Ch02-SG - EthicsandProfessional Responsibility...

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Ethics and Professional Responsibility W HAT   THIS  C HAPTER  I S  A BOUT The concepts set out in this chapter  include  the nature  of business ethics and  the rela tionship  between  ethics  and  business. Ultimately, the goal of this chapter  is to provide  you  with  basic tools for analyzing  ethical issues in a  business context. C HAPTER  O UTLINE I. BUSINESS ETHICS Ethics is the study  of what  constitutes  right  and  wrong  behavior. Ethics focuses on morality  and  the appli - cation of moral principles in everyday  life. A. W HAT  I S  B USINESS  E THICS ? Business ethics focuses on what  constitutes  ethical behavior  in the world  of business. Business ethics is  not  a separate kind   of ethics. B. W HY  I S  B USINESS  E THICS  I MPORTANT ? An understanding  of business  ethics is important  to the long-run  viability of a business, the well being  of its officers and  directors, and  the welfare of its employees. II. SETTING THE RIGHT ETHICAL TONE Some unethical conduct is founded  on the lack of sanctions. A. T HE  I MPORTANCE   OF  E THICAL  L EADERSHIP Management  must  set and  apply  ethical standards  to which  they  are committed.  Employees will likely   follow  their  example.  Ethical  conduct  can  be  furthered  by  not  tolerating  unethical  behavior,  setting  realistic employee goals, and  periodic employee review. B. C REATING  E THICAL  C ODES   OF  C ONDUCT Most large corporations  have codes of conduct  that indicate the firm’s commitment  to legal compliance  and  to the welfare of those who  are affected  by corporate  decisions and  practices. Large firms may  also  emphasize ethics in other ways (for example, with training programs). C. C ORPORATE  C OMPLIANCE  P ROGRAMS Components  of a comprehensive  corporate  ethical-compliance  program  include  an ethical code  of con- duct, an ethics committee, training  programs, and  internal  audits  to monitor  compliance. These compo - nents should  be integrated. The Sarbanes-Oxley Act of 2002 requires firms to set up  confidential systems   for employees to report suspected  illegal or unethical financial practices. D. C ONFLICTS   AND  T RADE -O FFS A firm’s duty  to its shareholders  should  be weighed  against  duties  to others  who  may  have  a greater   stake in a particular  decision. For example, an employer  should  consider  whether  it has an ethical duty   to loyal, long-term  employees not to replace them  with  workers who  will accept lower pay and  whether   this duty  prevails over a duty  to improve profitability by restructuring. 7
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Ch02-SG - EthicsandProfessional Responsibility...

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