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  • 1. Good day everyone. If you have not met me yet my name is Loren Karl Schwappach. I am the newcompliance officer for Expert Consulting Group (ECG). As the new compliance officer it is my duty and privilege to review existing ethical standards, researchapplicable laws, and develop a comprehensive code of conduct for ECG. These new measures are due in part to the well covered ethical transgressions of various well knowncompanies which have heightened ECG’s need for organizational and regulatory sensitivity to establishing and abiding to firmethical practices. In todays briefing I will discuss several theoretical approaches to ethics in order to aid ECG staff,leadership, and employees in understanding the relevance of ethical theories to current organizational situations. I am hopeful that after today’s short briefing you will leave having a better understanding of ethicaltheories and the importance of practicing sound, consistent, and professional ethical practices in your daily activities both athome and at ECG. Over the last ten years it has been exemplified over and over again, that companies following a strategicvision and profitable direction while practicing sound, consistent, and professional ethical practices leads to increasedprofitability in conjunction with far reaching appeal and public support. 1
  • 2. [Untitled illustration of a scale holding ethics]. Retrieved July 13, 2011, from:http://interview.officialtips.com/wp-content/uploads/2010/06/ethics-large.jpg In this ethics presentation we will discuss the following topics: normative versus non-normative ethics(applied ethics, descriptive ethics and meta-ethics), ethical principles (beneficence, least harm, respect for autonomy, andjustice), ethical theories which include ethics of conduct {(Consequentialism: Egoism, Altruism, Utilitarianism, Hedonism,Intellectualism, Welfarism), (Deontology: Kantianism, Contractualism, and Natural rights theory)} and ethics of character(Virtue ethics). I will next talk about historical consequences of unethical conduct, offer some theoretical ethical dilemmasfacing ECG and how ECG might respond to them, and offer proposed practices for ECG. Finally I will conclude this briefing willsome closing remarks and a time to allow for any questions. So to begin this presentation let me start with a discussion about ethics. Ethics, also known as moral philosophy, focuses on the issues of good and bad, right and wrong. The wordethics comes from the Greek word ethikos meaning moral, and ethos meaning character. Ethics is more concerned aboutvalues (both individual and societal) than about facts. (Ethics, 2002, para. 1) After the development of societal rules and conduct was engraved in humanity a sense of what human kindshould and ought to do with itself appeared in the form of ethic standards this was introduced by the introduction of the firstmoral codes. “Morality historically is linked to religion.” (Ethics, 2002, para. 2) For instance in Babylonian times the sun godShamesh presented the code of laws to Hammurabi, in the Old Testament God gave Moses the Ten Commandments, andaccording to Plato the Greek god Zues gives humanity morality to allow human kind to band together and protect themselvesfrom the world’s monstrous beasts. (Ethics, 2002, para. 2) In our global economy, with diverse attitudes, beliefs, and behaviors rampart throughout every workplace,vast differences in personal values that are still considered taboo to many, and the growing cries for ethical practice and justicethroughout society, the development of ethical guidelines and standards is an imperative for any corporation, to include ECG.It is believed that an understanding of these ethical theories will encourage ECG to develop a set of sound ethical practices thatwill encourage ECG’s growth as a respected, ethical corporation well into the future. 2
  • 3. [Untitled illustration of a large statue holding a weight]. Retrieved July 13, 2011, from:http://woffohm.prblogs.org/files/2007/03/ethics-9651.jpg Today the study of ethics is primarily separated into four functional areas: normative ethics, appliedethics, descriptive ethics, and meta-ethics. Normative ethics also called prescriptive ethics, tells how things ought to be versus how things are(descriptive ethics). Normative ethics tries to answer to the point moral questions about what humanity should do orbelieve. “The word normative refers to guidelines or norms”. (Principles of Normative Ethics, 2002, sect. 2) Establishing a standard for human conduct is the primary concern of normative ethics. Normative ethicscan further be divided into ethics of conduct (consequentialism, deontology) and ethics of character (virtue ethics). I willexplore these concepts in the following slides. Applied ethics uses ethical principles to evaluate conduct in certain areas of society. Applied ethicsapplies the conjectures of normative and/or descriptive ethics to sensible moral problems such as sexual equality, abortion,euthanasia and justice. These topics are the reason why modern day philosophers are increasingly attracted to appliedethics. (Ethics, 2002, para. 4) Descriptive ethics explains how things are versus how they ought to be (normative ethics) andincorporates a truthful description and explanation of human behaviors as a consequence of moral beliefs (what is rightversus what is wrong) concerning what has been actually accomplished. Descriptive ethics advances toward ethical standardsby means of a historical product sanctioned through societies daily moral customs. (Morals and Ethics, 2002, sect. 1A) Meta-ethics also known as analytical or critical ethics revolves around questions about the nature ofmoral judgments that is if the judgments can be considered true or false (right versus wrong) and of the structure of moralreasoning. (Ethics, 2002, para. 3) In the upcoming slides I will brief in more detail concerning normative ethics (how things ought to be) butfirst a discussion of the driving force behind ethical principles will be considered. 3
  • 4. [Untitled picture of a signpost]. Retrieved July 13, 2011, from: http://www.soxfirst.com/wp-content/uploads/ethics_header.jpg Ethics is constructed around ideas reflecting what is right versus what is wrong. Rules and laws allow forthe limitation and control of poor behavior in society while encouraging and rewarding good behaviors. Poor behavior isfurther isolated into ones ethical beliefs in other word what a person considers good versus bad. However, some actionsregardless of the perceived belief of whether or not it is bad are illegal. Ethical principles are common goals shared byseveral ethical theories in order to be successful. (Rainbow, 2002, para. 1) “The principle of beneficence guides the ethical theory to do what is good.” (Rainbow, 2002, para. 2)Beneficence refers to measures that advance the wellness and wellbeing of others. The principle is related to utility statingthat all should strive to create the largest ratio of good over evil possible in the world since people always benefit by themost good. The term good however has been used in many ethical theologies in vast and different ways as you will seelater in this briefing. A strategic corporate vision statement like “each ECG employee shall strive to provide top-notch,honest, valuable consulting services to all clients” would follow the principle of beneficence. Least harm is comparable to beneficence, however it is concerned with situations where neither choicecan be considered as beneficial. In such a situation it is of ethical importance to seek to do harm to the least amount ofpeople possible. (Rainbow, 2002, para. 3) The ethical principal respect for autonomy states that society should allow individuals to reign overthemselves and thus have the guiding impact on the course of their lives. This principle is in contrast to the political idea ofCommunism (a paternalistic view point of autonomy where the state decides a person’s best interests) and in complimentwith the political idea of Libertarianism. (Rainbow, 2002, para. 5) The principle of justice says that ethical theories should stipulate measures that are fair to everyoneconcerned and that ethical choices should comply with ethical theory unless justifiable circumstances are present.(Rainbow, 2002, para. 8) As an international corporation ECG should strive to maximize these four ethical principles into it’sstrategic vision and day to day activities. 4
  • 5. [Untitled illustration of altruism an impossibility]. Retrieved July 13, 2011, from:http://www.soxfirst.com/wp-content/uploads/ethics_header.jpg As mentioned previously, normative ethics can be divided into ethics of conduct and ethics ofcharacter (virtue ethics). Ethics of conduct revolves around what sort of actions should be performed and isbroken into consequentialism and deontology. Consequentialism is an approach to morality that envisions what should be done asdetermined by consequences. Consequentialism can further be broken down into the well known ethicaltheologies egoism, altruism, utilitarianism as well as that not so well known hedonism, intellectualism, andwelfarism. Egoism is the belief that all choices occupy self-promotion as their singular objective (peopleshould always do whatever is in their best interest). This is the theory that drives the free markets in the UnitedStates. At the initial view this theory may seem illogical. If individuals always did whatever was in their bestinterest wouldn’t humanity become a den of murders and thieves? However, with the societal creation of lawand the negative repercussions that follow poor decisions it seems to be in ones best interest to make goodethical choices. This is the viewpoint shared by Egoismists and is in direct contrast with Altruism andUtilitarianism. Altruism or regard for others is the ethical belief that people should always do whatever is inthe best interest of another. It is the essential principle that mans sole purpose is to serve others as a reason forones existence. Utilitarianism is an altruistic belief that a choice that produces the maximum good to thelargest amount of people is the ethically correct choice. Utilitarianism favors the paternalistic view point ofautonomy versus the Libertarian view point. The two commonly types of utilitarianism commonly referred to areact utilitarianism (a person performs the acts beneficial to the most people regardless of societal constraints suchas laws or personal feelings) and rule utilitarianism (a utilitarian performs the acts beneficial to the most peoplewith reverence for the law through the fairest most justifiable way possible) (Rainbow, 2002, para. 14) 5
  • 6. [Untitled photo of Hugh Hefner]. Retrieved July 13, 2011, from:http://blogs.sltrib.com/burger/uploaded_images/HughHefner1-727904.JPG As previously mentioned consequentialism is an approach to morality that envisionswhat should be done as determined by consequences. In addition to ethical theologies such as egoism,and utilitarianism consequentialism can also be taken into the ethical theologies of hedonism,intellectualism, and welfarism. Hendonism is the ethical belief that pleasure and pains are the sole motivators oflife. Normative hendonism claims that only pleasure has value and that pain only offers disvalue.(Moore, 2008, para. 1) From the view of hendonism the worth of friendships, actions, achievements,insight and character are all only as worthy as the pleasure they bring. And thus the purpose of life isto seek pleasure in all its manifestations. While this theology may be true it would seem a veryunfortunate and unethical from a personal or business standpoint to bring pleasure to oneself at thepain and suffering of another. However hedonists believe this ethical belief to be the driving force ofall creation and that one’s personal goal should be to increase the pleasures of others in order to fulfillpleasure in one’s own life. (Moore, 2008, para. 18) Intellectualism is the ethical belief system that promotes the best action is the onethat best grows and promotes knowledge whether or not it is agreed upon by society or the individual.This is a very emotionless ethical theology. Welfarism is the conviction that the best system that promotes the best action is theone that most increases economic health or happiness whether or not it is agreed upon by society orthe individual. This is the economic theology of most capitalists. 6
  • 7. [Untitled picture of Immanuel Kant]. Retrieved July 13, 2011, from:http://fcom.us.es/fcomblogs/vazquezmedel/files/2009/03/kant.jpg Deontology in contrast to consequentialism is the ethical belief that the good isdefined independently of the right (looking at inputs versus outcomes). Deontologists argue thatsome rights must never be violated even if they produce the most overall good. (Johnson, n.d., para.1) This is in striking contrast to the consequentialism utilitarian theology that stated that a choice thatproduces the maximum good to the largest amount of people is the ethically correct choice.Deontology can further be broken apart into three separate ethical philosophies to include kantianism,contractualism, and natural rights theory. Kantianism also called the categorical imperative is an ethical viewpoint inspired byImmanuel Kant that examines and judges’ morality based upon the nature of actions and theparticipation of the agents rather than the goals (good versus bad) achieved. (Kay, 1997, para. 3)According to Kant it was the actions and not the consequences that mattered and if you could notcause everyone to follow the rule then that rule was immoral. Contractualism is the view that morality is a contract based agreement (Ashford &Mulgan, 2008, para. 1) Contractualism held that moral acts are the ones that everyone would committo if viewed without bias. Natural rights theory is the principle that everyone has absolute or inalienablenatural rights which are universal and self evident. The United States Declaration of Independencedefined some of these natural rights as the right to life, liberty, and the pursuit of happiness. 7
  • 8. [Untitled picture of a Greek alabaster portrait of Aristotle]. Retrieved July 13, 2011,from: http://media-2.web.britannica.com/eb-media//84/87984-050-7C5547FE.jpg The second primary division of ethical theory is focused on the principle question,what sort of people should we be? This is known as ethics of character versus the ethics of conduct,discussed in the earlier slides. Ethics of character primarily revolves around virtue ethics an ethical belief systemfounded through the works of Plato and Aristotle that keys in on the inherent character role and virtuein moral philosophy of a person versus the persons duties or actions in order to create goodwill. Aristotle declared a virtuous person is someone whom has ideal character traitsstemming from birth that could be nurtured and stabilized allowing for that individual to lead a kindand generous life because of those character traits alone. A virtuous individual is kind because of theirinherent traits alone and does not perform as such in order to maximize utility or gain favors.(Athanassoulis, 2004, para. 2) Virtue ethics is rejected by most other philosophies because it fails to provideadequate guidance on how a virtuous person should act other than to hint that we should all act as avirtuous person would act. (Athanassoulis, 2004, para. 4 ) Instead of asking questions like, “What is the right action to take here and now?”virtue ethics proposes lifelong questions like “How should I live?”, and “What kind of person should Ibe?”. (Athanassoulis, 2004, para. 15) 8
  • 9. [Untitled illustration of a prison]. Retrieved July 13, 2011, from:http://www.unodc.org/images/southeasterneurope//prison051707.jpg Now that I have concluded discussing numerous ethical principles and theologies practicedthroughout the world it is now necessary to consider the implications and consequences that could befall ECG ifethical motivations and practices were to become shady or questionable. Remember as individuals and acorporate entity we should strive to maximize the principles of beneficence, least harmrespect for autonomy, and justice in all practices and thinking. Now we will discuss some of the consequences ofnot maximizing these four principles. The Enron scandal is considered by many to be the most notorious scandal in history. By thelate 1990s, Enron a natural gas company had turned into an online phenomenon. (Li, 2010, sect. 1) Andy Fastowand Jeffrey Skilling changed the business strategy and corporate culture of Enron increasing profits by deceivinginvestors. It can easily be seen that this strategy failed to incorporate the ethical principle of Justice(stipulating that ethical measures should be truthful and fare to everyone concerned), and when Enron’s growingdept ratio began weighing in on company profits a solution was sought. As a solution, Fastow, the former CFO ofEnron, suggested using a stacked and invalid balance sheet to continue misleading investors. (Li, 2010, sect. 1,para. 2) Although this unethical deceit was previously prohibited by the corporate ethical code as well as businesslaw Enron’s leadership choose to accept Fastow’s solution by waiving the ethical rules to allow for the alteredbalance sheets and in the process set up a cascading effect causing the death of Enron corporation, several longprison sentences for Enron leadership, and the loss of job and retirement benefits for thousands. Enron leadership took a teleological (ends justify means) point of view. However they failedto consider the four ethical principles of beneficence, least harm, respect for autonomy, and especially justice intothe equation. 9
  • 10. [Untitled picture of a man in a moral dilemma]. Retrieved July 13, 2011, from:http://talesofatwentysomething.files.wordpress.com/2011/06/moral-dilemma.jpg With the expected growth of ECG it is imperative that leadership and employeeskeep a vigilant eye out for unethical practices to include harassment, discrimination, espionage, insidertrading, dishonesty, and blackmail. Harassment includes a vast set of offensive behaviors with the sole intention ofdisturbing or upsetting another. Sexual harassment involves unwanted sexual advancement towardanother. Other types of harassment can include bulling, racial harassment, religious harassment,stalking, hazing, and electronic harassment. Discrimination involves the prejudicial treatment of an individual based upon theirmembership in some categorical group. Discrimination can be racial, ethical, sexual, political, orreligious. Espionage involves obtaining information considered private, secret, or confidentialwithout the permission of the owner. As a consulting business ECG consultants are consistentlyexposed to inside and outside information which must not be shared without the owners permission. As ECG prepares for the IPO it is imperative that ECG leadership and employees donot participate in insider trading. Insider trading involves trading of corporation stocks by employeeswith access to insider information (non-public information). Insider trading is illegal and punishableunder United States law. Dishonesty involves being deliberately deceptive to another (to include cheating andlying). In order for ECG to maintain status as an effective, honest, and profitable business honestyshould be paramount in all dealings at ECG and with ECG customers and employees. 10
  • 11. [Untitled illustration of a business ethics word collogue]. Retrieved July 13, 2011, from:http://us.123rf.com/400wm/400/400/kentoh/kentoh1104/kentoh110400053/9274202-business-ethics-and-guidelines-as-a-concept.jpg To reconstruct an organizational culture that benefits from sound ethical behaviors leadershipshould employ ethical moral codes and standards. Besides incorporating the four ethical principles ofbeneficence, least harm respect for autonomy, and justice in all practices and thinking the strategic vision andethical culture should incorporate the following culturally agreed upon sound ethical and leadership practices.These practices include communicating a clear vision, incorporating ethics policies, naming an executive position,establishing an ethics hotline, leading by example, and training leadership and employees (Turner, 2005, para. 8) Communicating a clear vision involves actively searching and responding to warning signs ofunethical practices in the corporate culture. This includes keeping an active eye open to harassment,discrimination, espionage, employee wellbeing, insider trading, dishonesty and corporate blackmail. Leadership and employee educators should seek reoccurring employee and leadershiptraining programs focused on teaching sound ethical decision making and encourage employees to survey andreport perceived unethical corporate practices. ECG has already made a great step forward by appointing an ethics compliance officerexecutive position and should continue to seek increased positions as the company continues to grow. Thesepositions alert employees, customers, and citizens that ethics is a valuable part of ECG’s culture and raises thevisibility of ethical performance. (Turner, 2005, para. 9) ECG should establish an ethics hotline to reduce fear-based employee silence at reportingunethical practices, and finally every member at ECG should make the best effort possible to lead by example. 11
  • 12. Today I covered numerous ethical principles from beneficence to justice and ethicalviewpoints from utilitarianism to egoism and many, many others.. I spoke about historical andprevailing ethical theologies that have diversified our global economy. I have talked about theconsequences of unethical conduct, using the example of Enron and offered a few theoreticaldilemmas that ECG is currently facing and or should be expecting to face with the announcement ofour IPO. Finally as the compliance officer I have suggested several proposed ethical practices forleadership and employees at ECG. Having a solid ethical view point that maximizes the four ethical principles whilerespecting and serving others is necessary and essential for corporate and individual success. It isimperative that ECG strives to maintain the highest standards of ethical conduct for the consequencesof not doing so can be many and irrevocable. With that said, I hope that the corporate atmosphere at ECG will continue toblossom into an atmosphere of conscientious ethical leadership and decision making and that ECG willaccelerate as one of the most ethics and economic driven consulting businesses in the world. Thank you for your time. I will leave the rest of our time open for questions anddiscussions about how to improve our corporate atmosphere. Does anyone have any questions? 12
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