Chapter 3 – Ethics and Social Responsibility

1. Your friend asks you to add a few extra hours to a work time sheet for him, but you know that he did not put in the time. 2. A salesperson in an electronics store offers to sell you an iPod after hours at a discounted price. 3. You are aware that the teller gave you back too much money when completing a banking transaction.

WHAT IS ETHICAL BEHAVIOUR?  Ethical behaviour is conduct that conforms to ethics—individual beliefs and social standards about what is right and good.  Ethics are rules that help us tell the difference between right and wrong. They encourage us to do the right thing.  Values tell us what is important. They help us make decisions about right and wrong.  Morals are rules we use to decide what is good or bad. 3

What Role Should Ethics Play in Business? Business ethics are based on society’s ethics and those of the people who work for and buy from them. A Code of Ethics Some companies write a code of ethics, a document that explains specifically how employees should respond in certain situations. 4

How Can Businesses Resolve Ethical Dilemmas? A dilemma is a situation where a difficult choice must be made between two or more options. An ethical dilemma is a moral problem with a choice between potential right and wrong. Some questions to consider are Who will be helped by what you do? Who will be hurt by what you do? What are the benefits and problems of such a decision? Will the decision survive the test of time? Whistle-blowing Whistle-blowing happens when an employee informs officials or the public about an illegal or ethical violation. 5

What Happens When People Do Not Behave Ethically? When an individual acts unethically, his or her behavior will most likely harm others. The individual could also be sent to jail for his or her actions. Major ethical issues include fraud, accounting scandals, and insider trading. Fraud Fraud is a crime of lying or pretending. Some businesses mislead consumers and trick them to buy their products or services: false or misleading advertising “bait and switch” selling double ticketing items for sale 6

Accounting Scandals An accounting scandal occurs when accountants or senior executives alter accounting records for personal benefit. Accounting information is used inside and outside of the business to make decisions. When accounting irregularities are uncovered, a forensic accountant investigates legal and financial documents to find evidence of tampering. 7

Embezzlement, a type of accounting fraud, happens when management redirects money for personal gain. Business owners rely on outside accountants, auditors, to check and report on the validity of financial records.

Insider Trading Insider trading is buying or selling shares of a company based on confidential information. This type of trading is illegal. Prosecution for insider trading falls under the provincial securities commissions. Punishment includes fining the individual(s) for up to $1 million turning over all profits from trading incarcerating the person(s) for up to two years being banned from future trading in securities 9

A business exhibits corporate social responsibility (CSR) through their values, ethics, and the contributions it makes to communities. CRS is driven by a desire to protect customers and to treat employees and shareholders fairly. 10

CSR Principles Businesses that practice CSR principles support their employees and consumers by providing a safe and healthy work environment adopting fair labour polices protecting the environment being truthful in advertising avoiding price discrimination donating to charity

Workplace Safety - It is covered by the Occupational Health and Safety Act (OHSA) of Ontario - the OHSA defines the rights and responsibilities of employees in their workplace to ensure their safety and health. Antidiscrimination Issues Discrimination is denying a qualified individual an interview, job, or promotion based on his or her religion, gender, sexual orientation, or physical disabilities. Gender discrimination is treating an employee differently based on their sex (male or female). ◦ The glass ceiling refers to invisible barriers that may affect the career path of senior leaders in corporate positions. 12

Harassment Many businesses have policies and procedures for dealing with harassment: behaviour that is threatening, disturbing, or makes others feel uncomfortable. 13

Accessibility Issues The duty to accommodate refers to an employer’s obligation to ensure accessibility for all employees. Environmental Responsibility Environmental concerns for business include the Earth’s air, land, and water. These issues affect Canadian businesses and others in the world Labour Practices In Ontario, the Employment Standards Act addresses the minimum employment conditions including:  hours of work, overtime pay, minimum wage  Holidays, vacations  equal pay for male and female employees 14

 Read the “Pirates Code of Ethics” (handout) ◦ What is good about the Pirate Creed of Ethics? ◦ What is bad about the Pirate Creed of Ethics? ◦ What is the purpose of the Creed for the Pirate Community? ◦ What values are embedded in the Pirate Creed?

Pirates Creed of Ethics About the year 1640 the pirates formed a kind of democratic confraternity. The Pirates Creed of Ethics was the social contract of the expedition. It was always signed by the whole ship's company before any departure when the elected Captain and the officers prepared a charter-party. Every decision of importance was discussed, followed by a vote. Courage alone conferred distinction. a pirate ship was an extremely well-ordered floating community. 1. Ye Captain shall have full command during the time of engagement, and shall have authority at all other times to conduct the ship accordingly. He who disobeys him may be punished unless the majority vote against the punishment. 2. If ye Captain's vessel is shipwrecked, the crew pledges to remain until he has possessed himself of a vessel. If the vessel is the common property of the crew, the first vessel captured shall belong to ye Captain with one share of the spoil. 3. Ye ship's surgeon shall have two hundred crowns for the maintenance of his medicine chest and he shall receive one part of the spoil. 4. Ye other officers will receive each single part, and if ye distinguish yourself, the crew will determine how much reward to be given to ye. 5. Ye spoil taken from a captured ship is to be distributed in equal portion. 6. Ye who shall be the first to signal the appearance of the vessel that is captured, shall receive 100 hundred crowns. 7. If ye lose an eye, or a hand or leg in ye said service, ye shall receive up to six slaves or six hundred crowns. 8. Ye supplies and rations are to be shared equally. 9. If ye introduce on board a woman in disguise, ye shall be punished to death. 10. If one Brother steals from another, his nose or ears are to be cut off. If he sins again, he is to be given a musket, bullets, lead and a bottle of water and marooned on an island. 11. If there is any doubt in a dispute between ye Brothers, a court of honour is to decide the verdict. If a Brother is proved in the wrong, the first time he shall be pardoned, but should he offend again, he shall be tied to a gun, and there shall receive from each of the ship's company one strike of the lash. The same punishment shall be given to ye among us, including officers, who shall get drunk, while on the ship, to the point of losing ye senses. 12. Whoever shall be placed on sentry, and upon his post shall go to sleep, shall in the first case be lashed by all the Brothers, and should he again offend, his head shall be split. 13. All ye who shall plot to desert, or having deserted shall be captured, shall have ye heads split open. 14. Quarrels between several Brothers whilst aboard ye ship shall be settled ashore with pistol and sword. He that draws first blood shall be the victor. No striking another whilst aboard ye ship.