Mondy hrm13 inppt02.ppt

1. Human Resource Management 13th Edition Chapter 2 Business Ethics and Corporate Social Responsibility 2-1Copyright © [2014] Pearson Education 2. Learning Objectives • Explain the purpose of paying for whistleblowers. • Define ethics and describe sources of ethical guidance. • Discuss attempts at legislating ethics. • Explain the importance of creating an ethical culture, describe a code of ethics, and support the importance of linking pay to ethical behavior. • Explain human resource ethics and describe ethics training. 2-2Copyright © [2014] Pearson Education 3. Learning Objectives (Cont.) • Describe the concept of corporate social responsibility. • Explain why everyone is not on board with regard to corporate social responsibility. • Explain corporate sustainability. • Describe a social audit. • Describe possible difficulties for corporate social responsibility to succeed in the global environment. 2-3Copyright © [2014] Pearson Education 4. HRM in Action: Pay for Whistleblowing • Whistleblower: Someone who engages in a “protected activity” • Dobb-Frank Act requires SEC to give an award to qualified whistleblowers (10-30% of total) • Act improves whistleblowers’ protection from retaliation 2-4Copyright © [2014] Pearson Education 5. Ethics Discipline of dealing with: –What is good and bad –What is right and wrong –Moral duty and obligation 2-52-5Copyright © [2014] Pearson Education 6. Ethics Examples • Nearly every industry has experienced a painful ethical crisis in recent years • Business ethics scandals continue make headlines • Examples: – Lying on résumés – Obstruction of justice – Destruction of records – Stock price manipulation – Cutting corners to meet Wall Street’s expectations – Fraud, waste, and abuse 2-62-6Copyright © [2014] Pearson Education 7. Sources of Ethical Guidance • Lead to our beliefs or convictions about what is right or wrong • Examples: –Bible and other holy books –Conscience –Significant others –Code of ethics 2-72-7Copyright © [2014] Pearson Education 8. Legislating Ethics • Procurement Integrity Act • Federal Sentencing Guidelines for Organizations (FSGO) • Corporate and Auditing Accountability, Responsibility, and Transparence Act • Dodd-Frank Wall Street Reform and Consumer Protection Act 2-82-8Copyright © [2014] Pearson Education 9. Procurement Integrity Act of 1988 • Prohibits release of source selection and contractor bid or proposal information • Places restrictions on former employees • Passed after reports of military contracts for: – $500 toilet seats – $5,000 hammer 2-92-9Copyright © [2014] Pearson Education 10. Federal Sentencing Guidelines for Organizations (FSGO) of 1992 • Outlined effective ethics training program • Promised softer punishments for wayward corporations that had ethics programs in place • Executives needed to be proactive • Created: – Ethics officer positions – Ethics hotlines – Codes of conduct 2-102-10Copyright © [2014] Pearson Education 11. Corporate and Auditing Accountability, Responsibility, and Transparence Act of 2002 • Known as Sarbanes-Oxley Act • Primary focus was to redress accounting and financial reporting abuses • Criminalized many corporate acts • Established whistleblower protections • Prohibited loans to executives and directors 2-112-11Copyright © [2014] Pearson Education 12. Bechtel v Competitive Technologies Inc., 2003 • Supreme Court case involving wrongful termination under Sarbanes-Oxley Act’s whistleblower protection rule • Court ruled that the company violated Act by firing two employees, and ordered them reinstated 2-122-12Copyright © [2014] Pearson Education 13. Dodd-Frank Wall Street Reform and Consumer Protection Act • Act brought on by worst financial crisis since Great Depression • Executive compensation played major role in financial services sector as well as in capital markets following the collapse of investment service firms 2-13Copyright © [2014] Pearson Education 14. Creating an Ethical Culture • Way for firm to create and sustain an ethical culture is to audit ethics • Climate at the top is fundamental to company's ethical culture • Firms with weak ethical cultures experience 10 times more misconduct than companies with strong ethical cultures 2-14Copyright © [2014] Pearson Education 15. Code of Ethics • Statement of values adopted by: – Company – Its employees – Directors • Sets official tone of top management regarding expected behavior • Establishes rules by which organization operates • Becomes part of organization’s corporate culture 2-152-15Copyright © [2014] Pearson Education 16. Ethics Officer • Larger firms appoint ethics officer • Keeps code on front burner for employees • Ethics committee often established 2-162-16Copyright © [2014] Pearson Education 17. Malcolm Baldrige National Quality Award • Increased emphasis on ethics in leadership • Criteria: Senior leaders should serve as role models for the rest of the organization 2-172-17Copyright © [2014] Pearson Education 18. Linking Pay to Ethical Behavior • Few companies have made ethics and compliance a process for determining how employees are compensated • Only about 1 in 6 companies ties incentives to ethical performance • More work needs to be done 2-182-18Copyright © [2014] Pearson Education 19. Human Resource Ethics • Application of ethical principles to HR relationships and activities • HR has a great deal to do with establishing an organization’s conscience 2-192-19Copyright © [2014] Pearson Education 20. Ethics Training • FSGO outlined effective ethics training program to educate employees in company’s standards and procedures • Ethics training should be for everyone 2-202-20Copyright © [2014] Pearson Education 21. Corporate Social Responsibility (CSR) • CSR: Implied, enforced, or felt obligation of managers, acting in their official capacities, to serve or protect interests of groups other than themselves • Corporation behaves as if it has a conscience 2-212-21Copyright © [2014] Pearson Education 22. Who Determines CSR? Organization’s top executives usually determine corporation’s approach to corporate social responsibility 2-222-22Copyright © [2014] Pearson Education 23. Trends & Innovations: Not Everyone Is on Board with Corporate Social Responsibility • Some have challenged the concept by saying that doing well is doing good • Milton Friedman--Only social responsibility of business is to increase profits • BP promoted themselves as being eco-friendly 2-23Copyright © [2014] Pearson Education 24. Corporate Sustainability • Evolved from the more traditional view of corporate social responsibility • Expanded to include the social, economic, environmental, and cultural systems needed to support an organization • Strives to use the best business practices 2-24Copyright © [2014] Pearson Education 25. Social Audit Systematic assessment of a company’s activities in terms of their social impact 2-252-25Copyright © [2014] Pearson Education 26. Possible Types of Social Audits • Simple inventory of activities • Compilation of socially relevant expenditures • Determination of social impact • Ideal social audit: Involve determining true benefits to society of any socially oriented business activity 2-262-26Copyright © [2014] Pearson Education 27. A Global Perspective: Can Corporate Social Responsibility Succeed in the Global Environment? • Some global firms are questioning the wisdom of being socially responsible • Adherence to CSR issues has declined • First 15 years of CSR efforts has not produced the desired results • Significant changes will have to be made • Reputation management? 2-272-27Copyright © [2014] Pearson Education 28. 2-28