CHAPTER 2: BUSINESS ETHICS AND SOCIAL RESPONSIBILITY Chapter Overview Many firms are concerned about the environment and their societies Sometimes that means growing more slowly or reducing short-term profits for longer, sustained benefits Although most organizations combine ethical behavior with profitable operation, some have faced ethical lapses Ethical failures led to lawsuits and judgments against firms The image of the CEO suffered amid reports of executives pocketing millions of dollars Now, both the government and companies have renewed their efforts to conduct themselves in an ethical manner Firms began to formulate standards and procedures for ethical behavior and recognize the impact of setting a good example While the aim of business is to serve customers at a profit, companies today try to give back to customers, society, and the environment Sometimes they face difficult questions When does self-interest conflict with society’s and customers’ well-being? And must profit-seeking conflict with right and wrong? Glossary of Key Terms Boycott: effort to prevent people from purchasing a firm’s goods or services Business ethics: standards of conduct and moral values involving right and wrong actions arising in the work environment Code of conduct: formal statement that defines how the organization expects employees to resolve ethical issues Conflict of interest: situation in which an employee must make a decision about a business’s welfare versus personal gain Consumerism: public demand that a business consider the wants and needs of its customers in making decisions Corporate philanthropy: act of an organization making a contribution to the communities in which it earns profits 41 Discrimination: biased treatment of a job candidate or employee Equal Employment Opportunity Commission (EEOC): government agency created to increase job opportunities for women and minorities and to help end discrimination based on race, color, religion, disability, gender, or national origin in any personnel action Family leave: granting up to 12 weeks of unpaid leave annually for employees who have or adopt a child, are becoming foster parents, are caring for a seriously ill relative or spouse, or are themselves seriously ill Green marketing: marketing strategy that promotes environmentally safe products and production methods Integrity: adhering to deeply felt ethical principles in business situations Pollution: environmental damage caused by a company’s products or operating processes Product liability: responsibility of manufacturers for injuries and damages caused by their products Recycling: reprocessing of used materials for reuse Sarbanes-Oxley Act: federal legislation designed to deter and punish corporate and accounting fraud and corruption and to protect the interests of workers and shareholders through enhanced financial disclosures, criminal penalties on CEOs and CFOs who defraud investors, safeguards for whistle-blowers, and establishment of a new regulatory body for public accounting firms Sexism: discrimination against members of either sex, but primarily affecting women Sexual harassment: unwelcome and inappropriate actions of a sexual nature in the workplace Social audit: formal procedure that identifies and evaluates all company activities that relate to social issues such as conservation, employment practices, environmental protection, and philanthropy Social responsibility: business’s consideration of society’s well-being and consumer satisfaction, in addition to profits 42 Stakeholders: customers, investors, employees, and public affected by or with an interest in a company Whistle-blowing: employee’s disclosure to company officials, government authorities, or the media of illegal, immoral, or unethical practices committed by an organization Learning Goal 1: Explain the concepts of business ethics and social responsibility Annotated Lecture Outline Notes: _ _ _ _ _ _ _ _ _ _ _ _ _ Opening Vignette: Wal-Mart: Big Retail Goes Green Wal-Mart plans to achieve sustainability—a way of conducting business that reduces its environmental impact Wal-Mart built experimental stores that use innovative technologies to reduce waste and energy use Wal-Mart sold 100 million compact fluorescent light bulbs a considerable energy savings over traditional incandescent bulbs Yet, sustainability does not mean that Wal-Mart is veering away from profits 43 Lecture enhancer: Describe the benefits to the environment, society, and WalMart CONCERN FOR ETHICAL AND SOCIETAL ISSUES Business ethics a Business ethics are the standards of conduct and moral values governing actions and decisions in the work environment b How will a decision affect the environment? customers? employees? c These issues are part of social responsibility—businesses’ consideration of society’s well-being and consumer satisfaction, in addition to profits d Businesses must balance between doing what is right and doing what is profitable Business ethics in practice a In business, deciding what is right or wrong is not clear cut b A company has responsibilities to: i ii consumers, employees, investors society c Conflicts can arise in serving each group d Business ethics are shaped by: i weighing right and wrong before taking action ii the ethical climate—a company’s stated beliefs and real actions iii a code of conduct, a formal statement that defines how the 44 PowerPoint Slide organization expects employees to resolve ethical issues iv a framework to encourage high ethical standards from workers Answers to Assessment Check To whom businesses have responsibilities? Customers, employees, investors, and society If a firm is meeting its responsibilities to others, why ethical conflicts arise? Ethical conflicts arise because business must balance doing what is right and doing what is profitable Learning Goal 2: Describe the factors that influence business ethics Notes: _ _ _ _ _ _ _ _ _ _ _ _ _ THE CONTEMPORARY ETHICAL ENVIRONMENT The ethical environment a Business ethics are in the spotlight as companies have to work harder to earn 45 PowerPoint Slide public trust b In a survey, 95 percent of CEOs replied that society has greater expectations of business than it did five years ago i Most managers have led companies without breaking the rules; some have documents that state the company’s beliefs Lecture enhancer: To what four groups is this firm responsible? Which group was mentioned first? Last? How does this order strengthen the message in the credo? ii Retailer Target says that its “DNA” is its commitment to the community and the environment c Not all firms meet ethical standards i The National Business Ethics Survey found that over half the employees surveyed “witnessed an act of misconduct in the past year.” ii The survey found that employees often did not report misconduct New government regulations a Sarbanes-Oxley Act i The Sarbanes-Oxley Act of 2002 establishes new regulations for securities trading and accounting practices 46 ii Companies must publish their code of ethics and inform public of changes iii It may encourage companies to write codes and guidelines b U.S Sentencing Commission i The U.S Sentencing Commission institutionalizes ethics compliance programs and sets high ethical standards for corporate conduct Lecture enhancer: Name a company in the news for not following these steps How about a company that has followed them in a newsworthy way? How companies regulate themselves c Ethics compliance officers: i monitor conflicts of interest ii deter wrongdoing iii train employees to spot fraud iv investigate sexual harassment and discrimination d Many companies have a 3-pronged approach to addressing ethics and social responsibility i engage in corporate philanthropy ii anticipate and manage risks iii identify opportunities to create value by doing the right thing Individuals Make a Difference 47 PowerPoint Slide b Individuals can affect ethical expectations and behavior c Some workers act illegally or unethically on the job i The National Business Ethics Survey identifies behaviors such as lying, misreporting hours, and Internet abuse ii Nearly every employee wrestles with ethical questions c Technology expands the range and impact of unethical behavior i Computers allow anyone with access to steal data or shut down a system d Employees face ethical questions and rationalize questionable behavior by believing that “everyone does it.” i Some act unethically when forced to meet performance quotas ii Others avoid actions that conflict with personal values and morals Answers to Assessment Check What role can an ethics compliance officer play in a firm? To deter wrongdoing and ensure that ethical standards are met What factors influence the ethical environment of a business? Individual ethics and technology Learning Goal 3: List the stages in the development of ethical standards 48 Notes: _ _ _ _ _ _ _ _ _ _ _ _ _ Development of individual ethics PowerPoint Slide Lecture enhancer: Ask for an example of an employee whose actions reflected one of the three stages of moral development a People develop ethical standards through three steps: preconventional, conventional, and postconventional b In the preconventional stage: i They consider their own needs and desires when making decisions ii d They obey external rules due to fear of punishment or hope for rewards In the conventional stage: i They respond based on their duty to others, including family, coworkers, and organizations 49 ii iii They decide what is acceptable based on the influence of these groups Self-interest plays a key role e In the postconventional stage: i They move beyond selfinterest by thinking of the needs of society ii They rely on ethical principles to decide what is right and to take action Business Etiquette: “The Do’s and Don’ts of Donating at Work” When should you agree to donate? When should you say no? A person’s stage in ethical development is affected by: a Experience b Family, educational, cultural and religious background c Environment within the company Answers to Assessment Check What is the preconventional stage in the development of ethical standards? The individual looks out for his or her own interests and follows rules out of fear of punishment or hope of reward What is the difference between the conventional and the postconventional stages? Conventional stage: the person considers the interests and expectations of others; Postconventional stage: the person considers personal, group, and societal interests Learning Goal 4: Identify common ethical dilemmas in the workplace 50 choices, promoted truth in advertising, and monitored unethical activities and fraud Challenges include assuring product safety since contamination leaks in, causing illness or even death Also, all communications with customers—from salespeople’s comments to warranties and invoices— must be controlled to clearly and accurately inform customers.  Businesses that fail to comply with truth in advertising face scrutiny from the FTC and consumer protection organizations What are the five major areas in which companies have responsibilities to their employees? What types of changes in society are now affecting these responsibilities? Promoting workplace safety, addressing quality-of-life issues, ensuring equal opportunity in hiring and on the job, and providing a work environment with no tolerance for age discrimination, sexual harassment, or sexism Today, employees have to balance time spent at work with time spent on personal and family issues such as caring for young children and elderly parents 10 Identify which Equal Opportunity law (or laws) protects workers in the following categories: a Parents who are adopting a child and need time off  Family and Medical Leave Act b A National Guard member who is returning from deployment overseas  The Vietnam Era Veterans Readjustment Act c A job applicant who requires the use of a wheelchair  The Americans with Disabilities Act d A person whose heritage is Native American  The Civil Rights Act (1964)—Title VII e A woman who is pregnant  Pregnancy Discrimination Act f A woman who has been sexually harassed on the job The Civil Rights Act (1991) 11 How does a company demonstrate its responsibility to investors and the financial community? One way is to produce sound profits But shareholders, investors, and financial partners also demand that a business acts legally and ethically, treats its employees fairly, reports its earnings and losses accurately, and considers the greater good when making decisions Failure to so can result in substantial losses to investors as well as to consumers and the public at large 73 Projects and Teamwork Applications Have students share the individual personal code of ethics that they wrote How did the codes differ among classmates? What values or beliefs did many students stress? Which ones were left out? Ask students which responsibility to share their findings How far does the firm’s ethical awareness, ethical education, ethical actions and ethical leadership go? Students can give examples Have students discuss the findings of their social audit Do they match the firm’s culture of ethics? Ask students whether they agree with the statement about how common it is to exaggerate in advertising Is it just part of the nature of advertising to embellish and elaborate? Or can it truly be considered deception and misrepresentation Students can give personal examples of negative experiences as a consumer How did they decide to handle this situation? How did they weigh the issues and come up with a balanced solution? Web Assignments Ethical standards Visit the Web site listed here It summarizes the ethical standards for all employees of the Walt Disney Company Review the standards, and then prepare a report relating Disney’s ethical standards to the material on corporate ethics discussed in the chapter http://corporate.disney.go.com/corporate/conduct_standards2.ht ml Best places to work Each year Working Mother magazine compiles a list of the best places to work for working mothers Go to the magazine’s Web site (http://www.workingmother.com) and click on “Best Companies.” Which employers made the top ten? What criteria does the magazine use when preparing its list? Climate change Companies throughout the world are adopting new policies and changing existing ones to deal with the issue of climate change Visit the Web site of a company you believe is committed to responding to climate change, or access the sites listed here Write a report on that firm’s efforts to protect the environment http://www.jpmorganchase.com/cm/cs? 74 pagename=Chase/Href&urlname=jpmc/community/env/policy/cli m http://www.alcoa.com/global/en/environment/position_papers/cli mate_change.asp http://www.astrazeneca.com/article/511607.aspx Case 2.1: Honda’s FCX Clarity: A Clearer View of the Future Answers to Questions for Critical Thinking: Describe ways in which Honda carries out its responsibilities to the general public Honda has a responsibility to the public to protect the environment by using resources efficiently and minimizing pollution The Honda Clarity runs on electricity and a hydrogen fuel cell Since the only exhaust is water vapor, the Clarity produces fewer emissions This means far less pollution Honda also has a responsibility for public health issues By not using fossil fuels, Honda is reducing pollution which contributes to respiratory diseases and lung cancer How does consumerism come into play in the production and marketing of a new type of vehicle? Consumerism comes into play because Honda must consider the wants and needs of its customers in making decisions Due to high gas prices, today’s consumers want safe, fuel efficient cars that not pose hazards to their health or to the environment Honda has to test the Clarity and inform the public through education and product information about its safety record, cost of operation, and effect on the environment Honda must provide consumers with a means of expressing legitimate complaints about the Clarity Case 2.2: Local Produce: It’s Good for Everyone Answers to Questions for Critical Thinking: What responsibilities food growers and supermarkets have toward their customers when offering locally grown produce? 75 Food growers and supermarkets have the responsibility of responding to the customer’s right to choose Consumers have enjoyed produce from farflung regions because the price of fuel has been low, but now consumers face skyrocketing fuel cost that have driven up the food costs Consumers also have a better awareness of environmental issues As a result, consumers and consumer advocacy groups have began to demand more local produce Food growers and supermarkets also have a responsibility to inform the public about the advantages of locally grown food such as freshness and the disadvantages of transported food There is a risk of contamination that can enter a food source that travels many miles Describe a situation in which there might be a conflict of interest for a supermarket buyer in charge of purchasing produce Large produce suppliers can offer volume discounts, rebates, and other incentives that small, local farms can’t match Buyers in super stores like Wal-Mart want to offer customers the lowest possible prices and might opt to purchase from large suppliers This is a conflict of interest because buyers should support other local businesses to bolster the local economy Buyers should select the most environmentally-friendly choice— purchasing locally grown products that not add pollution to the community Hit & Miss: Is It Time to Rethink Nuclear Power? Answers to Questions for Critical Thinking: On what basis you think decisions about nuclear power should be made: economic, environmental, or both? Explain your answer Decisions about nuclear power must consider both economic and environmental issues As the world searches for cleaner and cheaper alternatives to coal and petroleum-based fuels, nuclear power is regaining some momentum Faced with high oil prices, the decisions about nuclear power will be economic As oil consumption increases worldwide and oil prices continue to rise, the use of nuclear power has become more attractive Long-standing environmental concerns about nuclear power remain Accidents like the one at Three-Mile Island in Pennsylvania and the one at Chernobyl in Ukraine burned a negative image into the minds of the public 76 List what you think are the nuclear industry’s responsibilities to the general public and responsibilities to its customers Might there be any conflict between the two? The nuclear industry has the responsibility to protect the following rights of the public:  Right to be safe: safe storage  Right to be informed: disposal of waste is uncertain  Right to be heard: money may be better spent developing wind and biofuels  Right to choose: government investment in nuclear when the money could be put into renewables and energy efficiency The right to be safe is in conflict with the other rights because the nuclear industry doesn’t have a fool-proof plan for permanent waste storage Countries such as Sweden have reportedly drifted from safety standards, raising concern about potential harm to the environment and human lives Hit & Miss: Employers Examine Sick Time Answers to Questions for Critical Thinking: Do you agree with the use of software to track employees’ absenteeism? Why or why not? Answers will vary and spark a lively debate Pro: The software lets companies determine how much productivity they are losing through absenteeism It reduces time-recording mistakes, cuts down on “time theft” such as long lunches, generates work schedules, and productivity reports The company will be more efficient and by reducing costs, it will be more profitable for its shareholders and stakeholders Employees may well avoid lay-offs Con: The use of the software implies that employees are dishonest When a company trusts its employees, it allows them to feel valued, nurtured, and trusted Employees who feel secure and appreciated usually align themselves more closely with company goals, and work harder and smarter to reach those goals Also, some companies feel that employee productivity is what matters, not time Describe the role that integrity plays in the issue of absenteeism 77 Having integrity means doing what you say you will -coming to work Behaving with honesty and integrity inspires trust, and as a result, it can help build long-term relationships with customers, employers, suppliers, and the public Employees, in turn, want their managers and the company as a whole to treat them honestly and with integrity The use of tracking software shows management’s lack of trust in an employee’s honesty and integrity CHAPTER 2: COLLABORATIVE LEARNING EXERCISES Ethics and Legality Ethical Dilemmas Respect Internet Usage Ethical Awareness Corporate Philanthropy – Ethics and Legality Purpose: To clarify the difference between ethical and legal behavior Background: Many students have never thought about laws as the “floor” for ethical behavior; some, in fact, regard laws as the standard rather than the base The purpose of this exercise is to clarify the difference, and in doing so, to help students articulate their own personal ethical standards Relationship to Text: The New Ethical Environment Estimated Class Time: About 10 minutes Preparation/Materials: None needed Exercise: Ask your class to identify examples of the following behaviors You might find it helpful to present the categories on the board as quadrants, and to fill each quadrant with the examples that your students surface 78  Illegal and unethical behavior (e.g embezzling money, sexual harassment)  Illegal and ethical behavior (e.g providing rock-bottom prices only to struggling wholesalers in an underserved rural area)  Legal and unethical behavior (e.g promoting R-rated movies to young teens, engaging in favoritism, providing sub-par health insurance)  Legal and ethical behavior (e.g leading by example, contributing to the local community, protecting whistleblowers) Ask your students why and how an official, explicit code of ethics is important in encouraging employees to engage in legal and ethical behavior as a matter of course – Ethical Dilemmas Purpose: To stimulate discussion about the gray areas in business ethics Background: Many students have difficulty relating to the idea of ethical dilemmas in business, probably because the ethical meltdowns featured in the press seem so clear-cut: unscrupulous managers clearly did the wrong thing But real world ethical dilemmas are usually not so obvious; all too often there is no resolution that will not harm some party involved in the issue These exercises are designed to explore the gray areas, and by doing so, to help students clarify their individual ethical principles Relationship to Text: On-the-Job Ethical Dilemmas Estimated Class Time: 5-10 minutes per scenario 79 Preparation/Materials: Consider making copies of the scenarios for each student…it’s not crucial, but it really helps See Appendix for a copy-friendly version Exercise: Divide the class into small groups to discuss each of the scenarios below Ask each group to reach consensus on the best approach, but when you discuss as a class, ask students to respond with their personal viewpoints You may also want to ask them if their personal viewpoints changed based on the group discussion Here are the scenarios:  You’ve just done a great job on a recent project at your company Your boss has been very vocal about acknowledging your work and the increased revenue that resulted from it Privately, she said that you clearly earned a bonus of at least 10%, but due to company politics, she was unable to secure the bonus for you She also implied that if you were to submit inflated expense reports for the next few months, she would look the other way, and you could pocket the extra cash as well-deserved compensation for your contributions What should you do? Why?  You are the marketing director of a well-known private university One of your managers has come to you with an innovative proposal for building “buzz” among young people He recommends that the university marketing department host an evening—complete with punch, cookies, and music—for employees to come to the office, log onto the Web through their personal accounts, and surf a predetermined list of chat sites with “peer” recommendations to apply to the university The marketing department would supply a list of bullet points for the employees to use as they “spread the word” about the school Should you approve the proposal? What are the ethical implications?  A top employee at your small company tells you he needs some time off because he has AIDS You know the employee needs the job as well as the health insurance benefits Providing health insurance has already stretched the company’s budget, and this will send premiums through the roof You recently read of a case in which 80 federal courts upheld the right of an employer to modify health plans by putting a cap on AIDS benefits Should you proactively explore this possibility for your company? What are the tradeoffs? (Source: Richard L Daft, Management, Sixth Edition, South-Western Publishing, 2003, page 139)  One of the engineers on your staff has an excellent job offer from another company, and asks your advice on whether or not to accept the position You need him to complete a project that is crucial to your company (and to your own career) You also have been told—in strictest confidence by senior management—that when this project is complete, the company will be outsourcing the engineering function, which means that all internal engineers will be laid-off What are your options in advising this staff member? What are the implications of each option? What is the best choice? Why? – Respect Purpose: To encourage students to opt for self-respect over the respect of others when faced with difficult choices Background: This quick, discussion-based exercise is designed to encourage students to consider the long-term implications of tough ethical decisions Caution: This works great for some classes but is completely irrelevant or too abstract for others, so you may want to consider the chemistry of your class before you use it Relationship to Text: Individuals Make a Difference Estimated Class Time: Less than minutes Preparation/Materials: None needed Exercise: Share this quotation from Roy Rogers with your class: “I’d rather be the man who bought the Brooklyn bridge than the one who sold it.” Usually this sparks laughter and discussion, but if not, here are some starter questions: 81  What does this quotation mean?  When might this quotation apply in business? (Personnel/trust issues are a rich discussion area.)  What are the long-term benefits of risking being perceived as foolish versus being unethical? – Internet Usage Purpose: To highlight the growing ethical issue of surfing the Web on the company’s dime Background: Surfing the Web for personal use is a costly problem for many employers, and it’s likely to grow as the Net Generation begins to pour into the workplace This exercise is designed to approach the issue from a business owner perspective, which may also encourage students to reevaluate their own behavior from an employee perspective Relationship to Text: Honesty and Integrity Estimated Class Time: About 10 minutes Preparation/Materials: None needed Exercise:  Share with your class a recent survey published in Newsweek magazine about non-work-related Internet usage: 34% of employees spend between and hours per week on the Internet, unrelated to their jobs (that’s 7-23% of a standard work week…wow!) If forced to choose between giving up coffee and giving up the Internet, 56% would give up coffee (Source: Brad Stone, “Is the Boss Watching?” Newsweek, September 30, 2002, page 38L) Why are these numbers so high? Who pays the price? 82  Divide your class into groups of 3-5 Ask each group to assume that they are business owners and they are meeting to establish a policy to control non-work-related Internet usage in light of the growing sophistication and dropping costs of software to monitor employee computer usage Remind your students that their options range from no monitoring to complete blocking Reconvene as a class to discuss Questions might include:  What are the pros and cons of no monitoring? Of blocking measures?  What are the trade-offs between collegiality and productivity?  Are there any times when it makes sense to allow (or even encourage) employees to surf the Web for personal reasons?  Did the discussion change any minds on how they would handle this issue at their own companies? – Ethical Awareness Purpose: To demonstrate the importance of a formal code of conduct Background: As business globalizes, the workforce for small and large companies has grown significantly more diverse, particularly in terms of culture and nationality As a result, different workers faced with the same ethical dilemmas could take very different courses of action, each believing that he or she is making an ethical choice A formal code of conduct resolves this problem by providing a company-wide framework for decision-making This exercise highlights the potential differences in personal approach, which could be mitigated through a code of conduct Relationship to text: Ethical Awareness Estimated class time: About 15 minutes Preparation/Materials: 83 You may want to copy the ethics quiz for each student See Appendix for a copy-friendly version (or simply read the questions aloud) Exercise: Give your students the Workplace Ethics Quiz When they are finished, ask the class to share their answers to each question via a show of hands (encouraging them to be completely honest!) Then, share with them the answers given by the survey of a cross-section of American workers You and they may be surprised by the magnitude of differences (Source: The Wall Street Journal, October 21, 1999, p B1, from Ethics Officer Association, Belmont, Massachusetts; Leadership Group, Wilmette, Illinois; surveys sampled a cross-section of workers at large companies and nationwide—B&K Contemporary Marketing 11e, p 85) Is it wrong to use company e-mail for personal reasons? Yes No Is it wrong to use office equipment to help your children or spouse to schoolwork? Yes No Is it wrong to play computer games on office equipment during the workday? Yes No Is it wrong to use office equipment to Internet shopping? Yes No Is it unethical to blame an error you made on a technological glitch? Yes No Is it unethical to visit pornographic Web sites using office equipment? Yes No What’s the value at which a gift from a supplier or client becomes troubling? $25 $50 $100 Is a $50 gift to a boss unacceptable? Yes No Is a $50 gift from the boss unacceptable? Yes No 10 Of gifts from suppliers: Is it OK to take a $200 pair of football tickets? Yes No 11 Is it OK to take a $120 pair of theater tickets? Yes No 12 Is it OK to take a $100 holiday food basket? 84 Yes No 13 Is it OK to take a $25 gift certificate? Yes No 14 Can you accept a $75 prize won at a raffle at a supplier’s conference? Yes No 15 Due to on-the-job pressure, have you ever abused or lied about sick days? Yes No 16 Due to on-the-job pressure, have you ever taken credit for someone else’s work or idea? Yes No 34% said personal email on company computers is wrong 37% said using office equipment for schoolwork is wrong 49% said playing computer games at work is wrong 54% said Internet shopping at work is wrong 61% said it’s unethical to blame your error on technology 87% said it’s unethical to visit pornographic sites at work 33% said $25 is the amount at which a gift from a supplier or client becomes troubling, while 33% said $50, and 33% said $100 35% said a $50 gift to the boss is unacceptable 12% said a $50 gift from the boss is unacceptable 10 70% said it’s unacceptable to take the $200 football tickets 11 70% said it’s unacceptable to take the $120 theater tickets 12 35% said it’s unacceptable to take the $100 food basket 13 45% said it’s unacceptable to take the $25 gift certificate 14 40% said it’s unacceptable to take the $75 raffle prize 15 11% reported that they lied about sick days 16 4% reported that they have taken credit for the work or ideas of others – Corporate Philanthropy 85 Purpose: To clarify the importance of corporate philanthropy as a tool to both serve the community and build profitability Background: Some students might argue that extensive corporate philanthropy is a paternalistic approach to serving the community Wouldn’t it make more sense for companies to distribute that money to stockholders so that they could choose the organizations and causes to support (a form of trickle-down philanthropy)? One response could be that well-executed corporate philanthropy not only builds employee morale and burnishes a company’s image, but also builds long-term profits For example, Richard Branson created a highly successful chain of car lots in England that plant trees for each car you purchase in order to compensate for the pollution that your car will generate This exercise is designed to explore how that could happen across a range of businesses Relationship to Text: Corporate Philanthropy Estimated Class Time: About 15 minutes Preparation/Materials: None needed Exercise: Divide your class into teams of 3-5 students Direct each team to develop a focused philanthropy program for each of the following businesses, with the goal of both serving the community AND building long-term profits Ask them to be prepared to explain how their program would achieve these goals  A major city newspaper (e.g supporting a literacy program)  An advertising agency (e.g donating work to showcase creative)  An ophthalmologist office (e.g collecting used glasses for poor countries) 86  A supermarket (e.g donating 3% of each single tab above $200 to a food bank) Reconvene to discuss as a class You may be pleasantly surprised by the creativity of the responses 87 ... materials for reuse Sarbanes-Oxley Act: federal legislation designed to deter and punish corporate and accounting fraud and corruption and to protect the interests of workers and shareholders through... investors, safeguards for whistle-blowers, and establishment of a new regulatory body for public accounting firms Sexism: discrimination against members of either sex, but primarily affecting women... Sarbanes-Oxley Act i The Sarbanes-Oxley Act of 2002 establishes new regulations for securities trading and accounting practices 46 ii Companies must publish their code of ethics and inform public of changes