboueleish

Social Responsibility Issues: 

Environmental issues: Animal rights Pollution Global warming Community relations: Responsibility to the general welfare of the community Social Responsibility Issues Did You Know? In one year, Americans generated 230 million tons of trash and recycled 23.5 percent of it. 30 Business Ethics - Gihan Aboueleish

John F. Kennedy’s 1962 Consumer Bill of Rights: 

The right to safety The right to be informed The right to choose The right to be heard John F. Kennedy’s 1962 Consumer Bill of Rights Did You Know? John F. Kennedy was the 35th President of the United States. 31 Business Ethics - Gihan Aboueleish

Responsibility of the Ethics Officer: 

Provide advice about ethics to employees and management Distribute the company’s code of ethics Take action on ethics violations Review and modify the code of ethics as needed Responsibility of the Ethics Officer 32 Business Ethics - Gihan Aboueleish

Solve the Dilemma: 

What are the ethical issues involved in giving a customer an award for consumption behavior without notifying him/her first? Do you see this as a potential violation of privacy? Explain. Solve the Dilemma 33 Business Ethics - Gihan Aboueleish

Explore Your Career Options: 

Explore Your Career Options How do you explain the emergence of career opportunities in the field of business ethics and social responsibility? 2- 34

Additional Discussion Questions and Exercises: 

What makes ethical decisions so difficult? Many organizations are primarily concerned with earning a profit or a return on their investment. Does this concern for owners and investors present an ethical dilemma for companies when weighing business decisions that favor employees and/or the general public? The right to be heard is one of the four rights in the consumer bill of rights. How are some corporations addressing this consumer concern? Additional Discussion Questions and Exercises 35 Business Ethics - Gihan Aboueleish

Quiz: 

Which of the following has the greatest effect on ethical behavior in organizations? authority of an employee’s superiors an employee’s perception of the ethics of coworkers and managers an employee’s personal beliefs about what is right or wrong investors perceptions of ethics Copying someone else’s work and presenting it as your own is: ethics bribe plagiarism greenmail Quiz 36 Business Ethics - Gihan Aboueleish

Quiz: 

A code of ethics is: a set of formalized rules and standards describing what the company expects of its employees. a government legislation enforced by government agencies. a set of principles that describe what a person believes is the right way to behave. the impact of a business’s activities on society. Which one of the following is NOT one of the four rights provided in John F. Kennedy’s consumer bill of rights? right to safety right to be inform right to sue right to choose Quiz 37 Business Ethics - Gihan Aboueleish

Factors Influencing Managerial Ethics: 

Factors Influencing Managerial Ethics Individual Organizational Environmental Values Work Background Family Status Personality Top Level Mgmt. Philosophy The Firm’s Reward System Job Dimensions Competition Economic Conditions Social/Cultural Institutions 38 Business Ethics - Gihan Aboueleish

Ethics Check Questions:: 

Is It Legal? Is It Balanced? How Will It Make Me Feel About Myself? Ethics Check Questions: 39 Business Ethics - Gihan Aboueleish

Ethical Decision Resolved Through:: 

Religious Teachings Individual Rights Legislation Court Decisions Ethical Decision Resolved Through: 40 Business Ethics - Gihan Aboueleish

Codes of Ethics: 

Codes of Ethics Compliance-Based Increasing control and penalizing wrongdoers Integrity-Based Define guiding values Support ethical behaviour Shared accountability 41 Business Ethics - Gihan Aboueleish

Six Steps to Improve Ethics: 

Top management support Expectations begin at the top Ethics imbedded in training Ethics office set up External stakeholders informed There must be enforcement Six Steps to Improve Ethics 42 Business Ethics - Gihan Aboueleish

PowerPoint Presentation: 

Three Levels of Social Responsibility Societal Responsibility Stakeholder Responsibility Profit Responsibility Owners/Stockholders General Public Customers Employees Suppliers/Distributors Ecological Environment Public Interest Groups 43 Business Ethics - Gihan Aboueleish

Triple Bottom Line: 

The triple bottom line (TBL) focuses corporations not just on the economic value they add, but also on the environmental and social value they add – and destroy. Triple bottom line is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters. Triple Bottom Line IGNORE 44 Business Ethics - Gihan Aboueleish

Triple Bottom Line: 

At its broadest, the term is used to capture the whole set of values, issues and processes that companies must address in order to minimize any harm resulting from their activities and to create economic, social and environmental value. This involves being clear about the company’s purpose and taking into consideration the needs of all the company’s stakeholders – shareholders, customers, employees, business partners, governments, local communities and the public. Triple Bottom Line IGNORE 45 Business Ethics - Gihan Aboueleish

Interface Carpets A Sustainability Champion: 

Vision: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits — by 2020 — and in doing so we will become restorative through the power of influence. Ray Anderson - believes that if Interface, a petro-intensive company, can get it right, it will never have to take another drop of oil from the earth. Interface Carpets A Sustainability Champion IGNORE 46 Business Ethics - Gihan Aboueleish

Environmental Issues: 

Environmental Issues Pesticides Waste disposal Clear-cut logging Deforestation Auto exhaust Conservation Recycling Ozone depletion Extinction of species Populations explosion Nuclear proliferation and testing 47 Business Ethics - Gihan Aboueleish

The Resource Recovery Fund Board of Nova Scotia: 

50% waste diversion & 100% of Nova Scotians have curb-side recycling Almost 79% return rate on beverage containers Over 1.5 billion beverage containers recycled since April 1, 1996 & 403,000 litres of paint recycled since June 1, 2002 Over 912,000 tires are reused or recycled annually through the Used Tire Management Program. 5.5 million tires since the program began. Total waste diverted from landfills annually: 350,000 tonnes & Composted more than 233,000 tonnes of organic material The Resource Recovery Fund Board of Nova Scotia IGNORE 48 Business Ethics - Gihan Aboueleish

Responsibility Defined: 

Corporate Social Responsibility -the concern businesses have for the welfare of society. Corporate Charity – charitable donations. Corporate Responsibility – acting responsibly within society. Corporate Policy – position on social and political issues Responsibility Defined 49 Business Ethics - Gihan Aboueleish

What is the Answer? : 

Japan has developed “green technologies” and is exporting this technology - using “green” as a competitive advantage Some Canadian companies are exporting environmental technology We have established IISD - the International Institute of Sustainable Development Business continues to worry about the cost to institute “green” operating procedures What is the Answer? IGNORE 50 Business Ethics - Gihan Aboueleish

A Very Different Answer: 

American author, Paul Hawken, says that sustainable development is not enough His proposals would make “green” products cheaper Prices should reflect all costs including disposal and harm to the environment redesign products to make them biodegradable taxes on pollution and depletion instead of taxes on payroll redesign products to make them recyclable Are we ready for these kinds of changes? Do we have any choice ? A Very Different Answer IGNORE 51 Business Ethics - Gihan Aboueleish

Reaction to the New Social Responsibility: 

Many companies have undertaken a Social Audit - a systematic evaluation of the company’s position and progress on social issues Shareholders and other stakeholders have actively encouraged companies to become proactive on social issues Reaction to the New Social Responsibility 52 Business Ethics - Gihan Aboueleish

Why People Volunteer: 

Total is more than 100%- respondents could give more than one reason. Why People Volunteer Percent of Respondents IGNORE 53 Business Ethics - Gihan Aboueleish

Contributions to Charity (In Billions of Dollars): 

Contributions to Charity (In Billions of Dollars) IGNORE 54 Business Ethics - Gihan Aboueleish

PowerPoint Presentation: 

New Charity Donor Estimated Total Given (in Millions Causes Bill Gates $25.6 Health & Education Gordon Moore $6.6 Conservation & Education James Stowers $1.5 Biomedical Research Eli Broad $1.045 Education & Arts Walton Family $.75 Education IGNORE 55 Business Ethics - Gihan Aboueleish

Corporate Annual Giving: 

Merck Johnson & Johnson Pfizer Eli Lilly IBM Microsoft Intel Bank of America $221.0* 176.2 123.9 121.4 116.1 104.7 101.0 91.5 Corporate Annual Giving * In Millions IGNORE 56 Business Ethics - Gihan Aboueleish

Where US Charitable Contributions Go (2001): 

Where US Charitable Contributions Go (2001) In Billion $ Source: BusinessWeek . Dec. 2, 2002 IGNORE 57 Business Ethics - Gihan Aboueleish

International Ethics & Responsibility: 

Ethics Not Unique To U.S.- Leaders Accountable Demand for Socially Responsible Behavior Inter-American Convention Against Corruption International Ethics & Responsibility IGNORE 58 Business Ethics - Gihan Aboueleish

Most Admired Global Companies (Outside of U.S.): 

Nokia Finland Toyota Motor Japan Sony Japan Nestle’ Switzerland Honda Motor Japan BP Britain Singapore Airlines Singapore L’Oreal France Royal Dutch/Shell Britain & Netherlands Canon Japan Most Admired Global Companies (Outside of U.S.) 59 Business Ethics - Gihan Aboueleish