Social Responsibility And Ethics UGBS 207 PDF

SOCIAL RESPONSIBILITY AND ETHICS UGBS 207 BEN WELCOMES YOU TO LEVEL 200 HAVE A SUCESSFUL SEMESTER 1 SOCIAL RESPONSIBILITY AND ETHICS UGBS 207 PROFESSOR Robert Ebo Hionson INTRODUCTION  CSR is central to a whol...

SOCIAL RESPONSIBILITY AND ETHICS UGBS 207 BEN WELCOMES YOU TO LEVEL 200 HAVE A SUCESSFUL SEMESTER 1 SOCIAL RESPONSIBILITY AND ETHICS UGBS 207 PROFESSOR Robert Ebo Hionson INTRODUCTION  CSR is central to a whole range of concepts and issues relating to businesses and their role in society.  The term has become very popular in recent years and thereby vulnerable to suffering the same fate as other popular terms in management literature.  Because of this, it is useful to briefly consider where the idea of corporate social responsibility came from and how it has developed.  In understanding corporate social responsibility, it is important to examine the genesis of the term, its meaning and its application to business activities. SOCIAL RESPONSIBILITY AND ETHICS  Emergence of Corporate Social Responsibility  Various texts in ancient times included material suggestion that moral obligations existed for those engaging in trade and commerce.  In modern times, the first substantial publications on the role of business in society can be traced to as early as 1930s, but corporate social responsibility emerged as an area of general concern for companies only in the 1960s.  This reflected increasing pressures on placed on companies to assume a greater responsibility for correcting the harmful impacts of their operations, a role traditionally performed by society as a whole. SOCIAL RESPONSIBILITY AND ETHICS  The GAIA Principle  The GAIA Principle states that all life is interdependent on each other.  In other words, the planet Earth, the whole of the ecosphere and all living matter therein are not acting in isolation but form a complete system; where each is co-dependent upon the other and are all equally necessary for maintaining the earth as a planet capable of sustaining life.  It is easy, then, to see firms as part of the complete system (as they indulge in processes that enhance the quality of life) whose activities have consequences external to the firm. As such firms must be held liable for their impact on society as it creates an imbalance in the general scheme of life if they are not. SOCIAL RESPONSIBILITY AND ETHICS  Emergence of Corporate Social Responsibility  In this context, corporate social responsibility was seen as method self- regulation distinct from both government legislation and managerial ethics.  By the 1980s governments had introduced legislation on many of the issues that had lead to the emergence of corporate social responsibility in the 1960s.  The most recent wave of interest in corporate social responsibility has been marked by some new development. First, the debate is now more about how to make substantial commitments rather than whether to make them at all. Secondly, there has been an increasing interest in the topic in Europe initiatives on corporate social responsibility. SOCIAL RESPONSIBILITY AND ETHICS  Defining Corporate Social Responsibility  Corporate social responsibility can be defined as the accommodation of corporate behaviour to society’s values and expectations.  According to Howard Bowen, CSR is an obligation that arises from the impact corporate decisions and actions have on the lives of people. SOCIAL RESPONSIBILITY AND ETHICS  Defining Corporate Social Responsibility  CSR concerns the acceptance of voluntary or additional responsibilities beyond those motivated by economic interest and the law.  Davis defined CSR as ‘the firm’s consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm. SOCIAL RESPONSIBILITY AND ETHICS  Defining Corporate Social Responsibility Forstater et al. (2002) define CSR as: “a company’s actions that contribute to sustainable development through the company’s core business activities, social investment and public policy debate.” McWilliams and Siegel (2001) define CSR as: “actions that appear to further some social good beyond the interest of the firm and which are required by law.” SOCIAL RESPONSIBILITY AND ETHICS  Approaches to Social Responsibility Several views have been developed of the responsibilities of businesses e.g.  Milton Friedman,  Archie Caroll, and  Andrew Carnegie SOCIAL RESPONSIBILITY AND ETHICS  Friedman’s View  Friedman is of the view that the social responsibility of business is to increase profit within the requirements of the law.  If a business person acts “responsibly” by cutting the price of the firm’s produce to prevent inflation, by making expenditures to reduce pollution, or by hiring the hard-core unemployed, that person is spending the shareholders’ money for a general interest. SOCIAL RESPONSIBILITY AND ETHICS  Carroll’s View Archie Carroll is of the view that managers of business organisations have four responsibilities: Economic responsibilities involve the production of goods and services of value to society so that the firm can repay its creditors and stockholders. Legal responsibilities are defined by government in laws that are expected to be obeyed. Ethical responsibilities require that a firm follows the generally held beliefs about how one should act in society. Discretionary responsibilities are the purely voluntary obligations a corporation assumes, i.e. philanthropic contributions. –The difference between ethical and discretionary responsibilities is that few people expect an organization to fulfil ethical ones. SOCIAL RESPONSIBILITY AND ETHICS  Carnegie’s View  A Andrew Carnegie, the founder of US Steel Corporation, views corporations’ social responsibilities on two main principles: The Charity Principle and The Stewardship Principle.  The charity principle requires that more fortunate members of society assist its less fortunate members, including the unemployed, the handicapped, the sick and the elderly. The stewardship principle requires businesses and wealthy individuals to view themselves as the stewards, or caretakers, of their property. Carnegie holds the idea that the rich hold their money “in trust” for the rest of society and can use it for any purpose that society deems legitimate SOCIAL RESPONSIBILITY AND ETHICS  THE PRINCIPLES OF CSR Sustainability  Sustainability implies that society must at all times use no more of its resources than can be generated.  It is concerned with how the actions of the present have recurring effects upon the opportunities of the future.  To achieve this, organizations are required to ensure efficient exploitation of natural resources, efficient waste disposal systems and ensure environmentally friendly methods of production in general. SOCIAL RESPONSIBILITY AND ETHICS  THE PRINCIPLES OF CSR Accountability  Here an organisation must recognise that its actions generally affect the external environment and therefore assume responsibility for the effects of its actions.  The concept implies that organisations report themselves to all parties that can possibly be affected by an action it has taken and warn potential victims on how these actions may be affecting them, possibly averting danger. SOCIAL RESPONSIBILITY AND ETHICS  THE PRINCIPLES OF CSR Transparency  Transparency, in principle, means that all acts are obvious or communicated to all concerned.  As a principle of CSR, transparency indicates that organisations make clear all reports of their actions and that those reports, whether in facts or figures, give accurate and detailed information of the relevant information. SOCIAL RESPONSIBILITY AND ETHICS  PROMINENCE OF CSR Key drivers of CSR engagements in recent years have been identified as:  Sustainable development  Globalization  Governance ( UN, OECD, Signing of Compacts)  Corporate sector impact  Communications (Technological Advancement)  Ethical consumerism  Finance (pressure from investors)  Strategic Business Tool  Social awareness and education  Crises management SOCIAL RESPONSIBILITY AND ETHICS  Arguments for And Against CSR Profit maximization Milton Friedman and other activists advanced the idea of shareholder value being in conflict with CSR. According to their view, companies are misusing the resources that are entrusted to them if they engage in CSR. In contrast, others have argued that it is the interest of business and its owners to comply with the societal values and take an active role in society as this is in line with the long-term interest of business. Furthermore, CSR has a positive effect on reputation, through which companies can gain more customers, employees and other benefits. SOCIAL RESPONSIBILITY AND ETHICS  Arguments for And Against CSR Resource fit A second area of dispute is the role of business in addressing social problems. It may be argued that business has valuable resources that could be used to tackle social problems, for example by helping with the management of operational performance. It has however been argued in opposition to this that while companies may possess significant competencies, they lack the specific knowledge, skills and experience needed to deal with societal problem – knowledge such as the particular technical expects to communicate effectively with highly disadvantage clients. SOCIAL RESPONSIBILITY AND ETHICS  Arguments for And Against CSR Lack of accountability. Because of their structure, companies are mainly accountable to their shareholders rather than to society at large. This is why some have argue that companies should not engage in social activities and why business should focus on pursuing economic profit rather than performing other roles in society. The proponents of this view have therefore argued that CSR undermines democracy – part of this argument being that in the case of unethical or irresponsible practice by business, it is the responsibility of the prevailing government to reform those regulations that have allowed companies to misbehave in the first place. According to this view, CSR is somehow bad because it diverts attention from government , which is the body that should control the market for the benefit of society. SOCIAL RESPONSIBILITY AND ETHICS  Criticisms /Arguments against CSR Friedman (1962) argues that the only social responsibility of business is to make profit within the law. Some arguments against CSR are based on the following issues:  “The business of business is business.”  Useless PR exercise  The idea of theft  Lack of Regulation of CSR  Imposes unequal cost to organizations SOCIAL RESPONSIBILITY AND ETHICS  Criticisms/Arguments for CSR Arguments in favour of firm CSR engagements are based on:  Interdependence of firms and the society  Stakeholder interest may transcend financial benefits  Benefits of CSR-  Helps attract qualified staff  Minimizes government intervention  Improves Corporate Image – Goodwill  Leads to improved financial performance SOCIAL RESPONSIBILITY AND ETHICS  FORMS OF CSR ISSUES Areas of Social Responsibility Concerns: Concern for Consumers  Are products safe and well designed?  Are products priced fairly?  Are advertisements clear and not deceptive?  Are credit terms clear?  Is adequate product information available?  Are customers treated fairly by salespeople? SOCIAL RESPONSIBILITY AND ETHICS  FORMS OF CSR ISSUES Concern for Employees  Are employees paid fair wages?  Are employees provided safe work environment?  Are workers hired, promoted, and treated fairly without regard to sex, race, colour, or creed?  Are employees given special training and educational opportunities?  Are handicapped people given employment opportunities?  Does the business help rehabilitate employees with physical, mental, or emotional problems? SOCIAL RESPONSIBILITY AND ETHICS  FORMS OF CSR ISSUES Concern for Environment  Is the environment adequately protected from unclean air and water, excessive noise, and other types of pollution?  Are products and packages biodegradable or recyclable?  Are any by-products that pose a safety hazard to society (such as nuclear waste or commercial solvents) carefully handled and properly treated or disposed of? SOCIAL RESPONSIBILITY AND ETHICS  FORMS OF CSR ISSUES Concern for Society in General  Does the firm support minority and community enterprises by purchasing from them or subcontracting to them?  Are donations made to help develop and support education, art, health, and community development programmes?  Is the social impact of plant locations or relocations considered by managers who make those decisions? SOCIAL RESPONSIBILITY AND ETHICS Stakeholder Management FROM SHAREHOLDER VALUE TO STAKEHOLDER THINKING Stakeholder thinking has emerged over the last 25 years as a popular way of framing corporate behavior. A socially responsible firm is one whose managerial staff balances a multiplicity of interests. Instead of striving only for larger profits for its shareholders, a responsible enterprise also takes into account employees, suppliers, dealers, local communities, and the nation. More recently, many developments have contributed to increasing demands that companies broaden the distribution of business benefits to a wider set of stakeholders, not only shareholders. SOCIAL RESPONSIBILITY AND ETHICS  WHAT ARE STAKEHOLDERS? A stakeholder is an organization or person that affects, or is affected by, the corporation’s purpose. Stakeholders comprise individuals, or sometimes groups, with similar interest in a particular organization. A variety of groups, including shareholders, employees, customers and suppliers, are typically identified as stakeholders. However, shareholders are mainly interested in gaining adequate return on their investment. SOCIAL RESPONSIBILITY AND ETHICS  WHAT ARE STAKEHOLDERS? It should also be noted that the some individual or group may have multiple interests in an organization and therefore belong to various stakeholder clusters. Stakeholder groups can be categorized in many ways. A distinction is often made between internal and external stakeholders, distinguishing those who form the organization from those who just interact with it. However this distinction simply locates the groups involved and tells us little about the nature that the stakeholders have in the company. Examples of internal stakeholders are owners, managers and employees. Examples of external stakeholders include customers, shareholders, creditors, government, society and suppliers. SOCIAL RESPONSIBILITY AND ETHICS EXTERNAL AND INTERNAL STAKEHOLDERS OF A COMPANY SOCIAL RESPONSIBILITY AND ETHICS  STAKEHOLDER IMPORTANCE A more sophisticated way to determine the importance of stakeholders involves: Power of a stakeholder to influence an organization. Stakeholders derive their power from a mix of sources depending on their resources and relationships. Investors and governments, for example, derive their power from legal or contractual arrangements that allow them to have some degree of influence. Other stakeholders including customers and suppliers, have economic power over corporate performance, stakeholders may also have political power to express and put forward their interest. SOCIAL RESPONSIBILITY AND ETHICS  STAKEHOLDER IMPORTANCE A more sophisticated way to determine the importance of stakeholders involves:  Legitimacy of the stakeholder relationship with the company. Legitimacy pertains to the perception that the stakeholder's goals and activities are in line with generally accepted values and norms in society.  Urgency of the stakeholder's claim on the company. Urgency calls for immediate attention on the basis of two conditions: (1) time sensitivity- the degree to which a delay in dealing with the claim is intolerable to the stakeholder; and (2) criticality- the importance of the claim or relationship with the company to the stakeholder. SOCIAL RESPONSIBILITY AND ETHICS  STAKEHOLDER IMPORTANCE Stakeholder theory posits the company as a hub of relationships between diverse actors. These relationships were initially portrayed as a two-way influence between the company and a range of stakeholder groups, although it was recognized that stakeholders are interconnected and that coalitions of stakeholder groups may emerge to help or oppose a company on a particular issue. Researchers have viewed stakeholder relationships as more complex and interrelated, rather than just a collection of one-to-one relationships between the company and its various stakeholders. SOCIAL RESPONSIBILITY AND ETHICS  STAKEHOLDER IMPORTANCE Managers should take into account the interests of all stakeholders because of the intrinsic value that each stakeholder possesses. Stakeholders have legitimate interests in companies for their own sake, rather than because they can further the achievement of some organizational goals. SOCIAL RESPONSIBILITY AND ETHICS RESPONSIBILITIES OF THE BUSINESS TO STAKEHOLDERS Responsibilities for Consumers Guarantee the product quality and safety Protect consumer information Promote customer relationship management Responsibilities for Employees No hiring of child labour Fair employment Protect the employee’s safety and health The labour unions Pay attention to staff development Employee relationship management SOCIAL RESPONSIBILITY AND ETHICS RESPONSIBILITIES OF THE BUSINESS TO STAKEHOLDERS Responsibilities for Environments Save energy and resources Reduce negative impacts on environment The environmental public welfare Responsibilities for Communities Charity donations Employee volunteers Cooperate with NPO, referring to Non-Profit Organization Strategic charities SOCIAL RESPONSIBILITY AND ETHICS RESPONSIBILITIES OF THE BUSINESS TO STAKEHOLDERS Responsibilities for Environments Pay taxes The policy response SOCIAL RESPONSIBILITY AND ETHICS CORPORATE SOCIAL INITIATIVES  What is corporate social initiatives?  Kotler and Lee (2005) defined corporate social initiative as “ major activities undertaken by a corporation to support social causes and to fulfil commitments to corporate social responsibility.”  The second is from Hess et al. (2002, p. 110), who said, social initiative in the business context is defined as any program, practice, or policy undertaken by a business firm to benefit society. SOCIAL RESPONSIBILITY AND ETHICS  Corporate social initiatives Options for Doing Good Six major initiatives under which most social responsibility related activities fall have been identified by Kotler and Lee (2005) as:  Cause promotions  Cause-related marketing  Corporate social marketing  Corporate philanthropy  Community volunteering and  Socially responsible business practices SOCIAL RESPONSIBILITY AND ETHICS Corporate Cause Promotion  Cause Promotions  A corporation provides funds, in-kind contributions, or other corporate resources to increase awareness and concern about a social cause or to support fund raising, participation, or volunteer recruitment for a cause.  Cause promotions commonly assist in creating awareness about social issues of concern to society such as HIV/AIDS education programmes or contributing to support the fight against armed robbery and anti-drug campaign programmes.  The corporation may initiate and manage the promotion on its own; it may be a major partner in an effort; or it may be one of several sponsors. SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions Differences Between Cause Promotions and other forms of corporate social initiatives  It differs from cause-related marketing in that contributions and support are not tied to company sales of specified products.  It differs from social marketing in that the focus is not on influencing individual behavior change. Although cause promotion campaigns have calls to action, they are most commonly in the areas of contributing, such as donating money or time or by signing petitions. SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions It differs from philanthropy in that it requires more from the company than simply writing a check, as promotional campaigns will most often require involvement in the development and distribution of materials and participation in public relations activities, and will include visibility for the corporation's sponsorship. Although a cause promotion may include employee volunteerism, it goes beyond this to participating as well in the development and implementation of promotional materials. SOCIAL RESPONSIBILITY AND ETHICS  Typical Cause Promotions Corporate cause promotions most commonly focus on the following communication objectives. Cause promotion programmes are of the following forms: Building awareness and concern about a cause by presenting motivating statistics and facts; by sharing real stories of people or organizations in need or who have been helped by the cause. Persuading people to find out more about the cause by visiting a special web site or by requesting an informative brochure or tool kit. SOCIAL RESPONSIBILITY AND ETHICS  Typical Cause Promotions Persuading people to donate their time to help those in need. Persuading people to donate money that will benefit a cause. Persuading people to donate non monetary resources, such as unwanted cell phones and used clothing. Persuading people to participate in events, such as attending an art show featuring minority professional photographers, participating in a fund raising walk, or signing a petition to ban or promote a social issue. SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions By their very nature, cause promotion activities have a common theme of communications. They utilize publicity, printed materials, special events, web sites, and advertising, featuring the logo and key messages of the company as well as those representing the cause. SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions Potential corporate benefits: Strengthens brand positioning Builds traffic and customer loyalty Creates brand preference with target markets Provides customers convenient ways to contribute and participate in social causes Provides opportunities for employees to get involved in something they care about Creates partnerships with society Strengthens corporate Image SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions When should a corporate cause promotion be considered? When a company has easy access to the target markets. When the cause can be connected and sustained by a company's products. When the opportunity exists to contribute underutilized in-kind services, such as in- house printing or corporate expertise. When employee involvement will support the cause and employees get excited. SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions Developing a cause promotion campaign plan: Identify campaign partners (if needed) Design a campaign plan -Develop a creative brief Components of creative brief: 1. Target audiences 2. Communication objectives: This is a statement of what we want our target audience to know (facts, information), believe (feel), and perhaps do (e.g., donate or volunteer for a cause), based on exposure to our communications SOCIAL RESPONSIBILITY AND ETHICS  Cause Promotions 3. What benefits to promise? 4. Openings. This refers to the times, places and situations when the audience will be most attentive to and able to act on the message. 5. Positioning and requirements. This section describes the overall desired tone for the campaign (e.g., serious versus light hearted), as well as requirements such as the use of corporate logos. 6. Campaign goals e.g., desired reach and frequency goals, number of people to sign up for the race. SOCIAL RESPONSIBILITY AND ETHICS  Potential Concerns of Corporate Cause Promotions 1. Visibility for the corporation can get lost. 2. Most promotional materials are not sustainable 3. Tracking total investments and returns on promotional investment is especially difficult 4. You may get swamped with requests for contributions from other organisations connected to the cause 5. This approach requires more time and involvement than writing a cheques 6. Promotions are often easy to replicate, removing any competitive advantage SOCIAL RESPONSIBILITY AND ETHICS Cause Related Marketing  Cause Related Marketing  In cause-related marketing campaign, a corporation commits to making a contribution or donating a percentage of revenues to a specific cause based on product sales.  It is a marketing tool used to help address the social issues of the day, through providing resources and funding, whilst at the same time addressing important business objectives  Contributions may be in actual cedi amounts (e.g.GH¢4.95 donation for every high- speed Internet connection installed) or a percentage of sales (e.g., 50 per cent of revenues from sales of specified products will be donated to children’s charities). SOCIAL RESPONSIBILITY AND ETHICS  Cause Related Marketing Typical corporate cause-related marketing initiatives include:  A specified cedi amount for each product sold (e.g., Nestlé Ghana may run a promotion that promises ten (10) pesewas of every product sold, to Osu Children’s Home).  A specified cedi amount for every application or account opened (e.g., MTN may run a promotion that gives ten (10) pesewas to the Ghana Heart Foundation for every customer who subscribes to the network).  A percentage of the sales of a product or transaction is pledged to a charity (e.g., Michael Essien donating 100 per cent of proceeds from a recently organised top 11 World Best and top 11 African Best players football match to support the Osu Children’s home). SOCIAL RESPONSIBILITY AND ETHICS  Cause Related Marketing Typical corporate cause-related marketing initiatives include:  A portion of the sale of an item, sometimes not visibly disclosed, will be donated to a charity (e.g., HFC Realty’s commitment that every time a sales associate sells a home, a portion of the commission goes to their foundation that benefits non-profit agencies dedicated to the homeless).  The company matches consumer contributions related to product-related items (e.g., Metro Bus Transit matches miles donated by passengers to children with medical needs who may need to travel).  For the duration of the promotion, (it may be for a specific time frame or open-ended) a service firm may decide to set a ceiling for their contribution from sales (e.g. Unilever Ghana Ltd. contributes five pesewas for each product coupon redeemed, up to GHC 25,000). SOCIAL RESPONSIBILITY AND ETHICS  Cause Related Marketing When should a cause-related marketing (CRM) initiative be considered?  Those with products that enjoy a large market or mass market appeal.  Have well-established and wide distribution channels.  Product differentiation that offers consumers an opportunity to contribute to a favorite charity.  When increased product sales, visibility, or co-branding with a popular cause would support corporate marketing objectives and goals for a product or products. SOCIAL RESPONSIBILITY AND ETHICS  Cause Related Marketing Steps in Cause-Related Marketing Planning Process 1. Situational Assessment:  Identifying the company's marketing needs  Identifying a social issue to support: What are the major social concerns of target markets? Of these, which one is most closely aligned with the company's core values and has the strongest potential for connections with products that would support marketing objectives.  Potential partners are explored. How large is their membership or donor base and what is their reputation in the community? SOCIAL RESPONSIBILITY AND ETHICS  Cause Related Marketing 2. Setting Objectives; quantifiable goals, e.g. Increase in sales, desired fundraising levels. 3. Selecting Target Audiences i. Identify their characteristics, ii. needs, and iii. media consumption habits 4. Determine the Marketing Mix (4Ps or 7Ps) 5. Developing a Budget 6. Implementation and Evaluation Plans SOCIAL RESPONSIBILITY AND ETHICS  Cause Related Marketing Benefits of Cause Related Marketing 1. Attracting and maintaining new customers 2. Raising funds for a cause 3. Reaching niche markets 4. Increasing product sales 5. Building valuable partnerships that support the effort SOCIAL RESPONSIBILITY AND ETHICS Corporate Social Marketing  Corporate Social Marketing  A corporation supports the development and/or implementation of a behavior change campaign intended to improve public health, safety, the environment, or community well being.  The distinguishing feature is the behavior change focus, which differentiates it from cause promotions that focus on supporting awareness, fundraising, and volunteer recruitment for a cause.  For example, safe driving, eating healthy, family planning, the reduction of tobacco use are certain topics. In social marketing concrete products are marketed as well. SOCIAL RESPONSIBILITY AND ETHICS  Corporate Social Marketing Typical Corporate Social Marketing Campaigns Corporate social marketing campaigns most commonly focus on promoting behaviours that address specific issues such as the following:  Health issues including tobacco use prevention, secondhand smoke, breast cancer, prostate cancer, physical activity, fetal alcohol syndrome, teen pregnancy, skin cancer, eating disorders, diabetes, heart disease, HIV/AIDS, and oral health.  Injury prevention issues including traffic safety, safe gun storage, drowning prevention, suicide prevention, and emergency preparedness.  Environmental issues including water conservation, electrical conservation, use of pesticides, air pollution, wildlife habitats, and liter prevention  Community involvement issues such as volunteering, voting, animal rights, organ donation, crime prevention and blood donation. SOCIAL RESPONSIBILITY AND ETHICS  Corporate Social Marketing Potential Corporate Benefits  Supporting Branding Positioning  Creating Brand Preference  Building Traffic  Increase Sales  Improving profitability through reducing costs  Attracting enthusiastic and credible partners  Having a real impact on social change SOCIAL RESPONSIBILITY AND ETHICS  Corporate Social Marketing Potential Concerns  Some issues are not a good match for the corporate  For many issues and initiatives, clinical and technical expertise needs to be sought  Behaviour change and, therefore, impact does not often happen overnight  Be prepared for criticism from those who view social marketing campaigns as none of your business  Recognize that developing, even supporting a social marketing campaign involves more than writing a check SOCIAL RESPONSIBILITY AND ETHICS  Corporate Social Marketing Elements of Corporate Social Marketing  Identify what behaviour you want to change (for example, increase prenatal counselling among expectant mothers).  Identify your audience: Whose behaviour do you want to change? It may be that you want to change the behaviour of several different groups; in that case, you may want to influence them in different ways to bring them closer to the desired behaviour.  Identify the barriers to change: through interviews, surveys, focus groups or other methods, you'll want to find out what makes it difficult or unattractive for people to make these changes. Do pregnant women feel uncomfortable at the area clinic, or are they made to feel stupid when they talk to the doctor? Is the clinic too far away? SOCIAL RESPONSIBILITY AND ETHICS  Corporate Social Marketing  Reduce the barriers to change. Plan ways to make it easier, more accessible, and more attractive. Can the clinic stay open longer hours? Can physicians and nurses be better trained to discuss problems with women?  Pre-test your ideas on a small number of people, then modify your plan according to your results.  Publicise both the benefits of change, and also your efforts to make change easier in a way that will draw people to take advantage of your efforts.  Assess your results and see if you have created the change you wanted SOCIAL RESPONSIBILITY AND ETHICS  Corporate Social Marketing Developing a corporate social marketing campaign plan  Describe the plan background, purpose, and focus  Conduct a situation analysis  Select target audiences  Set behaviour object (the desired behaviour) and behaviour change goals.  Determine barriers and motivations to behaviour change  Craft a desired positioning  Develop the marketing mix  Outline plan for evaluation and monitoring  Establish budgets and find funding sources  Complete an implementation plan SOCIAL RESPONSIBILITY AND ETHICS Corporate Philanthropy  Corporate Philanthropy  A corporation makes a direct contribution to a charity or cause, most often in the form of cash grants, donations, and/or in kind services. This initiative is perhaps the most traditional of all corporate social initiatives and for many decades was approached in a responsive, even ad hoc manner.  Corporate philanthropy may be defined as a direct contribution by a corporation to a charity or cause, most often in the form of cash grants, donations and/or in-kind services (Kotler and Lee, 2005). SOCIAL RESPONSIBILITY AND ETHICS  Corporate Philanthropy Typical Philanthropic Programmes  Providing cash donations  Offering grants  Awarding Scholarships  Donating products  Donating services  Providing technical expertise  Offering the use of equipment SOCIAL RESPONSIBILITY AND ETHICS  Corporate Philanthropy Benefits of Corporate Philanthropy:  Reputation as a Corporate Citizen  Reputation for Consumer Centricity  Reputation as an Ethical Organisation  Building and Securing a Strong Brand Position  Strengthening the Corporation's Industry SOCIAL RESPONSIBILITY AND ETHICS  Corporate Philanthropy Key Success Factors (KSFs) of Corporate Philanthropy:  Align corporate giving with business activities  Clarify the role of officers and directors  Establish standards of independence for board members  Measure financial and social performance  Communicate Results  Celebrate Success SOCIAL RESPONSIBILITY AND ETHICS  Corporate Philanthropy Developing Philanthropic Endeavors  The process begins with reference to already established philanthropic priorities, those that have been chosen by the company as areas of focus based on a variety of factors including business goals, employee passions, and Customer concerns.  Determining levels of contributions  Developing a communication plan  Establish monitoring and evaluation systems to keep track of total cash contributions, estimate the value of any service, and, provide feedback on programmes and impacts on society.  Design tracking and measurement tools. SOCIAL RESPONSIBILITY AND ETHICS Community Volunteering  Community Volunteering  Community volunteering is an initiative in which the corporation supports and encourages employees, retail partners, and/or franchise members to volunteer their time to support local community organizations and causes Kotler and Lee (2005).  Volunteer efforts may include employees volunteering their expertise, talents; ideas, and/or physical labor. Corporate support may involve providing paid time off from work, matching services to help employees find opportunities of interest, recognition for service, and organizing teams to support specific causes the corporation has targeted. SOCIAL RESPONSIBILITY AND ETHICS  Typical Community Volunteering Programmes  Corporate support for employee volunteering ranges from programs that simply encourage their employees to give back to their communities to those representing a significant financial investment and display of recognition and reward. Examples that represent types of support include:  Promoting the ethics through corporate communications that encourage employees to volunteer in their community and that may provide information on resources to access in order to explore volunteer opportunities. SOCIAL RESPONSIBILITY AND ETHICS  Typical Community Volunteering Programmes  Suggesting specific causes and charity that the employee might want to consider and providing detailed information on how to get involved, often with causes and charities supported by other current social initiatives.  Organizing volunteer teams for a specific cause or event, such as blood donations to a hospital and breast cancer screening.  Providing paid time off during the year to do volunteer work with typical benefits ranging from offering two to five days of annual paid leave to do volunteer work on company time, to more vigorous programs that provide opportunities for an employee to spend a year on behalf of the company working in developing country. SOCIAL RESPONSIBILITY AND ETHICS  Typical Community Volunteering Programmes  Awarding cash grants to charities where employees spend time volunteering; grant amounts are then often based on numbers of hours reported by employees.  Recognizing exemplary employee volunteers through gestures such as mentions in internal newsletters, awards of service pins or plaques, and special presentations at department or annual company meetings.  NB: Types of projects that employees volunteer in range from those that contribute to a local community to ones that improve health and safety for individuals, to those that protect the environment. SOCIAL RESPONSIBILITY AND ETHICS  Potential Benefits of Community Volunteering This initiative creates a win-win-win situation for employees, society and the organization. Employees Benefits  It provides unique opportunity for employees to contribute directly to society in areas of social concern they are personally interested in.  It gives relief to employees from the pressure of their normal working routine, which may be a form of stress relief.  Increasing employee satisfaction and motivation. A company's reputation for community involvement, including support for employees to volunteer for causes, can influence their morale, as well as their choices about where they work. SOCIAL RESPONSIBILITY AND ETHICS  Organisational Benefits  Building genuine relationships in the community  Contributing to business goals  Enhancing Corporate Image  Providing opportunities to showcase products and services SOCIAL RESPONSIBILITY AND ETHICS  Potential Concerns Specific Nature of Concerns  This can get expensive.  With so many employees, efforts may get spread over so many issues that we don't really make a social impact.  Similarly, when efforts among employees are dispersed throughout the market, even the globe, how do we realize business benefits for company as well.  Being able to track efforts and outcomes for this initiative can be the most difficult of all. SOCIAL RESPONSIBILITY AND ETHICS  Potential Concerns The following factors are useful to serve as a guide: When selecting a social issue:  Choose issues and organizations that are relevant to the lives of the company’s employees.  Conduct due diligence, learn from history but always innovate. It is critical to learn from past efforts by companies and foundations.  Support causes and projects that improve the social and economic environment in the locations where the company has its physical facilities. SOCIAL RESPONSIBILITY AND ETHICS  Key Success Factors (KSFs) of Community Volunteering Projects The following factors are useful to serve as a guide: When selecting a social issue:  Choose issues and organizations that are relevant to the lives of the company’s employees.  Conduct due diligence, learn from history but always innovate. It is critical to learn from past efforts by companies and foundations.  Support causes and projects that improve the social and economic environment in the locations where the company has its physical facilities. SOCIAL RESPONSIBILITY AND ETHICS  KSFs of Community Volunteering Projects  Ensure that the projects, issues and organizations supported reflect the values of the company and have the support of senior leadership involvement, including the CEO and chairman of the board. SOCIAL RESPONSIBILITY AND ETHICS  KSFs of Community Volunteering Projects When implementing the programme  Stay committed to the issue for an extended period of time instead of jumping around between different causes. Positive change takes time, requiring a long-term investment. Be patient, many of the benefits of supporting worthy causes are not immediately evident.  Make sure you don't compromise the content of what you do. Keep your eye on the most valued customer, which must be the community in which you are engaged. Provide your employees with the tools and resources they need to be successful, SOCIAL RESPONSIBILITY AND ETHICS  KSFs of Community Volunteering Projects  Include promotional strategies. To reach employees and the community you are serving, you must publicize your programs both internally and externally and capitalize on efforts to recognize and share employee contributions and effective practices whenever possible. However, let the organization or community receiving support from the company tell the story of the company’s involvement.  Develop and implement measurement systems. Independent process and outcome evaluations must be in place to determine what is working and what is not, and the type of resource investments that will help you to be successful. SOCIAL RESPONSIBILITY AND ETHICS  When is Community Volunteering Ideal?  When current social initiatives would benefit from a volunteer component.  When a group of employees express an interest in a specific cause that has strong connections with business and corporate citizenship goals  When a community need emerges, especially an unexpected one that is a good match for the resources and skills of a workforce.  When technological advances make it easier to match employees to volunteer, opportunities.  When a strong community organization approaches a business for support, represents an issue of interest to employees, and has a natural connection to strategic corporate citizenship and business goals.  When a volunteer effort might open new markets or provide opportunities for new product development and research. SOCIAL RESPONSIBILITY AND ETHICS  Community Volunteering Programme Development Process  Develop guidelines for employee involvement.  Determine types and levels of employee support.  Develop an internal communications plan.  Develop a recognition plan.  Develop an external communications plan.  Develop a plan for tracking and assessment. SOCIAL RESPONSIBILITY AND ETHICS Establishing a Company’s Ethical Culture  Introduction  Creating a business with ethical integrity is no small task. In order to achieve this, top management must recognize various stakeholders of the firm.  Profitability is not enough to make a business ethical. Indeed ethical companies sometimes sacrifice profits for the greater good of their stakeholders.  There is the need to explore the components that generate a culture of ethical behaviour in business, starting with core values that shapes a company’s ethical culture. SOCIAL RESPONSIBILITY AND ETHICS  Identifying the Company’s Core Values  A mission statement stipulating why the business exits. A pharmaceutical company’s mission statement may include discovering and developing the safest possible drug therapies.  Core values: represents the ways in which the company pursues its mission. The people who run companies have to decide what kind of companies they want to be. Core Values may be (1) Treating others with respect (2) Honesty (3) Fairness (4) Justice SOCIAL RESPONSIBILITY AND ETHICS  All Ethical Organizations follow These Rules of Behaviour  Managers consider the interest of all affected stakeholders in making decisions.  The people affected by the company’s rules and policies participate in creating those rules and policies.  No single stakeholder group is always considered above other groups that is, stockholders may take precedence in some direction, but not in all matters.  Decisions protect the interests of minority stakeholders.  Rules and policies respect individuals.  The company understands its place in the community and acts as much as possible, to benefit the community.  Rules and policies governing the relationships among stakeholders are rooted in principles of fairness and justice. SOCIAL RESPONSIBILITY AND ETHICS  Considering the Customers  Businesses have a moral contract with their customers to provide an honest product or service at a fair price. Businesses that view customers as a means to an end(profits) typically expose their view in the way they handle customer problems.  Treating customers honestly and fairly is a hallmark of daily operations for ethical companies. It doesn’t apply only when a problem with a product or service occur. SOCIAL RESPONSIBILITY AND ETHICS  Looking at the Workforce  Treating employees ethically goes beyond merely following the law regarding wages, equal opportunity, and so on. If workers feel that company policies are unfair, the company will have a hard time convincing them its ethics are sound and may find it difficult to motivate employees to behave ethically.  One of the easiest and most effective ways to make employees feel valued is to give them a seat at the decision-making table. They must have a voice in shaping rules and policies that governs their jobs.  Managers have other moral responsibility towards their employees. Eg employee safety must not be sacrificed for profits. SOCIAL RESPONSIBILITY AND ETHICS  Making Concerns of Customers A Priority 1.1 Putting safety ahead of profits  Ethical companies realize that their customers safety and security is more important than making profit.  An ethical company is one that takes immediate action to ensure the safety of customers as soon as it identifies the safety of a product has been compromised.  A typical example is the recalling of automobiles from the market. SOCIAL RESPONSIBILITY AND ETHICS  Making Concerns of Customers A Priority 1.2 Encouraging Quality Customer Service  A company culture that focuses on customer service helps employees remember the company’s reason for being, as well as the customers reason for being there. Customer service doesn’t necessarily come naturally. Even though it makes sense from a profit-making standpoint, competing pressures can easily push the core value of serving the customer to the background.  Managers who value customer service make sure their employees  Are well trained in their jobs.  Receive regular customer service training, covering such topics as handling difficult clients, telephone etiquette, listening or communications skills and problem solving.  Are encouraged to suggest policy changes to improve the customer’s experience SOCIAL RESPONSIBILITY AND ETHICS  Thinking About Stockholders  Many economies and business ethics experts subscribe to the view that executives and managers sole responsibility to their stockholders is to make as much money as possible.  However, stockholders don’t always agree, they expect the companies they invest in to adhere to core values of justice and respect for human life and dignity.  In addition to making as much money as possible, business managers and executives also have a strong moral obligation to treat stockholders honestly and fairly. SOCIAL RESPONSIBILITY AND ETHICS  Dealing with Competitors  In ethical companies, competitors receive the same basic considerations that other stakeholders receive: respect, honesty, fairness, and justice.  Unfortunately competition can bring out the worst in managers, employees, and company culture.  To counter the natural negative reaction to competition, ethical companies must:  Focus on the virtues of their own product or service- bad mouthing the competition isn’t just impolite.  Gather information through legal means-pore over their competitors advertisements etc. industrial espionage.  Follow the rules for their business- unethical companies take shortcuts.  Use legitimate methods to gain market share. SOCIAL RESPONSIBILITY AND ETHICS  Fitting In with The Community  Ethical companies recognize that they are part of the community in which they operate and that the community therefore has an interest in how the company conducts itself.  Ways by which businesses can demonstrate a sense of community: 1. Consider how their operations affect their neighbours - consciousness and concern for their surroundings. 2. Build relationships with other local businesses. 3. Make community involvement a managerial priority 4. Employees like to be proud of where they work and communities like to be proud of their businesses. SOCIAL RESPONSIBILITY AND ETHICS  Developing an Effective Code of Ethics  The best codes of ethics catalog a company’s core values, apply to every employee at every level of the company hierarchy and transcend other economic pressures. The best ethics codes are written in language anyone can understand.  Having a written code of ethics doesn’t, in itself ensure that employees behave ethically.  A company must supplement its ethical code with meaningful participation, ongoing training and reinforcement, and periodic review so it doesn’t become a hypocritical window dressing. SOCIAL RESPONSIBILITY AND ETHICS  Recognizing a good code of ethics Ethics code that is respected and adhered to must have the following:  Apply to everyone- from top to down adherence to the code of ethics.  Are consistent even when the market isn’t-in times of economic pressures compliance with the company’s ethical code can easily decrease.  Promote transparency and accountability.  Keep up with the times. SOCIAL RESPONSIBILITY AND ETHICS  Crafting rules of conduct A company’s code of ethics basically describes it organizational policies or “how we do things around here,” and should be rooted in the core values the leadership has identified for the company. Laws and regulations don’t have to be the end point. A company’s code of conduct should go beyond what it has to do to stay within the law and spell out what employees should do to live up to the company’s core values. SOCIAL RESPONSIBILITY AND ETHICS  Getting input from all levels of the organization One of the keys to developing an effective code of ethics is having all employees, from upper management on down to frontline workers, involved in formulating the code. The discussion on codes of ethics can be done through: Poll employees on their personal values. Ask employees to identify the workplace pressures that can compromise their personal values. Use hypothetical examples to measure how employees would handle ethical dilemma. SOCIAL RESPONSIBILITY AND ETHICS  Sending the right message A company that wants employees to take the code of ethics to heart, management has to make sure that workplace pressures don’t compromise the standards spelled out in the code. Some common phrases and attitudes that can undermine-if not negate entirely –a manager’s efforts to build an ethical company culture: “No matter what we always meet our financial goals.” “ I don’t care how you do it, just get it done.” “I don’t want to hear why we cant do it.” “ Loyalty to the company comes first. “ Don’t give me bad news.” “ We never have any injuries on the job, understand?” SOCIAL RESPONSIBILITY AND ETHICS  Sending the right message A company that wants employees to take the code of ethics to heart, management has to make sure that workplace pressures don’t compromise the standards spelled out in the code. Some common phrases and attitudes that can undermine-if not negate entirely –a manager’s efforts to build an ethical company culture: “No matter what we always meet our financial goals.” “ I don’t care how you do it, just get it done.” “I don’t want to hear why we cant do it.” “ Loyalty to the company comes first. “ Don’t give me bad news.” “ We never have any injuries on the job, understand?” SOCIAL RESPONSIBILITY AND ETHICS  Making the code memorable The Ten commandments are memorable because they are simple, likewise a code of conduct must be simple and easy to remember. Keep your code of conduct brief and simple as possible. Resist the urge to provide too much detail or complexity in your code of conduct; instead, keep it as brief and simple as possible. SOCIAL RESPONSIBILITY AND ETHICS  Reviewing the code periodically After a company has written its code of ethics, it needs to review it periodically to make sure it covers all the essential aspects of the company’s ethical culture and is relevant to the conditions the company currently operates in. Make the reviewing your code of conduct part of your ongoing ethics and compliance training program. SOCIAL RESPONSIBILITY AND ETHICS  Keeping on top of changing conditions As laws and regulations evolve, so too do company codes of ethics and compliance programs. 1. Compliance officer- updating ethics and compliance policies to meet or exceed legal requirements. 2. Committee-representatives from all levels of the organization work to keep the compliance programs current. Sometimes issues arise that a company didn’t anticipate when it crafted the code of ethics. A compliance officer or committee should have the authority to review such issues as they come up and draft appropriate responses to present to the board of directors and CEO SOCIAL RESPONSIBILITY AND ETHICS  Maintaining a Strong Ethical Culture Companies that identify and adhere to their core values have an easier time creating a strong ethical culture among both management and staff. Instituting codes of ethics and compliance programs are good places to start but they aren’t enough to generate or sustain an ethical business culture. Managers and employees must be made to implement and continue the behaviours that create an ethical culture by offering the right incentives, following through with appropriate rewards and punishments, and eliminating the fear some employees feel to do what is right. SOCIAL RESPONSIBILITY AND ETHICS  Generating the right incentives In general, people are motivated to take actions that benefit them and avoid actions that are likely to harm them. Companies need to design rewards and incentives so that they motivate employees to live up to the core values established by the companies. Employees can be susceptible to misbehavior in the face of poorly constructed incentive programs, too- that’s not to say that financial rewards are inherently unethical; they are not. But they should be structured in a way that encourages honest measurement of goals SOCIAL RESPONSIBILITY AND ETHICS  Rewarding ethical behaviour The simplest way to reward employees for behaving ethically is to offer praise and recognition for those who alert their superiors to problems. This strategy accomplishes two things : It offers recognition, which everyone likes, and it reinforces the company’s core values and ethical standards to the rest to the workforce. SOCIAL RESPONSIBILITY AND ETHICS  Punishing unethical high performers The flip side of rewarding ethical behaviour, of course, is punishing unethical behaviour. Unfortunately, many managers and executives in many companies do ignore bad behaviour when the perpetrator is making money for the company. As painful as getting rid of an employee who’s producing well may be, it’s really the only choice if you want to preserve the ethical culture you have taken such care to build. SOCIAL RESPONSIBILITY AND ETHICS  Eliminating the fear that sometimes impedes ethical decision making Another part of maintaining a strong ethical culture at a company is making sure its employees feel comfortable making ethical decisions, even when those decisions may have negative consequences. The best thing a company can do to combat any fear its employees have- stress the company’s ethical standards more than the pressure for profits. Other important ways companies can combat fear in their employees include: 1. Taking corrective action- skeptical about reporting misconduct. 2. Providing for informers’ confidentiality- retaliation. 3. Refusing to tolerate retaliation-appropriate disciplinary measures against the offender. SOCIAL RESPONSIBILITY AND ETHICS  Sending the Message from the Top Down Ethical leadership involve is more than just posting a code of conduct. Provide transparency-stakeholders have access to information. Keep their promises-may be more profitable, ethical leaders put their commitments first. Are accountable in good times and bad-taking credit rather than accepting responsibility. Reward performance that promotes an ethical culture-Ethical leaders recognize and reward good behaviour and take action against bad behaviour. SOCIAL RESPONSIBILITY AND ETHICS  Mastering the Art of Apology No matter how vigilant a company is or how well crafted its ethical policy is, chances are it will have to make amends foe a mistake at some point. Apologies can be a tricky issue in business because they can be turned against you in court. SOCIAL RESPONSIBILITY AND ETHICS  Avoiding bad apologies Just as making a genuine apology can do wonders for a company and its relationship with its customers and employees, making careless or half-hearted apologies can damage the company’s reputation. The following are three types of apologies to avoid at all cost: 1. So-called nonapology apologies- remorse without admitting responsibility. Saying “ I’m sorry you think I did something wrong” isn’t the same as saying , “ I’m sorry”. 2. Delayed apologies- delays can also damage an apology’s effectiveness. Akio Toyoda, president of Toyota Motor Company. 3. Insincere apologies- A “we’re sorry, but we’re not going to do anything about it” apology can be even worse than no apology at all. SOCIAL RESPONSIBILITY AND ETHICS TEN ETHICAL ISSUES THAT MOST BUSINESSES FACE  INTRODUCTION NEARLY EVERY BUSINESS OWNER, MANAGER AND EMPLOYEE RUNS UP AGAINST ETHICAL DILEMMA ONCE IN A WHILE. SOMETIMES THE DILEMMA COMES FROM INTERNAL ACTIVITIES AND EXTERNAL OPERATIONS. THERE ARE TEN COMMON BUSINESS ETHICS ISSUES WHICH MUST BE CONSIDERED CUTTING COSTS VERSUS MAINTAINING QUALITY AND SAFETY STRIKING A BALANCE BETWEEN COSTS AND QUALITY (OR SAFETY) MAY BE THE QUINTESSENTIAL QUESTION IN BUSINESS. BUSINESSES WORKING HARD TO KEEP THEIR COST UNDER CONTROL. MAINTAINING QUALITY AND SAFETY STANDARDS DURING CHALLENGING ECONOMIC TIMES MAY TEMPORARILY DAMAGE YOUR COMPANY’S BOTTOM LINE- SACRIFICING QUALITY OR SAFETY CAN LEAD TO BANKRUPTCY. OVERPROMISING AND UNDERDELIVERING THE SAYING “ACTIONS SPEAK LOUDER THAN WORDS” MAY BE TRITE, BUT TRUE. OVERPROMISING CAN BE TEMPTING IN ANY NUMBER OF BUSINESS SCENARIOS. DISARMING UNREALISTIC EXPECTATIONS FROM VARIOUS STAKEHOLDERS BY SAYING STRAIGHT OUT, “ I DON’T WANT TO MAKE PROMISES I CAN’T KEEP.”  CONTROLLING THE MARKET COMPETITION CAN BE CUTTHROAT IN ANY MARKET SECTOR AND BUSINESS PEOPLE OFTEN ARE UNDER TREMENDOUS PRESSURE TO IMPROVE SALES, CUT COSTS, BOOST PROFITS AND GET A BIGGER PIECE OF THE MARKET. THE PROBLEM WITH RESORTING TO UNETHICAL PRACTICES TOWARD COMPETITORS IS THAT LIKE MOST UNETHICAL BEHAVIOUR, THOSE PRACTICES MOST LIKELY WILL COME BACK TO HAUNT YOU.  COPING WITH BAD PUBLICITY THE OLD SAYING THAT THERE’S NO SUCH THING AS BAD PUBLICITY JUST ISN’T TRUE- AND IT MAY NEVER HAVE BEEN TRUE. HOW A COMPANY HANDLES ITSELF IN THE LIGHT OF BAD PUBLICITY SPEAKS VOLUMES TO CONSUMERS, BUSINESS PARTNERS AND OBSERVERS ABOUT ITS CORPORATE ETHICS. TRANSPARENCY, HONESTY AND ACCOUNTABILITY ARE THE BEST ANTIDOTES FOR BAD PUBLICITY  BEING HONEST WITH CONSUMERS NUMEROUS STUDIES HAVE SHOWN HOW THE CUSTOMER’S EXPERIENCE WITH ALL LEVELS OF AN ORGANIZATION AFFECTS THE ORGANIZATION’S IMAGE AND OVERALL PROFITABILITY. GENERALLY CONSUMERS WOULD RATHER HAVE BAD NEWS DELIVERED STRAIGHT UP THAN HAVE BUSINESSES SKIRT THE REAL REASONS.  BEING HONEST WITH EMPLOYEES BEING HONEST WITH EMPLOYEES IS THE BEST WAY FOR A COMPANY TO ENCOURAGE THEM TO ALSO BE HONEST WITH THE COMPANY AND ITS MANAGEMENT. SOMETIMES MANAGERS COME UP WITH “TAKE IT OR LEAVE IT” STANCE WHEN RESTRUCTURING PAY OR BONUS PROGRAMMES. SOMETIMES EMPLOYEES DO NOT HAVE ACCESS TO INFORMATION. IN CASES WHERE THEY ARE TOLD CERTAIN INFORMATION IS CONFIDENTIAL IS BETTER THAN LYING TO THEM. INFORMATION SHARING AND EMPATHY GET COMPANIES A LOT FURTHER IN MINIMIZING DAMAGE TO MORALE. KNOWLEDGE IS POWER, AND EMPOWERED EMPLOYEES ARE HAPPIER AND MORE PRODUCTIVE THAN “MUSHROOM EMPLOYEES”- EMPLOYEES WHO ARE GET IN THE DARK.  BEING HONEST WITH STOCKHOLDERS STOCKHOLDERS NATURALLY WANT THEIR INVESTMENTS IN A COMPANY TO GROW IN VALUE. SHARE INFORMATION- KNOWLEDGE IS POWER. BE REALISTICALLY HOPEFULLY- IF YOUR COMPANY IS GOING THROUGH A ROUGH PATCH ACKNOWLEDGE THE CHALLENGES YOU FACE AND EXPLAIN WHAT YOU ARE DOING TO MEET THOSE CHALLENGES. LEAD BY EXAMPLE- PEOPLE TAKE THEIR EMOTIONAL CUES FROM THE PEOPLE AROUND THEM. KEEPING ACCOUNTING ON THE UP AND UP MAKING DIRECTORS AND EXECUTIVE MANAGERS, AUDITING FIRMS AND BOARDS OF DIRECTORS MORE ACCOUNTABLE FOR THEIR COMPANIES ACCOUNTING PRACTICES. THE BOTTOM LINE ISN’T ALWAYS THE BEST INDICATOR OF A COMPANY’S HEALTH AND WELL-BEING AND INACCURATE FINANCIAL REPORTS, WHETHER OUTRIGHT FRAUDULENT OR MERELY TWEAKED HERE AND THERE, GIVES NO VALID INDICATION AT ALL AS TO A COMPANY’S PERFORMANCE AND VISIBILITY. LOBBYING FOR AND AGAINST REGULATIONS EVEN IF YOU OWN A ONE-PERSON SHOP IN A ONE-BLOCK BUSINESS DISTRICT, YOU HAVE TO DEAL WITH LAWS AND REGULATIONS- DEFINITELY AT THE LOCAL AND STATE LEVELS, AND PROBABLY FEDERAL LEVEL. KEEPING GOVERNMENTAL COMMUNICATION APPROPRIATELY FOLLOWS THESE GUIDELINES: 1. REMEMBER WHO YOUR STAKEHOLDERS ARE AND WHAT THEY NEED AND FOCUS ON THEM IN YOUR CONTACTS WITH GOVERNMENT OFFICIALS. 2. MAKE YOUR CASE WITH FACTS, NOT WITH YOUR PERSONAL RELATIONSHIPS. CONTRIBUTING TO POLITICAL CAMPAIGNS GIVING MONEY TO CANDIDATES IS A COMMON WAY FOR CORPORATIONS AND THE PEOPLE WHO RUN THEM TO BUILD RELATIONSHIPS WITH ELECTED OFFICIALS. MAKING SURE YOU KNOW THE LIMITS ON CAMPAIGNS CONTRIBUTIONS AND NEVER PRESSURE EMPLOYEES, VENDORS, OR OTHER STAKEHOLDERS TO SUPPORT A CANDIDATE OR CAMPAIGN. TEN COMMON OBSTACLES TO ETHICAL BUSINESS  INTRODUCTION MAJOR SCANDALS SUCH AS ENRON, MADE BUSINESS ETHICS A MAJOR TOPIC OF CONVERSATION. SEVERAL STUDIES FOUND THAT LARGE CORPORATIONS WERE SEEN TO BE UNETHICAL THAN SMALL FIRMS. IT IS IMPORTANT TO IDENTIFY SOME IMPORTANT OBSTACLES TO MAINTAINING ETHICAL BEHAVIOUR IN THE WORKPLACE AND FIGURING OUT HOW TO OVERCOME THOSE OBSTACLES.  GREED GREED IS A “ SELFISH AND EXCESSIVE DESIRE FOR MORE OF SOMETHING(AS MONEY) THAN IS NEEDED”. BUSINESS EXECUTIVES AREN’T THE ONLY PEOPLE VULNERABLE TO GREED. GREED ISN’T ALWAYS ABOUT MONEY, SOMETIMES PEOPLE ARE GREEDY FOR POWER STATUS, INFLUENCE ETC. SOME IDEAS FOR HOW TO HELP KEEP GREEDY TENDENCIES IN CHECK: 1. ESTABLISH AN ETHICAL CULTURE THAT PUTS PRINCIPLES AHEAD OF PROFITS. 2. SET UP A SYSTEM OF CHECKS AND BALANCES THAT PROMOTES ACCOUNTABILITY AND TRANSPARENCY. 3. SET UP A REWARD SYSTEM THAT COMBINES FINANCIAL AND OTHER  GROUPTHINKING GROUPTHINKING WHICH IS FAILURE TO INVITE, RECOGNIZE, OR LISTEN TO DIFFERENT POINTS OF VIEW, IS A TAUGHT OBSTACLE TO OVERCOME IN BUSINESS BECAUSE GROUPTHINKERS CAN INTIMIDATE THE PEOPLE WHO MIGHT PRESENT DIFFERENT VIEWPOINTS IN A NUMBER OF WAYS. GROUPTHINKING CAN BE EXPENSIVE. IF MANAGERS AND EXECUTIVES DISPLAY ATTITUDE WHICH PORTRAYS THEY ARE WILLING TO INVITE OPINIONS OF PEOPLE, CHANCES ARE THEY’LL SELDOM GET ANY VALUABLE INPUT FROM THE PEOPLE AROUND THEM.  TUNNEL VISION TUNNEL VISION IS CLOSELY RELATED TO GROUPTHINKING IN THAT BOTH CONDITIONS INVOLVE NOT PAYING ATTENTION TO DIFFERING VIEWPOINTS AND IGNORING RELEVANT DETAILS THAT CAN QUICKLY TURN SUCCESS INTO DISASTER. TUNNEL VISION IS MOST COMMON WHEN THE CORPORATE CULTURE DOESN’T MAKE ALLOWANCES FOR FAILURE. COMBATING TUNNEL VISION ISN’T EASY ESPECIALLY WHEN YOU ARE FACING LOTS OF COMPETITIVE PRESSURES.  SELF-INTEREST RESEARCH IN VARIOUS DISCIPLINES INDICATES THAT MOST PEOPLE TEND TO DO WHAT WILL BENEFIT THEM AND AVOID WHAT MAY HARM THEM. BUT RESEARCH ALSO SUGGESTS THAT MOTIVATED SELF-INTEREST- THAT IS , AN INDIVIDUAL SPECIFIC NEEDS OR WANTS CAN TUG PEOPLE TOWARD UNETHICAL BEHAVIOUR IF THE SELF-INTEREST ISN’T COUNTERED BY SOME FACTOR. MOTIVATED SELF-INTEREST CAN STEM FROM ANY NUMBER OF NEEDS, DESIRES OR GOALS INCLUDING 1. FEAR OF LOSING A JOB. 2. DESIRE FOR MORE PAY. 3. DESIRE FOR STATUS, POWER, OR INFLUENCE  ARROGANCE EVERY BUSINESS LEADER NEEDS CONFIDENCE, BUT, ALL TOO OFTEN, CONFIDENCE DEVELOPS INTO ARROGANCE- THE BELIEF THAT YOU ARE SMARTER, MORE VISIONARY AND MORE RIGHT THAN THOSE AROUND YOU. THE FRAGILE LINE BETWEEN CONFIDENCE AND ARROGANCE IS HUMILITY- FOR EXAMPLE, UNDERSTANDING WHAT YOU CAN AND CAN’T CONTROL. CONFIDENT LEADERS ATTRIBUTE THEIR SUCCESS TO A COMBINATION OF TALENT, HARD WORK AND GOOD FORTUNE. TO GREATLY DIMINISH TENDENCY TOWARD ARROGANCE IN YOUR COMPANY, BE SURE THAT YOUR LEADERS INVITE AND RESPECT DISSENTING OPINIONS.  LABOUR COST HIRING WORKERS IS EXPENSIVE , AND LABOUR IS ALWAYS A TARGET LINE ITEM WHEN COMPANIES HAVE TO TRIM THEIR BUDGETS. NEARLY EVERY MAJOR COMPANY FACES THE LABOUR-COST ISSUE AT SOME POINT. DO YOU OUTSOURCE YOUR LABOUR TO THE LOWEST BIDDER AND CHOOSE NOT TO EXAMINE WHETHER THE BIDDER ABIDES BY CHILD LABOUR LAWS, OVERTIME RULES AND OTHER GENERALLY ACCEPTED WORKER’S RIGHTS? OR DO YOU TAKE A PRINCIPLED STANCE ON WORKER’S RIGHTS AND ACCEPT THE BLOW TO THE BALANCE SHEET. SEVERAL COMPANIES HAVE TRIED TO CHART A SENSIBLE MIDDLE COURSE. FOR EXAMPLE, AFTER COMING UNDER INTENSE CRITICISM FOR LABOUR, NIKE IMPLEMENTED PROGRAMS TO MONITOR ITS OVERSEAS SUPPLIERS AND PRODUCTION PLANTS FOR COMPLIANCE WITH HUMAN AND WORKER’S RIGHTS STANDARDS.  PRODUCTION COST EVEN IF YOU GET CHEAP LABOUR WITHOUT VIOLATING ETHICAL STANDARDS, THE COST OF THE MATERIALS, EQUIPMENT, AND SPACE YOU NEED TO MANUFACTURE YOUR PRODUCT CAN EASILY SOAR TO RAREFIED HEIGHTS. OF COURSE, RESPONSIBLE MANAGER, LIKE RESPONSIBLE CONSUMERS, SHOP AROUND FOR THE BEST DEALS TO MAKE SURE THEY AREN’T OVERPAYING FOR PRODUCTS THEY NEED. A GROWING BODY OF RESEARCH INDICATES THE CONSUMERS ARE WILLING TO PAY EXTRA FOR PRODUCTS THEY TRUST, SO, IN THE LONG RUN, YOU SERVE YOUR COMPANY’S BEST INTEREST BY STRICTLY ENFORCING QUALITY AND SAFETY STANDARDS.  LACK OF TRANSPARENCY TRANSPARENCY IS SIMPLY MAKING INFORMATION AVAILABLE TO BOTH EMPLOYEES AND THE GENERAL PUBLIC. THE MORE OPEN A COMPANY IS ABOUT ITS OPERATIONS, THE LESS LIKELY IT IS TO SUFFER ETHICAL NEARSIGHTEDNESS. WHILE AN ATMOSPHERE OF SECRECY BREEDS LACK OF ACCOUNTABILITY, TRANSPARENCY INVITES INSPECTION, AND WITH INSPECTION OFTEN COMES INCREASED HONESTY AND ETHICAL BEHAVIOUR.  FEAR FEAR IS DOUBLE-EDGED SWORD WHEN IT COMES TO BUSINESS ETHICS. ON THE ONE HAND, IT CAN HELP PEOPLE FIGHT THE TEMPTATION TO BEHAVE UNETHICALLY BECAUSE THEY FEAR THE CONSEQUENCES OF GETTING CAUGHT, FEELING EMBARRASSED ETC. SAME CAN NOT BE SAID OF THE OPPOSITE. INSIDE A COMPANY, FEAR CAN ARISE OUT OF ALL KINDS OF FACTORS, GREAT PRESSURE TO MEET FINANCIAL TARGETS CAN MAKE PEOPLE AFRAID OF FAILING AND THUS LOSING OUT ON BONUSES AND PROMOTIONS.  DOUBLE STANDARDS MANAGERS WHO TAKE A “DO AS I SAY, NOT AS I DO” DOUBLE-STANDARD APPROACH TO SUPERVISING THEIR EMPLOYEES SURRENDER THE MOST VALUABLE CURRENCY THEY HAVE IN PROMOTING ETHICAL BEHAVIOUR. THE SAME ISSUES ARISE WHEN MANAGERS IGNORE ETHICAL VIOLATIONS FROM HIGH PERFORMERS BUT PUNISH THE SAME INFRACTIONS FROM AVERAGE OR LOW- PERFORMING EMPLOYEES. THE ONLY WAY TO AVOID THE PROBLEMS ASSOCIATED WITH DOUBLE STANDARDS IS TO ENSURE THAT EVERYONE IN THE ORGANIZATION, FROM CEO ON DOWN, HELD ON SAME EXPECTATIONS FOR ETHICAL BEHAVIOUR. TEN WAYS MANAGERS CAN KEEP THEIR COMPANIES ETHICAL  CHOOSE ETHICAL LEADERS HIRING ETHICAL MANAGERS MAY BE THE SINGLE MOST IMPORTANT THING YOU CAN DO TO BUILD AND MAINTAIN AN ETHICAL CULTURE AT YOUR COMPANY. SO HOW DO YOU CHOOSE ETHICAL LEADERS? 1. ASK THE CANDIDATE TO DESCRIBE A WORKPLACE DILEMMA SHE HAS ENCOUNTERED AND TO EXPLAIN HOW SHE RESOLVED IT. 2. POSE A HYPOTHETICAL ETHICAL DILEMMA TO THE CANDIDATE AND ASK HIM HOW HE WOULD HANDLE IT. 3. ASK THE CANDIDATE’S OPINION ON CURRENT BUSINESS ETHICS NEWS. HAVE AN INDEPENDENT BOARD OF DIRECTORS BOARD OF DIRECTORS ARE RESPONSIBLE FOR THE COMPANY’S FUTURE, CREATING POLICIES AND OBJECTIVES, APPOINTING THE RIGHT PEOPLE WHO ADMINISTER THE POLICIES AND IMPLEMENT THE OBJECTIVES. IN ORDER TO ENSURE EFFECTIVE CORPORATE GOVERNANCE, GIVE YOUR BOARD AS MUCH INDEPENDENCE AS POSSIBLE BY DOING THE FOLLOWING: 1. AVOID NEPOTISM. 2. INSTITUTE STRUCTURAL REFORMS. 3. ASK OUTSIDERS TO SERVE ON THE BOARD. 4. PROVIDE INFORMATION IN CLEAR LANGUAGE. 5. INVITE QUESTIONING.  HAVE A LIVING CODE OF ETHICS ONE OF THE KEYS TO KEEPING YOUR COMPANY ETHICAL IS MAKING SURE YOUR CODE OF ETHICS ISN’T JUST A FORGOTTEN PIECE OF PAPER. THE BEST ETHICS CODES APPLY TO EVERYONE IN THE COMPANY, PROMOTE TRANSPARENCY AND ACCOUNTABILITY, REMAIN COMMITTED TO CORE VALUES AND KEEP UP WITH TECHNOLOGICAL AND OTHER CHANGES. EXPLAIN THE REASONING BEHIND YOUR CODE KNOWLEDGE IS POWER AND THE EASIEST WAY TO GET YOUR EMPLOYEES TO ADHERE TO YOUR CODE IS TO EXPLAIN WHY THE CODE IS SO IMPORTANT. FOR EXAMPLE SAY YOUR CODE OF ETHICS PROHIBITS FAMILY MEMBERS FROM WORKING IN THE SAME DEPARTMENT. YOU CAN EITHER LET THE RULE SPEAK FOR ITSELF AND LET YOUR EMPLOYEES COME UP WITH REASONS WHY THIS PARTICULAR RULE IS INCLUDED IN THE CODE OR YOU CAN EXPLAIN THE RULE’S PURPOSE TO AVOID ANY ISSUES OF FAVOURITISM OR UNFAIR TREATMENT. APPLY ETHICAL STANDARDS TO EVERYONE NOTHING SAPS MORALE AND COMMITMENT TO ETHICAL CONDUCT MORE QUICKLY THAN THE PERCEPTION THAT DIFFERENT RULES APPLY TO DIFFERENT PEOPLE IN AN ORGANIZATION. MOST PEOPLE EXPECT LEADERS IN AN ORGANIZATION TO SET AN EXAMPLE FOR THE REST OF THE GROUP AND MOST EMPLOYEES CAN SMELL HYPOCRISY , ESPECIALLY FROM THE EXECUTIVE OFFICE. TO BE EFFECTIVE ETHICAL STANDARDS MUST APPLY EQUALLY TO EVERYONE IN THE ORGANIZATION.  VALUE ETHICS OVER PERFORMANCE OFTENTIMES HIGHER-PERFORMING WORKERS AREN’T HELD TO THE SAME ETHICAL RULES AS POOR PERFORMERS. COUNTERACTING THE STRONG TENDENCY TO IGNORE ETHICAL LAPSES AMONG HIGH PERFORMERS: 1. STRUCTURE REWARDS PROGRAM TO ENCOURAGE ETHICAL COMPLIANCE. 2. GIVE THE RESPONSIBILITY OF ENFORCING ETHICAL STANDARDS TO SOMEONE ELSE. 3. APPOINT AN ETHICS COMMITTEE.  ENGAGE STAKEHOLDERS TO ENGAGE STAKEHOLDERS IN YOUR ETHICAL CULTURE, YOU FIRST HAVE TO IDENTIFY THEM AND THEIR CONCERNS. GENERALLY THE MORE COMMUNICATION PATHS YOU BUILD BETWEEN YOUR COMPANY AND YOUR STAKEHOLDERS THE MORE SUCCESSFUL YOU WILL BE IN GETTING THE INPUT YOU NEED TO MAINTAIN YOUR COMPANY’S ETHICAL CULTURE.  SUPPORT INDUSTRY-WIDE REGULATION COMPANIES THAT SINCERELY PROMOTE SENSIBLE REGULATION OF THEIR INDUSTRY GET AN IMAGE BOOST THAT CAN TRANSLATE INTO NEW CUSTOMERS AND HIGHER REVENUES. BEFORE YOU PROPOSE OR SUPPORT INDUSTRY-WIDE REGULATION, TAKE AN HONEST LOOK AT THE IMPACT YOU EXPECT SUCH REGULATIONS TO HAVE. THESE DAYS ITS MORE COMMON TO READ ABOUT INDUSTRY GROUPS WHO ARE FIGHTING AGAINST GOVERNMENT REGULATIONS RATHER THAN DEMANDING IT. CREATE AN ENVIRONMENT WHERE PEOPLE WANT TO COME TO WORK EVER SINCE HUMAN BEINGS BEGAN FORMING GOVERNMENTS , WISE LEADERS HAVE KNOWN THAT CONTENT SUBJECTS DON’T REVOLT. THE SAME PRINCIPLES APPLIES IN THE WORKPLACE. MAKING YOUR EMPLOYEES CONTENT: 1. ASSIGN EMPLOYEES TO JOBS THAT THEY ARE WELL SUITED FOR. 2. GIVE EMPLOYEES A MEANINGFUL WAY TO MAKE SUGGESTIONS. 3. RECOGNIZE THAT EMPLOYEES HAVE LIVES OUTSIDE THE WORKPLACE. HAPPY EMPLOYEES TEND TO STAY IN THEIR JOBS LONGER, REDUCING THE COST ASSOCIATED WITH HIGH TURNOVER  STAY ALERT TO ETHICAL THREATS CREATING AND MAINTAINING AN ETHICAL CULTURE ISN’T A ONE-SHOT DEAL; IT REQUIRES LONG TERM COMMITMENT AND INTEGRATION INTO TOUR OVERALL BUSINESS STRATEGY. ETHICAL DANGERS CAN COME FROM A VARIETY OF SOURCES. E.G. LAUNCHING A NEW PRODUCT RAISES NEW ETHICAL CONCERNS ESPECIALLY IN MARKETING. PROFESSOR R.E. HINSON  ETHICAL ISSUES AND DILEMMAS IN BUSINESS  AN ETHICAL DILEMMA IS A PROBLEM, SITUATION, OR OPPORTUNITY THAT REQUIRES AN INDIVIDUAL OR GROUP TO CHOSE AMONG SEVERAL WRONG OR UNETHICAL ACTIONS  THERE IS NO ETHICAL CHOICE 155  Shareholder Issues 1. Core values 2. Shareholder participation in electing directors 3. Executive compensation 4. Legal compliance 5. Lobbying and political activities 6. Reputation management 156  MISUSE OF COMPANY RESOURCES THE LEADING FORM OF OBSERVED MISCONDUCT  CAN RANGE FROM UNAUTHORIZED USE OF EQUIPMENT AND COMPUTERS TO EMBEZZLING COMPANY FUNDS  TIME THEFT COSTS ORGANIZATIONS HUNDREDS OF BILLIONS IN LOST PRODUCTIVITY ANNUALLY 157  ABUSIVE OR INTIMIDATING BEHAVIOR ONE OF THE MOST COMMON ETHICAL PROBLEMS  CAN BE PHYSICAL THREATS, FALSE ACCUSATIONS, PROFANITY, INSULTS, HARSHNESS, IGNORING SOMEONE, OR UNREASONABLENESS  INTENT IS IMPORTANT IN DETERMINING ABUSE  BULLYING IS A GROWING PROBLEM  IS ASSOCIATED WITH A HOSTILE WORKPLACE 158  Actions Associated with Bullies 1. Spreading rumors to damage others 2. Blocking others’ communication in the workplace 3. Flaunting status or authority to take advantage of others 4. Discrediting others’ ideas and opinions 5. Use of e-mails to demean others 159  LYING THREE TYPES OF LIES  JOKING WITHOUT MALICE  COMMISSION LYING IS CREATING A FALSE PERCEPTION WITH WORDS THAT DECEIVE THE RECEIVER  CREATING NOISE  OMISSION LYING IS INTENTIONALLY NOT INFORMING CHANNEL MEMBERS OF PROBLEMS RELATING TO A PRODUCT THAT AFFECTS AWARENESS, INTENTION, OR BEHAVIOR © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 160  CONFLICTS OF INTEREST EXIST WHEN AN INDIVIDUAL MUST CHOOSE WHETHER TO ADVANCE HIS/HER PERSONAL INTERESTS, THOSE OF THE ORGANIZATION, OR SOME OTHER GROUP  INDIVIDUALS MUST SEPARATE PERSONAL INTERESTS FROM BUSINESS DEALINGS 161  BRIBERY THE PRACTICE OF OFFERING SOMETHING IN ORDER TO GAIN AN ILLICIT ADVANTAGE  DIFFERENT TYPES OF BRIBERY  ACTIVE BRIBERY: THE PERSON WHO PROMISES OR GIVES THE BRIBE COMMITS THE OFFENSE  PASSIVE BRIBERY: AN OFFENSE COMMITTED BY THE OFFICIAL WHO RECEIVES THE BRIBE  FACILITATION PAYMENTS: LEGAL AS LONG AS THEY ARE SMALL 162  CORPORATE INTELLIGENCE THE COLLECTION AND ANALYSIS OF INFORMATION ON…  MARKETS  TECHNOLOGIES  CUSTOMERS AND COMPETITORS  SOCIOECONOMIC AND EXTERNAL POLITICAL TRENDS 163  CORPORATE INTELLIGENCE THREE INTELLIGENCE MODELS  PASSIVE MONITORING SYSTEM FOR EARLY WARNING  TACTICAL FIELD SUPPORT  SUPPORT DEDICATED TO TOP MANAGEMENT STRATEGY 164  HACKING  SYSTEM HACKING  REMOTE HACKING  PHYSICAL HACKING  SOCIAL ENGINEERING  SHOULDER SURFING  PASSWORD GUESSING  DUMPSTER DIVING  WHACKING  PHONE EAVESDROPPING 165  DISCRIMINATION IS ILLEGAL IN THE U.S.  A COMPANY CAN BE SUED FOR DISCRIMINATION IF IT…  REFUSES TO HIRE AN INDIVIDUAL FOR DISCRIMINATORY REASONS  UNREASONABLY EXCLUDES AN INDIVIDUAL FROM EMPLOYMENT  UNREASONABLY DISCHARGES AN INDIVIDUAL  DISCRIMINATES AGAINST AN INDIVIDUAL WITH RESPECT TO HIRING, EMPLOYMENT TERMS, PROMOTION, OR PRIVILEGES 166  EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC)  THE AGE DISCRIMINATION IN EMPLOYMENT ACT  AFFIRMATIVE ACTION PROGRAMS  EFFORTS TO RECRUIT, HIRE, TRAIN, AND PROMOTE QUALIFIED INDIVIDUALS FROM GROUPS THAT HAVE TRADITIONALLY BEEN DISCRIMINATED AGAINST 167  SEXUAL HARASSMENT A REPEATED, UNWANTED BEHAVIOR OF A SEXUAL NATURE PERPETRATED UPON AN INDIVIDUAL BY ANOTHER  HOSTILE WORK ENVIRONMENT  THE CONDUCT WAS UNWELCOME  THE CONDUCT WAS SEVERE, PERVASIVE, AND REGARDED BY CLAIMANT AS HOSTILE/OFFENSIVE  THE CONDUCT WAS SUCH THAT A REASONABLE PERSON WOULD FIND IT HOSTILE OR OFFENSIVE 168  DUAL RELATIONSHIP A PERSONAL, LOVING, AND/OR SEXUAL RELATIONSHIP WITH SOMEONE WITH WHOM YOU SHARE PROFESSIONAL RESPONSIBILITIES  A KEY ETHICAL ISSUE IN SEXUAL HARASSMENT  UNETHICAL DUAL RELATIONSHIP: THE RELATIONSHIP CAUSES A CONFLICT OF INTEREST OR IMPAIRMENT OF PROFESSIONAL JUDGMENT 169  1. STATEMENT OF POLICY 2. DEFINITION OF SEXUAL HARASSMENT 3. NON-RETALIATION POLICY 4. SPECIFIC PROCEDURES FOR PREVENTION 5. ESTABLISH, ENFORCE, AND ENCOURAGE VICTIMS TO REPORT 6. ESTABLISH A REPORTING PROCEDURE 7. TIMELY REPORTING REQUIREMENTS TO THE PROPER AUTHORITIES © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 170  FRAUD ANY PURPOSEFUL COMMUNICATION THAT DECEIVES, MANIPULATES, OR CONCEALS FACTS IN ORDER TO CREATE A FALSE IMPRESSION  ACCOUNTING FRAUD  MISREPRESENTATION OF COMPANY’S FINANCIAL REPORTS  DRAMATIC CHANGES IN ACCOUNTING FIELD  INCREASED COMPETITION AND PRESSURES TO PERFORM CAN CREATE OPPORTUNITIES FOR MISCONDUCT  ACCOUNTANTS SHOULD ABIDE BY A STRICT CODE OF ETHICS © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 171  Initial Detection of Operational Frauds Source: Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and Abuse: 2012 Global Fraud Study , 14. 172  MARKETING FRAUD THE PROCESS OF DISHONESTLY CREATING, DISTRIBUTING, PROMOTING, AND PRICING PRODUCTS  PUFFERY: EXAGGERATED ADVERTISING CLAIMS, BLUSTERING, AND BOASTING  CAN BE DIFFICULT TO DISTINGUISH FROM FRAUD  IMPLIED FALSITY: AN ADVERTISING MESSAGE THAT MISLEADS, CONFUSES, OR DECEIVES THE PUBLIC  LITERALLY FALSE: CLAIMS CAN BE DIVIDED INTO TESTS PROVE (ESTABLISHMENT CLAIMS) AND BALD ASSERTIONS (NON-ESTABLISHMENT CLAIMS) 173  WHEN CONSUMERS ATTEMPT TO DECEIVE BUSINESSES FOR PERSONAL GAIN  PRICE TAG SWITCHING, ITEM SWITCHING, OR LYING TO OBTAIN DISCOUNTS  COLLUSION INVOLVES AN EMPLOYEE WHO HELPS A CONSUMER COMMIT FRAUD  DUPLICITY INVOLVES A CONSUMER DUPING A STORE  GUILE IS ASSOCIATED WITH A PERSON WHO USES TRICKS TO OBTAIN AN UNFAIR ADVANTAGE 174  FINANCIAL MISCONDUCT  THE FAILURE TO UNDERSTAND AND MANAGE ETHICAL RISKS WAS A KEY PROBLEM IN THE RECENT FINANCIAL CRISIS  MANY FIRMS REWARDED RISK-TAKING  DIFFICULT-TO-UNDERSTAND FINANCIAL INSTRUMENTS AND MURKY ACCOUNTING PLAYED ROLES  GOVERNMENT CALLS FOR REFORM  STRICTER CONTROLS ON HEDGE FUNDS AND OTHER INSTRUMENTS  GREATER TRANSPARENCY  DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT 175  INSIDER TRADING  TWO TYPES OF INSIDER TRADING  LEGAL INSIDER TRADING: INVOLVES LEGALLY BUYING AND SELLING STOCK IN AN INSIDER’S OWN COMPANY, BUT NOT ALL THE TIME  ILLEGAL INSIDER TRADING: THE BUYING OR SELLING OF STOCKS BY INSIDERS WHO POSSESS MATERIAL THAT IS NOT PUBLIC 176  INTELLECTUAL PROPERTY RIGHTS AND PRIVACY  INVOLVE THE LEGAL PROTECTION OF INTELLECTUAL PROPERTIES  BOOKS, MOVIES, SOFTWARE  MANY PRIVACY ISSUES IN THE BUSINESS WORLD  EMPLOYEE USE OF TECHNOLOGY  CONSUMER PRIVACY  CAN BE CHALLENGING FOR BUSINESSES TODAY TO MEET THE NEEDS OF CONSUMERS WHILE PROTECTING PRIVACY  IDENTITY THEFT IS A GROWING PROBLEM 177  THE CHALLENGE OF DETERMINING ETHICAL ISSUES IN BUSINESS  MOST ETHICAL ISSUES BECOME VISIBLE THROUGH STAKEHOLDER CONCERNS  DETERMINING ETHICAL ISSUES IS A CHALLENGE  CHANGING SOCIETAL STANDARDS OVER TIME  THE ETHICAL DECISION MAKING PROCESS STARTS WHEN ETHICAL ISSUE AWARENESS OCCURS AND A DISCUSSION BEGINS 178 GOOD LUCK