BUSINESS ETHICS AND

SOCIAL RESPONSIBILITY

ABM 1 – Organization and Management

LEARNING OBJECTIVES
At the end of this chapter, the students should be able to:

• Explain the concepts of business ethics and social responsibility

• Describe the factors that influence business ethics
• Identify common ethical dilemmas in the workplace
• Discuss how organizations shape ethical behavior
• Describe how businesses’ social responsibility is measured
• Summarize the responsibilities of business to the general public, customers, and
employees.
 What is ethics? What is your social
Placement Test responsibility?
 Genesis of Ethics

Ethics comes from the Greek word ethos, that means character, guiding beliefs,
standards and ideals that governs a group, a community or people.

Business Ethics are that functions which leads to choosing right decision at right time
which leads for the welfare of not only business owners but also society, consumers,
stakeholders and its employees.

Business ethics is the study of business situations, activities, and decisions where
issues of right and wrong are addressed.

Business ethics involves adhering to legal, regulatory, professional and company

standards, keeping promises and commitments and abiding by general principles
like fairness, truth, honesty, and respect.
 Common Business Ethical Challenges

Situation in which business Telling the truth and adhering to

decision may be influenced for deeply gelt ethical principles in
personal gain. business decisions.

Employee’s disclosure of illegal, Business people expect

immoral, or unethical practices in employees to be loyal and
the organization. truthful, but ethical conflicts may
arise.
 Ethical Issues for Business

Fraud – is a crime of lying or pretending. Some business mislead consumers and trick
them to buy their products or services. The Competition Act 2002 bans such deceptive
practices and defines these as:
- False or misleading advertising
- “bait and switch: selling
- Double ticketing items for sale

Insider Trading – is buying or selling shares of a company based on confidential

information. This type of trading is illegal.

Accounting Scandals – occurs when accountants or senior executives alter accounting

records for personal benefit. Accounting information is used inside and outside of the
business to make decisions.
Embezzlement – a type of accounting fraud, happens
when an accountant or senior executives creates false
accounts and redirects money into them for personal
gain.

Other issues:
➢ Product Safety Standards
➢ Advertising Contents
➢ Working Environment
➢ Unauthorized Payments
➢ Employee’s Privacy
➢ Environmental Issued
 Structure of an Ethical Environment

The structure of an ethical environment in

an organization is made up of a
company's policies, values, and social
norms that define what is considered
"right" behavior. The ethical climate of
an organization is the shared
understanding of these policies and
procedures, and it can have a significant
impact on the organization.

How organizations shape ethical conduct?

 Ethical Awareness

Ethical awareness is the first step in ethical decision-making, which involves evaluating the
ethical and business aspects of a situation, it is the ability to recognize and act on moral and
ethical issues. It involves:
• Recognizing ethical implications and considerations in a given context
• Being aware of biases, prejudices, and stereotypes, and working to combat them
• Considering the effects of one's actions on others
• Evaluating the ethical and business aspects of a situation

Code of Conduct
A code of conduct, also known as privacy and code of conduct, is a defined set
of rules, principles, values, employee expectations, behaviour, and relationships
that a business considers important and believes necessary for its success. You
can find the code of conduct for an organization in its employee handbook
 Ethical Education

Code of conduct cannot detail a solution for every

ethical situation, so corporations provide training
in ethical reasoning.

Ethical education in business ethics is the training of

individuals, professionals, and decision-makers to
consider the moral nature and consequences of their
actions. The goal is to equip students/employees with
the concepts they need to apply to the business world
when faced with ethical dilemmas.
 Ethical Action • Honesty: Being truthful in all communication and
actions
• Fairness: Treating others equally and courteously
Helping employees recognize and • Transparency: Making business information and
reason through ethical problems policies available to appropriate groups
and turning them into ethical • Accountability: Committing to the ethical quality of all
actions. decisions, actions, and relationships
• Respect: Treating customers and clients with respect and
Ethical action in business ethics is trust
the application of moral principles • Diversity, equity, and inclusion (DEI): Embracing a
to guide decision-making and diverse workforce and taking steps to improve
interactions. It include: accessibility
• Trustworthiness: Earning the trust of clients, customers,
and employees through honesty, transparency, and
reliability
 Ethical Leadership Here are some characteristics of ethical leaders:

• Set high standards: Ethical leaders set high standards

and guide and nurture their employees.
Executives must demonstrate ethical
behavior in their actions. • Consider the moral implications: Ethical leaders
consider the moral implications of every decision they
Ethical leadership in business is a make.
style of leadership that prioritizes
• Prioritize values: Ethical leaders prioritize values like
moral guidelines, transparency, and respect, honesty, integrity, and community over easy
accountability. Ethical leaders make profits.
decisions that consider the needs of
the community, employees, and • Admit mistakes: Ethical leaders admit mistakes,
customers, in addition to the apologize, and share a recovery plan.
company's growth and • Establish common ground: Ethical leaders establish
revenue. They are role models who common ground with their employees, often starting in the
inspire others to follow their lead. hiring process
 Social Responsibility

Social responsibility
Is the obligation of organization’s
management to make decisions and
take actions that will enhance the
welfare and interest of society as well
as the organization.

Management’s consideration of profit,

consumer satisfaction, and societal
well-being of equal value in
evaluating the firm’s performance.

Contributions to the overall economy,

job opportunities, and charitable
contributions and service.
 Responsibilities to the General Public

✓ Public Health Issues – What to do about inherently dangerous products such as

alcohol, tobacco, vaccines, and steroids.
✓ Protecting the Environment – using resources efficiently, minimizing pollution,
✓ Recycling – reprocessing used materials for reuse.
✓ Developing the Quality of the Workforce – enhancing quality of the overall
workforce through education and diversity initiatives.
✓ Corporate Philanthropy – cash contributions, donations of equipment and
products, and supporting the volunteer efforts of company employees.
 Responsibilities to the Customers

✓ The Right to be Safe – safe operation of products, avoiding product liability

✓ The Right to be Informed – avoiding false or misleading advertising and
providing effective customer service
✓ The Right to Choose – Ability of consumers to choose the products and services
they want
✓ The Right to be Heard – ability of consumers to express legitimate complaints to
the appropriate parties.
 Responsibilities to the Employees

✓ Workplace Safety – Monitored by Occupational Safety and Health Administration

✓ Quality-of-Life Issues – Balancing work and family through flexible work schedules,
subsidized child care, and regulation such as the Family and Medical Leave Act of 1993
✓ Ensuring Equal Opportunity on the Job – Providing equal opportunities to all employees
without discrimination regulated by law
✓ Age Discrimination – Age discrimination in Employment Act of 1968 protects workers
age 40 or older
✓ Sexual Harassment or sexism – equal pay for equal work without regard to gender.
 Responsibilities to the Employees

✓ Provide adequate monetary, psychological rewards as well as job security

✓ Selection of employees should be made fairly
✓ Providing educational opportunities and training to the employee at company’s expense
✓ Working conditions should be safe and pleasant.
 Responsibilities to the Investors

✓ Investors protected by regulation by the Security and Exchange Commission and State
regulations
✓ Resources available are used for the benefit of the owners/shareholders
✓ Stability of the enterprise
✓ Ensure that the company grows, so that the shareholder gains from increase in the
market price of his shares.
➢ Thank you and stay safe! <3