Question

If Foxconn’s management hired you to offer advice on improving its ethical decision making and corporate social responsibility, what measures would you suggest? Why?

Answer 1

Making good ethical decisions requires a trained sensitivity to ethical issues and a practiced method for exploring the ethical aspects of a decision and weighing the considerations that should impact our choice of a course of action. Having a method for ethical decision making is absolutely essential. When practiced regularly, the method becomes so familiar that we work through it automatically without consulting the specific steps.

The more novel and difficult the ethical choice we face, the more we need to rely on discussion and dialogue with others about the dilemma. Only by careful exploration of the problem, aided by the insights and different perspectives of others, can we make good ethical choices in such situations.

We have found the following framework for ethical decision making a useful method for exploring ethical dilemmas and identifying ethical courses of action.

A Framework for Ethical Decision Making

· Recognize an Ethical Issue

· Get the Facts

· Evaluate Alternative Actions

· Make a Decision and Test It

· Act and Reflect on the Outcome

Measures of Ethical Decision Making Process

1 – Gather the Facts

¨ Don’t jump to conclusions without the facts

¨ Questions to ask: Who, what, where, when, how, and why.

¨ Some facts are not available

¨ Assemble as many facts as possible before proceeding

¨ Clarify what assumptions you are making!

2 – Define the Ethical Issue(s)

¨ Don’t jump to solutions without first identifying the ethical issue(s) in the situation.

¨ Define the ethical basis for the issue you want to focus on.

¨ There may be multiple ethical issues – focus on one major one at a time.

3 – Identify the Affected Parties

¨ Identify all of the stakeholders

Who are the primary or direct stakeholders?

Who are the secondary or indirect stakeholders?

¨ Why are they stakeholders for the issue?

  Perspective-taking -Try to see things through the eyes of those individuals affected

4 – Identify the Consequences

¨ Think about potential positive and negative consequences for affected parties by the decision (Focus on primary stakeholders to simplify analysis until you become comfortable with the process).

¨ What are the magnitude of the consequences and the probability that the consequences will happen.

¨ Short term vs. Long term consequences – will decision be valid over time.

¨ Broader systemic consequences – tied to symbolic and secrecy

Symbolic consequences – Each decision sends a message.

Secrecy consequences – What are the consequences if the decision or action becomes public?

¨ Did you consider relevant cognitive barriers/biases?

¨ Consider what your decision would be based only on consequences – then move on and see if it is similar given other considerations.

5 – Identify the Relevant Principles, Right and Justice Issues

¨ Obligations should be thought of in terms of principles and rights involved

A) What obligations are created because of particular ethical principles you might use in the situation?

B) What obligations are created because of the specific rights of the stakeholders?

What rights are more basic vs. secondary in nature? Which help protect an individual’s basic autonomy?

What types of rights are involved – negative or positive?

C) What concepts of justice (fairness) are relevant – distributive or procedural justice?

¨ Did you consider any relevant cognitive barriers/biases?

¨ Formulate the appropriate decision or action based solely on the above analysis of these obligations.

6 – Consider your Character and Integrity

¨ Consider what your relevant community members would consider to be the kind of decision that an individual of integrity would make in this situation.

¨ What specific virtues are relevant in the situation?

¨ Disclosure rule – what would you do if the New York Times reported your action and everyone was to read it.

¨ Think about how your decision will be remembered when you are gone.

¨ Did you consider any relevant cognitive biases/barriers?

¨ What decision would you come to based solely on character considerations?

7 – Think Creativity about Potential Actions

¨ Be sure you have not been unnecessarily forced into a corner

¨ You may have some choices or alternatives that have not been considered

¨ If you have come up with solutions “a” and “b,” try to brainstorm and come up with a “c” solution that might satisfy the interests of the primary parties involved in the situation.

In an increasingly interconnected and interdependent world, fraud and corruption are among the most serious problems facing organizations and nations. To better address their emergence and growth, it is important to understand the influence of significant individual and situational factors on moral reasoning. Social networks lie at the centre of this challenge. As unethical attitudes/behaviour appear to have a symbiotic relationship with social structures and their influences, the effects of individual factors such as self-monitoring and future orientation on social network development remain critical areas of investigation.

Corporate Social Responsibility means that a company takes steps to ensure there are positive social and environmental effects associated with the way the business operates. Businesses that engage in active CSR efforts take stock of the way they operate in the world to incorporate addressing cultural and social issues, with the aim of benefiting both in the process. Not only can CSR models increase business and revenue, they promote change and progress throughout the world, which often involves helping people with few or no resources.

Lord Holme and Richard Watts define Corporate social responsibility defined as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”

Beyond CSR, investing in your company’s reputation can have a major impact on your business. Reputation Institute found that companies that invest in a strong reputation have the following results:

· Better performance than the overall market

· Better stock price recovery after the 2008 financial crisis

· Increased influence on policy making and policy makers

· Better access to acquisitions

· Increased recommendations

· Improved employee talent

· Higher employee engagement and alignment

Corporate social responsibility is more than just a business trend or fad. Businesses that want to stay relevant to new generations and who want to help people in need around the world while increasing their own revenue and efficiency will benefit from embracing CSR.

According to the World Business Council for Sustainable Development, CSR is “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families, as well as of the community and society at large.” CSR, in its essence, looks beyond profits and instead focuses on how business can benefit the greater community.

Approaches of the Corporate social responsibility

(i) Focus on business firms: Though both business and non-business organisations should be responsible towards society, the focus is more on business firms to look after social interests.

(ii) Deals with moral issues: Companies have specific policies and programmes to look after interests of the employees and other stakeholders. These programmes are devised from the need to do what is right and just for the society as a whole.

(iii) Commensurate with the objective of profit maximization: Social goals are discharged by economically sound organizations. A financially unviable enterprise cannot look after interests of the society. In fact, it may pass the costs of social responsibility to consumers by increasing prices of goods and services.

(iv) Pervasive activity: Social responsibility is not just the obligation of top level managers. Managers at all levels are involved in social responsibilities.

(v) Continuing activity: Social responsibility is not catering to the interests of society once or twice. It is important for organizations to continuously engage in social issues if they want to survive in the long-run. The economic and social issues, in fact, go hand in hand.

The relevance and importance of corporate social responsibility (CSR) is highly significant today in this capitalist economy, to ensure the sustainability of life and business in the future.

Measures of the Corporate social responsibility

1. Brand Value

A quick look at the top 10 brands in the world would suggest that responsibility is at the core of their operations. A well-managed CSR program can help increase brand equity, awareness and resonate with strong values. People appreciate the company not only for its high-quality products but also for the activities that they do for the greater good of the people. The company has exceptional goodwill and the name exudes trust.

2. Increased Sales – Customer Matters

Companies that lead with a purpose are perceived positively by the customers. According to a study,88% of the people surveyed would buy products from a responsible company. 85% of the people said that they would support the company in their community. Millennials and Generation Z connect with companies having a positive impact on the communities. This engagement translates into greater sales in today’s highly connected world. This further highlights the importance of Corporate Social Responsibility projects.

3. Employee Retention and Engagement

There was a time when people looked at their jobs from the bread and butter perspective alone. Today, employees look for a higher purpose other than their monthly salary. Employees enjoy working for companies that have a positive public image. CSR initiatives incorporate volunteering programs which foster values such as empathy and loyalty. This leads to better team-work and camaraderie among employees. It is a well-known fact that happy employees lead to low attrition.

4. Cost Savings

In the past, operating sustainably came at a huge cost to the company. Cost savings as one of the factors in the importance of CSR would be surprising a few years ago. Responsible companies have found new technologies that have reduced the operating costs.

5. Poverty Alleviation

The corporate sector’s core competency is the execution of projects. They have the talent and know-how to ensure maximum impact at minimum cost. CSR programs bring out change at the grassroots level by harnessing this operational efficiency.

6.Risk Management

It is no longer a debate that social and environmental risk affect businesses in a big way. In the long term, these factors affect the growth strategies and are completely out of its control.

CSR has become a fundamental business practice and has gained much attention from the management of large international companies. They understand that a strong CSR program is an essential element in achieving good business practices and effective leadership. Although the prime goal of a company is to generate profit, companies can at the same time contribute to social and environmental objectives by integrating corporate social responsibility as a strategic investment into their business strategy. A number of companies with good social and environmental records indicate that CSR activities can result in a better performance and can generate more profit and growth.