2 Learning ObjectivesLO1 Describe how different ethical perspectives guide decision making LO2 Explain how companies influence their ethics environment LO3 Outline a process for making ethical decisions LO4 Summarize the important issues surrounding corporate social responsibility LO5 Discuss reasons for businesses’ growing interest in the natural environment LO6 Identify actions managers can take to manage with the environment in mind
3 EthicsEthicsThe system of rules that governs the ordering of values
4 Telling the Truth and Lying: Possible Outcomes Table 5.1
5 It’s a Personal IssueMost of us think we are good decision makers, ethical, and unbiased.But most people have unconscious biases that favor themselves and their own group.
6 It’s a Personal Issue Managers often: Hire people who are like them Think they are immune to conflicts of interestTake more credit than they deserveBlame others when they deserve some blame themselves
7 It’s a Personal IssueIf the employer pays for the computer and the time you spend sitting in front of it, is it ethical for you to use the computer to do tasks unrelated to your work?
8 Ethics Ethical issue Business ethics Situation, problem, or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrongBusiness ethicsThe moral principles and standards that guide behavior in the world of business.
9 Ethical Systems Moral philosophy Universalism Principles, rules, and values people use in deciding what is right or wrongUniversalismThe ethical system stating that all people should uphold certain values that society needs to function.
10 Caux Principles Caux Principles Ethical principles established by international executives based in Caux, Switzerland, in collaboration with business leaders from Japan, Europe, and the United States.
11 Caux Principles Kyosei Human dignity living and working together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competitionHuman dignityconcerns the value of each person as an end, not a means to the fulfillment of others’ purposes
12 QuestionWhich ethical system bases ethical behavior on the opinions and behaviors of relevant other people?EgoismUtilitarianismRelativismVirtue ethicsThe correct answer is c – relativism. See slide 5-14
13 Ethical Systems Egoism An ethical system defining acceptable behavior as that which maximizes consequences for the individual
14 Ethical Systems Utilitarianism An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers.
15 Ethical Systems Relativism Virtue ethics Philosophy that bases ethical behavior on the opinions and behaviors of relevant other peopleVirtue ethicsClassification of people based on their level of moral judgment.
16 Ethical Systems Kohlberg’s model of cognitive moral development Perspective that what is moral comes from what a mature person with “good” moral character would deem right.
18 QuestionWhat act passed into law by Congress in 2002 established strict accounting and reporting rules?Wagner ActSarbanes-Oxley ActChapin ActGAAP ActThe correct answer is b – Sarbanes-Oxley. See next slide
19 The Ethics Environment Sarbanes-Oxley ActAn act passed into law by Congress in 2002 to establish strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence
20 Business Ethics Ethical climate In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong
21 Danger SignsExcessive emphasis on short-term revenues over longer-term considerations.Failure to establish a written code of ethics.A desire for simple, “quick fix” solutions to ethical problems.An unwillingness to take an ethical stand that may impose financial costs.
22 Danger Signs (cont.)Consideration of ethics solely as a legal issue or a public relations toolLack of clear procedures for handling ethical problems.Responding to the demands of shareholders at the expense of other constituencies
23 Danger Signs Ethical leader One who is both a moral person and a moral manager influencing others to behave ethically.
24 Ethics Programs Compliance-based ethics programs Company mechanisms typically designed by corporate counsel to prevent, detect, and punish legal violations.
25 Ethics Programs Integrity-based ethics programs Company mechanisms designed to instill in people a personal responsibility for ethical behavior
26 A Process for Ethical Decision Making Figure 5.1
27 Ethical Decision Making Making ethical decisions takes:Moral awarenessrealizing the issue has ethical implicationsMoral judgmentknowing what actions are morally defensibleMoral characterthe strength and persistence to act in accordance with your ethics despite the challenges
28 CourageBehaving ethically requires not just moral awareness and moral judgment but also moral character, including the courage to take actions consistent with your ethical decisions
29 Corporate Social Responsibility Corporate social responsibility (CSR)Obligation toward society assumed by business.Triple bottom line
30 Corporate Social Responsibility Economic responsibilitiesTo produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors.Legal responsibilitiesTo obey local, state, federal, and relevant international laws
31 Corporate Social Responsibility Ethical responsibilitiesMeeting other social expectations, not written as law.
32 Corporate Social Responsibility Philanthropic responsibilitiesAdditional behaviors and activities that society finds desirable and that the values of the business support.
33 Pyramid of Global Corporate Social Responsibility and Performance Figure 5.2
34 Corporate Social Responsibility Transcendent educationAn education with five higher goals that balance self-interest with responsibility to othersEmpathy, generativity, mutuality, civil aspiration, intolerance of ineffective humanity
35 Contrasting ViewsFirst - holds that managers act as agents for shareholders and, as such, are obligated to maximize the present value of the firm Second - managers should be motivated by principled moral reasoning
36 ReconciliationProfit maximization and corporate social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can convergeRecent attention has also been centered on the possible competitive advantage of socially responsible actions
37 Ecocentric Management Goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders.
38 Ecocentric Management Sustainable growthEconomic growth and development that meet present needs without harming the needs of future generations
39 Ecocentric Management Life-cycle analysis (LCA)A process of analyzing all inputs and outputs, though the entire “cradle-to-grave” life of a product, to determine total environmental impact
40 Video: Cell Phones for Soldiers Why is it important for Rob and Brittany Bergquist to be socially responsible?