BA 342 Exam 1

Figure 7.1 from Textbook (scandals)

*~Enron: Andrew Fastow, Jeffrey Skilling, Kenneth Lay -- securities fraud, conspiracy to inflate profits, corrupt corporate culture* ~ Volkswagen: top executives and board -- emissions scandal ~ Chesapeake Energy: Aubrey McClendon, CEO -- conspiracy to rig bids ~ Takata: Shigehisa Takada, chairman and CEO -- faulty airbags leading to consumer deaths and recalls ~ Toshiba Corp: Hisau Tanaka, CEO -- accouting irrgeualrities ~ Veteran's Administration: Eric Shinseki, VA Secretary -- manipulatin and falsification of medical waiting lists and systemwide rigging to hide deception ~ Peanut Corporation of America: Stewart and Michael Parnell -- deadly salmonella outbreak leading to deaths, fraud ~ WorldCom: Scott Sullivan, CFO; Bernard J Ebbers, CEO -- accounting, fraud, lying. filing false financial statements ~ Arthur Andersen: entire firm; David Duncan, auditor for Enron -- accounting fraud, criminal charges, obstruction ~ Tyco: Mark Schwarz, CFO; Dennis Kozlowski, CEO -- sales tax evasion, stealing through corruption, fraud ~ HealhSouth: Richard Scrushy, CEO -- found not guilty in company scandal, later convicted of bribery

Warren Buffet quote

"In looking for people to hire, you look for three qualities: integrity, intelligence, energy, and if they don't have the first, the other two will kill you."

Video -- Spiderman

"With great power comes great responsibility"

Ethics definition (textbook)

"concerned with morality and fairness in behavior, actions, policies, and practices that take place within a business context"

Responsible Leadership (Financial Times definition)

"making business declensions that take into account stakeholders such as workers, clients, suppliers, the environment, the community, and future generations"

Values Framework: Steps

(1) Awaress (2) Facts (3) Stakeholders (4) Standards (5) Values (6) Options/Action

Intellectual Property

(music examples)

Responsibility

the ability or authority to act or decide on one's own without supervision: Can you do the right thing?

Survey Statistics on how business is viewed: Gallup Survey Dec 2016

~ % rating on honesty high to very high: Business execs 17% ~ % rating on honesty average to high: Business execs 67% ~ higher jobs: professors, nurses, military, clergy ~ lower jobs: congress and car sales

Influences on Behavior

~ Behavior of Superiors = primary influence of unethical behavior ~ Behavior of one's peers ~ Industry or professional ethical practices ~ Personal financial need ~ Society's moral climate ~ Formal organizational policy (or lack thereof)

Case: Madoff (Ponzi Scheme)

~ Bernie Madoff -- lead the largest financial fraud in US history ~ Ponzi scheme: keep pouring money in at the bottom, few people paid at the top ~ Madoff -- invest in US, modest but consistent earnings, put extra money in personal bank account ~ Financial crisis --> everyone asked for their returns, but there wasn't enough money ~ Result: Madoff turned in by his sons and spending life in prison ~~ One son dies from cancer and the other killed himself ~ Interview in 2011 with Barbara Walters == tried to justify to some extent

Global Business Ethics -- Big 5 Issues

~ Bribes and corruption ~ Employee abuse ~ Fraud/Lying and theft ~ Regulatory violations ~ Contracts misconduct

CISCO Video Case on Responsibility

~ CISCO tech company: how the internet works (hardware and software) Responsible citizen of the world ~ West Africa and Ebola: info design 100 location ~ Nepal earthquakes: TacOps Comm Infrastructure ~ Malaysia: 1300 sensors ~ Packaging: 400+ ton decrease, 4600 CO, down ~ Public/Private partnership Network Academies ~ Women and Tech ~ Disability: Kenya, Russia, Mexico

"Bottom-Line" Mentality

~ Composed of internal norms ~ Internal influences operating together, influential impact on individual and group behavior ~ Focus on performance and results: profit is the sacred, instrumental value that seems to take precedence over all others

Three Approaches to Ethics

~ Conventional -- Societal Norm Focus ~ Principles -- Moral Guideline Focus ~ Ethics Tests -- Applied Guideline Focus

Tech: Side Effects

~ Depletion of Natural Resources ~ Technological unemployment ~ Environmental pollution ~ Creation of unsatisfying lobs

Case: Domino's

~ Domino's: 30 minutes or free ~ Campaign relied too heavily on the driver, the last link in the chain. They ended up negotiating with customers and some situations resulted in car accidents ~ Today: commercial about 30 minutes, but so guarantee

Principle of ends/respect for persons principle

~ Duties ~ Each person has dignity and moral worth and should never be exploited or manipulated or merely used as a means to another end

Principle of Autonomy

~ Duties ~ We do not need an external authority (God, the state, culture) to determine the nature of the moral law

Snapshot Cases: Chipotle and Food Safety

~ E. Coli outbreak in late 2015 into 2016, 240 BC students ~ Founder Steve Ellis stepped down as CEO, stock prices fell and have yet to recover ~ Chipotle is still struggling to make a comeback ~ Food Safety: adjusted the way they cooked and prepared food

Big Topics -- Leadership Competencies

~ Ethical issues in business ~ Sustainability ~ Diversity and Inclusion ~ Corporate Social Responsibility

Corporate Dilemma (ex. Enron case)

~ Ethically "down in flames" or "caught in the act" ~ Andy Fastow CEO (jail, 6 years, out) ~ Ken Lay Founder (died) ~ Jeff Skilling CEO (jail) ~ Set up offshore companies to take on debt, manipulating earnings, and participating in insider trading ~ Enron Ethics Code based on respect, integrity, communication, and excellence ~ Whistle blower: Sherron Watkins, Enron VP ~ Arthur Anderson: Accounting for Enron ~ Big 5 is now the Big 4

Case: Lockheed Martin #4 (online video case)

~ Ethics Awareness training == who's gpt a Visa ~ Do what is right ~ Respect others ~ Perform with excellence ~ Table of contents -- our conduct, our work environment, our generations, out corporation

EAP

~ Excellent Performance ~ Academic Integrity ~ Professional Behavior

Tech and Trouble: Personal

~ Favor quick fixes ~ Fear and worship technology ~ Blurred lines between real and false ~ Accept violence as normal ~ Love technology as a toy ~ We live distanced and distracted ~ Communication better or worse ~ Knowledge better or worse ~ Ethics better or worse

Snapshot Cases: Volkswagon

~ German car company, "clean diesel" cars with no bad fumes, became #1 car company in the world, but it was a lie, device put in cars that showed lower emissions in testing than there actually were ~ 40x more in 500,000 US vehicles ~ Cheated on emissions tests, bought back all the cars, still not enough to repair environmental damage ~ Executives in jail and still in court

Snapshot Cases: Wells Fargo

~ High pressure sales culture led to cross-selling, banks sold products for high incentives, started to create up to 3.5 million fake accounts ~ "Trust is broken" -- cultural issue driving employees to do wrong ~ 5,300 firing of front line employees ~ Tim Sloan: new CEO ~ Besty Duke: new board chair

Economic Eras and Tech

~ Hunter/Gatherer: 1 in 1 out ~ Agrarian (from 2000 BC): 1 in 50 out ~ Industrial (1760s to 1940s): 1 in 2500 out ~ Information (1940s-1990s): 1 in ? ~ Knowledge, Big Data Era (1990s - present): 1 in ?

Models of Moral Management (3)

~ Immoral ~ Amoral ~ Moral

Tech: Benefits

~ Increase in goods/services ~ Decrease in labor to produce ~ Labor is safer and easier ~ Increase in living standards

Privacy Bill of Rights

~ Individual Control ~ Transparency ~ Stolen personal info ~ Respect for context ~ Security ~ Access and accuracy ~ Focused collection ~ Accoutability

Security Bill of Rights (the same as the Privacy Bill of Rights)

~ Individual control ~ Transparency ~ Stolen personal info ~ Respect for context ~ Security ~ Access and accuracy ~ Focused collection ~ Acountability

License to Operate (data on responsibility)

~ Intangibles: 53% of total value of Fortune 500 or about $24.47 trillion ~ Consumers: 85% reputation, responsibility key (competitiveness and marketing positioning) ~ Risk Management: government, NGOs, legal ~ Employees: 3/5 want to work for value companies ~ Investors: 80% institutional investors ~ Operations: innovation, energy, waste ~ Bottom line: Am I doing things the world says I should be allowed to?

Marijuana Cost to Employees/Issues to Address

~ Lost productivity ($200 bil/year) ~ Abesnteeism (78% higher) ~ Injuries (85% more likely) ~ Litigation (general and across states) ~ Safety (equipment or non-equipment) ~ Compliance and risk ~ Health Costs Increase

Case: Merck and River Blindness

~ Merck & Co -- pharmaceutical firm invested millions of dollars to develop a drug for treating "river blindness" ~River blindness is a Third World disease that affects 18 million people ~ No government or air agency would buy the drug, so Merck pledges to suppy the drug free forever ~ Organized a committee to oversee the drug's distribution`

Millennials and Ethics

~ Millennials: 1981-200 ~ Report just as much as other generations ~ More likely to experience retaliation ~ Report to more informal sources than formal sources

Elements of Judgement

~ Moral Imagination ~ Moral Identification and Ordering ~ Moral Evaluation ~ Tolerance of Moral Disagreement and Ambiguity ~ Integration of Managerial and Moral Competence ~ A Sense of Moral Obligation

Tech and Trouble: Corporate

~ Online scams (identity theft) ~ Invasion of privacy vs. informed consent ~ Intellectual property rights ~ Stolen data ~ Hacking corporate knowledge ~ Sharing consumer information ~ Spam ~ Behavioral advertising (cookies) ~ GEO tags with photos ~ Biotechnology (personal data) ~ Company cell phones ~ Information overload

Penn State Values (PRRIDE)

~ Penn State Community ~ Responsibility ~ Respect ~ Integrity ~ Discovery ~ Excellence

Poor Ethics versus Good Ethics Culture

~ Pressure to compromise standards: 23% vs 3% ~ Observed misconduct: 62% vs 33% ~ Reported misconduct of those who observed wrongdoing: 32% vs 87% ~ Experienced retaliation of those who reported wrongdoing: 59% vs 4%

Smeal Strategic Plan 2014-2019

~ Providing extraordinary education ~ Highest quality research ~ Building our culture of integrity, diversity, service, sustainability (match up with BA 342 topics)

Google Glass and Sneaky Televisions

~ Recording without people realizing ~ Issues of privacy

Internal norms prevalent to business organizations

~ Respect fro the authority structure ~ Loyalty to bosses and the organization ~ Conformity, principles, practices, and traditions ~ Performance counts above all else ~ Results count above all else: these play a more significant role in shaping business ethics that the external sources do

Fairness principle

~ Rights/Justice ~ the principle of justice involves the fair treatment of each person

Compliance vs. Values

~ Rules found in compliance document ~ Ethics found in code of conduct

Marijuana Economic Impact in Chicago

~ Sales = $996 million ~ $2.39 billion economic impact ~ 18005 jobs created

Ethics definition (3 parts in class)

~ Set of principles ~ Right conduct ~ Underlying values

Best Practice Org. Ethical Culture

~ Shape Attitudes ~ Reinforce Beliefs ~ Direct Behavior ~ Set Expectations

Marijuana Personal Impacts

~ Short-term memory problems ~ Impaired thinking ~ Loss of balance and coordination ~ Decreased concentration ~ Changes in sensory perception ~ Impaired ability to perform complex tasks ~ Decreased alertness and reaction time

Hours Case

~ Small town, big fraud ~ Rita Crundwell ~ Finance Chief of Dixon, IL. $30 million n theft that went to help raise her show horses and pay for her lavish lifestyle ~ The city was her bank account

Facebook: Benefits

~ Staying connected ~ Information ~ Sharing photos ~ Marketplace

Smeal Honor Code (like corporate codes)

~ We aspire to high ethical standards ~ We will hold each other accountable ~ We will not engage in any improper academic or professional actions ~ Today and Tomorrow

Cultural Relativism/Moral Absolutism (same as Ethical Imperialism): Questions to Be Resolved

~ Which ethical standards will be used? ~ Which ethical standards will transcend national business? ~ Work and product safety? Fair treatment? Health? Discrimination? Freedom? Minimum pay? Consumer rights? Environmental protection? ~ What constitutes moral minimum in each category

Survey Statistics on how business is viewed: Marist College Institute of Public Opinion

~ Yes, corporate moral compass negative: 75% general public, 58% business leaders ~ Grade for honesty: D or F from general public, C or B from business leaders ~ Investment industry negative: 53% general public, 67% from business leaders ~ Can businesses operate ethically? 75% of general public say yest, 94% of business leaders say yes ~ Business people's ethics same at home: 28% of general public say yes, 44% of business leaders say yes

Drones: Side Effects

~ danger to aviation industry ~ privacy ~ noise pollution ~ military intelligence ~ loss of jobs ~ use by terrorists

Facebook: Side Effects

~ decrease in personal interaction ~ waste of time ~ irresponsible pictures and videos ~ cyber bullying ~ skewed advertising and information ~ depression ~ addition ~ catfishing

Drones: Benefits

~ military intelligence ~ faster transportation for delivery ~ better news coverage ~ cheaper aerial footage ~ promotions ~ marketing

Kohlberg within Management

~ most of us act to avoid punishment (level 1) and to receive some reward ~ many of us act to be responsive to family, friends, or superiors ~ very few of us act to do what is right or pursue some ideal, such as justice (level 5)

Video: Kaspersky, 7 cycles of Cyber Hell

1. Researchers and scientists (1980s) 2. Hooligans and jokers (1990s) 3. Criminals (late 1980s) 4. Hacktivists (late 1990s) ~ damage personal/ corporate relationships 5. Espionage (trade stolen data bus/nattions 6. Military attacks (cyber warfare) 7. Terrorists (anything)

Case: Tylenol (J&J) 1982

1980s: Tylenol is big portion of J&J profits ~ Mary Kellerman: 12 year old girl dies of stroke symptoms after taking Tylenol ~ More Tylenol-related deaths in 1982 Chicago area -- few pills in bottles contained enough cyanide to kill you ~ Problem limited to Chicago area, but word spread across the country ~ J&J pulled all Tylenol products -- cost $100 mil, first total product recall in history ~ Case never solved, thought that the pills were individually injected by a random killer, product serves as the murder weapon ~ J&J took responsibility early and rebuilt brand through safety (Corporate Culture Impact Leadership) ~ J&J credo (order of importance/focus): Cusomers > Employees > Communities > Stockholders

Adam Smith

2 books: economics and ethics ~ "The Wealth of Nations" 1776 ~ "Theory of Moral Sentiments" 1759 ~ Invisible hand: based on trading honorably, not working the system

2013 National Business Ethics Survey

41% of workers observed misconduct ~ down 4% from 2011 (good) 63% of those who witness misconduct report it ~ down 2% from 2011 (bad) 21% of those who reported misconduct faced retaliation ~ down 1% from 2011 (good) 9% perceived pressure to commit a misconduct ~ down 4% from 2011 (good) ~ 28% in 1994, 14% in 200, 11% in 2003 and 2005, 10% in 2007, 8% in 2009, back up to 13% in 2011 (due to financial crisis), 9% in 2013

Elements of Judgement: Moral Identification and Ordering

Ability to discern the relevance or irrelevance of moral factors that are introduced into a decision-making situation ~ See moral issues and rank them due to priority

Elements of Judgement: Moral Imagination

Ability to perceive that a web of competing economic relationships is, at the same time, a web of moral relationships ~ Business and ethics occur side by side in organizations

Technology

All the ways people use inventions and discoveries to meet needs and wants

Elements of Judgement: Tolerance of Moral Disagreement and Ambiguity

Amout of disagreement generated and the volume of ambiguity that must be tolerated ~ Natural part of ethics discussions

Values Framework: (4) Standards

Are there any laws, policies, or professional standards that apply to this situation?

Kohlberg: Level 2 -- Conventional Level

As a person matures, there are others whose ideas or welfare ought to be considered, including family and friends ~ Individual learns the importance of conforming to conventional norms, and social relationships for and become dependent Stage 3: Good ~ Good boy/nice girl morality stage: rewards such as acceptance, trust, loyalty, or friendship for living up to what is expected by family and peers Stage 4: Law ~ Law-and-Order Morality Stage: become socialized or acculturated to what being a good citizen means; become part of larger societal system

Moral Disengagement

Being productive and morally engaged ~ THON, orgs, mentoring/coaching/tutoring, community service, working towards degrees honestly Moral disengagement ~ 70% of college students have cheated at some point while in school ~ Buying papers, selling intellectual property, clicker violations, alcohol abuse, sexual abuse, discrimination

Media Influence Data

Business Round table Study on High School Students, asked about what business people would do ~ 74% falsify finances ~ 68% secret dumping of toxic waste ~ 62% blackmail normal ~ 53% sabotage competition's facilities ~ 17% injure or murder if you know too much Students said these attitudes did not come from someone they knew but from the media

Behavioral Ethics: Slippery Slope

Causes people to not notice others' unethical behavior when it gradually occurs in small increments

Boeing Case

Central Question: Do you think personal like should be fair game in an employment decision? ~ Boeing 787 Dreamliner ~ Old CEO had bad ethics and company put on probation ~ CEO Harry Stonecipher brought back in, implemented codes and policies, changed culture (the Nexus of Ethics) ~ Stonecipher started an affair with an employee, emails leaked to board and he was fired ~ Implications: destroy trust, is judgement strong enough to lead, open for extortion and bribery (CEO has top clearances)

Kohlberg: Level 1 -- Preconventional Level

Characteristic of how people behave as infants and children, the focus mainly being on the self Stage 1: Punish ~Reaction-to-Punishment: do something followed by scolding and discipline; orientation towards the avoidance of pain Stage 2: Reward ~ Seeking-of-Reward: see a connection between good and some reward; do not understand morally "right" and "wrong," but learn to behave according to consequences

Conventional Ethics

Comparison of decision, behavior, or practice to prevailing norms of acceptability ~ Common Sense

Moral Management

Confirms to the highest standards of ethical behavior or professional standards of conduct ~ ex. Merck case

Behavioral Ethics

Connects to bounded ethicality. Helps us to understand at a deeper level many of the behavioral processes that research has shown are actually taking place in people and organizations ex Bounded Ethicality, Conformity Bias, Overconfidence Bias, Self-Serving Bias, Framing, Incrementalism, Role Morality, Moral Equilibrium, Ill Conceived Goals, Motivated Blindness, Indirect Blindness, Slippery Slope, Overcoming Values

Immoral Management

Conscience is seared ~ "I am going to beat you regardless. I don't care. I am going to do something wrong" ~ ex. Bernie Madoff Case

Matrix: Utilitarianism

Consequences and results ~ Cost benefit, we should always act to produce the greatest good to evil ratio for everyone ~ Jeremy Bentham and John Stuart Mill: One should take the action that represents the greatest good for the greatest number

Sources of Values External to the Organization: Cultural Values

Culture is that broad synthesis of societal norms and values emanating from everyday living ~ Modern sources of culture: music, movies, television, social network, video games, the internet ~ Melting-Pot Culture: norms, customers, and rules that defy summarization

Chief Privacy Officer

Deals with policy

Moral Guideline Matrix: J&J Tylenol

Deontological -----> ~ Duties: shut down nation, need to do more ~ Rights/Justice: right to safety/help everyone affected Teleological -----> ~ Utilitarianism: pull product just in Chicago ~ Virtue: J&J credo, character of company

Cultural Relativism/Moral Absolutism (sane as Ethical Imperialism): Big Question

Does right and wrong work the same in every country? Choice based on custom and culture

Ethical Test: Big Four

Don't compromise your action or decision by tempting behaviors. (1) Greed (2) Speed (3) Haziness (4) Laziness

Ethical Test: Purified Idea

Don't think that others in authority such as an accountant, a lawyer,or boss can "purify" your proposed action by saying they think it is okay. It still may be wrong. You will still be held responsible.

Video: 3 commercials (especially Honest Tea)

Doritos and Taco Bell: bad ethics commercials Honest Tea: Honesty Experiment ~ leave money to take tea, but no one there to collect money, just a donation box ~ example of good ethics

Ethical Tests

Ethical Test Approach (Applied Guideline Focus) -- Ethical Decision-Making ~ Common Sense ~ One's Best Self ~ Going Public ~ Ventilation ~ Purified Idea ~ Big Four ~ Gag Test

PONG

Ethics is ~ Personal (most important, ethics always starts with the person) ~ Organizational ~ National ~ Global

Ethical Test: Ventilation

Expose your proposed course of action to other's opinions. Don't keep your ethical dilemma to yourself, get a second opinion.

Artilce: "The Fraud Triangle and What You Can Do About It"

FCPA - Book review ~ US Foreign Corrupt Practices Act (1977): criminal offense for a representative of an American corporation to offer or give payments to the officials of other governments for the purpose of getting or maintaining business ~ Differentiates between bribes and facilitating/grease payments

Kohlberg: Level 3 -- Postconvntional Level

Focus moves from individual to humankind as a whole ~ individual develops a concept of ethics that is more mature than the conventionally articulated situation Stage 5: Social ~ Social-Contract Orientation: right action is thought of in terms of general individual rights and standards that have been agreed upon by a society as a whole Stage 6: Universal ~Universal-Ethical-Principle Orientation: individual uses his or her thinking and conscience is accord with self-chosen ethical principles that are anticipated to be universal, comprehensive, and consistent

Kholberg" Levels and Stages of Moral Development

General sequence of three levels, each with tow stages, through which individuals progressed in learning to thinlk or develop morally ~ Preconventional Level, Conventional Level, Post Conventional Level ~ As one develops morally, the focus moves from self, to others, and them to humankind

Goal of managers should be __________.

Goal of managers should be to create moral decisions, moral managers, and ultimately, moral organizations while recognizing that what we frequently observe is the achievement of moral standing at one of these levels.

Society's Expectations of Business Overtime

Growing disconnect between society's expectations of business ethics and ethics in practice ~ Actual business ethics slightly improving, but not at the same pace as public expectations are rising ~ Ethical problem: space between society's expectations of business ethics and actual business ethics (this space is growing larger)

Exercise: Ferrari and Secirity

Hired Kaspersky to be technology provider, company would set the needs set forth

Etrhical Test: One's Best Self

If the proposed course of action is not consistent with your perception of yourself at your best, don't do it.

Ethical Test: Common Sense

If the proposed course of action violates your common sense, don't do it. If it doesn't pass the smell test, don't do it.

Ethical Test: Gag Test

If you "gag" at the prospect of carrying out a proposed course of action, don't do it

Ethical Test: Going Public

If you would not be comfortable with people knowing you did something, don't do it. Don't take a course of action if you think your grandma would disapprove.

Sources of Values Internal to the Organization

Immediate factors that help to channel the individual's values and behavior ~ Grow out of the specific organizational experience ~ Constitute more immediate and direct influence on one's actions and decisions Societal process takes place in which the individual comes to learn and adopt the predominant values ~ Certain norms must by internalized, honored, and perpetuated in order to survive and succeed

3 components of ethics and technology

Intellectual Property, Privacy, Security

Right and Wrong Exercise and Discussion

Is there such a thing as right and wrong? ~ Have you ever heard that ethics is situational, relative, contextual, cultural, etc? --> the wrong place to start when talking about ethics Ethics are not situational, but we should be sensitive to situational factors ~ John Q movie: extreme example of right/wrong with life saving heart transplant

Case: J&J 2009

J&J products "off," specifically for PediaCare Products ~ Hired independent people to investigate rather than recall immediately ~~ Too worried about protected brand ~~ J&J reformed by Sandi Peterson

Case: Phantom Expenses

Jane, a new sales rep, is told by Ann to pad expense vouchers by 25%. She says everyone does it. What should Jane do? ~ Awareness: potential cheating on expense account ~ Facts: What is company policy? Does Ann do this as well? How much money? Consequences? ~ Stakeholders: company, other companies, clients, Jane is new, so she is easily influences ~ Standards: IRS, company policy, legal ~ Values: honestly and fairness,

Matrix: Duties

Kant's Categorical Imperative ~ A person should act only on the rules that you would be willing to see everyone follow

Biggest Problem in Fraud

Lack of Institutional Control

Elements of a Strong Ethics Culture

Leadership Support, Code of Ethics, Ethics Officers, Compliance Standards, Company-Wide Training, Clear Communication, Detection/Prevention

Sources of Values External to the Organization: Legal Values

Legal system is one of the most powerful forces defining what is ethical and what is not for managers and employees ~ Ethical behavior generally is that which occurs over and above legal debates ~ Law represents a minimum ethic of behavior but does not encompass all the ethical standards of behavior

Limited, Broader, and Highest Goal of Managers

Limited goal: Moral decisions, policies, practices Broader goal: Moral managers Highest goal: Moral organizations ~ Successes feedback to managers and to moral decisions, policies, and practices

Behavioral Ethics: Bounded Ethicality

Managers and employees find that even when they aspire to behave ethically, it is difficult to do to a variety of organizational pressures and psychological tendencies that intervene

Rights - Types (List from Fig. 8.1)

Moral rights: important, justifiable claims or entitlements ~ Legal rights: rights that some government authority has formalized as rights ~ Principle of rights: a right can only be overridden by a more basic or important right

Chief Privacy Officer information

Mostly deals with policy

Chief Security Officer

Mostly deals with technical systems

Fraud Triangle

Motivation, Opportunity, Rationalization ~ Opportunity is the only piece of the triangle we control

Elements of Judgement: Integration of Managerial and Moral Competence

Necessary capability to make ethical decisions in organizations ~ Future looking view that is essential to sustainable organizations

Media Influence Types (6 Categories)

News ~ "If it bleeds, it leads" -- show sensational things Movies ~ Business, big corporations oftentimes the villain Television ~ Prime TV Study -- 77% of plots involving business were negative Advertising ~ Go Daddy commercial -- using sex to sell product Internet

Behavioral Ethics: Indirect Blindness

Occurs when one holds others less accountable foe unethical behaviors when they are carried out by third parties

Trolley Illustration

Option 1: Pull lever to change track; kill 1, save 5 Option 2: Push man out in front of trolley; kill 1, save 5 ~ Means vs. Ends: Both options have same result, but require different actions

Teleological and Deontological

Part of principles approach (moral guidelines focus) to Ethical Decision-Making Teleological: Consequences or Results ~ Utilitarianism: greatest ratio of good to evil Deontological: Duties to Society ~ Kant: act as if to will it a universal law

Stakeholder Exercise: Sandusky Scandal

Penn State and NCAA stakeholders to consider: Sandusky victims, Penn State, NCAA, football program, all PSU sports, media, PSU trustee, PSU faculty staff students alumni, lawyers, public relaitons, Center County folks

Behavioral Ethics: Framing

People's ethical judgements are affected by how a question or issue is posed (framed) ~ People may respond differently to an issue as an "ethical" issue in comparison to a "business" issue

Sources of Values External to the Organization: Philosophical Values

Philosophers have claimed to demonstrate that reason can provide us with principles or morals in the same way it gives us the principles of mathematics ~ Today, strong influences of moral relativism and postmodernism have influenced people's values

Article: "Creating Ethical Culture"

Poor Ethics vs Good Ethics Program: ~ 23% vs 3% pressure to compromise standards ~ 62% vs 33% observed misconduct ~ 32% vs 87% reported misconduct ~ 59% vs 4% experienced retaliation

Behavioral Ethics: Ill-Conceived Goals

Poorly set goals that encourage negative behaviors such as sales goals emphasized too much or set too high

ERC date -- know trends and misconduct

Present focus: top 1/3 of managers Past focus: bottom 2/3 of managers

Ethical Decision-Making Process

Question: Can you teach ethics or make someone ethical? ~ An individual process: ethical awareness --> ethical judgement --> ethical behavior ~ Goal of teaching ethics is to increase awareness so people have better judgement

Sources of Values External to the Organization: The Web of Values

Refer to broad sociocultural values that have emerged in society over a long period of time ~Religious, Philosophical, Cultural, Legal, Professional Values

Sources of Values External to the Organization: Religious Values

Religion and faith have long been a basic source of morality in most societies, and religion and morality are intertwined

Elements of Judgement: A Sense of Moral Obligation

Requires the intuitive or learned understanding that moral threads are woven into the fabric of managerial decision making and are the integral components that hold systems together ~ Moral Threads: concern for fairness, justice, and due process to people, groups, and communities

BA 342 Theme

Responsibility and Responsible Leadership

Rationalization to Commit Fraud examples

Revenge, "It's not that big of a deal," "I'm not hurting anyone, company has plenty of money, not getting paid enough, deserving, not being values, helping town having famous horses, no one will know, promise to pay it all back

Matrix: Rights/Justice

Rights Figure list: civil rights, minorities' rights, women's rights, disabled persons' rights, older people's rights, religious affiliation rights, employee rights, consumer rights, privacy rights, right to life, right to work, gay rights, right to healthcare, animal's rights, victim's rights

Case: Sexual Harassment (Values Framework)

Situation: On the bus going home, a woman sitting next to you from another department says she is being sexually harassed at work. You are a manger. What do you do? ~ Awareness: potential sexual harassment ~ Facts: Harasser, how high up? Which department? Duration? Who else knows? Type of harassment (quid pro quo or hostile workplace) ~ Stakeholders: Management, other firms/competitors, other employees, victims family, ethics office/HR, accused person and family, authorities ~ Standards, laws, company policy ~ Values: duty of care Action: you contact your company's Ethics Office or ethics officer

Case: Understanding Drug Use on Job

Situation: You know an employee uses drugs on the job. A friend says to confront them and don't tell the supervisor. What do you do? Action: Report the matter to HR

Bounded Ethicality (University of Texas Video)

Sometimes ethics are compromised because of situational factors ~ Organizational factors ~ Psychological factors

Ethical Lag

Speed of technological change far exceeds that of ethical development ~ Always seem to be living in the state ~ Pairs with Technological Determinism

Video: Speed of Tech

Speed of technology is changing dramatically, exponential increase in information ~ Ethical decision making cannot keep up

Snapshot Cases: Playing Sports

Stepping out of bounds but not being called for it -- right thing to do is to tell the ref you were out of bounds

Video: The Matrix

Technology has taken over ~ Blue pill: "I love technology and don't want to think about the ethical implications" ~ Red pill: "I want to know what is wrong with technology, so I can be a better manager"

Behavioral Ethics: Overconfidence Bias

Tendency for people to be more confident of their own moral character behavior than they have organizational than they have a reason to be

Behavioral Ethics: Incremenetalism

The Predisposition toward the Slippery Slope ~ It has been noted that there is a tendency toward making a series of minor ethical misjudgments that can lead to major ethical mistakes

Behavioral Ethics: Overcoming Values

The act of letting questionable behaviors pass if the outcome is good.

Behavioral Ethics: Moral Equilibrium

The penchant for people to keep and ethical scoreboard in their heads and use this information when making future situations

Elements of Judgement: Moral Evaluation

The practical, decision phase of moral judgement and entails essential skills such as coherence and consistency ~ Integrate the concern for others into organizational goals, purposes, and legitimacy

Behavioral Ethics: Motivated Blindness

The process of overlooking the questionable actions of others when it comes to one's best interest.

Behavioral Ethics: Serf-Serving Bias

The propensity people have to process information in a way that serves to support the preexisting and perceived self interest

Behavioral Ethics: Conformity Bias

The tendency for people to take their cues for ethical behavior from their peers rather than exersising thier own ethical judgement

Behavioral Ethics: Role Morality

The tendency some people have to use different ethical standards as they move through different roles in life

Motivation to Commit Fraud examples

The three, deep in debt, helping family in financial trouble, greed and money, power, something to attain, make you feel smarter, social status, ability to influence, not get caught, problem/addiction

Best Practices for Improving an Organization's Ethical Culture

Top Management Leadership/Moral Management: ethics programs and officers, Board of Directors oversight, ethics audits and risk assessments, effective communication, ethics training, corporate transparency, whistle-blowing mechanisms (hotlines), discipline of violators, codes of conduct, ethical decision-making process, realistic objectives

Trust and Value Connection

Trust = Value

Amoral Management

Unintentional ~ Trying to do their job and not thinking about ethical implications ~ ex. Domino's case

Sources of Values External to the Organization: Professional Values

Values emanating from professional organizations and societies that represent various jobs and positions, and articulate the ethical consensus of the leaders of those professions

Ethics, Econ, and Law Model

Venn Diagram of Ethical Responsibility, Economic Responsibility, and Legal Responsibility Area 1: Crossover of all 3 ~ Profitable, Legal, and Ethical --> go for it! Area 2a: Profitable and Legal ~ Proceed Cautiously Area 2b: Profitable and Ethical ~ Probably legal too, but unsure so proceed cautiously Area 3: Legal and Ethical, but not Profitable ~ Find ways to seek profitability

Media Dilemma: Wall Street and the Office videos

Wall Street movie: "Greed is good" ~ Poor portrayal of business The Office: "Let's get ethical" ~ Funny, but still bad

Values Framework: (1) Awareness

What are the ethical concerns or issues?

Technological Determinism

What can be developed will be developed ~ Driven to push back the frontiers of technological development without the consideration of ethical issues, social problems, or side effects

Values Framework: (3) Stakeholders

What individuals or groups are affected or will be affected?

Descriptive vs. Normative (values framework)

What is = descriptive. What ought to be = normative ~ 70% of students say they have cheated in college -- descriptive ~ Most people say "you should not cheat" -- Normative

Values Framework: (2) Facts

What is known or unknown in this situation?

Values Framework: (6) Options/Action

What options do you have? What actions will you take?

Values Framework: (5) Values

What personal or organizational values apply?

Rawl's Principle of Justice

What we need first is a fair method by which we may choose the principles through which will be resolved ~ Each person has an equal right to the most extensive basic liberties compatible with similar liberties for all others ~ Social and economic inequalities are arranged so that they are both reasonably expected to be to everyone's advantage and attached to positions and offices open to all

When are hypernorms justified and confirmed?

When they meet the following conditions ~ Widespread consensus that the principle is universal ~ A component of well-known global industry standards ~ Supported by prominent NGOs, regional government organizations, and global business organizations

Matrix: Virtue

Who you are ~ I care about everyone and I'll sacrifice myself ~ Plato and Aristotle ~~ Focuses on the individual becoming imbued with virtues ~~ Centered in the heart of the person

Congratulations on joining the Smeal College of Business. As part of Smeal you wish to hold yourself to the highest ethical standards. Which of the choices below is NOT considered part of the Smeal Honor Code? a. We will not engage in improper actions. b. We believe our past actions reflect our present actions. c. We will hold high ethical standards. d. We will hold each other accountable. e. We believe high standards & accountability are crucial.

b. "We believe our past actions reflect our present actions" is NOT part of the Smeal Honor Code. The following are: - We will not engage in improper actions - We will hold high ethical standards - We will hold each other accountable - We believe high ethical standards & accountability are crucial

Technological side effects -- something to include in our ethical thinking. Which below is NOT a side effect of technology? a. Creation of low-quality jobs b. Decrease in labor to produce c. Environmental pollution d. Depletion of Natural Resources e. Technology Unemployment

b. Decrease in Labor to Produce

Ethical Imperialism/Moral Absolutism

business firm should continue to follow its home country's ethical standards even when operating in another country

Ethics has so many approaches to consider. In class we reviewed one approach called descriptive ethics. Which answer below best captures "normative ethics"? a. Developing a principaled approach to ethics b. Learning how to justify one's chosen actions c. Determining what should be done in a given situation d. Justifying a moral system of thinking and judging e. Assessing what is occurring in the realm of moral behaviors

c. Determining what should be done in a given situation

Hypernorms

cross all cultures, trans-cultural values, standards that are so basic that they are universally accepted ~ health, safety, and freedom

Safety is a critical element in any workplace. Imagine you lead a J&J facility and decide to not release a product. The moral philosophy practiced is? a. Utilitarianism (cost/benefit-based) b. Golden Rule Test c. Teleological Ethics d. Categorical Imperitave (duty-based) e. Ethical Test

d. Categorical Imperative (duty-based)

In class, we considered two sides of the same coin. On one side, it was all about technology, the other all about ethics. What are these two issues? a. Strategy and Execution b. Ethics and Compliance c. Right and Wrong d. Ethical Lag and Determinism

d. Ethical Lag and Determinism

Teaching & Ethics -- does anyone really know how to put those tow things together? In class we learned three things that make sense for teaching/ethics. Below which element is NOT part of that model? a. Ethical Awareness b. Ethical Judgement c. Ethical Behavior d. Ethical Principles e. None of the Above

d. Ethical Prinicpals

Global Ethics Survey 2018 -- great data. Which below is a Big 5 Type of misconduct from the survey? a. Improper Internet Useage b. Mental Challenges c. Conflicts between companies d. Regulatory Violations e. Discrimination by Age, Race, etc.

d. Regulatory Violations

Rules and Values -- things that every corporation lives by. TO find those values you would look where in a big company? a. Human Resources Department b. Legal Department c. Business Compliance Group d. Your boss - they know everything e. Code of Conduct

e. Code of Conduct

Testing, testing, testing -- it seems life is always about tests. In ethics we considered ethical tests. Which below in the MOST important ethical test? a. The Big Four b. Purified Idea c. Venting to Others e. Public Disclosure

e. Public Disclosure

Corporations succeed at their highest level by ensuring two major concepts are tightly linked. What are those two elements? a. Leadership & Motivation b. Responsibility & CSR c. Leadership & Teamwork d. Principles & Rules e. Trust & Value

e. Trust & Value

Cultural Relativism

investing firm should set aside its home country's ethical standards and adopt the ethical standards of the house country ~ When in Rome, do as the Romans do ~ No international rights or wrongs, but case of moral relativism