IMPROVING

ETHICAL
BEHAVIOUR
GROUP 2
Content

• Ethics- A definition
• Examples of Unethical Behaviour
• Corporate Governance
• How to deal with ethical issues
• Best practices
• Ethics in decision making
• Rules for ethical decision making
• Corporate social responsibility and citizenship
• Benefits of corporate citizenship
• Summary
• References
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Ethics- A definition

• Ethics are the moral standards used to judge right

from wrong.

• Some examples of unethical behavior in business

practice are:
• Saying things that you know not to be true.
• Taking something that doesn’t belong to you.
• Buying influence.
• Hiding or divulging information.

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Examples of Unethical Behaviour

WorldCom
• The largest financial fraud in U.S.
history
• Overstated its income by more
than $9 billion
• CEO was granted $400 million in
loans with the approval of BOD
• Forced into bankruptcy

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Examples of Unethical Behaviour

Enron
• Grew to be one of the largest
companies in U.S. in 15 years
• Involved in a huge accounting
scandal
• Largest Chapter 11 bankruptcy
filings in U.S. history
• Deceptive accounting practices,
employees lost retirement
savings, while executives
received multimillion-dollar
bonuses

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Corporate Governance
According to James Wolfenson, “Corporate
governance is about promoting corporate fairness,
transparency, and accountability.”

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How to deal with ethical issues

Creating an ethical standard

• Internal organizational relations
• External organizational relations

Ethics training
• involve the discussion and analysis of ethical dilemmas
• helpful in providing employees with the tools to make the right decisions

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How to deal with ethical issues

Monitoring complaints and encouraging feedback

• Monitor complaints against the company made by customers, shareholders,
and employees
• Encourage feedback by having toll-free telephone lines for customers

Whistle blowing
• Common method for detection of occupational fraud is employee tips
• Employee’s disclosure to the media or government of a company’s un- ethical
activities

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Best practices

Hewlett-Packard
• Recognized internationally for its out-
standing corporate governance and ethics
• Set high ethical standards to which
employees are expected to adhere
• Honesty in communicating within the
company
• Responsibility for words and actions
• Compassion in relationships with our
employees
• Citizenship in observance of all the laws

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Best practices

Starbucks
• Committed to 100% sustainably sourced
coffee
• C.A.F.E. (Coffee and Farmer Equity Practices)
• Quality, Economic transparency, Social
responsibility, and Environmental leadership
• Uses third parties to verify that its sourcing
is ethical
• Now recognized as the industry standard for
ethical sourcing
• Shining example for North America’s coffee
industry

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Ethics in decision making
Ethics are your
personal standards of
right and wrong
Ethical sensitivity of
the individual or work
group
Improving Ethical Behaviour
Relevance of and
ethical issue in the
Cognitive process eyes of individual,
work group,
organisation
Individual/organisational
factors and opportunity
affects
11
Rules for ethical decision making

• Utilitarian rule
• Moral rights rule
• Justice rule
• Practical rule

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Corporate social responsibility and citizenship

Firms will adhere to fair selling tactics, produce quality products, and price their
products fairly. They will obey laws regarding business practices.

Workplace and employee issues

• Includes upholding the rights of employees’ individual freedoms, equal opportunity
employment
• Paying employees fair wages, adhering to legal employment statutes, ensuring
employee safety
Social development
• Development of communities by creating jobs and contributing resources

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Corporate Social Responsibility and Citizenship

Environmental impact
• Firms ensure that their impact on the environment is at a minimum
• using environmentally sound manufacturing processes
• producing products that do not damage the environment

Marketplace and consumer issues

• ensuring consumer safety with the products that are produced
• may involve monitoring and responding to consumer complaints
• fairness in the marketplace, giving consumers a choice, and pricing products fairly

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Benefits of Corporate
Citizenship
• Reputation management
• Risk profile and risk management
• Investor relations and access to capital
• Learning and innovation
• Employee recruitment, motivation, and retention
• Competitiveness and market positioning
• Operational efficiency
• License to operate
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Summary

In the business setting, ethics are the standards of moral values and conduct that
govern decisions made and actions carried out in the work environment. Ethics in an
organisation cannot be ignored or put back. Companies can enhance their ethical
behaviour both internally and externally. Corporate governance can help in creating
standards and providing training. CSR can facilitate organisations to look forward to
various issues and impacts related to ethical behaviour. Ethics can also improve decision
making abilities using effective ethical rules. Companies are realizing that in order to
achieve sustainability, they must become more socially aware and ethically conscious in
the business climate.

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References

• Leonard, Dennis, and Rodney McAdam. “Corporate Social Responsibility.” Quality

Progress.
• “MBA IN A DAY” by Steven Stralser
• Mehta, Stephanie M. “MCI: Is Being Good Good Enough?” Fortune.
• Joyner, Brenda E., and Dinah Payne. “Evolution and Implementation: A Study of
Values, Business Ethics and Corporate Social Responsibility.” Journal of Business
Ethics.
• Verschoor, Curtis C. “New Evidence of Effective Ethics Systems” Strategic Finance.

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Thank you

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