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Conducting Business Ethically and Responsibly

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Mike Byrne

on 6 March 2018

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Transcript of Conducting Business Ethically and Responsibly

Conducting Business Ethically and Responsibly
ref. 'Business Essentials', Ebert et al
Ethics in the Workplace
Ethics: beliefs about what is right and wrong or good and bad.
an individual's personal values and morals,and the social context in which they occur, determine whether a particular behaviour is perceived as ethical or unethical.
Ethical behaviour is behaviour that conforms to individual beliefs and social norms about what is right and good.
Unethical behaviour is behaviour that individual beliefs and social norms define as wrong and bad
Business ethics is a term often used to refer to ethical or unethical behaviours by a manager or employee of a business.
Individual Ethics
...because ethics are based on both individual beliefs and social concepts, they vary from person to person, from situation to situation, and from culture to culture...but there are some commonalities...
commonalities...most societies see stealing as wrong but what if you happen to see someone drop a $20 bill in a store?
most people would probably say that it would be ethical to return it to the owner...but some people might think it is OK to keep it.
there would be even less agreement if you found $20 and didn't know who dropped it....should you turn it into the lost and found?

Definitions:
Ethics
: individual standards or moral values regarding what is right and wrong or good and bad
Business Ethics
: ethical or unethical behaviours by a manager or employee of an organization
It is important to distinguish between unethical behaviour and illegal behaviour
a given behaviour might be ethical and legal
might be ethical and illegal
might be unethical and illegal
making ethical judgments is complicated by the fact that practices that are legal in one country may not be legal in another...
eg., selling Nazi memorabilia online is legal in the USA but is illegal in Germany
in some cultures, ethically ambiguous practices are 'standard procedure' for doing business
Brazilians, as an example, apply the principle of 'jeitinho'....meaning "to find a way"...by using personal connections, bending the rules, or making a 'contribution'!
eg., if you had to get an official document signed in some countries, and found yourself in a complex maze of rules and regulations and think you'll never get your document signed, you might resort to 'jeitinho' to get the job done!
eg., selling railcars in Sri Lanka...TWL.
Individual Values and Codes
ethical views of individuals in a business (managers, employees) are determined by a combination of factors:
we start to form ethical standards as children in response to our perceptions of the behaviour of parents and other adults
We also develop values and morals that influence our behaviour....
if you put
financial gain
at the top of your priority list, you may develop a code of ethics that supports the pursuit of material comfort, but if you put a high priority on
family and friends
, you will probably adopt different standards...
agree? disagree?
When we enter school, peers and the entertainment media also shape our lives and contribute to our ethical beliefs and our behaviour.
because ethics are both personally and culturally defined, differences of opinion arise as to what is ethical or unethical.
For example, people who would never think of stealing a candy bar from a grocery store may think it perfectly legitimate to take home pens and pads of paper from the workplace.
Many law abiding citizens have no issues about using radar detectors to avoid speeding tickets
In each situation, people will use different standards of ethics and will argue that their actions are ethical.
Managerial Ethics...
are the standards of behaviour that guide individual managers in their work
for our discussion, we will classify these behaviours into 3 groups
Behaviour towards employees
Behaviour towards the organization
Behaviour towards other economic agents
Managerial ethics (behaviour towards employees)
issues like hiring, firing, wages, working conditions, and privacy
In Canada, ethical and legal guidelines state that hiring and firing decisions should be SOLELY BASED on a
person's ability to do the job.
A manager who discriminates against any ethnic minority in hiring therefore exhibits both
unethical
and
illegal
behaviour...in Canada.
But what about the manager who hires a friend or relative when someone else might be more qualified??
ethical or unethical?...thoughts?
such decisions (hiring a friend) may not be illegal but, in Canada, they may seem objectionable on ethical grounds.....but in some countries they may not necessarily be seen as unethical.
Wages and working conditions are also areas for debate...
consider a manager who pays a worker less than what is deserved because the manager knows the employee can't afford to quit
while some people will see this behaviour as unethical, others may see it as smart business

Protecting the privacy of employees is another area with ethical implications
the Personal Information Protection and Electronics Documents Act (PIPEDA)
this Act requires organizations to obtain consent before they collect, use, or disclose information about individuals
some people see these requirements as useful and necessary; others view them as yet another example of bureaucratic red tape and government interference with business

What do you think?

Behaviour Toward the Organization
Ethical issues also arise with respect to employee behaviour towards employers!
Conflict of Interest
: occurs when an activity benefits an employee at the expense of the employer
example...a shoe buyer (purchasing agent) for a large department store accepts a free vacation from a shoe manufacturer....later on, the manufacturer asks the buyer to increase the size of a particular purchase order....the buyer may feel obligated to do so because of the free vacation
most companies have policies that forbid buyers (or...in my case, project engineers) from accepting gifts from suppliers
other problem areas related to ethical behaviours of employees towards employers are:
stealing supplies
'padding' expense accounts
using business phone to make personal calls.

do you think these behaviours are ethical or unethical?
Behaviour towards Other Economic Agents
Ethical disputes often arise in the relationship between a company and its
customers
,
competitors
,
stockholders
,
suppliers
,
dealers
, and
union
.
Caterpillar case:
in 2012, Caterpillar Inc. demanded that workers take a 50% pay cut in order to make the company's organization more cost effective...when the union refused, the company closed the plant and moved production to the USA.
some people think it is unethical for a company to give employees and ultimatum like Caterpillar did...because the company knows that the employees cannot accept such an outrageous offer
others will argue that Caterpillar has to do what it thinks is economically necessary.
Drug Companies are often criticized for charging such high prices for some of their drugs.
the companies argue that they need to charge high prices to offset the high cost of developing new drugs
critics argue that they are 'price gouging' (charging unnecessarily high prices)
are the companies acting ethically towards their customers? how would we know?

What if a manager at a company is given information by an unhappy former employee of the competitor who wants to get revenge on his former employer?
is it acceptable for the manager to accept and act on this info?
some people would say it is unethical
some people would argue that because the manager didn't go looking for the information, it is acceptable to use

What do you guys think?
Ethical difficulties also arise because business practices vary globally
in some countries, bribes are a normal part of doing business but in Canada, bribes are seen as both unethical and illegal
SNC-Lavalin in 2015 were charged by the RCMP with offering millions of dollars in bribes to Libyan government officials.
In 2014, drug company GlaxoSmithKline were fined $489 million by the Chinese government for bribing doctors!
A 2014 Survey indicated that, globally,
40
% of managers thought that corruption was widespread in their country....only
20
% of Canadian managers thought corruption was widespread in Canada
Encouraging Ethical Behaviour in Organizations
to promote ethical behaviour, managers must understand why unethical behaviour occurs in the first place
3 general factors have been identified as important in causing unethical behaviour:
pressure (the employee has some problem that cannot be solved by legitimate means)
opportunity (the employee uses his/her position in the organization to secretly solve the problem)
rationalization (the employee sees themself as basically an ethical person caught up in an unfortunate situation)
to reduce the chance of unethical behaviour, organizations should
demonstrate top management commitment
to ethical standards,
adopt
written code of ethics
, and
provide ethics
training to employees
it is crucial that top management of a company demonstrate a serious public commitment to high ethical standards...
example, Mountain Equipment Co-op is publicly committed to the concept of 'ethical sourcing' meaning that they monitor facilities that make their products to make sure those factories are providing good working conditions for their employees

without this 'tone at the top', lower level employees are not likely to take ethics very seriously
Google's core principle is "Don't Be Evil"
Adopt written Codes of Ethics
a written Code of Ethics formally acknowledges that a company intends to do business in an ethical manner
Codes of Ethics increase the public confidence in a company and help managers respond on those occasions when there are problems with unethical or illegal behaviour.
About 67% of Canada's largest companies have Codes of Ethics....about 90% in the USA
More and more Regulatory and Professional Associations in Canada are recommending that corporations adopt Codes of Ethics
Many Canadian and US firms are also adding a position called "Ethics Director" or "Ethics Officer"
For Code of Ethics to be effective, there must be
consistent enforcement
when unethical behaviour occurs...employees will then know that the company is serious about it pursuit of high ethical standards
Enron had a Code of Ethics but managers did not follow it...
What's an Enron??
Providing Ethics Training
Can business ethics be 'taught'? (either in workplace or in school)
most analysts agree that companies must take the lead in educating employees about ethics
eg., Imperial Oil conducts workshops that help employees put Imperial Oil's ethic statement into actual practice
one management consultant says, " employees know the difference between right and wrong, but they occasionally behave in an unethical fashion because they don't know how to resist pressure from peers and bosses to behave unethicallly"
Dealing with ethical issues is not a simple matter...particularly true for companies that operate internationally
In 2013, 1100 workers were killed when a garment factory in Bangladesh collapsed...soon after, a workers rights group was circulating a photo of a Joe Fresh label in the debris.
In 2011, allegations were made that products sold by Victoria's Secret contained cotton produced using child labour
****
Wallet scenario: you find a wallet, with money in it, on the floor of a store...what would you do?
1. walk away and leave the wallet there
2. turn the wallet in to the Customer Service desk
3. put the wallet in your pocket and leave the store with it
4. leave the wallet on the floor after taking the money out of it.
5. turn the wallet into Customer Service after taking the money out of it.

quickly put a number on 3x5 card
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