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BA 342 Exam 3 Study Guide

by: Lisa Thein

BA 342 Exam 3 Study Guide BA 342

Lisa Thein
Penn State
GPA 3.91

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These notes cover what is gonna be on the final exam
Socially Responsible, Sustainable and Ethical Business Practice
Ronald Johnson
Study Guide
BA, ethics, sustainability, Social Responsibility
50 ?




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This 28 page Study Guide was uploaded by Lisa Thein on Thursday May 5, 2016. The Study Guide belongs to BA 342 at Pennsylvania State University taught by Ronald Johnson in Winter 2016. Since its upload, it has received 67 views. For similar materials see Socially Responsible, Sustainable and Ethical Business Practice in Business Administration at Pennsylvania State University.

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Date Created: 05/05/16
BA 342 Exam 3 Chapters 2 & 3  Corporate Social Responsible o 20 years ago top term was CSR and sustainability was underneath that o Today – 50% of companies use sustainability  25% use CSR; 25% other  Banking and consulting use CSR still  CSR and You o Our generation is really interested in this idea of responsibility so CSR and you is recruiting  Michael Hastings Director Corporate Citizenship for KPMG o Working to be a positive influence to the community around them o Corporations have a role and individuals have a role o Understanding impact and the giving of time o Business needs politics  Business and Stakeholders o Today most companies will say we are a stakeholder company o Government  Local  Federal  State o Employees  Union  Older  Women  Minority  Activists o Consumers  Consumer activities  Product liability o Owners  Private  Corporate  Institution o Community  Public  Env. Groups  Responsibility – the ability of authority to act or decide on one’s own without supervision o Can you do the right thing?  Responsible Leadership Financial Times Definition o “Responsible leadership – making business decisions that… takes into account stakeholders, such as workers, clients, suppliers, the environment, the community and future generations.”  How about a case on CSR? o Hurricane Katrina 2005  Who saved New Orleans? o The business community  Walmart to the rescue o Disaster recovery team – recover stores and communities they’re in o Ship things ahead of disasters (Poptarts!) o $30 million to NOLA  Walmart and disaster recovery o People o Operations o Community o 25 hundred truck loads of donations  Walmart and Sam’s Club in the US o Growth of Walmart and Sam’s club; hub and spokes system o Power of business for good is huge  Walmart Case o The Pros  Disaster recovery program  Good for local economies (job creation)  Customers – 200 million/week  Largest company $470 billion/year  10,800 stores, 27 countries  2012 gave $1 billion cash, $2.2 million hours  Sustainability drives (zero waste, 100% renewable energy, production, innovation)  Saved the Gulf o The Cons  Kills local businesses  Downtown declines  Green becomes pavement  Consumerism – buy more stuf  Closed culture led many activists to fight company  Workforce issues (wages, overtime, gender)  Legal issues (63 class actions settled)  Bribery scandal in Mexico o What’s it all mean?  There are always pros and cons  Big companies yield a lot of power  Social impact and CSR is big now o Book Case  Sourced from foreign suppliers – loss of American jobs  Environmental Awareness campaign  Much opposition to Walmart’s way of business  What Makes You A Good Citizen? (MULTIPLE SELECT) o Individual citizenship characteristics  Volunteering  Public engagement  Voting  Care for environment  Helping others  Follow the rules  Pay your taxes  Donate (time, talent, treasure)  Not harming others  Don’t cheat  Be productive o True for us and every corporation you go work for  Business & responsibility a license to operate o Intangibles: 53% of total value of Fortune 500 or about $24.27 trillion (Coke 96% of value) o Consumers: 85% reputation responsibility key (competitiveness and market positioning) o Risk management: Gov, NGO’s, legal o Employees: 3 of 5 want to work for values co. o Investors: 86% institutional investors o Operations: innovation, energy, waste, water  Corporate Social Responsibility – Citizenship o 1. Corporate social responsibility  Emphasis on obligation and accountability o 2. Corporate social responsiveness  Emphasis on action and activity o 3. Corporate social performance  Emphasis on outcomes and results  The CSR Business Case The Big 6 Reasons Core Benefits Innovation New business Cost savings Customer retention Brand diferentiation Better relations stakeholders Long-term thinking Attract/retain employees Customer engagement Decrease costs Employment engagement  How Firms respond To CSR Pressure o Defensive – garments  We need to get way better at protecting our stuf o Cost/benefit – DuPont  Smoke stacks didn’t have proper scrubbing so they did c/b analysis and based on their values they put them in o Strategic – IBM  Entire business strategy is built around social responsibility o Innovation - Tesla  Headline – CSR Today o CVS to stop selling cigarettes by 10/1/14 o Feb. 5 Washington Post  Pharmacy chain CVS said it will stop selling tobacco products at its 7,600 locations across the U.S., a move that public health advocates hope will become a watershed and pressure other large drug store franchise o Doing it so they can have clinics in their stores (will bring in more money than cigarettes did) o Pressure was defensive and now is strategic  CSR and IBM o 20 years ago CSR was regulatory, today its revenue o Spoke with business leaders not CSR people o Do well financially and help society o Using CSR to drive new revenue streams, innovate, draw in customers  IBM Study Data on CSR o Change in importance of CSR to strategic objectives over the past year o Went from 60 percent down to 0  Corporate Performance financial and Social o Positive social -> positive financial -> positive reputation o Positive financial -> positive social -> positive reputation o Positive social -> positive financial -> positive reputation  CEO Unilever Paul Polman Sustainability o Doubles size of business while reducing their impact on environment increase social impact o Climate change; food security; water, sanitation and hygiene o Sustainable Living  Grow in business while decoupling environmental footprint from growth and increasing positive social impact  Economic invisible Hand – 1700s o Adam Smith o “A Wealth of Nations” – published 1776 o “Theory of Moral Sentiments” – published 1759 o Free markets is an underlying base of integrity and CSR o Invisible hand – society can best determine its needs and wants through the marketplace  CSR – The History o Economic model – 1700+ o Legal model – 1800+  Used kids o Social model – 1850+  Whatever the boss thought was a good idea to do (paternalistic) o Stakeholder model – 1950+ o Social responsibility – philanthropy  Andrew Carnegie 1835 – 1919  Donated 28 libraries  Iron Law of Responsibility (early 1900s) o In the long run, those who do not use power in a manner that society considers responsible will tend to lose it  4 Part Pyramid of CSR = Total Corporate Social Res.  philanthropic ethical legal economic o Philanthropic – take a citizenship approach  Be a good corporate citizen. Give back. Make corporate contributions. Provide programs supporting community – education, health or human services, culture and arts, and civic. Provide for community betterment. Engage in volunteerism  Desire/expected of business by society o Ethical – do right and avoid harm  Avoid questionable practices. Respond to spirit as well as to letter of law. Assume law is a floor on behavior, operate above the minimum required. Do what is right, fair, and just. Assert ethical leadership.  Expected of business by society o Legal – obey the societies laws  Adhere to all regulations. Environmental and consumer laws. Laws protecting employees. Fulfill all contractual obligations. Honor warranties and guarantees  Required of business by society o Economic – foundation – make a profit  Be profitable, maximize sales, and minimize costs. Make sound strategic decisions. Be attentive to dividend policy. Provide investors with adequate and attractive returns on their investments  Produce goods and services society wants and sell them at a fair price  Required of business by society o Total corporate social responsibility = economic responsibilities + legal responsibilities + ethical responsibilities + philanthropic responsibilities  Stocks and Stakes o Stockholders = owners o Stakeholders = interests  The Case New Holland – a CSR Story o Make equipment to use on farms o Belleville Plant – ½ mil sq. ft.; decided to close plant (out of line in supply chain) o Stakeholder issues (IMPORTANT!)  Lost jobs  Community issues  Transition services  Other businesses o Small business o Service  Shrinking tax base  Education  Sanitation  Police/fire  Roads  Local reputation  Economic slowdown  Families impacted  Environmental issues  Equipment issues  How its handled is watched by everyone  3 Views of the Firm (Prod. Mgr. Stakeholder p.67) o Production view  Owners thought of stakeholders as only those individuals or groups that supplied resources or bought products or services o Managerial view of the firm  Firms began to see their responsibilities toward other major constituent groups o Stakeholder view of the firm  Managers were required to undergo a radical conceptual shift in how they perceived the firm and its multilateral relationships with constituent or stakeholder groups  Stakeholder Model or Stakeholder View of the Firm o  The Stakeholder Corporation o 1. Governing Philosophy  Shareholder value = responsibility o 2. Values statement  Accountability to all stakeholders o 3. Measurement system  Stakeholder performance system that includes profit and responsibility  4 Key Stakeholder Groups o Employees o Consumers o Community o Government and non-government  Socially Responsible Activities (fig. 2-5 themes) o Makes safe products o Does not pollute o Obeys laws o Promotes honest or ethical employee behavior o Commits to safe workplace ethics o No misleading or deceptive advertising o Environmentally friendly packages o Protects employees against sexual harassment o Recycles o No past record of questionable activity o Responds quickly to customer problems o Maintains waste reduction program o Provides or pays portion of medical costs o Promotes energy conservation o Helps displaced workers with placement o Gives money to charity or education o Biodegradable or recyclable materials only o Friendly, courteous, or responsive personnel o Continually improving quality  Arguments Against CSR o Classical economics o Business not equipped o Dilutes business purpose o Too much power already o Global competitiveness  Arguments For CSR o Enlightened self-interest o Warding of government regulations o Resources available o Proaction better than reaction o Public support  Stages of Citizenship Development (fig 2-11) o Stage 1 elementary  Credibility o Stage 2 engaged  Capacity o Stage 3 Innovative  Coherence o Stage 4 Integrated  Commitment o Stage 5 Transforming  Our Stakeholders and Our Responsibility to Them o Responsibility – typically reflected in areas of philanthropy  Legal, ethical, and philanthropic o Stakeholder types  Supportive stakeholder  High potential for cooperation, low potential for threat  Marginal stakeholder  Low on potential threat and potential for cooperation  Nonsupportive stakeholder  High potential for threat, low potential for cooperation  Mixed-blessing stakeholder  High potential for threat and cooperation Chapters 13 and 14 – Consumer Stakeholders  Dutch Boy Lead Paint o Influenced gov. to not regulate lead paint and issued a national marketing campaign o Lead was known to kill children so they renamed the brand to Dutch Boy to show innocence o Continue to add lead to paint til the 70s o Marketed to children to convince people it was safe o Gave teachers a pure lead candy dish  Lead Paint – Kids and You o Learning disabilities o Brain damage o Low IQ o Academic failure o Neuropsychological deficits o ADD o Hyperactive behavior o Antisocial (criminal) behavior o Brain swelling o Organ failure o Coma and death  Dutch Boy Paint Today o Google: lead paint in toys recall o Note – starting in 2004 millions of recalled toys including 30+ million in 2014  Lead – the players o Designers o Manufacturers – produce/sell/account for  Finance  Marketing  Supply chain  Accounting  Risk mgmt.  Management o Customers o Governments o Employees o The kids and their families  Carroll and Buchholtz Book o Customer care measurement and consulting o 45% serious issue last year o 60-70% enraged by how issue mgmt. o 45% CEOs felt hadn’t earned their customer’s loyalty  Iceberg and Customer Complaints o 1-5% complain management o 45% complain front line agent o 50% problem no complaint  2 to 1 rule o Good experience – tell 1 person o Bad experience – tell 2 people  Better Business Bureau Complaint Leaders o Banking o Advertising o Automotive  Consumer Magna Carta Or Rights of the Consumer o 1215 in England with Sir John and then 1962 Pres. Kennedy o Safety  Products that are dangerous o Choice  Assurance that competition is working efectively and choices are available o Informed  Know about a product, its use, and the cautions to be exercised while using it o Heard  Efectively communicate to business their desires and grievances  Consumer international o World federation of consumer groups that, working together with its members, serves as the only independent and authoritative global voice for customers o From the US consumer protection act  240 organizations  100+ countries  United Nations – April 1985 adopted o Basic needs o Safety o Information o Choice o Representation o Redress o Education o Healthy environment  Moral Management and Consumer Stakeholders o Moral – customers equal partners  Give fair value and full info o Amoral – letter of law and mgmt. rights  Profit not customer driven o Immoral – customer exploited norm  Intend to cheat or deceive  Consumerism o “Consumerism is a social movement seeking to augment the rights and powers of buyers in relation to sellers”  1965 Corvair/GM/Nadar o Corvair – to save costs they didn’t put in safety features and had exact tire pressure specifications o Nadar – father of modern consumer movement  Book on automotive industry (Unsafe at Any Speed) -> safety should be #1  Automotive industry responded by hiring PI’s and hookers to try to discredit him  Coke and Pepsi in India o Virtually no regulations on pesticides in soft drinks o Not only a pesticide issue, a water issue  Using all of the town’s water supply etc. o Coke responds - video  Coca cola bar with everyone drinking coke o Cola was used as a pesticide  Did not go after any Indian bottlers, only Coke and Pepsi because they’d have biggest impact o Both companies utilized marketing campaigns to get back in public favor  Coke and CSR o ’04-’05 pull money from advancing and put it into community o CSR initiatives – integral member of communities they do business with, water-conservation, awareness, clean  Rainwater harvesting, fixed aid wells, providing water to 30,000 children o Jobs disability hiring, sustainability, recycling, health and education (scholarships), promote sports and well being, disaster relief  Consumer Problems with Business Overpriced Products Poor Guarantees Poor quality Mishandled complaints Misleading ads Dangerous products Hidden fees Poor information Poor service Unclear service help Product failures Misleading labeling Complaints ignored  Consumer Stakeholder Focus o Product information  Ex: Bloomingdale’s Christmas catalogue – “spike your friends eggnog when they’re not looking” o Product itself  Product Advertising Opinions o 60% consumers negative opinion of advertising o 61% believe advertising is out of control o 69% attracted to products to avoid commercials o Product information must be:  Clear  Accurate  Adequate  Misleading ads, models, and makeup o Product information example o Retouching photos  Advertising – Pro o Beneficial component of a market system o Efficient way to distribute info o Increases sales and profits for company o Brand awareness built o Increase company knowledge  Advertising – Con o Wastes resources (direct mail) o Inefficient way to communicate o Invades customer privacy o Creates materialism culture o Distorts perception o Decreases standards of living  Advertising Issues Customer Relationship MGMT (What not to do) o Ambiguous Advertising  Loose terms – exciting, virtually, fast, beautiful, deluxe, etc.  Ex: Colgate – 9/10 dentists would recommend  Ex: Cigarettes  Helps: o Fight o Protect o Germ free o Stop o Prevent o Virtual o Can do o Up to  FREE  Ex: cable companies gives something free for 3 months and then automatically charges you afterwards  SALE  Discount – Retail Theatre o 31 department stores 2009-2012  Deals increased by 63%  Avg. Discount 36% up from 25%  Gross Margins – flat at 27.9% o Inflating base price to tell people it’s a bigger discount  Ex: JCPenny’s o “We must compete to win” o “That means initially marking up our goods to sufficient levels to protect our margins when the discount or sale is applied” – Myron “Mike” Ullman CEO o 2012 – 1 of 500 items full price  Average discount 60% o Disclosure is key  Dirty Secret of Black Friday o Discounts are built into the price o Customer discount rates are up but profit margins are flat o Concealed Facts  Ex: Cell Phone Plans  “Guaranteed to never go up” “rates increase after 2 years”  Fine print syndrome o Pharmaceutical side efects o Exaggerate  Pufery  Greatest  Best in class  Top seller  Must have  Ex: Burger King Whopper  Ad vs. actual burger  Ex: Exaggerated Bus Services  Ex: Coke’s Vitamin Water  Exaggerated claims: o Defense o Multi-v o Restore o Nutrition enhanced o Psychological Appeals  Health  Germ free  Protects  Strong  Keep young  Prevent  Keep safe  Become  Look hot  Confident   Ex: Bow flex;  Ex: Sensa and weight loss  Disclaimer – results not guaranteed  FTC $34 million fine (4 company settle 2014)  Sensa 2008 – 2012 sold $364 million  Product Placement in TV & Movies (concealed) o More and more products are being placed in movies and TV shows  What Not to Do o FTC and Product Placement  People have a right to know when they are being advertised to and by whom  Free Press Guide o 1. Clear o 2. Extend o 3. Ban o 4. Rigorous  Other Product Information Categories in Advertising o Social responsibility and product information issues o Comparative advantage one product to another o Use of sex in ads o Advertising to children o Marketing to the poor o Advertising alcohol and cigarette o Health ads o Environmental ads  Advertising to Children o American child has viewed an estimated 360,000 ads before HS graduation o Youth influence $500 billion of spending a year o Companies spend $15 billion annually to advertise to children o By 36 months children can recognize over 100 logos o Children between 8-12 don’t understand intent to sell  Percent of children using selected electronics o Avg. age 1 cell phone use = 11 st o Avg. age 1 smart phone use = 7  Victoria’s Secret and Girls o Bright young things (2013+)  Lingerie for college age women, however teens and tweens buy most of it  Ads use really young girls and sex  Principles of Advertising to Children o Take into account that children cannot discern ads o Never deceptive or unfair o Objective information o Don’t stimulate unreasonable expectations o Inappropriate products not marketed to children o Avoid social stereotypes o Advertising should be educational o Contribute to parent/child relationship  How Product Information Regulation Happens o Industry regulation:  Self discipline  Pure – by industry  Ex: Int. Fed. Of Pharmaceuticals Manu.  Co-opted – (Ex: BBB)  Involves non-industry stakeholders o Government Regulation  Negotiated – Ind./Gov.  Ex: Coke/Pepsi in India  Mandated – legal  (Ex: FTC, NAD, NARB)  Self Regulation Code of Ethics o Internal single co. o Clear, adequate, and accurate information  Industry Self Regulation o International federation of pharmaceutical manufactures association  Advocate policies and practices that encourage the discovery and access to life-saving and life- enhancing medicines and vaccines, for people everywhere  AICPA o CPA o Provide the most relevant knowledge, resources, and advocacy and protect the evolving public interest  Co-Op Regulation through Advocacy Groups o Council of better business bureaus  Connect targeted consumer populations to BBB services, promote consumer awareness and financial literacy, and advance business ethics in the marketplace o Advertising code  Federal Trade Commission o FTC’s mission  To prevent business practices that are anticompetitive, deceptive, or unfair to consumers  To enhance informed consumer choice and public understanding of the competitive process  To accomplish this without unduly burdening legitimate business activity o FTC’s vision  A U.S. economy characterized by vigorous competition among producers and consumer access to accurate information, yielding high-quality products at low prices and encouraging efficiency, innovation, and consumer choice o Strategic Goals  1. Protect consumers: prevent fraud, deception, and unfair business practices in the marketplace  2. Maintain competition: prevent anticompetitive mergers and other anticompetitive business practices in the marketplace  3. Advance performance: advance the FTC’s performance through organizational, individual, and management excellence o Benefits to Consumer:  Deals with issues that touch economic life of every American  Only federal agency with both consumer protection and competition jurisdiction in broad sectors on the economy  Pursues vigorous and efective law enforcement; advances consumer’s interests by sharing its expertise with federal and state legislatures and U.S. and international gov. agencies; develops policy and research tools through hearings, workshops, and conferences; and creates practical and plain- language educational programs for consumers and businesses in a global marketplace with constantly changing technologies o Headquarters – Washington DC  Amazon and Apple and Other in App Purchasing o In app charges from kids that parents have to pay for  Federal Packaging and Labeling (FRPLA of 1967)  Product Itself Issues o Safety o Quality  Consumer Product Safety Commission o Death, injury, and property damage from consumer products o $1 trillion cost U.S. o Leadership in safety, commitment to prevention, rigorous hazard identification, decisive response, raising awareness  Ford/Firestone Case Posted on Angel o Tire tread coming of while driving, causing car to rollover and many died o Blame each other for the lack of safety o National Highway Traffic Safety Administration  Ford brings data/story to NHTSA o The Tire Players (MULTIPLE SELECT)  Victims (271 deaths US – thousands injured)  Ford Motor  Bridgestone/Firestone  Rand Roberts Attorney  NHTSA (gov./safety)  Consumers  Other car companies  General public  Gov.  State farm and other insurers  Venezuela, Saudi Arabia, others  Ethics/Legal Three Views on Quality and Safety o Contractual o Due care  Expanded contract to make sure customer knows how to use safely  Ex: training, proper use videos, warning labels o Social cost  Strict liability  Design, manf., deliver, sale  Absolute liability  Unknown issue  Product has an inherent danger and you are responsible for it o First 2 are by law, last one is more of an ethical issue  Ladder Safety Video o Contractual – basic safety o Due care – instruction books, stickers o Social cost – some percentage will fall of ladder, should company be responsible?  The Smart Phone Dilemma o Exhibit “A” Cell Phone and Driving  Projected capabilities were way lower than actual  23x more likely to crash  Talking on phone 21 yr olds reaction time are like a 70 yr. old  Texting/driving kills 11 tens every day  Apple iPhone Manual (2013)  “Distraction: using iPhone in some circumstances can distract you and may cause a dangerous situation”  “Observe rules that prohibit the use of mobile phones or headphones (driving a car or riding a bike)” o Exhibit “B” Cell Phone & Walking  Pedestrian Cell Phone Data Science News  2012 saw 1,500 injured and treated while using cell phone and walking  Age 16-25 most likely hurt  Talking on phone 69% of injuries  Taking account of all injuries it is estimated almost 2 million injuries o Exhibit “C” Cell Phones & Illness  Video: Cell phones and bacteria  Dirtier than toilet seat  Apple iPhone Manual  Use soft lint free cloth  No cleaning products and avoid moisture  Michigan State Study College Students 10% don’t wash, 33% no soap 95% don’t wash correctly Women - 7.07 sec, men – 6.27 sec o Exhibit “D” Other Exhibits on Cell Phones  Decrease in personal responsibility  Decrease in civility  Increase in bullying behavior  Decline in emotional intelligence  Health hazards (posture)  Decrease in academic performance  Decrease in work productivity  Decline in family connectedness  And it goes on and on  Caveat Emptor – let the buyer beware (old)  Caveat Vendor – let the seller take care (new)  FDA – Food and Drug Administration o Responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, and our nations food supply, cosmetics, and products that emit radiation o 3 main categories – analysis, surveillance, and correction   Chapter 17 & 18 – Employee Stakeholders  Social progression and employees o Personal o Human resources o Human capital o Ex: Toyota – no layof policy; contingent workforce they use temps when workload fluctuates o Ex: Apple and Social Contract  Foxconn factory  Manufactures for other people  Earn $2/hour and work 60 hrs./week  Pros: jobs, modern facility, benefits, shelter and food, social interaction  Cons: 12 hr. days, unscheduled overtime, no privacy, company food, company dorm, low interest work, suicide  US Employer/Employee Social Contract  Past (Old)  Present (New)  Stable job security  Declining job security  Lifetime one employer  Norm – job changes  Stable assignments  Temporary assignments  Loyalty to employer  Loyalty to career  Employer responsibility  Personal responsibility  Individual work force  Team/project focus  Moral Management o Ex: Alta Gracia Knights Apparel Brand CEO Joe Bozich  Textile industry – pay workers a living wage (3 times the minimum wage)  People will pay a little bit more if they believe what you’re doing is socially responsible  Only 5% turnover so not retraining people  Living wage – a basic lifestyle and the wage required for that  In a developed country it can lead to lost jobs  Immoral management o Ex: Child Labor 2016 UN Goals  250 million children impacted 2006  200+ million still impacted 2014 o Develop global guidelines on employment  Amoral o Investment banking and employee social contract  Banking   Hrs/  Yearly pay job Age week st  1 year   85-  $80K + $50k analyst 22 110 bonus  2 ndyear   55-  $100k + associates 28 105 $150k bonus  Pro:  Jobs  Modern facilities  Benefits  Expense accounts  Social interaction  Career path  Prestige  Wealth  Cons:  85-100 hr./week  No work/life balance  High stress  Drug/alcohol abuse  Health issues  Family issues  Psychological  Suicide  Overwork and under whelmed article on investment banking industry – burning out  Currently a dramatic decline in interest in investment banking o Young Bankers Fed Up Article  Many are leaving banking to start their own businesses  Banks are requiring employees to take days of  Taking stimulants and prescription meds to not burn out  Do Employees Have Rights? o Civil o Minority o Women o Disabled o Older o Religious affiliation o Employee o Privacy o Smokers o Non-smokers o Children o Animal o Due process o Appearance o Legal  Statutory (discrimination)  Collective bargaining (unions)  Contractual (CEO)  Employment (HR) o Moral  Fired w/ cause shared  Due process fair treatment  Freedom of speech  Respect and dignity o Joint – legal/moral  Privacy – safety – health  Big Three Employee Rights o 1. Good cause (if fired) o 2. Due process o 3. Freedom of Speech  Basic Right #1 – Fired for Cause o Ex: Steve Jobs – fires programmer o Employment at Will Doctrine  Fairness standard or “good cause norm”  How people in the U.S. can/cannot fire people  Can only be fired for cause  You can leave your job at any time  Can fire employee at any time o Employment at Will  Pros:  Increase claims  Outs low performance  Risk weakening mgrs. leverage  Increases hiring  Less jobs  Less flexibility  Favors employee & employer  Cost to rehire high  Company competitiveness  Cons:  US stands alone  Arbitrary nature  Laws against  Respect – moral  Employee rights  Trust expectation broken  Broken culture  Reduce claims o Exceptions to “At Will”  Public policy  Implied contract  Good faith principle  We owe our employees respect  Discrimination law  Ex: Uber – independent contractors o What should you do?  1. Have you been fair  2. Consistent with all  3. Business related  4. Good documentation o Eliminating Employment At Will Article  Would bring about many new lawsuits  Employers would tolerate poor performance, attendance, and workplace conduct o Dismissing Employee With Care  Do’s  Fire employees in a private space  Be mindful of employee’s logistics  Preserve employee’s dignity  Choreograph the notification in advance  Use transparent criteria for layofs  Don’ts  Don’t fire on a Friday  Don’t say that downsizing is finished  Don’t terminate an employee via email  Stick to the topic and avoid platitudes  Don’t rush through the meeting  Basic Employee Right #2 – Due Process  Due Process – right to receive impartial review of one’s complaints and to be dealt with fairly  Ex: due process at PSU – official process for academic integrity violations o Class conflict, cheating, HR issues, research, civil and criminal  Alternative Dispute Resolution (ADR) o Resolving disputes without litigation  Duke Law school survey  36 companies spent $4.1 billion  Tort system in US $800 billion o On the rise o Mandatory arbitration  Neutral party resolves a dispute between 2 or more parties and the result is binding  Coca Cola Case o Paid $192.5 million for discrimination o MLK advocated a boycott of coke – would not hire blacks for higher level jobs o New CEO demotes diversity officer and says diversity isn’t a problem any more o Ombudsman – 3 party who listens to and tries to solve problems  Examples of Due Process o Alternative dispute resolution  Open door policy (most)  Arbitration/mediation (50%+)  Ombudsman (16%)  Peer review panel (13%) o Compliance director o Ethics officer  Basic Employee Right #3 – Freedom of Speech o Freedom of speech – “the right to express your opinions without censorship, restraint, or retaliation”  Responsibility  In workplace – freedom of speech applies to things only in the context of the work you’re doing o Where Free Speech Goes to Die: The Workplace  Employers have a right to take action against any employee who engages in political speech that company leaders find ofensive  Only 8 states have a ban of employers encouraging employees to vote for or support certain candidates  Valid reasons to restrict political speech – fear of lawsuits alleging a hostile work environment o 2013 Ethics Resource Center  41% workers witness misconduct (47 million)  63% witness reported (30 million)  21% of those who reported misconduct felt retaliated against o ERC Data 2013 Conference in Managers  Note misconduct down from 2011  60% of misconduct by managers  24% by senior managers o Whistle blowing defined and components  Former/current employee who discloses improper actions by members of the organization with the goal to efect change  Whistle blower  Complaint  Party reported to  Organization accused  National Whistle Blower Center PWC Study 2007  43% fraud uncovered by whistle blowers  Laws o False claims act (start 1863)  Allows employees to blow the whistle about contractor fraud and share with the gov. in any financial recoveries realized by their eforts o Sarbanes/Oxley (start 2002) o Dodd/Frank (start 2010) o IRS (start – beginning of time)  Whistle Blowing Traditional Approach  Corporation <---- employee  Loyalty – obedience – confidentiality  Whistle Blowing Emerging Approach  Corporation->employee<-public  Whistle blower still has a duty to the firm o Whistle Blowing – ADM & Price Fixing  Mark Whitaker went to the FBI o UBS – Brad Birkenfeld outed the Swiss banks  Employee Stakeholder o Expectations of:  A. Safety p. 528  B. Health p. 534  C. Privacy p. 517  Yik Yak Terroristic Threat at PSU o #1 priority of a manager should be safety o Yik Yak  Connect people in an open way  Who post quality content  Safe place to spill your soul  Anonymity and proximity  Terroristic threats o Business Issues  Do we operate or not?  Is it valid  What level of communication  Employees and students  Bringing in outside help  Safety of 70,000+ people  Campus security  Community  Leadership  Hard costs  Risk and liability  Culture  Students/staf/faculty  Media  Family  Privacy (student implicated)  Brand equity (recruiting new students)  Workplace Safety o Ex: Rand Plaza in Dhaka, Bangladesh  Not built to hold heavy textile equipment  Building collapsed o Ex: brought Ebola patients to the US  Safety issues:  Employees and families  Other patients  Chain of contact  U.S. Safety Data – Overall o Deaths – 4,821 o Injuries – 2,953,500  Safety Data –Big 6 Categories o Transportation o Contact with objects o Harmful substance exposure o Assaults and violent acts o Falls o Fires and explosions  Most dangerous job – commercial fishing  OSHA – Occupational Safety and Health Administration (40 Years) o Created in 1970 by congressional act o Mission – to assure safe and healthful workplaces by setting and enforcing standards, and by providing training, outreach, education and assistance o PSA – there are no accidents o Managed by the department of labor & have oversight of all facilities  Workplace violence o Subset of workplace safety o Statistics  Violent acts  1993 – 2,100,000  2009 – 572,000  Deaths  1993 – 1,068  2012 – 463 o Ex: Virginia Tech – 2007; 32 dead; 25 injured o Note: 2006-2010 average 551 homicides in the workplace  Health o Health Initiatives  Family medical leave act  Designed to make life easier for employees with family or health problems  12 weeks paid leave for care of child, spouse, parent  Smoking  WHO declares every individual has the right to breathe smoke-free air  Americans with disabilities act  Prohibits discrimination and ensures equal opportunity for persons with disabilities in employment  Privacy o Definition – “right to keep personal afairs to oneself and to know how information about you is being used o Issues  Collection and use of employee information in personnel files  Integrity testing  Drug testing  Monitoring of employee work, behavior, conversations, and location by electronic means o Employee Privacy Bill of Rights  1. Informed consent before acquiring info  2. Disclose nature of surveillance  3. Set controls of info. access  4. Limit collection/use of medical/health data  5. Require reasonable cause before drug test  6. Respect boundary between work and home  Google & Europe & Privacy o Freedom of speech vs. right to be forgotten  Monitoring Employees (know Basics) o What can be monitored  Cannot monitor purely personal phone calls  Reasonable expectations of privacy o Efects of being monitored  Stress and tension  Low morale  Sense of job insecurity    1 question from each article  Question directly from Unilever video 


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