1. Business Ethics
Ethics is a part of decision making at all levels of work and management
Just as important as functional areas of business
Deals with questions of whether practices are acceptable
No universally accepted approach for resolving issues

2. A Crisis in Business Ethics
Nearly half of employees observe misconduct in the workplace
After the financial crisis, business decisions and activities have come under scrutiny
The financial sector has not regained stakeholder trust

3. Americans’ Trust in Business Sectors
(% of respondents who say they trust the following business categories)

4. Specific Issues Misuse of company resources Abusive behavior
Harassment
Accounting fraud
Conflicts of interest
Defective products
Bribery
Employee theft

5. A Timeline of Ethical and Socially Responsible Concerns
Source: Adapted from “Business
A Timeline of Ethical and Socially Responsible Concerns
1960s
1970s
1980s
1990s
2000s
Environmental issues
Employee militancy
Bribes and illegal contracting prices
Sweatshops and unsafe working conditions in third-world countries
Cybercrime
Civil rights issues
Human rights issues
Influence peddling
Rising corporate liability for persona damages (for example, cigarette companies)
Financial misconduct
Increasing employee-employer tension
Covering up rather than correcting issues
Deceptive advertising
Financial mismanagement and fraud
Global issues, Chinese product safety
Changing work ethic
Disadvantaged consumers
Financial fraud (for example, savings and loan scandal)
Organizational ethical misconduct
Sustainability
Rising drug use
Transparency issues
Intellectual property theft
Ethics Timeline,” Ethics Resource Center, (accessed May 27, 2009). Copyright ©
2006, Ethics Resource Center (ERC). Used with permission of the ERC, 1747 Pennsylvania Ave. N.W., Suite 400, Washington, DC, 2006,

6. Organizational Ethical Culture
Ethical culture: The component of corporate culture that captures the values and norms that an organization defines as appropriate
Creates shared values
Goal is to:
Minimize need for enforced compliance
Maximize utilization of principles/ethical reasoning

7. Three Approaches to Management Ethics

8. Ethics Contributes to Employee Commitment
Commitment comes from employees who are invested in the organization
Employees willing to make personal sacrifices for the organization
The more company dedication to ethics, the greater the employee dedication
Concerns include a safe work environment, competitive salaries and benefits packages, and fulfillment of contractual obligations

9. Ethics Contributes to Investor Loyalty
Companies perceived by their employees as being honest are more profitable
Ethical climates in organizations provide a platform for
Efficiency
Productivity
Profitability

10. Ethics Contributes to Customer Satisfaction
Consumers respond positively to socially concerned businesses
Being good can be profitable
Customer satisfaction dictates business success
A strong organizational ethical climate places customers’ interests first
Research shows a strong relationship between ethical behavior and customer satisfaction

11. Ethics Contributes to Profits
Corporate concern for ethical planning is being integrated with strategic planning
Maximizes profitability
Corporate citizenship is positively associated with
Return on investment and assets
Sales growth
Studies have found a positive relationship between corporate citizenship and performance

12. Survey on Ethics and Workplace

13. Survey on Ethics and Workplace

14. Survey on Ethics and Workplace

15. Survey on Ethics and Workplace

16. Survey on Ethics and Workplace Findings of Deloitte&Touche 2007

17. Discussion Case: Madoff
Madoff pleads guilty to 11 counts of financial fraud and theft in March 2009
Is sentenced to 150 years in prison
A Ponzi scheme is a fraud that attracts investors with a promise of high returns
The perpetrator benefits either by disappearing with the money or living a wealthy lifestyle by skimming
Many would say this is a complete failure of government regulations
The Enron scandal was only one in a series of scandals that erupted in WorldCom, Tyco, Aldelphia, Globcal Crossing, Qwest, Merrill Lynch, Citigroup Salomon Smith Barney, Marsh and McClennen, Credit Suisse First Boston, and even the New York Stock Exchange all came under investigation for illegal activity.