Title: Business Ethics
1Business Ethics
- Doing the Right thing, and Making the Good Life
Better
2Welcome and Introduction
- I am Andy Gustafson
- I teach Business Ethics at Creighton
- Son of a Farmer from Aurora, NE
3Overview of Ethics
- What is Business Ethics?
- Some Ethical Quotes/Quiz
- Some moral theories
- Moral Development
- Professional Standards/Industry Paradigms
- Moral Decision Making
4- ETHICS QUOTES
- 1. When I do good, I feel good when I do bad, I
feel bad. Thats my religion. (Abraham Lincoln) - 2. A man does what he must.. in spite of
personal consequences, in spite of obstacles and
dangers, and pressures.. and that is the basis of
all human morality. (JFK)3. If you don't have
integrity, you have nothing. You can't buy it.
You can have all the money in the world, but if
you are not a moral and ethical person, you
really have nothing. (Henry Kravis) - 4. Always do right this will gratify some and
astonish the rest. (Mark Twain) - 5. Good people do not need laws to tell them to
act responsibly, while bad people will find a way
around the laws. (Plato) - 6. Associate with men of good quality, if you
esteem your own reputation for it is better to
be alone than in bad company. (George
Washington) - 7. To educate a person in mind and not in morals
is to educate a menace to society. (Theodore
Roosevelt) - 8. A good name is more desirable than great
riches to be esteemed is better than silver or
gold. (Pr 221) - 9. Two wrongs dont make a right. (old english
proverb) - 10. Its not enough to be busy so are the ants!
The question is what are we busy about?
(thoreau) - 11. What does it profit a man to gain the whole
world, yet forfeit his soul? - 12. It takes less time to do a thing right than
to explain why you did it wrong. (longfellow) - 13. Live so that when your children think of
fairness and integrity, they think of you. (H.J.
Brown) - 14. The most important persuasion tool you have
in your entire arsenal is integrity (Zig Zigler)
5ETHICS
6Question 1
- 1. Which of the following has been found to be a
true statement regarding ethics and the insurance
industry? - a.) On average, insurance practitioners are more
likely to act unethically in business practices
than in purely personal situations. - b.) More than 50 percent of people in business
indicate having observed one or more unethical or
illegal acts in the past twelve months. - c.) Insurance practitioners believe that
managements emphasis on the bottom line is one
of the main factors leading to unethical
decision-making. - d.) All of the above are true statements.
7Answer
- Answer Q1. (d) All of the above are true
statements. (a) is based on research by Eastman,
Eastman, and Eastman 1996 (b) is American
Society of CLU and CFC Ethics Officer
Association) (c) Cooper and Frank, 1991. People
with high ethical values in their personal lives
may act unethically in their business practices
because of what is expected and rewarded in their
work. (Reilly, Kjy 1990)
8Question
- 2. A strong organizational culture is one in
which there is a high expectation of conformity
with the organizations beliefs, values, and
purpose. All of the following are true statements
regarding organizational culture EXCEPT - a.) In general, members of organizations having
strong cultures are more likely act ethically. - b.) In general, members in organizations with
weak cultures are more likely to base their
ethical decisions on the norms and values of
small groups within the organization. - c.) In general, members of large organizations
feel less responsibility for their actions than
those in small organizations. - d.) In general, higher level employees have less
ethical beliefs and their ethical decision-making
is less than lower level employees.
9Answer
- Answer Q2. (a) A strong culture can lead to more
ethical behavior if the cultures values and
purposes are ethical but it can also lead to
conformity of unethical behavior. (Diacon
Ennew, 1996) (b) is true (Trevino 1986) (c) is
true because responsibility is more diffused in
large organizations (Ford Richardson, 1994)
(d) (Ford Richardson 1994)
10Question
- 3. All of the following are true statements
EXCEPT - a.) Individuals see themselves as more ethical
than their coworkers or supervisors. - b.) The ethical behavior of supervisors strongly
influences the ethical behavior of their
subordinates. - c.) In general, supervisors and managements
actions have little influence over individuals
ethical behavior because individuals form their
ethical values outside of the work environment. - d.) Supervisors who are successful performers
have greater influence over their subordinates
ethical behavior.
11Answer
- Answer Q3. (c ) is the only one that is not true.
Countless studies show that although some core
values may not change, most values and ethical
standards of conduct are influenced by
supervisors and management actions (a) is true
(Tyson 1992), people judge themselves by their
intentions and they judge others by their
actions. (Cooper, 1996) (b) Nel Watson, 1989,
Cooper Frank, 1992)) (d) True, (Javidan,
Memmels, Devine Dastmalchian).
12Question
- 4. Which one of the following is a true
statement? - a.) Most employees report that a companys
ethical position is stated in their training
courses. - b.) The existence of a formal code of ethics is
a strong deterrent to unethical behavior. - c.) The awareness of a formal code of ethics is
a strong deterrent to unethical conduct rather
than just the mere existence of one. - d.) The most successful ethical training
programs are ones that emphasize how to make
ethical decisions rather than setting clear,
uncompromising rules.
13Answer
- Answer Q4. (d) As in other training in other
aspects, training on how to make decisions is
more effective in changing behaviors than
training that sets out lists of rules to abide
by. (Mahoney, 1997) (a) less than half of
employees state that their companys ethical
position is stated in training (b) The existence
of a formal code has no relationship on ethical
behavior. (Weaver, Trevino, Cochran, 1999) Enron,
for example, had an award-winning 79 page Code of
Conduct. (c) Unfortunately, awareness by
employees does not affect their behavior either.
(Kohut Corriher, 1994, Vitell, 1997). However,
clearly communicated and strongly enforced
guidelines do make a difference. (Laczniak
Inderrieden, 1987).
14Vocabulary Business Ethics
- What is Business ?
- What is Ethics ?
15Business 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
-
16Business 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)
17Alternate 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)
18Your 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
19Responsibilities in Business
- To your employer
- To Customers
- To employees
- To boss/es
- To your community
- To your family
- To your God
20The challenge Balancing Responsibilities
21What is ethics?
22Ethics 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
23Ethics and Regulation
- Government regulation often is designed to
promote ethical behavior - SOX
- OSHA Regulations
- EPA Regulations
- Federal Sentencing Guidelines
24Federal 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
25Company 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.
26Many think Ethics is just about what to NOT do
Dont do __!!
27But 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 - Zoo, Childrens Hospital, Holland, Real Estate
28Business 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. -
29How 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?
30The 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.
31Moral Psychology
- WHY DO PEOPLE DO WRONG THINGS?
- Milgram Experiment
32Question Why do Soccer moms sometimes drive
like jerks?
33Question Why do people forge signatures and
documents?
34Why do people stretch or edit the truth, or
exaggerate?
35Moral 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?
36Some 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
37More Moral Psychology
- WHY DO PEOPLE DO THE RIGHT THINGS?
38Kohlbergs 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
39moral dilemma Condo
- Scott Bennett is the engineer assigned to deal
with vendors who supply needed parts to the
Upscale Company. Larry Newman, sales
representative from one of Upscale's regular
vendors, plays in the same golf league as Scott.
One evening they go off in the same foursome.
Sometime during the round Scott mentions that he
is really looking forward to vacationing in
Florida next month. Larry says his uncle owns a
condo in Florida that he rents out during the
months he and his family are up north. Larry
offers to see if the condo is available next
month -- assuring Scott that the rental cost
would be quite moderate. - What should Scott say?
40Condo II
- Larry tells Scott he can rent his uncle's condo
for 100 a week. "My uncle," Larry says, "gets
nervous when he rents to total strangers. He
likes to have reliable people stay in his condo
the condo is paid for, and my uncle isn't
interested in making money on it -- he just wants
a little help meeting basic operating expenses
and the taxes." - Scott accepts the offer and begins making plans
for his vacation. Just before leaving, an Upscale
vice president sends out a new policy statement
that says, among other things "Accepting
incentives from vendors is strictly prohibited". - What should Scott do?
41Kohlbergs 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
42Part 2 Ethical Principles, and how to use them
- Brief explanation of the 5 classic ethical
theories - Egoism
- Social Contract Theory
- Utilitarianism
- Duty-Based
- Virtue Ethics
43Egoism
- People should always do what is in their own
self-interest. - (ex do what it takes to get repeat business)
44Social Contract Theory
- Compromise-Egoism Make concessions to others,
but try to get what you can - Obey the law, respect others because you want to
be respected, etc - When driving, slow down near other schools, not
just your own kids school
45UtilitarianOutcome-Based
- Do what benefits the greatest number the most
- Jump on the grenade if it benefits the most.
- Do what is right if it will make for a better
society in the long run, even if you could have
short term maximization right now - I can save my client on this insurance premium by
under-reporting risks, but in the long run this
will cause the insurance company and other
clients to be at considerable risk.
46We can lose our moral conscience and concern!
- Capacity for the nobler feeling is in most
natures a very tender plant, easily killed, not
only by hostile influences, but by mere want of
sustenance and in the majority of young persons
it speedily dies away if the occupations to which
their position in life has devoted them, and the
society into which it has thrown them, are not
favourable to keeping that higher capacity in
exercise.
47 John Stuart Mill
- Men lose their high aspirations as they lose
their intellectual tastes, because they have not
time or opportunity for indulging them and they
addict themselves to inferior pleasures, not
because they deliberately prefer them, but
because they are either the only ones to which
they have access, or the only ones which they are
any longer capable of enjoying.
48Principle/Duty-Based
- Only act in a way that you could make your act a
universal law - Should I lie? Would I make lying a universal
law? No. Then dont lie! - Should I cheat on my taxes? Would I want
everyone to do that? No. Then dont!
49Principle 2
- Treat others always as an end, not as a means to
an end. - Dont treat checkout person as humanoid ATM
- Dont treat other drivers as obstacles in your
path - Dont treat customer as a just a means to money
50Virtue Ethics/Nebraska Ethics
- What is the GOOD life,
- and how do we achieve that?
- Aim for excellence
- Moderation/Balance
- -- Vice Virtue Vice
- (Too little) (just right) (too much)
- Coward Courage Foolhardy
51Being Virtuous
- Does depend on the situation
- When to be witty
- Does depend on the individual
- Child Maestro
- Is something we must constantly strive to upkeep,
work at - We can lose our touch!
- It helps to have roll models WWJD?
52Virtues
- Honesty
- Integrity
- Responsibility
- Respect/Caring
- Truthfulness
-
53Moral 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?....
54Guiding 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.?
55Guiding 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?
56Guiding 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?
57Guiding 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?)
58Final 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.
59Summary What have we covered?
- What is Business Ethics?
- Some moral theories
- Moral Development
- Moral Decision Making
60The End