ADMS 3660 Business Ethics Notes

Ch 1- Business and Society Relationship

-aside from corporate wrongdoing, many common issues include
-corporate abuse of the environment, toxic waste disposal
-sweatshop conditions, sexual harassment in the workplace
-corporate power, minority rights
-drug testing, insider trading, whistle blowing, product liability crises
-lack of concern for the welfare of consumers (eg. Fast food industries)
Business and Society
Business- the collection of private, commercially oriented orgs, ranging in diff sizes
-big businesses are more widely known in the public eye
-people in our society often associate size with power
-when referring business in relation to society, all different business sizes must be kept in mind
Society- a community, nation or broad grouping of people that have common traditions and values
-is composed of numerous interest groups, formalized orgs, and a variety of institutions
Society as the Macroenvironment
Macroenvironment- the total env outside a firm; is the societal context in which the organization resides
-composed of four segments
Social environment- focuses on demographics, lifestyles, social values of the society
Economic env- nature and direction of the economy in which business operates
Eg. GNP, inflation, unemployment rates, global trade
Political env- processes by which laws get passed and officials get elected
Technological env- total set of tech-based advancements taking place in society
Our Pluralistic Society
Pluralism- the diffusion of power among societys many groups and organizations
-a pluralistic society is one in which there is wide decentralization and diversity of power concentration
-the power is dispersed among many individuals
Strengths- prevents power from being concentrated in the hands of a few
-maximizes freedom of expression and action
-no single group will dominate
Weaknesses- diverse institutions pursue own self-interests; no central direction to unify these pursuits
-there is confusion as to which orgs best serve which functions
-conflicts among groups when they each try to pursue their own objectives
-the system isnt very efficient
Business and Multiple Publics, Systems, and Stakeholders
-when we speak of business and society relationships, we usually refer either to particular segments, or
to business and some system in our society

Our Special-Interest Society

Defn- the idea of pluralism to an extreme in which thousands of special interest groups each pursues its
own limited agenda
-specialization on the part of interest groups representing all sectors of society
-including consumers, communities, natural environment, the government
-these groups have increasingly become active, committed, intense and diverse
-each of these groups have been able to attract many members, thus increasing revenues
-at the same time, they also increase the complexity for businesses to operate with them
Business Criticism and Corporate Response
Factors in the Social Environment
Societal Beliefs Regarding Success in Business
-the belief that material success is derived from some kind of dishonesty
-tv has suggested that in order to succeed, one has to engage in some kind of dishonesty, manipulation
-essentially, to get ahead, one needs to step on other people
Affluence and Education
-as a society becomes more affluent and better educated, there are also higher expectations
Affluence- the level of wealth, disposable income, standard of living of society
-reflects both economic welfare and social elements
Education- how much one receives in their environment
-the combo of affluence and education forms the underpinning for a climate where societal criticism of
businesses arises
Awareness through the Media
-newspapers, magazines, television
-through tv, the audience gets a variety of info that contributes to a climate of business criticism
Straight News and Investigative News Programs
-straight news shows that often portray businesses in a negative spotlight/bias
-journalists see it differently though, they say that when asked, businesses ignore qtns&downplay issues
Prime-Time TV Programs
-business people are often cast as evil and greedy
-is also shown through movies as well
Commercials
-are a double edged sword; in SR they may sell more products, but if products are promoted in a
deceptive way, then LR they will lose credibility
-the media therefore should be seen as only one major factor that contributes to the env in which the
business now finds itself

Revolution of Rising Expectations

Defn- belief that each succeeding generation has a standard of living higher than the one before
Social problem- the gap b/n a societys expectations of social conditions and the actual social realities
-the nature of rising expectations is such that they outpace the responsiveness of businesses, thus
creating a predicament that is conducive to criticism
Entitlement Mentality
Defn- the general belief that someone is owed something because theyre a member of society
-the current context of workplace has contributed to making the issue of entitlement more prominent
Rights Movement
Defn- comes from the revolution of rising expectations, entitlement mentality, and more
-activism for rights of other groups, like blacks, women, ethnic minorities, disabled
Criticisms: Use and Abuse of Power
-common issue that runs through all complaints is the use and abuse of power
-the reason that Canadians are less trusting of companies is they feel mistreated and ignored as both
citizens and consumers
-some points of friction include CEO pay, high gas and drug prices, poor airline service
Business power- ability or capacity to produce an effect or to bring influence to people
-in the context of business criticism, power is perceived as being abused
Levels of Power
Macro level corporate system
Intermediate level groups of corps that act in concert in an effort to produce a desired effect
-could be to raise prices, control markets
Micro levellevel of the individual firm; any one major corporation
Individual levelindividual corporate leader that exerts power; one person
-as one analyzes corporate power, they should keep in mind the diff levels of power
Spheres of Power
-economic power, political power are most common
-social and cultural; power over the individual; technological; environmental
Balance of Power and Responsibility
-the power/responsibility relationship is the foundation for CSR
Iron law of Responsibility- in the LR, those who do not use power in a manger which society considers
responsible will lose it
-when power is out of balance a variety of forces come to bear on business to be more responsible;
including governmental actions

Business Response: Concern and Changing Social Contract

-social env is also seen as a collection of conditions, events, that reflect how people think and behave
Social contract- two way understandings that characterizes the r/n between business and society
-social contract has been changing to reflect societys expectations of business
Social contract can be articulated through:
-laws and regulations that the society has established
-shared understandings to each groups expectations of the other
-creates more confusion and room for misunderstandings though
Ch 6- Business Ethics Fundamentals
The Publics Opinion of Business Ethics
-there is just a fine line between a business exec and somebody who lies
Gallup Poll Ranks Business Ethics
-the poll surveys public opinion of social and political issues
-quizzes the public on its perceptions about the ethics of business execs
-honesty and ethics of business execs arent thought to be highly ranked
-those lower are real estate agents, salespeople, stockbrokers
-nurses are highly ranked
-business execs ranks in the middle
Are the Media Reporting Ethics More Vigorously
-the media are reporting ethical issues more frequently
-ethics questions among all institutions are subjects of growing and sustaining interest
Is It Society that is Actually Changing
-illegal corp activities can be traced to changes that have taken place in society, and to the unwillingness
of many in business to adjust to these changes
-what has changed are the contexts in which decisions are made, the demands that are being made, and
the nature of whats considered proper corporate conduct
Business Ethics: What Does it Really Mean?
Ethics- deals with what is good and bad and with moral duty and obligation
-is a set of moral principles or values
-moral conduct refers to the principles of right and wrong in behaviour
Business ethics- good and bad, or right and wrong practices within a business context
-fairness, justice, equity
Descriptive ethics- characterizes the morality of people, culture, society
-compares moral codes, systems, beliefs, values, practices
-focuses on what is the prevailing set of ethical standards
-some people adopt the view that since everybody is doing it, its acceptable
Normative ethics- justifying a coherent moral system of thinking and judging
-justifies basic moral principles that are intended to guide behaviour
-focuses on what should be

Conventional Approach to Business Ethics

Defn- compares a decision with prevailing norms of acceptability
-challenge is answering whose norms to use, and what norms are prevailing
-legitimate norms emanate from family, friends, religious, local community, ones employer, law
Ethics and the Law
-both law and ethics have to do with whats appropriate, but law reflects societys codified ethics
Making Ethical Judgments
Three key elements compose this decision:
1) Observe the decision, action or practice committed
2) Compare the practice with prevailing norms of acceptability
3) Recognize that value judgments are being made by someone as to what really happened, and what
the acceptable norms are
-aka 2 diff people could look at the same behaviour but interpret diff things
Determinations of whats ethical require judgments to be made on:
-what the true nature of the practice is
-what societys prevailing norms are
-what value judgments are being made by someone about the practice
Ethical relativism- we pick and choose which source of norms we wish to use based on what will justify
our actions
Ethics, Economics, and Law: A Venn Model
-in ethical decision making, the focus is on ethical expectations, economics and law
-it must be balanced against each other to make wise decisions
4 Important Ethics Questions
-the questions are asked at five diff levels; individual, organization, industry or profession, societal,
global or international level
What Is?
-what is actually going on in an ethical sense in business or in a specific decision
-is a factual, scientific or descriptive question
-helps us understand the reality of the ethical behaviour
-what are your personal ethics; orgs; industrys; societys; global
What Ought to Be?
-rightness, fairness, or the justice of a decision
-often viewed in terms of what management should do in an ethical sense in a given situation
How Do We Get from What Is to What Ought To Be?
-bridging the gap between where we are and where we should be
-we may find that from a practical point of view, we cant achieve the goals
-managerial decision making and strategy come into play
-identify the problem, identify where we want to be, and then closing the gap
What is Our Motivation?
-sometimes it reveals some manipulative or self-centred move

Three Models of Management Ethics

Immoral Management
Defn- holds that managements motives are selfish and it cares only about its own, or the cos gains
-managements goals are profitability and organizational success at any price
-regards legal standards as barriers that management must avoid to accomplish what it wants
Moral Management
Defn- conforms to the highest standards of ethical behaviour
-strive sot be ethical in terms of professional standards of conduct, motives, goals
-aspires to succeed, but only within the confines of sound ethical precepts
-fairness, justice, respect for rights
-moral management pursues its objectives of profitability, legality, and ethics as required and desirable
-the law is viewed as a minimal standard of ethical behaviour, because moral management strives to
operate above the law
Operating Strategy of Moral Management
-live by sound ethical standards
-will the action be fair to all stakeholders as well as to the organization
Integrity Strategy- ethics as the driving force of an organization
-provides a common frame to unify diff functions, lines of business, employee groups
-helps define what an org is and what it stands for
-moral leadership is also related to moral management
-they have a passion to do right, be morally proactive, consider all stakeholders
-strong ethical character
-obsession with fairness
-undertake decision making
-not all orgs in moral management have done so all along though
-the companies arrive at this position as lawsuits/gov regulations rise, consumers expect more
Amoral Management
-is not just the middle position between immoral and moral management;
Intentional amoral management- managers do not factor ethical considerations into their decisions
-neither moral nor immoral
Unintentional amoral management- managers dont think about business activity in ethical terms
-are inattentive that their decisions may have negative effects on others
-managers are well intentioned but are too insensitive to consider the effects of their behaviour
on others
Operating Strategy of Amoral
-permit free rein within the unspoken but understood tenets of the free enterprise system
-key question is can we make money with this action
Compliance strategy- focused on obedience to the law as its driving force
-oriented toward compliance with regulatory and criminal law
*Fig 6.7 for summary of moral, immoral, amoral

Two Hypotheses Regarding the Moral Management Models

Population hypothesisdistribution of the three models might approximate a normal curve
-amoral in the middle, other two on ends
Individual hypothesisthe three models may operate at various times and under diff circumstances
Eg. The avg manager may be amoral most of the time, but be moral/immoral for 1 circumstance
Amoral Management as a Serious Organizational Problem
-managers driven by the profitability ethos regards economic success as the exclusive barometer of
organizational and personal achievement
Making Moral Management Actionable
-senior management should lead the transition from amoral to moral management by business ethics
training, codes of conduct, mission and vision statements, ethics officers
Developing Moral Judgment
Kohlbergs levels of moral development- how we as individuals develop morally
Levels of Moral Development
Level 1: Preconventional Level
-focus is mainly on self
Reaction to punishment stageavoidance of pain, scolding is usually needed
Seeking of rewards stagepraise or something tangible
-they learn to behave according to the consequences
Level 2: Conventional Level
-there are others whose ideas are to be considered
-the importance of conforming to the conventional norms of society
Good boy/nice girl morality stagethere are some rewards for living up to what is expected
Law and order morality stageindividual recognizes there are certain norms in society that are
expected to function in an orderly fashion
-individual sees they are part of a larger system
Level 3: Postconventional, Autonomous, or Principled Level
-indiv develops a notion of right & wrong that is more mature than the conventionally articulated notion
-moral principles are self accepted, because they now perceive them as right
Social contract orientationright action is thought of in terms of general individual rights and standards
agreed by society
Universal ethical principle orientationindiv uses conscience with self chosen ethical principles that are
anticipated to be universal
Feminist Views of Kohlbergs Research
-Carol Gilligan argues that women see themselves to be part of a network of relationships with family
and friends and thus are more focused on relationship maintenance when they confront moral issues
-women move in and out of three moral levels:

-self is the sole object of concern

-desire is to establish connectives and participate in social life
-women recognize their own needs and the needs of others, those with whom they have r/n
Sources of a Managers Values
-values are the individuals concepts of the worth or importance of certain ideas
-ones values shape ones ethics
Religious Valuesethics is the big of religion that tells us how we should behave
Philosophical valuesreason can provide us with principles/morals in the same way it gives us
principles of other things like mathematics
Cultural Valuessocietal norms from everyday living has had an impact on the managers thinking
-music, movies, television
Legal valueslegal system reps the codification of what the society considers right and wrong
Professional valuesemanates from professional orgs that rep diff jobs and positions
-articulates the ethical consensus of the leaders of those professions
Sources Internal to the Organization
-when an individual goes to work for an org, they learn that to survive, certain norms must be
perpetuated and revered
-respect for the authority structure
-loyalty; conformity; performance; results
Elements of Moral Judgments
There are 6 major elements that are essential to making moral judgments
Moral Imagination
-ability to perceive that a web of competing economic relationships is at the same time a web of moral
or ethical relationships
-means not only becoming sensitive to ethical issues in business decision making but also developing the
perspective of searching out subtle places where ppl are likely to be affected by decision making of mgrs
Moral Identification and Ordering
-ability to discern the relevance of moral factors introduced into a decision making situation
-ability to see moral issues as issues that can be dealt with
Moral Evaluation
-practical phase of moral judgment entails essential skills like consistency and coherence
-develop the ability to identify what the likely moral as well as economic outcomes of a decision will be
-integrate the concern for others into orgl goals and purposes
Tolerance of Moral Disagreement and Ambiguity
-must be accepted because it is a natural part of ethics discussions
-is an extension of a managerial talent present in all decision making situations
Integrating of Managerial and Moral Competence
-the scandals that major corps face occur as a result of many decisions made at diff points in time
-managers are learning that there is a huge corporate price to pay for their amorality

A Sense of Moral Obligation

-requires the intuitive or learned understanding that moral fibers are the integral components that hold
systems together
-moral manager has a sense of moral obligation and integrity that is the glue that holds together the
decision making process
Ch 7- Personal and Organizational Ethics
Levels at Which Ethical Issues may be Addressed
Personal Levelpersonal lives; outside the work context
Organizational levelroles as managers or employees
-these issues may bring consequences for the cos reputation and success in the community
Industry levelstock brokerage, real estate, insurance, financial services, cars, telemarketing
-any profession by which the individual is a member
Societal and Intl levelsbecomes hard for the manager to have direct effect on business ethics here
-managers acting in concert through their companies can bring high standards of change though
-the managers greatest impact can be felt through what they do personally, or as a member of
the management team
Personal and Managerial Ethics
-entails making decisions, confronting the individual with a conflict of interest situation
-individual often has to choose between their interests, and the interest of somebody else
-the question often asked in this situation is What shall I do in this situation
-there is the conventional approach, principles approach, ethical tests approach
Principles Approach to Ethics
-based on the idea that managers make decisions based on a more solid foundation than conventional
-managers can improve their ethical decision making if they factor into their proposed actions a
consideration of certain principles or concepts of ethics
Principle of Utilitarianism
Utilitarianism- we should always act to produce the greatest ratio of good and evil to everyone
-greatest good for the greatest number
-forces us to think about the general welfare
-proposes a standard outside of self interest
-also makes us think in stakeholder terms; what would produce the greatest good in our decision,
considering stakeholders
Disadv- ignores actions that may be actually wrong
-by focusing on the consequences of a decision, the decision itself may be ignored
-may come into conflict with the idea of justice
-some say the increase in total good isnt good because it ignores the distribution of the good
-it is also hard to formulate satisfactory rules for decision making
-doesnt handle the issue of rights very well

Principle of Rights
-utilitarianism implies that certain actions are morally right, when they can actually violate somebody
elses rights
Moral rights- important claims or entitlements
-there are also legal rights as well
Principle of Rights- rights cannot be overridden by utility
-it can only be overridden by another, more important right
-principle of right expresses morality from the POV of the individual
-utilitarianism expresses morality in terms of the group as a whole
Principle of Justice
Defn- the fair treatment of each person
Distributive justice- distribution of benefits and burdens
Compensatory justice- compensating someone for a past injustice
Procedural justice- fair decision making procedures
-John Rawls talks about a comprehensive principle of justice, based on the idea that what we need is a
fair method by which we choose the principles through which conflicts will be resolved
-he says each person has an equal right to the most extensive basic liberties
-everybody is essentially to be treated equally
-also that inequalities are arranged so they are to everyones adv and attached to positions open to all
Principle of Caring
-this principle is critical of the traditional views mentioned above
-they embrace a masculine approach
-traditional ethics focuses too much on the individual self
-feminist theory views the person as essentially relational, not individualistic
-emphasizes caring as opposed to justice or rights
-focused entirely on people, and is essentially personal
-caring people could lead to a caring org that offers new possibilities
Virtue Ethics
Defn- focuses on the individual becoming imbued with virtues
-is centre dint he heart of the person; the manager
-action oriented principles focus on doing; virtue ethics focuses on being
-it emphasizes character development
-we are lacking this today because we have failed to teach the young principles of good character
-corporate well being will demand character, and bus leaders are necessary for teaching character back
Golden Rule
Defn- strong principle of ethical living and decision making
-do unto others as you would have them do unto you

-if you want to be treated fairly, treat others fairly

-we are not to make an exception of ourselves
-however, there is no single principle that is recommended to be always used
Reconciling Ethical Conflicts
-three common concerns must be addressed in conflict situations:
Obligationsverbal/written contract to which we have agreed
Idealsgoal, principle, virtue
Effectson stakeholders of our actions
Shaw and Berry say that when two or more moral obligations conflict,
-choose the stronger one
-honour the more important one
-when the effects are mixed, choose the action that produces the greater good/less harm
Ethical Tests Approach
-more practical in orientation and do not require the depth of moral thinking that principles do
Test of Common Sensedoes the action about to take place really make sense
-has limitations though; can conclude they would not actually get caught
Test of ones best selfis the action compatible with your concept of yourself at your best
-isnt helpful to those who dont hold themselves in high esteem
Test of making something publichow would you feel if others knew you were doing this
-has to do with whether your action can withstand public disclosure
Test of ventilationexpose your proposed action to others and get their thoughts on it
-seek others views first
Test of the purified ideaare you taking the action just because somebody else with more authority or
knowledge says it is right
-just because somebody superior says its right doesnt mean it is
Gag testa managers signal if an action is worthy or not is if they gag at the hearing of it
Managing Organizational Ethics
-to manage ethics, a manager must realize the orgs ethical climate is part of its overall corporate culture
Factors Affecting the Orgs Moral Climate
-to create an ethical climate, they must understand the factors that influence whether or not other
employees behave ethically
-there are factors in terms of their influence to unethical behaviour;
-behaviour of superiors, ones peers, industry/profl ethical practices, personal financial need
Pressures Exerted on Subordinates by Superiors
-managers were asked to what extent they agreed with the phrase Managers today feel under pressure
to compromise personal standards to achieve company goals
-lower management felt it most
-the lower a manager is, the more the manager feels pressure toward unethical conduct
-employees frequently find themselves making compromises as a result of the need to conform to their
superiors wishes and the expectation of loyalty

Other Behaviours of Superiors and/or Peers

-amoral decision making; managers who fail to factor ethical considerations into their actions
-unethical acts; some managers are simply not ethical
-acceptance of legality as a standard of behaviour; some think if they abide by the law, they are simply
doing the most they ought to be
-bottom line mentality and the expectations of loyalty and conformity; little value on doing what is right
-absence of ethical leadership; management never assumes a leadership role
-objectives/evaluation systems that overemphasize profits- setting unrealistic goals
-insensitivity toward how subordinates perceive pressure to meet goals; management must be vigilant
of the expectations theyre making on employees
-inadequate formal ethics policies; lacking controls for monitoring/compliance/clear code of conduct
Improving the Organizations Ethical Climate
*Fig 7.5 for best practices for creating an ethical organization climate
Top Management Leadership (Moral Management)
-the moral tone of an org is set by top management
-management has to set an example for all the others to follow
-a managers reputation for ethical leadership is founded on two pillars;
-perceptions of the manager as a moral person, and as a moral manager
-being a moral person is composed of three things; trait, behaviours, decision making
-moral managers recognize the importance of putting ethics at the forefront of their ethical agenda
-they engage in role modeling, they communicate about ethics and values, and use rewards and also
discipline effectively
-they should create clear and concise policies
-select for employment only those whose traits are in check with corporate standards
-promote people on the basis of performance and ethical conduct and beliefs
-company employees must feel the obligation to report irregularities in ethics
Effective Communication
-both written and verbal forms
-candour requires a manager be sincere and honest in communication transactions
-requires the manager to be fair and free from prejudice
-fidelity means the communicator should be faithful to detail
-confidentiality means the manager must exercise care in deciding what info they disclose to others
Ethics Programs and Ethics Officers
-ethics officers are in charge of implementing ethics initiatives of the organization
-they have helped to reduce penalties
-there are also codes of conduct, ethics hotlines, ethics training, audits
Setting Realistic Objectives
-a manager may innocently create a condition leading to unethical behaviour on a subordinates part
-top mgmt must establish sales that are realistic, so they can be achieved with current bus practices

Ethical Decision Making Processes

-process of stating the problem, analyzing it, identify possible courses of action, evaluating them, and
then deciding on the best alternative and implementing it
5 main points about the nature of ethics and decision making:
-most ethical decisions have consequences; theyre followed by effects that impact both within
and outside the organization
-they have multiple alternatives
-they have mixed outcomes
-they have uncertain consequences
-they have personal implications
*Fig 7.6 for ethical decision making process
-individual is asked to identify the action, to subject the course of action to the ethics screen
-the ethics screen consists of several select standards against which the proposed course of
action is to be compared
-another approach is to ask and answer a series of simple questions
Ethics Checkis it legal; is it balanced; how will it make me feel about myself
Ethics Quick Testis a seven part test
Codes of Conduct
-top management has the responsibility for establishing standards of behaviour and communicating
them to all managers and employees
-code of ethics are used, aka codes of conduct
-there are benefits that bus orgs receive as a result of a code of ethics;
-legal protection, pride, consumer goodwill
-improved loss prevention, product quality, productivity
-common topics discussed in corporate codes:
-conflicts of interest, discrimination, sexual harassment
-receiving or giving gifts
-employee theft, proper use of company assets
-when codes are implemented strongly in the culture, reports of unethical employee behaviour is lower
-study of corporate codes by Mark Schwartz revealed there are diff ways in which employees perceive
codes of conduct, and he broke them down into 8:
Rule Bookclarifies what is expected
Smoke detectoremployees try to convince others
Signpostleads employees to consult other individuals
Mirror; Shield
Fire alarmemployees contact the proper authority figures
Magnifying glasssuggests a note of caution to be more careful
Disciplining Violators of Ethics Standards
-the moral manager consistently rewards ethical conduct and disciplines unethical conduct
-management ahs to communicate to all that unethical behaviour will not be tolerated

Whistle-Blowing Mechanisms and Hotlines

-people do not know how to react when they observe a questionable practice
-employees may phone in their inquiries about the companys ethics code
Disadv; it may do harm; many of the reported wrongdoings are false accusations many times
Business Ethics Training
-instruction in business ethics should be made a part of business school education, management
training, executive development programs, and seminars
-purposes are to increase the managers sensitivity to ethical problems
-encourage critical evaluation
-increase awareness of organizational realities, and societal realities
-improve understanding of the importance of public image
Ethics Audits and Self Assessments
Ethics audits- approaches by which a company may assess its ethical climate or programs
-intended to carefully review ethics programs, codes of conduct, hotlines, training programs
-can include managements activity, communication efforts, incentive and reward systems
-if management takes specific steps as suggested, many behaviours have a greater chance of being in
line with leaderships ethical standards
-thus ethics can be positively supervised
Ch 2- Corporate Citizenship
The Corporate Social Responsibility Concept
-requires the individual to consider their acts in terms of a whole social system, holds themselves
responsibly for the effects of their acts anywhere in the system
-the commitment to social responsibility by businesses has led to increased corporate responsiveness to
stakeholders and improved social performance
Corporate Citizenship Concepts:
CSRemphasizes obligation, accountability
CSResponsivenessaction, activity
CSPerformanceoutcomes, results
Historical Perspective on CSR
-Adam Smiths concept of invisible hand holds that a society could best determine its needs and wants
through the marketplace
Modification of the Economic Model
-modification of the classical economic model was seen in philanthropy; contributions to charity
Community obligations- are to improve, beautify and uplift
Paternalism
Evolving Viewpoints of CSR
it seriously considers the impact of the companys actions on society
is the obligation of decision makers to take actions which protect the welfare of society as a whole
along with their own interests

implies that a corporation doesnt just have economic and legal obligations, but also responsibilities
to society that extends those obligations
relates to achieving outcomes from organizational decisions concerning specific issues which have
beneficial rather than adverse effects upon pertinent corporate stakeholders
Carrolls Four-Part Definition of CSR
-the social responsibility of business encompasses the economic, legal, ethical and discretionary
expectations that society has of organizations at a point in time
Economic Responsibilities- produces goods and services that society wants and to sell them at fair
prices; attention to revenues, costs, strategic decision making
Legal Responsibilities- the laws under which business is expected to operate
Ethical Responsibilities- activities that are expected by societal members even though theyre not in law
-full scope of norms and standards that reflect a belief of what consumers regard as fair/just
Philanthropic Responsibilities- voluntary decisions of a business to engage in social activities
-not required by law, and not generally expected of business
-corporate giving, product and service donations, partnerships with local government
-difference between ethical responsibilities and philanthropic responsibilities is that philanthropic arent
expected in a moral or ethical sense
Pyramid of CSR Fig 2.3
-the socially responsible should strive to make a profit; obey the law; be ethical; and a good corp citizen
Arguments Against and For CSR
Arguments Against CSR
-management has one responsibility only, to maximize the profits of owners/shareholders
-social issues should be resolved by the workings of the free market system
-if the free market cant solve the social problem, then the government should
-business isnt equipped to handle social activities; managers are oriented toward finance & operations
-if managers were to pursue CSR, it would dilute the businesss primary purpose
-businesses have enough power; engaging in CSR would only give them more
-encouraging them to assume social responsibilities would only place them in a position of international
balance of payments
Arguments for CSR
-is in the LR self-interest of a business to be socially responsible
-its the business fault that todays social issues exist anyways
-if businesses are to exist in the future, then they need to take actions now to ensure their LT position
-to ward off future gov intervention and regulation
-it is more practical and less costly to behave this way than to react when issues have developed
-because the public supports it
Corporate Social Responsiveness
-is the action oriented variant of CSR
Ackerman and Bauers Point of View
-criticized CSR; says that responding to social demands is more than deciding what to do

-they think social responsiveness is a more apt description of what is essential in the social arena
-responsibility implies having assumed an obligation
-responsiveness connotes an action-oriented condition
Sethis Three-Stage Schema
Social obligationcorporate behaviour in response to market forces/legal constraints
Social responsibilitybringing corporate behaviour up to a level where it is congruent with the
prevailing social norms
Social responsivenesslong run role in a dynamic social system
Fredericks CSR1, CSR2, CSR3
-CSR is CSR1; social responsiveness CSR2
-social responsiveness is the capacity of a corporation to respond to social pressures
-CSR3 is corporate social rectitude
-the moral correctness of actions taken and policies formulated
Epsteins Process View
-discusses corporate social responsiveness within the corporate social policy process
-focuses on the individual and organizational processes for evaluating the firms capacity to anticipate,
respond to, and manage issues
Other Views of Responsiveness
Ian Wilsonfour business strategies that include reaction, defence, accommodation, proaction
Terry McAdamfour social responsibility philosophies
- Fight all the Way
-Do only what it required
-Be progressive
-Lead the industry
Davis and Blomstromalternative responses to societal pressures that include withdrawal, public
relations approach, legal approach, bargaining, problem solving
James Postthree major social responsiveness categories; adaptive, proactive, interactive
Corporate Social Performance (CSP)
-intended to suggest that what really matters is what companies are able to accomplish
-needs to identify a particular philosophy, pattern, mode of responsiveness, identify stakeholder issues
-particular issues are of varying concern to businesses, depending on the industry in which they exist
Carrolls CSP Model
Social responsibility categorieseconomic, legal, ethical, discretionary
Philosophy of social responsivenessreaction, defence, accommodation, proaction
Social issues involvedconsumerism, environment, discrimination
Usefulness of the CSP Model to Academics and Managers
Academics; aid to perceiving the distinction among the concepts of CSR that have appeared in literature
Managers; helps in understanding that social responsibility isnt separate from economic performance
-integrates economic concerns into a social performance framework
-places ethical and philanthropic expectations into a rational economic framework
Wartick and Cochrans CSP Extensions
-proposed that the dimension of social issues matured from an identification of the social issue

categories in which companies must take action known as social issues management
-issues identification, issues analysis, response development
-proposes that the three dimensions be thought of as depicting principles, processes, policies
Woods Reformulated CSP Model
-to think of social responsiveness as a set of processes rather than as a single process
-think of Warticks policies as entailing outcomes of corporate and managerial actions
-proposes that each 3 components (principles, processes, outcomes) are composed of specific elements
Swansons Reorientation of CSP
-links corporate social performance to the personally held values and ethics of executive managers
-organizations can impact society through economizing (efficiently converting inputs into outputs) and
ecologizing (forging community-minded collaborations)
Corporate Citizenship
-there isnt one distinct meaning
-serves a variety of stakeholders well
-shared moral and ethical principles
-integrating individuals into the communities in which they work
-balances all stakeholders claims
-embraces the four faces of corporate citizenship; economic, legal, ethical, philanthropic
-functions through which business intentionally interacts with NPO, citizen groups, other stakeholders
-works to improve employee relations; customer relationships; bus performance; cos marketing efforts
Social Performance and Financial Performance
-whether or not there is a r/n b/n a firms social responsibility or financial performance
-the appropriate performance criteria are subject to debate
Perspective 1built on the belief that socially responsibly firms are more financially profitable
Perspective 2a firms financial performance is a driver of its social performance
-when cos are enjoying financial success, we see higher levels of social performance
Perspective 3interactive r/n among social performance, financial performance, corp reputation
-since they are so interrelated, it is hard to identify which factor is driving the process
A Multiple Bottom Line Perspective
-there is only one bottom line; a corporate bottom line that addresses the shareholders or owners
investments in the firm
-alternative view is that the firm has multiple bottom lines that benefit from CSP
-CSP cant be fully comprehended unless we also consider that its impacts on stakeholders are noted,
measured and considered
Socially Conscious or Ethical Investing
-this movement began in the 1970s
-social investing had matured into a comprehensive investing approach with social and environmental
screens, shareholder activism, and community investment
-no clear evidence that returns from socially conscious funds will equal or exceed the returns from funds
that arent so carefully screened

-socially conscious funds are valued most highly by the investors who really care about the special
performance of companies
3 main reasons why there is an increase in social/ethical investing:
-more reliable research on CSP than in the past
-investment firms using social criteria have established a solid track record
-socially conscious generation in the 60s are now making investment decisions
Ch 3- Stakeholder Approach to Business, Society, Ethics
Origins of the Stakeholder Concept
What is a Stake?
Stake- interest of a share in an undertaking; it is also a claim
-in between the two extremes is a right to do something
Stakeholder- individual or group that has 1+ various kinds of stakes in a business
-as stakeholders may be affected by the actions of the business, stakeholders may also affect
the orgs actions, decisions
-any individual or group who can affect or is affected by the actions of the org
Who are Businesss Stakeholders?
-shareholders, employees, customers
-competitors, suppliers, the community, special interest groups, media, society
-natural environment, nonhuman species, future generations
ProductionManagerialStakeholder Views
Production view- owners thought of stakeholders as individuals that supplied resources, or bought
products or services
Managerial view-separation of ownership from control, interaction with major constituent groups
Stakeholder view- firm and its multilateral relationships with constituent or stakeholder group
-management must perceive its stakeholders as those that management thinks have some stake in the
firm but also the groups that themselves think they have a stake in the firm
Primary and Secondary Stakeholders
Primary social stakeholders:
-shareholders, investors
-employees, managers, customers
-local communities, suppliers, business partners
-direct stake in the org
Secondary social stakeholders:
-government and regulators, civic institutions
-social pressure groups, media and academic commentators, trade bodies, competitors
-can be extremely influential, but their stake is representational of the public and indirect
Primary nonsocial stakeholders:
-natural environment, future generations, nonhuman species
Secondary nonsocial stakeholders:

-environmental pressure groups

-animal welfare organizations
Core, Strategic, Environmental Stakeholders
Core stakeholders- specific subset of strategic stakeholders that are essential for the survival of the org
Strategic- vital to the org and the set of threats/opportunities it faces
Environmental- others in the orgs environment that arent core or strategic
-whether stakeholders were core, strategic or environmental would depend on their characteristics, like
legitimacy, power, or urgency
Legitimacy, Power, Urgency: A Typology of Stakeholder Attributes
Legitimacy- the perceived appropriateness of a stakeholders claim to a stake
-owners, employees, customers have a high degree of legitimacy due to their direct
relationships with a company
Power- the ability to produce an effect; to get something done that otherwise wouldnt get done
-power means the stakeholder could affect the business (PETA)
Urgency- degree to which the stakeholder claim on the bus calls for the businesss immediate attention
Strategic, Multifudiciary, Synthesis Views
Kenneth Goodpaster distinguished among:
Strategic approachviews stakeholders as factors to be taken into consideration and managed while
the firm is pursuing profits for its shareholders
-sees stakeholders as instruments that may facilitate/impede the firms pursuit of its strategic objectives
Multifudiciary approachholds that management has a responsibility to stakeholders just as it has the
responsibility to shareholders
Stakeholder synthesis approachnew approach that Goodpaster recommends
-business does have moral responsibilities to stakeholders, but is also expected to be implemented
within a context of ethical responsibility
3 Values to the Stakeholder Model
Donaldson and Preston have articulated three values:
Descriptiveprovides language and concepts to describe the corporation or organization
Instrumentaluseful in establishing the connections between the practice of stakeholder management
and achievement of corporate performance goals
Normativestakeholders are identified by their interest in the organization whether or not the org has
any interest in them
-is often thought of as the moral/ethical view because it places a focus on how stakeholders
should be regarded
Questions in Stakeholder Management
1) Who are our Stakeholders
-must identify not only generic stakeholder groups, but also the subgroups
-a generic group could be employees, shareholders, environmental groups, consumers
-within those groups there may be subgroups as well

2) What are our Stakeholders Stakes

-different specific interests, concerns, perceptions of rights, expectations
3) What opportunities and Challenges Do Our Stakeholders Present to the Firm?
-the opportunities are to build good working relationships with the stakeholders
-challenges present themselves in a way that the firm must handle the stakeholders well or be hurt in
some way; either financially or by reputation in the community
-emphasis is placed larger on challenges than it is on opportunities
-the challenges normally arise because stakeholders think their needs arent being met
-in terms of potential for threat, managers need to consider the stakeholders relative power and its
relevance to a particular issue confronting the org
-in terms of potential for cooperation, the firm needs to be sensitive to the possibility of joining forces
with other stakeholders
4) What Responsibilities Does the Firm Have to its Stakeholders?
-what economic, legal, ethical, philanthropic responsibilities does mgmt have to each stakeholder
-the most pressing threats present themselves as legal and ethical questions
5) What Strategies or Actions Should Management Take?
-do we deal directly or indirectly with stakeholders
-do we take the offence or the defence in dealing with stakeholders
-do we accommodate, negotiate, manipulate, or resist stakeholder overtures
-do we employ a combo of the above or just a single action
*Fig 3.8 for the diff stakeholder types*
Stakeholder type 1supportive; high on potential for cooperation, low on potential for threat
Stakeholder type 2marginal; low on both
Stakeholder type 3nonsupportive; low on potential for cooperation, high on potential for threat
Stakeholder type 4mixed blessing; high on both
-managers should attempt to satisfy minimally the needs of marginal stakeholders
-satisfy maximally the needs of supportive and mixed blessing stakeholders
Effective Stakeholder Management
-one major criticism is the complexity and time consuming nature of identifying, assessing, responding
to stakeholder claims
-some managers continue to think in shareholder terms because it is easier
-but thinking in stakeholder term increases is most consistent, though it takes more time
Stakeholder Management Capability
-it resides at one of three levels of increasing sophistication
Level 1: Rational Level
-a low level of SMC; most orgs have at least identified who their stakeholders are, but not all have
analyzed the nature of the stakes or the stakeholders power

Level 2: Process Level

-orgs implement organizational processes to scan the env and receive relevant info about stakeholders
-the info is then used for decision making purposes
-issues management or crisis management approaches are also used here
Level 3: Transactional Level
-highest and most developed; managers engage in transactions
-aka the communication level; interactiveness, genuineness, satisfaction, resource adequacy
-Steven F. Walker and Jeff Marr argue that cos should compete on the basis of intangible assets
Stakeholder Corporation
-development of loyal relationships with customers, employees, shareholders willbecome one of the
most important determinants of commercial viability and business success
Stakeholder symbiosis- idea that recognizes all stakeholders depend on each other for their success and
financial well being
Stakeholder Power: Four Gates of Engagement
-Walker and Marr assessed the commitment level of each stakeholder group
-each successful stakeholder relationship passes through four stages
Awareness gate 1; to know that something or someone exists
-there are often hidden stakeholders who may not be aware of the firm though
Knowledgeknowledge among stakeholders addresses not only p&s but also about corporate character
-refers to the cos values, integrity, culture, practices
Admirationstakeholders must come to trust the firm
-loyalty and commitment
Actioncompany can build partnerships that benefit both of you
-getting referrals from customers, employees, investors
-main implication of the four gates is the need to effectively manage communications with stakeholders
of all types
Principles of Stakeholder Management
-to provide managers with guiding precepts regarding how stakeholders should be treated
*Fig 3.9 for the principles*
-focus is on acknowledge, monitor, listen, communicate, adopt, recognize, work, acknowledge conflicts
Ch 15- Employee Stakeholders and Workplace Issues
The New Social Contract
-the work force of today is more mobile, less loyal, more diverse
-fewer employees feel their employer is committed to them; trust is declining
-many have lost faith in the system as a consequence of feeling mistreated and ignored
-todays employees are seeking competitive pay and benefits coupled with opportunities for
professional growth
Social contract- set of reciprocal understandings regarding each partys role and responsibilities
-pay based on longevity and status has been replaced with rewards based on performance

-three main forces drive the collapse of the old social contract:
-global competition
-advancements in technology
-deregulation (of transportation, telecommunications)
-the new social contract places on employees more responsibility for their own success
-job security and compensation depend more on what the employee is contributing to the org
-companies are expected to provide learning opportunities, and honest communication
Employee Rights Movement
Private property- holds that individuals and private orgs are free to use their property as they desire
Meaning of Employee Rights
Defn- legitimate privileges obtained by workers through group membership that protect them in
specific ways from the prevailing system of governance
-guarantees fair treatment in the workplace
-serves to provide workers with either desired outcomes or protection from unwanted outcomes
Statutory rights- rights provided by the law
-includes protection from discrimination, pay equity, occupational health and safety
Contractual rights- rights deriving from contracts based on oral or written statements
Implied contract- employers promise of some kind of job security
-employers should take the necessary precautions to reduce implied contract lawsuits:
-train managers to conduct hiring procedures properly
-insert clear statements in employment offers regarding employment/termination conditions
-provide employee handbooks, employee applications, letters of employment
-obtain written confirmation that employees have read all the documents
The Right not to be Fired without Cause
-in the US, the employment-at-will doctrine allowed an employer to terminate an employment
relationship at any time for any reason without notice
-in Canada, the employer must provide reasonable notice, as well as grounds for termination
Just cause- grounds for terminating an individuals employment under this cause
Some activities that constitute just cause include
Serious misconducttheft, assault, dishonesty
Habitual neglect of dutyfailure to improve over reasonable job requirements
Conduct incompatible with the employees responsibilitiesactivities that compete with the
employers business
Willful disobedience
-when employers terminate on the basis of just cause, it is their responsibility to prove the existence of
it; it has to have already existed, not inferred
Precautions to minimize risk of wrongful dismissal lawsuits
Dont make promises of permanent employment
Document disciplinary actions
Conduct an investigationdone prior to any termination

Provide a termination letter and settlement offerindicate that employee is beign dismissed,
state the effective date of dismissal, set out reasons for termination
Conduct a termination meetinginform them of the termination, reasons
-employee shouldnt sign a settlement offer during the meeting, but be given some time
to review the offer and seek legal advice
Constructive dismissal- when employer s terms of employment that adversely impacts the employee
-employers restricting their operations may have to consider altering the terms of employment for
certain employees
Managements Response to Employees Job Claims
Stay on the right side of the lawknow the law and obey it
Investigate any complaints fullyemployee complaints about company activities should be checked out
Deal in good faith with employeesemployees win court cases when its determined that the
companies have acted in bad faith
When firing someone, make sure it is for a good reason make sure the reason is supported by sound
records and documentation as proof
Reasonable Notice vs. Just Cause
-just cause exists in restricted situations; when an employee has engaged in significant misconduct
-the Labor Standards Code indicate the minimal notice periods and standards that must be provided
-length of employment, performance record for eg must be taken into account
-while some employers retain the employee during the notice period, more commonly, employers will
pay a salary instead of giving the notice
-this is due to the fact that office morale may be affected during the notice period; they may
slack, not perform to the best of their ability, etc
The Right to Due Process and Fair Treatment
Due process- the right to receive an impartial review of ones complaints
-the right of employees to have decisions that adversely affect them be reviewed by objective
third parties
-every employee has a right to a public hearing before being demoted, transferred, fired
A Due Process System
Employee constitutionalism- a set of clearly defined rights, and a means of protecting employees from
discharge, demotion
Main requirements of a due-process system:
-must follow rules; must be effective
-must be sufficiently visible that potential violators are aware of it
-must be institutionalized, perceived as equitable, easy to use, apply to all employees
Alternative Dispute Resolution (ADR)
Common Approaches
Open-door policy- senior level exec that leaves the door open for those who think theyve been treated
unfairly to walk in and talk whenever they want

-assigning an HR department
From an employees standpoint, issues with this are that the process is closed
-one person is reviewing what happened
-there is a tendency for one manager to support another managers decisions
Hearing procedure- employees to be represented by a lawyer to decide the outcome based on evidence

Ombudsperson
Defn- one who investigates reported complaints and helps to achieve equitable settlements
-to ensure fair treatment of employees
-the person reports directly to the president, who is the only one that can reverse the persons decisions
-managers may feel threatened when employees go to the ombudsperson, who must be willing to anger
execs in order to get the job don
Peer Review Panel
-employee is to talk first with the manager, and then HR manager, and then a higher exec
-if employee is still not satisfied, they are entitled to request a peer review board
-consists of two randomly chosen peers of the aggrieved employee, along with one disinterested exec
from a different position
-the success of this depends on having the clear support of top management for fair treatment, and
being seen as a permanent fixture
-ADR is growing more though; this is money saved by avoiding expensive litigation
Freedom of Expression in the Workplace
-employee may sometimes find themselves balancing obligations of loyalty to the employer with the
right to free expression of opinions
-individuals involved in a labour dispute may legally picket not only outside the employers premises, but
at other locations as well (known as secondary picketing)
-most whistle blowers stories lack happy endings though; are often negative outcomes
-they may lose their jobs, endure more stress, encounter harassment
Whistle-Blowing
Defn- one who exposes what they consider to be unconscionable practices of their own org
-one who reports to an outside party some wrongdoing
-the disclosure by org members of illegal, immoral, practices under the control of their employers
4 key elements in the whistle-blowing process:
-the whistle blower
-the act/complaint
-the party to whom the report is made -the org against which the complaint is made
-the emerging view of employee responsibility holds that the employee has a duty not only to the
employer, but also to the public
Consequences of Whistle-Blowing
-whistle-blowers are seldom rewarded; most often they encounter negative experiences

Eg. Criticism of work; less desirable work assignments

-pressure to drop charges, heavier workloads, lost perks, exclusion from meetings
Governments Protection of Whistle-Blower
-Environmental Protection Act, Labour Code, Competition Law
-some support for whistle-blower rights in the provincial section
-no comprehensive protection plan for whistle blowers in Canada
-Sarbanes Oxley permits an employee of a publicly traded company to sue the company if the employee
suffers retaliation as a result of providing info regarding corporate violations
-New Brunswick is the only province that offers protection of rights of whistle blowers in private sector
Government efforts should:
-allow whistle blowers to report anonymously
-establish independent enforcement agencies to examine reports of whistle blowers
-empower enforcement agencies to fully protect whistle blowers
-permit the right to appeal any enforcement agencys decisions to court
-reward whistle blowers accordingly
There are some forms of speech that shouldnt be protected though:
-employees shouldnt have the right to make personal accusations
-they should not be entitled to make accusations that dont reflect a conviction that wrong is
being done
-shouldnt be entitled to object t6op discharge if management can demonstrate violation of a
code of conduct was the reason for its actions
Management Responsiveness to Potential Whistle-Blowing Situations
company should assure employees the org wont interfere with their basic political freedoms
orgs grievance procedures should be streamlined so employees can obtain direct hearings
orgs concept of social responsibility should be reviewed
org should communicate respect for the consciences of employees
-whistle blowing can be averted if management listens and be responsive to employees concerns
Companies should engage in the following to be responsive to employees:
-listen
-delve into why the employee is pursuing the complaint
-look for solutions that will addre4ss the interests of both objector and company
-attempt to establish an equitable means of judging future actions
Four key components of a model whistle-blower policy:
Shout it from the rooftops: encourages employees to bring forward wrongdoing
Face the fear: directing complaints to someone outside the wbs chain of command
Get right on it: immediately investigate it
Go public: show the public that complaints are taken seriously
Ch 16- Employee Stakeholders: Privacy, Safety, and Health
Right to Privacy in the Workplace

-the increase in workplace monitoring has led to new ethical considerations

-privacy includes the right to be left alone, the right to autonomy
-claim of individuals/groups to determine when, how and to what extent info about them can be
communicated to others
-info is stored in federal agencies, provincial agencies, local departments and businesses
-Canadians are protected by 2 federal privacy laws;
-Privacy Act and PIPEDA
-Privacy Act places limits on the collection, use and disclosure of personal info
-allows Canadians to correct personal info as needed
-PIPEDA applied to the commercial activities and employment relationships
Three main issues that are important of data collecting:
Collection and Use of Employee Information by Employers
-personal info includes any factual or subjective info
-controlling a persons personal info means controlling the collection and use of that info
-PIPEDA is aimed at controlling employers behaviour with regard to the collection of the data
PIPEDA requires that companies must obtain consent for use of info, except for specific circumstances;
-companies can use personal info only for the purpose that they gave consent to
-companies must limit the collection/use of info to purposes that the person would deem
appropriate for use
-individuals have a right to access the personal info
-businesses must conform to the law
The individual must be aware of the fact that the company is using their personal info
-the purpose behind data collection
-the recipients of the personal info, and the nature of the privacy controls
Steps in developing a system:
Appoint a compliance teamdetermine who is responsible for ensuring compliance
Assess existing privacy policiesensure policies are in compliance with PIPEDA
Adopt a privacy code or privacyit will become the orgs public statement about its privacy standards
Conduct a personal info practices auditwhat prsonal info is collected, how its used, how long its kept
Assess purposes for use and disclosureensure the info is for reasonable use
Assess existing info on fileindividuals have the right to access their personal info
Identify when, where, what kinds of consents are requiredinstruments for obtaining consent must be
designed, as well as the form of consent (express, opt-out, implied consent)
Assess collateral collection and uses of personal inforequired to ensure uses are reasonable and
necessary to achieve the purpose
Implement organizational protocolspolicies to oversee approvals for all info collection
Plan for regular compliance auditsassess how the org is conforming to policies
-companies need to be careful not to misuse the information collected
-the employer need to understand that the info collected isnt a commodity to be exchanged or sold
-employees should know what info is being stored, and have the chance to correct any info

Testing of Employees
Integrity Testing: aka honesty tests
-done to stem employee theft, to avoid negligent hiring suits
-to screen employees in a cost effective way, to replace polygraphs
-the questions asked usually require simple yes or no answers
-the tests are inexpensive, quick to administer, and easy to grade
Drug Testing
-businesses are reluctant to conduct drug tests due to invasion of moral issue/privacy
-inaccuracy of these tests, negative impact on employee morale
-tests only show the use of it, not abuse
-is costly; management, employee and unions oppose this
-the Canadian Human Rights Commission banned all drug testing on employees, though random alcohol
testing is still allowed
-employees that are substance abusers create higher financial burdens in compensation claims,
accidents, negligence in their work
Arguments for Drug Testingemployers have the right to protect their own employees
-they are responsible to the general public in providing safe workplaces
Arguments against Drug Testinginvasion of privacy, and the accuracy of the drug tests
-do employers have a right to know if they employees use drugs
Guidelines for Drug Testing
-management shouldnt discipline someone for refusing to take a drug test
-the tests should only be used when there is a legit suspicion of abuse
-focus of the test should be placed on-the-job performance only
-if an employees status is going to be affected by the outcome of a drug test, the confirmatory test
should be conducted
-privacy of the employee is to be respected
Monitoring Employees on the Job
Employee monitoring includes recording phone calls, voice mail, reading computer files, taping them
-Internet is often looked at; e-mails
-monitoring is an invasion of privacy, and also unfair treatment
-can cause stress and tension, low morale, job insecurity
-in response to alleged employee crimes, employers have placed cameras in pinholes in walls, LD
cameras for overseas operations, and video evidence
Policy Guidelines on the Issue of Privacy
Steps that management may consider taking to be responsive to employee stakeholders:
Prepare a privacy impact statementanalyze the implications to which all systems are subjected
Construct a comprehensive privacy planensure privacy controls are integrated at the beginning
Train employees who handle personal infoso theyre aware of the importance of protecting privacy

Make privacy a part of social responsibility programsmake employees aware of it

Chief Privacy Officer (CPO)- responsible for monitoring, protecting the private info held by firms
Workplace Health and Safety
Occupational injury- any cut, fracture, sprain, amputation from a workplace incident
-workers involvement in this can be direct or indirect
Occupational illness- any condition caused by the work environment
-varies from acute to chronic
Role of the Government
-enforce occupational health and safety legislation
-conduct workplace inspections
-disseminate health and safety info
-promote training, education and research
-resolve workpalce disputes regarding occupational health and safety
-the CCOHS is a federal dpt corp that enhances workplace health and safety through supporting efforts
to eliminate work related illnesses and injuries
-it gives info and advice that promotes safe working environments
-Bill C-45 imposes criminal liability on corps that fail to take reasonable measures to protect employee
and public safety
The org can be held criminally liable:
-as a consequence of actions by senior officers who oversee day to day operations but who may
not be directors
-exec officers who intentionally commit crimes to benefit the org
-those who are aware of offences but dont take action to stop them
-those who show a lack of care that constitutes criminal negligence
Role of the Employer
-establish a joint health and safety committee
-take appropriate precautions to ensure the workplace is safe
-train employees, supply personal protective equipment
-report all critical injuries to the proper gov department
-appoint a supervisor to ensure safe working conditions
-communicate to employees the health and safety requirements
-maintain records, document and annual summary of work
-employers must report to the Workers Compensation Board
-employees injured at work can receive benefits in the form of a cash payout or wage loss payments
Role and Rights of Employees
-work in compliance with occupational health and safety acts and regulations
-use personal protective equipment
-report workpalce hazards and dangers
-work in a manner as required by the employer

Occupational Health and Safety Act outlines 3 main rights of all employees to a safe workplace:
-right to refuse unsafe or hazardous work
-right to participate in the workplace health and safety activities
-right to know, or the right to be informed about work place safety
Workplace Hazardous Materials Information System (WHMIS) requires employers to:
-label containers of hazardous materials
-provide MSDSs with additional info
-provide education so employees understand the hazards
Workplace Violence
-there has been increased gov legislation
-employers are to write a report on the incident, describing what action and what change will occur
Promoting Health and Safety in the Workplace
-joint safety and health committees
-lifestyle info; flexible working hours; employee involvement initiatives
-active lifestyle programs; work-life balance initiatives; self directed work teams
Safety Programs
-maintain an employee-management safety committee with reps from management, each dpt,
employee representatives to investigate accidents and helping publicize the importance of safety
-leads to higher motivation to conform with the safety rules
-is a good idea for management to encourage employees to participate
-employees can involve by helping set safety standards, safety training
-assist with design of programs, establish safety incentives, participate in investigations
-employee handbooks should be given or placed somewhere everybody can access it
Employee Assistance Programs
-EAPS help with alcohol and drug abuse problems, as well as financial/emotional stress
-aging, legal problems, emotional, social difficulties
-aka broad brush EAP
-they should be a part of a comprehensive company plan to promote wellness
Family-Friendly Workplace
-they look out for the mental and psychological health of their employees
-there is an increase in corporate support for families in the workplace
-these programs bring issues of resentment developing among childless couples, family feuds at work
-due to these programs, it shows a change in the corporate culture
Ch 17- Employee Discrimination and Employment Equity
Challenges in the Labour Pool
Designated groups- women, Aboriginals, visible minorities, people with disabilities
Women
-they have both lower status and lower pay
-theyre underrepresented in semiprofessional occupations, management and board positions,

supervisors in crafts and sales and service personnel

-stereotyping and preconceptions of womens roles and abilities
-they hit the glass ceiling, and do not get accepted into the exec level culture
-there are extreme barriers for them to career advancement
Aboriginal or First Nations People
-underrepresented in the work force
-they face a huge educational challenge, big dropout rates
-employment is limited due to the small number of opportunities near their reserves
Individuals with Disabilities
-higher unemployment rate compared to the national average
-attitudinal barriers, physical demands, inadequate access to the technical and human support systems
Visible Minorities
-culturally biased aptitude tests, lack of recognition or foreign credentials, high language requirements
-foreign born visible minorities experience the greatest difficulty finding desirable work
Discrimination
Legal Protection
Canadian Charter of Rights and Freedoms
-aim is to balance individual and collective rights
Fundamental rights of all Canadians include
-freedom of speech, press, assembly, association, religion
-democratic rights
-right to move freely from province to province for residence or employment
-legal, equality, language rights
Canadian Human Rights Act
-ensures equality of opportunity and freedom from discrimination in the fed jurisdiction
-includes race, colour, ethnic origin, religion, age
-it protects the rights of Canadians but applies to a specific class or organizations; all fed gov dpts, Crown
corporations, businesses and industries under fed jurisdiction, insurance and communications cos
Canadian Human Rights Commission
-prohibits employment discrimination in federally regulated businesses, like race, religion, sex, age,
ethnic origin, marital status, handicap
-examines allegations of discrimination to establish greater equality
-it provides effective and timely mans for resolving complaints
-promotes knowledge of human rights, and helps reduce barriers in equality
-to file a complaint, the complainant must complete a written report first
-the CHRC rep assesses the facts and determines whether the claim is legitimate
-investigator gathers more facts and a report is submitted to the CHRC to recommend either
substantiation or nonsubstantiation
-if substantiated, the parties attempt to settle the matter, and if they cant a human rights
tribunal may be appointed
-the tribunal has the power to seek damages for the victim

Expanded Meanings of Discrimination

Direct Discrimination or Disparate Treatment
Disparate treatment- unequal treatment due to race, colour, sex
Indirect Discrimination: Adverse Effect or Disparate Impact
-all groups are to be treated equally, without regard for colour, sex or other traits
-employers may be justified in discriminatory policies if based on a bona fide occupational qualification
-any policy viewed as discriminatory must pass three criteria to support it is a bona fide occupl rqmt
-it must be rationally related to the requirements of job performance
-must be created in good faith
-reasonable necessary in order to accomplish a valid purpose
-BFOR is permissible if the employer can prove this discrimination is necessary for business operations
Systemic Discrimination
-occurs when problems of discrimination are embedded in institutional policies and practices
-thought the practice may apply to everyone, they create a distinction between groups of individuals
which disadvantage one group based on shared personal characteristics
To assess whether organizational policies harbor systemic barriers:
-is it job related
-is it consistently applied
-is it valid
-does it have a disparate impact
-is it a business requirement
-does it conform to human rights
Eg. Workplace environment that doesnt expressly discourage sexual harassment
-job descriptions that undervalue the work of positions traditionally held by women
-physical access that restricts those who are mobility impaired
Issues in Workplace Discrimination
Sex Discrimination
Moving into Professional/Managerial Positions
-male CEOs blamed glass ceiling on womens lack of experience and time
-female execs disagreed, saying the exclusionary corporate culture is the reason why they dont advance
Sexual Harassment
Quid pro quo harassment- type of sexual harassment where something is given/received for sthg else
Hostile work env harassment- employee perceives a hostile work env by uninvited sexually oriented
behaviours being present in the workplace
Corporate Responses to Sexual Harassment
-letters from CEO, workshops, training as to what constitutes sexual harassment
-worker orientation programs, films, role playing exercises, sexual harassment audits
-they may choose to educate employees more, reissue written policy
-make employees aware, update training programs, get input from women employees
Age and Religious Discrimination
-involves older workers being laid off to save money because younger workers can be paid less
-many companies require workers to sign waivers of their right to sue in order to receive severance pkgs

Reasonable accommodation- adapting employment policies so that no individual is denied benefits,

disadvantaged with respect to employment opportunities
-includes reallocating tasks, redesigning job duties, revising work schedules
-human rights tribunals across Canada require employers to demonstrate fleexibi.ity in accommodating
the needs of employee
Employment Equity
Defn- treatment of employees in a fair and nonbiased manner
-some objectives include eliminating employment barriers for the four designated groups
-redressing past discrimination in employment opportunities
-improve access for the designated groups
-to foster a climate of equity, to implement positive policies
Legal Basis of the Employment Equity Act
-identify and removing systemic barriers that affect the four designated groups
-Employment Equity Act achieves equality in the workplace
-the act governs private sector employers under federal jurisdiction
-it requires employers and Crown corps that have 100+ employees and are regulated under the Canada
Labour Code to implement employment equity
Employment Equity Planning in the Organization
Step 1: Senior Management Commitment
-the business leader can issue written policies to describe the orgs commitment to employment equity
-explain what employment equity is, reason for the program, implications for current/future employees
-info sessions, workpalce posters, departmental or group meetings, newsletters, employee handbooks
Step 2: Data Collection and Analysis
-assessment of employment practices and policies
-permits employers to gather data on members of designated groups with the consent of employees
Step 3: Employment Systems Review
-personnel activities like recruitment, hiring, training, development, promotion, job classification,
discipline, termination
Step 4: Establishment of a Work Plan
-concrete goals like numerical goals with time frames
-programs aimed at achieving the estimated goals
-planned changes in hiring, training, promotion
-methods of monitoring and evaluating the program implementation
Step 5: Implementation
-success of plan implementation depends on the clear definitions of roles and responsibilities, training
and effective communication
-plan strategies may be altered or terminated when the results arent achieved
Step 6: Evaluation, Monitoring, Revision
-progress reports are provided to all members to communicate plan initiatives and outcomes

Advocates and Opponents of Employment Equity

Preferential treatment- whenever an injustice is done, just compensation or reparation is owed to the
injured party or parties
-underlying rationale for this is compensatory justice
Reverse discrimination- when any preference is given to minorities, women or other groups,
discrimination may occur against those in the majority
-employment equity has practical business value in customer relations, especially for makers of
consumer goods and providers
-the diversity programs constitute a competitive advantage or used as competitive weapons
Pay Equity
Defn- refers to two diff issues; the legislation and the principles behind it
-objective of pay legislation is to eliminate the wage gap b/n men and women
-pay equity refers to the equal pay for equal work;
-and equal pay for work of equal value or comparable worth
-workers doing the same job should receive the same pay
-male and female workers must be paid the same wage rate for jobs of a similar nature even though
they may have different titles (nurses aide and orderly)
-workers should receive the same pay if those diff jobs have equal inherent worth
-comparisons are based on the amount and type of skill, effort, responsibility needed
Ch 16- Employee Stakeholders: Privacy, Safety, and Health
Right to Privacy in the Workplace
-the increase in workplace monitoring has led to new ethical considerations
-privacy includes the right to be left alone, the right to autonomy
-claim of individuals/groups to determine when, how and to what extent info about them can be
communicated to others
-info is stored in federal agencies, provincial agencies, local departments and businesses
-Canadians are protected by 2 federal privacy laws;
-Privacy Act and PIPEDA
-Privacy Act places limits on the collection, use and disclosure of personal info
-allows Canadians to correct personal info as needed
-PIPEDA applied to the commercial activities and employment relationships
Three main issues that are important of data collecting:
Collection and Use of Employee Information by Employers
-personal info includes any factual or subjective info
-controlling a persons personal info means controlling the collection and use of that info
-PIPEDA is aimed at controlling employers behaviour with regard to the collection of the data
PIPEDA requires that companies must obtain consent for use of info, except for specific circumstances;
-companies can use personal info only for the purpose that they gave consent to
-companies must limit the collection/use of info to purposes that the person would deem

appropriate for use

-individuals have a right to access the personal info
-businesses must conform to the law
The individual must be aware of the fact that the company is using their personal info
-the purpose behind data collection
-the recipients of the personal info, and the nature of the privacy controls
Steps in developing a system:
Appoint a compliance teamdetermine who is responsible for ensuring compliance
Assess existing privacy policiesensure policies are in compliance with PIPEDA
Adopt a privacy code or privacyit will become the orgs public statement about its privacy standards
Conduct a personal info practices auditwhat prsonal info is collected, how its used, how long its kept
Assess purposes for use and disclosureensure the info is for reasonable use
Assess existing info on fileindividuals have the right to access their personal info
Identify when, where, what kinds of consents are requiredinstruments for obtaining consent must be
designed, as well as the form of consent (express, opt-out, implied consent)
Assess collateral collection and uses of personal inforequired to ensure uses are reasonable and
necessary to achieve the purpose
Implement organizational protocolspolicies to oversee approvals for all info collection
Plan for regular compliance auditsassess how the org is conforming to policies
-companies need to be careful not to misuse the information collected
-the employer need to understand that the info collected isnt a commodity to be exchanged or sold
-employees should know what info is being stored, and have the chance to correct any info
Testing of Employees
Integrity Testing: aka honesty tests
-done to stem employee theft, to avoid negligent hiring suits
-to screen employees in a cost effective way, to replace polygraphs
-the questions asked usually require simple yes or no answers
-the tests are inexpensive, quick to administer, and easy to grade
Drug Testing
-businesses are reluctant to conduct drug tests due to invasion of moral issue/privacy
-inaccuracy of these tests, negative impact on employee morale
-tests only show the use of it, not abuse
-is costly; management, employee and unions oppose this
-the Canadian Human Rights Commission banned all drug testing on employees, though random alcohol
testing is still allowed
-employees that are substance abusers create higher financial burdens in compensation claims,
accidents, negligence in their work
Arguments for Drug Testingemployers have the right to protect their own employees
-they are responsible to the general public in providing safe workplaces

Arguments against Drug Testinginvasion of privacy, and the accuracy of the drug tests
-do employers have a right to know if they employees use drugs
Guidelines for Drug Testing
-management shouldnt discipline someone for refusing to take a drug test
-the tests should only be used when there is a legit suspicion of abuse
-focus of the test should be placed on-the-job performance only
-if an employees status is going to be affected by the outcome of a drug test, the confirmatory test
should be conducted
-privacy of the employee is to be respected
Monitoring Employees on the Job
Employee monitoring includes recording phone calls, voice mail, reading computer files, taping them
-Internet is often looked at; e-mails
-monitoring is an invasion of privacy, and also unfair treatment
-can cause stress and tension, low morale, job insecurity
-in response to alleged employee crimes, employers have placed cameras in pinholes in walls, LD
cameras for overseas operations, and video evidence
Policy Guidelines on the Issue of Privacy
Steps that management may consider taking to be responsive to employee stakeholders:
Prepare a privacy impact statementanalyze the implications to which all systems are subjected
Construct a comprehensive privacy planensure privacy controls are integrated at the beginning
Train employees who handle personal infoso theyre aware of the importance of protecting privacy
Make privacy a part of social responsibility programsmake employees aware of it
Chief Privacy Officer (CPO)- responsible for monitoring, protecting the private info held by firms
Workplace Health and Safety
Occupational injury- any cut, fracture, sprain, amputation from a workplace incident
-workers involvement in this can be direct or indirect
Occupational illness- any condition caused by the work environment
-varies from acute to chronic
Role of the Government
-enforce occupational health and safety legislation
-conduct workplace inspections
-disseminate health and safety info
-promote training, education and research
-resolve workpalce disputes regarding occupational health and safety
-the CCOHS is a federal dpt corp that enhances workplace health and safety through supporting efforts
to eliminate work related illnesses and injuries
-it gives info and advice that promotes safe working environments
-Bill C-45 imposes criminal liability on corps that fail to take reasonable measures to protect employee
and public safety
The org can be held criminally liable:

-as a consequence of actions by senior officers who oversee day to day operations but who may
not be directors
-exec officers who intentionally commit crimes to benefit the org
-those who are aware of offences but dont take action to stop them
-those who show a lack of care that constitutes criminal negligence
Role of the Employer
-establish a joint health and safety committee
-take appropriate precautions to ensure the workplace is safe
-train employees, supply personal protective equipment
-report all critical injuries to the proper gov department
-appoint a supervisor to ensure safe working conditions
-communicate to employees the health and safety requirements
-maintain records, document and annual summary of work
-employers must report to the Workers Compensation Board
-employees injured at work can receive benefits in the form of a cash payout or wage loss payments
Role and Rights of Employees
-work in compliance with occupational health and safety acts and regulations
-use personal protective equipment
-report workpalce hazards and dangers
-work in a manner as required by the employer
Occupational Health and Safety Act outlines 3 main rights of all employees to a safe workplace:
-right to refuse unsafe or hazardous work
-right to participate in the workplace health and safety activities
-right to know, or the right to be informed about work place safety
Workplace Hazardous Materials Information System (WHMIS) requires employers to:
-label containers of hazardous materials
-provide MSDSs with additional info
-provide education so employees understand the hazards
Workplace Violence
-there has been increased gov legislation
-employers are to write a report on the incident, describing what action and what change will occur
Promoting Health and Safety in the Workplace
-joint safety and health committees
-lifestyle info; flexible working hours; employee involvement initiatives
-active lifestyle programs; work-life balance initiatives; self directed work teams
Safety Programs
-maintain an employee-management safety committee with reps from management, each dpt,
employee representatives to investigate accidents and helping publicize the importance of safety

-leads to higher motivation to conform with the safety rules

-is a good idea for management to encourage employees to participate
-employees can involve by helping set safety standards, safety training
-assist with design of programs, establish safety incentives, participate in investigations
-employee handbooks should be given or placed somewhere everybody can access it
Employee Assistance Programs
-EAPS help with alcohol and drug abuse problems, as well as financial/emotional stress
-aging, legal problems, emotional, social difficulties
-aka broad brush EAP
-they should be a part of a comprehensive company plan to promote wellness
Family-Friendly Workplace
-they look out for the mental and psychological health of their employees
-there is an increase in corporate support for families in the workplace
-these programs bring issues of resentment developing among childless couples, family feuds at work
-due to these programs, it shows a change in the corporate culture
Ch 17- Employee Discrimination and Employment Equity
Challenges in the Labour Pool
Designated groups- women, Aboriginals, visible minorities, people with disabilities
Women
-they have both lower status and lower pay
-theyre underrepresented in semiprofessional occupations, management and board positions,
supervisors in crafts and sales and service personnel
-stereotyping and preconceptions of womens roles and abilities
-they hit the glass ceiling, and do not get accepted into the exec level culture
-there are extreme barriers for them to career advancement
Aboriginal or First Nations People
-underrepresented in the work force
-they face a huge educational challenge, big dropout rates
-employment is limited due to the small number of opportunities near their reserves
Individuals with Disabilities
-higher unemployment rate compared to the national average
-attitudinal barriers, physical demands, inadequate access to the technical and human support systems
Visible Minorities
-culturally biased aptitude tests, lack of recognition or foreign credentials, high language requirements
-foreign born visible minorities experience the greatest difficulty finding desirable work
Discrimination
Legal Protection
Canadian Charter of Rights and Freedoms
-aim is to balance individual and collective rights
Fundamental rights of all Canadians include

-freedom of speech, press, assembly, association, religion

-democratic rights
-right to move freely from province to province for residence or employment
-legal, equality, language rights
Canadian Human Rights Act
-ensures equality of opportunity and freedom from discrimination in the fed jurisdiction
-includes race, colour, ethnic origin, religion, age
-it protects the rights of Canadians but applies to a specific class or organizations; all fed gov dpts, Crown
corporations, businesses and industries under fed jurisdiction, insurance and communications cos
Canadian Human Rights Commission
-prohibits employment discrimination in federally regulated businesses, like race, religion, sex, age,
ethnic origin, marital status, handicap
-examines allegations of discrimination to establish greater equality
-it provides effective and timely mans for resolving complaints
-promotes knowledge of human rights, and helps reduce barriers in equality
-to file a complaint, the complainant must complete a written report first
-the CHRC rep assesses the facts and determines whether the claim is legitimate
-investigator gathers more facts and a report is submitted to the CHRC to recommend either
substantiation or nonsubstantiation
-if substantiated, the parties attempt to settle the matter, and if they cant a human rights
tribunal may be appointed
-the tribunal has the power to seek damages for the victim
Expanded Meanings of Discrimination
Direct Discrimination or Disparate Treatment
Disparate treatment- unequal treatment due to race, colour, sex
Indirect Discrimination: Adverse Effect or Disparate Impact
-all groups are to be treated equally, without regard for colour, sex or other traits
-employers may be justified in discriminatory policies if based on a bona fide occupational qualification
-any policy viewed as discriminatory must pass three criteria to support it is a bona fide occupl rqmt
-it must be rationally related to the requirements of job performance
-must be created in good faith
-reasonable necessary in order to accomplish a valid purpose
-BFOR is permissible if the employer can prove this discrimination is necessary for business operations
Systemic Discrimination
-occurs when problems of discrimination are embedded in institutional policies and practices
-thought the practice may apply to everyone, they create a distinction between groups of individuals
which disadvantage one group based on shared personal characteristics
To assess whether organizational policies harbor systemic barriers:
-is it job related
-is it consistently applied
-is it valid
-does it have a disparate impact
-is it a business requirement
-does it conform to human rights

Eg. Workplace environment that doesnt expressly discourage sexual harassment

-job descriptions that undervalue the work of positions traditionally held by women
-physical access that restricts those who are mobility impaired
Issues in Workplace Discrimination
Sex Discrimination
Moving into Professional/Managerial Positions
-male CEOs blamed glass ceiling on womens lack of experience and time
-female execs disagreed, saying the exclusionary corporate culture is the reason why they dont advance
Sexual Harassment
Quid pro quo harassment- type of sexual harassment where something is given/received for sthg else
Hostile work env harassment- employee perceives a hostile work env by uninvited sexually oriented
behaviours being present in the workplace
Corporate Responses to Sexual Harassment
-letters from CEO, workshops, training as to what constitutes sexual harassment
-worker orientation programs, films, role playing exercises, sexual harassment audits
-they may choose to educate employees more, reissue written policy
-make employees aware, update training programs, get input from women employees
Age and Religious Discrimination
-involves older workers being laid off to save money because younger workers can be paid less
-many companies require workers to sign waivers of their right to sue in order to receive severance pkgs
Reasonable accommodation- adapting employment policies so that no individual is denied benefits,
disadvantaged with respect to employment opportunities
-includes reallocating tasks, redesigning job duties, revising work schedules
-human rights tribunals across Canada require employers to demonstrate fleexibi.ity in accommodating
the needs of employee
Employment Equity
Defn- treatment of employees in a fair and nonbiased manner
-some objectives include eliminating employment barriers for the four designated groups
-redressing past discrimination in employment opportunities
-improve access for the designated groups
-to foster a climate of equity, to implement positive policies
Legal Basis of the Employment Equity Act
-identify and removing systemic barriers that affect the four designated groups
-Employment Equity Act achieves equality in the workplace
-the act governs private sector employers under federal jurisdiction
-it requires employers and Crown corps that have 100+ employees and are regulated under the Canada
Labour Code to implement employment equity
Employment Equity Planning in the Organization
Step 1: Senior Management Commitment

-the business leader can issue written policies to describe the orgs commitment to employment equity
-explain what employment equity is, reason for the program, implications for current/future employees
-info sessions, workpalce posters, departmental or group meetings, newsletters, employee handbooks
Step 2: Data Collection and Analysis
-assessment of employment practices and policies
-permits employers to gather data on members of designated groups with the consent of employees
Step 3: Employment Systems Review
-personnel activities like recruitment, hiring, training, development, promotion, job classification,
discipline, termination
Step 4: Establishment of a Work Plan
-concrete goals like numerical goals with time frames
-programs aimed at achieving the estimated goals
-planned changes in hiring, training, promotion
-methods of monitoring and evaluating the program implementation
Step 5: Implementation
-success of plan implementation depends on the clear definitions of roles and responsibilities, training
and effective communication
-plan strategies may be altered or terminated when the results arent achieved
Step 6: Evaluation, Monitoring, Revision
-progress reports are provided to all members to communicate plan initiatives and outcomes
Advocates and Opponents of Employment Equity
Preferential treatment- whenever an injustice is done, just compensation or reparation is owed to the
injured party or parties
-underlying rationale for this is compensatory justice
Reverse discrimination- when any preference is given to minorities, women or other groups,
discrimination may occur against those in the majority
-employment equity has practical business value in customer relations, especially for makers of
consumer goods and providers
-the diversity programs constitute a competitive advantage or used as competitive weapons
Pay Equity
Defn- refers to two diff issues; the legislation and the principles behind it
-objective of pay legislation is to eliminate the wage gap b/n men and women
-pay equity refers to the equal pay for equal work;
-and equal pay for work of equal value or comparable worth
-workers doing the same job should receive the same pay
-male and female workers must be paid the same wage rate for jobs of a similar nature even though
they may have different titles (nurses aide and orderly)
-workers should receive the same pay if those diff jobs have equal inherent worth
-comparisons are based on the amount and type of skill, effort, responsibility needed

Ch 12- Consumer Stakeholders: Product and Service Issues

2 Central Issues: Quality and Safety
Issue of Quality
-rise in family income means demands are higher
-no one has extra time to wait at home for service people to show up
-Internet, global competitiveness contribute to this
-to increase value, firms try to give higher quality than their competitors for the same price, offer the
same quality at a lower price, or some combo of both
-quality includes service, as well as products
Eight critical dimensions of product or service quality:
Performanceproducts primary operating characteristics
Featuressupplement their basic functioning
Reliabilityprobability of a product malfunctioning
Conformanceextent to which the product or service meets established standards
Durabilityproduct life
Serviceabilityspeed, ease of repair
Aestheticslooks, feels, tastes
Perceived qualityhow they think the product performs
Contractual theory- contract between the firm and the customer
Due care theory- relative vulnerability of the customer
-customers must depend on the firm providing the product or service to live up to the claims
Social costs view-if a product causes harm, the firm should pay the costs of any injurt even if the firm
met the terms of the contract
Issue of Safety
-manufacturers today are held responsible for all products placed on the market
-the challenge is to make products as safe as possible, while making them adorable and useful
-the rise in gmos in food and living near toxic land, food scares
-charges can be based on one or more allegations
-may be charged that the prod was improperly manufactured
-if the product was manufactured properly, its design could have been defective in the
alternative designs or devices
-producer failed to provide satisfactory instructions and warnings
-producer failed to foresee a reasonable misuse of the prod and warn against it
Product Liability
-anyone in the value chain of a product is liable for harm caused to the user if the product as sold was
unreasonably dangerous because of its defective condition
-applies to anyone involved in the design, manufacture, or sale
-product liability in Canada is governed by contract law and negligence law
-in addition to proving strict liability, the plaintiff must also prove the products defect arose due to the
defendants negligence as well

Absolute liability- the manufacturer is liable for damages even if it didnt have a way of knowing the
product might have caused a problem later
-it frequently involves cases involving chemicals or drugs
-firm could be held liable for side effects or health problems years later as well
Delayed manifestation cases/market share liability- situations where delayed reactions to products
appear years later
Product Tampering and Product Extortion
-tainted pills, wrong product information, tampered best before dates
Health Canada
-it is a federal gov dpt that acts in cooperation with provincial bodies to protect the health of Canadians
-administers the FDA and gives warnings on foods, drugs, medical devices
-info and policies on GM foods, nutrition labeling
-monitors health and safety risks related to the sale and sue of drug products, devices, pesticides
-administers the Product Safety Programme (PSP) by researching, assessing safety hazards associated
with consumer products, cosmetics, new chemical substances, products of biotechnology
-promotes safe use of products through raising consumer awareness
-chemical hazards, flammability hazards, mechanical hazards
Food and Drug Safety Administration in Canada
Healthy Environments and Consumer Safety Breach (HECS)
-promotes safe living, working, recreational environments
-reduce health risks posed by environmental factors
-promote initiatives to reduce and prevent the harm caused by tobacco
-regulate tobacco and controlled substance
Health Products and Food Branch (HPFB) minimizes health risk factors to Canadians while maximizing
the safety provided by the regulatory system for health products
-promotes conditions that enable Cdns to make healthy choices
Canadian Food Inspection Agency (CFIA)
-protects consumers by contributing to food safety, protection of plants, health of animals in Canada
-inspects meat processing facilities, inspecting borders for foreign pests and diseases, conducting food
investigations and recalls
US Food and Drug Administration(FDA)
-goals are the same as Health Canada, as well as to promote public health by reviewing clinical research
-ensure foods are safe, wholesome, sanitary, properly labeled
Businesss Response to Consumer Stakeholders
Consumer Affairs Offices
Basic Missionheigten management responsiveness to consumer stakeholders
-two key roles: role of consumer advocate in the co, and the role of consumer specialist making

managerial recommendations that mesh well with consumers and the co

Essential Functionsestablish a comprehensive, complete, accurate database that assess consumer
satisfaction and dissatisfaction, like billing, repair services
Audit the companys programs
Recommend specific consumer programs, policies
Establish programs to ensure effective communication
Four principal factors that determine the success or failure of consumer affairs offices
-office should be located close to the chief executive
-have access to all relevant info in the company about consumers
-info about consumers should be quantified
-managers should be skilled in designing performance measurement tools to evaluate what people
throughout the company are doing
Product Safety Offices
-three factors to the need for greater org in handling the product safety issue
-products today may be made of exotic materials
-there is also the subtlety of hazards that can be generated during product use
-there are coordination problems in manufacturing organizations that can inhibit communications
among departments
Levels at Which to Locate Product Safety Offices
-divisional and corporate level
-division such as manufacturing, quality control, packaging
-at the corporate level, the product safety officer would most likely servie in a liaison role with the
divisions; supervision of safety education
Other Functions of a Product Safety Office
-helping to enforce financial and nonfinancial rewards
-helping with product safety litigation
-regulatory liaison
-product safety committees
-periodic safety audits
-contingency plan for product recalls
Total Quality Management Programs
TQM- all of the functions of the business are blended into a holistic, integrated philosophy built around
the concept of quality, teamwork, productivity
-premise is the customer is the final judge of quality
-customer expectations are converted to standards and specifications
Six Sigma
-body of methodologies and techniques
-statistical measure of variation from the mean; higher values of sigma mean fewer defects

-3.4 defects per million

-represents a philosophy that stresses the importance of customers as well as careful measurement
Ch 11- Consumer Stakeholders: Info Issues and Responses
CRM- the ability of an org to effectively identify, acquire, foster and retain loyal profitable customers
-in practice though, there is a lot of talk and not enough action
The Paradox of the Customer Revolution
-putting the customer first is no longer sufficient; tech advances have allowed them to not only demand
what they want, but they also expect to get it
-they have a wide range of choices to choose from
-companies have evolved to serve customers on a one to one basis
The Consumer Movement
Consumers Magna Carta- consists of the four basic consumer rights:
Right to safety
Right to be informed related to marketing and advertising function
-what a product is, how it is to be used
Right to choosethe assurance that competition is working effectively
Right to be heardeffectively communicating to business their desires
Consumerism- social movement seeking to augment the rights & powers of buyers in relation to sellers
-a set of activities of ind consumer orgs and consumer activists designed to protect the consumer
Product info- includes advertising, packaging, labeling
Product Information Issues
-companies want to portray their products in the most positive light, so they may sometimes paint a
positive portrait that can easily cross the line into misinformation regarding the prods attributes
-thus Consumers Union exists to protect the consumers interests
-there are also online editions of Consumer Reports
-in Canada, the Competition Act is intended to prohibit false or misleading advertising
Advertising Issues
-opinions are diverse as to whether advertising is beneficial or detrimental as a business function
-advertising heavily can help attract shoppers to retail stores, giving the they-must-be-doing-somethingright logic
-the advertising can promote efficiency
-it can stimulate competition and make info that consumers use in comparison buying
Clear information- direct and straightforward
Accurate information- communicates full truths
Adequate information- gives potential purchasers with enough info to make the best choice
-most consumers today expect that business advertises to persuade them to buy their products
Advertising Abuses
Ambiguous advertising- something about the product/service isnt made clear
Weasel words- words that are vague; that cos could use for defense as not misleading

Eg. Help, Big

Concealed facts- the practice of not telling the whole truth
Exaggerated claims- claims that cant be substantiated by any kind of evidence
Puffery- hyperbole that refers to the use of general superlatives
-making it seem bigger than it actually is (breakfast of champions)
-exaggerated product claims to induce people to buy things that do them no good;
-it results in the loss of advertising efficiency
-drives out good advertising
-results in consumers losing faith in the system
Psychological appeal- persuading on the basis of human emotions rather than reason
Specific Controversial Advertising Issues (7)
Comparative advertising- comparing a firms product with the product of a competitor
Exploitive advertising- the notion of employing offensive images in advertisements
Eg. Benetton, Calvin Klein
Advertising to children- on weekend mornings, weekday afternoons
-the bulk of food advertising on childrens TV is fast food, candy, soft drinks
-more than 2/3 of Internet sites targeted at children rely on advertising for their revenue
-the Media Awareness Network works with MNET to promote media and Internet education by
producing online programs and resources that discusses the ethics of marketing toys to children
Advertising of Alcoholic Beverages- 1996 CRTC revised regulations governing the advertising of alcoholic
beverages in Canada
-ads cant be directed at those under the legal drinking age
-thy cant influence nondrinkers
-cant imply that alcohol is essential to the enjoyment of an activity
-cant establish the product as a status symbol
-the hard liquor industry is now turning to the Internet, using games to attract consumers
-in Canada, tobacco cos must abide by the Tobacco Act, regulating the manufacture, sale,
labeling and promotion of tobacco products
Health and Environmental Claims- advertising and labeling practices that entail product claims related to
health and environmental safety
-diet products are often offenders in this category, containing more bad ingredients than the
ones that theyre promoting
-Consumer Packaging and Labeling Act and the Competition Act reflect that those who make
environmental claims are responsible for ensuring the claims are accurate
-claims that are ambiguous shouldnt be used
-they should indicate whether theyre related to the product of the packaging materials
Ad creep- is the way advertising can increasingly be found everywhere one looks
-it generates more ad creep because people become number to messages in traditional places
so unique new venues are sought, to get the consumers attention
Warranties

Defn- essential when marketing by mail

-if companies siply offer complete satisfaction with no fine print, the warranty problem isnt an issue
The Competition Bureau
-two major activities of the Competition Bureau are
-to maintain free and fair competition in the economy;
-to protect consumers from unfair or misleading practices
-it is responsible for administration of the Competition Act, Consumer Packaging and Labeling Act
-promotes and maintains fair competition so Cdns can gain from lower prices
-aimed at creating equity in the marketplace, including consumers and producers
-informs companies of what they can and cant do under competition law
-promotes greater competition in the business sector
-seeks to rectify anticompetitive activities; prosecutes those who violate the Competition Act
-it monitors advertising; if it decides an ad is false/misleading, it may order the advertiser to withdraw
the ad or give them a fine to pay
Self regulation- control of business conduct by the business itself rather than by the gov
Types of Self-Regulation
Self discipline- firm controls its own advertising
Pure self regulation- the industry controls advertising
Co-opted self-regulation- the industry involves nonindustry people in the development of norms
Negotiated self-regulation- industry negotiates the development of norms with some outside body
Mandated self regulation- industry is ordered by the gov to develop, use and enforce norms
-Advertising Standards Canada (ASC) maintains community confidence in advertising
Ch 9- Ethical Issues in the Global Arena
Transnational economy- if business expects to establish and maintain leadership in one country, it must
strive to hold a leadership position in all developed markets
The New, New World of International Business
Concepts of Global Business
Internationalization- process by which firms increase their awareness of the influence of international
activities on their future and conduct transactions with firms from other countries
Eg. Export, joint venture, acquisition
Globalization- economic integration of the globe of national economies into one economy (free trade)
Backlash Against Globalization
-extreme rightists, environmentalists insist on saving the poor people of developing countries from
economic development
-theyre special interest groups committed to halting the expansion of global trade
-the globalists advocate open markets with private firms moving freely across the globe
-antiglobalists protest the expansion and greed of corporate global enterprises
MNCs and the Global Environment
-MNC- a business that has direct investments in at least two diff countries

-they control assets operated in 2+ countries

-are global companies when they operate in many countries around the world
-most MNCs have headquarters in developed countries; the home country
Changed Scope and Nature of US-Based MNCs
Less developed countries (LDC)-is a challenge when MNCs when they operate in here
-are likely to be criticized for American imperialism in struggling economies by antiglobalists
Underlying Challenges of Operating in a Multinational Environment
Corporate Legitimacy
-it must fulfill its social responsibilities; economic, legal, ethical, philanthropic
-differences b/n the values of managers who live in the two countries could post legitimacy problems
-interests of MNC and those of the host country may conflict
-while the MNC looks to optimize globally, host countries optimize locally
-MNCs have difficulty achieving legitimacy because it is a reaction to the conflicts between the interests
of the firm and those of the host country that place the MNC in a no-win situation
Differing Philosophies Between MNCs and Host Countries
-philosophy of Western industrialized nations focus on growth, efficiency, specialization, free trade
-LDCs focus on equitable income distribution, increased economic self-determination
MNC-Host Country Challenges
Facing Cultural Differences
-MNCs inability to cope with the foreign cultural environment
Business and Government Differences
-interaction of the business and gov sectors
-governments influence
-it isnt uncommon for conflicts to arise between host country governments and MNCs in relation to
control over operations in the host country and the division of profits, regulation of tech transfer
Management and Control of Global Corporations
-organizational structure and design, human resource management
Eg. Where a firm has licenses in Country A, joint ventures in B, countertrades in C
Exploration of Global Markets
-expansion into new foreign markets
-developing Third World Markets
Ethical Issues in the Global Business Environment
-production and operations, marketing, finance, management
-fair treatment of stakeholders; employees, customers, community, competitors
-product safety, plant safety, advertising practices, HR management, environmental problems
Questionable Marketing and Plant Safety Practices
Questionable Marketing: Infant Formula Controversy
-Nestle supplying Africa with infant formula, giving them a needle to stop breast-feeding
-caused mothers to over-dilute the formula, thus babies die
Plant Safety and the Bhopal Tragedy

-gas leak killed more than 2000 people and injured 200 000 others
-due to the fact that people of developing countries are unaware of dangers of the new tech
Sweatshops and Labour Abuses
-sweatshops are characterized with child labour, low pay, poor working conditions, worker abuse, health
and safety violations
-the Ethical Trading Action Group (ETAG) is an anti-sweatshop coalition
-Union of Needletrades, Industrial and Textile Employees (UNITE) fights sweatshops
-Maquila Solidarity Network (MSN) is also an anti-sweatshop movement in Toronto
Corruption, Bribery, Questionable Payments
-bribes often include huge sums of money
Arguments for and Against Bribery
Fornecessary for profits
-everybody does it
-is accepted practice in many countries
-bribes are forms of commissions for conducting business between cultures
Againstbribes are wrong; illegal in NA
-one shouldnt have to compromise their beliefs
- managers shouldnt deal with corrupt govs
-once these demands start, they dont stop
-one should take a stand for honesty
-those that receive bribes are the only ones who benefit
-bribes create dependence on corrupt individuals
-bribes deceive shareholders and pass on costs to customers
Legislation
-Foreign Corrupt Practices Act (FCPA) makes it a criminal offence for an American corp to offer or give
payments to get or maintain business
-specifies a series of fines and prison terms
Grease payments- payments to officials to get them to do what theyre supposed to anyways
-are not illegal, but bribing is
Bribery Trends: The Growing Anticorruption Movement
Transparency Internationalis the worlds foremost anticorruption lobby
-Corruption Perception Index to rank countries
OECD Antibribery Initiativesagreed to ban intl bribery and to ask each member to introduce laws
-makes it a crime to offer, compromise, or give a bribe to a foreign public official to obtain
international business deals
Improving Global Business Ethics
Balancing and Reconciling the Business Ethics Traditions of Home and Host Countries
-ethical imperialism; MNC should continue to follow its home countrys ethical standards even while

operating in another country

-cultural relativism; foreign direct investors such as MNCs following the host countrys ethical standards
Typology of Global Types
Foreign Country Typeconforms to local customs and ethics of the host country
Empire Typeapplies its domestic or home country standards without making any serious adaptations
to the host country
Interconnection Typethe companies regard the international sphere as differing significantly from the
domestic sphere
Global Typethese firms view the domestic or home standards as not relevant/applicable
Integrative Social Contract Theory (ISCT)
-is an approach to navigating cross-national cultural differences
Hypernorms- transcultural values
-they rep values that are acceptable to all cultures and organizations
Consistent norms- are more culturally specific
Moral free space- norms that are inconsistent with at least some other legitimate norms existing in
other economic cultures
Illegitimate norms- norms that are incompatible with hypernorms
-only the interconnection type satisfies ISCT by acknowledging both universal moral limits and the ability
of communities to set moral standards of their own
Four Actions for Improving International Business Ethics
Global Codes of Conduct
Corporate global codesownership and investment, corporate facilities, relationships with employees,
product quality, sharing of technology, accounting, financial records, diff bus practices
Global codes and standards set by intl orgsintl orgs have developed global codes that they aspire
companies to adopt and abide by
Ethics and Global Strategy
-the ethical dimensions of multinational corporate activity should be considered into top level strategy
formulation and implementation
Suspension of Activities
-a MNC may sometimes encounter unbridgeable gaps between ethical values of its home&host country
-MNC should consider suspending activities in the host country
Ethical Impact Statements
-periodically assess the companys impacts
-social audit so they can identify, analyze the effect of an orgs operations on society
-ethical impact statements attempt to assess the underlying moral justifications for corp actions
Fundamental International Rights
The right to freedom of physical movement
The right to ownership of property

The right to freedom from torture

The right to a fair trial
The right to nondiscriminatory treatment
The right to physical security
The right to freedom of speech and association
The right to minimal education
The right to political participation
The right to subsistence
Seven Moral Guidelines
MNCs should do no intentional, direct harm
MNCs should produce more good than bad
MNCs should contribute to the host countrys development
MNCs should respect the human rights
MNCs should pay their fair share of taxes
MNCs should respect the local culture and work with it, not against it
MNCs should cooperate with the local government