Business Ethics

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Business Ethics

• Doing the Right thing, and Making the Good Life
  Better

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Vocabulary Business Ethics

• What is Business ?
• What is Ethics ?

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Business is inherently social

• Business has its own culture
• Enron, Paypal, your office
• Business Transforms Culture
• Kiewit, FNB, community outreach
• Business is about relationships
• Workers, subcontractors, suppliers

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Business Its purpose/goal

• Lone Ranger/I am an Island View
• The purpose of business is to make me money, and
  increase stockholder value
• (Milton Friedman)

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Alternate Stakeholder View

• Business should make money, but it has many
  stakeholders groups/individuals who have a stake
  in what the business does. Owners are not the
  only ones with a stake (Freeman)

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Your business makes the world Better or Worse for
people by

• The way you treat your customers
• The way you treat your employees or coworkers
• The way you treat your boss/company
• The way you contribute to the local community

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Responsibilities in Business

• To your employer
• To Customers
• To employees
• To boss/es
• To your community
• To your family
• To your God

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The challenge Balancing Responsibilities
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What is ethics?
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Ethics isnt legal Difference between the
Law and Ethics

• Some legal issues are neither ethical or
  unethical.
• Some ethical issues have no laws to support them.
• Law often tries to encourage ethical behavior
• Better to have self-regulation than more govt
  regulations

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Ethics and Regulation

• Government regulation often is designed to
  promote ethical behavior
• SOX
• OSHA Regulations
• EPA Regulations
• Federal Sentencing Guidelines

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Federal Sentencing Guidelines

• 1. Having Standards
• 2. Assigned Responsibility - Adequate Resources
• 3. Due diligence in Hiring
• 4. Communications and Training
• 5. Monitoring, Auditing, Reporting
• 6. Promotion and Enforcement of Ethical Conduct
• 7. Reasonable Steps to Prevent Misconduct

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Company Ethics

• Company Policy often has some basis in the
  compliance regulations and legal statutes and
  fine schedules set up by government.
• But Personal ethics requires personal
  decision-making, rooted in values.

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Many think Ethics is just about what to NOT do
Dont do __!!
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But ethics is more than just what not to do

• Minimal What we shouldnt do
• Dont steal, dont kill, dont lie
• Better What we should do (justice)
• Be fair, Be honest, Fulfill duties, work hard
• Best What we could do to make things excellent
  for all of us
• Mutual of Omaha Project, Real Estate

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Business can help create an excellent life

• Example of this mindset Midland National Life
  insurance mission
• "To make life better for individuals and
  families to afford security, trust, superior
  value, and peace of mind to those we serve to
  offer the best in financial resources and
  services.

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How does Business make life better? Table
discussion (5 min)

• How do you make life better for your community
  through your business?
• What are positive things you do for the benefit
  of the many through your work?
• Do you see these things you do for others as
  being ethical?

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The Point is Realize the good you do in society!

• Businesses do have an effect on society and
  culture. Business is not just about making money.

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Moral Psychology

• WHY DO PEOPLE DO WRONG THINGS?
• Milgram Experiment

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Question Why do Soccer moms sometimes drive
like jerks?
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Question Why do people forge signatures and
documents?
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Why do people stretch or edit the truth, or
exaggerate?
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Moral Development Why do people do unethical
things?

• Why did the soccer mom drive like a jerk?
• Why did my student cheat on the exam?
• Why did people at Enron do unethical things?
• Why do subcontractors cut corners?

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Some reasons people do wrong

• Ignorant
• In a hurry
• Thoughtless
• Didnt plan ahead
• Financial difficulties
• Pressure from organization
• Not clear communication from management
• Lazy
• Want a quick buck
• They are a Bad evil wicked person

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More Moral Psychology

• WHY DO PEOPLE DO THE RIGHT THINGS?

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Kohlbergs theory of moral development

• Stage 1 Obedience and Punishment
• Stage 2 For self-benefit
• Stage 3 For sake of reputation (good boy)
• Stage 4 Maintain Social order
• Stage 5 Contractual-Legalistic orientation
• Stage 6 Conscience/Principle Orientation

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Moral Principles for Living and Working

• Banker Friend look in the mirror rule
• Showgirl from Las Vegas Grandma rule
• Golden Rule do unto others
• Silver Rule do no harm
• What rules do you use?....

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Business Ethics Issues

• Fraud
• Abusive Behavior/Harassment
• Conflicts of interest
• Defective products
• Bribery
• theft

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Guiding Questions

• Questions to help decide if the situation or
  decision has ethical dimensions
• Is it legal but unethical?
• Is it necessary?
• Does it involve a core ethical principle such as
  honesty, integrity, truthfulness, etc.?

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Guiding Questions Info

• Information gathering questions
• Who are the stakeholders and what are their
  rights?
• Consider the source, reliability, and accuracy of
  all relevant information.
• Who should be involved in this decision?
• Do I have enough information to make a sound
  ethical decision? If not, how do I get it?

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Guiding Questions Options

• Questions to help identify and evaluate
  alternatives
• Am I rationalizing to justify what I want to do?
• Am I using anyone for my own personal gain? (Who
  will be injured and how)
• Are there conflicting loyalties to stakeholders?
• What would result in the long run if everyone did
  this?

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Guiding Questions Conclusion

• Questions that help in reaching a decision
• Could I defend my position before the Board of
  Directors, the CEO, or the media?
• What would ______________________ do? (Fill in
  the name of the best role model you know.)
• Will this seem to be the right decision a year
  from now? Five years from mow?
• Do I have the moral courage to take the more
  ethical course of action? (Am I willing to pay
  the price for my convictions?)

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Final Thoughts

• Usually, doing the right thing is clear, even if
  its not easy
• We tend to cut corners for short-term apparently
  inconsequential issues, but this can come back to
  haunt us
• Having Ethical Habits takes practice, and some
  thoughtfulness.

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Summary What have we covered?

• What is Business Ethics?
• Some moral theories
• Moral Development
• Moral Decision Making

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The End