1. Business Essentials, 7th Edition Ebert/Griffin
Business Ethics and Social Responsibility
Business Essentials, 7th Edition Ebert/Griffin
Instructor Lecture PowerPoints
PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College
© 2009 Pearson Education, Inc.

2. Ethics and Social Responsibilty in the Workplace
Social Responsibility
Obligation of a business to contribute to society
Ethics
Beliefs about right and wrong
When we explore the concept of ethics in the workplace, we need to examine four different areas:
These include ethics, or beliefs about what is right and wrong or good or bad.
In addition we need to examine ethical behavior, which is behavior conforming to individual beliefs and social norms about what’s right and good.
What is unethical behavior? It is behavior confirming to individual beliefs and social norms about what is defined as wrong and bad.
In order to succeed in business, we need to address the ethical or unethical behavior by employees in the context of their jobs.
Teaching Tips:
In your student team, please develop a list of 5 examples of ethical behavior and 5 examples of unethical behavior in the workplace.
Answers will vary.
© 2009 Pearson Education, Inc.

3. ETHICS: MURKIER THAN YOU THINK
© 2009 South-Western, a division of Cengage Learning

4. UNIVERSAL ETHICAL STANDARDS
Developed by Character Counts, a nonpartisan organization of educators, community leaders, and ethicists.
© 2009 South-Western, a division of Cengage Learning

5. ETHICS AND THE INDIVIDUAL
Framework for Ethical Decisions
Do you understand the dimensions of the problem?
Who would benefit? Who would suffer?
Are the alternative solutions legal? Are they fair?
Does your decision make you comfortable?
Could you defend your decision on the nightly news?
© 2009 South-Western, a division of Cengage Learning

6. Individual Values and Codes
Sources of Personal Codes of Ethics
Childhood responses to adult behavior
Influence of peers
Experiences in adulthood
Developed morals and values
How does an individual develop a code of personal ethics? Here are some answers:
First, a person can develop personal values through their own childhood responses to adult behavior. An example could include seeing parents yell at each other or at their children whenever something goes wrong in the household, whenever the child does not do something the parent likes, etc. By doing this, the child internalizes that whenever anything bad happens, they should yell or scream at the other people in their lives. On the opposite side, if children see that whenever they make an honest mistake or make an error, their parents correct them and demonstrate the appropriate behavior and give them a hug, then in the future, these children probably would be more patient with others when they make mistakes, correct them in an even tone, and show empathy.
People may also be influenced by their peers, whether they are other children, teenagers or adults. For example, in middle school, one of the teens in a group of friends gets some cigarettes. The friends think it is cool and so they try it too. They may continue the behavior because they think it makes them look better in front of their friends. Adults do the same thing. They may see their friends buying new cars, new furniture and other things, and adults think they need to buy the same type of things, even though they may not have the money. Instead of paying cash, they use credit cards, and end up with a huge credit card balance they cannot pay.
Other experiences in adulthood can also impact an individual’s values or codes. For example, an adult may decide they love working for their employer, and offer to stay late and work harder, but then when it comes time for a promotion, they are overlooked by someone who may have offered favors or friendship to the boss. The hard worker may begin to think it is not worth it to work hard.
Of course, all of the above develop morals and values in a person. These are the foundation for their behavior both personally and within the workplace. Their morals and values seem correct to the individual, and so employees may need special attention or training if they come from another culture, where, for example, it is OK to stand very close to other people, while in the U.S. culture, people like to have about 3 feet of personal space around them in a business setting.
Teaching Tips:
Using your example from our last exercise, please remain in your teams and write down the possible source or personal code of ethics that might cause the ethical or unethical business behaviors you shared with the class. Once you have discussed these, we will share them with the class.
Answers will vary but will include religion, family upbringing, culture or subculture, social class and income levels, etc.
© 2009 Pearson Education, Inc.

7. Personal Ethics Simple Steps in Applying Ethical Judgments
Is the action legal?
Does it comply with our values?
If you do it, will you feel bad?
How will it look in the newspaper?
If you know it's wrong, don't do it!
If you're not sure, ask.
Keep asking until you get an answer.

8. Assessing Ethical Behavior
Ethical Norms and the Issues They Entail
Utility: Does a particular act optimize the benefits to those who are affected by it? Do all relevant parties receive “fair” benefits?
Rights: Does the act respect the rights of all individuals involved?
Justice: Is the act consistent with what’s fair?
Caring: Is the act consistent with people’s responsibilities to each other?
Now let’s examine the Ethical Norms that we can use when gathering information. We can examine the issue we are facing in terms of:
Utility: Utility answers the question, “Does a particular act optimize the benefits to those who are affected by it?” and the question, “Do all relevant parties receive ‘fair’ benefits?”.
Rights: Rights answers the question, “Does the act respect the rights of all individuals involved?”.
Justice: Justice answers the question, “Is the act consistent with what’s fair?”.
Caring: Caring answers the question, “Is the act consistent with people’s responsibilities to each other?”.
If we return to our example of the prepayment for consulting services by one of our customers, let’s apply these four ethical norms:
Utility: The answer to these two questions is yes in this case. The customer receives the ability to deduct the expense during his or her current fiscal year and the consulting firm receives the revenue.
Rights: The answer to this question is yes. The fiscal calendar year of the customer is respected as is the right for the consultant to receive payment.
Justice: The answer is yes because the customer is paying a fair price, and is just paying in advance. The consultant is receiving payment in advance for agreed-upon services.
Caring: The answer is yes because the consultant is putting the money in “escrow,” or is holding it and only taking it into its books as it provides the services, while the customer is receiving the right to pay in advance and thus take a tax advantage during the current fiscal year.
Teaching Tips:
Please join again with your same class team. In your team please refer back to one of the ethical issues you picked in our earlier discussion. Please discuss your example through the use of these norms. Let’s share our examples with the class.
Answers will vary but can build upon examples presented earlier in this slide.
© 2009 Pearson Education, Inc.

9. Company Practices and Business Ethics
Encouraging Ethical Behavior Involves:
Adopting written codes of conduct and establishing clear ethical positions for the conduct of business
Having top management demonstrate its support of ethical standards
Instituting programs to provide periodic ethics training
Establishing ethical hotlines for reporting and discussing unethical behavior and activities
A company can encourage ethical behavior in a number of ways. These include:
Adopting written codes of conduct and establishing clear ethical positions for the conduct of business. These codes can include rules of conduct, for example not allowing employees to accept gifts from suppliers or customers.
Having top management demonstrate its support of ethical standards. This can include having management be very public in its manner of following the rules established for employees, as in not accepting gifts, trips, event tickets, etc.
Instituting programs to provide periodical ethics training. This can include providing media training for key managerial employees so if they are contacted by the media during a potential crisis or product recall situation, they will know exactly what to say.
Establishing ethical hotlines for reporting and discussing unethical behavior and activities. This practice encourages employees to call in and report on or discuss unethical behavior or activities in an anonymous manner.
Teaching Tips:
In your same team, please choose one of the four ways firms encourage ethical behavior. Please discuss and describe an example of your choice. Please share your example with the class.
Answers will vary but could build on the examples listed above in this slide.
© 2009 Pearson Education, Inc.

10. SOCIAL RESPONSIBILITY
Responsibility to
Whom?
Stakeholders are any
groups that have a stake –
or a personal interest - in the
performance and actions
of an organization.
© 2009 South-Western, a division of Cengage Learning

11. RESPONSIBILITY TO…… EMPLOYEES CUSTOMERS INVESTORS COMMUNITY
Creating Jobs that Work
CUSTOMERS
Value, Honesty and Communication
INVESTORS
Fair Stewardship and Full Disclosure
COMMUNITY
Business and the Greater Good
ENVIRONMENT
Sustainable Development
© 2009 South-Western, a division of Cengage Learning

12. RESPONSIBILITY TO EMPLOYEES: CREATING JOBS THAT WORK
Meet Legal Standards
Workplace Safety
Minimum Wage/Overtime Requirements
Value Employees
Provide Work/Life Balance
© 2009 South-Western, a division of Cengage Learning

13. © 2009 South-Western, a division of Cengage Learning
DOES IT PAY TO PAY MORE?
Costco
Wal-Mart’s
Sam’s Club
Average hourly wage
$15.97
$11.52
Annual health costs per worker
$5,735
$3,500
Covered by health plan
82%
47%
Employee turnover
6%/yr
21%/yr
Labor and overhead costs
9.8% of sales
17% of sales
Profits per employee
$13,647
$11,039
© 2009 South-Western, a division of Cengage Learning

14. RESPONSIBILITY TO CUSTOMERS
CONSUMERISM:
The Right to Be Safe
The Right to Be Informed
The Right to Choose
The Right to be Heard
© 2009 South-Western, a division of Cengage Learning

15. Planned Obsolescence –
ROTTEN APPLE?
Planned Obsolescence –
Deliberately designing products
to fail in order to shorten
the time between consumer
repurchases
APPLE COMPUTERS:
iPods had irreplaceable battery.
Batteries died after 18 months.
Customers were encouraged to purchase new iPods
Two customers posted high profile protest movies online.
APPLE announced replacement program.
© 2009 South-Western, a division of Cengage Learning

16. RESPONSIBILITY TO INVESTORS
FAIR STEWARDSHIP AND FULL DISCLOSURE
Legal Requirements
Sarbanes-Oxley
Responsible use of Corporate Dollars
Honesty
Is Optimism or Pessimism Socially Responsible?
© 2009 South-Western, a division of Cengage Learning

17. RESPONSIBILITY TO COMMUNITY
Cause-related Marketing –
partnerships between businesses
and nonprofit organizations,
designed to spike sales for the
company and raise money
for the nonprofit.
Corporate Responsibility -
The actions of the business rather than donations of money and time.
Corporate Philanthropy -
business donations to
nonprofit groups, including
both money and time.
© 2009 South-Western, a division of Cengage Learning

18. RESPONSIBILITY TO ENVIRONMENT
Green Marketing –
marketing environmental
products and practices
to gain a competitive edge.
© 2009 South-Western, a division of Cengage Learning

19. RESPONSIBILITY TO ENVIRONMENT
Responsibility to environment is a part of responsibility to community
Reducing the amount of trash is more important than recycling
Although consumers support green marketing, they may not be willing to sacrifice quality
© 2009 South-Western, a division of Cengage Learning

20. Implementing Social Responsibility (SR) Programs
Arguments Against SR
The cost of SR threatens profits.
Business has too much control over which SR issues would be addressed and how SR issues would be addressed.
Business lacks expertise in SR matters.
Arguments for SR
SR should take precedence over profits.
Corporations as citizens should help others.
Corporations have the resources to help.
Corporations should solve problems they create.
There are arguments for and against an organization’s implementation of a social responsibility program.
Let’s first examine the arguments against implementation of social responsibility programs:
The cost of social responsibility programs threatens profits. Or, essentially, why should we spend money we don’t have to? This is truly a short-term business perspective.
The business or organization would have too much control over which programs would be addressed and how they would be addressed. In this argument, people believe that business would not choose the most appropriate socially responsible project to fund, and only fund those that enhance its image and reputation.
The business or organization lacks expertise in social responsibility matters. There is a new trend toward what is called “philanthrocapitalism,” whereby businesses are learning how they can apply their for-profit frameworks to the non-profit sector.
Next we will examine the arguments for the implementation of social responsibility programs by business:
Social responsibility should take precedence over profits.
Corporations as citizens should help others, or those less fortunate.
Corporations have the resources to help. This is true of many multinational corporations. Examples include Warren Buffet and Bill Gates and the combining of their foundations to address those less fortunate.
Corporations should solve problems they create. This position believes that corporations will continue to cause problems or continue to be socially irresponsible, and hence need to implement social responsibility programs to fix what they have broken.
It is important to note that the United Nations developed its Millennium Development Goals ( which were formed to end world poverty and hunger by There are eight specific goals to achieve the overarching development goal. The eighth goal specifically addresses the development of partnerships with businesses and other organizations to assist in meeting employment goals to help end poverty and thus hunger.
Teaching Tips:
In your student teams, please choose an argument either for or against the implementation of social responsibility programs and choose an example from current or past business news that supports your position. We will then share our team positions with the class.
Answers will vary but should show direct evidence to the arguments for and against implementation of social responsibility programs as stated above in this slide.
© 2009 Pearson Education, Inc.

21. Approaches to Social Responsibility
Obstructionist Stance
A company does as little as possible and may attempt to deny or cover up violations
Defensive Stance
A company does everything required of it legally but no more
Accommodative Stance
A company meets its legal and ethical requirements and also goes further in certain cases
Proactive Stance
A company actively seeks to contribute to the well-being of groups and individuals in its social environment
These different arguments for or against social responsibility programs by businesses take four stances. Let’s examine them:
Obstructionist stance: With this stance, the company does as little as possible and may attempt to deny or cover up violations.
Defensive stance: In the defensive stance, a company does everything required of it legally, but no more.
Accommodative stance: A company taking an accommodative stance meets its legal and ethical requirements and also goes further in certain cases.
Proactive stance: With this stance, a company actively seeks to contribute to the well-being of groups and individuals in its social environment.
Let’s take a look at this from a visual standpoint.
© 2009 Pearson Education, Inc.

22. FIGURE 2.4: Spectrum of Approaches to Corporate Social Responsibility
In Figure 2.4 we can see the spectrum of approaches to corporate social responsibility more graphically.
Those corporations or organizations with the lowest level of social responsibility fit the obstructionist and defensive stance, while those with higher levels of social responsibility take the accommodative and proactive stances.
Teaching Tips:
In your student teams, please choose one of the four stances toward corporate social responsibility. In your teams, provide an example of a company or a type of company and what their actions might be if they take the stance your team has chosen. We will share these with the class.
Answers will vary, but should include specific evidence from the previous slide or examples from the text or current affairs.
© 2009 Pearson Education, Inc.

23. Managing Social Responsibility Programs
Social responsibility must start at the top and be considered as a factor in strategic planning.
A committee of top managers must develop a plan detailing the level of management support.
One executive must be put in charge of the firm’s agenda.
The organization must conduct occasional social audits—systematic analyses of its success in using funds earmarked for its social responsibility goals.
Managing social responsibility programs involves a number of steps. Let’s review these:
Social responsibility must start at the top of the corporation and be considered as a factor in strategic planning.
A committee of top managers must develop a plan detailing the level of management support.
One executive must be put in charge of the firm’s social responsibility agenda.
The organization must conduct occasional social audits or systematic analyses of its success in using funds earmarked for its social responsibility goals.
Teaching Tips:
Please join with another class member. In your team, please develop an example of how you believe a company should initiate and manage a social responsibility program.
Answers will vary. Each team should provide evidence from the four steps provided in this slide.
© 2009 Pearson Education, Inc.

24. Social Responsibility and the Small Business
Large Business versus Small Business Responses to Ethical Issues
Differences are primarily differences of scale
More issues are questions of individual ethics
Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size
Now we are going to discuss social responsibility and the small business. We take it for granted that large, multinational firms must be socially responsible in the 21st century. But how can a small business be socially responsible?
The differences between how large and small businesses respond to ethical issues are primarily difference of scale. In general, more issues are questions related to individual ethics.
Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size.
Teaching Tips:
In your student teams, choose a small business that you know in your community. Then discuss together how this small business could or does address social responsibility based on the information you have learned today from Chapter 2.
The answers will vary based on the small business chosen. However, as this slide states, ethical and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size. Student answers should reflect back on the concepts from this chapter.
© 2009 Pearson Education, Inc.

25. Key Terms accommodative stance business ethics collusion consumerism
defensive stance
ethical behavior
ethics
insider trading
managerial ethics
obstructionist stance
organizational stakeholders
proactive stance
social audit
social responsibility
unethical behavior
whistleblower
There are many key terms that we learned in this chapter.
Teaching Tips:
Please form teams of two students. Each team will be assigned a number of terms. Your team should write an appropriate sentence using the key terms assigned to your group, which we will share with the class.
© 2009 Pearson Education, Inc.