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Business	  Ethics	         Tathagat	  Varma	           Session	  4/12:	  7-­‐Aug-­‐09	  
Painful	  Personal	  Encounters	  •  Ken	  Shelton,	  editor	  and	  publisher	  of	  Execuve	     Excellence	  magazine,	...
Painful…	  •  When	  one	  area	  or	  aspect	  of	  our	  lives	  or	  organizaIons	     is	  more	  or	  less	  legiImat...
Painful…	  •  Unethical	  behavior	  is	  most	  oSen	  about	     subtleIes,	  gray	  areas,	  whisper,	  shadows,	     n...
The	  Cost	  of	  Being	  Ethical	  •  Norman	  AugusIne,	  President	  &	  CEO	  of	  Lockheed	     MarIn	      –  Every	...
The	  Cost…	  –  The	  truly	  difficult	  ethical	  choices	  in	  life	  involve	  day-­‐to-­‐day	     decisions,	  where	...
Ethics	  in	  Sports	  -­‐	  Baseball	  •  In	  1959,	  Ted	  Williams	  was	  40	  years	  old	  and	  closing	  out	    ...
Ethics	  in	  Sports	  -­‐	  Golf	  •  Golfers	  someImes	  joke	  about	  the	  player	  who	  cheated	     to	  regularl...
Ethics	  in	  Business	  -­‐	  Sears	  •  A	  century	  ago,	  Richard	  Sears	  –	  founder	  of	  Sears	     Roebuck	  a...
Deterring	  Dubious	  Business	  Behavior	  •  Alfred	  Marcus,	  	  Carlson	  School	  of	  Management,	  University	    ...
A	  Price	  for	  Principle	  •  David	  Neldert,	  Director	  of	  Auxiliary	  Services	  at	     Anderson	  University,	...
Reinforcing	  Ethics	  in	  Recession	  •  David	  Perry,	  Consultant	  with	  the	  Ethics	  Journal	      –  Recessiona...
A	  QuesIon	  of	  Ethics	  •  Barbara	  Strandell,	  Consultant	     –  There	  is	  an	  implicit	  social	  contract	  ...
A	  QuesIon…	  •  Many	  employees	  are	  unhappy	  with	  their	  work,	     but	  unable	  to	  bail	  out;	  so	  they...
Ethical	  Leadership	  •  Willard	  Butcher,	  reIred	  Chairman	  of	  Chase	  ManhaLan	     CorporaIon	      –  Forty	  ...
Why	  ‘Good’	  Managers	  make	  Bad	                 Ethical	  Choices?	  •  Saul	  Gellerman	  •  Four	  commonly	  held...
Why	  ‘Good’…	  •  Top	  execuIves	  seldom	  ask	  their	  subordinates	  to	     do	  things	  that	  both	  of	  them	 ...
Why	  ‘Good’…	  •  How	  can	  managers	  avoid	  crossing	  a	  line	  that	  is	     seldom	  precise?	  Unfortunately,	...
Why	  ‘Good’…	  •  …there	  is	  a	  difference	  between	  taking	  a	  worthwhile	     economic	  risk	  and	  risking	  ...
Why	  ‘Good’…	  •  The	  sad	  truth	  is	  that	  many	  managers	  have	     been	  promoted	  on	  the	  basis	  of	  “...
Why	  ‘Good’…	  •  Top	  management	  has	  a	  responsibility	  to	  exert	  a	  moral	     force	  within	  the	  compan...
Examining	  Ethics	  of	  a	  Business	  decision	  •  Ethics	  without	  the	  Sermon	  –	  Laura	  Nash	  •  12	  quesIo...
Q2	  •  How	  would	  you	  define	  the	  problem	  if	  you	  stood	  on	     the	  other	  side	  of	  the	  fence	  ?	 ...
Q3	  •  How	  did	  this	  situaIon	  occur	  in	  the	  first	  place?	      –  As	  important	  as	  deciding	  the	  eth...
Q4	  •  To	  whom	  and	  what	  do	  you	  give	  your	  loyalIes	  as	  a	     person	  and	  as	  a	  member	  of	  the...
Q4…	  –  The	  US	  securiIes	  industry,	  for	  example,	  is	  one	  of	  the	  most	     rigorous	  industries	  in	  ...
Q5,	  Q6	  •  What	  is	  your	  intenIon	  in	  making	  this	  decision?	  •  How	  does	  this	  intenIon	  compare	  w...
Q7	  •  Whom	  could	  your	  decision	  or	  acIon	  injure?	     –  In	  an	  integrated	  society	  where	  business	  ...
Q8	  •  Can	  you	  engage	  the	  affected	  parIes	  in	  a	     discussion	  of	  the	  problem	  before	  you	  make	  ...
Q9	  •  Are	  you	  confident	  that	  your	  posiIon	  will	  be	  as	     valid	  over	  a	  long	  period	  of	  Ime	  a...
Q10	  •  Could	  you	  disclose	  without	  qualm	  your	     decision	  or	  acIon	  to	  your	  boss,	  your	  CEO,	  th...
Q11	  •  What	  is	  the	  symbolic	  potenIal	  of	  your	  acIon	  if	     understood?	  If	  misunderstood?	      –  Th...
Q12	  •  Under	  what	  condiIons	  would	  you	  allow	  excepIons	  to	     your	  stand?	      –  If	  we	  accept	  th...
References	  •  hLp://web.tepper.cmu.edu/ethics/aa/   arthurandersen.htm	  for	  mini-­‐case	  studies	  •  Integrity	  at...
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Business Ethics 03

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Courseware from the course on Business Ethics that I taught at St. Joseph\'s College of Business Administration in 2009

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Transcript of "Business Ethics 03"

  1. 1. Business  Ethics   Tathagat  Varma   Session  4/12:  7-­‐Aug-­‐09  
  2. 2. Painful  Personal  Encounters  •  Ken  Shelton,  editor  and  publisher  of  Execuve   Excellence  magazine,  the  world’s  leading  execuIve   advisory  newsleLer,  and  Personal  Excellence  magazine   –  One  reason  unethical  behavior  is  so  common  is  because  it   can  be  very  rewarding  in  the  short-­‐term.  The  near-­‐term   costs  of  honest  behavior  are  well  documented,  making  the   ethical  choice  very  tough,  especially  when  the  long-­‐term   payoff  or  advantage  seems  remote  at  best.     –  Part  of  the  maturaIon  process  is  to  pass  through  close   encounters  with  unethical  people,  judging  for  ourselves   who  is  who  and  what  is  what,  and  then  associaIng  with   the  people  and  organizaIons  we’re  most  comfortable   with.   –  But  aSer  an  encounter  or  two,  we  ought  to  spot  a  trend,   have  the  eyes  to  see  certain  signs,  certain  things  coming,   before  we  experience  them  
  3. 3. Painful…  •  When  one  area  or  aspect  of  our  lives  or  organizaIons   is  more  or  less  legiImate,  all  other  areas  then  borrow   credibility  from  the  Bank  of  Strength  (our  strong   points).  So,  we  may  be  highly  ethical  in  one  area,  highly   unethical  in  another.  And  when  our  unethical  acts  are   exposed,  our  loved  ones  are  typically  “stunned”  or   “shocked”,  and  quick  to  come  to  our  defense  because   they  know  us  to  be  legiImate  and  lovable  in  other   roles.  And  yes,  we  may  be  based  on  a  solid  foundaIon   in  a  profession  only  because  it  imposed  a  certain   discipline  on  us,  meaning  we  must  abide  by  certain   rules  and  regulaIons,  checks  and  balances  within  the   system.  But  once  outside  that  system  or  specialty,  we   may  register  counterfeit  to  a  high  degree.  
  4. 4. Painful…  •  Unethical  behavior  is  most  oSen  about   subtleIes,  gray  areas,  whisper,  shadows,   nuances,  and  noise.  And  because  of  duality  in   people,  differences  can  be  hard  to  detect.  We   are  all  composites,  not  100%  counterfeit  or   authenIc.  We  are  both  originals  and  copies  –   nurtured  from  seed  and  made  from  scratch  in   some  areas,  and  influenced  by  imitaIon,   comparison,  or  compeIIon  in  others.  
  5. 5. The  Cost  of  Being  Ethical  •  Norman  AugusIne,  President  &  CEO  of  Lockheed   MarIn   –  Every  great  leader  puts  ethics  first.  In  business,  it  means   pufng  ethics  before  profits,  before  sales,  even  before   staying  in  business   –  I  personally  believe  hardly  anyone  comes  to  work  in  the   morning  –  or  shows  up  at  school  or  goes  out  on  the  ball   field  –  with  the  idea  of  doing  something  unethical.  I   believe  most  people  want  to  be  honest  and  ethical.  But  if   people  set  out  to  do  the  ‘right  thing’,  why  do  so  many  end   up  doing  something  unethical?  The  answer  is  that  being   ethical  oSen  –  perhaps  even  usually  –  entails  a  short-­‐term   cost   –  Well,  no  one  ever  said  being  ethical  is  easy!  Being  ethical   means  that  we  oSen  must  subsItute  short-­‐term  gains  for  a   greater,  long-­‐term  reward  
  6. 6. The  Cost…  –  The  truly  difficult  ethical  choices  in  life  involve  day-­‐to-­‐day   decisions,  where  the  immediate  cost  is  very  evident  and   the  long-­‐term  “payoff”  or  advantage  seems  remote.  –  I  believe  what  needs  to  be  said  to  our  friends,  our   employees,  and  our  colleagues  is  that  by  paying  the  price   of  being  ethical  today,  we  are  actually  invesIng  for  the   longer  good.  We  all  know  that  nothing  worth  achieving  is   easily  aLained.  We  must  not  reject  ethical  behavior   because  it  is  hard  in  the  short  run,  but  embrace  it  for  the   fact  that  it  yields  dividends  over  the  long  run.  –  The  great  French  Marshal  Lyautey  once  asked  his  gardener   to  plan  a  certain  type  of  tree.  The  gardener  protested  that   the  tree  was  slow-­‐growing  and  would  not  reach  maturity   for  a  hundred  years.  The  Marshal  replied,  “  In  that  case,   there  is  no  Ime  to  lose;  plant  it  this  aSernoon!”    
  7. 7. Ethics  in  Sports  -­‐  Baseball  •  In  1959,  Ted  Williams  was  40  years  old  and  closing  out   his  career  with  the  Boston  Red  Sox.  He  was  suffering   from  pinched  nerve  in  his  neck  that  reason.  For  the   first  Ime  in  his  career,  he  baLed  under  .300,  hifng   just  .254  with  10  home  runs.  He  was  the  highest   salaried  player  in  sposts,  making  $150,000  a  year.  The   following  winter,  the  Red  Sox  sent  him  the  same   contract  he  had  during  his  disappoinIng  season.  •  When  we  got  the  proposal,  Williams  sent  it  back  with  a   note  saying  that  he  would  not  sign  it  unIl  they  gave   him  the  full  pay  cut  allowed.  “I  was  always  treated   fairly  by  the  Red  Sox  when  it  came  to  contracts”,   Williams  said.  “Now  they  were  offering  me  a  contract  I   didn’t  deserve.  And  I  only  wanted  what  I  deserved”.   The  upshot  was  that  Williams  cut  his  own  salary  by   25%.  
  8. 8. Ethics  in  Sports  -­‐  Golf  •  Golfers  someImes  joke  about  the  player  who  cheated   to  regularly  that  when  he  once  had  a  “hole  in  one”,  he   wrote  down  “zero”  in  his  scorecard.    •  A  more  admirable  approach  to  ethical  behavior  on  the   links  was  exhibited  once  during  the  Kemper  Open.  The   great  professional  golfer  Tom  Kite  wanted  his  playing   partner,  Grant  Waite,  that  Waite  was  about  to  commit   a  rules  infracIon  that  would  cost  him  two  strokes.   Waite  corrected  his  behavior,  avoided  the  two-­‐stroke   penalty,  and  went  on  to  win  the  tournament,  eking  out   a  one-­‐stroke  victory  –  over  Tom  Kite!  Not  only  did  Kite   lost  the  victory  trophy,  he  also  lost  $94,000  in  prize   money  as  a  result  of  coming  in  second.  But  he  gained  a   great  deal  of  respect  that  is  far  more  lasIng.  
  9. 9. Ethics  in  Business  -­‐  Sears  •  A  century  ago,  Richard  Sears  –  founder  of  Sears   Roebuck  and  Company  –  started  the  modern  mail   order  industry,  supplying  a  burgeoning  naIon   with  innovaIve  products  and  building  a  business   that  gave  employment  to  hundreds  of  thousands   of  people.  •  In  his  zeal  to  sell  merchandize,  Sears  occasionally   would  get  carried  away  with  catalogue   descripIons,  praising  products  far  beyond  the   literal  truth.  This  in  turn  led  to  returned   merchandise  and  reduced  profits.    •  But  Sears  learned  his  lesson.  In  later  years,  he   was  fond  of  saying,  “Honesty  is  the  best  policy.  I   know  because  I’ve  tried  it  both  ways.”  
  10. 10. Deterring  Dubious  Business  Behavior  •  Alfred  Marcus,    Carlson  School  of  Management,  University   of  Minnesota   –  Enlightened  self-­‐interest  may  not  be  sufficient  guarantee  that   ethical  behavior  will  take  place;  a  stronger  ethical  stance,  once   which  is  not  Ied  to  pure  self-­‐interest,  may  be  needed   –  The  only  dependable  deterrent  to  dubious  behavior  is  moral   duty,  an  awareness  of  the  consequences  in  one’s  acIons  and  an   aLenIon  to  right  conduct.  The  meaning  here  is  that  managers   should  treat  people  in  the  organizaIon  and  those  outside  of  it   with  respect,  as  ends  and  not  as  means,  as  Kant  as  stated  it,  and   as  automonous  creatures  not  subject  to  the  managerial   coercion.  These  standards  should  apply  regardless  of  the  short-­‐   or  long-­‐term  shareholder  impact.   –  Stockholders  should  not  necessarily  be  the  sole  determinant  of   “goodness”  of  a  parIcular  policy.  The  the  raIonal  pursuit  of  self-­‐ interest  always  comes  before  moral  duty,  then  humanity  is  the   great  loser.  
  11. 11. A  Price  for  Principle  •  David  Neldert,  Director  of  Auxiliary  Services  at   Anderson  University,  Anderson,  Indiana   –  The  price  of  principle  may  never  cost  us  personal  loss.   But  principle  may,  at  Imes,  demand  every  cent  we   have  invested.  The  lives  of  Nelson  Mandela,  of   Abraham  Lincoln  and  of  the  great  social  reformer   Mahatma  Gandhi  let  us  know  that  imprisonment  –   and  even  death  –  may  be  the  price  of  principle.   Charles  Swindoll  writes  about  costs  in  his  best-­‐selling   book,  Strengthening  Your  Grip.  Swindoll  reminds  us   that  the  fight  for  principle  –  for  truth,  integrity  and   jusIce  –  can’t  be  fought  by  “weary,  ill-­‐trained,   noncommiLed,  half-­‐hearted  troops”.  The  war  of   principle  will  be  won  in  the  long  run  by  those  who  are   willing  to  pay  the  price  for  principle,  even  if  the  cost  if   life  itself.  
  12. 12. Reinforcing  Ethics  in  Recession  •  David  Perry,  Consultant  with  the  Ethics  Journal   –  Recessionary  pressures  manifect  themselves  in  many   areas:  cornet-­‐cufng  in  producIon;  “creaIve”   accounIng’  no-­‐holds-­‐barred  markeIng  and  sales   pracIces’  and  high-­‐pressure  purchasing  techniques,   and  in  the  conduct  of  layoffs  and  RIFs.  RIFs  generate   employee  grievances  and  resentment.  Who  to  lay  off   is  probably  the  most  agonizing  decision  a  manager  can   face  but  a  RIF  is  a  strong  test  of  whether  ethics  has   truly  become  imbedded  in  the  corporate  culture.   –  If  employees  see  that  the  RIF  leaves  unscathed  an  “old   boy  network”  in  management,  if  they  see  their   reIrement  benefit  cut,  or  f  they  see  that  ethics   “whistleblowers”  are  among  the  first  to  be  let  go,   employees  will  be  unlikely  to  take  seriously  any  future   company  statements  on  business  ethics.  
  13. 13. A  QuesIon  of  Ethics  •  Barbara  Strandell,  Consultant   –  There  is  an  implicit  social  contract  that  management   of  our  large  publicly  held  corporaIons  have  with   shareholders,  customers,  and  employees.  Many   corporate  mission  statement  make  those  social   contracts  explicit….The  social  contract  with  employees   is  being  broken.  This,  this  “great  asset”  is  currently   experiencing  record  levels  of  work-­‐related  stress.     –  To  understand  why  this  contract  has  gone  awry,   merely  look  under  the  saIn  sheets  of  the  corporate   culture:  management  negligence  creates  a  conInuous   deterioraIon  of  morale,  pride  and  loyalty.  Layoffs,   acquisiIons  and  divesItures  obviously  have  a  serious   impact  on  the  “survivors”.  But  the  real  disease  is  the   on-­‐going  management  pracIces  that  alienate  and   suffocate  people  on  a  daily  basis.  
  14. 14. A  QuesIon…  •  Many  employees  are  unhappy  with  their  work,   but  unable  to  bail  out;  so  they  hang  in  there,   with  resentment  toward  the  company,   working  at  about  half  of  their  potenIal  pace.   They  oSen  “act  out”  by  abusing  the  system   the  way  they  feel  when  they  have  been   abused;  ulImately,  they  burn  out,  making   worklife  even  more  miserable  for  those   around  them.  The  net  result  is  a  less   producIve  workforce.  
  15. 15. Ethical  Leadership  •  Willard  Butcher,  reIred  Chairman  of  Chase  ManhaLan   CorporaIon   –  Forty  years  ago,  I  received  some  simple  advise  that  has  stayed   with  me  from  a  family  friend  named  Marion  Folsom,  the   architect  of  our  naIon’s  social  security  system  and  then  a  top   execuIve  of  the  Eastman  Kodak  Company.     –  “Bill”,  Mr.  Folsom  said,  “you  are  going  to  find  that  95%  of  all   decisions  you’ll  ever  make  in  your  career  could  be  made  as  well   by  any  reasonably  intelligent  high  school  sophomore.  But  they’ll   pay  you  for  the  other  5%.”   –  And  it’s  those  5%  that  will  be  the  most  difficult  –  the  subjecIve   51-­‐49  decisions  that  will  call  into  play  your  own  long-­‐term   vision,  your  corporate  ideals,  the  discipline  and  constancy  of   your  character.  If  in  making  these  decisions,  you  rely  on  clear   ethical  principles,  a  firm  commitment  toward  ethical  behavior,   and  an  inflexible  standard  of  what’s  right  and  wrong,  then  your   track  record  will  be  very  good.  
  16. 16. Why  ‘Good’  Managers  make  Bad   Ethical  Choices?  •  Saul  Gellerman  •  Four  commonly  held  raIonalizaIons  that  can   lead  to  misconduct:   –  A  belief  that  the  acIvity  is  within  reasonable  ethical   and  legal  limits  –  that  is,  that  is  not  “really”  illegal  or   immoral   –  A  belief  that  the  acIvity  is  in  the  individual’s  or  the   corporaIon’s  best  interests  –  that  the  individual   would  somehow  be  expected  to  undertake  the  acIvity   –  A  belief  that  the  acIvity  is  “safe”  because  it  will  never   be  found  out  or  publicized;  the  classic  crime-­‐and-­‐ punishment  issue  of  discovery   –  A  belief  that  because  the  acIvity  helps  the  company   the  company  will  condone  it  and  even  protect  the   person  who  engages  in  it    
  17. 17. Why  ‘Good’…  •  Top  execuIves  seldom  ask  their  subordinates  to   do  things  that  both  of  them  know  are  against  the   law  or  imprudent.  But  company  leaders   someImes  leave  things  unsaid  or  give  the   impression  that  there  are  things  don’t  want  to   know  about.  In  other  words,  they  can  seem,   whether  deliberately  or  otherwise,  to  be   distancing  themselves  from  their  subordinates’   tacIcal  decisions  in  order  to  keep  their  own   hands  clean  if  things  go  awry.  OSen  they  lure   ambiIous  lower  level  managers  by  implying  that   rich  rewards  await  those  who  can  produce   certain  results  –  and  that  the  methods  for   achieving  them  will  not  be  examined  too  closely.  
  18. 18. Why  ‘Good’…  •  How  can  managers  avoid  crossing  a  line  that  is   seldom  precise?  Unfortunately,  most  know   that  they  have  overstepped  it  only  when  they   have  gone  too  far.  They  have  no  reliable   guidelines  about  what  will  be  overlooked  or   tolerated  or  what  will  be  condemned  or   aLacked.  When  managers  must  operate  in   murky  borderlands,  their  most  reliable   guideline  is  an  old  principle:  when  in  doubt,   don’t.  
  19. 19. Why  ‘Good’…  •  …there  is  a  difference  between  taking  a  worthwhile   economic  risk  and  risking  an  illegal  act  to  make  more   money  •  Contrary  to  popular  mythology,  managers  are  not  paid   to  take  risks;  they  are  paid  to  know  which  risks  are   worth  taking.  Also,  maximizing  profits  is  a  company’s   second  priority,  not  its  first.  The  first  is  ensuring  its   survival.  •  AmbiIous  managers  look  for  ways  to  aLract  favorable   aLenIon,  something  to  disInguish  them  from  other   people.  So  they  try  to  outperform  their  peers.  Some   may  see  that  it  is  not  difficult  to  look  remarkably  good   in  the  short  run  by  avoiding  things  they  pay  off  only  in   the  long  run.  
  20. 20. Why  ‘Good’…  •  The  sad  truth  is  that  many  managers  have   been  promoted  on  the  basis  of  “great”  results   obtained  in  just  those  ways,  leaving   unfortunate  successors  to  inherit  the   inevitable  whirlwind.  •  The  most  effecIve  deterrent  is  not  to  increase   the  severity  for  those  caught  but  to  heighten   the  perceived  probability  of  being  caught  in   the  first  place  
  21. 21. Why  ‘Good’…  •  Top  management  has  a  responsibility  to  exert  a  moral   force  within  the  company.  Senior  execuIves  are   responsible  for  drawing  the  line  between  loyalty  to  the   company  and  acIon  against  the  laws  and  values  of  the   society  in  which  the  company  must  operate.  Further,   because  that  line  can  be  obscured  in  the  heat  of  the   moment,  the  line  has  to  be  drawn  well  short  of  where   reasonable  men  and  women  could  begin  to  suspect   that  their  rights  had  been  violated.  •  ExecuIves  have  a  right  to  expect  loyalty  from   employees  against  compeItors  and  detractors,  but  not   loyalty  against  the  law,  or  against  common  morality,  or   against  society  itself.  
  22. 22. Examining  Ethics  of  a  Business  decision  •  Ethics  without  the  Sermon  –  Laura  Nash  •  12  quesIons    •  Have  you  defined  the  problem  accurately  ?   –  A  truly  moral  decision  is  an  informed  decision.  A   decision  that  is  based  on  blind  or  convenient   ignorance  is  hardly  defensible.   –  Importance  of  ‘factual  neutrality’   –  Extensive  fact  gathering  may  also  help  defuse   the  emoIonalism  of  an  issue  
  23. 23. Q2  •  How  would  you  define  the  problem  if  you  stood  on   the  other  side  of  the  fence  ?   –  The  purpose  of  arIculaIng  the  other  side,  who  needs  are   understandably  less  proximate  than  operaIonal  consideraIons,  is  to   allow  some  mechanism  whereby  calculaIons  of  self-­‐interest  (or   even  of  a  project’s  ulImate  general  beneficence)  can  be  interrupted   by  a  compelling  empathy  for  those  who  might  suffer  immediate   injury  or  mere  annoyance  as  a  result  of  corporaIon’s  decision.   –  Such  empathy  is  a  necessary  prerequisite  for  shouldering  voluntarily   some  responsibility  for  the  social  consequences  of  corporate   operaIons,  and  it  may  be  the  only  soluIon  to  today’s  overly  liIgious   and  anarchic  world.   –  There  is  a  power  in  self-­‐examinaIon:  with  an  exploraIon  of  the   likely  consequences  of  a  proposal,  taken  from  the  viewpoint  of  those   who  do  not  immediately  benefit,  comes  a  discomfort  or  an   embarrassment  that  rises  in  proporIon  to  the  degree  of  the  likely   injury  and  its  arIculaIon.  
  24. 24. Q3  •  How  did  this  situaIon  occur  in  the  first  place?   –  As  important  as  deciding  the  ethics  of  the   situaIon  was  the  inquiry  into  its  history.  Indeed,   the  history  gave  a  clue  to  solving  the  dilemma   –  Very  few  execuIves  are  outright  scoundrels.   Rather,  violaIons  of  corporate  and  social  values   usually  occur  inadvertently  because  no  one   recognizes  that  a  problem  exists  unIl  it  becomes  a   crisis.  This  tendency  toward  iniIal  trivializaIon   seems  to  be  the  biggest  ethical  problem  in   business  today.    
  25. 25. Q4  •  To  whom  and  what  do  you  give  your  loyalIes  as  a   person  and  as  a  member  of  the  corporaIon?   –  Every  execuIve  faces  conflicts  of  loyalty.  The  most  familiar   occasions  pit  private  conscience  and  sense  of  duty  against   corporate  policy,  but  equally  frequent  are  the  situaIons   (tacit  or  explicit)  in  an  operaIon  or  a  decision  that  runs   counter  to  company  policy.  To  whom  or  what  is  the  greater   loyalty  to  ons’e  corporaIon?  Superior?  Family?  Society?   Self?  Race?  Sex?   –  The  good  news  about  conflicts  of  loyalty  is  that  their   idenIficaIon  is  a  workable  way  of  smoking  out  the  ethics   of  a  situaIon  and  of  the  absolute  values  inherent  in  it.   –  The  bad  news  about  is  that  there  are  few  automaIc   answers  for  placing  prioriIes  on  them  
  26. 26. Q4…  –  The  US  securiIes  industry,  for  example,  is  one  of  the  most   rigorous  industries  in  America  in  its  requirements  of   honesty  and  disclosure.  Yet  in  the  end,  all  its  systemaIc   precauIons  prove  inadequate  unless  the  people  involved   also  have  a  sense  of  strong  sense  of  integrity  that  puts   loyalty  to  these  principles  above  personal  gain.  –  How  does  one  probe  into  one’s  own  loyalIes  and  their   implicaIons?  A  useful  method  is  simply  to  play  various   roles  out  loud,  to  call  on  one’s  loyalty  to  family  and   community  by  asking,  “What  will  I  say  when  my  child  asks   me  why  I  did  that?”.  If  the  answer  is  “that’s  the  way  the   world  works”,  then  your  loyalIes  are  clear  and  moral   passivity  inevitable.  But  if  the  quesIon  presents  real   problems,  you  have  begun  a  demodulaIon  of  signals  from   your  conscience  that  can  only  enhance  corporate   responsibility.  
  27. 27. Q5,  Q6  •  What  is  your  intenIon  in  making  this  decision?  •  How  does  this  intenIon  compare  with  the  likely   results?   –  Sociologist  Max  Weber  called  [this  an]  “ethics  of  aftude”   and  contrasted  it  with  an  “ethics  of  absolute  ends”.  An   Ethics  of  aftude  sets  a  standard  to  ensure  a  certain   acIon.   –  The  goodness  of  intent  pales  somewhat  before  results  that   perpetrate  great  injury  or  simply  do  liLle  good.  Common   sense  demands  that  the  “responsible”  corporaIon  try  to   align  the  two  more  closely,  to  idenIfy  the  probable   consequences  and  also  the  limitaIons  of  knowledge  that   might  lead  to  more  harm  than  good.  Two  things  to   remember  in  comparing  intenIon  and  results  are  that   knowledge  of  the  future  is  always  inadequate  and  that   overconfidence  oSen  preceded  a  disastrous  mistake.  
  28. 28. Q7  •  Whom  could  your  decision  or  acIon  injure?   –  In  an  integrated  society  where  business  and   government  share  certain  values,  possible  injury  is   an  even  more  important  consideraIon  than   potenIal  benefit.  
  29. 29. Q8  •  Can  you  engage  the  affected  parIes  in  a   discussion  of  the  problem  before  you  make   your  decision?   –  If  the  calculus  of  injury  is  one  way  of  responding   to  limitaIons  of  knowledge  about  the  probable   results  of  a  parIcular  decision,  the  parIcipaIon  of   affected  parIes  is  one  of  the  best  ways  of   informing  that  consideraIon.   –  The  issue  of  parIcipaIon  affects  everyone.  And   yet  it  is  a  principle  oSen  forgoLen  because  of  the   pressure  of  Ime  or  the  inconvenience  of  calling   people  together  and  facing  predictably  hosIle   quesIons.  
  30. 30. Q9  •  Are  you  confident  that  your  posiIon  will  be  as   valid  over  a  long  period  of  Ime  as  it  seems   now?   –  Doing  what  you  can  get  away  with  today  may  not   be  a  secure  moral  standard,  but  short-­‐term   discomfort  for  a  long-­‐term  sainthood  may  require   irraIonal  courage  or  a  raIonal  reasoning  system   or,  more  likely,  both  
  31. 31. Q10  •  Could  you  disclose  without  qualm  your   decision  or  acIon  to  your  boss,  your  CEO,  the   board  of  directors,  your  family,  or  society  as  a   whole?   –  A  corporaIon  may  maintain  the  there’s  really  no   problem,  but  a  survey  of  how  many  “trivial”   acIons  it  is  reluctant  to  disclose  might  be   interesIng.  Disclosure  is  a  way  of  sounding  those   submarine  depths  of  conscience  and  of  searching   out  loyalIes.  It  is  also  a  way  of  keeping  corporate   character  coherent.   –  Disclosure  does  not,  however,  automaIcally  bring   universal  sympathy  
  32. 32. Q11  •  What  is  the  symbolic  potenIal  of  your  acIon  if   understood?  If  misunderstood?   –  The  Greek  root  of  our  word  “symbol”  means  both   signal  and  contract.  A  business  decision  –  whether   it  is  the  use  of  an  expense  account  or  a  corporate   decision  –  has  a  symbolic  value  in  signaling  what  is   acceptable  behavior  within  the  corporate  culture   and  in  making  a  tacit  contract  with  employees  and   the  community  about  the  rules  of  the  same.  How   the  symbol  is  actually  perceived  (or  misperceived)   is  as  important  as  how  you  intend  it  to  be   perceived.  
  33. 33. Q12  •  Under  what  condiIons  would  you  allow  excepIons  to   your  stand?   –  If  we  accept  the  idea  that  every  business  decision  has  an   important  symbolic  value  and  a  contractual  nature,  then   the  need  for  constancy  is  obvious.  At  the  same  Ime,  it  is   also  important  to  ask  under  what  condiIons  the  rules  of   the  same  may  be  changed.   –  What  conflicIng  principles,  circumstances,  or  Ime   constraints  would  provide  a  morally  acceptable  basis  for   making  an  excepIon  to  one’s  normal  insItuIonal  ethos?   –  QuesIons  of  consistency  –  if  you  would  do  X,  would  you   also  do  Y?  –  are  yet  another  way  of  eliciIng  the  ethics  of   the  company  and  of  oneself,  and  can  be  a  final  test  of   strength,  idealism,  or  pracIcality  of  those  values.  
  34. 34. References  •  hLp://web.tepper.cmu.edu/ethics/aa/ arthurandersen.htm  for  mini-­‐case  studies  •  Integrity  at  Work,  Ken  Shelton,  2000  edion  •  Harvard  Business  Review  on  Corporate  Ethics,   2003  edion  
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