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University of Fraser Valley
Business Administration
BUS 100
Kim Milnes

Thomas Davies Business 100 Chapter 3 - Conducting Business Ethically and Responsibly Ethics in the Workplace 1) Ethics are beliefs about what is right and wrong/good or bad (aka values and morals) 2) Business ethics refers to ethical or unethical behaviours by a manager or employee of a business Individual Ethics 1) Ethical conduct varies, depending on the individual and situation a) A general „standard‟ of ethical behaviour is present in society – often reflected in laws b) Not always followed – some people culturally will “find a way” – bending laws, personal connections, bribes, etc. c) Individual Values and Codes  Individual ethics begin to form as a child, and standards affected by goal (i.e. money, family) 2) Managerial Ethics = standards of behaviour that guides managers in work a) Behaviour towards employees  Hiring, firing, wages, working conditions, privacy, respect  Such decisions must be based on ability only (1) Discrimination is unethical and illegal, and nepotism is discouraged (2) Wages/working conditions are regulated, yet improvements have ethical arguments: pay less to a competent worker who needs the job, or reward him? b) Behaviour toward the organization  Conflict of interest is activity that benefits the employee at expense of employer  Controlled by restrictions on accepting gifts, designers selling company secrets, etc.  Other issues: stealing supplies, padding expenses account c) Behaviour towards other economic agents  Managers must be ethical with advertising, financial disclosure, ordering/purchasing..  Pharmaceutical companies criticized for high $$, claim cost needed for R&D (1) Some say solution is to find balance btwn price gouging and reasonable prices  Corporate espionage increasing (1) Ex. WestJet hacking in Air Canada database to gain competitive info (2) AC sued for $220 million, WestJet admitted and paid $5 mil + $10 community (3) Hacking unethical, but what if info given by disgruntled former employee???  Bribes are accepted practice in some countries, but illegal/unethical in others 3) Assessing Ethical Behaviour a) 1: Gather relevant facts  2: determine most appropriate moral values  Make ethical judgement b) Taking a client to dinner and claiming expense = ethical, but then claiming for another dinner with a friend = ethical???  Utility, rights, justice, caring? 1 Thomas Davies Business 100 (1) Utility norm says managers benefit from padding expenses, but does not respect rights of others. Is unfair, and compromises manager (2) If manager loses valid receipt, submit personal dinner receipt? 4) Managing Ethics in Organizations a) Businesses promote ethics, but best management is for quick action when problem arise (product contamination, PR issues, etc.) b) Adopting Written Codes  Many companies adopted written code of ethics, usually to perform 1-4 functions: (1) Increase public confidence (2) Stem tide of gov‟t regulation (3) Improve internal operations by setting clear standards] (4) Help managers respond to problems arising from unethical behaviour  Ethics play a key role in corporate policy (1) Core Principles/Values – unchanging (2) Organizational Objectives – changed infrequently (3) Strategies and Practices – revised frequently c) Instituting Ethics Programs  Companies mostly responsible for instilling ethics into employees (1) Not always good, ex. Nike using “just short of slave labour” in Asia (2) Conflict of interest affects companies as a whole, in regards to ethics Social Responsibility 1) Corporate social responsibility (CRS) = idea that business should balance commitments to both individuals and groups that are directly affected by the organization, the organizational stakeholders a) Differing opinions on which holds most important  stakeholders deserve as much money as possible  be responsible to affected environment (employees, investors, suppliers, local area) 2) Contemporary Social Consciousness a) 1930‟s people blamed business/bank failures on greed/lack of restraint b) 1950‟s and 60‟s had social unrest, and business characterized as –ve social force  Led to warnings on cigarettes, stricter enviro. laws, c) Late 19 century characterized by laissez-faire/entrepreneurial spirit, but concern public, and led to more regulations d) This century, financial excess that led to recession resulted in new business laws  Also, increasing environmental awareness etc. and the resulting pressure forced businesses to adapt, and not always focus solely on profit Areas of Social Responsibility 1) Responsibility Toward the Environment a) Due to social pressure, companies are now attempting to control pollution  Air Pollution (1) CO (cars), smoke and other chemical gaseous waste from manufacturing plants contribute (2) Kyoto Summit (1997) was initial attempt to reduce pollution threat, and although Canada signed, we failed to meet the terms (3) UN promotes „cap and trade‟ system, but is open for exploitation/fraud 2 Thomas Davies Business 100 (4) Currently, debate regarding pollution increase causes global warming (5) In tough economic times, people less willing to sacrifice for the environment (6) Wind power is a partial solution, but less reliable and more expensive  Water pollution (1) In past, waste was dumped into lakes/rivers/oceans without regard (2) BP Oil Spill an example of large scale pollution  Land Pollution (1) Toxic wastes = dangers chemical and/or radioactive materials leftover (2) Changes in practices/laws resulting in now forms of safer waste disposal, recycling initiates.  Plant/animal waste used to produce electricity (biomass)  Other waste is converted into fuel or reused elsewhere
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