Conducting Business Ethically

Conducting Business Ethically and Responsibly : 

Conducting Business Ethically and Responsibly Shahrazad osman Mohammed Subject Lecturer

Ethics in the Workplace : 

Ethics in the Workplace Ethics are beliefs about what is right and wrong or good and bad in actions that affect others. Ethical Behavior is a behavior confirming to generally accepted social norms concerning beneficial and harmful actions. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 2

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Unethical Behavior is a behavior that does not conform to generally accepted social norms concerning beneficial and harmful actions. Business Ethics is referred to ethical or unethical behaviors by a manager or employer of an organization. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 3

Individual Ethics : 

Individual Ethics Ethics are based on both individual beliefs and social concepts, they vary from: Person to person Situation to situation Culture to culture 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 4

Individual Ethics : 

Individual Ethics Social Standards are broad enough to support differences in beliefs. Without violating general standards, therefore, people may develop personal code of ethics reflecting a wide range of attitudes and beliefs. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 5

Business and Managerial Ethics : 

Business and Managerial Ethics Managerial Ethics are the standards of behavior that guide individual managers in their work. Categories of Work Ethics: Behavior toward Employees Behavior toward Organization Behavior toward other Economic Agents 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 6

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Behavior toward Employees covers such matters as hiring, firing, wages and working conditions, privacy and respect. Ethical and legal guidelines suggest that hiring and firing decisions should be based solely on ability to perform job. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 7

Business and Managerial Ethics : 

Business and Managerial Ethics Behavior toward the Organization Ethical issues arise from employee behavior toward employers such areas as, conflict of interest and honesty. Conflict of interest occurs when an activity may benefit the individual and hurt his/her employer. Companies forbid buyers from accepting gifts from suppliers, gifts might be understand as a bribe on an attempt to induce favoritism. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 8

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Behavior toward Other Economic Agents Ethics comes into play in the relationship between: firm and its employees in one side primary agents of interest on the other side which include: customers, competitors, stockholders, suppliers, unions. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 9

Assessing Ethical Behavior : 

Assessing Ethical Behavior Three-step Model for applying Ethical Judgments to situations that may arise during the course of business activities Gather the relevant factual information. Analyze the facts to determine the most appropriate moral values. Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 10

Assessing Ethical Behavior : 

Assessing Ethical Behavior Ethical Norms Four ethical norms: 1. utility, does a particular act optimize what is best for those who are affected by it? 2. rights, does it respect the rights of the individual involved? 3. justice, is it consistent with what we regard as fair? 4. caring, is it consistent with people’s responsibilities to each other? 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 11

Adopting Written Codes : 

Adopting Written Codes Written Codes Ethics are used by the companies to formally announce their intent to do business in an ethical manner. Company Practices and Business Ethics: Adopting Written Codes Instituting Ethics Programs 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 12

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Written Codes Ethics, Example: We have trust and respect for individuals. We focus on a high level of achievement and contribution. We conduct our business with integrity. We achieve our common objectives through teamwork. We encourage flexibility and innovation. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 13

Instituting Ethics Programs : 

Instituting Ethics Programs The question arises whether business ethics can be “taught.” Most analysts agree that companies must take the chief responsibility for educating employees. Some firms have major training programs or ethical “hot line” numbers employees can call to report unethical behavior of others. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 14

SOCIAL RESPONSIBILITY : 

SOCIAL RESPONSIBILITY Social Responsibility is a related concept, but it refers to the overall way in which a business attempts to balance its commitments to relevant groups and individuals in its social environment. Organizational Stakeholders are those groups, individuals and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance. Third Lecture: Conducting Business Ethically and Responsibly 23-Oct-08 15

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Third Lecture: Conducting Business Ethically and Responsibly The Stakeholder Model of Responsibility 23-Oct-08 16

SOCIAL RESPONSIBILITY : 

SOCIAL RESPONSIBILITY Areas of Social Responsibility: Responsibility toward the environment Responsibility toward the customers Responsibility toward the employees Responsibility toward the investors 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 17

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Responsibility toward the Environment Air Pollution Water Pollution Land Pollution 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 18

Responsibility toward the Environment : 

Responsibility toward the Environment Air Pollution results when several factors combine to lower air quality. Carbon monoxide emitted by automobiles contributes to air pollution, as do smoke, and other chemicals from manufacturing plants. Air pollutants tend to get trapped in the atmosphere, Denver Area, Los Angeles and Mexico City, considered to be the most polluted in the entire world 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 19

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Water Pollution Water becomes polluted primarily from chemical and waste dumping. Companies dumb waste into rivers, streams and lakes without regard for the consequences. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 20

Responsibility toward the Environment : 

Responsibility toward the Environment Land Pollution Two issues: 1.How to restore the quality of land that has already been damaged. land and water damaged by poison waste, must be cleaned up. 2. The Prevention of future contamination. waste can be separated and used as fuels in industry. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 21

Responsibility toward Customers : 

Responsibility toward Customers Consumer Rights Unfair Pricing Ethics in advertising 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 22

Responsibility toward Customers : 

Responsibility toward Customers Consumers Rights A right to safe products. A right to be informed about all relevant aspects of a product. A right to choose what they buy. A right to be educated about purchases. A right to courteous services. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 23

Responsibility toward Customers : 

Responsibility toward Customers Unfair Pricing Interfering with competition can take form of illegal pricing. Collusion occurs when two or more firms agree to collaborate on such wrongful act as price fixing. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 24

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Ethics in Advertising For product information, misinterpretation of words and phrases such as light, reduced calorie, diet, and low fat, food producers are now required to used a standardized format for listing all the ingredients on product packages. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 25

Responsibility toward Employees : 

Responsibility toward Employees Legal and Social Commitments A company cannot refuse to hire someone because of ethnicity or pay someone a lower salary than someone else on the basis of gender. Such actions must be taken for job-related purposes only. A company must provides its employees with equal opportunities for rewards and advancement. Third Lecture: Conducting Business Ethically and Responsibly 23-Oct-08 26

Responsibility toward Investors : 

Responsibility toward Investors Irresponsible behavior toward shareholders means abuse of a firm's financial resources. Companies acts irresponsibly toward shareholders includes:

Responsibility toward Investors : 

Responsibility toward Investors Check kiting involves writing a check against money that has not yet been credited at the bank on which the checks are drawn. Insider Trading is referred to illegal practice of using special knowledge about a firm for profit or gain. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 28

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Improper Financial Management: managers may be guilty of financial mismanagement, Misrepresentation of Finances , a firm’s failure to conform to generally accepted accounting practices (GAAP) . 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 29

IMPLEMENTING SOCIAL RESPONSIBILITY PROGRAMS : 

IMPLEMENTING SOCIAL RESPONSIBILITY PROGRAMS corporations have adopted a variety of approaches to social responsibility, There is four stance that an organization can take concerning it's obligations to society, These stance ranging from the lowest to the highest degree of social responsible practices.

Approaches to Social Responsibility : 

Approaches to Social Responsibility Obstructionist Stance involves doing as little as possible and may involve attempts to deny or cover up violations. Defensive Stance an approach by which a company meets only minimum legal requirements in its commitments to groups and individuals in its social environment. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 31

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3. Accommodative Stance is an approach by which a company, if specifically asked to do so, exceeds legal minimums in its commitments to groups and individuals in its social environment. 4. Proactive Stance is an approach by which a company actively seeks opportunities to contribute to the well-being of groups and individuals in its social environment. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 32

Approaches to Social Responsibility : 

Third Lecture: Conducting Business Ethically and Responsibly Approaches to Social Responsibility 2. Defensive Stance 3.Accommodative Stance 4. Proactive Stance 1.ObstructionistStance Lowest Level of Social Responsibility Highest Level of Social Responsibility 23-Oct-08 33

Managing Social Responsibility Programs : 

Managing Social Responsibility Programs Social responsibility must start at the top and be considered as a factor in strategic planning. A committee of top mangers must develop a plan detailing the level of management support. One executive must be put in charge of the firm’s agenda. The organization must conduct occasional social audits—systematic analyses of its success in using funds devoted for its social responsibility goals. Third Lecture: Conducting Business Ethically and Responsibly 23-Oct-08 34

Review of Learning Objectives : 

Review of Learning Objectives Now you should be able to: Explain how individuals develop their personal codes of ethics and why ethics are important in the workplace. Distinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness today. Third Lecture: Conducting Business Ethically and Responsibly 23-Oct-08 35

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Show how the concept of social responsibility applies both to environmental issues and to a firm’s relationships with customers, employees and investors. Identify four general approaches to social responsibility and describe the four steps that a firm must take to implement a social responsibility program. 23-Oct-08 Third Lecture: Conducting Business Ethically and Responsibly 36