1. Copyright Atomic Dog Publishing, 2003 1/18 Social Responsibility and Management Ethics Chapter 3

2. Copyright Atomic Dog Publishing, 2003 2/18 Ethics and Social Responsibility  The issue of ethics and practicing ethical behavior took on a new meaning with the passage in 1991 of the U.S. Sentencing Commission Guidelines  Under the Guidelines, companies and managers could be prosecuted and punished even if they didn’t know about the unethical behavior  The Guidelines cover such laws as price fixing, fraud, antitrust violations, civil rights, money laundering, conflict of interest, stolen property, copyrights, and extortion

3. Copyright Atomic Dog Publishing, 2003 3/18 The Meanings of Social Responsibility  Social Obligation  Corporation engages in socially responsible behavior when it pursues profit only within the constraints of law  Social Reaction  Firms are reactive  Social reaction is behavior that is in reaction to currently prevailing social norms, values, and performance expectations  Business must be accountable for the ecological, environmental, and social costs incurred by its actions

4. Copyright Atomic Dog Publishing, 2003 4/18 The Meaning of Social Responsibility (cont.)  Social Responsiveness (SR)  Behaviors are anticipatory and preventive, rather than reactive and retroactive  SR involves actions that exceed social obligation and social reaction  SR actively seeks solutions to social problems  The SR view is the broadest meaning of social responsibility

5. Copyright Atomic Dog Publishing, 2003 5/18 Specific Socially Responsible Activities 1. Product Line 2. Marketing Practices 3. Environmental Control 4. Employee Education and Training 5. Employee Relations, Benefits, and Satisfaction 6. Employment and Advancement of Minorities or Women 7. Employee Safety and Health 8. Corporate Philanthropy

6. Copyright Atomic Dog Publishing, 2003 6/18 Beneficiaries of Socially Responsible Actions  Internal Beneficiaries  Customers  Employees  Stockholders (owners)  External Beneficiaries  Specific  General

7. Copyright Atomic Dog Publishing, 2003 7/18 Internal Beneficiaries  Customers  Respond promptly to complaints  Provide complete and accurate product information  Implement advertising programs that are completely truthful

8. Copyright Atomic Dog Publishing, 2003 8/18 Internal Beneficiaries (cont.)  Employees  Adhere particularly to the safety and health issues, wage and hour provisions, and union and unionization  Provide environments where employees are free from pressure to act in unethical or illegal ways  Provide fringe benefits  Stockholders  Disclose fully and accurately to stockholders its uses of corporate resources and the results of those uses

9. Copyright Atomic Dog Publishing, 2003 9/18 External Beneficiaries  Specific  Special-interest groups: racial and ethnic minorities, women, the handicapped, and the aged  Corporate actions: obligatory, reactive, or responsive  Important characteristic of these actions: economic, social, and political well-being of a special group is enhanced through the corporation’s efforts

10. Copyright Atomic Dog Publishing, 2003 10/18 External Beneficiaries (cont.)  General  Involves efforts to solve or prevent environmental or ecological water, air, and noise pollution, and waste and radiation disposal  Introduce stakeholder management devices (SMDs)—relatively new mechanisms through which organizations respond to stakeholder concerns

11. Copyright Atomic Dog Publishing, 2003 11/18 Business Ethics Today  Business ethics refers to:  Standards of right and wrong  Development of one’s own ethical standards  Implicit, informal social contract between the corporation and its employees  Will not guarantee lifetime employment  Will offer employees new responsibilities, new benefits, and new power  New compensation schemes such as stock options and gain sharing  Employee rights  “Human Rights Audit”

12. Copyright Atomic Dog Publishing, 2003 12/18 Impact of Technology on Business Ethics  Helps to manage and protect the security and integrity of company data  Monitors and controls organizational equipment and processes  Facilitates high-tech crime  Ranges from employees using their computers to snoop through confidential computer files to criminal theft of trade secrets

13. Copyright Atomic Dog Publishing, 2003 13/18 Impact of Technology on Business Ethics (cont.)  Credit card fraud  Telecommunications fraud  Employee use of computers for personal reasons  Unauthorized access to confidential files  Unlawful copying of copyrighted or licensed software  Computer-based sexual harassment  Pornography  Copyright infringement  Obscenities  Software piracy  The inadvertent and deliberate communication of trade secrets to external audiences  Most common crimes reported were:

14. Copyright Atomic Dog Publishing, 2003 14/18 Managerial Ethics  Ethics are used by managers as guidelines in making decisions that affect employees, the organization, consumers, and other parties  Continues to be a topic of concern because businesses are realizing that ethical misconduct by management can be extremely costly for the company and society as a whole  Determining what is and isn’t ethical is often difficult to do  Currently, several ethical issues are being debated in employee surveillance and polygraph tests

15. Copyright Atomic Dog Publishing, 2003 15/18 Ethical Standards  Managers must reconcile competing values in making decisions. They make decisions that have consequences  Some prefer a pluralistic approach comprising several principles arranged in a hierarchy of importance  The advantage of the pluralistic approach to ethical decision making is that the decision maker, with intentions to do right, has the basis for evaluating decisions

16. Copyright Atomic Dog Publishing, 2003 16/18 The Organization’s Role in Ethical Behavior  Provides managers with specific guidelines concerning ethics in decision making

17. Copyright Atomic Dog Publishing, 2003 17/18 How Companies Make Ethical Governance the Norm  Create credo that publicly proclaims ethical position  Ensure that top management makes clear that it believes in and personally lives up to those standards  Establish ethics officers  Establish ongoing education training programs  Include ethics as part of performance reviews  Place procedures for dealing with those who violate the code of ethics

18. Copyright Atomic Dog Publishing, 2003 18/18 End of Chapter 3