BA 342

Warren Buffett 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."

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 society as a whole

Sources of Values (P 213)

Sources External to the Organization: The Web of Values Refer to broad sociocultural values that have emerged in society over a long period of time

Values Framework (know 6 parts formula) - need to know how to apply

Step 1 - Awareness o What are the ethical concerns or issues? Step 2 - Facts o What is known or unknown in this situation? Step 3 - Stakeholders o What individuals or groups are affected or will be affected? Step 4 - Standards o Are there any laws, policies, or professional standards that apply to this situation? Step 5 - Values o What personal or organizational values apply? Step 6 - Options/Action o What options do you have? What actions will you take?

Peanut Corporation of America

Stewart and Michael Parnell - deadly salmonella outbreak leading to deaths; fraud

• Legal values

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

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

J&J Tylenol Example

o 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 in 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 million • First total product recall in history Case never solved, thought that the pills were individually injected by a random killer, product served as the murder weapon J&J took responsibility early and rebuilt brand through safety • Corporate Culture Impact Leadership J&J credo (order of focus) • Customers - employees - communities - stockholders o 2009 - J&J products "off", specifically PediaCare products Hired independent people to investigate rather than recall immediately • Too worried about protecting brand • J&J reformed by Sandi Peterson

Michigan State Stakeholder Example

o Failure at the Gym - Gymnastics & University Scandal 2017/2018 o Larry Nassar - MSU doctor & USA Gymnastics & Michigan State & USOC o Said it was a medical thing, but it was a sexual abuse o 332 women (U.S. Gymnasts: Aly Raisman, Simone Biles......)

Hyper Norms - that cross all cultures

o Hypernorms - transcultural values, standards that are so basic that they are universally accepted --- Health, safety and freedom --- Ex. customers - fair deal (price), good/honest info --- Ex. Employees - safe working conditions, benefits o 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

Models of Management (know all 3) (sec.7.4)

o Immoral - conscience is seared x The immoral manager: "If I can steal your money I will" x "I am going to beat you regardless. I don't care, I am going to do something wrong." x Example: Bernie Madoff Case (see below) o Amoral - intentional or unintentional x Trying to do their job and not thinking about ethical implications x Example: Domino's case (see below) o Moral - confirms to the highest standards of ethical behavior or professional standards of conduct x Example: Merck case (see below)

• Privacy Bill of RIghts

o Individual Control o Transparency o Stolen personal info o Respect for context o Security o Access and accuracy o Focused collection o Accountability

Right and Wrong exercise and discussion

o Is there such a thing as right and wrong? - start with values -- Have you heard it said that ethics is... x Situational x Relative x Contextual x Cultural x It all depends --- These are WRONG places to start on ethics o Ethics are not situational, but we should be sensitive to situational factors o John Q movie - extreme example of right/wrong with life saving heart transplant

• Conventional Ethics

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

Ethics, Econ, and Law model (p 197) - Area 3 - legal and ethical, but not profitable

Find ways to seek profitability

Kohlberg

Kolberg's Levels of Moral Development (moral judgement) General sequence of three levels, each with two stages, through which individuals progress in learning to think or develop morally As one develops morally, the focus moves from self, to others, and then to humankind

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

o Enron

Leadership Team - Andy Fastow, CFO (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 Whistleblower - Sherron Watkins, Enron VP Arthur Anderson - Accounting for Enron • Big 5 is now the Big 4

Personal & Corporate Focused

Personal (individuals making choices) and Corporate level (our choices impact others)

Snapshot Cases "Responsibility Today"-Playing Sports

Playing Sports - Stepping out of bounds but not being called for it - right thing is to tell the referee you were out of bounds

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

READ

Stage 1 - Punish

Reaction-to-punishment - do something followed by scolding and discipline; orientation toward the avoidance of pain

Stakeholder exercise - Sandusky scandal

o Jerry Sandusky was convicted of rape and child sexual abuse o Penn State and NCAA stakeholders to consider o Sandusky victims, Penn State, NCAA, Other universities, football program, all PSU sports, media, PSU trustees, PSU faculty staff students and alumni, Paterno Family, activists groups, Spanier, Curley and Schultz, McQueary, lawyers, public relations, Ethics & Compliance, Freeh Report, Emmert and others, families, Centre County folks, local businesses, new businesses

• Survey statistics how business viewed

o Marist College Institute of Public Opinion Yes - Corporate Moral Compass Negative: 75% general public, 58% business leaders Grade for Honest: D or F from general public, C or B from business leaders Investment industry negative: 53% general public, 67% from business leaders Can Business people operate ethically? 75% of general public say yes, 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

Merck and River Blindness

o Merck & Co ((in book) - pharmaceutical firm invested millions of dollars to develop a drug for treated "river blindness" x Mectizan - 2.5 Billion Pills - for free x Third World disease that affects 18 million people o No government or aid agency would buy the drug, so Merck pledges to supply the drug free forever x Organized a committee to oversee the drug's distribution

Millennials and Ethics (Social networks slide)

o Millennials: 1981-2000 --- Report just as much as other generations --- More likely to experience retaliation --- Report more to informal sources than formal sources o Social networks & Millennials (What they post - percent reporting) --- Job Feelings 40% --- Bad Joke on Boss 26% --- Work Information 26% --- Photo of Co-worker Drinking 22% --- Annoying Habit of Co-worker 20% --- Opinion on Co-worker politics 16%

• Trolley Illustration

o Option 1 - pull level to change track; kill 1, save 5 o Option 2 - push man out in front of trolley; kill 1, save 5 o Means vs ends Both options have same result, but require different actions

• Teleological and Deontological

o Part of principles approach (moral guidelines focus) to Ethical Decision-Making o Teleological - consequences or results Utilitarianism - greatest ratio good to evil o Deontological - duties to society Kant - act as if to will, it a universal law

Penn State Values knows - PRRIDE

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

Poor Ethics versus Good Ethics culture (themes) (ERC Report Large Companies)

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

Ethics Decision-Making Process (3 part)

o Question: Can you teach ethics or make someone ethical? --- An individual process: --- 1. Ethical Awareness → 2. Ethical Judgement → 3. Ethical Behavior o Goal of teaching ethics is to increase awareness so people have better judgement

Settlements

o Sandusky $109 Million - 33 victims - 2% of PSU Budget o Nassar $500 Million - 332 victims - 37% MSU Budget

✓Phantom Expenses case (book pg. 668)

o Situation: Jane, a new sales rep, is told by Ann to pad expense vouchers by 25%. She says everyone does it. What should Jane do? x Awareness: potential cheating on expense account (are you being directed to falsify your expenses?) x Facts: who is Ann? How do you know everyone is doing this? Kinds of expenses, frequency of reports, total dollar involved? What is company policy? Does Ann do this as well? How much money? Consequences? Jane is new, so she is easily influenced x Stakeholders: You, company, department manager, other departments, HR, Legal & Compliance, media, other employees, clients, Jane and Ann, stockholders, families, community (reputation) x Standards: Industry protocols (CPA exams), IRS, company policy/guidelines, legal guides x Values: your values, company stated values, honesty and fairness

• Understanding Drug Use on Job case

o 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

Understanding Drug Use on Job case

o 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? x Action: report the matter to HR o Drug Use Values Framework o Awareness: someone using? o Facts: are they impaired? legal/illegal. o Location, 5 W's, someone knows besides you o Stakeholders: boss, media, co-workers, competitors, family, clients/customers, HR, public/ stockholders o Standards: federal & state laws, company policy (drug testing), industry focus o Values: o Actions:

Bounded ethicality - watch video (univ. Texas)

o Sometimes ethics are compromised because of situational factors x Organizational pressure x Psychological factors x (People are rational but only boundedly so)

Business Roundtable Study High School Students

o Survey Results on What Business People Would Do: 74% Falsify Finances 68% Secret dumping of topic waste 62% Blackmail normal 53% Sabotage competition's facilities 17% Injure/murder if you knew too much (Notes: Students said attitudes did not come from someone they knew but from media)

Ethics Definition- 3 parts in class and book def

o Textbook - "concerned with morality and fairness in behavior, actions, policies, and practices that take place within a business context" o In class 3 part Ethnics definition 1. Set of principles 2. Right conduct 3. Underlying values

• Ethics, Econ, and Law model (p 197)

o Venn Diagram of Ethical Responsibility, Economic Responsibility, and Legal Responsibility

Media Dilemma: Wall Street and The Office videos

o Wall Street Trailer (Money Never Sleeps) o Greed is Good x Poor portrayal of business o The Office - Let's Get Ethical (song) x Funny, but still bad

Smeal Honor Code (like corporate codes)

o We aspire to high ethical standards o we will hold each other accountable o We will not engage in any improper academic or professional actions o TODAY AND TOMORROW

• Descriptive vs. Normative (values framework)

o What is descriptive out to be normative 70% of students say they have cheated in college - descriptive Most people say "you should not cheat" - normative

✓Descriptive vs. Normative (values framework)

o What is descriptive out to be normative x What is (descriptive) x What should be (normative) x 70% of students say they have cheated in college - descriptive x Most people say "you should not cheat" - normative

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

• 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 o Today, strong influences of moral relativism and postmodernism have influenced people's values

• Religious values -

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

Responsibility

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

Corporate Dilemma (ex. Enron case) Fig 7.1

o Ethically "down in flames" or "caught in the act" o Enron: x Enron Leadership Team (Aug 2001) - Andy Fastow, CFO (jail, 6 years, out), Ken Lay, Founder (died, no jail), Jeff Skilling, CEO (jail) x 1985 startup - combining 2 energy company Houston TX x Have power plant → distribution (pipeline) x Hedge on fuel cost x Set up offshore companies to take on debt, manipulating earnings and participating in insider trading x 1990 - one of the best/profitable companies x Enron Ethics Code based on respect, integrity, communication, and excellence x The smartest guys in the room -- Play with stock market -- Open 500 companies -- California energy - play with price - profit goes up -- Employee lost everything -suicide/divorce o Whistleblower - Sherron Watkins, Enron VP o Arthur Anderson - Accounting for Enron x Big 5 is now the Big 4 x 85,000 accountant lost job o Figure 7.1 from Textbook (Loss of Trust & Value) x Volkswagen - top executives and board - emissions scandal x Chesapeake Energy - Aubrey McClendon, CEO - conspiracy to rig bids x Takata - Shigehisa Takada, chairman and CEO - faulty airbags leading to consumer deaths and recalls x Toshiba Corp - Hisau Tanaka, CEO - accounting irregularities x Veteran's Administration - Eric Shinseki, VA Secretary - manipulation and falsification of medical waiting lists and systemwide rigging to hide deception x Peanut Corporation of America - Stewart and Michael Parnell - deadly salmonella outbreak leading to deaths; fraud x ✓Enron - Andrew Fastow, Jeffrey Skilling, Kenneth Lay - securities fraud, conspiracy to inflate profits, corrupt corporate culture x WorldCom - Scott Sullivan, CFO; Bernard J Ebbers, CEO - accounting fraud, lying, filing false financial statements x Arthur Andersen - entire firm; David Duncan, auditor for Enron - accounting fraud, criminal charges, obstruction x Tyco - Mark Schwartz, CFO; Dennis Kozlowski, CEO - sales tax evasion, stealing through corruption, fraud x HealthSouth - Richard Scrushy, CEO - found not guilty in company scandal, later convicted of bribery o ✓Survey statistics how business viewed (themes) x Gallop Survey Dec 2016: - % rating on honesty high to very high ---Nurses - 84% ---Military - 69% ---Clergy - 54% --- ✓ Business Executives - 17% ---Congress - 8% ---Car Sales - 9% o % rating on honesty average to high ---Nurses - 97% ---Military - 93% ---Clergy - 93% --- ✓ Business Executives - 67% ---Congress - 39% ---Car Sales - 54% x Higher jobs - professors, nurses, military, clergy x Low - congress and car sales o Marist College Institute of Public Opinion x Yes - Corporate Moral Compass Negative: 75% general public, 58% business leaders x Grade for Honest: D or F from general public, C or B from business leaders x Investment industry negative: 53% general public, 67% from business leaders x Can Business people operate ethically? 75% of the general public say yes, 94% of business leaders say yes x Business people's ethics same at home: 28% of the general public say yes, 44% of business leaders say yes

EAP

o Excellent performance o Academic integrity o Professional behavior

Video - Spiderman

"With great power comes great responsibility."

Responsible Leadership (Financial Times definition

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

2 Dilemmas

- Corporate and Media

Snapshot Cases - Volkswagen

- German car company, "clean diesel" 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 the cars, still not enough to repair environmental damage - Executives in jail and still in court - Suited by every state - Paying fine VW car graveyard - get all the car back

License Plates & Personal Data (Privacy & Security)

- Police tracking license plates --- Help solve crime and stolen cars but invasion of privacy --- Privacy & Security (Vigilant Solution) ---Technology for tracking license plate (1800 License plate in an hour) - Connected Cars & Big Data --- GM CEO: Mary Barra --- Future of cars is autonomous, electrification, connectivity --- Data on how you drive - lower rate on insurance → data sent back for improvement

License to Operate (data on responsibility)

- Where stakeholders and business interests connect o Intangibles - 53% of the total value of Fortune 500 or about $24.27 trillion (coke 96% of value) -Intangibles include consumers, risk management, employees, investors, operations (energy, waste, water, innovation) o Consumers - 85% reputation, responsibility key (competitiveness & marketing positioning) o Risk Management - government, NGOs, legal o Employees - 3 out of 5 employees want to work for value companies o Investors - 86% institutional investors o Operations - innovation, energy, waste, water

Why take BA 342?

1) part of our education 2) leadership competency 3) companies are highly interested in leadership competencies 4)The corporate world, professional associations (majors and careers), Smeal College of Business, Smeal majors, The American Association of Collegiate Schools of Business (AACSB)

Five Principles of a High Quality Ethics & Compliance Program

1. Ethics & compliance central to business strategy 2. Ethics & compliance risks are identified, owned, managed and mitigated 3. Leaders all levels across the org. Build & sustain a culture of integrity 4. The organization encourages, protects, & values reporting of concerns & suspected wrongdoing 5. Organization takes action and holds itself accountable when wrongdoing occurs

Bottom line

Am I doing things the world says I should be allowed to?

Enron

Andrew Fastow, Jeffrey Skilling, Kenneth Lay - securities fraud, conspiracy to inflate profits, corrupt corporate culture

o Level 2 - Conventional Level

As a person matures, there are others whose ideas or welfare out to be considered, including family and friends • Individual learns the importance of conforming to conventional norms, and social relationships form and become dominant

Chesapeake Energy

Aubrey McClendon, CEO - conspiracy to rig bids

Sexual Harassment case (using 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 manager. 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

Level 1 - Preconventional Level

Characteristic of how people behave as infants and children, the focus mainly being on the self

Rights/Justice

Civil rights, minorities' rights, women's rights, disabled people's rights, older people's rights, religious affiliation rights, employee rights, consumer rights, privacy rights, right to life, right to work, gay rights, right to health care, animal's rights, victims' rights Fairness principle - the principle of justice involves the fair treatment of each person Rawls's Principle of Justice - what we need first is a fair method by which we may choose the principles through which conflicts 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 reasonable expected to be to everyone's advantage and attached to positions and offices open to all

Ethical tests (7 from book) - Ford, GM, Volkswagen Ethical Test Approach (Applied Guideline Focus) - Ethical Decision-Making

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. One's Best Self - If the proposed course of action is not consistent with your perception of yourself at your best, don't engage in it. 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 might disapprove. Ventilation - Expose your proposed course of action to others' opinions. Don't keep your ethical dilemma to yourself, get a second opinion. 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. Big Four - Don't compromise your action or decision by tempting behaviors, such as greed, speed, laziness, or haziness. Gag Test - if you "gag" at the prospect of carrying out a proposed course of action, don't do it. Car companies Ford, GM, and Volkswagen are in need of an ethical test

o Conventional Approach

Comparison of decision, behavior, or practice to prevailing norms of acceptability

o Chipotle and Food Safety

E. coli outbreak in late 2015 into 2016, 140 Boston College students, stores temporarily closed, had to regain customer trust Founder Steve Ells 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

Veteran's Administration

Eric Shinseki, VA Secretary - manipulation and falsification of medical waiting lists and systemwide rigging to hide deception

(NOT ON PACKET) Lockheed Martin Case #4 online video case

Ethics Awareness training - Who's got a Visa Do what is right Respect others Perform with excellence Table of contents - our conduct, our work environment, our operations, our corporation

PONG

Ethics is: - Personal (most important) - Ethics always starts with the person - Organizational - National - Global

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

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

Snapshot Case - 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 firings of front line employees • Tim Sloan - new CEO • Betsy Duke - new Board Chair

• Survey statistics how business viewed

Higher jobs - professors, nurses, military, clergy Low - congress and car sales

Toshiba Corp

Hisau Tanaka, CEO - accounting irregularities

• BA 342 Theme

Responsibility and Responsible Leadership ---Exercise "It is cool to be young and responsible."

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

Takata

Shigehisa Takada, chairman and CEO - faulty airbags leading to consumer deaths and recalls

✓Conventional Ethics (first of three ways to assess ethics)

Three Approaches: x Conventional - Societal Norm Focus x Principles - Moral Guideline Focus x Ethics Tests - Applied Guideline Focus Conventional Approach: x Comparison of decision, behavior, or practice to prevailing norms of acceptability x Common sense

Trust and Value Connection

Trust = Value --- Most people trying integrity - some are not

Stage 6 - Universal

Universal-ethical-principle orientation - individual uses his or her thinking and conscience in accord with self-chosen ethical principles that are anticipated to be universal, comprehensive, and consistent

Elements of Judgement t (7.7 section) - Moral Imagination

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

ERC date - know trends and misconduct

o 2013 National Business Ethics Survey (% of US Workers Perceiving pressure to commit misconduct) 41% of workers observed misconduct 63% of workers who witness misconduct reported it 21% of those who reported misconduct faced retaliation 9% perceived pressure to commit a misconduct o Present focus - top ⅓ managers, past focus - bottom ⅔ managers -60% misconduct by managers --- 24% by senior managers o 28% in 1994, 14% in 2000, 11% in 2003 and 2005, 10% in 2007, 8% in 2009, back up to 13% in 2011 (due to financial crisis); 9% in 2013

Marijuana issues for employers & people (know the theme not data)

o 2015 Economic Impact in Colorado Marijuana x Sales = $996 million --- $2.39 billion economic impact x Jobs created = 18,005 --- 2015 Tax Revenue ($150 million) --- 2017 Tax Revenue ($233 million)

Moral Disengagement - overview and exercise

o Being productive and morally engaged: x THON, orgs, Smeal orgs, PSU orgs, mentoring/coaching/tutoring, community service, working towards degrees honestly o Moral disengagement: x 70% of college students have cheated at some point while in school x Buying a paper on internet, selling intellectual property, clicker violations, alcohol abuse, sexual abuse, discrimination

✓Madoff case (Ponzi scheme)

o Bernie Madoff - lead the largest financial fraud in US history (Charles Ponzi) x Ponzi scheme - keep pouring money in at the bottom, few people paid at the top x 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 x Result: Madoff turned in by his sons and spending life in prison --- One son died from cancer and the other killed himself x Interview in 2011 with Barbara Walters - tried to justify to some extent x Wizard of Lies - HBO 2017

Global Business Ethics - Big 5 Issues

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

✓ Media Influence Data

o Business Roundtable 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 knew too much o Students said these attitudes did not come from someone they knew but from the media

Marijuana 2 videos (California weed & lawyer advice)

o California weed o Lawyer advice

Boeing Case (personal life insights)

o Central question - Do you think personal life should be fair game in an employment situation? o Boeing 787 Dreamliner o Old CEO had bad ethics and company put on probation o CEO Harry Stonecipher brought back in, implemented codes and policies, changed culture o Stonecipher started an affair with an employee Debra Peabody, led to divorce, emails leaked to board and he was fired, breaching the company's code of conduct --- The Nexus of Ethics o Implications - destroy trust, is judgement strong enough to lead, open for extortion and bribery ---CEO has top clearances

Cost to Employers/Issue to Address

o Corporate x Lost productivity ($200 billion/year) x Absenteeism (78% higher) x Injuries (85% more likely) x Litigation (general and across states) x Safety (equipment or non-equipment) x Compliance and risk x Health Costs Increase o Personal x Short-term memory problems x Impaired thinking x Loss of balance and coordination x Decreased concentration x Changes in sensory perception x Impaired ability to perform complex tasks x Decreased alertness and reaction time

Cultural Relativism / Moral Absolutism(ethical imperialism) (chp 10 book p.318-328)

o Does right and wrong work the same in every country? o Ethical imperialism / moral absolutism - business firm should continue to follow its home country's ethical standards even when operating in another country o 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 wrong, but in the case of moral relativism o Questions to be resolved: --- Which ethical standards will be used? --- Which ethical standards will transcend national boundaries? --- Worked and product safety? Fair treatment? Health? Discrimination? Freedom? Minimum pay? Consumer rights? Environmental protection? --- What constitutes moral minimums in each category o Choice based on custom and culture

✓Domino's case know (values framework application)

o Domino's 30 minutes or free - 1973 to 1993 - Today? x Campaign relied too heavily on the drivers, the last link of the chain. They ended up negotiating with customers and some situations resulted in car accidents o Today: commercial about 30 mins, but no guarantee (Modification) o India women usually should be good at cooking (unintentional amoral)

Videos - 3 commercials - Doritos/Taco Bell/Honest Tea

o Doritos and Taco Bell - bad ethics commercials o Doritos & Ethics - fritos o Honest Tea - Honesty Challenge - social experiment -- Leave money to take a tea, no one there to collect money, just a donation box -- Example of good ethics o Taco Bell -- Take the money & run commercial (Yum brands)

ECI Data - Global Business Ethics Survey (ethics.org) (know interactive maps themes and 4 Fears)

o ECI Research on Misconduct o Pressure Observed Reported Retaliation o Global 2018 Report Online --- 74% Report Would Not Be Confidential --- 64% Could Not Report Anonymously --- 69% Corrective Action Would Not Be Taken --- 63% They Would Be Labeled a Snitch

• Marijuana cost to employees and people

o Economic Impact in Colorado Sales = $996 million $2.39 billion economic impact Jobs created = 18,005 o Cost to Employers/Issue to Address Lost productivity ($200 billion/year) Absenteeism (78% higher) Injuries (85% more likely) Litigation (general and across states) Safety (equipment or non-equipment) Compliance and risk Health Costs Increase o 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

Adam Smith - 2 books - economics and ethics

o Economics thinker and moral philosopher o Books: - "The Wealth of Nations" -1776 - "Theory of Moral Sentiments" -1759 - Free market - the tendency to regulate themselves by means of competition, supply and demand, and self-interest o Invisible Hand - based on trading honorably, not working the system

4 Big Topics - Leadership Competencies

o Ethical Issues in Business o Sustainability o Diversity and Inclusion o Corporate Social Responsibility

Media Influence Types (6 categories)

x News "If it bleeds, it leads" - show sensational things x Movies Business, big corporations often times the villain x Television (Business & Media Institute) Prime Time TV Study - 77% of plots involving business were negative x Advertising o Reinforcing stereotypes o Go Daddy Commercial on Super Bowl - using sex to sell product o Liberty Mutual Stereotypes - before & after body x Social Media o Amplifies what is happening o Twitter, facebook, Youtube... x Internet

• Professional values

• 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