2 Ethics in BusinessEthics – set of moral principles or values that govern behaviorManagers must face sometimes difficult ethical decisions in business situations.Code of Ethics – document that outlines the principles of conduct to be used in making decisions within an organization
3 A Code of Ethics Content May Address the following: Trading in securities/using confidential informationAcquiring and using information about competitorsSecurityPayments to obtain bonusesProtection of the environmentHonestyAdherence to the lawProduct safety and qualityHealth and safety in the workplaceConflicts of interestEmployment practicesStaffing and marketing practicesFinancial reportingPricing, billing, and contracting
4 Behaving Ethically and Unethically Helps employees gain the most of the people with whom they workHelps businesses gain the trust of customers, suppliers, and othersBehaving unethically:Can hurt or end a businessperson’s careerCan cause a company to lose millions of dollars or even go out of business altogether
5 Behaving Honestly Sarbanes-Oxley Act of 2002 Employee Theft Due to Enron and WorldCom scandals, President Bush signed this act that affects the reporting and governance of public companies and their directors and officers.Employee TheftEmployers trust their employees not to steal from them.EmbezzlementStealing supplies, inventory
6 Behaving Honestly Hours worked Records Employees who behave ethically are honest about the hours they work.Ethical employees will only miss work when they are truly ill or have a legitimate reason to be home.RecordsOne of the worst ethical lapses an employee can commit is falsifying records.Damages company reputationCan have grave effects on health of public (i.e. pharmaceutical company)
7 Dealing with Ethical Dilemmas An ethical dilemma is a situation in which the ethical course of action is not clear.Examples: your boss tells you your friend will be fired, you notice a co-worker has been accepting expensive gifts (violating company’s code of ethics)Some companies, like Boeing, hire a Director of Business Practices to help with these situations.
8 Solving Ethical Dilemmas – Ask: Have you defined the problem accurately?How would you define the problem if you stood on the other side of the fence?Whom could your decision or action injure? Can you discuss the problem with the affected parties before you make your decision?
9 Solving Ethical Dilemmas - Ask Are you confident that your position will be as valid over a long period of time as it seems now?Could you disclose without qualm your decision to action to your boss, your CEO, the board of directors, your family, and society as a whole?
10 Laws Relating to Ethical Behavior The Sherman ActMonopolies became illegal.The Clayton Act of 1914Charging different wholesales customers different prices became illegal.Requiring customers to purchase a second item also became illegal.Wheeler-Lea Act of 1938Banned unfair or deceptive acts, such as false advertising, inform customers of possible negative consequences of using products.
11 Consumer ProtectionSeveral laws and agencies were designed to protect consumers against unethical and unsafe business practices:The Federal Food, Drug, and Cosmetic Act of 1938Food and Drug Administration (FDA)Consumer Product Safety Commission (CPSC)Forces manufacturers to recall products that may be defectiveTruth in Leading Act of 1968
12 Environmental Protection National Environmental Policy Act of 1969Created Environmental Protection Agency (EPA)Protects human health and safeguards the air, water, and land.The Clean Air Act of 1970Regulates air emissions.The Toxic Substances Control Act of 1976Gave the EPA the ability to track industrial chemicals produced In or importing into the U.S.The Clean Water Act of 1977Sets standards on the type and quality of pollutants that industries can put into bodies of water
13 Ethical Standards and Culture Corporate Gift GivingIn Japan, lavish gifts are a part of business.In United States, government officials are not allowed to accept gifts (and many corporations have policies against this).When doing business abroad, be sure to understand culture.
14 Ethical Standards and Culture Intellectual PropertyOwnership of ideas, such as inventions, books, movies, and computer programsIn the U.S., creators of intellectual property have the exclusive right to market and sell their work (guaranteed through patent, trademark, and copyright laws)
15 Social Responsibility Social responsibility refers to the obligation that individuals or businesses have to help solve social problems.Profit MaximizationTrusteeship ManagementSocial InvolvementPhilanthropy and VolunteerismEnvironmental AwarenessSensitivity to Diversity and Quality of Work Life
16 Profit MaximizationIn th19th and early 20th centuries, business owners in the U.S. believe that their role was simply to maximize profits their companies earned. Social problems were not considered a legitimate business activity.
17 Trustee ManagementRecognized that owners of business had obligations to do more than just earn profits.Businesses had obligations to their employees, their customer, and their creditors.Most businesspeople continued to hold this view until the 1960’s.
18 Social InvolvementDuring the 1960’s, people believed businesses should use their influence to address social issues, such as poverty, crime, environmental destruction, and illiteracy.Business have obligations to all the people affected by their actions – stakeholders.Employees, customers, suppliers, and the community
19 Social AuditA review of a businesses social responsiveness
20 Philanthropy and Volunteerism A company can demonstrate social responsibility by contributing time and money to charitable, cultural, and civic organizations.Some companies grant employees paid time off to participate in charitable activities.Many companies offer “matching” programs.
21 Environmental Awareness Businesses limit the damage their business causes on the environment.Business can establish policies to reduce pollution.For example, encouraging employees to carpool.Business can use biodegradable and refillable containers.Ex: The Body Shop
22 Sensitivity to Diversity and Quality of Work Life Maintaining ethnically diverse workforces hat reflect the societies in which they operate.Enacting policies that contribute to the quality of workers’ livesFlexible hoursOn-site day care