1. Common Ethical Dilemmas
What, Why, and How You Can Do
Between Ethics and the Individual
• i t t 孟母三遷 (Mencius'' mother, th
Chinese ancient story:孟母三遷 (M
Chi i th three moves) refers t
) f to
the legend that Mencius' mother moved their house three times—from
beside a cemetery, marketplace, to finally beside a school—before finding a
location that she felt was suitable for his upbringing. As an expression, it
as s itable pbringing e pression
refers to the importance of a proper environment for the proper upbringing
• Especially, a person’s b h i i a b i
E i ll ’ behavior in business world will b strongly
ld ill be t l
influenced by the environment outside and inside (SWOT Analysis).
Environment is the ecology of ethics.
• Why be hi l? Why bother? Who
Wh b ethical? Wh b h ? Wh cares? A individuals we must care
? As i di id l
about ethics, because most of us prefer to work for ethical organizations,
what’s more, ethics is really an valuable assets for business organizations.
• Corporate culture is the soul of business ethics; whereas, the code of
conduct is the core value of ethics. It plays the role of
• The Objectives of Business:
Profit Maximization; Alternatives to Profit Maximization;
I There a Single, A
Si l Appropriate Obj ti F
i t Objective Function?
• Ethics Value In The Business:
Why Be Ethical? Wh B th ? A d Wh Cares?
Wh B Ethi l? Why Bother? And Who C ?
• An Individual in Business Ethics:
Common Ethi l Problems, and Individual’s Dil
C Ethical P bl d I di id l’ Dilemmas
and What Could be The Solutions and Decisions?
• Good Examples and Models:
Ethical Applications in The Real Business.
4. Learning Objectives
• U d t d the various objectives th t
Understand th i bj ti that
businesses as a business entity and Individual
as a employee my pursue and reflect on which
objects are most important to them.
• Understand the legal and social limitations on
business objectives and how these limitations
affect their decisions.
• Assess how their corporation’s culture and code
of conduct supports or inhibits its stated mission
and ethical philosophy.
5. • More C
M Countries B Chi
t i Ban Chinese P d t A id Milk S
Products Amid Scandal
• China's recent troubles with contaminated milk are prompting more skepticism in other
countries about its quality control, despite authorities' efforts to contain the crisis.
• A Chinese dairy factory worker monitors the production at a plant in Wuhan, central China.
• Countries stepped up testing of foods imported from China after Chinese authorities
disclosed that the industrial chemical melamine had tainted products -- including liquid
milk, yogurt and candy -- made by 22 companies. Baby formula contaminated by melamine
has killed at least three babies and sickened more than 50,000. Taiwan and Indonesia have
now joined the list of at least 12 regions that have banned Chinese-made dairy p
j g y products.
• New Zealand's Food Safety Authority warned the public on Wednesday that quot;unacceptablequot;
amounts of melamine were found in a popular Chinese candy called quot;White Rabbit Creamy
Candies.quot; British supermarket chain Tesco PLC said it recalled the candy as a
precautionary measure from its stores in the U.K., China and Malaysia.
U S and European consumer-safety officials said the crisis highlights the need for better
enforcement of public-safety standards at all stages of manufacturing. quot;You have to know
what's coming into your factory and what's going out of your factory,quot; said Nancy Nord,
acting head of the U.S. Consumer Product Safety Commission.
• Wall Street Journal SEPTEMBER 25, 2008
6. Lehman Brothers In Not New
The Only Difference is the Term
• I 1920s, there was Charles Ponzi’s “
In 1920 th Ch l P i’ “postal coupon
• 1970s reappeared as Robert Vesco’s “mutual funds
1970s, Vesco s mutual
• 1980s, with Charles Keating and the “multiple-book
accounting scam”; Ivan Boesky and Michael Milken’s
• 1990s leveled as Martha Stewart s “doyenne of
1990s, Stewart’s doyenne
• Obviously and painfully, this theme of mistakes of the
past reiterated in the present is dramatically portrayed in
Enron, WorldCom, Tyco, and a lot of other corporations.
7. Environment: An Ecology o Ethics
o e co ogy of cs
• A 孟母三遷(M
As 孟母三遷(Mencius'' mother, th
i th three moves) th ) the
same affection could be referred to the
importance of a proper environment for the
proper upbringing of ethical behavior.
• The world is a village no one live in vacuum
This is the same true for the corporations, it also
the members of society needing to play a
positive role in the business and real world.
8. The Motivation to Be Ethical
• Classical economists such as Ad
Cl i l i h Adam S i h assume that practically
Smith h i ll
all human behavior is motivated solely by self-interest (Invisible
hand)—that humans are purely rational economical actors who
make choices solely on the basic of cold cost/benefit analysis.
• Etzioni, in his book “ The Moral Dimension”, cites many more
examples and research evidence to document his claim that human
action has two distinct sources: the pursuit of pleasure or self-
interest, and moral commitments.
Accordingly, most h
di l t human d i i
decisions are bbased on
1.ethical and emotional considerations
2 as well as rational economic self-interest
They are motivated by both economic and moral concerns.
9. KY Lee Is Not YT Wang
ee s o a g
• 2007年5月17日 • 李焜耀曾說品牌是他最大的冒險。
機 為何圓品牌夢 會讓明基捲入
Source: Business Weekly
2007.05.21, A special report
concerning KY Lee when he was
speculated insider trade.
Reputation is respecting worthy.
10. Jack Welch CEO General Electric
Jack Welch’s lessons for success, Fortune, January 25, 1993:86-93
• Every organization needs
E i ti d
values….Values are what enable
people to guide themselves
thro gh that kind of change…
• Trust is enormously powerful in a
corporation. People won’t do their
b t unless th b li
they believe th ’ll b
• The only way I know to create that
ki d of trust i b l i out your
is by laying
values and then walking the talk.
• 道德VS道得: 儒商新
11. The Value of Corporate Ethics
• An outstanding in-depth article on the can be found in an article by Reggie
Van Lee, Lisa Fabish, and Nancy McGaw in this month's S+B.
Based on a survey at 365 companies in 30 countries, the authors claim quot;quot;.
The highlights of the survey and article are:
• A large number of companies are making their values explicit. That’s . The
ramifications of this shift are just beginning to be understood.
j g g
• Ethical behavior is a core component of company activities.
• Most companies believe values influence two important strategic areas —
relationships and reputation — but do not see the direct link to growth.
• Most companies are not measuring their “ROV ”
M i i h i “ROV.”
• Top performers consciously connect values and operations.
• Values practices vary significantly by (continental) region.
• The CEO’ tone really matters.
Th CEO’s t ll tt
12. Politic, Economic, and Social Balance
It’s A New Time Come
Economic Vibration The government
法律政策 can’t cure the souls
Law & Policy
co o c o e ted
Supposed to operate under market ethics—
each party pursues interest vigorously and
h t i t t i l d
intelligently, and the invisible hand makes
Social Code sure everyone does better in the long run.
be a >恩惠義務
13. An Ethics Survey 2005
Discusses what’s d i i b i
h t’ driving business ethics t d ?
• Describes What’s today’s state-of-the-art
business ethics practices?
b i thi ti ?
• Forecasts what will drive business ethics over
th next 10 years?
• Discusses what the best-in-class practices may
look lik i the
l k like in th year 2015?
Source: American Management Association/Human
Resource Institute 2005 study.
14. Do You Know ?
o ou o
Why People Compromise Ethical Standards
• Did you know that ?
k th t
• the number one factor most likely to cause
people to compromise ethical standards is
quot;pressure to meet unrealistic business
• The second answer was,
quot;a desire to further one's careerquot;
a one s career
• and number three,
quot;desire to protect one's livelihood.quot;
desire one s livelihood.
This information comes from a global study made by the American
15. Ethics Global Study 2005
Wh exactly are the reasons
behind the rise in corporate unethical behavior?
• According to American Management’s study, the number 1 answer from the 1,100 respondents to
• Factors Most Likely to Cause People to Compromise Ethical Standards was Pressure to meet
unrealistic business objectives/deadlines.
• Considering that marketplace competition was cited as a major business driver of ethics today
and the respondents believe, to remain a major driver 10 years into the future in addition to the
desire to further one’s career and protect one’s livelihood, what can companies do now to p
p p protect
themselves from future scandals?
• Answers to these questions, areas where organizations can draw the line of first defense
are found in their ability to
1 make transparent current business cultures
2.Leadership support and modeling ethical behavior, training programs (through a Train-the-
Trainer Certification Program where individual accountability and a responsibility is tied to
promotional opportunities, bonuses/incentives, retention, future assignments and departments
which includes new hires straight up to the C Levels and into the Board of Director)
new-hires C-Levels Director),
3.the development of an Ombudsman Program with 24/7 anonymous hotline, an enforceable Code
of Conduct and ethic audits addressing technology, Corporate Social Responsibility Program are
just to name a few.
16. Why Lehman Makes Mistakes?
When Unlimited Profit Meet Battling Competition
• Lehman B th
L h Brothers FFormer R t ti in Taiwan 陳嫦芬
Representative i T i
• If the board of directors and top leaders of either Lehman’s Brother,
or other organizations still keep the unlimited p
g p pursuit of p
profit as the
only objective; consequently, enforced the management running
business with all attention to profit maximization, then the same
story will repeat again and again
17. Enron’s Wrongdoing
The ultimate failure of the system
Enron I ’t Real but Risk Money
E Isn’t R l b t Ri k M
had never been profitable under any acceptable
definition of “profitability”
•The financialization of all things
Integrity: Everything rested
•Hedge derivatives with derivatives
on the reputation
•Refer tax division as a profit center
Auditing VS Consulting
•Sell underperforming assets to improve balance
•Never owned anything that
Kept silent to the checks and balances
•created real value and make real money
Had Profited form its participation The Wall Street Fixation
Everybody knows that the market
has to be kept happy
The only real things Enron had
--were sold to raise quarterly earnings
The Market need huge funds to grow their assets
And that need coincides nicely with the opportunity of insiders
To make a huge amount of money by manipulating stock
And cashing in options
18. Why King Car Makes Mistakes?
Limited Equity VS Unlimited Profits
• 罪莫大於可欲 禍莫大於不知足;咎莫大於欲得 故知定之
• 欲而不知止, 失其所以欲; 有而不知足, 失其所以有。(司馬
• It seems true that greedy misleading is the main
reason why lots of corporations’ falling into guile.
• Greed as Plato pointed out so long ago is
essentially unlimited. If I am enjoying a
comfortable existence now, I immediately see
that with more money I could enjoy a l
h ih ld j luxurious
existence, and I want it, also immediately.
19. Johnson & Johnson
Learning from Tylenol’s Rebound
• “It’s easier to turn water into wine than to bring back Tylenol It is dead” An
It s Tylenol. dead
advertising head said when Tylenol crisis happened in 1982, 7 deaths in Chicago
area from the cyanide-laced Exta-Strength Tylenol capsules.
• Johnson & Johnson took actions soon in few days:
1 Yanked millions of bottles of Tylenol off the shelves across the country;
2.Ran newspaper ads 10 days after the tragedy offering to swap Tylenol tablets.
3.Investigated tamper-resistant packaging; to develop marketing strategies to rebuild
the brand—coupons for consumers and discounts for retailers—and to employ once
the i i
th crisis was over.
4.Obtained letter from the Food and Drug Administration stating that the agency was
satisfied that there had been no criminal tampering with the product manufactured by
Johnson & Johnson.
5.Aired ‘Roadblock” d
5 Ai d ‘R dbl k” ads, and granted access t media, t l t th publics and
d t d to di to let the bli d
consumers know the whole stories through corporate statement and actions to do.
• Tylenol had more than 28.6 % share of the $1.2 billion non-prescription pain relieve market, and
over 80 % of it t t l Still after the crisis, competitors made surprisingly small headway in
f its total. Still, ft th i i tit d i i l ll h d i
grabbling off chucks of its market share by about 1%.
20. Johnson & Johnson Ranks No. 1 in National Corporate
Reputation Survey for Seventh Consecutive Year
• ROCHESTER, N.Y. December 7, 2005 The Annual RQ 2005 study conducted by
Harris Interactive measures the corporate reputations of the most visible
companies in the United States. According to this year Reputation survey, for
the seventh consecutive year,
• Johnson & Johnson ranks No. 1 with an RQ score of 80.56.
• Coca Cola ranks second (79.69),
• Google ranks third, with an RQ score of 79.52.
• The study evaluates companies along six key dimensions :
2.vision and leadership,
5.products and services,
6.workplace environment and financial performance.
Overall the study shows that Corporate America reputation has declined
slightly since 2004. This year, the majority of U.S. adults (71%) say its
reputation is quot;not good/terriblequot; compared to 68% a year ago.
21. There Is An World of Imagination
Crested by Mathematicist Edwin Abbott
• Line Land 線國:
Business is business, profit is all thing, careless of law and moral, if will not
be punished. This corporation is called Alpha looking for short term profit.
• Flat Land 平面國:
While in pursuit of profit, corporation needs to obey the law and rule, but
care not too much moral. It called Omega firm such as “The Body Shop”
and “ Dow Corning “paying attention to limited social responsibility and
g p y g p y
middle term profit.
• Real Land 真實國: A Company of Character
Economic and business are close link with law, moral, and reputation,
Corporation Zeta such as ‘Merck” operated in balance.
Source: Kevin T. Jackson, Building Reputational Capital: strategies for
integrity and fair play that improve the bottom line, 2004.
i t it d f i l th t i th b tt li 2004
22. The fundamental findings were:
• Ethical behavior is a core component of company activities. Of
the 89 percent of companies that have a written corporate values
statement, 90 percent specify ethical conduct as a principle. Further,
81 percent believe their management p
p g practices encourage ethical
behavior among staff. Ethics-related language in formal statements
not only sets corporate expectations for employee behavior; it also
serves as a shield companies are using in an increasingly complex
and global legal and regulatory environment
• Most companies believe values influence two important
strategic areas — relationships and reputation — but do not
see the direct link to growth Of the companies that value
commitment to customers, 80 percent believe their principles
reinforce such dedication. Substantial majorities also categorize
employee retention and recruitment and corporate reputation as
both important to their business strategy and strongly affected by
b th i t t t th i b i t t d t l ff t d b
values. However, few think that these values directly affect earnings
and revenue growth.
23. The Findings 2
• Most companies are not measuring their “ROV ” In a business
environment increasingly dominated by attention to definable returns
on specific investments, most senior executives are surprisingly lax
in attempting to q
p g quantify a return on values (
y (ROV). Fewer than half
say they have the ability to measure a direct link to revenue and
• Top performers consciously connect values and operations.
Companies th t report superior fi
C i that t i financial results emphasize such
i l lt h i h
values as commitment to employees, drive to succeed, and
adaptability far more than their peers. They are also more
successful in linking values to the way they run their companies: A
significantly greater number report that their management practices
are effective in fostering values that influence growth, and
executives at these companies are more likely to believe that social
and environmental responsibility have a positive effect on fi
d i t l ibilit h iti ff t financial
24. The Findings 3
• Values practices vary significantly by region Asian and
European companies are more likely than North American firms to
emphasize values related to the corporation’s broader role in society,
such as social and environmental responsibility. The manner in
which companies reinforce values and align them with company
strategies also varies by region.
• The CEO’s tone really matters. Eighty-five percent of the
respondents say their companies rely on explicit CEO support t
d t th i i l li it t to
reinforce values, and 77 percent say such support is one of the
“most effective” practices for reinforcing the company’s ability to act
on its values It is considered the most effective practice among
respondents in all regions, industries, and company sizes. (See
“Leaders Make Values Visible,” below.)
25. Common Ethical Problems
Human R Resources I Issues: Di i i ti
• C fli t of Interest: O t bribes or ki kb k
Conflicts f I t t Overt b ib kickbacks,
Subtle “Bribes”, Influence, Privileged Information;
• C t
Customer C fid
Confidence: C fid ti lit P d t
safety, Truth in advertising, Special fiduciary
• Use of Corporate Resources: Use of corporate
reputation Corporate financial resources
providing honest information.
26. Sexual Harassment
• If a man makes a pass at a female colleague, it
k t f l ll
is not sexual harassment. If he continues, it is.
(Letitia Baldrige PR consultant on corporate
etiquette, quoted in U.S. News & World Report,
• I am treating an executive now who’s been sued
for calling a secretary “honey”. He’s become
honey He s
functionally paranoid, afraid to talk to people—
especially women at work—at all. (Steven
p y (
berglas, clinical psychologist, quoted in Fortune,
September 8, 1997)
27. What Is code of conduct ?
• A set of rules outlining the responsibilities of or proper practices f
f l li i h ibili i f i for
an individual or organization. Related concepts include ethical codes
and honor codes.
• quot;Principals, values, standards, or rules of behavior that guide
the decisions, procedures and systems of an organization in a
way that (a) contributes to the welfare of its key stakeholders
and (b) respects the rights of all constituents affected by its
In its 2007 International Good Practice Guidance, Defining and Developing an Effective Code of Conduct for
Organizations, the International Federation of Accountants  provided the following working definition:
28. Code of Ethics
29. Create & Evaluate
A Code of Ethics and Conduct
30. A Manu for Managing Ethics
31. Dell’s Code of Conduct
A Good Model to Learn
• Dell s
Dell's Higher Standard
• Dell's success is built on a foundation of personal and professional integrity.
We hold ourselves to standards of ethical behavior that go well beyond legal
minimums. We never compromise these standards and we will never ask
any member of the Dell team to do so either. We owe this to our customers,
suppliers, shareholders and other stakeholders. And we owe it to ourselves
because success without integrity is essentially meaningless.
• Our higher standard is at the heart of what we know as the quot;Soul of Dell -
the statement of the values and beliefs which define our shared global
culture. This culture of performance with integrity unites us as a company
that understands and adheres to our company values and to the laws of the
countries in which we do business Just as the Soul of Dell articulates our
values and beliefs, the following Code of Conduct provides guidance to
ensure we meet our higher standard and conduct business the Dell Way -
the right way, which is quot;Winning with Integrity.quot; Simply put, we want all
members of our team along with our shareholders customers suppliers
team, shareholders, customers,
and other stakeholders, to understand that they can believe what we say
and trust what we do
32. Dell’s Code of Conduct
A Good Model to Learn
• . Our higher standard includes several key characteristics that both underpin the Soul
of Dell and provide the foundation for our Code of Conduct:
• Trust - Our word is good. We keep our commitments to each other and to our
• Integrity - We do the right thing without compromise. We avoid even the
appearance of impropriety.
• Honesty - What we say is true and forthcoming - not just technically correct. We are
open and transparent in our communications with each other and about business
• Judgment - We think before we act and consider the consequences of our actions.
• Respect -We treat people with dignity and value their contributions. We maintain
fairness in all relationships.
• Courage - W speak up for what is right. We report wrongdoing when we see it.
C We k f h t i i ht W t d i h it
• Responsibility - We accept the consequences of our actions. We admit our
mistakes and quickly correct them. We do not retaliate against those who report
violations of law or policy.
33. What’s Corporation
Legalities is Clear, But Morality is Not Exact
• Legally, corporations are” fictitious persons” (Sth
Invested or imagined) created by the law and
empowered with certain rights and abilities that
allow them to be recognized as financial entities;
• Capable of carrying on commercial transactions,
and as institutional citizens that can be held
accountable to regulation and taxation.
• In general, the legalities are relatively easy to
34. What’s Corporation
Legalities is Clear, But Morality is Not Exact
• However the moral issues involved are much less clear
• Is a corporation responsible only to its shareholders?
p p y
• Is financial performance the only measure of corporate
• Are corporations moral agents in the same sense as
• Can corporation be held morally accountable for their
decisions and b h i ?
d i i d behavior?
• Beyond the strict requirements of the law, what rules,
rights, and obligations do corporations share with other
stakeholders, that is employees, customers, vendors,
and the community and society?.
35. Ethics and The New Management
Organization and Business World
• Th new business paradigm-people and work:
The b i di l d k
Work organizations are viewed as communities, and employees are
members of these communities
Business is no longer just about products and bottom line profits.
The words products and profits join with words like meaning and
• The new business paradigm-interconnectedness :
Organizations are viewed as i t
O i ti i d integral parts of an i t
l t f interconnected
world community and ecosystem.
It has clearly shifted p
y perceptions of social responsibility beyond the
p p y y
corporation’s front door-to its suppliers and their suppliers both local
36. Examples of Interconnectedness
Sears: W ’t import forced-labor products f
Won’t i tf dl b d t from Chi
• Dow Chemical: Asks its international suppliers to
conform to U.S. Standards on pollution and safety that
are frequently tougher than local laws.
• Levi Strauss & Co.: Has ditched some suppliers that
didn’t measure up to its tough conduct standards, and
has exacted reforms from many others.
• Home Depot: Distributed a questionnaire to its
worldwide suppliers, asking whether any factory in the
supply chain employs children or p
pp y p y prison convicts.
37. A Booz Allen Hamilton/Aspen Institute survey of corporate
behavior finds that leading companies are crafting a purpose-
• The V l
Th Value of Corporate
by Reggie Van Lee, Lisa
Fabish and Nancy McGaw
• Increasingly, companies
around the world have adopted
formal statements of corporate
f l t t t f t
values, and senior executives
now routinely identify ethical
behavior, honesty integrity
behavior honesty, integrity,
and social concerns as top
issues on their companies’
38. New Week We Will Discuss
• Deciding What’s Right? And How to Deal
Between Black and While?
• How to Build A Framework to Think and To
Manage Business Ethically?
• From Prescriptive and Psychological