Business Ethics

1. Business Ethics “it’s nothing personal, it’s just business”

2. Collect the following sheet from the wiki • Business Ethics Worksheet

3. What do businesses need from: • Other businesses • Customers • The Government Besides Money

4. What do businesses need from: • Other businesses – respect and honesty • Customers - respect and honesty • The Government – protection, respect and honesty

5. Australian Competition & Consumer Commission • Promotes competition and fair trade to benefit consumers, businesses and the community. • To ensure individuals and businesses comply with the competition, fair trade and consumer protection laws.

6. What do businesses owe: • Other businesses • Customers • The Government Besides Money

7. What do businesses owe: • Other businesses - respect and honesty • Customers - respect and honesty • The Government - respect and honesty

8. What is ethics?

9. Ethics • Can be defined as a “system of right and wrong” • Assists individuals decide whether an act is: – Moral or immoral – Socially desirable or undesirable

10. Where do ethics come from?

11. Ethics • Many sources: – Religious beliefs – National and ethnic beliefs – Community standards – Family practices – Educational experiences – Friends

12. What is meant by business ethics?

13. Business ethics • Principles and standards which guide behaviour in the world of business. • “Right” or “wrong”, “acceptable” or “unacceptable” behaviour within the organisation. • Determined by key stakeholders – the people affected by any decision.

14. Business ethics • Behaving ethically in business is widely regarded as good business practice.

15. Ethical versus lawful • An important distinction to remember is that behaving ethically is not quite the same thing as behaving lawfully: • Ethics are about what is right and what is wrong • Law is about what is lawful and what is unlawful. Lawful is obeying the laws. • An ethical decision is one that is both legal and meets the shared ethical standards of the community

16. Some myths about business ethics • It’s easy to be ethical • Unethical behaviour is part of business • There are no rewards for being ethical • Ethical behaviour will prevent me from being successful • Business is like sport – push the rules and try not to get caught • Business ethics is about character education and teaching moral philosophy

17. Ethical issues for business • Product safety standards • Advertising contents • Working environment • Unauthorised payments • Employee privacy • Environmental issues

18. Common unethical acts(reported by employees) • Lying to supervisors • Falsifying records • Alcohol and drug abuse • Conflict of interest • Stealing • Receiving a gift/entertainment in violation of company policy • Improper accounting procedures • Sexual harassment • Discrimination • Violation of environmental laws

19. Ethical decisions • Should businesses profit from problem gambling? • Should supermarkets sell beer cheaper than bottled water? • Is ethical shopping a luxury we can’t afford? • Should businesses buy good made by cheap foreign workers over long standing Australian workers?

20. Ethical decisions • Should Australian mines be sold to foreign Governments? • Should pollution be covered-up? • Is insider tradingethical? • Should local Government councillors take bribes to approve developments that are not in the interests of the communities they represent?

21. Ethical decisions • Should businesses be allowed to double the prices of goods just before Christmas? • Should telemarketers be allowed to ring just on meal time?

22. Why do people behave unethically? • Meeting overly aggressive financial or business objectives • Meeting schedule pressures (“deadlines”) • Helping the organisation survive • Rationalising that others do it • Resisting competitive threats • Saving jobs

23. What stops unethical behaviour? • Personal values • Supervisor influence • Senior management influence • Internal drive to succeed • Friends/co-worker influence (peer pressure)

24. Why misconduct is not reported • Fear of not being considered a team player • Did not think that corrective action would be taken • Fear of retribution – from management • “No-one else cares – why should I?” • Did not trust the organisation to keep the report confidential

25. Conflict of interest • Exists when an individual must choose whether to advance his/her own interests, the organisation’s or others’ • Examples: Bribes/personal payments, gifts, or special favours intended to influence decision making • Do auditor actual or alleged conflicts of interest represent unethical behaviour?

26. Honesty and fairness • Following applicable laws and regulations and not knowingly harming stakeholders – Is advertising cigarettes at the cricket fair? Why was it phased out? – Are mobile phone ads that ‘mask’ the effective cost of the call, especially if the limit is exceeded, fair?

27. Communications • Refers to the transmission of information and the sharing of meaning – e.g.: deceptive advertising, product safety information, product composition – Financial Statements – is this not simply a means of communication to stakeholders? – Continuous disclosure obligations for ASX companies?

28. So what does this mean toyou and me? • We have a personal obligation to ourselves to act ethically in our business dealings – The risk to our personal reputation – The risk to our businesses reputation

29. What is good business ethics?

30. What is bad business ethics?

31. Why should businesses behave ethically?

32. References • University of Notre Dame • Chartered Accountants • http://business-ethics.com/2012/10/05/1036-arbitrage-when-there-is-never-enough/ • www.accc.gov.au • http://business-ethics.com/2012/10/05/1036-arbitrage-when-there-is-never-enough/ • http://www.tutor2u.net/business/strategy/business-ethics-introduction.html • http://toolkit.smallbiz.nsw.gov.au/chapter/17/85