Making it Stick | Why has the increased attention to corporate scandals proven to be something of a mixed blessing?

Why has the increased attention to corporate scandals proven to be something of a mixed blessing?

On the one hand, the average investor can be forgiven for thinking that the business world is full of crooks whose only purpose is to make as much money as possible. Problems with product quality, poor customer service, and fraudulent financial reports with no admission of guilt paint a very negative picture. The response to this negative picture has been the creation of new rules and tighter controls that now represent a greater risk for organizations who fail to comply with the expected standard of behavior. On the other hand, ethics has become an issue that also positively impacts the business world. This sense of value results in increased commitment and reduced turnover, which means greater profits for the company.



Source: Ghillyer_Business Ethics A Real World Approach 2e

Blowing the Whistle | Discuss both positive and the negative views of whistleblowers in the media

Discuss both positive and the negative views of whistleblowers in the media. 

How do you view whistleblowers?

One could argue that whistleblowers provide an invaluable service to their organizations and to the general public. The discovery of illegal activities before the situation is revealed to the media could potentially save organizations millions of dollars in fines and lost revenue from the inevitable damage to their corporate reputation. However, in contrast to the general perception that whistleblowers are brave men and women putting their careers and personal lives at in order to "do the right thing," some feel that whistleblowers are motivated by money or personal egos. 

Student responses will vary on the second part of the question. 



Source: Ghillyer_Business Ethics A Real World Approach 2e

Blowing the Whistle | Key Terms

Key Terms - Blowing the Whistle

External Whistle-Blowing:  When an employee discovers corporate misconduct and chooses to bring it to the attention of law-enforcement agencies and/or the media.

Internal Whistle-Blowing:  When an employee discovers corporate misconduct and brings it to the attention of his or her supervisor, who then follows established procedures to address the misconduct within the organization.

Whistle-Blower:  An employee who discovers corporate misconduct and chooses to bring it to the attention of others.



Source: Ghillyer_Business Ethics A Real World Approach 2e

Corporate Governance | Key Terms

Key Terms - Corporate Governance

Audit Committee:  An operating committee staffed by members of the board of directors plus independent or outside directors. The committee is responsible for monitoring the financial policies and procedures of the organization—specifically the accounting policies, internal controls, and the hiring of external auditors.

Board of Directors:  A group of individuals hired to oversee governance of an organization. Elected by vote of shareholders at the annual general meeting (AGM), the true power of the board can vary from institution to institution from a powerful unit that closely monitors the management of the organization, to a body that merely rubber-stamps the decisions of the chief executive officer (CEO) and executive team.

Compensation Committee:  An operating committee staffed by members of the board of directors plus independent or outside directors. The committee is responsible for setting the compensation for the CEO and other senior executives. Typically, this compensation will consist of a base salary, performance bonus, stock options, and other perks.

“Comply or Else”:  A set of guidelines that require companies to abide by a set of operating standards or face stiff financial penalties.

“Comply or Explain”:  A set of guidelines that require companies to abide by a set of operating standards or explain why they choose not to.

Corporate Governance:  The system by which business corporations are directed and controlled.

Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility | Key Terms

Key Terms - Corporate Social Responsibility

Altruistic CSR:  Organizations take a philanthropic approach by underwriting specific initiatives to give back to the company’s local community or to designated national or international programs.

Corporate Citizenship:  An alternative term for corporate social responsibility, implying that the organization is a responsible citizen in meeting all its obligations.

Corporate Conscience:  An alternative term for corporate social responsibility, implying that the organization is a responsible citizen in meeting all its obligations.

Corporate Social Responsibility:  The actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits for its shareholders and meeting all its legal obligations.

Ethical CSR:  Organizations pursue a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their local community and society as a whole, and their ethical responsibilities to “do the right thing” for all their stakeholders.

Instrumental Approach:  The perspective that the only obligations of a corporation is to maximize profits for its shareholders in providing goods and services that meet the needs of its customers.

Social Contract Approach:  The perspective that a corporation has an obligation to society over and above the expectations of its shareholders.

Strategic CSR:  Philanthropic activities are targeted toward programs that will generate the most positive publicity or goodwill for the organization.


Source: Ghillyer_Business Ethics A Real World Approach 2e