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Art of Leadership & Motivation HRM – 760 Lecture - 28 FACILITATOR Prof. Dr. Mohammad Majid Mahmood Corporate Social Responsibility & Ethics-II Ethical Principles  No discrimination should be done on the basis of caste, color, and religion  The polices should be fair and transparent  Proper provision of safety should be provided by the company to the employees.  There should be honesty, loyalty, and integrity in the employees.  The company’s resources should not be utilized by the employees for their personal usage. Ethical Principles • Information about employee’s personal lives, health, and work evaluations should be kept confidential. • To neither give nor take any illegal payment, remuneration, gift, donation, or benefits to obtain business or favors. • To comply with all regulations regarding preservation of the environment. Ethical Principles • • • • • Rights and equitable treatment of shareholders Interests of stakeholders Role and responsibilities of the Board Integrity and ethical behavior Disclosure and transparency Advantages of Ethical Behavior • • • • Brand image Greater loyalty Greater commitment of employees Employees become more creative Why have a Code of Ethics? • • • • To define acceptable behavior To promote high standards of practice To provide a benchmark for self-evaluation To establish a framework for professional behavior and responsibilities CODE OF ETHICS -TRANSITION Compliance Integrity Enforcement Inspiration Punishment Motivation Directive Educational Secretive Open Are Ethics and Business Compatible? Are Ethics & Business Compatible? • In an extreme, business and ethics may seem incompatible: – Earning profits may also be unethical – In Islamic finance, earning interest is unethical – Possession itself may be unethical in extreme sense • Lots of businesses may need violence of some degree: – E.g., Medical research • Where do we draw the line between business and morality: – If the approach is subjective, then ethics lose their meaning as everyone defines ethics to suit one’s convenience Ethics and Society • In fact, ethics serve society • Societies are built on support • All societies, whether those of humans or nonhumans, need mutual support, patience and care. ETHICS IS LONG TERM POLICY • All religions, all ethics and morals spring from the basic conflict between short term and long term: – If we limit ourselves to the short term: • Pleasures today, even at the cost of pains tomorrow, sound like a good bargain – If we take long term into account: • Every such pleasure which is not lasting, should be avoidable • Long term is how long: – Do we look at our lifetime? – Do we look at the lives of our children? LONG TERMISM IN BUSINESS • Issues of corporate ethics have taken the form of shorttermism vs. long-termism • If businesses are focused on long term stability and growth, they are ethical: – Short term strategies compromise on longer interests • Warren Buffet has stressed on long term strategies • McKinsey survey shows that companies are focused on short term strategies due to market pressures Ethical Theories TELEOLOGICAL No act is wrong or right in itself, only in terms of its consequences Do the best thing Do what produces the better outcome DEONTOLOGICAL Acts are wrong or right irrespective of their consequences VIRTUE ETHICS Acts are wrong or right depending on what the morally good person would do Do the right thing Be the most honest person The right thing may Being good is a not produce the best matter of character 14 outcome Why ethical problems occur in business? 1) Personal gains and selfish interests 2) Competitive pressure on profits 3) Business goals vs. personal values 4) Cross cultural contradiction 15 Typical issues of ethics in business  Bribery and kickbacks  Corporate crime, e.g. Price fixing  Employee issues  Product issues, e.g.. Patent and copyright violation, product defects 16 Warren Buffet’s Rule of Thumb for Ethical Conduct • “…I want employees to ask themselves (when they are in doubt about whether a particular conduct is ethical or not), whether they are willing that their act appear the next day on the front page of local paper – to be read by their spouses, children and friends.” [Berkshire, code of ethics] Coca Cola International “Make every drop count” Mission “To refresh the world in body, mind and spirit” “To inspire moments of optimism through our brands and our action” “To create value and make a difference everywhere we engage” Values Leadership Passion Integrity Accountability Collaboration Innovation Quality 20 Company Profile Worlds largest liquid non-alcoholic refreshments producer. Headquarter in Georgia Atlanta, USA 21 Powerful Brand Interbrands 2011 ranked coca cola the no.1 brand in the world and estimated its brand value at $150 billions. Coca Cola in Pakistan Established in 1964 Corporate Social Responsibility The good side of picture Coca-Cola and its Employees Coca-cola’s top priority for the employees are: Health and safety Training and development Respect and rights protection 26 Code of Conduct Employees Must: Avoid conflicts of interest Safeguard the company nonpublic information Never attempt to accept bribe Fairly deal with customer and suppliers Protect the company asset Must report violations Coca-Cola and Environment Establish objectives and targets Work with local communities Use recycle able packaging Comply with local environmental laws 28 Communit y  Education Providing education to youth in underdeveloped areas of China Improving their infrastructure Libraries Community (Cont’d) Community (Cont’d) Sports Encourage more active lifestyles physical and nutrition education programs Environme nt Environmental Performance Aspire to environmental excellence Focus on environmental efforts on three area: 1. 2. 3. water use; packaging; and energy use & climate protection. Coca cola in Colombia  More then 70 years in business Employs more then 2000 Colombians. 5000 retailers. Employee’s Benefit Cola Cola provides its employees with: Emergency cell phones Transportation services Secure Housing Additional security for union leaders 24 hour hot line Conclusion “Those who can see the deepest into the past can also see farthest into the future” FACILITATOR Prof. Dr. Mohammad Majid Mahmood 1-36