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ETHICSETHICS

Practicing Ethical BehaviorPracticing Ethical Behavior

andand

Social ResponsibilitySocial Responsibility

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A concept of right and wrongA concept of right and wrongconductconduct

beyond legal compliancebeyond legal compliance

Ethical principles are implicit agreements

that represent who you are and what youstand for ² what others expect to rely on

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Ethical Behavior and SocialEthical Behavior and Social

ResponsibilityResponsibility

The importance of these issues areThe importance of these issues areincreasing in business lifeincreasing in business life

Social Responsibility Social Responsibility : the idea that: the idea that

business has certain obligations tobusiness has certain obligations tosociety beyond the pursuit of profits.society beyond the pursuit of profits.

EthicsEthics±± EthicsEthics: the principles and standards of moral: the principles and standards of moral

behavior that are accepted by society asbehavior that are accepted by society asright versus wrongright versus wrong

±± Business ethicsBusiness ethics: the application of moral: the application of moralstandards (right or wrong) to businessstandards (right or wrong) to businesssituationssituations

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Why Should OrganizationsWhy Should Organizations

Behave Ethically?Behave Ethically? Prevent harm to others, avoid

reputational harm and reduce

potential liability

Fulfill public expectations and

improve external relations

Protect organization from others

(employees, competitors, etc.)

Improve workforce productivitybut protect employees if needed

from their employers

Promote personal morality

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"We Will Not Lie, Steal Or Cheat, Nor

Tolerate Among Us Anyone Who Does"

Educational Institutionsalso have established ethics

codes for their students, Eg

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President

Lincolnsaid:

Honor isbetter

thanhonors.

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Reasons for Ethical Problems inReasons for Ethical Problems inOrganizationsOrganizations

Personal Gain and Selfish Interest

Competitive Pressure on Finances

Organizational Goals vs. Personal Values

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Ethics in the workplaceEthics in the workplace

Businesses are responsible to manyBusinesses are responsible to manypeople includingpeople including

±± StakeholdersStakeholders: groups to whom business has a: groups to whom business has a

responsibility (colleagues, employees,responsibility (colleagues, employees,Supervisors, investors, etc.).Supervisors, investors, etc.).

±± Businesses must keep these people in mindBusinesses must keep these people in mind

when deciding the ethics (behaviour) of awhen deciding the ethics (behaviour) of acompany.company.

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StakeholdersStakeholdersCustomersCustomers

GovernmentGovernment

StockholdersStockholders

EmployeesEmployees

SocietySociety

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Ethics in the workplaceEthics in the workplace

In business, besides obeying all laws andIn business, besides obeying all laws andregulations, practicing good ethics means:regulations, practicing good ethics means:

C

ompeting Fairly and HonestlyC

ompeting Fairly and Honestly

Communicating TruthfullyCommunicating Truthfully

Not Causing Harm to OthersNot Causing Harm to Others±± Investment scamsInvestment scams

±± cheatcheatinging on expense accountson expense accounts

±± C onflict of Interest C onflict of Interest

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Factors Influencing Ethical Behavior Factors Influencing Ethical Behavior

Although many factors influence the ethicalAlthough many factors influence the ethicalbehavior of businesspeople, the following threebehavior of businesspeople, the following threehave the most impact: have the most impact: cultural differences,cultural differences,knowledge, and organizational behavior.knowledge, and organizational behavior.

Cultural DifferencesCultural Differences±± What may be considered unethical in one country mayWhat may be considered unethical in one country may

be an accepted practice in another culture.be an accepted practice in another culture.

KnowledgeKnowledge±± A wellA well--informed person is in a position to make betterinformed person is in a position to make better

decision and avoid ethical problems.decision and avoid ethical problems.

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Factors Influencing Ethical Behavior Factors Influencing Ethical Behavior

Organizational BehaviorOrganizational Behavior±± Organizations that strongly enforce company codes of Organizations that strongly enforce company codes of

conduct and provide ethics training help employeesconduct and provide ethics training help employeesrecognize and reason through ethical problems.recognize and reason through ethical problems.

±± Companies with strong ethical practices (ethicsCompanies with strong ethical practices (ethicstraining, newsletters on ethics) set a good example fortraining, newsletters on ethics) set a good example foremployees to follow.employees to follow.

±± C ode of ethicsC ode of ethics: defines the values and principles that: defines the values and principles thatshould be used to guide decisionsshould be used to guide decisions..

±± Companies can establish a system for reportingCompanies can establish a system for reporting

unethical or illegal actions at work.unethical or illegal actions at work.±± WhistleWhistle--blowing:blowing: an employee¶s disclosure to thean employee¶s disclosure to the

media or government authorities of illegal, unethical,media or government authorities of illegal, unethical,or harmful practices by the company.or harmful practices by the company.

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ETHICAL MINDS AND STANDARDSETHICAL MINDS AND STANDARDS

The UN Global CompactThe UN Global Compact -- ten principlesten principles

1. Support human rights.1. Support human rights.2. Not allow human rights abuses (directly or indirectly2. Not allow human rights abuses (directly or indirectly

indirectly through stakeholders e.g. managers, staff,indirectly through stakeholders e.g. managers, staff,

suppliers, customers etc.)suppliers, customers etc.)3. Accept trade unions and collective bargaining.3. Accept trade unions and collective bargaining.4. No forced or compulsory labour4. No forced or compulsory labour5. No child labour.5. No child labour.6. No employment discrimination6. No employment discrimination

7. Environmental responsibility7. Environmental responsibility8. Environmental protection8. Environmental protection9. Environmentally friendly technologies.9. Environmentally friendly technologies.

10. No corruption10. No corruption ±± by any stakeholdersby any stakeholders

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±± Do the Right Thing: Policies & Do the Right Thing: Policies & ProceduresProcedures -- PPrinciples of rinciples of Business C onduct Business C onduct

±± Ethics & Compliance Staff andEthics & Compliance Staff andVolunteersVolunteers

±± Risk AssessmentRisk Assessment

±± Continuing EducationContinuing Education

±± Integrity LineIntegrity Line

±± Community LeadershipCommunity Leadership

Corporate Ethics & Compliance Program

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Social Responsibilities in BusinessSocial Responsibilities in Business

Social responsibility Social responsibility : the idea that business has: the idea that business hascertain obligations to society beyond the pursuitcertain obligations to society beyond the pursuitof profitsof profits²²developed in the early 20th century.developed in the early 20th century.

Current climate indicates that ethics in businessCurrent climate indicates that ethics in business

is important to consumersis important to consumersMany investors and managers now support aMany investors and managers now support abroader view of social responsibilitybroader view of social responsibility

SSocial responsibility can be balanced with anocial responsibility can be balanced with an

efficient business, and strong profitsefficient business, and strong profits, but it is, but it ischallenging for companies.challenging for companies.

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Business¶s Efforts to IncreaseBusiness¶s Efforts to Increase

Social ResponsibilitySocial ResponsibilityResponsibility to society and environment: Businesses mustResponsibility to society and environment: Businesses must

often balance the needs of investors, society, andoften balance the needs of investors, society, andconsumers.consumers.

Responding to environmental issues demonstrates the carefulResponding to environmental issues demonstrates the careful

balance business must attempt to maintain as they seek tobalance business must attempt to maintain as they seek toplease: please:

±± consumersconsumers (who want quality products)(who want quality products)

±± workersworkers (who need safe surroundings and fair wages)(who need safe surroundings and fair wages)

±± societysociety (which needs as little pollution as(which needs as little pollution as

±± investorsinvestors (who want lower costs, efficient production, high(who want lower costs, efficient production, highprofits)profits)

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DEVELOPING GUIDELINES FOR FUTUREDEVELOPING GUIDELINES FOR FUTURE BUSINESSBUSINESS

SUSTAINABILITYSUSTAINABILITY

1. Recognize that ethical standards are1. Recognize that ethical standards arenecessary for business sustainability, tonecessary for business sustainability, toprevent Global Business becoming a Mafiaprevent Global Business becoming a Mafia--warfare, with unlimited harm done towarfare, with unlimited harm done toothers, in the name of profit and survival.others, in the name of profit and survival.

2.2. Recognize ethics as part of HONEST Recognize ethics as part of HONEST business responsibility to Society, whichbusiness responsibility to Society, which

requires validation in annual Financial andrequires validation in annual Financial andNonNon--financial audit and reporting.financial audit and reporting.

On we go « together?On we go « together?

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Can you makea difference?Thank you for your attention

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