CHAPTER Demanding Ethical and Socially Responsible Behavior McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc All rights reserved Ethics 4-2 LIFE AFTER SCANDAL • Scandals have shaken the real estate, mortgage and banking industries • How we restore trust in the free market system? - Punish those who have broken the law - Make accounting records more transparent - Consider what is ethical, not just what is legal 4-3 WHAT are ETHICS? • Ethics The standards of moral behavior Behaviors that are accepted by society as right versus wrong 4-6 ETHICS Doing What Is Right… 4-7 ETHICS As You Know It To Be Right ETHICS Ethics Begins With Each of Us Stem From Individual More Than Legality 4-9 ETHICS Ethical Dilemma a situation requiring a choice between equally undesirable alternatives 4-10 FACING ETHICAL DILEMMAS • Ask yourself these questions: - Is it legal? - Is it balanced? - How will it make me feel about myself? 4-11 FACING ETHICAL DILEMMAS The TI Ethics Quick Test - Is the action legal? - Does it comply with our values? - If you it, will you feel bad? - How will it look in the newspaper? - If you know it's wrong, don't it! - If you're not sure, ask - Keep asking until you get an answer For copies of the card or further information, contact the TI Ethics Office at 1-800-33-ETHIC (This information is provided to TI employees on a business-card size mini-pamphlet to carry with them.) RESPONSIBILITES TO CUSTOMERS ■ ■ ■ ■ The Right to Be Safe Safe operation of products, avoiding product liability The Right to Be Informed Avoiding false or misleading advertising and providing effective customer service The Right to Choose Ability of consumers to choose the products and services they want The Right to Be Heard Ability of consumers to express legitimate complaints to the appropriate parties ■ Consumer Product Safety Commission ■ www.cpsc.gov INSIDER TRADING • Insider Trading Insiders using private company information to further their own fortunes or those of their family and friends • Unethical behavior does financial damage to a company and investors are cheated 4-33 RESPONSIBILITY to EMPLOYEES • Create jobs and provide a chance for upward mobility • Treat employees with respect • Offer salaries and benefits that help employees reach their personal goals 4-34 AMERICA’S MOST ADMIRED COMPANIES of 2014 10 Apple Amazon Google Berkshire Hathaway Starbucks Coca-Cola Disney FedEx Southwest Airlines General Electric Source: Fortune, www.fortune.com, accessed November 2014 4-35 WHEN EMPLOYEES are UPSET… • Employee fraud costs U.S businesses about 5% of annual revenue and causes 30% of all business failures • Disgruntled workers relieve frustration by: - Blaming mistakes on others - Manipulating budgets and expenses - Making commitments they intend to ignore - Hoarding resources - Doing the minimum 4-36 SOCIETY and the ENVIRONMENT • Over one-third of working Americans receive their salaries from nonprofits – who are dependent on funding from others • The green movement emerged as concern about global warming increased • Many companies are trying to minimize their carbon footprints – the amount of carbon released during an item’s production, distribution, consumption and disposal 4-37 RESPONSIBILITY to the ENVIRONMENT • Environmental efforts may increase costs, but can offer good opportunities • The emerging renewable-energy and energyefficiency industries account for million U.S jobs • By 2030, as many as 40 million “Green” jobs will be created 4-38 SOCIAL AUDITING • Social Audit A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs • Five Types of Watchdogs 1) Socially conscious investors 2) Socially conscious research organizations 3) Environmentalists 4) Union officials 5) Customers 4-39 TEST PREP • What is corporate social responsibility, and how does it relate to each of a business’s major stakeholders? • What is a social audit, and what kinds of activities does it monitor? 4-40 INTERNATIONAL ETHICS • Many businesses want socially responsible behavior from their international suppliers • In the 1970s, the Foreign Corrupt Practices Act criminalized the act of paying foreign businesses or government leaders in order to get business • Partners in the Organization of American States signed the Inter-American Convention Against Corruption 4-41 Social Responsibility Bottom Line: Should Companies Have? 4-42 The Majority View Companies are citizens in the communities in which they reside, therefore, They have a Social Responsibility 4-43 An Economist’s View Milton Friedman – Argues that firms need to focus on making a profit, not on social responsibility – Claims that firms that focus on social responsibility get distracted from their real purpose 4-44 CORPORATE SOCIAL RESPONSIBILITY To Sum It Up: Doing Good vs Doing Well 4-45 TEST PREP • How are U.S businesses demanding socially responsible behavior from their international suppliers? • Why is it unlikely that there will be a single set of international rules governing multinational companies soon? 4-46 ... just what is legal 4- 3 WHAT are ETHICS? • Ethics The standards of moral behavior Behaviors that are accepted by society as right versus wrong 4- 6 ETHICS Doing What Is Right… 4- 7 ETHICS As You... CSR proponents argue that businesses owe their existence to the societies they serve 4- 24 CORPORATE PHILANTHROPY • Corporate Philanthropy -Includes charitable donations 4- 25 CORPORATE RESPONSIBILITY... company 4- 27 HELPING HANDS Most Generous Celebrities Source: Parade Magazine 4- 28 GENEROUS GUYS World’s Biggest Givers in 2013 Source: Forbes, www.forbes.com, accessed November 20 14 4-29 PRESIDENT