BUSINESS FUNDAMENTALS BAB 2 Business Ethics and Social Responsibility Just because others see something as ethical, doesn’t mean you will agree. There is not always a yes/no, right/wrong, black/white answer to everything. We all develop a personal code of ethics that we carry over into our jobs. Sometimes we decide what is ethical based on what is acceptable to others—even though the behavior may be unethical. Ethics in the Workplace Ethics are beliefs about wrong and right or bad and good; ethical behavior conforms to individual beliefs and social norms about what is right and good. Business ethics refers to ethical or unethical behaviors by employees in the context of their jobs. A. Individual Ethics Ethics are based on individual beliefs and social concepts; thus, they vary by person, situation, and culture. 1. Ambiguity, the Law, and the Real World. Societies adopt formal laws that reflect ethical standards; however, real-world situations are sometimes difficult to interpret. 2 Individual Values and Codes. Individuals’ personal codes of ethics are determined by a combination of factors. B. Business and Managerial Ethics Managerial ethics are the standards of behavior that guide individual managersin their work. 1. Behavior toward Employees. This category covers hiring and firing, wages and working conditions, and privacy and respect. 2. Behavior toward the Organization. Conflict of interest, confidentiality, and honesty are ethical issues. A conflict of interest occurs when an activity may benefit the individual to the detriment of the organization. Many organizations have policies that forbid buyers and other personnel from accepting gifts from suppliers or customers thus avoiding even the appearance of bribery. 3. Behavior toward Other Economic Agents. Ethics also comes into play in the relationship between the firm and a number of primary agents of interests, such as customers, suppliers, competitors, stockholders, dealers, and unions. In 2009, Bernard Madoff’s Ponzi scheme (investment scam) cost hundreds of clients their life savings as he led them to believe that their investments were safe. C. Assessing Ethical Behavior 1. A similar process that is often recommended when making ethical decisions is for the person to (1) gather relevant information, (2) analyze the facts to determine the most appropriate moral values, and (3) make an ethical decision based on the rightness or wrongness of the proposed activity or policy. Although ethical judgments are not always easy to make or even always agreed upon, this process does at least give a good starting point for an ethical decision making process. Ethical norms include: 1. Utility: Does a particular act optimize the benefits to those who are affected by it? 2. Rights: Does it respect the rights of all individuals involved? 3. Justice: Is it consistent with what’s fair? 4. Caring: Is it consistent with people’s responsibilities to each other? D. Company Practices and Business Ethics Many companies set up codes of conduct and develop clear ethical positions on how the firm and its employees will conduct business. 1. Adopting Written Codes. Almost all major corporations have written codes of ethics. 2. Instituting Ethics Programs. Ethical responses can be learned through experience; companies must take the responsibility for educating employees. More and more companies, like Boeing and Exxon Mobil, require managers to go through regular ethics training to remind them of the importance of ethical decision making and to update them on current laws and regulations. Social Responsibility Social responsibility refers to the overall way in which a business itself tries to balance its commitments to relevant groups and individuals in its social environment. A. The Stakeholder Model of Responsibility Most companies strive to be ethically responsible to five main groups: 1. Customers. Critical factors include charging fair prices, honoring warranties, and standing behind product quality. 2. Employees. Treating workers fairly, making them a part of the team, and respecting their dignity promote a company’s reputation. 3. Investors. Managers must follow proper accounting procedures, provide appropriate information to shareholders, and manage the organization to protect shareholder investments. 4. Suppliers. Partnership arrangements with suppliers can enhance market image and firm reputation. 5. Local and International Communities. Contributing to local and global programs has a positive impact on the community. Areas of Social Responsibility A. Responsibility toward the Environment 1. Air Pollution: Under new laws, many companies must install special devices to limit pollutants they expel into the air. 2. Water Pollution: Increased awareness of chemical and waste dumping and the resulting dangers has led to improved water quality in many areas of the country. 3. Land Pollution: Proper toxic waste disposal and recycling programs are allowing companies to help restore land quality and to prevent further contamination. 4. Green Marketing: Businesses are increasingly recognizing that looking after the environment is good marketing. As a result, businesses are now concerned with a number of environmental factors: a. Production Processes: The most ethical thing a business can do is use scarce and valuable resources well. Businesses often invest in new production technologies so that resources are used more efficiently. b. Product Modification: Products can be modified to make them more environmen-tally friendly. One example is of a business that only uses wood from sustainable managed forests. c. Carbon Offsets: Many companies are committed to offsetting the CO2 produced by their products by buying carbon offsets. Consumers now also have the opportunity to buy carbon offsets for the air travel that they take. d. Packaging Reduction: Reducing and reusing materials is another important strategy for green marketing. For many years, The Body Shop has been a leader in this area of marketing. e. Sustainability: Using materials that are sustainable is also a strong marketing tool of many companies. Whole Foods Market is committed to using agricultural products that are sustainable. Unfortunately, not all the green claims made by some companies are legitimate and some companies promote a green image in their advertising to increase sales without making any real changes to their operations. This is known as greenwashing. Green marketing claims often include statements about production processes, product modifications, carbon offsets, packaging reduction, and sustainability. B. Responsibility toward Customers 1. Consumer Rights: Consumerism is social activism dedicated to protecting the rights of consumers in their dealings with businesses. 2. Unfair Pricing: Collusion occurs when two or more firms agree to collaborate on wrongful acts, such as price fixing; price gouging occurs when firms respond to increased demand with steep price increases. 3. Ethics in Advertising: Consumers deserve to be given product information that is truthful and can be proven, as well as information that is not morally objectionable. C. Responsibility toward Employees 1. Legal and Social Commitments: Recruiting, hiring, training, promoting, and compen-sating are the basis for social responsibility toward employees; a whistle-blower is an employee who discovers and tries to end a company’s unethical, illegal, or irresponsible actions by publicizing them. Most organizations now have whistleblower policies to protect whistleblowers from retaliation. D. Responsibility toward Investors 1. Improper Financial Management: Insider trading occurs when someone uses confidential information to benefit from the purchase or sale ofstocks.Misrepresentation of finances is where unethical managers projectprofits that they do not expect to get or hide losses and expenses incurred to boost paper profits. Implementing Social Responsibility Programs A. Approaches to Social Responsibility 1. Obstructionist Stance: Organizations do as little as possible to solve social or environmental problems. 2. Defensive Stance: Organizations will do everything that is required of them legally but nothing more. 3. Accommodative Stance: The organization meets its legal and ethical requirements but will also go further in certain cases. 4. Proactive Stance: Firms that adopt this approach take to heart the arguments in favor of social responsibility. B. Managing Social Responsibility Programs 1. Managers must take steps to foster social responsibility. Such steps include: . Making social responsibility a factor in strategic planning. . Developing a plan detailing the level of management support. . Putting one executive in charge of the agenda. . Conducting occasional social audits.
Posted on: Thu, 10 Jul 2014 11:49:07 +0000
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