Chapter Chapter FourFour

Demonstrating Demonstrating Ethical Behavior &Ethical Behavior &

Social Social ResponsibilityResponsibility

Ethics Check Questions:

Is It Legal?

Is It Balanced?

How Will It Make Me Feel About Myself?

Factors That Cause WorkersTo Act Unethically

• Pressure to meet sales, budget or profit goals

• Lack of recognition• Personal financial worries• Balancing work & family• Poor communication

Top Five Unethical/IllegalBehaviors of Workers

Cut corners in quality controlCovered up incidentsAbused or lied about sick daysLied to or deceived customersPut inappropriate pressure on

others

Fostering Ethical Behavior

• Leadership• Codes of Conduct

– Compliance-based– Integrity-Based

• Social Audits• Whistle Blowing

Factors Influencing Managerial Ethics

IndividualIndividual OrganizationalOrganizational EnvironmentalEnvironmental

ValuesValuesWork Work BackgroundBackground

Family StatusFamily Status

PersonalityPersonality

Top Level Top Level Mgmt. PhilosophyMgmt. Philosophy

The Firm’s The Firm’s Reward SystemReward System

Job DimensionsJob Dimensions

CompetitionCompetition

Economic Economic ConditionsConditions

Social/Cultural Social/Cultural InstitutionsInstitutions

Business Mission Statement

• Why?• What?• How?

“Our mission is to show people how they can use the power of their bodies and minds to make their lives better. ‘You can do it,’ we say on every page of our magazines and books.-Ardath Rodale, Rodale Publishing

Business Mission Statement

Our mission is to be the world leader in Customer Service, innovation and product value in the Hand Tool industry. We will accomplish this by fostering an environment that allows our people to produce quality hand tools on time and meet business growth needs through employee excellence and development.- Western Forge

Business Ethics & Social Responsibility

• Ethics- Values/Principles

• Responsibility- Consequences of Actions

Ethical Decision Resolved Through:

• Religious Teachings

• Individual Rights

• Legislation

• Court Decisions

Classifying Classifying Business Business DecisionsDecisions

EthicalEthical

UnethicalUnethical

IllegalIllegal LegalLegal

Unethical Unethical and and

IllegalIllegal

Ethical Ethical and and LegalLegal

Unethical Unethical but but

LegalLegal

Ethical Ethical but but

IllegalIllegal

Steps to Improve U.S. Business Ethics

1. Top Management

2. Employees

3. Managers

4. Ethics Office

5. Outsiders

6. Enforcement

Three Levels of Three Levels of Social ResponsibilitySocial Responsibility

Societal ResponsibilitySocietal Responsibility

Stakeholder ResponsibilityStakeholder Responsibility

Profit ResponsibilityProfit Responsibility

Owners/StockholdersOwners/Stockholders

GeneralGeneral

PublicPublicCustomersCustomers EmployeesEmployees

Suppliers/DistributorsSuppliers/Distributors

EcologicalEcological

EnvironmentEnvironment

Public Interest GroupsPublic Interest Groups

Source: Source: MarketingMarketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius., 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

Responsibility to Employees

• Working Conditions• Equal Employment

Opportunity• Affirmative Action• Diversity Training

• Economic Security

• Child Care/Parental Leave

• Employee Dignity• Conflict of Interest

What Concerns WorkersMost on the Job?

• Hazardous Materials 23%• Injury 20%• Repetitive job motions 10%• Poor ventilation 7%• HIV/Aids 6%

PercentPercent

Responsibility to Customers/Environment

• Right To Safety

• Right To Be Informed

• Right To Choose

• Right To Be Heard

• Quality Of Life

• Ecology/Pollution

Responsibility to Society, Investors, & Suppliers

• Fairness• Honesty• Timely Action• Appropriate Compensation• Philanthropy

Why People Why People VolunteerVolunteer

0 20 40 60 80 100

Help People

Be With People They Enjoy

Learn Issues/Problems

Percent of RespondentsPercent of Respondents

Total is more than 100% because respondents could give more than one reason.

Contributions to Charity(In Billions of Dollars)

$9$10

$120

$12 IndividualsFoundationsBequestsCorporations

Source: Forbes Dec. 15, 1997

New Economy & New Economy & New PhilanthropyNew Philanthropy

Foundation Donation

Bill & Melinda Gates Foundation $21.8*

Ford Foundation 13.1

Packard Foundation 13.0

Lilly Foundation 11.2

Robert Wood Johnson Foundation 8.3**In BillionsIn Billions

Source: Source: Business WeekBusiness Week, Mar. 13, 2000, Mar. 13, 2000

Corporate Annual GivingMerckJohnson & JohnsonPfizerEli LillyIBMMicrosoftIntelBank of America

$221.0* 176.2 123.9 121.4 116.1 104.7 101.0 91.5

Source: The Taft Group * In Millions* In Millions

Most Admired Companies by Industry

Apparel Levi-StraussAirlines SouthwestFood Services McDonald’sFood Products Campbell’sBeverages Coca-ColaElectronics Intel

IndustryIndustry CompanCompanyy

Source: Fortune Magazine

International Ethics &Social Responsibilities

• U.S. not unique– Japan/S. Korea/China = influence peddling– Mexico = child labor

• Leaders being held to new/higher standards– Chinese prison labor– McDonald’s using rain forest land for cattle

grazing