Ethical Management 7-3 Goals Justify the need for ethical management. Identify the role of leaders in increasing ethical behavior.

Key Terms Ethical business practices- Core values- Ensures that the highest standards of conduct are observed in a company’s relationships with everyone who is a part of the business is affected by the business’ activities Core values- Important principles that will guide decisions and actions in the company. Chapter 7

Focus On Real Life – pg. 163 Do you believe most business executives are ethical or unethical? Which gets more attention-- ethical or unethical behavior? Which results in a better reputation among employees, customers, and other businesses – ethical or unethical behavior? Chapter 7

IMPORTANCE OF ETHICAL BEHAVIOR Would you copy a paper from the Internet and submit it to your teacher as your own work? Would you cheat on a test to ensure a higher grade? Is it okay for an employee to call in sick to justify a day off from work to take office supplies from the company for use at home? Do you believe a manager should lie to an employee or ignore unsafe working conditions in order to save money or speed production? Each of these situations describes an ethical decision you and others may face in your personal life and in business. Chapter 7

IMPORTANCE OF ETHICAL BEHAVIOR Not everyone has the same belief about what is ethical and what is not ethical. Organizations should develop a clear view of what is acceptable business behavior and what is not. Individuals and organizations develop reputations based on their actions and the decisions they make. Chapter 7

WHAT IS ETHICAL BEHAVIOR? Ethics are principles of conduct governing an individual or a group. Ethical business practices Ensures that the highest standards of conduct are observed in a company’s relationships with everyone who is a part of the business is affected by the business’ activities Ethical behavior involves the actions of EVERY employee. Chapter 7

WHAT IS ETHICAL BEHAVIOR? Two parts to ethical behavior 1. actions of the individual. 2. the results of those actions. Ethical behavior meets several standards: It is lawful. It is consistent with company values and policies. It does not harm some while benefiting others. If the actions and results become public, it will not embarrass the company. Chapter 7

ETHICAL MANAGEMENT Managers are responsible for the success or failures of a business. Success or failure is not just determined by results (profits/losses). It is determined by the actions and activities of the business. Are the actions and activities of the business are legal, honest, and ethical? Are people and other companies treated fairly? Does the work of the company improves the communities and countries in which it operates? Does the company works to protect the environment and conserve natural resources? Chapter 7

INCREASING ETHICAL BEHAVIOR THROUGH LEADERSHIP Most people want to do what is right. But when they are working under time pressures or facing a major problem, some people act unethically. The unethical behavior ends up harming the business and its relationship with customers and the community. Chapter 7

Preparing the organization It is a manager’s duty to create an atmosphere in which all employees know they are expected to act ethically. Employees must know they will be supported when they make the right decisions. Leaders should also make it clear that unethical behavior is unacceptable and will be punished if it occurs. Chapter 7

Preparing the organization Most organizations have a mission statement. Mission statements-describes the reason a business exists and what it wants to accomplish. To make ethical behavior a part of a company’s mission, many businesses develop a statement of core values. Core values-important principles that will guide decisions and actions in the company. Ex. Rite Aid – pg. 165 Managers should work with employees to develop core values that emphasize ethical behavior. The company’s commitment to ethical behavior should be made clear when each new employee is hired. Chapter 7

WTBS… Are all unethical activities illegal? Chapter 7

Modeling Ethical Behavior Always ACT ethically. When it comes to encouraging ethical behavior, actions speak louder than words. Being an ethical role model inspires others to do the same. Chapter 7