Business ethics

 Add up all the numbers you circled.
 What was your grade? 10? 15? 30? 40?
 ……………………………………………..
 The lower the score, the more questionable
are your ethical principles regarding business
activities.
 10 is the lowest … 40 is the highest.
 Consider why you answered as you did.

Business Ethics - Gihan Aboueleish 2

1. Legality is only a first step
2. Questions to ask: When faced with a
potentially unethical action.
3. Management’s role
4. Compliance/Integrity based codes
5. Corporate social responsibility
 A definition and stakeholders


oMore Than Legality

oStandards are
Fundamental

oStem From Individual


Ethical Unethical
Illegal but And
Illegal Illegal

Legal Legal
And But
Legal
Ethical Unethical

Ethical Unethical

 Business Ethics:
◦ The principles and standards that define acceptable
conduct in business
 Social Responsibility:
◦ A business’s obligation to maximize its positive
impact and minimize its negative impact on society


 An ethical issue is an identifiable problem,
situation, or opportunity that requires a
person to choose from among several actions
that may be evaluated as right or wrong,
ethical or unethical.

Did You Know?
The most common types of observed
misconduct
are lying, withholding information, and
abusive/ behavior.

1. Didn’t believe corrective action would be
taken
2. Feared retribution or retaliation from
supervisor or management
3. Feared they wouldn’t remain anonymous
4. Thought someone else would report the
misconduct
5. Didn’t know who to contact


 Conflict of interest
 Fairness and honesty
 Communications
 Business relationships


 Occurswhen a person must
choose whether to advance their
own personal interest or those of
others


 The heart of
business ethics

◦ General values of
decision makers


 False and misleading
advertising and
deceptive personal-
selling tactics anger
customers and may
cause a business to fail.


 Business people must be ethical toward their
customers, suppliers, and others in their
workplace.


 Are there any potential legal restrictions
or violations that could result from the
action?
◦ Question: If I do this will it break any laws?

 Does your company have a specific code
of ethics or a policy on the action?
◦ Question: If I do this will I go against the
employee handbook?


 Is this activity customary in your industry?
 Are there any industry trade groups that
provide guidelines or codes of conduct that
address this issue?
◦ Question: If I do this will I violate any trade
practices?


 Would this activity be accepted by your
coworkers?
 Will your decision or action withstand open
discussion with coworkers and managers and
survive untarnished?
◦ Question: Will my action cause peer acceptance or
rejection, or any peer pressure?


 How does this activity fit with your own
beliefs and values?
◦ Question: Will my action violate any of my personal
ethics, religious beliefs, or social values?


Individual Managers’ Opportunity: Ethical/Unethical
Standards and Codes and Choices
and Coworkers’ Compliance in Business
Values Influence Requirements


 Formalized rules and standards that describe
what a company expects of its employees

Did You Know?
Written ethics standards are more often found
in larger companies than smaller ones.


 The act of an employee exposing the
employer’s wrongdoing to outsiders
◦ The media
◦ Government regulatory agencies


 Four Dimensions:
◦ Economic – earn profits
◦ Legal – comply with the law
◦ Ethical
 Not just ―for profit‖ only
◦ Voluntary & Charity
 Promote human welfare and goodwill


Voluntary
Responsibilities
being a
“good corporate citizen;”
contributing to the
community and quality of life

Ethical Responsibilities
being ethical; doing what is right, just,
and fair; avoiding harm

Legal Responsibilities
obeying the law (society’s codification
of right and wrong)

Economic Responsibilities
being profitable


1. Green Mountain Coffee 11. Intel
2. Hewlett-Packard 12. Johnson and Johnson
3. Advanced Micro Devices 13. NIKE
4. Motorola 14. General Mills
5. Agilent Technologies 15. Pitney Bowes
6. Timberland 16. Wells Fargo
7. Salesforce.com 17. Starbucks
8. Cisco Systems 18. Wainright Bank & Trust
9. Dell 19. St. Paul Travelers
10. Texas Instruments 20. Ecolab


1. Business helped to create many of the
social problems that exist today, so it
should play a significant role in solving
them
2. Businesses should be more responsible
because they have the financial and
technical resources to help solve social
problem


4. Social responsibility is necessary to ensure
economic survival
◦ Businesses must take steps to help solve the
social and environmental problems that exist
today


1. Participation in social programs gives
businesses greater power, perhaps at the
expense of particular segments of society.

2. Many people believe that social problems
are the responsibility of government
agencies and officials


 Organizational relationships with owners
and stockholders:
◦ Profit and ROI
 Employee relations:
◦ Providing a safe workplace, adequate pay,
information about the company, listening to
grievances, and treating employees fairly
 Consumer relations:
◦ Respecting the rights of customers and providing
them with safe and satisfying products


 Environmental issues:
◦ Animal rights
◦ Pollution
◦ Global warming
 Community relations:
◦ Responsibility to the general welfare of the
community

Did You Know?
In one year, Americans generated 230 million tons
of trash and recycled 23.5 percent of it.


 The right to safety
 The right to be informed
 The right to choose
 The right to be heard

Did You Know?
John F. Kennedy was the 35th President
of the United States.


 Provide advice about ethics to employees
and management
 Distribute the company’s code of ethics
 Take action on ethics violations
 Review and modify the code of ethics as
needed


1. What are the ethical issues involved in
giving a customer an award for
consumption behavior without notifying
him/her first?
2. Do you see this as a potential violation of
privacy? Explain.


 How do you explain the
emergence of career
opportunities in the field of
business ethics and social
responsibility?

2-
34

1. What makes ethical decisions so difficult?
2. Many organizations are primarily concerned with
earning a profit or a return on their investment.
◦ Does this concern for owners and investors present an
ethical dilemma for companies when weighing business
decisions that favor employees and/or the general
public?
3. The right to be heard is one of the four rights in
the consumer bill of rights.
◦ How are some corporations addressing this consumer
concern?


1. Which of the following has the greatest effect on
ethical behavior in organizations?
a. authority of an employee’s superiors
b. an employee’s perception of the ethics of coworkers
and managers
c. an employee’s personal beliefs about what is right or
wrong
d. investors perceptions of ethics
2. Copying someone else’s work and presenting it
as your own is:
a. ethics
b. bribe
c. plagiarism
d. greenmail


3. A code of ethics is:
a. a set of formalized rules and standards describing
what the company expects of its employees.
b. a government legislation enforced by government
agencies.
c. a set of principles that describe what a person
believes is the right way to behave.
d. the impact of a business’s activities on society.

4. Which one of the following is NOT one of the four
rights provided in John F. Kennedy’s consumer
bill of rights?
a. right to safety
b. right to be inform
c. right to sue
d. right to choose


Individual Organizational Environmental

oValues oTop Level Mgmt. oCompetition
oWork Philosophy
oEconomic
Background
oThe Firm’s Reward Conditions
oFamily Status System
oSocial/Cultural
oPersonality oJob Dimensions Institutions


Is It Legal?

Is It Balanced?

How Will It Make Me Feel About
Myself?


 Religious Teachings
 Individual Rights
 Legislation

 Court Decisions


 Compliance-Based
◦ Increasing control and
penalizing wrongdoers

 Integrity-Based
◦ Define guiding values
◦ Support ethical behaviour
◦ Shared accountability


1. Top management support
2. Expectations begin at the top
3. Ethics imbedded in training
4. Ethics office set up
5. External stakeholders informed
6. There must be enforcement


Three Levels of
Social Responsibility

Societal Responsibility

Stakeholder Responsibility

General Profit Responsibility Ecological
Customers Employees
Public Environment
Owners/Stockholders

Suppliers/Distributors

Public Interest Groups


 The triple bottom line (TBL)
focuses corporations not just
on the economic value they
add, but also on the
environmental and social value
they add – and destroy.
 Triple bottom line is used as a
framework for measuring and
reporting corporate
performance against economic,
social and environmental
parameters.


 At its broadest, the term is used to capture the
whole set of values, issues and processes that
companies must address in order to minimize
any harm resulting from their activities and to
create economic, social and environmental value.
This involves being clear about the company’s
purpose and taking into consideration the needs
of all the company’s stakeholders – shareholders,
customers, employees, business partners,
governments, local communities and the public.


 Vision: To be the first  Ray Anderson - believes
company that, by its deeds, that if Interface, a petro-
shows the entire industrial intensive company, can get
world what sustainability is it right, it will never have to
in all its dimensions: take another drop of oil
People, process, product, from the earth.
place and profits — by
2020 — and in doing so we
will become restorative
through the power of
influence.


 Pesticides
 Waste disposal
 Clear-cut logging
 Deforestation
 Auto exhaust
 Conservation
 Recycling
 Ozone depletion
 Extinction of species
 Populations explosion
 Nuclear proliferation and testing


 50% waste diversion & 100% of Nova Scotians have
curb-side recycling
 Almost 79% return rate on beverage containers
 Over 1.5 billion beverage containers recycled since
April 1, 1996 & 403,000 litres of paint recycled
since June 1, 2002
 Over 912,000 tires are reused or recycled annually
through the Used Tire Management Program. 5.5
million tires since the program began.
 Total waste diverted from landfills
annually: 350,000 tonnes & Composted more than
233,000 tonnes of organic material


 Corporate Social Responsibility -the concern
businesses have for the welfare of society.

 Corporate Charity – charitable donations.

 Corporate Responsibility – acting responsibly
within society.

 Corporate Policy –position on social and
political issues


 Japan has developed ―green technologies‖ and is
exporting this technology - using ―green‖ as a
competitive advantage
 Some Canadian companies are exporting
environmental technology
 We have established IISD - the International
Institute of Sustainable Development
 Business continues to worry about the cost to
institute ―green‖ operating procedures


 American author, Paul Hawken, says that
sustainable development is not enough
 His proposals would make ―green‖ products
cheaper
◦ Prices should reflect all costs including disposal and harm
to the environment
◦ redesign products to make them biodegradable
◦ taxes on pollution and depletion instead of taxes on payroll
◦ redesign products to make them recyclable
 Are we ready for these kinds of changes? Do we
have any choice?


 Many companies have undertaken a Social
Audit - a systematic evaluation of the
company’s position and progress on social
issues

 Shareholders and other stakeholders have
actively encouraged companies to become
proactive on social issues


Percent of Respondents

Civic Duty

Learn Issues/Problems

Be With People With Same Ideals

Be With People They Enjoy

Improve Community

Help People

0 20 40 60 80 100

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


$9
$10 Individuals
$12
Foundations

Bequests
$120

Corporations


New Charity
Estimated Total
Donor Given (in Causes
Millions
$25.6 Health &
Bill Gates
Education
$6.6 Conservation &
Gordon Moore
Education

James Stowers $1.5 Biomedical Research

Eli Broad $1.045 Education & Arts

Walton Family $.75 Education


o Merck $221.0*
o Johnson & Johnson 176.2
o Pfizer 123.9
o Eli Lilly 121.4
o IBM 116.1
o Microsoft 104.7
o Intel 101.0
o Bank of America 91.5

* In Millions

Int'L Affairs $4.1

Environ./Animals $6.4

Umbrella Charities $11.8
In Billion $
Art/Culture $12.1

Health $18.4

Human Serv. $20.7

Education $31.8

Religious Charity $81.0
Source: BusinessWeek. Dec. 2, 2002


Ethics Not Unique To U.S.-
Leaders Accountable
Demand for Socially
Responsible Behavior
Inter-American Convention
Against Corruption


1) Nokia Finland
2) Toyota Motor Japan
3) Sony Japan
4) Nestle’ Switzerland
5) Honda Motor Japan
6) BP Britain
7) Singapore Airlines Singapore
8) L’Oreal France
9) Royal Dutch/Shell Britain &
Netherlands
10) Canon Japan


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