Demanding Ethical and Socially Responsible

Behavior

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Ethics&

Social Responsibility

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• Ethics -- The standards of moral behavior. Behaviors that are accepted by society as right versus wrong.

WHAT are ETHICS?

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Ethics

Doing What Is Right…

As You Know It To Be Right.

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Right:• Integrity

• Respect for human life

• Self control

• Honesty

• Courage

• Self-sacrifice

Wrong:•Cheating•Cowardice•Cruelty

BASIC MORAL VALUES

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Ethics

Ethics Begins With Each of Us

Stem From Individual

More Than Legality

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Ethical Dilemma

A situation requiring a choice between equally undesirable alternatives.

Ethics Begins with Each of Us

• Ask yourself these questions:

- Is it legal?

- Is it balanced?

- How will it make me feel about myself?

FACING ETHICAL DILEMMASLG2

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Ethics Begins with Each of Us

• Plagiarizing from Internet materials is the most common form of cheating in schools today.

ETHICS and YOU

• Studies found a strong relationship between academic dishonesty and dishonesty at work.

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• Trust between workers and managers must be based on fairness, honesty, openness and moral integrity.

• Leadership can help instill corporate values in employees.

ETHICS START at the TOP

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• An increasing number of companies have adopted written codes of ethics.

ETHICS CODES

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Texas InstrumentsThe TI Ethics Quick Test- 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.

For copies of the card or further information, contact the TI Ethics Office at 1-800-33-ETHIC.

(This information is provided to TI employees on a business-card size mini-pamphlet to carry with them.)

• Compliance-Based Ethics Code -- Emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers.

• Integrity-Based Ethics Code -- Define the organization’s guiding values, create an environment that supports ethically sound behavior and stress a shared accountability among employees.

ETHICS CODES

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1. Top management must adopt and unconditionally support an explicit corporate code of conduct.

2. Employees must understand that senior management expects all employees to act ethically.

3. Managers and others must be trained to consider the ethical implications of all business decisions.

(continued)

HOW to IMPROVE AMERICA’S BUSINESS ETHICS

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4. An ethics office must be set up with which employees can communicate anonymously. Whistleblowers -- People who report illegal or unethical behavior.

HOW to IMPROVE AMERICA’S BUSINESS ETHICS, cont.

5. Involve outsiders such as suppliers, subcontractors, distributors and customers.

6. The ethics code must be enforced.

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Source: James Gehrke, Magnify Leadership & Development, November 2008.

1. Managers must communicate the organization’s vision on ethical behavior.

2. Organizations must have a code of ethics.

3. Policies have to be enforced regarding ethical offences.

4. Ethical responsibility must be taught to all employees.

(continued)

HOW to PREVENT UNETHICAL BEHAVIORS LG4

Setting Corporate Ethical Standards

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Source: James Gehrke, Magnify Leadership & Development, November 2008.

5. Discussions of ethics must be included in the decision-making process.

6. Accountability must be taken seriously at all levels in the organization.

7. Organizations must act fast when a crisis occurs.

8. Employees must know they have to defend and maintain the company’s reputation.

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Setting Corporate Ethical Standards

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Social Responsibility

Social Responsibility

Social responsibility is management’s obligation to make choices and take actions that contribute to the welfare and interests of society as well as to those of the organization.

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*Corporate Social Responsibility

• Corporate Social Responsibility (CSR) -- The concern businesses have for the welfare of society.

• CSR is based on a commitment to integrity, fairness, and respect.

• CSR proponents argue that businesses owe their existence to the societies they serve and cannot exist in societies that fail.

CORPORATE SOCIAL RESPONSIBILITY

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• Corporate Responsibility -- Includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment.

• Corporate Policy -- The position a firm takes on social and political issues.

• Corporate Philanthropy -- Includes charitable donations.

CORPORATE RESPONSIBILITY and POLICY

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• Xerox offers a Social Service Leave program.

• Citizen Corps encourages volunteers to help strengthen homeland security by helping in their community.

• Two-thirds of MBA students surveyed reported they would take a lower salary to work for a socially responsible company.

POSTIVE IMPACTS of COMPANIES

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www.dosomething.org 2013

HELPING HANDS – Most Generous Celebrities

Who? For?

Taylor Swift Nashville Symphony and Centrepoint homeless.

One DirectionHelping African and UK’s living in severe poverty or

injustice, & cancer research.

BeyonceLondon’s charity concert for women’s rights: ‘Chime For

Change’

Paul Walker Founded: Reach Out WorldWide (ROWW)

Macklemore & Ryan Lewis Adopting a culture of acceptance.

Sandra BullockMothers Who Make a Difference Award and People’s Choice Award: “Favorite Humanitarian” for ongoing

efforts in disaster relief & education.

Kerry WashingtonPresident Obama’s President’s Committee on the Arts & Humanities, advocating nationally for arts education in

low-income areas

Ian SomerhadlerIan Somerhalder Foundation “to empower, educate, and collaborate with people and projects to positively impact

the planet and its creatures.”

Ryan SeacrestThe Ryan Seacrest Foundation to give kids in hospitals a

chance to feel like a star for day.

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Source: Forbes, June 6, 2011.

GENEROUS GUYSWorld’s Biggest Givers

Who? How Much? What For?

Bill Gates $28B Malaria, public health, education

Warren Buffett $8.3B Gates Foundation

George Soros $8B Human rights, democracy

Gordon Moore $6.8B Environment

Carlos Slim $4B Education, healthcare

Eli Broad $2.6B Education, arts

Azim Premji $2.1B Education

James Stowers $2B Genetic research

Michael Bloomberg $1.8B Antismoking, transportation

Li Ka-Shing $1.6B Education, healthcare

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RESPONSIBILITY to CONSUMERS

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• The Right to Safety

• The Right to be Informed

• The Right to Choose

• The Right to be Heard

PRESIDENT KENNEDY’S BASIC RIGHTS of CONSUMERS

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Responsibilities to Customers

The Right to Be Safe. Safe operation of products, avoiding product liability.

The Right to Be Informed. Avoiding false or misleading advertising and providing

effective customer service.

The Right to Choose. Ability of consumers to choose the products and services they

want.

The Right to Be Heard. Ability of consumers to

express legitimate complaints to the appropriate parties.

Consumer Product Safety Commission

www.cpsc.gov

RESPONSIBILITY TO INVESTORS

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• Insider Trading -- Insiders using private company information to further their own fortunes or those of their family and friends.

• Unethical behavior does financial damage to a company and investors are cheated.

RESPONSIBILITY TO INVESTORS

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RESPONSIBILITY to EMPLOYEES

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• Create jobs and provide a chance for upward mobility.

• Treat employees with respect.

• Offer salaries and benefits that help employees reach their personal goals.

RESPONSIBILITY to EMPLOYEES

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Source: Fortune, www.fortune.com, March 21, 2011.

1. Apple

2. Google

3. Berkshire Hathaway

4. Southwest Airlines

5. Procter & Gamble

6. Coca-Cola

7. Amazon

8. FedEx

9. Microsoft

10. McDonald’s

AMERICA’S MOST ADMIRED COMPANIES

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RESPONSIBILITY to the ENVIRONMENT

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• Environmental efforts may increase costs but can offer good opportunities.

• The emerging renewable-energy and energy-efficiency industries account for 8.5 million U.S. jobs.

RESPONSIBILITY to the ENVIRONMENT

• By 2030, as many as 40 million “Green” jobs will be created.

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• Social Audit -- A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs.

• Five Types of Social Audit Watchdogs1) Socially conscious investors

2) Socially conscious research organizations

3) Environmentalists

4) Union officials

5) Customers

SOCIAL AUDITING

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• Many businesses want socially responsible behavior from their international suppliers.

• In the 1970s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business.

• Partners in the Organization of American States signed the Inter-American Convention Against Corruption.

INTERNATIONAL ETHICS

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Social Responsibility

Bottom Line:

Should Companies Have?

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Companies are citizens in the communities in which they reside,

therefore,

They do have a Social Responsibility!

The Majority View

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Milton Friedman - – Argues that firms need to focus on making a

profit, not on social responsibility, and – Claims that firms that focus on social

responsibility get distracted from their real purpose.

An Economist’s View

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Social Responsibility

To Sum It Up:

Doing Good vs. Doing Well