Chapter 9 - Business Ethics Flashcards
Define business ethics
Identifying and implementing standards of conduct that will ensure, at minimum level, business does not detrimentally impact interests of its stakeholders
Ethical business issues include :
Product safety Employee health and safety Employee privacy Sexual harassment HIV/aids in the workplace Smoking Affirmative action and empowerment of employees Waste disposal
Three types of business values:
Strategic values : deal with direction of the business
Work values: behaviors required for employees to achieve short term and long term goals
Ethical values : the integrity required from employees and management
The 12 generic values
ACCOUNTABILITY - to make commitments, take responsibility for and deliver on commitment
RESPONSIBILITY - taking responsibility for personal choices, admitting mistakes and failures, realizing mutual dependence
CARE AND COMPASSION - Feeling and exhibiting concern and empathy for others, creating an empowering environment and recognition of others
DIVERSITY - value our people, value diversity, ensure there is no discrimination
RESPECT - respect people, shareholder interest, customer needs, privacy and dignity
EXCELLENCE: moving beyond minimum expected standards by continually improving products, processes and staff to deliver outstanding performance
DILIGENCE : putting in a lot of effort and hard work, doing tasks in detail
INNOVATION : innovate to be competitive, push boundaries, break new ground
INTEGRITY: Acting consistently with principles like honesty and commitment
TEAMWORK: business interest above self interest creates a sense of belonging and identity
TRUST : The bond in business relationship and ensures sustainable competitive advantage, makes things predictable
CORPORATE CITIZENSHIP: pursuit of commercial success in ways that honor values and respect people, communities and the natural environment
Personal ethics of the entrepreneur
The entrepreneur plays a major in establishing the initial code of ethics
The integrity of the entrepreneur has a lasting impact on the character and reputation of the business
The Integrity of an entrepreneur relates to the way he or she consistently adheres to, and makes decisions based on a set of ethical standards including honesty, reliability, fairness, consistency, care, loyalty and professionalism.
PRCCH
Ethical dilemmas
When the entrepreneur has to balance his or her own needs with the needs and interests of the other stakeholders
For example, choosing to pay workers before taking a bonus for themselves
This relates not only to products and services but also advertising, personal, natural resources and community interests
The code of ethics includes;
Safety of products and services
Quality and price of products and services
Advertising: comparative advertising legal in SA, as long as correct information is given
After sales service and warranty
Dealing with employees
Competitive advertising
Competitive appetising involves a promotional technique in which an advertiser claims the superiority of its products over competing products by direct or indirect comparison
The moral development phases
PHASE 1 - The immoral mode
Little regard is shown for fair competition requirements, customers or the environment due to fear of high costs involved
PHASE 2 - The reactive mode
This phase starts when the entrepreneur is doing a lot of damage control because things are going wrong and it’s affecting the profitability of the business. They become aware of the need of policies and procedures to provide a guideline for behaviour.
PHASE 3 - The compliance mode
In this mode the entrepreneur realizes that ethical behaviour endangers the profitability of the business and puts mechanisms in place to enforce policies and procedures: audits are done, unethical behaviour is punished through disciplinary and grievance procedures and people are held responsible and accountable.
PHASE 4 - The integrity mode
In a mature organisation, ethical values are internalised and there is a value-based approach to ethics. The focus shifts from a reactive mode of punishing and ethical behaviour to the promotion and awarding of ethical behavior.
Define code of ethics
A code of ethics is a written set of guidelines issued by an organisation to its workers and management to help them contact their actions in accordance with its primary values and ethical standards
Define the code of conduct
A code of conduct could refer to the disciplinary code, which is also a document that spells out conduct of requirements with associated penalties in accordance with schedule eight of the Labour relations act: code of good practice
Code of ethics should not be rule based but rather inspirational and based on companies strategic, work and ethical values
Structure of the code of ethics
PREAMBLE - written by CEO
APPLICATION OF THE CODE - to whom it applies (management, employees, suppliers or contractors)
GENERAL OBLIGATIONS
SPECIFIC ISSUES (deals with risk areas such as conflict of interests, sexual harassment, customer service)
SPECIFIC STAKEHOLDERS
CONTRAVENTION OF THE CODE
ETHICS DECISION MAKING MODEL
Ethics resources
ETHICS OFFICER (ombudsman)
- an officer who reports on business compliance to the code of ethics (large businesses)
ETHICS HOTLINE (whistle blowers hotline)
Big business might need an external supplier to provide an anonymous reporting line for serious cases of wrongdoing.
ETHICS ADVICE LINE
And ethics advice line allows employees who are faced with an ethical dilemma to send emails or make phone calls to get advice on how to deal with such a dilemma. Its not anonymous but there for guidance.
LINE MANAGERS
Line managers are our key role players in dealing with ethical dilemmas. Employees often approach first line supervisors for advice. Supervisor must ensure that the advice given is illegal and based on company policies and procedures.
Social responsibility toward these stakeholders:
THE ENVIRONMENT
- A critical area of social responsibility and includes issues of waste disposal and pollution.
CUSTOMERS
- 4 rights
- The right to safe products and services
- The right to be informed about all relevant aspects of products and services
- The right to be heard in event of a complaint
- The right to choose what to buy
EMPLOYEES
- should extend to their families and communities like treating employees fairly, respecting their dignity and basic human rights
INVESTORS
- The business should maintain a proper account system, providing information on financial situation of the venture, and reinvesting any profits will address this responsibility
SUPPLIERS
- Adventure can put in place a preferential procurement policy to support local suppliers
GENERAL SOCIAL WELFARE OF A COMMUNITY
- entrepreneur should be involved in the health and education of the community and contributions to charities and even sports developments
Different approaches to social responsibility
Obstructionist approach-
this views social responsibility as an unnecessary cost item the company behaves irresponsibility and often illegally.
Defensive approach - this is a non-strategic, “management by crisis “ approach to social or environmental concerns that only deals with basic compliance.
Accommodative approach -
A corporate social responsibility plan is developed with a dedicated budget, but in a very compartmentalised manner.
Assimilated approach -
All the stakeholders are involved in determining the various social and environmental needs. The social responsibility goals are incorporated into all business operations and policies.
Altruistic approach - The primary corporate mission is focused on creating a better society or environment, and the products and services are aligned to for fill the corporate social responsibility mission.
