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Chapter Chapter FourFour

Demonstrating Demonstrating Ethical Behavior &Ethical Behavior &

Social Social ResponsibilityResponsibility

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I have a great deal of I have a great deal of confidence in the people confidence in the people

in charge of running in charge of running major companies. major companies.

(Agree/Disagree)(Agree/Disagree)

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What is Ethics?What is Ethics? Standards of moral Standards of moral behavior; that is, behavior; that is, behavior that is behavior that is accepted by accepted by societysociety as as right versus wrong.right versus wrong.

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The Evolutionary Origins The Evolutionary Origins of Ethics and Moralityof Ethics and Morality

““All humans live in moral All humans live in moral communities…in which public communities…in which public opinion decisively shapes the opinion decisively shapes the behavior of individuals. Shared behavior of individuals. Shared values define specific rights and values define specific rights and wrongs of behavior, and the wrongs of behavior, and the group decides which individuals group decides which individuals are deviant and sanctions them are deviant and sanctions them accordingly.”accordingly.”

- Christopher Boehm, “Conflict and the - Christopher Boehm, “Conflict and the Evolution of Social Control,” 2000Evolution of Social Control,” 2000

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(Christopher Boehm, continued)(Christopher Boehm, continued)““In effect, a large, ad hoc, In effect, a large, ad hoc,

community-wide political coalition community-wide political coalition serves as watchdog over individual serves as watchdog over individual behaviors that could lead to behaviors that could lead to victimization of others, or to victimization of others, or to conflict within the group. This conflict within the group. This macro-coalition is prepared to use macro-coalition is prepared to use coercive force, if it must, to protect coercive force, if it must, to protect individual members from predatory individual members from predatory exploitation or other harm.”exploitation or other harm.”

- Christopher Boehm, “Conflict and the - Christopher Boehm, “Conflict and the Evolution of Social Control,” 2000Evolution of Social Control,” 2000

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Why Do People Engage in Why Do People Engage in So Much UnethicalSo Much Unethical

BehaviorBehavior?? 70% of high school students said they 70% of high school students said they

had cheated on an exam in the past had cheated on an exam in the past 12 months12 months

33% of the students in one San Diego 33% of the students in one San Diego State professor’s class used the State professor’s class used the pirated test key, even though he had pirated test key, even though he had scrambled the questionsscrambled the questions

People bought an estimated $533 People bought an estimated $533 billion worth of counterfeit (pirated) billion worth of counterfeit (pirated) goods last year.goods last year.

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Here’s what I thinkHere’s what I think1. 1. MostMost people are ethical people are ethical most of the timemost of the time, especially , especially where it really counts.where it really counts.

People leave tips in restaurants they’ll People leave tips in restaurants they’ll never use again.never use again.

LotsLots of people turn in purses, wallets, and of people turn in purses, wallets, and backpacks they have found to the lost and backpacks they have found to the lost and found with the money still in them.found with the money still in them.

Lots of people and corporations give Lots of people and corporations give money and/or time to charity.money and/or time to charity.

People help strangers every day.People help strangers every day.

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Here’s what I think Here’s what I think (cont.)(cont.)

2. We 2. We complain a lotcomplain a lot about the moral about the moral transgressors transgressors because it because it is our nature to is our nature to complaincomplain..

It is part of the social mechanism It is part of the social mechanism we have developed to modify the we have developed to modify the behavior of those who, in our behavior of those who, in our collective opinion, have behaved too collective opinion, have behaved too selfishly.selfishly.

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How Hard Should I Try to How Hard Should I Try to Ensure That I and My Ensure That I and My

Employees Behave Ethically at Employees Behave Ethically at Work?Work?

Damage to reputationDamage to reputation Civil and criminal Civil and criminal penaltiespenalties

Harm to relationshipsHarm to relationships Harm to self-esteemHarm to self-esteem

(leading to self-destructive (leading to self-destructive behavior)behavior)

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Factors That Cause Factors That Cause WorkersWorkers

To Act UnethicallyTo Act Unethically Pressure to meet sales, Pressure to meet sales,

budget, or profit goalsbudget, or profit goals Silence from management on Silence from management on

the subject of ethical the subject of ethical behaviorbehavior

A tendency for people not to A tendency for people not to discuss ethical issues in the discuss ethical issues in the workplace (moral muteness)workplace (moral muteness)

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Causes of Moral Causes of Moral MutenessMuteness

Societal ambivalence Societal ambivalence about the role of ethics in about the role of ethics in businessbusiness

Moral relativismMoral relativism Fear of being labeled a Fear of being labeled a

“goody two shoes”“goody two shoes”

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Bedrock: UtilitarianismBedrock: Utilitarianism That which produces the That which produces the greatest good for the greatest good for the greatest number is ethical, greatest number is ethical, and everything else is and everything else is unethical.unethical.

Example: If by stealing a loaf Example: If by stealing a loaf of bread you can keep yourself of bread you can keep yourself alive, but the baker has plenty alive, but the baker has plenty of money, and if you have no of money, and if you have no alternative, then stealing the alternative, then stealing the loaf of bread is ethical.loaf of bread is ethical.

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Compliance-Based Compliance-Based Ethics CodesEthics Codes

Emphasize preventing Emphasize preventing unlawful behaviorunlawful behavior

Are long and specificAre long and specific Are usually accompanied Are usually accompanied by increased “controls”by increased “controls”

Threat of disciplinary Threat of disciplinary actionaction

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Define the Define the organization’s guiding organization’s guiding valuesvalues

Are short and generalAre short and general Are accompanied by an Are accompanied by an environment that environment that supports ethically supports ethically sound behaviorsound behavior

Integrity-Based Integrity-Based Ethics CodesEthics Codes

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Corporate Social Corporate Social ResponsibilityResponsibility

A business’s concern for A business’s concern for the welfare of society as a the welfare of society as a whole. Three dimensions: whole. Three dimensions:

Corporate PhilanthropyCorporate Philanthropy Corporate ResponsibilityCorporate Responsibility Corporate PolicyCorporate Policy

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Corporate Corporate PhilanthropyPhilanthropy

AventisAventis

Bank of AmericaBank of America

Wal-MartWal-Mart

General ElectricGeneral Electric

JPMorgan ChaseJPMorgan Chase

CitigroupCitigroup

WachoviaWachovia

Wells FargoWells Fargo

$221.7* $221.7*

144.8144.8

128.0128.0

88.388.3

79.979.9

73.973.9

64.464.4

64.464.4

Source: The Foundation Center * Annual figures, 2006, in Millions* Annual figures, 2006, in Millions

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U.S. Charitable Contributions By Source ($Billions - 2006)

222.9

36.4

22.912.7

Individuals

Foundations

Bequests

Corporations

Total: $295 billion

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Companies Who Have Companies Who Have Exceeded Our Expectations Exceeded Our Expectations

for Social Responsibilityfor Social Responsibility

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Ben & Jerry’s Ice Ben & Jerry’s Ice CreamCream

Gives 7.5% of pretax Gives 7.5% of pretax profits to charityprofits to charity

Organizes “community Organizes “community action teams” to do good action teams” to do good works in the community.works in the community.

Chooses “social mission Chooses “social mission suppliers”suppliers”

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Samsung ElectronicsSamsung Electronics Gives appx. 5.7% of annual Gives appx. 5.7% of annual

pretax profits to charitypretax profits to charity Treats its customers with Treats its customers with

honesty and fairnesshonesty and fairness Treats its employees with Treats its employees with

dignity and concerndignity and concern Lets employees do volunteer Lets employees do volunteer

work and disaster relief on work and disaster relief on company timecompany time

Pursues environment-friendly Pursues environment-friendly policiespolicies

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Other Socially Other Socially Responsible Responsible CompaniesCompanies

The Body ShopThe Body Shop Patagonia, Inc.Patagonia, Inc. Delancey Street RestaurantDelancey Street Restaurant Greyston BakeryGreyston Bakery Interface (carpet tiles)Interface (carpet tiles) Seventh GenerationSeventh Generation Stonyfield Farm YogurtStonyfield Farm Yogurt

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Other Socially Other Socially Responsible Responsible CompaniesCompanies

The GapThe Gap StarbucksStarbucks Timberland FootwearTimberland Footwear Steelcase (furniture)Steelcase (furniture) Working Assets (Long Working Assets (Long

Distance)Distance)

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The Gap, Inc.The Gap, Inc. Released a social responsibility Released a social responsibility

report in May 2004 that received report in May 2004 that received international attention for its international attention for its surprisingly honest look at health surprisingly honest look at health and safety conditions in its and safety conditions in its suppliers’ factories around the suppliers’ factories around the world.world.

““They’re the first ever to do this,” They’re the first ever to do this,” said Ruth Rosenbaum of the Center said Ruth Rosenbaum of the Center for Reflection, Education and Action for Reflection, Education and Action in New York City. in New York City.