08-04-20081 Chapter 4 Legal and Ethical Considerations 4.1Management Obligations 4.2 Social and professional responsibilities 4.3 Ethical considerations

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Chapter 4Chapter 4Legal and Ethical Legal and Ethical

ConsiderationsConsiderations

4.14.1 Management ObligationsManagement Obligations

4.2 4.2 Social and professional responsibilitiesSocial and professional responsibilities

4.3 4.3 Ethical considerations Ethical considerations

4.4 4.4 Government regulations Government regulations

4.5 4.5 Protecting ideas Protecting ideas

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4.1 – Management Obligations 4.1 – Management Obligations (Compulsions)(Compulsions)

Government industrial Government industrial legislationlegislation has increased has increased

steadily since the start of the industrial revolution steadily since the start of the industrial revolution

Understand the aims and reasons behind Government Understand the aims and reasons behind Government

regulations, and be able to work with government regulations, and be able to work with government

agencies to satisfy these requirements agencies to satisfy these requirements

Need to maintain a greater awareness of the Need to maintain a greater awareness of the

environmental and social obligations placed on environmental and social obligations placed on

organizations by the communityorganizations by the community

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Management ObligationsManagement Obligations

The requirements and norms (standards) of The requirements and norms (standards) of

present and future societypresent and future society The manager at the same time needs to resolve The manager at the same time needs to resolve

the conflict which can exist between the needs the conflict which can exist between the needs of society, employees, shareholders, customers of society, employees, shareholders, customers and suppliers and suppliers

It is important that employees are adequately It is important that employees are adequately trained and developed trained and developed

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4.2 – Social and Professional 4.2 – Social and Professional ResponsibilitiesResponsibilities

Three factors differentiate a Three factors differentiate a professional groupprofessional group from from

society or club:society or club:

1.1. Whether members who are admitted to it are Whether members who are admitted to it are required to reach a specific academic levelrequired to reach a specific academic level

2.2. Whether technical and ethical standards of Whether technical and ethical standards of performance have been specified for membersperformance have been specified for members

3.3. Whether a body exists to set and enforce these Whether a body exists to set and enforce these standards, to provide ongoing guidance to members standards, to provide ongoing guidance to members and to administer membershipand to administer membership

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Social and Professional ResponsibilitiesSocial and Professional Responsibilities

Most professional bodies have rules of conduct Most professional bodies have rules of conduct and can expel members if these rules are and can expel members if these rules are broken broken

Members who belong to management Members who belong to management professional bodies also often belong to other professional bodies also often belong to other professional association, such as in professional association, such as in engineering, physics, accountancy, marketing engineering, physics, accountancy, marketing and personnel and personnel

Two areas of Special ConcernTwo areas of Special Concern::– Environmental protectionEnvironmental protection– Responsibility to employeesResponsibility to employees

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Environmental protectionEnvironmental protectionThere are three main environmental considerations:There are three main environmental considerations:1.1. Pollution, usually created as a by-product in the day-to-day Pollution, usually created as a by-product in the day-to-day

operation of the company, must be eliminated operation of the company, must be eliminated • Processes used during manufacture do not create waste by-products Processes used during manufacture do not create waste by-products

which harm the environmentwhich harm the environment• Products themselves do not create an environmental hazard when Products themselves do not create an environmental hazard when

being usedbeing used• Environmental considerations must be paramount at every stage in a Environmental considerations must be paramount at every stage in a

product’s life cycleproduct’s life cycle

2.2. The use of natural resources in the manufacture of the product, The use of natural resources in the manufacture of the product, (particularly those that are non renewable) should be (particularly those that are non renewable) should be minimizedminimized

3.3. Health and safety issue must be considered, relating to the Health and safety issue must be considered, relating to the work environment and to the productwork environment and to the product

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Environmental protectionEnvironmental protectionMajor steps in the introduction of an Major steps in the introduction of an environmental policyenvironmental policy1.1. Enhance environmental awarenessEnhance environmental awareness

• Management LeadershipManagement Leadership• Employee involvementEmployee involvement• Employee trainingEmployee training

2.2. Develop environmental strategiesDevelop environmental strategies• Clear communicated aimsClear communicated aims• Develop methods/processesDevelop methods/processes• Prioritize tasksPrioritize tasks

3.3. Conduct Conduct environmental Auditsenvironmental Audits• Set measuresSet measures• Conduct audits/feedbackConduct audits/feedback• Continuous improvement targetsContinuous improvement targets

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Social and Professional Responsibilities Social and Professional Responsibilities

Responsibility to employeesResponsibility to employees There is no job, which is for life There is no job, which is for life Employees moving from long term employment relationship Employees moving from long term employment relationship

with their companies to short term contractwith their companies to short term contract There is no longer any ‘loyalty’, only a contract to work There is no longer any ‘loyalty’, only a contract to work

together for mutual good together for mutual good The relationship is no different from that between competitors The relationship is no different from that between competitors

who form an alliance for mutual benefitwho form an alliance for mutual benefit (alliance of non-Muslims against ……)(alliance of non-Muslims against ……)

but companies have an obligation to provide the opportunity but companies have an obligation to provide the opportunity for employees to learn and develop for employees to learn and develop

Achievement must be rewarded, not seniority Achievement must be rewarded, not seniority Employees may also move at their own will for better Employees may also move at their own will for better

opportunities opportunities

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4.3 – Ethical Considerations4.3 – Ethical Considerations an organization is not accountable for the ethical an organization is not accountable for the ethical

behaviour of its employees behaviour of its employees ??

Unethical business practices by employees reflect the Unethical business practices by employees reflect the

values, attitudes and beliefs of an organization’s values, attitudes and beliefs of an organization’s

operating culture operating culture

the ‘the ‘if it is legal – it is ethicalif it is legal – it is ethical’ attitude ’ attitude ??

Organizations should set their own internal values, Organizations should set their own internal values,

which lead to laws of conduct, and these should go which lead to laws of conduct, and these should go

beyond minimum legal requirements beyond minimum legal requirements

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Ethical ConsiderationsEthical Considerations

Ensure that customers ‘needs’ are kept in Ensure that customers ‘needs’ are kept in sharp focus sharp focus

Ethical conduct in advertising is often Ethical conduct in advertising is often controlled by legislation and by voluntary controlled by legislation and by voluntary standards boards standards boards

Customers should be given adequate Customers should be given adequate information during the marketing stage, to information during the marketing stage, to ensure that they are capable of making a ensure that they are capable of making a correct decision when choosing a product correct decision when choosing a product which satisfies their needs which satisfies their needs

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4.4 – Government Regulations4.4 – Government Regulations which seek to effect the organization’s conduct which seek to effect the organization’s conduct

towards its employeestowards its employees

which protect consumerswhich protect consumers

environmental protection lawsenvironmental protection laws

laws on the company’s trading relationships laws on the company’s trading relationships

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Government RegulationsGovernment Regulations

Employees Regulations Employees Regulations Employee-related regulations cover a wide spectrumEmployee-related regulations cover a wide spectrum

– Rules governing the employment of peopleRules governing the employment of people– Safety and conditions at workSafety and conditions at work– Conditions of employment Conditions of employment

The factories Act of 1833: The factories Act of 1833: – Conditions of employees Conditions of employees – Prohibited the employment of children under nine years of Prohibited the employment of children under nine years of

ageage– Hrs worked per dayHrs worked per day

for children between 9 and 13 yrs to 9 hrs for children between 9 and 13 yrs to 9 hrs for children between 13 and 18 yrs to 12 hrs for children between 13 and 18 yrs to 12 hrs

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Employees RegulationsEmployees Regulations The Factories Act of 1961: The Factories Act of 1961:

– Minimum conditions which were to exist wherever Minimum conditions which were to exist wherever people were employed in manual labourpeople were employed in manual labour

Act of 1963: law for office workersAct of 1963: law for office workers– at Shops, Offices and Railway premisesat Shops, Offices and Railway premises

Occupational Safety and Health Act (OSHA) Occupational Safety and Health Act (OSHA) of 1970 in the USA: of 1970 in the USA: – defined safe working conditions for employeesdefined safe working conditions for employees

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Employees RegulationsEmployees Regulations

The Factories Act can be considered to affect The Factories Act can be considered to affect FOURFOUR areas areas1.1. Health of workersHealth of workers

• factors such as cleanliness of premises; overcrowding; temperature factors such as cleanliness of premises; overcrowding; temperature and ventilation; and sanitary accommodationand ventilation; and sanitary accommodation

2.2. Safety of EmployeesSafety of Employees• factors such as the procedure for recording and reporting accidents; factors such as the procedure for recording and reporting accidents;

use of protective guards around machineryuse of protective guards around machinery

3.3. Welfare of workersWelfare of workers• factors such as provision of drinking water; availability of washing factors such as provision of drinking water; availability of washing

facilities; and availability of first aid kitsfacilities; and availability of first aid kits

4.4. Employment of women and young personsEmployment of women and young persons• factors such as hours workedfactors such as hours worked

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Employees RegulationsEmployees RegulationsPrinciples in its dealing with employeesPrinciples in its dealing with employees

Company policies must be applied consistently and Company policies must be applied consistently and fairly to all concerned fairly to all concerned

Mangers and supervisors are briefed on all aspects of Mangers and supervisors are briefed on all aspects of company policy and adequately trained to deal with company policy and adequately trained to deal with their subordinatestheir subordinates

All actions which the manger takes relating to All actions which the manger takes relating to employee’s personal performance must be employee’s personal performance must be documented with a copy to the concerneddocumented with a copy to the concerned

All employee grievances must be investigated All employee grievances must be investigated promptly, fairly and thoroughly promptly, fairly and thoroughly

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Employees RegulationsEmployees Regulations Protecting the interests of Protecting the interests of minorityminority groups, especially groups, especially

in USAin USA DisabledDisabled persons Acts of 1944 and 1958 persons Acts of 1944 and 1958 Rehabilitation of OffendersRehabilitation of Offenders Act of 1974 Act of 1974

– Not to be discriminated on the basis of past convictionsNot to be discriminated on the basis of past convictions Race RelationsRace Relations Act of 1976 makes it illegal to Act of 1976 makes it illegal to

discriminate against people on grounds of racediscriminate against people on grounds of race Sex discriminationSex discrimination Acts of 1975 and 1986, the Equal Acts of 1975 and 1986, the Equal

pay Act of 1970 and the Equal Pay Regulations of pay Act of 1970 and the Equal Pay Regulations of 19831983

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Employees RegulationsEmployees Regulations The Data Protection Act of 1984The Data Protection Act of 1984 The contracts of employment Act of 1963: The contracts of employment Act of 1963:

Enhanced by the employment protection Enhanced by the employment protection (Consolidation) Act of 1978: Amended by the (Consolidation) Act of 1978: Amended by the Employment Acts of 1980 and 1982. These Employment Acts of 1980 and 1982. These also defined items such as sick leave, notice also defined items such as sick leave, notice periods and unfair dismissal.periods and unfair dismissal.

Recorded series of steps, to handle employees, Recorded series of steps, to handle employees, who need to be disciplinedwho need to be disciplined

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Consumer ProtectionConsumer Protection Table 4.2 Table 4.2 → some UK legislations→ some UK legislations

Act of 1983 was a landmark in the field of consumer Act of 1983 was a landmark in the field of consumer

protectionprotection

– Goods supplied must be as described, that it must be of ‘merchantable Goods supplied must be as described, that it must be of ‘merchantable

quality’ and should be fit for its intended purpose quality’ and should be fit for its intended purpose

Trade Descriptions Acts of 1968 and 1972Trade Descriptions Acts of 1968 and 1972

Consider Protection Act of 1982Consider Protection Act of 1982

Fair Trading Act of 1973 in order to look after consumer Fair Trading Act of 1973 in order to look after consumer

protection legislation, such as the Federal Fair Packaging and protection legislation, such as the Federal Fair Packaging and

Labeling Act 1966 in the USA Labeling Act 1966 in the USA

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Consumer ProtectionConsumer Protection Quality systems and controls should also be kept Quality systems and controls should also be kept

current to ensure that the product requirements are current to ensure that the product requirements are met throughout the operation. This could be based on met throughout the operation. This could be based on ISO 9001ISO 9001– Model for quality assurance in design development, Model for quality assurance in design development,

production, installation and servicing: UK as BS5750: Part production, installation and servicing: UK as BS5750: Part 1: 19871: 1987

Documentation forms an important part of the Documentation forms an important part of the process. These documents must be stored for a process. These documents must be stored for a relatively long time, to meet product liability criteria relatively long time, to meet product liability criteria

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Environmental ProtectionEnvironmental Protection Environmental laws are relatively new, but they now Environmental laws are relatively new, but they now

exist in most countries. exist in most countries. – These laws benefit the whole community, including These laws benefit the whole community, including

customers, suppliers and employeescustomers, suppliers and employees

Table 4.3 → some of the laws in the UKTable 4.3 → some of the laws in the UK– designed to protect the environment designed to protect the environment

National Environmental Policy Act (1969)National Environmental Policy Act (1969) Noise Control Act (1972)Noise Control Act (1972) Resource Conservation and Recovery Act (1976)Resource Conservation and Recovery Act (1976)

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Trading Regulations Trading Regulations Laws governing contracts, which need to be followed Laws governing contracts, which need to be followed

by organizations by organizations Transfer of ownership of goods, in exchange for Transfer of ownership of goods, in exchange for

money ( the price). money ( the price). Sale of Goods ActSale of Goods Act Schedule 24 of the Companies Act of 1985 lists over Schedule 24 of the Companies Act of 1985 lists over

200 offences which a 200 offences which a DIRECTORDIRECTOR can commit that can commit that can lead to a fine or disqualification from holding can lead to a fine or disqualification from holding office for a number of years office for a number of years

Fraudulent tradingFraudulent trading– Directors are then personally liable for the company’s Directors are then personally liable for the company’s

debts and can also be criminally liable debts and can also be criminally liable

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4.5 – Protecting Ideas4.5 – Protecting IdeasTrade & Service Marks / PatentsTrade & Service Marks / Patents

Industry is moving from the age of manufacturing to Industry is moving from the age of manufacturing to the age of ideas (PATENTS). This is placing greater the age of ideas (PATENTS). This is placing greater emphasis on the need for companies to protect their emphasis on the need for companies to protect their ideas. ideas.

A company’s A company’s intellectual property rightsintellectual property rights (IPR) are (IPR) are similar to rights available with conventional property. similar to rights available with conventional property. The legal owner of an IPR is allowed to use and The legal owner of an IPR is allowed to use and exploit it for gain, until all or part of the IPR is exploit it for gain, until all or part of the IPR is transferred to another owner. transferred to another owner.

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Trade and Service MarksTrade and Service Marks Trade marks and service marks are used to Trade marks and service marks are used to

differentiate a product or service originating from one differentiate a product or service originating from one organization from those which come from another organization from those which come from another company. They are very important since consumers company. They are very important since consumers often buy on the basis of the trade mark. For example often buy on the basis of the trade mark. For example ………………………………………………

A trade or service mark must be distinctive to be A trade or service mark must be distinctive to be registered at the registered at the Trade Marks RegistryTrade Marks Registry. The . The registration certificate gives the registered owner the registration certificate gives the registered owner the exclusive right to use the mark.exclusive right to use the mark.

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PatentsPatents Patens are connected with inventions that have Patens are connected with inventions that have

practical applications. It must meet several practical applications. It must meet several criteria:criteria:– It must be new and must never have been disclosed It must be new and must never have been disclosed

to the public in any part of the world. to the public in any part of the world. – It must be inventive; that is, it must not be obvious It must be inventive; that is, it must not be obvious

to a person with state of the art knowledge in the to a person with state of the art knowledge in the field concerned. field concerned.

– It must be capable of practical applications. It must be capable of practical applications.

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PatentsPatents

A large portfolio of patens form an important A large portfolio of patens form an important commodity for an organization to own. They serve commodity for an organization to own. They serve several purpose:several purpose:– Provide a strong bargaining position when the company is Provide a strong bargaining position when the company is

negotiating with another company to carry out a joint negotiating with another company to carry out a joint operation, or to come to cross-licensing agreements on operation, or to come to cross-licensing agreements on technology.technology.

– Provide a competitive edge over other companies, often by Provide a competitive edge over other companies, often by keeping them out of a given field. keeping them out of a given field.

– Protect the company from allegations that it is infringing Protect the company from allegations that it is infringing another company’s patents. another company’s patents.

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PatentsPatents Often companies need to license their IPR to Often companies need to license their IPR to

competitors. This arises when customers need two competitors. This arises when customers need two sources of supply before they are prepared to buy a sources of supply before they are prepared to buy a product. Also, when a technology is new the product. Also, when a technology is new the company may wish it to be adopted as an company may wish it to be adopted as an international standard. It would then need to license international standard. It would then need to license others to gain their support. In these circumstances others to gain their support. In these circumstances the originating company still has a competitive edge, the originating company still has a competitive edge, since its competitor’s costs would be increased by the since its competitor’s costs would be increased by the license fees involved. license fees involved.

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Documents

08-04-20081 Chapter 4 Legal and Ethical Considerations 4.1Management Obligations 4.2 Social and professional responsibilities 4.3 Ethical considerations