AFM 131 Module 12
Terms in this set (39)
• "...laws do not make people honest, reliable, or truthful. If they did, crime would disappear."
• Legality is more narrow
refers to laws we have
written to protect ourselves from fraud, theft, and violence
• More than legality, it's about "doing the right thing"
• Ethics as the standards of moral behaviour
- Goes beyond the law to look at what's "right" vs. "wrong"
- Cultures and beliefs will impact judgement
• "Do unto others as you
would have them do unto you"
• Values that transcend cultural/religious differences
- Respect, integrity, reliability, fairness
An ethical dilemma refers to a situation where you must:
A. treat someone unfairly.
B. choose between equally unsatisfactory alternatives. C. choose between a correct and an incorrect option. D. balance the concerns of profit and legality.
challenges with no desirable alternatives
- Is it legal?
- Is it balanced?
- How will it make me feel about myself? How would my family and friends feel about my decision
All of the following are reasons why a business should be managed ethically except:
A. because it is the right thing to do.
B. because strict global regulations require it.
C. to attract new customers and retain existing customers.
D. to please customers, employees, and society.
Businesses should be managed ethically to:
• Maintain a good reputation (customers could be lost)
• Keep/attract customers
• Avoid lawsuits (time consuming and expensive)
• Reduce employee turnover (employees could easily leave)
• Avoid government intervention (regulations)
• Do the right thing
Ethics begin at the top
• "Tone from the top"
- Leaders can help instill corporate values in employees
employees observe and learn
Consider a pharmaceutical company
- Introducing new drugs
• Investment of time, money, and expertise
• Could fail before going to market!
- Ethical considerations
• Pressure to release the product early
• Testing practices
• Pricing strategies
Compliance-based ethics codes
emphasize preventing unlawful behaviour by increasing control and having penalties
Integrity-based ethics codes
guiding values that create an environment that supports ethically sound behaviour and encourage shared accountability among employee
- "No employee shall..." or "Don't"
- So what's not stated is permitted?
- Policing instead of moving business forward
- Guidelines on what to do, everyone is accountable
- Empower others to be more ethical
• Reinforce self-esteem of your staff
• Empower employees to take the lead
• Set a positive culture from the start
Code of Ethics
1) Top Management must adopt a code of conduct
2) Expectations must begin at the top
3)Ethics are embedded in training
4) Ethics office set-up
5) External Stakeholder must be informed
those who report illegal/unethical behaviour
good faith allegations
- Protect from retaliation or harm
Those who argue in favour of corporate social responsibility suggest that:
A. you need to justify socially responsible behaviour from an investor's standpoint only.
B. being socially responsible is all about being ethical.
C. business exists only to make money for shareholders.
D. companies who are perceived as being socially
responsible will attract and retain better employees and draw more customers.
Corporate Social Responsibility (CSR):
- Safe products, safe work environments, minimizing pollution, etc.
• CSR critics
- Investors invest to make more money, not improve society
- CSR steals from investors
• CSR defenders
- CSR makes more money for investors in the long run
- Company wouldn't exist without society's influence
- Making long-term commitments to a cause
• Tim Hortons Camp Day
Corporate social initiatives
philanthropy directly related to the company's competencies
includes everything from hiring minority workers to making safe products
position a company takes on social and political issues
Social Responsibility to Stakeholders
Views of corporate responsibility to stakeholders
management's primary orientation is the economic interests of shareholders
recognizes the responsibility of management to optimize profits, but not at the expense of their stakeholders
Responsibility is to stakeholders
Stakeholder - Customers
• Satisfy customers
• Customer rights
- Be informed
- To choose
- To be heard
When it comes to social responsibility, some people feel that
"before you can do good, you must do well."
This reflects a firm's primary responsibility is to their:
Stakeholder - Investors
• "Before you can do good, you must do well"
• "By doing good, you can also do well"
- Ethical behaviour is good for shareholder wealth - adds to the bottom line
• Social responsibility investing (SRI)
no sweat shops, fair wages
Stakeholder - Employees
• Create jobs
• Reward hard work and talent
opportunity to grow and have a
• Those who are treated unfairly may strike back
Stakeholder - Society
• Create wealth for society, to benefit employees, suppliers, shareholders, and other stakeholders
• Promote social justice
Stakeholder - Environment
• Criticized for their role in damaging the environment
- Impact of oil spills
• Praised for the "green" movement
systematic evaluation of a company's progress toward implementing socially responsible and responsive programs
One problem of conducting a social audit is:
A. that most businesses are really not very concerned with these issues.
B. determining what should be measured and how to calculate the effect on society.
C. the primary focus of management is on the interests of stakeholders.
D. governmental "red-tape."
Triple-bottom line (TBL):
focuses not just on the economic value companies add, but also the environmental and social value they add
• TBL advocates
- Socially conscious investors
implementing a process that integrates environmental, economic, and social considerations into decision making
- Wind energy vs. oil and gas
How can a company be sustainable?
• Factor into annual budgets
• Recognize and reward
• Accountability meetings
• TBL reporting
social movement dedicated to making sure that producers in developing countries are paid a fair price for the goods we consume
This approach recognizes the special responsibility of management to
optimize profits, but not at the expense of employees, suppliers, and members of the community