SM 131 Module 2

The Smell Test

"Publicity Rule" what decision would you make if you knew it would be on the newspaper's front page

Bazerman

*DONT FALL FOR BLINDSPOTS - regularly audit your decisions - expose to other environments / NOT stereotypes - consider other options - unconscious and conscious bias

Martha Stewart / Sam Waksal

- board member of NYSE - investment in ImClone Systems (biotech / comp): 5000 shares --- friends w CEO: Sam Waksal erbitux = anticancer drug not approved by fda - Waksal transfers shares to daughter/tells her to sell - wealthy, extravagant lifestyle, modern art (shipped to nj to avoid tax) - slippery slope - charges --- fed gov't wants to send message that his behavior is not ok - Bacanovic - Martha's broker - Faneuil - Martha's assistant W calls B to tell Martha, B tells F Martha doesn't have fiduciary duty

Dan Ariely (Ted Talk: Our Buggy Moral Code)

- burns all over body, pain / bandages - cheating = a lot of ppl cheat a little bit = ppl will cheat until they don't feel good about selves (personal fudge factor) cheating norms: -if in-group, will cheat more

counteract biases

- gather better data (expose own implicit biases) - rid workplace of stereotypical cues - broaden mind-set when making decisions

Toby Groves

- older brother commits bank fraud - 22 years later he does the same - 2003: Grove's company = hella debt applies for loan on house lies abt income air loan: loans to buy house that doesn't exist for fake person (ask bank for $, fraud docs, ask employees to do illegal/immoral things=all comply) FOCUS: making the best business decision lot of fraud = unintentional !!!!!! ***Spread to employees / company so easily bc... 1.) financial incentives 2.) like to help those we identify w/

Ethics Checklist:

1.) Facts? 2.) Critical Issues? 3.) Stakeholders? 4.) Alternatives? 5.) Make a Decision.

Soll: Outsmart Your Own Biases

1.) Make estimates 2.) Think twice (use premortems) 3.) Take an outside view (planning fallacy)

Libertarianism

= Rights Theory fundamental indiv right = liberty - freedom of indiv choice/respect others' freedom - indivs act rationally, make own decisions - re-distrib of wealth (taxes) DOWNSIDES: no selling kidneys FRIEDMAN ASSOCIATION (corp responsib to shareholder value, not society)

Price Waterhouse v. Hopkins

Ann Hopkins brought in $25 million for company - turned down for partner, sued solo statement = person is only one of a kind (only woman...)

unconscious biases

Bazerman: - implicit (!) prejudice - overclaiming credit - in-group favoritism

Utilitarianism

Bentham & Mill greatest good for greatest # = MAX (: MIN ): - focus: consequences - fail: respecting indiv rights - same value on everyone's happiness DOWNSIDES: minority struggles

APPLE (ny times)

CEO: Tim Cook should apple help FBI unlock iPhone - Apple moral obligation to help or to protect privacy??? - if complies w court order, other gov'ts might also require info from Apple for own investigations - risk bus w/ others (China) - Google following Apple's lead

GM

Chevrolet Cobalt recalls - record penalty for automotive company - lawsuits for wrongful death - ignition switch defect -- engineer changes part w/out changing part # - GM sales increase despite scandal - GM or NHTZA's fault? -- NHTZA had info abt stalling/260 complaints - culture of company: don't welcome bad news

Veil of Ignorance (person)

John Rawls - only person ignorant of own identity is capable of truly ethical decisions - none of us know anything about ourselves (:

Deontology -categorical imperative

Kant motives > outcomes we have certain rights/duties regardless of the consequences - categorical imperative: if comp make rule, must be rule you are willing to universalize - focus: not on consequences DOWNSIDES: follow rules strictly, lying

Parable of Sadhu

McCoy - indiv vs. corporate ethic (Stephen) No 1 person wants responsib for sadhu - do what's convenient & pass on - indiv vs. group ethic (M) adrenaline, superordinate goal, 1-in-a-lifetime - values of bus revealed when under stress = need mutually accepted, shared values - need guidelines to confront risk *must serves corp vision to be ethical in bus sense ! *in complex sit, indiv requires/deserves group's support *management challenge: be sensitive to indiv - focus on whole group benefit

Carter Racing

NEED MORE DATA (temp pts, driver rep, sponsor data, more ppl at decision making table) - more data = 100% failure rate (Challenger NASA) - avoid unethical issues / do uncomfortable things anyway

Casey Martin

PGA golf car or no? risk / stake: disabled, sponsors, board, fans, CM arguments for & against

Social Justice

Rawls ethics is about fairness/justice/equality - Veil of Ignorance - Original Position reality: - Qualified Principle of Equality - Obligation of the Lucky

hedge bets

Soll 80% chance you'll sell btwn x & y amt cars = 80% ranges are only 1/3 right

System 1 Thinking

Soll Based on intuition/emotion = QUICK, effortless automatic judgements that stem from associations stored in memory (not logically working thru available info- stressed/fatigue/multitasking)

System 2 Thinking

Soll more conscious/logical/critcal = SLOWER (flawed) - delib reasoning gone away (cog limitations/laziness- focus on wrong things)

Arthur Anderson & Enron

accounting firm -- fraudulent financial statements of Enron - lose ship in storm , heavy losses by liability for audit work on Anderson - of the book entities at Enron hubris spawns deceit

CONFLICT OF INTEREST

bias that favors those who benefit you - conflict = honest/ethical professionals --> unconsciously unethical recommendations - First Call (Nasdaq drop, analysts say to buy/hold)

overclaiming credit

bias that favors you - in group indivs claim more credit than others / parties don't want to collar in the future

Lockhead

bribed into paying extortion $ to Jap. airline - wants to safeguard 2500 jobs so gets large gov't subsidy options: abandon jet & company wellbeing increases & lose 2500 jobs or nah & be casuist

False Claims Act

committing fraud against fed gov't

continual awareness

continual adjustments: 1.) collecting data 2.) shaping the environment 3.) broadening the decision-making process

planning fallacy

creating narrative of success/managing even tho odds of failure increases

MISAPPLIED INCENTIVE

do incentives encourage unethical behavior ?

primum non nocere

don't knowingly do harm

Kanti evasion

don't lose competitive advantage

INDIRECT BLINDNESS

don't question behavior - company/person does unethical thing to another but we overlook the responsib. of that company/person

Bazerman & Tenburnsel (Ethical Breakdown)

employees break/bend ethics rules bc those in charge are blind to unethical behavior / unknowingly encourage it

ETHICAL FADING

ethics fade away when we consider a problem just a business decision - COST-BENEFIT ANALYSIS (kids/daycare pickup fee)

MOTIVATED BLINDNESS

failure to notice others' ethical conduct when doing so would harm you - absence of knowledge/thought - ignore safety issues of Ford Pinto

illusion of objectivity

free of the biases we're so quick to recognize in others

OVER VALUING OUTCOMES

good outcome from bad decisions

Group Think

harder to do things/say something when there's more ppl

prudence

highly visible - ***lead by example - obsessed w appearance - only bc of job / authority

Confucianism

how to be good person, respectfully, polite, hard-working interdep - rely on relationships-- all relationships = familial relationships

Original Postion

if we're all equally ignorant, what would we agree on as fundamental rights?

premortems

imagine future failure & explain cause aka prospective hindsight

Greenwald

implicit association tests (IAT) study unconscious bias - computerized version: classify words/images as good/bad to expose implicit bias

Thomas v. Kodak (1999)

implicit biases can be the basis for rulings court: plaintiff can challenge subject evals which could easily mask covert/unconsc. race discrim

Rudman & Glick

implicit biases may work to exclude qualified ppl from certain roles (gender & roles)

Dodd-Frank Act

in response to 2008 fin collapse, imposes regulation to prevent another collapse & protect consumers from abusive lending (mortgages, etc)

Qualified Principle of Equality

inequality is ok as long as most well-off use their adv to help less well-off (Bill Gates & Melinda Association)

Taoism

keep promise, do right thing, be humble, humility

casuistry

leader thinks they must subordinate their beliefs to do what is best for company - balance ordinary ethics (indiv) & social responsib to company (will become politicized)

Unilever

leadership development programs #1 reason ppl come & stay = atmosphere of integrity

Virtue Ethics

living a good /virtuous life through habit - nature of activity ? (Telos) - what virtues will a decision reward? - what kind of person do you wanna be? ARISTOTLE ASSOCIATION (defining rights requires us to determine purpose/nature of activity)

confirmation bias

look for info that fits pre-existing beliefs

Obligation of the Lucky

luck is arbitrary so the lucky must use position to help unlucky

IN-GROUP FAVORITISM

majority/who is in power allocate scarce resources to similar ppl = discrim against diff - favoritism vs. hostility

Peter Drucker relationships purp of bus

no such thing as bus ethics, just ethics relies on Confucianism (interdep - rely on relationships) relationships: - master-servant - parent-child - spouse - siblings - friends purp of bus = create customers, honesty don't cheat, steal, lie, bribe, take bribes

Albert Carr

personal ethics is NOT bus ethics -pressure to deceive -bus = poker (Game theory) -- bluffing -no one expects truth --- diff standards of right & wrong -discard golden rule

the indiv and the game

play to win

unpacking

reduced magnitude of bias by thinking of others' contrib before own

Weary of Relativity

set bar low enough & all blame is deflected - justify by pointing fingers at ppl acting likewise/less - someone will establish def of greed - lesser of evils confused w virtuous (pres campaigns) - RIGHT & WRONG, not better/worse: recognize=leadership

SLIPPERY SLOPE

slow erosion of ethics; the more we accept minor infractions, = more likely we are to accept incrementally larger infractions

IMPLICIT BIAS

stereotyping

fighting motivated bias?

trip wire: redirect self to more logical path

confucian of ethics

universal ethics - same rules for everyone - no social responsib overrding indiv conscience - no cost-benefit calc - no greater good than the indiv / his behavior *NO CASUISTRY