copyright © 2006 pearson education canada inc. 4-1 chapter 4 conducting business ethically and...

4-1

Copyright © 2006 Pearson Education Canada Inc.

Chapter 4Chapter 4

Conducting BusinessEthically and Responsibly

4-2 Copyright © 2006 Pearson Education Canada Inc.

Explain how individuals develop their personal codes of ethics and why ethics are important in the workplaceDistinguish social responsibility from ethics, identify organizational stakeholders, and characterize social consciousness todayShow how the concept of social responsibility applies to both environmental issues and to a firm’s relationships with customers, employees, and investors

Learning Objectives


Learning Objectives

Identify four general approaches to social responsibility and describe the four steps a firm must take to implement a social responsibility programExplain how social responsibility and ethics affect small businesses


What Is Ethical Behaviour?

Ethics Standards or moral values that

dictate what is right and wrong Culturally based Formed upon society’s expectations Vary by person, and by situation

Everyone develops their own “code of ethics”


Influences on Ethical Behaviour

Personal Code of Ethics Family Peer Group Experiences


Managerial Ethics

Behaviour toward employeesBehaviour toward the organizationBehaviour toward other economic agents


Assessing Ethical Behaviour

Gather the relevant factual

information

Analyze the facts to determine the most appropriate

moral values

Make an ethical judgment based on

the rightness or wrongness of the proposed activity

or policy


Company Practices & Business Ethics

Firms are creating ethical codes of conduct to guide employee decisionsTop management support is essential Adopting written codesInstituting ethics programs


Written Codes of Ethics

Increase public confidence in a firm or its industryHelp stem the tide of government regulationImprove internal operations by providing consistent standards of both ethical and legal conductHelp managers respond to problems that arise as a result of unethical or illegal behaviour


Social Responsibility

A business’s collective code of ethics towards The environment Its customers Its employees Its investors


Organizational Stakeholders

Groups, individuals, and organizations that are directly affected by the practices of an organization and that therefore have a stake in its performance


Responsibility Towards Customers Social

Responsibility

Responsibility TowardsInvestors

Responsibility Towards Environment

Responsibility Towards Employees

Areas of Social Responsibility


Air pollutionWater pollutionLand pollutionToxic waste Acid rain

Environmental Responsibility Issues


Customer Responsibility Issues

Rights of consumersUnfair pricingEthics in advertising


Consumer Rights Issues

Consumerism

Social movement that seeks to protect and expand the rights of consumers in their dealings with businesses

Consumers rightsRight to safe productsRight to be informedRight to be heardRight to choose what they buy


Unfair Pricing Issues

Illegal pricing practices may occur due to the intentional (illegal) limiting of competitionCollusion A group of companies conspiring to

fix prices Results in inflated prices and a lack of

competition


Ethics in Advertising Issues

Increased attention to ethics in advertising and product information Words and phrases such as “light”,

“diet”, “low fat”

Concerns about advertising that is considered morally objectionable Ad campaigns by tobacco and alcohol

companies


Employee Responsibility Issues

Human resource management issuesSocial responsibility issuesPrivacy issuesEncouraging ethical behaviour Whistle-blowers


Human Resource Management Issues

Fair and equitable treatment of all employees without discrimination based upon sex, race, or other factorsRecruitingHiringTrainingPromotingCompensating


Social Responsibility Towards Employees

Safe workplaces Socially and emotionally - no abuse or

harassment Physically - safe work environment


Privacy of Employees

How much control is acceptable in the workplace? Drug testing Video monitoring Internet/E-mail Monitoring

Employees may not be aware or may not know when they are being monitored Results in increased job stress


Encouraging Ethical Employee Behaviour

Top management support for ethical behaviour is critical“Whistle-blowers” are employees who report unethical, illegal, and/or socially irresponsible behaviour The company should support its

“whistle blowers” rather than threatening them with dismissal or other penalties


Responsibility Towards Investors

Improper financial managementCheque kiting Insider tradingMisrepresentation of finances


Improper Financial Management

Doing a poor job of managing the financial resources of a company Payment of high salaries, lavish expense

accounts, & other perks with little control over how money is spent

May be legally unpunishable because no law has been brokenIt may be difficult to replace management because unrest in the firm may devalue its stock


Cheque Kiting

Illegal practice of writing cheques against money that has not yet arrived in the bank account A creative “cheque kiter” can write cheques from account to account with very little money to back it up


Insider Trading

Using confidential (non-public) information to gain from the purchase or sale of stock Martha Stewart (ImClone shares)

Involves gaining knowledge of inside information about the company prior to making the purchase


Misrepresenting Financial Information

Companies must conform to accounting guidelines called “generally accepted accounting principles” (GAAP)Failure to follow GAAP in order to inflate expected profit figures can mislead investors


Small Business Ethics

A small business does not have the same impact on society if it acts in an irresponsible wayMany entrepreneurs decide to conduct themselves in a socially responsible manner because they feel it is important to contribute to societyIndividual entrepreneurs make independent decisions

copyright © 2006 pearson education canada inc. 4-1 chapter 4 conducting business ethically and...

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