Business Ethics

1
Business Ethics Professional Responsibility
2
Unethical Behavior

• Unethical behavior in business is not just a
  recent phenomenon
• In the sixth century, B.C., the philosopher
  Anacharsis once said, The market is a place set
  apart where men may deceive one another.

3
Unethical Behavior

• The Old Testament also talks about false
  balances (Amos 85 Hosea 127 Micah 611)
  despite Gods command against such (Lev. 1936
  Ezek. 4510)

4
Business Ethics

• Business Ethics is about
• Decision-Making
• By People in Business
• According to Moral Principles or Standards

5
Decision-Making

• Conflicting duties, loyalties or interests create
  moral dilemmas requiring decisions to be made

6
Decision-Making

• Ethical decision-making involves the ability to
  discern right from wrong along with the
  commitment to do what is right.

7
Decision-Making

• Some factors affecting decision-making (from
  Integrity Management, by D. T. LeClair et al,
  Univ. of Tampa Press, 1998)
• Issue Intensity
• (i.e. how important does the decision-maker
  perceive the issue to be?
• Can be influenced by company/management
  emphasis)
• Decision-Makers Personal Moral Philosophy
• Decision-Makers Stage of Moral Development
• Organizational Culture

8
Decision-Making

• 8 Steps to Sound, Ethical Decision-Making
• 1. Gather as many relevant material facts as
  circumstances permit.
• 2. Identify the relevant ethical issues (consider
  alt. viewpoints)
• 3. Identify, weigh prioritize all the affected
  parties (i.e. stakeholders) (see Johnson
  Johnson Credo, Taking Sides, p.25)
• 4. Identify your existing commitments/obligations.
  
• 5. Identify various courses of action (dare to
  think creatively)
• 6. Identify the possible/probable consequences of
  same (both short long-term)
• 7. Consider the practicality of same.
• 8. Consider the dictates and impacts upon your
  character integrity.

9
Decision-Making

• Disclosure Test How comfortable would I feel if
  others, whose opinion of me I value, knew I was
  making this decision?

10
Decision-Making

• The higher the level of a decision-maker
• the greater the impact of the decision
• and the wider the range of constituencies that
  will be affected by the decision.

11
By People In Business

• The moral foundation of the decision-maker
  matters
• He doesnt have a moral compass. Whistleblower
  Sherron Watkins describing Andrew Fastow, former
  CFO of Enron. (Watkins gets frank about days at
  Enron, Edward Iwata, USA Today, March 25, 2003,
  p. 3B.)

12
By People in Business

• Ultimately, one's own motivation for ethical
  behavior must be internal to be effective.
  External motivation has a limited value --
  punishment and fear is only effective in the
  short-run. If people believe that they are above
  the law, they will continue to act unethically.
  Organizations that have a clear vision, and
  support individual integrity are attractive
  places of employment. - Teri D. Egan, Ph.d,
  Associate Professor, The Graziadio School of
  Business at Pepperdine University, Corporate
  Ethics, Washington Post Live Online, Friday, Aug.
  2, 2002

13
Ethics

• Values guiding constructs or ideas, representing
  deeply held generalized behaviors, which are
  considered by the holder, to be of great
  significance.
• Morals a system or set of beliefs or principles,
  based on values, which constitute an individual
  or groups perception of human duty, and
  therefore which act as an influence or control
  over their behavior. Morals are typically
  concerned with behaviors that have potentially
  serious consequences or profound impacts. The
  word morals is derived from the Latin mores
  (character, custom or habit)
• Ethics the study and assessment of morals. The
  word "ethics" is derived from the Greek word,
  ethos (character or custom).

14
Morality

• The most important human endeavor is the
  striving for morality in our actions. Our inner
  balance and even our very existence depend on it.
  Only morality in our actions can give beauty and
  dignity to life. - Albert Einstein (in a letter
  11/20/50)

15
Morality

• The historian Arnold Toynbee observed "Out of 21
  notable civilizations, 19 perished not by
  conquest from without but by moral decay from
  within."

16
Absolutism vs. Relativism

• Ethical Absolutism What is right or wrong is
  consistent in all places or circumstances. There
  are universally valid moral principles. ( only
  by obedience to universal moral norms does man
  find full confirmation of his personal uniqueness
  and the possibility of authentic moral growth. -
  Pope John Paul II, see also Rom. 122 Heb. 138)
• History is a voice forever sounding across the
  centuries the laws of the right and wrong.
  Opinions alter, manners change, creeds rise and
  fall, but the moral law is written on the tablets
  of eternity. James A. Forude

17
Absolutism vs. Relativism

• Ethical Relativism (also called Situational
  Ethics) What is right or wrong varies according
  to the individual/society/culture or set of
  circumstances. There are no universally valid
  moral principles. (Related Biblical reference
  "everyone did what was right in his own eyes"
  (Deut. 128, Judges 176 2125) (see also Isa.
  520 24, Jer. 213, Rom. 118-32, 1 Cor.
  56-7, 2 Cor. 614-15, 1 John 18)

18
Relativism

• As R.H. Popkin describes relativism in his
  article on the subject in The Encyclopedia of
  Religion, views are to be evaluated relative to
  the societies or cultures in which they appear
  and are not to be judged true or false, or good
  or bad, based on some overall criterion but are
  to be assessed within the context in which they
  occur. Thus, what is right or good or true to one
  person or group, may not be considered so by
  others there are no absolute standards Man
  is the measure of all things (quoting the Greek
  philosopher Protagoras (481-420, B.C.), and
  each man could be his own measure Relativism
  urges suspension of judgment about right and
  wrong. (Ellis Washington, Reply to Judge Richard
  A. Posner on the Inseparability of Law and
  Morality, Rutgers Journal of Law and Religion,
  Vol. 3)

19
Relativism

• As Cardinal Joseph Ratzinger said, Relativism is
  presented as a position defined positively by
  the concepts of tolerance and knowledge through
  dialogue and freedom, concepts which would be
  limited if the existence of one valid truth for
  all were affirmed affirming that there is a
  binding and valid truth in history in the figure
  of Jesus Christ and the faith of the church is
  described as fundamentalism. Such fundamentalism,
  is presented in different ways as the
  fundamental threat emerging against the supreme
  good of modernity i.e., tolerance and freedom.
  - Address to Congregation for the Doctrine of
  Faith, Guadalajara, Mexico, May 1996

20
Absolutism v. Relativism

• The demise of Americas legal foundations occur
  when society rejects laws that are based on
  solid, irrevocable, moral, universal, absolute
  values, to a society that bases its laws on an
  arbitrary system of relativism, situational
  ethics, materialism, individualism, hedonism,
  paganism, or in any secularist ideology. This
  secularization of law has influenced all branches
  of knowledge law, philosophy, business,
  religion, medicine, education, science, the arts,
  and mass media. Harold Berman, The Interaction
  of Law and Religion 21 (1974).

21
Absolutism vs. Relativism

• According to a recent poll of college seniors,
  73 agreed with the statement that What is right
  or wrong depends on differences in individual
  values and cultural diversity. Only 25 agreed
  with the statement that There are clear and
  uniform standards of right and wrong by which
  everyone should be judged."

22
Problems with Relativism

• Relativism undermines moral criticism of
  practices of particular individuals or in
  particular societies where those practices
  conform to their own standards. For instance, it
  could be used to permit slavery in a slave
  society or it could be used to justify trade and
  investment with basically evil regimes, e.g.
  Apartheid governments.
• But, as Cardinal Ratzinger said, There are
  injustices that will never turn into just things
  (for example, killing an innocent person, denying
  an individual or groups the right to their
  dignity or to life corresponding to that dignity)
  while, on the other hand, there are just things
  that can never be unjust. - Address to
  Congregation for the Doctrine of Faith,
  Guadalajara, Mexico, May 1996

23
Problems with Relativism

• Relativism allows for oppression of those with
  minority views by allowing the majority in any
  particular circumstance to define what is morally
  right or wrong.
• In Germany they first came for the Communists,
• and I didn't speak up because I wasn't a
  Communist.
• Then they came for the Jews,
• and I didn't speak up because I wasn't a Jew.
• Then they came for the trade unionists,
• and I didn't speak up because I wasn't a trade
  unionist.
• Then they came for the Catholics,
• and I didn't speak up because I was a Protestant.
• Then they came for me
• and by that time no one was left to speak up.
• - German anti-Nazi activist, Pastor Martin
  Niemöller

24
Problems with Relativism

• Relativists speak in terms that soften harsh
  realities.
• "Intelligent, educated, religious people embrace
  illogical absurdities that set aside not only
  God's truth, but also our responsibility for the
  well-being of others. When words are warped and
  twisted perversely, they're eventually emptied of
  their true meaning. When you shine the light of
  common sense on deceptive language couched in
  medical, philosophical or intellectual terms, the
  logic evaporates. Moral choices require that we
  use language to describe reality. - Jean Staker
  Garton, Author/Lecturer, Co-Founder of Lutherans
  for Life

25
Problems with Relativism

• Relativists never need bother to examine why
  something is moral or immoral, they merely
  accept/tolerate alternative determinations, so
  that none are held to account
• Over the years I have found that those who call
  themselves atheists actually have a strong sense
  of the absolute truth they know exists. They just
  dont want to acknowledge that its true -
  because if they did, they would have to change
  the way they live. They flee on moral grounds
  refusing to submit themselves, they exchange the
  truth for a lie. - Chuck Colson -Being the Body,
  2003.

26
Problems with Relativism

• Commenting on the idea that legal reforms can
  compel corporate morality, Michael Prowse, in
  the Financial Times, stated that "The underlying
  problem is that we are living in times that might
  aptly be called 'post-ethical.'" People are now
  "emotivists," who relativize moral judgments and
  "obey the law, help others and respect customs
  and mores only if they calculate that this will
  benefit them personally in some way. ... The root
  problem is a loss of belief in objective ethical
  standards.

27
Problems with Relativism

• Jesus said in John 831-32, If you continue in
  my word, then are you my disciples indeed And
  you shall know the truth, and the truth shall
  make you free. It would seem follow then that,
  people cannot experience ultimate and true
  freedom unless and until they come to terms with
  the absolute truth revealed by God.

28
Absolutism vs. Relativism

• Most ethicists reject the theory of ethical
  relativism. Some claim that while the moral
  practices of societies may differ, the
  fundamental moral principles underlying these
  practices do not. -Markkula Center for Applied
  Ethics

29
Values

• To ensure that employees can and will act with
  integrity organizations need a strong and
  consistent set of values that dictate appropriate
  individual actions. - Conclusion of study
  conducted by Professor Pratima Bansal, cited in
  Rebuilding trust, The integral role of leadership
  in fostering values, honesty and vision,by Carol
  Stephenson in the Ivey Business Journal, Jan/Feb.
  2004, Vol. 68, Issue 3.

30
Values

• Navigating the complexities of a situation ...
  requires a reliable compass. We can plot that
  "north" by determining clearly our own core
  values. We have to identify - and articulate -
  what we believe is important to us and to our
  companies. Our core values drive our behaviors,
  and our behaviors tell the world who we are and
  what we stand for. ...Identifying and adhering to
  a core-values compass point provides a standard
  that will make decisions easier, consistent and
  justified. - Parkinson, J. Robert, Thinking
  clearly, remembering values key to making the
  call, Milwaukee Journal Sentinel, March 22, 2004.

31
Values

• Without commonly shared and widely entrenched
  moral values and obligations, neither the law,
  nor democratic government, nor even the market
  economy will function properly.- (Vaclav Havel
  Politics, morality, and Civility, Summer
  Meditations)

32
Values

• What are the core values that are fundamental to
  the success of any individual or organization?

33
Values

• Honesty
• Respect
• Responsibility
• Fairness
• Compassion
• Perseverance
• Courage

34
Values - Honesty

• Honesty - Being straightforward, sincere,
  truthful, free of fraud, deception or
  misrepresentation.
• Transparency - To be open, honest and available,
  to provide clear, accurate, and understandable
  information (e.g. in the context of financial
  disclosures). Some ethicists have argued that
  ethical business practices are best measured by a
  company's character and commitment to
  transparency than by their social vision or
  rhetoric (e.g. Jon Entine)

35
Values - Honesty

• Honesty
• Builds/Maintains Trust
• Fosters Community
• Makes Communication more Efficient Effective
• Demonstrates Respect for the Dignity of Others

36
Values - Honesty

• Moral Leaders welcome transparency and truth as
  opposed to secrecy and deception.
• Respondents to a recent Victor James ethical
  leadership survey, by a wide margin, cited
  honesty as the quality most admired in a leader.

37
Values - Honesty

• Richard Searsfounder of Sears Roebuck and
  Companystarted the modern mail order industry,
  supplying a burgeoning nation with innovative
  products and building a business that gave
  employment to hundreds of thousands of people. In
  his zeal to sell merchandise, Sears occasionally
  would get carried away with catalogue
  descriptions, 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. - from
  Integrity at Work, ed. By Ken Shelton.

38
Values - Honesty

• Honesty and transparency make you vulnerable. Be
  honest and transparent anyway. - Mother Teresa
• Contra "Speech was given to man to disguise his
  thoughts." - Charles-Maurice de Talleyrand

39
Values - Honesty

• Some scriptural references regarding honesty in
  business
• (Exodus 2210 2313 Leviticus 191112, 35-36,
  Deuteronomy 251316, Proverbs 616-19, 111,
  1217-19 22, Ephesians 425)

40
Values - Respect

• Respect To give particular attention to, show
  consideration for, or hold in high or special
  regard (Merriam-Webster's Online Dictionary, 10th
  Edition)
• Should respect be given or must respect be earned?

41
Values - Respect

• Every man is to be respected as an absolute end
  in himself and it is a crime against the dignity
  that belongs to him as a human being, to use him
  as a mere means for some external purpose. -
  Immanuel Kant, Prussian geographer and
  philosopher (1724-1804)

42
Values - Respect

• Human Dignity is the intrinsic worth that
  inheres in every human being. From the Catholic
  perspective (among other Christian perspectives),
  the source of human dignity is rooted in the
  concept of Imago Dei, in Christs redemption and
  in our ultimate destiny of union with God. Human
  dignity therefore transcends any social order as
  the basis for rights and is neither granted by
  society nor can it be legitimately violated by
  society. In this way, human dignity is the
  conceptual basis for human rights. While
  providing the foundation for many normative
  claims, one direct normative implication of human
  dignity is that every human being should be
  acknowledged as an inherently valuable member of
  the human community and as a unique expression of
  life, with an integrated bodily and spiritual
  nature. In Catholic moral thought, because there
  is a social or communal dimension to human
  dignity itself, persons must be conceived of, not
  in overly-individualistic terms, but as being
  inherently connected to the rest of society. -
  from the Ascension Health Code of Ethics

43
Values - Respect

• Civilizations should be measured by "the degree
  of diversity attained and the degree of unity
  retained. - W.H. Auden, English poet
  (1907-1973)
• Never look down on anybody unless you're helping
  him up. - Jesse Jackson, American political
  activist and preacher

44
Values - Respect - Tolerance?

• What about tolerance?

45
Values - Respect - Tolerance?

• "Our culture has fallen into a kind of moral
  vertigo we value tolerance so much that we
  don't know how to talk to each other about what
  is right and good, - Rev. Kevin Phillips,
  director of the Business Leadership and
  Spirituality Network (BLSN) quoted in Competing
  Values, by Jane Lampman, Christian Science
  Monitor, August 1, 2002.

46
Values - Respect - Tolerance?

• Did you know that the term tolerance (or in
  some translations sufferance Gk. eao) is
  rarely used in the New Testament, and that where
  it is used it is generally used in a negative
  sense? For example
• Notwithstanding I have a few things against
  thee, because you tolerate that woman Jezebel,
  who calls herself a prophetess, to teach and to
  seduce my servants to commit fornication, and to
  eat things sacrificed unto idols. Rev. 220
• By contrast, the New Testament uses the term
  love Gk. agapeo nearly 150 times in a positive
  sense.
• So whats the difference between love and
  tolerance?

47
Values - Respect - Tolerance?

• Tolerance Demonstrating sympathy for,
  indulging, or making allowances for, beliefs or
  practices differing from, or conflicting with,
  one's own.
• Love In the Christian context, from the Gk.,
  agapeo, an active and beneficent interest in,
  and concern for, the well-being of another. It is
  given unconditionally and unselfishly. It
  involves a clear determination of will and
  judgment (i.e. a responsible choice). A loving
  person, honestly (Rom. 129) gives respect and
  demonstrates compassion. Demonstrating such love
  often requires courage. The source of such love
  comes from above (James 117).
• Would you rather be loved or tolerated?

48
Values - Compassion

• Compassion "sympathetic consciousness of
  another's distress together with a desire to
  alleviate it" Webster's 7th New Collegiate
  Dictionary, fellow feeling, the emotion of
  caring concern the opposite of cruelty, in
  Hebrew rahamanut, from the word rehem, 'womb',
  based on the idea of sibling love (coming from
  from the same womb).

49
Values - Compassion

• "The word 'care' finds its roots in the Gothic
  'Kara' which means lament. The basic meaning of
  care is to grieve, to experience sorrow, to cry
  out with.. . . A friend who cares makes it clear
  that whatever happens in the external world,
  being present to each other now is what really
  matters." Henri Nouwen, Here and Now, p. 105

50
Values - Compassion

• Southwest Airlines CEO Herb Kelleher has openly
  demonstrated a willingness to go the extra mile
  for Southwest employees. He has made it a
  priority to learn their names and to chip in and
  work alongside them when the situation has
  demanded his help. He has been observed lugging
  baggage and greeting customers in an Easter Bunny
  costume. He has repeatedly demonstrated a truly
  exceptional level of caring and compassion for
  his employees, and his employees have responded
  in kind. Perhaps the most dramatic example of
  their commitment to their beloved leader occurred
  when they pooled their own money and ran a
  60,000 ad in USA Today recognizing him on Bosses
  Day. In the ad they thanked Kelleher for being a
  friend, not just a boss. - from The Leadership
  Wisdom of Jesus, Charles C. Manz, 1998.

51
Values - Compassion

• I expect to pass through the world but once. Any
  good therefore that I can do, or any kindness I
  can show to any creature, let me do it now. Let
  me not defer it, for I shall not pass this way
  again. - Stephen Grellet, French/American
  religious leader (1773-1855)
• "Men are only great as they are kind. - Elbert
  Hubbard, American entrepreneur and philosopher
  (founder of Roycroft) (1856-1915)

52
Values - Compassion

• "No act of kindness, no matter how small, is ever
  wasted." - Aesop, 6th Century B.C. Writer of
  Greek fables
• "If the world seems cold to you, kindle fires to
  warm it. - Lucy Larcom, American poet
  (1826-1893)
• "The individual is capable of both great
  compassion and great indifference. He has it
  within his means to nourish the former and
  outgrow the latter.- Norman Cousins, American
  essayist editor (1912-1990)

53
Values - Compassion

• "There are two ways of spreading light to be the
  candle or the mirror that reflects it. - Edith
  Wharton, American novelist (1862-1937) -
• Compassion is the basis of morality.'' - Arthur
  Schopenhauer, German philosopher (1788-1860)
• All we need in order to be moral human beings is
  compassion. - Nina Rosenstand summarizing the
  view of David Taylor in Good and Evil, from The
  Moral of the Story An Introduction to Ethics,
  McGraw-Hill, 2004.

54
Values - Compassion

• Some scriptural references regarding compassion
• (Matthew 1827, Luke 1030-37, (Parable of the
  Good Samaritan), 1 John 317, Jude 122)

55
Values - Responsibility

• Responsibility/Accountability/Reliability Moral
  Leaders take responsibility for their own
  actions/failures and those of their companies and
  they demand accountability from their
  subordinates. (e.g. at Dell theres no The dog
  ate my homework. Dell ruthlessly exposes weak
  spots during grueling quarterly reviews and execs
  know they had better fix the problem before the
  next meeting. What You Dont Know About Dell,
  Business Week, Nov. 30, 2003, p.79) Involves a
  commitment to competent quality performance.
  Implies fidelity to promises and other
  commitments and not making promises that cannot
  be kept, such as committing to unrealistic
  delivery dates. Also calls for acknowledgment of
  implicit commitments, such as the protection of
  confidences.

56
Values - Responsibility

• I am only one, but still, I am one. I cannot do
  everything but I can do something. And, because I
  cannot do everything, I will not refuse to do
  what I can. - Edward Everett Hale, American
  clergyman and writer (1822-1909)
• The question for each man to settle is not what
  he would do if he had the means, time, influence
  and educational advantages, but what he will do
  with the things he has. - Hamilton Wright Mabee

57
Values - Responsibility

• Any mans life will be filled with constant and
  unexpected encouragement if he makes up his mind
  to do his level best each day. - Booker T.
  Washington, American educator (1856-1915)
• I long to accomplish some great and noble task,
  but it is my chief duty to accomplish small tasks
  as if they were great and noble. - Helen
  Keller, American social activist, public speaker
  and author (1880-1968)

58
Values - Fairness

• Fair just, equitable, impartial, unbiased,
  objective. Involves a elimination (or at least a
  minimalization) of one's own feelings, prejudices
  and desires, so as to achieve a proper balance of
  conflicting interests. Implies an equitable
  distribution of burdens and benefits. John Rawls
  argues in A Theory of Justice that rules are fair
  if they are rules that the people operating under
  them would have agreed to, had they been given an
  opportunity to accept or reject them beforehand.

59
Values - Fairness

• Justice demonstrating fairness, equity,
  impartiality, righteous action,
• To some, justice is about conformity to truth. To
  others, its about conformity to law
• But law and justice are 2 different concepts.
• The law is something we must live with. Justice
  is somewhat harder to come by. - Sherlock
  Holmes, in The Case of the Red Circle.
• This is a court of law, young man, not a court
  of justice.  Oliver Wendell Holmes, Jr.
• justice occurs on earth when power and
  authority between people are exercised in
  conformity with Gods standards of moral
  excellence. - Gary Haugen, in The Good News
  About Injustice, InterVarsity Press, 1999.

60
Values - Perseverance

• Perseverance/Fortitude - steadfast determination
  to continue on despite adversity usually over a
  long period of time.

61
Values - Perseverance

• Nothing in the world can take the place of
  perseverance. Talent will not nothing is more
  common than unsuccessful men with talent.
  Education will not the world is full of educated
  derelicts. Genius will not unrewarded genius is
  almost a proverb. Persistence and determination
  alone are omnipotent. - Calvin Coolidge

62
Values - Perseverance

• Some Biblical References Job 179a, the
  righteous one holds fast to his way Hos. 126b,
  endure to the end, John 831-32, 2 Cor. 135,
  keep proving yourself Gal. 514, stand fast
  Gal. 69, do not give up in doing what is fine
  Phil. 127, stand firm, striving side by side
  Phil. 41, stand firm 1 Thes. 521, hold fast to
  what is fine 2 Thes. 21517, stand firm,
  maintain your hold 1 Tim. 61112, pursue
  endurance 2 Tim. 212, go on enduring 2 Tim.
  314, continue in the things you have learned 2
  Tim. 478, fight the fine fight, finish the
  course Heb. 21, pay attention to what you have
  heard that you not drift away Heb. 314, make
  fast your hold to the end Heb. 1023, 3536,
  hold fast to the declaration of our hope, you
  have need of endurance James 12-4, perseverance
  must finish its work, 2 Pet. 317, do not fall
  from steadfastness.
• God helps those who persevere. - The Koran

63
Values

• Which of the core values is the most important?

64
Values - Courage

• The first place to start is for every individual
  to become aware of their core values and to have
  the courage and discipline to live out of them in
  all aspects of their lives. (The rising tide
  won't lift this economy Unless we're willing to
  confront the trust problem we've helped to
  create, Bill Grace, Founder Executive
  Director, Seattle's Center for Ethical
  Leadership, Guest Columnist, Seattle
  Post-Intelligencer, June 16, 2003.)

65
Values - Courage

• Courage is the greatest of all virtues because,
  unless a man has that virtue, he has no security
  for preserving any other. - Samuel Johnson
• Courage is the ladder on which all the other
  virtues mount. - Clare Booth Luce (1903 - 1987),
  in Reader's Digest, 1979
• Courage is the footstool of the virtues, upon
  which they stand. - Robert Louis Stevenson
• Courage is not simply one of the virtues, but
  the form of every virtue at the testing point.
  - C.S. Lewis
• Courage is strength of mind, capable of
  conquering whatever threatens the attainment of
  the highest good. - St. Thomas Aquinas

66
Values - Courage

• Courage is a perfect sensibility of the measure
  of danger and a mental willingness to endure it.
  - General William T. Sherman (for whom the
  Sherman tank was named).
• Courage is being scared to death . . . and
  saddling up anyway. - John Wayne

67
Values - Courage

• Whenever you see a successful business, someone
  once made a courageous decision. - Peter
  Drucker
• We must constantly build dykes of courage to
  hold back the flood of fear. - Martin Luther
  King, Jr.
• One isn't necessarily born with courage, but one
  is born with potential. Without courage, we
  cannot practice any other virtue with
  consistency. We can't be kind, true, merciful,
  generous, or honest. - Maya Angelou (1928 - )

68
Values - Courage

• The credit belongs to the man who is actually in
  the arena... who strives valiantly... who spends
  himself for a worthy cause who, at the best,
  knows, in the end, the triumph of high
  achievement, and who, at the worst, if he fails,
  at least he fails while daring greatly, so that
  his place shall never be with those cold and
  timid souls who knew neither victory nor defeat.
  - Theodore Roosevelt

69
Values - Courage

• Courage the ability to disregard fear bravery.
  The Latin root of this word is cur, which means
  heart. Courage literally means to take heart.
  Fear exists along a continuum. Courage involves
  recognizing a reasonable amount of fear or
  nervousness, facing it and then taking an
  intelligent risk.
• Moral courage involves standing up for ones
  principles, in spite of possible adverse
  consequences to such things as reputation or
  emotional well-being.

70
Values - Universal Rule?

• The Golden Rule , i.e. to do unto others as
  you would have them do unto you is an example of
  a value common to many cultures/religions
  (Mahabharata 51517, Hinduism, Talmud, Shabbat
  31a Levitcus 1918, Judaism, Matthew 712,
  Christianity, Udana-Varga 518, Buddhism,
  Analects 1523, Confucianism, Number 13 of Imam
  "Al-Nawawi's Forty Hadiths.", Islam)
• Note Several Corporations have directly
  incorporated some form of this rule in their
  codes of ethics including Coachman, Mary Kay,
  Progressive, Merrill Lynch and USAA

71
Corporate Culture

• Both individuals and organizations hold values
• A corporation is said to manifest its values in
  its corporate culture
• Corporate culture is loosely defined as the
  attitudes, behaviors and personalities that make
  up a company and that shape its behavior and
  reputation, or as Elizabeth Kiss of the Kenan
  Institute for Ethics puts it, corporate culture
  is how we perceive, think, feel and do things
  around here.
• Most employees take their cues from the company
  culture and behave accordingly.
• A business derives its character from the
  character of the people who conduct the business.
  - Ricky W. Griffin, Management, Boston
  Houghton Mifflin Company (2002)

72
Corporate Culture
73
Corporate Culture

• "Moral behavior is concerned primarily with the
  interpersonal dimension of our behavior how we
  treat one another individually and in groups
  and, increasingly, other species and the
  environment." The key here is that morality
  brings us into contact with others and asks us to
  consider the quality of that contact. -
• Quote from The Leadership Compass, John Wilcox
  and Susan Ebbs, as quoted in Everyday Ethics, by
  Thomas Shanks, S.J., Markkula Center for Applied
  Ethics.

74
Corporate Culture

• "The first step in the evolution of ethics is a
  sense of solidarity with other human beings."
  Albert Schweitzer, early 20th-century German
  Nobel Peace Prize-winning mission doctor and
  theologian

75
Corporate Culture

• The Pressure to Conform
• We are all a kind of Chameleon, taking our hue -
  the hue of our moral character, from those who
  are about us. - John Locke (1632 - 1704)

76
Corporate Culture

• The Pressure to Conform
• Some years ago, a social scientist named Solomon
  Asch wanted to see how people dealt with social
  pressure so he designed an experiment to measure
  the results. He came up with a simple test that
  showed a series of lines on a board in front of
  the room, with one of the lines matching another
  in being the same length. The others were either
  much shorter or much longer. A person was brought
  into the room, along with others in a group,
  which unbeknown to the subject, were helpers to
  the professor. The whole group was asked to match
  the two lines that were the same length together.
  The helpers intentionally gave the wrong answer
  and it was found that in almost 75 of the time,
  the subjects would go along with the wrong
  answer, knowing full well it was wrong, but not
  wanting to stand out. - Opinion and Social
  Pressure, Scientific American, Nov. 1955, 31-35.

77
Corporate Culture

• The Pressure to Conform
• Culture shapes behavior. There are plenty of
  perfectly decent people who go astray because
  they're in a culture that creates an environment
  in which they can't get their jobs done unless
  they engage in unethical activities. - Harvard
  Business School professor and business ethicist
  Barbara Toffler, former partner at Arthur
  Andersen. Toffler left Andersen in 1999, well
  before the Enron and Global Crossing scandals
  destroyed the company. Her book, Final
  Accounting Ambition, Greed, and the Fall of
  Arthur Andersen (Random House/Broadway Books,
  2003), describes the process of ethical erosion
  in grim detail. Postcards from an Ethical
  Wasteland, CIO, June 1, 2003

78
Corporate Culture

• In Moral Man and Immoral Society, Reinhold
  Niebuhr proposed that individual persons are
  always more moral functioning alone than when
  they function in a social group. -
  Institutional Ethics An Oxymoron, By Joe E.
  Trull, Editor, Christian Ethics Today, Journal of
  Christian Ethics, Issue 035 Volume 7 No 4 August
  2001 .
• Do you agree with this?

79
Corporate Culture

• Rarely do the character flaws of a lone actor
  fully explain corporate misconduct. More
  typically, unethical business practice involves
  the tacit, if not explicit, cooperation of others
  and reflects the values, attitudes, beliefs,
  language, and behavioral patterns that define an
  organizations operating culture. - Lynn Sharp
  Paine, Harvard Business School

80
Corporate Culture

• A strong corporate culture founded on ethical
  principles and sound values is a vital driving
  force behind strategic success. - Thompson
  Strickland
• One company stressed its commitment to RICE
  respect, integrity, communication, and
  excellence. The words have been on T-shirts,
  paperweights, and on signs. The firm printed a
  61-page booklet with its code of ethics and every
  employee had to sign a certificate of compliance.
  That company was Enron!

81
According to Ethical or Moral, Values, Principles
or Standards

• Whose Values?

82
According to Ethical or Moral, Values, Principles
or Standards

• Personal
• Family
• Peers
• Religious
• Company
• Community, Regional, National, International

83
According to Ethical or Moral, Values, Principles
or Standards

• Learned Where?

84
According to Ethical or Moral, Values, Principles
or Standards

• Home
• School
• Church (or other place of worship)
• Life Experience
• Work Experience
• Books
• News Media
• Entertainment Media

85
According to Ethical or Moral, Values, Principles
or Standards

• The average American, by the age of 65, will have
  spent the equivalent of 15 years of their life
  watching television.
• By contrast, over the same time period, the
  average weekly church-going American will have
  spent only 8 months of their life receiving
  spiritual instruction.
• American children will take in 63,000 hours of
  media (television, radio, internet, i-pods,
  etc.) input between the ages of 5 and 17. 
• By contrast, if they go to church once a week for
  an hour, over the same number of
  years, that's 600 hours. 

86
According to Ethical or Moral, Values, Principles
or Standards

• In the middle of an interview for acceptance to a
  prestigious Ivy League school back east, the
  interviewer asked his sure of himself
  candidate, If no one would ever find out, and no
  one got hurt, would you lie for 1M? The young
  man thought for a moment and said, If no one
  found out, and no one was hurt? Sure, I think I
  would! The interviewer then asked, Would you
  lie for a dime? The young man shot back, No
  way, what kind of man do you think I am? The
  interviewer responded, I have already determined
  that, I am just trying to determine your price.

87
According to Ethical or Moral, Values, Principles
or Standards

• So fearful were the ancient Chinese of their
  enemies on the north that they built the Great
  Wall of China, one of the 7 wonders of the
  ancient world. It was so high they knew no one
  could climb over it, so thick that nothing
  could break it down. Then they settled back to
  enjoy their security. But during the first 100
  years of the walls existence, China was invaded
  3 times. Not once did the enemy break down the
  wall or climb over its top. Each time they bribed
  a gatekeeper marched right through the gates.
  According to the historians, the Chinese were so
  busy relying upon the walls of stone that they
  forgot to teach integrity to their children.

88
According to Ethical or Moral, Values, Principles
or Standards

• In the 1950s a psychologist, Stanton Samenow, and
  a psychiatrist, Samuel Yochelson, sharing the
  conventional wisdom that crime is caused by
  environment, set out to prove their point. They
  began a 17-year study involving thousands of
  hours of clinical testing of 250 inmates here in
  the District of Columbia. To their astonishment,
  they discovered that the cause of crime cannot be
  traced to environment, poverty, or oppression.
  Instead, crime is the result of individuals
  making, as they put it, wrong moral choices. In
  their 1977 work The Criminal Personality, they
  concluded that the answer to crime is a
  "conversion of the wrong-doer to a more
  responsible lifestyle." In 1987, Harvard
  professors James Q. Wilson and Richard J.
  Herrnstein came to similar conclusions in their
  book Crime and Human Nature. They determined that
  the cause of crime is a lack of proper moral
  training among young people during the morally
  formative years, particularly ages 1 to 6.

89
According to Ethical or Moral, Values, Principles
or Standards

• 33 of teens would act unethically to get ahead
  or to make more money if there was no chance of
  getting caught, according to a new Junior
  Achievement/Harris Interactive Poll of 624 teens
  between the ages of 13 and 18. 25 said they were
  not sure and only 42 said they would not.
  These results confirm our belief that ethics
  education must begin in elementary school. said
  Barry Salzberg, U.S. Managing Partner of Deloitte
  Touche.

90
According to Moral Principles or Standards

• Does society require a moral code to survive and
  prosper?

91
According to Moral Principles or Standards

• 17th Century Philosopher Thomas Hobbes postulated
  that life in an amoral society would be poor,
  nasty, brutish and short, lacking in industry
  and commerce, as well as knowledge and arts, and
  that its people would live in a constant state of
  fear and insecurity.

92
According Moral Principles or Standards

• Men qualify for freedom in exact proportion to
  their disposition to put moral chains on their
  own appetites. Society cannot exist unless a
  controlling power is put somewhere on will and
  appetite, and the less of it there is within, the
  more of it there must be without. - Edmund Burke
  (1774)

93
According to Moral Principles or Standards

• The institutions of our society are founded on
  the belief that there is an authority higher than
  the authority of the State that there is a moral
  law which the state is powerless to alter that
  the individual possesses rights, conferred by the
  Creator, which government must respect And the
  body of the Constitution as well as the Bill of
  Rights enshrined those principles. Justice
  William O. Douglas, in McGowan v. Maryland, 366
  U.S, 420 (1961)

94
According to Moral Principles or Standards

• Without civic morality communities perish
  without personal morality their survival has no
  value. Bertrand Russell, 20th-century British
  mathematician and philosopher

95
According to Moral Principles or Standards

• Martin Luther King, Jr. once noted, " The most
  dangerous criminal may be the man gifted with
  reason but with no morals."

96
According to Moral Principles or Standards

• We have grasped the mystery of the atom and
  rejected the Sermon on the Mount. The world has
  achieved brilliance without wisdom, power without
  conscience. Ours is a world of nuclear giants and
  ethical infants. --General of the Army, Omar
  Bradley

97
According to Moral Principles or Standards

• There are seven sins in the world Wealth without
  work, Pleasure without conscience, Knowledge
  without character, Commerce without morality,
  Science without humanity, Worship without
  sacrifice and politics without principle. -
  Mahatma Gandhi (1869 - 1948)

98
Ethics

• R. H. Tawney, the British historian, once wrote
  ''To argue, in the manner of Machiavelli, that
  there is one rule for business and another for
  private life, is to open the door to an orgy of
  unscrupulousness before which the mind recoils.''

99
Ethics

• Truett Cathy, founder of Chick-fil-A, argues
  there is no such thing as business ethics - only
  ethics.

100
Ethics

• Duty-Based v. Outcome-Based Ethics
• Duty (Deontology)
• Duty is an act done simply for the sake of what
  is right.
• Duty is determined by revealed truths and
  involves universal principles
• Often religion-based
• e.g. Kants Categorical Imperative
• "Everyone is obligated to act only in ways that
  respect the intrinsic value, human dignity and
  moral rights of all persons."
• Places High Value on Individual Rights
• Outcome (Consequentialism)
• Ethical if best outcome for the majority
• Involves cost-benefit analysis
• e.g. Bentham Mills Utilitarianism
• "Of any two actions, the most ethical one is that
  which will produce the greatest balance of
  benefits over harms."
• De-emphasizes individual rights

101
Ethics

• Strategic v. Real Ethics
• What is the motivation/purpose for acting
  ethically?

102
Integrity

• Integrity from the Latin integritas, meaning
  wholeness, completeness, or purity. To
  courageously hold to what one believes is right
  and true, without compromise. To stand undivided,
  immovable, consistent in both heart and action,
  word and deed. Involves the maintenance of virtue
  and the pursuit of moral excellence. Integrity is
  demonstrated by not only espousing your values,
  but by living according to them. Integrity
  describes both who you are and what you do.
  People of integrity are conscientious,
  trustworthy, accountable, committed and
  consistent. A key to maintaining integrity is
  counting the cost before committing yourself.

103
Integrity

• Psychologists have found integrity to be
  essential to an individual's sense of identity
  and self-worth, enabling the successful
  navigation of change and challenge. Links between
  integrity and the ability to gain and maintain
  the trust of others have often been noted. Many
  purveyors of practical advice, including Cicero
  and Benjamin Franklin, have counseled that
  integrity is the cornerstone of worldly success.
  According to Franklin, "no Qualities are so
  likely to make a poor Man's Fortune as those of
  Probity Integrity" (quoted in Beebe, 1992, p.
  8) - from Blackwells Encyclopedic Dictionary of
  Business Ethics.

104
Integrity

• In Living a Life That Matters Rabbi Harold
  Kushner describes the kind of people who are able
  to overcome the negativity in their lives as
  shalem, people who are whole, united within
  themselves, their internal conflicts ended.
  Because of this, he says, they are persons of
  integrity. Integrity, says Kushner, is a quality
  just as essential to human well-being as is the
  pursuit of peace and justice.

105
Integrity

• The Bible/Talmud says that
• The man of integrity walks securely, but he who
  takes crooked paths will be found out. (Prov.
  109)
• The integrity of the upright guides them, but the
  unfaithful are destroyed by their duplicity.
  (Prov. 113)
• Integrity brings peace (i.e. a clear conscience)
  and marks the perfect man (Hebrew Word Tam Man
  of Integrity) (Ps. 3737, 1 Kings 94)
• The just man walketh in his integrity his
  children are blessed after him. (Prov. 207)
• A good name is better than precious ointment.
  (Ecc. 71)

106
Integrity

• Some Biblical Examples of Integrity
• Joseph, Gen. 391-12
• Jacob/Israel (Gen 3229) known as a simple man
  (tam, Gen 2527) that is to say, that his mouth
  was like his heart.
• Job (Book of Job, see in particular description
  of Job at 23, 275)
• Daniel, Shadrach, Meshach Abednego (Daniel
  Chapters 3 6)
• David (Ps. 78)
• Solomon (1 Kgs. 94)
• Contrast Ananias Sapphira, Acts 51-11 and
  Acts 2016-36

107
Integrity

• According to Michael Useem, Director of the
  Center for Leadership and Change Management,
  Warren Buffett's influence derives from his
  moral stature and integrity. In the aftermath of
  scandals that have rocked U.S. companies in the
  past few years, it is difficult to overemphasize
  the importance of ethics as a factor in
  leadership. -Leadership and Change Becoming
  the Best What You Can Learn from the 25 Most
  Influential Leaders of Our Times , Knowledge _at_
  Wharton Newsletter, Jan.28-Feb.4, 2004

108
Character

• Character The notable/conspicuous/
  distinguishing moral/ethical traits or
  characteristics of a person that give evidence of
  their essential nature and which ultimately shape
  their reputation.

109
Character

• President Harry Truman used to say "Fame is a
  vapor, popularity an accident, riches take wings,
  those who cheer today may curse tomorrow, only
  one thing endures -- character.

110
Character

• "What you are stands over you... and thunders so
  that I cannot hear what you say to the contrary.
  - Ralph Waldo Emerson

111
Character

• In his book The Death of Character, James Hunter,
  a noted sociologist from the University of
  Virginia, concludes that while Americans are
  innately as capable of developing character as
  they ever were in the past, there are now few
  cultural or institutional guidelines in our
  society that call for its cultivation or
  maintenance. The reason, he suggests, is because
  there is no consensus of moral authority.
• Do you agree with this?

112
Character

• Compartmentalization Many people believe that
  what individuals do in their private lives is
  their own business as long as it does not
  adversely impact the performance of their duties
  to the organization and they are able to deliver
  the goods professionally. Under this way of
  thinking even serious moral failures may be
  excused. Some refer to this kind of thinking as
  compartmentalization. (e.g. President
  Clinton/Monica Lewinsky situation, where, despite
  the scandal, President Clinton maintained between
  a 60 and 70 approval rating with the American
  public.)
• Do you agree with this?
• Contrast Find God in all things, St. Ignatius
  Loyola.

113
Character

• Character vs. Reputation It has been said that
  an individuals character can be illustrated by a
  barrel of apples. The apples seen on top by all
  represent ones reputation, and the apples that
  lie hidden underneath are his character.

114
Reputation

• Eli Lily introduced a drug, fialuridine, intended
  to treat hepatitis B. However, 15 patients who
  submitted to trials of the drug suffered liver
  toxicity and 6 died. Rather than follow the
  companys long-standing no comment policy, the
  new Chairman and CEO, Randall Tobias openly
  acknowledged the failure. His view was that
  communication stands at the top of the list in
  the elements of good leadership. In addition, he
  believed that if a company leaves a
  communications void, others will fill it with
  misinformation. (Put the Moose on the
  TableLessons in Leadership from a CEOs Journey
  Through Business and Life, Randall and Todd
  Tobias, Indiana University Press)

115
Reputation

• A railroad executive burst into Arthur Andersens
  office one day in 1914, demanding that the firms
  founder approve the railroads books. Accountants
  had discovered that the railroad was inflating
  its profits by failing to properly record
  expenses. Andersen refused, saying that there
  wasnt enough money in the city of Chicago to
  make him approve the fraudulent accounting.
  Andersens independence cost him the client, but
  it gained him something far more valuable, a
  reputation for integrity that gave investors
  confidence in Arthur Andersen audits, a
  reputation that helped the firm become one of the
  top 5 accounting firms in the U.S. After nearly
  90 years in business, Andersen imploded in 2002
  after acknowledging that its auditors had
  shredded documents relating to its audits of
  Enron.

116
Reputation

• Warren Buffett, CEO of Berkshire Hathaway, warns
  his executives once a year not to do anything
  that year they would be ashamed to read about in
  their local newspaper. You can lose a reputation
  that took 37 years to build in 37 seconds. And it
  might take more than 37 years to build it back.

117
Virtue

• VirtueThe quality of doing what is right and
  avoiding what is wrong.
• "Virtue develops from a habitual commitment to
  pursue the good. - Ronald F. Thiemann, a
  professor of religion and society at Harvard
  Divinity School
• Wisdom is know what to do next virtue is doing
  it. - David Starr Jordan (1851 - 1931), American
  naturalist

118
The Role of Leadership in Developing a Culture of
Integrity

• According to Marshall Schminke, who teaches
  business ethics at the University of Central
  Florida, A persons individual moral framework
  is only the third-most important factor in
  deciding what theyll do. The most important is
  what does their boss do. Workers look to their
  boss first for cues on what constitutes moral
  behavior. Second, they look at their peers, and
  finally at their own moral code. -Experts
  Ethics not Just Codes, Marshall Schminke, Raleigh
  News Observer, June 8, 2003, p.12E, based on an
  article by Harry Wessel in the Orlando Sentinel.)

119
The Role of Leadership in Developing a Culture of
Integrity

• A company's commitment to integrity flows from
  the commitment, action, and credibility of its
  leaders. - Responsibility Lies In Leadership ,
  By Ruettgers, Mike, Chairman of the Board of EMC
  Corporation, Vital Speeches of the Day, 0042742X,
  12/15/2003, Vol. 70, Issue 5, Delivered to The
  Fall 2003 Raytheon Lectureship in Business
  Ethics, Bentley College, Center for Business
  Ethics, Waltham, Massachusetts, October 8, 2003

120
Role of Leadership in Developing a Culture of
Integrity

• A leaders integrity is probably the single most
  important factor in an organizations ability to
  develop a culture of integrity
• Numerous business leaders have described the
  development and maintenance of a culture of
  integrity as the very purpose of leadership?

121
The Role of Leadership in Developing a Culture of
Integrity

• Edgar Schein argues that leaders shape culture
  through what they notice, measure, reward and
  dislike.
• e.g. At Enron and Worldcom, executives and Board
  members elevated growth and short-term profits
  above all other considerations and nurtured a
  culture of cut-throat competition within the
  company.

122
The Role of Leadership in Developing a Culture of
Integrity

• President George W. Bush observed recently,
  "Ultimately the ethics of American business
  depend on the conscience of America's business
  leaders."

123
The Role of Leadership in Developing a Culture of
Integrity

• A report by former U.S. Attorney General Richard
  Thornburg explained how the corporate culture
  created by CEO Bernie Ebbers and CFO Scott
  Sullivan fostered an environment that led to the
  largest ever bankruptcy in U.S. history. Ebbers
  resisted efforts to establish a company code of
  conduct calling it a colossal waste of time. He
  also made numerous, often highly emotional
  demands for results. (ReportsEbbers knew of
  gimmickry, Matthew Barakat, Raleigh News
  Observer, June 10, 2003, p.1)

124
The Role of Leadership in Developing a Culture of
Integrity

• The closer the enterprise the greater the
  correlation between the corporate culture and the
  personal ethics of its leaders (e.g. small,
  family business (note Malden Mills was a family
  business), contrast a multinational corporation)

125
The Role of Leadership in Developing a Culture of
Integrity

• In a recent study by the Southern Institute for
  Business and Professional Ethics, 97 of
  respondents said that the leader of an enterprise
  must also be the moral leader, but many
  executives dont see or appreciate their power as
  role models in this regard. Employees take their
  cue from superiors on how to conduct themselves,
  and written codes of conduct rarely carry as much
  weight as the actual actions of those in command.

126
Role of Leadership in Developing a Culture of
Integrity

• Perhaps Skilling and Lay couldn't know all the
  goings-on at Enron, as they claim. However,
  "people at the top tend to set the target, the
  climate, the ethos, the expectations that fuel
  behavior," says Thomas Donaldson, a business
  ethics professor at the Wharton School at the
  University of Pennsylvania. (Corporate Ethics
  Right Makes Might, Business Week, 4/11/02)

127
Role of Leadership in Developing a Culture of
Integrity

• Business ethics is integral to effective
  leadership. It is not something that can be
  delegated to othe