Business Ethics Final Exam
Strategist Michael Porter quote
" The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society be addressing its needs and challenges.
proactive power
"Dedicating time to focusing on what we would say and do in such situations, and examining the experiences of others who have voiced their values, can build the muscle and the instincts to do so as well."
Google's purpose
"Do No Evil"
Ernst&Young Power-Presence-Purpose
"Full of out-of-touch advice, the presentation focused on how women need to fix themselves to fit into a male-dominated workplace. The training, called Power-Presence-Purpose or PPP, took place during the height of the Me Too movement when sexual misconduct accusations dominated the news. In response, large businesses, including EY, shored up their sexual harassment policies and training."
Clean Water Act
(CWA, 1972) set maximum permissible amounts of water pollutants that can be discharged into waterways; aims to make surface waters swimmable and fishable
What is a whisper campaign?
- Gossiping - Negative Comment Fishing - Derogatory Names
What does Kant mean by a 'good will' and how does the example of the clerk in a store illustrate it?
-"will" is the uniquely human capacity to act from principle -good will contains the concept of duty: only when we act from duty does our action have moral worth -ex: store clerk accidentally doesn't give enough change back and can give the money back out of a goodwill (duty to do what is right) or just did it in accordance with the law instead of willing the action from a sense of duty to be fair and honest
How many people were killed in the BP oil spill?
-11 killed -17 injured
What is the difference between Corporate Social Responsibility [CSR] and Creating Shared Value [CSV]? How does the fair trade coffee movement illustrate this difference?
-CSR: motivation=corporate reputation; main driver= external stakeholders; approach=reactive; measurement= spending, standard ESG metrics; management= CSR departments; business benefit= risk reduction and goodwill; social benefit= successful projects -CSV: Policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates; motivation=competitive advantage; main driver= corporate strategy; approach=proactive; measurement=social and economic value created; management= across the whole firm; business benefit= new business opportunities; social benefit= large scale sustainable change Fair Trade Coffee Movement: Fair trade coffee is coffee that is certified as having been produced to fair trade standards by fair trade organizations, which create trading partnerships that are based on dialogue, transparency and respect, with the goal of achieving greater equity in international trade.(CSR- benefits society)
How does creating shared value relate to capitalist goals? What's the difference between shareholder capitalism and stakeholder capitalism?
-Creating shared value is a framework for creating economic value while simultaneously addressing societal needs and challenges. When businesses act as businesses—not as charitable donors—they can improve profitability while also improving environmental performance, public health and nutrition, affordable housing and financial security, and other key measures of societal wellbeing. Only business can create economic prosperity by meeting needs and making a profit, creating infinitely scalable and self-sustaining solutions. -shareholder capitalism: The only legitimate social responsibility of business is to maximize (financial) returns for owners; Maximizing Shareholder Value Only; Management Focus: Unintended Consequences,Externalizing the costs of these consequences, Narrow Purpose, Wealth shared with few, Short Term Horizon -stakeholder capitalism: The strategic importance and legitimacy of stakeholders beyond shareholders (e.g. employees, customers, suppliers, the environment, the community); Creating Social, Environmental and Financial Value Management Focus:Reducing externalities, Broader Purpose, Wealth shared with many, Longer Term Horizon
What are the two principles of justice?
-Rawls' Theory of Justice accords with both principles 1)Principle of Justice (Greatest Liberty Principle)-Each person is to have an equal right to the most extensive total system of equal basic liberties (freedom) compatible with a similar system of liberty for all. 2)Social and economic inequalities are to be arranged so that they are... a)to the greatest benefit of the least advantaged [The Difference Principle], and b)attached to offices and positions equally open to anyone.
What are the four main personality types according to the Myers-Briggs test and what are their key characteristics?
-SJ (guardians)-cornerstone of society, given to serving and preserving our most important social institutions; §Paying Attention to Detail Likes to know the who, what, when, where and why before acting -NF-idealists, passionately concerned with personal growth and development; quest for self-knowledge drives imagination; § Growth/ Development/ Caring Likes to know that everyone's voice has been heard, perspectives and feelings have been taken into consideration before acting -SP- artisans, want to be where the action is, spontaneous, adaptable, competitive,§ Acting "Let's do it!"- Likes to act, try things, plunge in -NT-rationals, problem-solving temperament, rigorously logical and value competence and ingenuity above all; §Speculating Likes to look at the big picture and the possibilities before acting
Why did Starbucks change its logo in 2011?
-Starbucks started selling things other than coffee (food items) and wanted to symbolize a shift into the consumer packaged goods business
How do Tesla, Walmart, Unilever, and Danone create shared value?
-Toyota hybrid-reconceiving products and markets; Identified environmentally sound technologies as a competitive strategy (1990s) • Invested heavily in R & D for hybrids • Moved from niche to mainstream with hybrid cars projected as 25% of sales in 2010 -China • Toyota surpassed GM as #1 automaker in 2008 -Tesla: reconceiving products and markets; "to accelerate the world's transition to sustainable transport" • to illustrate and inspire innovation by producing and marketing entirely-electric vehicles • provides technologies to other auto companies • makes business decisions that contribute to its mission of sustainability; PowerWall battery -Walmart: redefining productivity in the value chain; Cost Savings Driven -Walmart • Renowned for its laser-like focus on cutting costs and providing value to its customers;Auxiliary power units in trucks Save $26 million a year in fuel costs ANDReduces CO2 emissions; Waste reduction and recycling in stores Saves $28 million a year ANDReduces load of solid waste in landfills by millions of tons ;Energy use reductions (Walmart consumes .5% of energy in US) Saves of $300 million a year AND New stores use 30% less energy; existing stores by 20% -Unilever-reconceiving products and markets; To double the size of Unilever's business while reducing by half its environmental impact; reduce greenhouse gas emissions from washing clothes -Danone-enabling local cluster development; Danone Ecosystem Fund supports the partners of Danone's "ecosystem" (small agricultural producers, small suppliers, proximity distributors) to effect powerful social changes— and reinforces the company at the same time • The Fund is designed to support initiatives with general interest purposes, which are first identified by Danone subsidiaries in the territories where they operate
How do stakeholder concerns affect the corporate business models at Unilever, Toms, Nike, and Patagonia?
-Unilever- sustainability: Sustainable Living Plan- reduce greenhouse gas emissions -Toms: for every pair of Toms shoes bought; Toms would donate a pair to a child in need -Nike: work on improving conditions for workers, Nike is innovating its materials development and management to address the impact of climate change on the supply chain and reduce its environmental impact. One area of concentration is water conservation; adopted their new carbon-based dyeing process that dyes garments without using water or chemicals. Without water, the process also reduces its energy use by 60 percent since the garment doesn't have to be dried. It also dyes 40 percent faster. -Patagonia: conscious consumption; telling consumers to buy less ("Don't buy this jacket")
Which examples in the readings are examples of CSV and which are examples of CSR?
-Unilever-reconceiving products and markets; To double the size of Unilever's business while reducing by half its environmental impact; reduce greenhouse gas emissions from washing clothes (CSV) -Toms- CSR; donating shoes -Nike-carbon-based dyeing process; CSR -Patagonia-don't buy this jacket; CSR
What have Zappos, 3M, and Starbucks done to foster ethical and learning cultures in the workplace? How do these companies' decisions and cultures align with Utilitarianism, Respect for Persons, Virtue Ethics, and Schein's learning culture characteristics?
-all foster innovation and new learning; learn from consequences (utilitarianism), respect people and are just, learn to learn and look at failure as opportunities
What is the connection between authentic leadership and emotional intelligence?
-authentic leaders need to have emotional intelligence:•Self-awareness •Knowing one's emotions, strengths and weaknesses •Self-regulation •Controlling or redirecting emotional impulses •Motivation •Being driven to achieve •Empathy •Considering others' feelings, particularly in decision making
B Corps
-businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose -accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.
Leadership is about coping with ____, while management is about coping with _____.
-change -complexity
What is the commensurability problem and how does the Ford Pinto decision illustrate it?
-commensurability problem-a number value cannot be put on people -Ford Pinto tried to evaluate their choices based on costs and put a money value to people who were being injured/killed from impact-related fuel tank fires
What are the different stakeholder approaches to corporate social responsibility that we discussed in class? What are examples of each?
-companies may feel like they have to do CSR -companies may want to do CSR to boost their business (Patagonia) -companies may want to do CSR and CSV (make profits or reduce cost; Unilever)
What are consequentialist ethics? What is a hedonistic ethical view?
-consequentialist ethics: utilitarianism; good and bad acts are determined by their consequences -Ethical hedonism is the view that our fundamental moral obligation is to maximize pleasure or happiness.
deontological theories
-duty-based -Kantianism -treats no person as a mere means to an end -a good will is the only intrinsic value
According to Goleman's research, how significant is emotional intelligence compared to cognitive skills, technical skills, and IQ for excellent leadership performance?
-emotional intelligence proved twice as important as the others
What does it mean to say we shouldn't treat someone as a mere means?
-every rational creature has an inherent worth that results from the sheer possession of rationality; don't just use people -Golden Rule- treat people how you'd want to be treated
How do the stories about fetching water, mosquito nets in Africa, web development in Rwanda, and eyesight screening in India illustrate the need for and the nature of design thinking?
-fetching water-woman couldn't carry heavy jar of water back -mosquito nets-provided free to pregnant women but difficult for everyone else to obtain -Rwanda: weavers had no access to internet -eyecare in India: The designers first tried to screen a young girl's vision through traditional tests. Immediately, though, she burst into tears; the designers had the children screen each other and talk about the process. They loved playing doctor and both respected and complied with the process. By prototyping and creating an implementation plan to pilot and scale the project, ideo was able to design a system for the eye screenings that worked for VisionSpring's practitioners, teachers, and children.
What is Starbucks's supererogatory "balanced stakeholder orientation" and how have they pursued it?
-focus on all five groups of stakeholders and how they can please each
What are some of the challenges Starbucks has had as a business?
-global recession in 2008 -resistance in the UK market
How do utilitarianism and respect for persons apply to the topic of diversity?
-greatest good for greatest number (utilitarianism) -respect for persons- don't treat someone as a mere means to an end
What are the two ways of determining which kinds of pleasures or type of happiness is the best? What is the problem with each way?
-hedonism: happiness is pleasure and the absence of pain; argument: happiness is not just mere hedonism and people can experience happiness in a variety of different ways -there is a form of happiness that is qualitatively better than sensations of pleasure; some people are better at judging what is good than other people; argument: How do we know which people are more competent in judging what is good?
What is, and what is the purpose of a power-interest grid? What are the four quadrants of a power-interest grid and who belongs in each one of them?
-helps segregate and prioritize stakeholders based on their power and interest • High power - High interest: manage closely; these are the stakeholders are decision makers and have the biggest impact on the project success and hence you must closely manage their expectations. • High power- Low Interest: keep satisfied; these are the stakeholder needed to be kept in loop, these stakeholders need to be kept satisfied even though they aren't interested because they yield power. These type of stakeholders should be dealt with cautiously as well since they may use their power in a not desired way in the project if they become unsatisfied. • Low power - High interest: keep informed; keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project. • Low power - low interest: monitor these people, but do not bore them with excessive communication.
TerraCycle
-in New Jersey TerraCycle is Eliminating the Idea of Waste® by recycling the "non-recyclable." Whether it's coffee capsules from your home, pens from a school, or plastic gloves from a manufacturing facility, TerraCycle can collect and recycle almost any form of waste.
What's the difference between an intrinsic and extrinsic motivation?
-intrinsic motivation: involves doing something because it's personally rewarding to you. -extrinsic motivation: involves doing something because you want to earn a reward or avoid punishment.
What is the difference between intrinsic and extrinsic value and how is that relevant to determining what is right, according to utilitarianism?
-intrinsic value: good in and of itself -extrinsic value: good or bad instrumentally (for what it brings about) -utilitarianism maximizes total utility, meaning it maximizes everyone's intrinsic good; utilitarians use cost-benefit analysis
What does it mean to say that moral obligation must be law-like? Why does Kant think this is essential?
-must carry absolute necessity, must be based on something that is absolute -moral law must be based in pure reason
Toyota Prius CSV
-reconceives products and services; increases revenue •Hybrid tech • Introduced Worldwide 2000 • 2008 Toyota #1 Auto Manufacturer
Creating Shared Value either increases _____ or decreases ______, which both increase profitability, or strengthens longer term prospects of sustained profitability through cluster development.
-revenues -costs
What is the relevance of one's life story to authentic leadership?
-shapes who they become; develop authentic characteristics
What was the point of the Candid Camera slip shown in class? What's the difference between bullying and harassment?
-shows targeting someone -bullying-intent to hurt someone (can be emotional or behind someone's back) -harassment-usually has a strong physical component
What does it mean to have an integrated life?
-the person's work-self and home-self are the same -they treat their family, friends, and employees with respect -whole life is integrated together
How do the ideas of corporate constraint (e.g. a requirement for social improvement) and externalities factor into the way business has traditionally thought about regulation?
-thought about regulation and future regulation as a possible opportunity in the market; CSV
What are the three spaces of design thinking according to Brown and Wyatt, and how do they work? Why are they called "spaces?"
-three spaces: inspiration(problem or opportunity that motivates the search for solutions), ideation(process of generating, developing, and testing ideas), implementation (path that leads from the project stage into people's lives) -called spaces because they may overlap and don't always go in order; they're not steps
What are the seven top characteristics of success at Google?
-top seven are soft skills 1)Being a good coach 2)Communicating well 3)Listening well 4)Insights into others (including others' different values & points of view) 5)Having empathy toward and being supportive of one's colleagues 6)Being a good critical thinker and problem solver 7)Being able to make connections across complex ideas 8)STEM expertise
What is the ultimate goal of our moral decisions, according to utilitarianism? How do Mill and Bentham differently interpret that goal?
-ultimate goal: maximizing the overall good; greatest good for the greatest number; happiness is the ultimate good -Jeremy Bentham: only pleasure, or the absence of pain is intrinsically valuable; unhappiness=pain or deprivation of pleasure; maximizing pleasure and minimizing pain is the objective -John Stuart Mill: there is a form of happiness that is qualitatively better than sensations of pleasure; acknowledges that not all opinions are equal and recognizes that some people are better than others in judging what is good
What would each of the three ethical theories say about BP and their handling of the oil spill?
-utilitarianism: bad because of the consequences, not because of their recklessness -Rawls-bad because it didn't match up with two principles of justice -Kantianism-bad because it treated people as means to an end and only looked to make profit
Human Centered Design
-•Embracing human-centered design means believing that all problems, even the seemingly intractable ones like poverty, gender equality and clean water, are solvable -believing that the people who face those problems every day are the ones who hold the key to their answer -Human centered designers deeply understand the people they are looking to serve, to dream up scores of ideas, and to create innovative new solutions rooted in people's actual needs
qualities of a successful team
1) They communicate well with each other. 2) They focus on goals and results. 3) Everyone contributes their fair share. 4) They offer each other support. 5) Team members are diverse. 6) Good leadership. 7) They're organized. 8) They have fun.
What are Thomas Plante's six ways to create an ethical business culture in any organization?
1) clear expectations for what are okay and what is not okay 2)modeling desired behavior (especially from organizational leaders) 3) reinforce the behavior you want, and don't reinforce the behavior you don't want 4)focus on skill building and problem solving 5)provide the tools people need to act ethically 6)provide corrective feedback
What are the five main stakeholders Starbucks addresses in its corporate social mission and what are examples of initiatives focused on advancing the interests of each?
1) environment- Environmental Starbucks Coffee Company Affairs team, Shared Planet Website, decomposable Cup Summits 2)employees- health care programs, program called Thrive Wellness (smoking cessation, weight loss, exercise) 3)suppliers- Starbucks Coffee and Farmer Equity practices (responsible coffee buying guidelines that ensure preferential buying status for participants that receive high scores for best practices) 4)customers- upgrading coffee-brewing machines, new food and drink items for health and budget-conscious consumers 5)communities-encouraged to donate to local causes; partnered with Opportunity Finance Network to establish a program called Create Jobs for the USA---> provides funds to Community Development Financial Institutions that finance small businesses, community centers and housing projects
What were the causes of the BP Deepwater Horizon oil spill?
1) financial/time pressures- oil companies were referred to as partners, and MMS officials routinely received cash bonuses for meeting federal deadlines for offshore leasing; national policy was to create revenue; The well was scheduled for 78 days at a cost of $96 million, but the real target was 51 days. BP urged speed. 2) safety issues- BP's response plan for the gulf referenced seals and walruses, which aren't found in that body of water, referred to a home shopping network in Japan and listed scientists who were dead. No one noticed. The inspectors, Ruch says," just made sure the companies checked the right boxes." Since much of the drilling data necessary to complete environmental reviews was proprietary, MMS scientists were not allowed access to exploration and drilling details. when BP made repeated last- minute changes to its drilling plan in the days before the blowout, the MMS approved them all, often within minutes. "That's what happens," Ruch says, "when the government is dependent upon industry for its expertise." According to the Center for Public Integrity, from June 2007 to February 2010, BP's refineries in Texas City, Texas, and Toledo, Ohio, accounted for 829 of 851 industry-wide safety violations identified as "willful" by the Occupational Safety and Health Administration (OSHA). These were refineries, not oil rigs, but they demonstrate what OSHA describes as "plain indifference to . . . employee safety and health." 3) regulations/crisis management- In 2007, BP Products North America paid a criminal fine of more than $60 million for violating federal environmental regulations in Texas and Alaska, including a 2006 spill on the North Slope of Alaska that resulted from BP's failure to address pipeline corrosion. The 200,000 gallons of crude that spread across the tundra formed the largest spill on the North Slope. 4) workplace culture? BP corporate culture: "'we have the matter in hand.' It might be a northern European cultural thing, but BP was convinced that the Texas City accident was a one-off, rather than something systemic and pervasive. They were arrogant and proud of the systems they had in place. They were in denial."
stakeholder
1)"those groups who are vital to the survival and success of the corporation"
What are Freeman's four arguments for adopting Stakeholder theory and how do they work?
1)Argument from Consequences-Managing for stakeholders may actually produce better consequences for all stakeholders because it recognizes that stakeholder interests are joint. If one stakeholder pursues its interests at the expense of all the others, then the others will either withdraw their support, or look to create another network of stakeholder value creation. 2)Argument from Rights-One way to understand managing for stakeholders is that it assumes that stakeholders have some rights. Now, it is notoriously difficult to parse the idea of "rights." But, if executives take managing for stakeholders seriously, they will automatically think about what is owed to customers, suppliers, employees, financiers, and communities, in virtue of their stake, and in virtue of their basic humanity. 3)Argument from Character-The business virtues of efficiency, fairness, respect, integrity, keeping commitments, and others are all critical in being successful at creating value for stakeholders. 4)The Pragmatist's Argument-Pragmatists want to know how we can live better, how we can create both ourselves and our communities in ways where values such as freedom and solidarity are present in our everyday lives to the maximal extent. While it is sometimes useful to think about consequences, rights, and character in isolation, in reality our lives are richer if we can have a conversation about how to live together better; For the pragmatist, business (and capitalism) has evolved as a social practice, an important one that we use to create value and trade with each other. On this view, first and foremost, business is about collaboration.
What are Starbucks guiding principles?
1)Provide a great work environment and treat each other with respect and dignity. 2)Embrace diversity as an essential component in the way we do business. 3)Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. 4)Develop enthusiastically satisfied customers all of the time. 5)Contribute positively to our communities and our environment. 6)Recognize that profitability is essential to our future success.
What are the types of Normative theories?
1)Teleological (Goal-based); utilitarianism 2)Rawls (in middle) 3)deontological (duty-based) theories; Kantianism
What was the purpose of Starbucks' Shared Planet Website? What other things has Starbucks done to advance its commitment to ethics and sustainability?
1)achieve ethical sourcing 2)environmental stewardship 3)greater community involvement other things Starbucks has done: comprehensive benefits package to workers who work more than 20 hrs a week -partners with nonprofits around the world - Fair Trade Certified Coffee and Foodservice Packaging Institute/ Paper Recovery Alliance -Conservation International- sustainable agricultural practices -African Wildlife Foundation, Business for Social Responsibility, and RED (works to fight AIDS)
What are the three main challenges to utilitarianism?
1)all utilitarians must find a defensible way to measure happiness; requires some form of measurement and comparison 2) differing versions of the good and the implications for human freedom; finding a balance between individual freedom and the overall good 3)the ends justify the means; we have certain duties and obligations we have to obey even when doing so does not produce a net increase in overall happiness
What are Rick Gibbes four steps to building a company culture and what is an example of each?
1)build a foundation (ex: discussions and decisions about foundational values of the business; What does the organization want to be known for? How does the company's overall mission align with the values of its employees? Is it one that inspires employees daily to work harder, generate new ideas and surpass last year's goals? Does the organization value great work paired with a healthy home-life balance? leaders should discuss the kind of place they want their company to be 2)identify company values (ex: organizations should pick values that resonate with people at all levels of the company and are commonly understood. One good strategy for achieving this goal is to include staff throughout the organization in discussions about the development of company values) 3)put values into action (ex: messages should be shared internally via the intranet and employee communications. They should be referred to regularly, and the actions of leaders should always align with the foundational values. They should help guide hiring decisions and the questions posed to job candidates; a company that values input from staff at all levels of the organization should seek to make managers accessible and more integrated with those charged with the day-to-day operations) 4) revisit and assess regularly (ex: companies with highly regarded cultures conduct annual engagement surveys to ensure their stated values align with the day-to-day actions of employees. These surveys can also serve to identify areas for course correction to keep a great culture on track)
steps of utilitarian decision making
1)come up with a list of relevant alternative actions 2)list the stakeholders involved 3)list the expected consequences to those stakeholders of each alternative 4)list the feelings those consequences will likely bring about and determine their relative intrinsic values 5)determine the net intrinsic value of each alternative action **the right decision is the alternative with the most net intrinsic value.
What are the central insights of Kantianism?
1)consistency-act that you could will the maxim to become a universal law 2)respect for persons-don't treat people as a mere means to an end 3)an act is right if its maxim is consistent with the will being itself a universal legislator
What things has Starbucks done to reinforce their mission and guiding principles among their partners?
1)distributes mission statement and comment cards for feedback during orientation for all new partners 2)continually relates decisions back to the guiding principle or principles it supports 3)formed a "Mission Review" system so partners can comment on a decision or action relative to its consistency with one of the six guiding principles
What are the central insights of utilitarianism?
1)hedonistic theories (only experiences are morally relevant) 2)consequentialist theories (actions should be judged by their results) 3)teleological theories (actions should be judged by their purposes) -meant to maximize greatest good for the greatest number of people
What are the four roles played in employee workplace colleague abuse?
1)leader of the abuse 2)targeted employee 3)members of the mob who bully the targeted employee under the direction of the abuse leader 4)participants in a whisper campaign
What are the three greatest sources of stress, and how does what bullies do lower their own stress levels?
1)low social status 2)lack of friends 3)childhood stress
What are three examples of 3M innovations discovered through failure or accident?
1)man had fear of razor, created a waterproof sandpaper to sand the stubble from his face-->now wet-dry sandpaper 2)chemical spilled on sneakers (kept them clean)--> Scotchguard fabric protector 3)man wanted to create a strong adhesive -->used to create sticky notes
What are the three ways of creating shared value (and what is an example of each)?
1)reconceiving products and markets-Improve access to products and services that meet pressing societal needs and thereby create new market and revenue opportunities; ex:Products from GE Healthymagination increase access to high quality health care for low-income populations in emerging markets 2)Redefining productivity in the value chain- Improve use of resources, people skills, access to technologies, context for suppliers' business to improve cost, quantity, quality and reliability of inputs; ex: IHG's Green Engage initiative improves hotel resource efficiencies and reduces costs 3)Building clusters and framework conditions-Improve the operating environment affecting business, such as regulatory, input factors, demand conditions, and the vitality of supporting industries to unleash business growth; ex: Nestle supports farmers and local producers to improve crop yields
problems with the shareholder view according to Freeman
1)resistant to change 2)inconsistent with the law 3)inconsistent with basic ethics
What are the five elements of emotional intelligence?
1)self-awareness 2)self-regulation 3)motivation 4)empathy 5)social skill
sole constraints to Milton Friedman's view that the social responsibility of business is to increase its profits
1)the law 2) the "rules of the game"-(because markets can only convert the selfish choices of participants into collectively beneficial results if free)
What are the three formulations of Kant's categorical imperative?
1)universalization- we should act in a way that we can will the maxim of our action to become a universal law 2)Principle of humanity as an end, never as a mere means (Golden Rule) 3)Principle of universal acceptability- whether all rational beings thinking rationally would accept it regardless of whether they are the doers or receivers of the actions
Steps of Stakeholder Analysis
1. Identify all potential project stakeholders 2. Analyze (prioritize) the potential impact or support 3. Assess how key stakeholders will respond in various situations.
What is the relationship for a business between being ethical and being profitable?
1. ethical businesses are the most profitable 2.the most ethical businesses are not the most profitable (too ethical)
Kantian decision making steps
1.Decide what the relevant maxim is. (E.g., fill in the blank: Person X [_____] should do Y [_____].) 2.List the stakeholders. [E.g., what persons will be affected by that action.] 3.Determine whether any of those stakeholders will be used as mere means to X's goal.. **The decision is right only if it uses NO person as a mere means.
Rawlsian decision making steps
1.Principle 1: decide whether there are any relevant basic liberties violated. 2.Principle 2: decide whether the positions of advantage are available to everyone and whether there are social or economic inequalities that are not of greatest benefit to the least advantaged. **The decision is just only if it accords with the two principles of justice
Kant's argument against teleological or contractual normative theories
1.The Moral Law/obligation must carry with it absolute necessity. 2.If 1., the Moral Law/obligation cannot be founded on any fact of anthropology or empirical human nature, but must be based on something that is absolute. 3.The only possible absolute foundation for the Moral Law/obligation is Pure Reason. 4.Therefore, the Moral Law must be based in Pure Reason.
What is the culture of Zappos like, and what are its 10 core values?
10 core values: deliver wow through service, embrace and drive change, create fun and a little weirdness, be adventurous, creative, and open-minded, pursue growth and learning, build open and honest relationships with communication, build a positive team and family spirit, do more with less, be passionate and determined, be humble -learning to learn, proactive
3M motivates innovation by:
15 % Program New Project Fairs Viewing Failure as Necessary for Innovation
According to Dr. Pragya Agarwal, _______ % of employees surveyed had been affected by workplace bullying. A: 40 B: 50 C: 75 D: 85
75
What are the key advantages and challenges of utilitarianism for business?
Advantages: Federal Reserve Board and public policy "good" that Fed Reserve Board takes to be the greatest good for the country; sets interest rates; competitive markets and promoting policies that deregulate private industry, protect property rights, allow for free exchanges, and encourage competition 1)comfort of cost-benefit analysis 2)fit with stakeholder theory challenges: serious ethical issues; "expert" and "market" dispute; ex: questions of safety and risk in the workplace should be determined by experts. 1)commensurability problem (impossible to reduce all values to a common measure) 2)problem of consequentialism (we cannot know the actual consequences of our actions beforehand) 3)problem of objective good (paternalism) and individual freedom (relativism) 4)the problem of moral rules (if the end justifies the means, principles can always be overridden)
What kind of person, according to Myers-Briggs, would be more inclined to describe a celebrity using lots of physically descriptive words? A) N- Intuitive B) S- Sensory C) P- Perceiving D) J- Judging
B
The Myers-Briggs is a test that: A) Measures intelligence. B) Generates a six character personality 'type.' C) Illuminates sociological influences. D) Generates a four character personality 'type.'
D
What are the keys to building a thriving company culture, according to the fifteen members of Forbes Coaches Council?
Enlist, empower, and encourage, create a respectful workplace, care about each other, live it, be inclusive, be the example, communicate properly, repeat your message, never forget your purpose, establish trust, make it about humanity, create a core values statement, focus on what's going right, share the same vision, have a common story
Title VII or the Civil Rights Act of 1964
Established EEOC; prohibited employment discrimination on the basis of race, color, religion, national origin, or sex
Why do diversity and inclusion matter to business?
Ethics / Innovation / Productivity / Potential
What does it mean when team members are diverse?
Everyone is unique and will be able to offer their own experiences and knowledge that others may not possess. Diversity is needed so that all of the required skills are covered by somebody in the team and each individual can be assigned a particular role on the basis of their strengths and skills. A variety of personalities, age groups, cultures, etc. can also bring creativity and a broad range of ideas to the table.
Project Aristotle
Google's Project Aristotle, which analyzed data on inventive and productive teams found that the best teams at Google demonstrate (all soft skills): § Emotional safety (no bullying) § Empathy § Curiosity toward teammates' ideas § Equality § Generosity § Emotional Intelligence
What is the difference between hard and soft skills, and what did Google's research discover about them?
Hard skills are teachable and measurable abilities, such as writing, reading, math or ability to use computer programs. By contrast, soft skills are the traits that make you a good employee, such as etiquette, communication and listening, getting along with other people -best teams at Google exhibit a range of soft skills: equality, generosity, curiosity toward the ideas of your teammates, empathy, and emotional intelligence. And topping the list: emotional safety.
What is the relationship between organizational integrity, trust, and profitability, according to Allen?
If the market's belief in an organization's integrity is confirmed time and time again, no one will be surprised when people become customers or clients with an unshakable allegiance to its brand. The power of return on ethics is exponential. When any business relationship is established with trust as its cornerstone, everyone can win. -profitability will then increase
Isolation test for determining intrinsic value
If the world would be more valuable if you add one thing and change NOTHING ELSE, then that one thing is intrinsically valuable!
High Power/Low Interest
Keep satisfied ex: government
Where do bullies and targets fit, on the scale of social intelligence?
Low on the scale of social intelligence; no conscience, incapable of feeling shame or remorse; extreme lower end of social intelligence; zero-empathy employees and negative treatment of others
What is a maxim, and how do maxims factor into moral decisions, according to Kant?
Maxim-a short, pithy statement expressing a general truth or rule of conduct. A maxim is a personal "ought" statement, and these come into mind when we make a moral decision (universalization, is it a duty?)
1919 Dodge vs. Ford
Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a charitable manner for the benefit of his employees or customers • The case still most often used in law schools to illustrate a director's obligation is Dodge v. Ford Motor (1919) • But it has been cited in only one decision by Delaware courts in the past 30 years
What is the content and the take-away message of Jane Elliot's "Blue Eyes/Brown Eyes" exercise?
Ms. Elliott, then an elementary school teacher, devised the "Blue Eyes/Brown Eyes" exercise for her first-grade classroom. This famous exercise groups participants by eye color then subjects the different groups to inferior or superior labeling and stereotypes based on their eye colors. The experiment is world-renowned for its ability to help people empathize with being a minority in any situation. Jane Elliott's work has been used by corporations, heads of states and school districts around the world as sensitivity training and diversity education. Take-aways: It is essential that corporations do not lose clients or employees solely because of discriminatory or unethical practices, whether they be intended or constructive. ethical necessity for corporate culture to embrace diversity so that it can achieve its highest goals. By addressing "typical statements" and proactive means of combating racism, along with other eye-opening exercises fostered by Ms. Elliot, the corporate climate can be changed to become more tolerant and diversified.
What are some ways to address abusive workplaces, according to Nagele-Piazza?
New legislation that addresses abusive conduct Anti-bullying company policies and an inclusive organizational culture Bystander intervention training for employees and workplace civility training
How do studies of conformity factor into understanding workplace bullying?
People conform; they are apathetic and willing to follow a leader who can protect them because they lack self-confidence and tend to avoid conflict; don't want to become the target of abuse themselves; don't like the person who is being abused
What are Schein's 10 learning culture characteristics? Why are they especially important given today's business market place?
Proactivity, commitment to learning to learn, positive assumptions about human nature (theory Y), belief that the environment can be managed, commitment to truth through pragmatism and inquiry, positive orientation toward the future, commitment to full and open task-relevant communication, commitment to cultural diversity, commitment to systemic thinking, belief that cultural analysis is a valid set of lenses for understanding and improving the world
Rawls original position
Procedure to arrive at a shared sense of justice uses the veil of ignorance; ignore basic liberties and human rights, try to create basic institutions of society (how taxes work, how voting works, etc.) in a way that's fair for everybody, then remove the veil and put yourself in a position of lots of different scenarios
Age Discrimination Act
Prohibits discrimination on the basis of age in hiring, firing, or compensating
Clean Air Act
Set emission standards for cars, and limits for release of air pollutants
Marsh v. Alabama
The Court held a state law that attempted to punish the distribution of religious literature in a privately-owned town constituted state action in violation of the 1st and 14th amendments, because the town's public character transformed the private entity into a state entity. (constitutional rights of the residents of a town > property rights of Gulf Shipbuilding Corporation) o
Project Oxygen
The purpose of Google's Project Oxygen was to evaluate: A)Their policy of hiring using algorithms that sort for computer science students with top grades from elite science universities Based on the data collected through Project Oxygen, Google changed its hiring practices to include: A) Humanities majors, artists, and MBAs
True or false: 3M allows all of its employees to spend 15% of their time working on personal projects that may or may not benefit the company.
True
In what ways does Rick Gibbs claim that values are important to great company culture?
Values are crucial to the foundation of a great company culture Organizations should pick values that resonate with people at all levels Company values must be mirrored in daily activities and communication
What metaphor does Rawls use to explain the nature of morality?
Veil of ignorance
Consumer Product Safety Commission (CPSC)
a federal agency established to protect the health and safety of consumers in and around their homes
whistleblower
a person who informs on a person or organization engaged in an illicit activity.
Myers-Briggs
a personality test that taps 4 characteristics and classifies people into 1 of 16 personality types
What is the "Tale of Two Stories?"
a time in your work experience (or life) when your values conflicted with what you were expected to do, and you did not speak up and act to try to resolve the conflict in a way that was consistent with your values.
What is "positive deviance?"
approach to behavioral and social change based on the observation that in any community there are people whose uncommon but successful behaviors or strategies enable them to find better solutions to a problem than their peers, despite facing similar challenges and having no extra resources
axiology
asks "what does good mean?"
How is workplace bullying defined?
behaviors directed at the employee with the intent to harm him or her
What is a categorical and a hypothetical imperative, and what is an example to show that difference between it and other sorts of imperatives?
categorical imperative: we should act in a way that we can will the maxim of our action to become a universal law hypothetical imperative: what to do if we desire a particular outcome
How has utilitarianism influenced economics?
classical free market economics-economic transactions occur when individuals seek their own happiness; if they buy products that don't bring them satisfaction, they learn from their mistakes and don't buy these again
build clusters/framework conditions
community/social supports
Markets are regulated by_______.
competition
What does it mean for an action, institution, or policy to maximize total utility?
cost-benefit analysis to determine how to maximize everyone's intrinsic good
What does Freeman say is the primary responsibility of corporate executives?
create as much value as possible for stakeholders
What is managing for stakeholders about?
creating as much value as possible for stakeholders, without resorting to trade-offs
According to Goleman, in 'What Makes a Leader', what do the most effective leaders have?
emotional intelligence
What are the symptoms and effects of workplace bullying on the employee? On the employer?
employee- difficulty sleeping, burnout, illness, absenteeism, legal and medical costs, early retirement employer-economic cost to the employer- workman's compensation, lowered morale, employee turnover
teleological theories
goal-based -utilitarianism -maximizes total utility -happiness is the only intrinsic value (good by its very nature, in and of itself)
Kant believed that the only good thing was a?
good will
Why does Kant think happiness is irrelevant to ethics?
happiness is less important than making the right, moral decision
What is the goal of an ethical culture?
helps employees learn and grow in their jobs. An ethical culture promotes ethical behavior among the members of an organization.
What determines a business's success?
how well people can work together to achieve their common goals
What is the most important commitment today's business leadership can have, given the complexity, fast pace, and diverse business environment?
involvement in the learning process
Low Power/High Interest
keep informed
What are the key advantages and challenges of Kantianism for business?
key advantages: avoids consequentialism and subjectivity, humanizes business, focuses on principle and motives challenges: lack of fit with free-market capitalism (goal: maximum satisfaction of consumer demand), failure to recognize exceptions to rules or conflicts of duty, mere means problem
High Power/High interest
key stakeholders; manage closely ex:shareholders
What is ethical leadership?
leadership that is directed by respect for ethical beliefs and values and for the dignity and rights of others. It is thus related to concepts such as trust, honesty, consideration, charisma, and fairness.
Are leaders of workplace abuse high or low in social intelligence, according to Popp?
low
How might a utilitarian determine whether regulating business is justifiable? (Consider the example of the banking industry and the 2008 financial crisis as an example.)
lowering or raising interest rates (rightness of the act depends on consequences) -promote policies that deregulate private industry, protect property rights, allow for free exchanges, and encourage competition
Low Power/Low Interest
monitor
reconceive products and markets
new revenue source
information conformity
occurs because of the desire to be correct.
normative conformity
occurs because of the desire to be liked and accepted. Peer pressure is a classic example
Big Five
openness, conscientiousness, extraversion, agreeableness, neuroticism
Social Contract Theory
people live together in society in accordance with an agreement that establishes moral and political rules of behavior. -individual rights, laissez faire capitalism, utilitarianism, classical economics
Valeant
pharmaceutical company -worked with Philidor -bought rival drug companies and slashed its Research and Development; raised the prices of its drugs
What are the three types of happiness, according to Hsieh?
pleasure, passion, purpose
What does it mean to say that the basis of moral obligation must be a priori?
reason by itself can reveal to us the basic moral principles and that moral reasoning is not based on factual knowledge
redefine productivity in the value chain
reduces costs
What is social intelligence and what characteristics do people with social intelligence have that those without lack?
social intelligence- empathic capacity, gives us compassion and a conscience general intelligence-reasoning and memory -people without social intelligence lack compassion and a conscience
fiduciary
someone obligated to act for the benefit of their clients
If one stakeholder continuously benefits at the expense of others, what happens?
stakeholders will either (1) exit to form a new stakeholder network that satisfies their needs; (2) use the political process to constrain the offending stakeholder; or (3) invent some other form of activity to satisfy their particular needs.
Asch Conformity Experiment
subjects had to judge which line was longest, the only subject conforms and actually believes that they were right when the answer was clearly wrong, there is a need of social respect and conformity is the outcome
Veil of Ignorance
this veil, you know nothing of yourself and your natural abilities, or your position in society. You know nothing of your sex, race, nationality, or individual tastes. -we would make the fair decision in this case
An "equal opportunity harasser" (a mean manager) might not be engaging in unlawful conduct (unlawful harassment), according to Lisa Nagele-Piazza in "Workplace Bullying and Harassment: What's the Difference?" A: True B: False
true
Self-awareness has been cited as the most important capability for leaders to develop. A) TRUE: It's the most important B) FALSE: It's important but not most important
true
4Ocean
uses a portion of the profits to remove one pound of trash from the ocean and coastlines for each bracelet that is sold in an effort to clean up plastic pollution in oceans.
How do Schein's learning culture characteristics reflect virtue ethics, utilitarianism, and Kant's respect for persons (especially treating people as ends in themselves)?
utilitarianism-learn from consequences, learn to learn -respect people, open communication and cultural diversity -virtue ethics: emphasize the role of character and virtue in moral philosophy rather than either doing one's duty or acting in order to bring about good consequences.
Bullying and conformity
¡Bonding Cycle (Individuals; Social Groups; VP/Pres) ¡Gaslighting (Crazymakers) ¡In-Group/Out-Group §Belonging §Pecking Orders ¡Whistleblowers
What is emotional intelligence?
§Ability to Work with Others § Ability to Motivate Others § Effectiveness in Leading Change
What leadership styles do authentic leaders have?
§Charismatic: Confident, Dynamic, Outgoing §Steady/ Dependable: Committed, Loyal, "True Blue" §Strategic: Analytical, Systems Thinker, Thoughtful §Empowering: Growth, Compassionate, Nurturing
Doll test
§Drs. Kenneth and Mamie Clark §1939 & 1954 in Brown v Board of Education -black and white dolls, children (even African Americans) said the black dolls were "ugly" or "bad"
What do the letters of the Myers-Briggs stand for?
§Extrovert (E) / Introvert (I); Extraversion - Introversion, signifies the source and direction of a person's energy expression. An extravert's source and direction of energy expression is mainly in the external world, while an introvert has a source of energy mainly in their own internal world. § Sensory (S) / Intuitive (N); represents the method by which someone perceives information. Sensing means that a person mainly believes information he or she receives directly from the external world. Intuition means that a person believes mainly information he or she receives from the internal or imaginative world. § Thinking (T) / Feeling (F); Thinking - Feeling, represents how a person processes information. Thinking means that a person makes a decision mainly through logic. Feeling means that, as a rule, he or she makes a decision based on emotion, i.e. based on what they feel they should do. § Perceiving (P) / Judging (J); reflects how a person implements the information he or she has processed. Judging means that a person organizes all of his life events and, as a rule, sticks to his plans. Perceiving means that he or she is inclined to improvise and explore alternative options.
How did Combitech use Learning culture characteristics?
§R&D Subsidiary of Saab §Seven research units -Aerospace, space exploration, marine electronics, etc -Units friendly but didn't share insights §Culture Model/ "Anthropologists" -2 volunteers go to each unit, learn culture (ask questions, report back) §Before formal dinner - Go to Rooms, Follow instructions - Tie-dyed shirts, loose pants, slippers, headbands -Wear to Parking Lot for "dance lessons" -Music, Easy steps, Get to know each other §Dinner - Big Indian buffet - Moving around, Loosening up §Outcome - Laughter, exchange cards, plans to get together §Cultural Intervention §R&D: 7 Research Units §Company "Icebreakers"/Team Building (ropes courses) §Ambassadors §Parking Lot Dance Lessons in Tie-dyed Clothes! §Indian Buffet Dinner §Get to Know Others / Break down barriers - Laughter, Exchange cards, Plans to get together - Networking, Sharing Information, Collaboration
What are the characteristics of an authentic leader?
§Requires knowledge of your own motivations as well as those of others §Courage, Flexibility, Self-Awareness (Coping with Change)
What does it mean to be an authentic leader?
§Requires knowledge of your own motivations as well as those of others●- Not a Hierarchy ●- Empowering Everyone to Lead ● ●- Flexibility to Deal with Change & ● A diverse workforce ● ●- Optimize productivity or teams with insight into Motivations
personalities within great teams
§Results-Oriented §Relationship-Focused §Process and Rule Followers §Innovative and Disruptive Thinkers §Pragmatic
Who were the major players (businesses & regulatory agencies) relative to the Deepwater Horizon disaster?
· : British Petroleum and the crew of Transocean's Deepwater Horizon; regulatory agencies: U.S. Department of the Interior's Minerals Management Service (MMS)- managed and regulated offshore drilling; after the disaster disbanded the service and created the Bureau of Ocean Energy Management, Regulation and Enforcement, with an investigative arm to root out misconduct and complacency; OSHA •BP: Based in the UK • Transocean: -World's largest offshore drilling contractor - Based in Switzerland - Owns drilling rig, Deepwater Horizon • Halliburton, Schlumberger: Oilfield services companies • MMS (U.S. Department of Minerals Management): - Manages & regulates offshore drilling § BP § Transocean (Deepwater Horizon) § Schlumberger, Halliburton § MMS § Employees § Community/Environment § Shareholders
Why is open communication so important to business?
· Central to organization well-being; anyone must be able to communicate with anyone else, and everyone must assume that telling the truth as best they can is positive and desirable .
What does Schein use the example of the dance lessons at SAAB Combitech to illustrate?
· Cultural intervention; Risberg recruited Schein to help him design an intervention that would teach the hundred or so members of these seven groups about culture and help them become more familiar with each other's cultures
According to Tony Hsieh, Zappos' CEO, what is the place of failure in entrepreneurship?
· Entrepreneurs view the failure as getting one step closer to success instead of realizing they've failed
What is the difference between a manager and a leader, according to John Kotter?
· Leaders create a vision, managers create goals; leaders are change agents, managers maintain the status quo; leaders are unique, managers copy; leaders take risk, managers control risk; leaders are in it for the long-haul, managers think short-term; leaders grow personally, managers rely on existing, proven skills; leaders build relationships, managers build systems and processes; leaders coach, managers direct; leaders create fans, managers have employees; leaders have people that follow them whereas managers have people that work for them
What is the goal of management for employees at Zappos?
· Looking for people whose cultural values match the corporate values- people who are naturally living the brand · Make people feel like they're part of something special; defining their culture and delivering happiness; work into life integration
What things does 3M do to foster innovation?
· Minnesota Mining and Manufacturing Company · Fostering a deep culture of innovation, encouraging collaboration, and maintaining a dedication to research and development · Allow team members to take risks in a protected environment · Encourages everyone to look for new products · 6% of sales every year in Research and Development
Why is cultural analysis important to business?
· The organization with the more diverse cultural resources will be better able to cope with unpredicted events; diversity creates subcultures, and those subcultures eventually become a necessary resource for learning and innovation
Customer satisfaction & trust
·Customers value corporate social responsibility ·Focusing on customer satisfaction increases customer dependence & loyalty ·Happy customers will come back, unhappy customers will broadcast their dissatisfaction
Investor loyalty & trust
·Investors are increasingly interested in supporting companies with reputations for ethical culture because they want to be associated with it ·Investors associate ethical culture with the productivity benefits above and long term viability
Managerial capitalism
• Balanced drive for profits with the needs of various other constituencies • 1943 "credo" penned by Robert Wood Johnson, founder of Johnson & Johnson, designating five groups to be served 1. Customers 2. Workers 3. Managers 4. Communities • Shareholders were the "fifth and last responsibility" of the company
Adam Smith
" How selfish so every man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it...."
Freeman quote
"Capitalism is on this view a system of social cooperation and collaboration, rather than primarily a system of competition."
Thomas Hobbes
"During the time men live without a common power to keep them all in awe, they are in that conditions called war; and such a war, as if of every man, against every man...No arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death: and the life of man, solitary, poor, nasty, brutish and short
John Locke
"The state of nature has a law of nature to govern it, which obliges everyone: and reason which is that law, teaches all mankind who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty or possessions..."
Wealth of Nations quote
"[B]y directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."
stakeholder
"those groups who are vital to the survival and success of the corporation"
What are the formal elements of the Deloitte ethics program?
--A leader to guide it--our chief ethics and compliance officer. --Policies and procedures, including our Code of Ethics & Professional Conduct. --Ethics and compliance training programs, including an extensive orientation in which we introduce new hires to our ethical culture and define what is acceptable ethical behavior. --An Integrity Helpline that's available to assist our people with any inquiries and reports they may have, 24 hours a day, 365 days a year.
How does the Open Question Argument undermine the separation fallacy, according to Freeman?
-Open Question Argument questions are always open for most business decisions, it is reasonable to give up the Separation Fallacy, which would have us believe that these questions aren't relevant for making business decisions, or that they could never be answered. We need a theory about business that builds in answers to the "Open Question Argument"
What is systems thinking, and how is it relevant to both business and ethics?
-Systems thinking is a holistic approach to analysis that focuses on the way that a system's constituent parts interrelate and how systems work over time and within the context of larger systems. business: many different parts of a business that are related and need to work together ethics: ethical decisions have an impact on other people and decisions
Wells Fargo CEO
-Tim Sloan, stepped down -pushed out managers and senior executives - Eliminated the unrealistic sales goals that drove employees to open fake accounts. - Urged workers to speak up if they saw something shady- Promised to shore up the bank's confidential ethics hotline
What does Friedman mean when he says corporate executives may have ethical responsibilities as individuals but not as agents?
-as individuals they can do things outside the company and spend money ethically, but as agents their duty is to their boss and making profits
How does business ethics factor into employee commitment, investor loyalty, customer satisfaction, & profits?
-employee commitment comes from workers who believe their future is tied to that of the organization and from a willingness to make personal sacrifices for the business; the more a company takes care of its employees, the more likely the employees will take care of the organization -investors want to invest in a company with an ethical culture that provides a foundation for efficiency, productivity, and profits -socially responsible companies increase customer trust and satisfaction -ethical conduct builds a strong competitive position shown to positively affect business performance (profits) and product innovation
Why does Friedman think corporate executives are incapable of discharging their alleged 'social responsibilities', even if it were the right thing to do?
-how will they know how to spend it? -stockholders would become angry
constraints on the duty to shareholders
-law and ethical custom -"Rules of the Game"--> markets can only convert the selfish choices of participants into collectively beneficial results if free
What does it mean to say it is not consistent with basic ethics?
-reasonable to give up the Separation Fallacy, which would have us believe that these questions aren't relevant for making business decisions, or that they could never be answered -Friedman claims that the responsibility of the executive is to make profits subject to law and ethical custom. Depending on how "law and ethical custom" is interpreted, the key difference with the stakeholder approach may well be that we disagree about how the world works -to create value we believe that it is better to focus on integrating business and ethics within a complex set of stakeholder relationships rather than treating ethics as a side constraint on making profits
What was the significance of the perpetual puzzles we looked at in class, and what did they each show?
-show the different perspectives/lenses -two people/vase -bunny/rabbit -letter E -old lady/young woman -half a monument -woman looking into mirror/skull -"I love Paris in the the spring time"--> 2 thes -states -Jesus -fish
What does Friedman mean when he says that "...the doctrine of "social responsibility" involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scarce resources to alternative uses"?
-socialist view is that government should determine use of people's money -political mechanisms (ethical stuff, etc.) would be spending someone's money without permission instead of following the rules of the market
How has the makeup of stakeholders changed over time?
-started to mean anyone who held stake in a business
value, property rights, markets
-value is increased by the division of labor -division of labor requires a system of property rights -property rights lead to trade and markets -markets expand economic welfare
Challenge to the Invisible Hand's Credibility
1)Prisoner's Dilemma 2)Tragedy of the Commons
What three elements make up ethics?
1)axiology 2)casuistry 3)normative theory
What are the three parts of a system?
1)elements 2)interconnections 3) a function or purpose
What are the five factors, according to Gary Neilson, a principal at Strategy&, that make it increasingly likely that a given CEO will be ousted for corporate ethical scandal?
1)public has grown more skeptical and less forgiving when it comes to bad behavior, and consumers' public outcry combined with the threat of activist investors has prompted boards to react more often. 2)a digital communications world primed to expose bad behavior that might have gone unnoticed in the past 3)a 24/7 news cycle that acts as a megaphone, particularly for negative stories that catch fire on social media. 4)increased regulation and governance requirements, as well as more business being done in emerging markets where there is more unethical behavior, have added to the higher numbers. 5)CEOs who hold both the chairman and chief executive's title — resulting in the potential for less oversight — were more likely to be involved in a forced turnover than those who were only CEO.
What are the four explanations that may have left employees at the bank susceptible to unethical behavior?
1)they felt pressured 2)they thought it was just business-business mindset 3)they separated their lives at work from their lives at home 4)"moral muteness," or people's reluctance to communicate their moral concerns and speak up about unethical behaviors in the workplace.
Open Question Argument
1. If this decision is made for whom is value created and destroyed? 2. Who is harmed and/or benefited by this decision? 3. Whose rights are enabled and whose values are realized by this decision (and whose are not)? 4. What kind of person will I (we) become if we make this decision?
The Equal Pay Act
1963 law that required both men and women to receive equal pay for equal work
FSGO
Federal Sentencing Guidelines for Organizations -requires that a business's governing authority be well-informed about its ethics program with respect to content, implementation, and effectiveness
Why does Friedman use the language of 'taxation without representation' to describe corporate executives who use corporate resources for other than maximizing profits?
Here the businessman--self-selected or appointed directly or indirectly by stockholders--is to be simultaneously legislator, executive and jurist. He is to decide whom to tax by how much and for what purpose, and he is to spend the proceeds--all this guided only by general exhortations from on high to restrain inflation, improve the environment, fight poverty and so on and on. The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This justification disappears when the corporate executive imposes taxes and spends the proceeds for "social" purposes. He becomes in effect a public employee, a civil servant, even though he remains in name an employee of a private enterprise.
What does it mean to say the dominant model is not consistent with the law?
In actual fact the clarity of putting shareholders' interests first, above that of customers, suppliers, employees, and communities, flies in the face of the reality the law. The law has evolved to put constraints on the kinds of trade-offs that can be made. In fact the law of corporations gives a less clear answer to the question of in whose interest and for whose benefit the corporation should be governed. The law has evolved over the years to give de facto standing to the claims of groups other than stockholders. It has, in effect, required that the claims of customers, suppliers, local communities, and employees be taken into consideration
Adam Smith believed in the __________.
Invisible Hand
Separation Fallacy
It is useful to believe that sentences like "x is a business decision" have no ethical content or any implicit ethical point of view. And, it is useful to believe that sentences like "x is an ethical decision, the best thing to do all things considered" have no content or implicit view about value creation and trade (business).
Shareholder view of corporate responsibility
Management's sole duty is to do what shareholders (stockholders) want -•corps hire management to make them $ -•taking the job = making a promise to do so -corporate executives ought to maximize value for its shareholders. M
Shkreli and Daraprim
Martin Shkreli, then CEO of Turing Pharmaceuticals and the notorious "pharma bro," jacked up the cost of the lifesaving drug Daraprim by 5,000 percent. Overnight, its price tag skyrocketed from $13.50 a pill to $750.
Integration Thesis
Most business decisions, or sentences about business have some ethical content, or implicit ethical view. Most ethical decisions, or sentences about ethics have some business content or implicit view about business 10
Responsibility Principle
Most people, most of the time, want to, actually do, and should accept responsibility for the effects of their actions on others.
What was Wells Fargo's "Gr-eight Initiative" and why was it ethically problematic?
a push to increase the average number of financial products customers held from six to eight. -led to the Wells Fargo scandal when employees engaged in secretly creating new bank and credit-card accounts for customers without their knowledge, resulting in overdraft and other fees. So far, 5,300 Wells Fargo employees have been fired over the issue.
What is an ethical culture?
acceptable behavior as defined by the company and industry -captures values and norms an organization defines and is compared to by its industry as appropriate conduct -goal is to minimize the need for forced compliance of rules and maximize the use of principles that contribute to ethical reasoning in difficult or new situations
normative theory
asks "how do we know what is good?"
casuistry
asks "what things are good?"
function or purpose
behavior of a system; often the most crucial determinant of a system's behavior
According to Neilson, why are CEOs who hold both the chairman and chief executive's title more likely to get ousted for ethical lapses than those who don't hold both positions?
belief among good-governance experts that splitting the roles is a good idea. "Where there is a separation, they're getting in front of it," Neilson said. "It's not boiling over, or it may not be happening because of this check and balance in the first place. And if it does happen, they're catching it early."
What kinds of ethical issues result from the rise of Cloud Computing?
businesses can look at our information -can look at your social networking services, location, what you've been looking at, and what you've done in the last day
What is the central insight of systems theory, and how do the examples of the slinky, the human body, and the blind men and the elephant illustrate that insight?
central insight of systems theory: systems largely cause their own behavior -slinky: can bounce up and down the stairs; the hands that manipulate or suppress it release behavior that is latent within the structure of the spring itself -human body: flu virus doesn't attack us; we set up the conditions for it to flourish -blind men and elephant: each blind man felt one part of the elephant and thought it was something different; but the behavior of a system cannot be known just by knowing the elements of which it is made
primary stakeholders
communities, customers, financiers, the firm, employees, suppliers
Value-creation activity
contractual process, which requires autonomy, solidarity, and fairness.
Stakeholder View of Corporate Social Responsibility
corporate executives ought to maximize value for all stakeholders.
What are common elements of systems?
easiest parts to notice, visible, tangible things; can be intangible ex: elements of a tree are its roots, trunk, branches and leaves
ethic
ecologically-limitation on freedom of action in the struggle for existence philosophically-differentiation of social from anti-social conduct
Tragedy of the Commons
economic problem in which every individual has an incentive to consume a resource at the expense of every other individual with no way to exclude anyone from consuming. It results in overconsumption, under investment, and ultimately depletion of the resource 1.Human nature results in individuals acting in their perceived self-interest. 2.It is in the self interest, given common resources, for individuals to take advantage of those resources, even when they know it would be disastrous if everyone were to do the same.
Friedman believed that an employee had responsibility to_____.
employer " In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom."
What does Ferrell think such legislation implies is the greatest danger to an organization's success?
ethical issues
What is the difference between ethics and compliance and how does ethical culture fit in?
ethics- values, beliefs, and established and enforced patterns of conduct employees use to identify and respond to ethical issues; doing what is right regardless of what the law says compliance-following the law; what the government requires you to do
Power-Interest Grid
identify stakeholders
What, according to Friedman, is the sole social responsibility of a corporate executive and why does Friedman think that is the case?
increase the profits of a business -In each of these cases (money to ethical things), the corporate executive would be spending someone else's money for a general social interest. Insofar as his actions in accord with his "social responsibility" reduce returns to stockholders, he is spending their money. Insofar as his actions raise the price to customers, he is spending the customers' money. Insofar as his actions lower the wages of some employees, he is spending their money.
What does it mean to understand stakeholders' interests as 'joint', rather than as 'opposed', and why is this difficult?
joint- they are all related -It is not always easy to find a way to accommodate all stakeholder interests. It is easier to trade off one versus another. Why not delay spending on new products for customers in order to keep earnings a bit higher? Why not cut employee medical benefits in order to invest in a new inventory control system? Managing for stakeholders suggests that executives try to reframe the questions. How can we invest in new products and create higher earnings? How can we be sure our employees are healthy and happy and are able to work creatively so that we can capture the benefits of new information technology such as inventory control systems?
National Labor Relations Act
law passed in 1935 that protects American workers from unfair management practices; right to unionize and to bargain
employee commitment & trust
makes employees willing to make personal sacrifices for the organization because they believe their future is tied to the organization -increased group creativity, increased productivity, increased job satisfaction, lower turnover
Greenman v. Yuba Power
manufacturers liable for damage caused by their products
What, according to Friedman, is the difference between political mechanisms and market mechanisms?
market mechanism-unanimity. In an ideal free market resting on private property, no individual can coerce any other, all cooperation is voluntary, all parties to such cooperation benefit or they need not participate. There are not values, no "social" responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form. political mechanism-conformity. The individual must serve a more general social interest--whether that be determined by a church or a dictator or a majority. The individual may have a vote and say in what is to be done, but if he is overruled, he must conform. It is appropriate for some to require others to contribute to a general social purpose whether they wish to or not.
secondary stakeholders
media, government, competitors, special interest groups, consumer advocate groups
social contract theory
moral obligations are the result of contracts/agreements among self-interested individuals
Sarbanes-Oxley Act
passed in 2002 -made securities fraud a criminal offense and stiffened penalties for corporate fraud -created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to investors and other interested parties -requires top executives to sign off on their firm's financial reports and risk fines or long prison sentences if they misrepresent their companies' financial positions -requires company executives to disclose stock sales immediately and prohibits companies from giving loans to top managers
What is an archetype?
pattern of behavior of a system
What does business consist of?
people working together within an organized structure in the context of a society
What does it mean to say that the shareholder model of business is resistant to change?
puts shareholders' interests over and above the interests of customers, suppliers, employees, and others, as if these interests must conflict with each other. It understands a business as an essentially hierarchical organization fastened together with authority to act in the shareholders' interests. -On this interpretation, change should occur only when the shareholders are unhappy, and as long as executives can produce a series of incrementally better financial results there is no problem. According to this view the only change that counts is change oriented toward shareholder value. If customers are unhappy, if accounting rules have been compromised, if product quality is bad, if environmental disaster looms, even if competitive forces threaten, the only interesting questions are whether and how these forces for change affect shareholder value, measured by the price of the stock every day.
What is the difference between reductionism and holism, when understanding the behavior of a system?
reductionism: emphasis on parts of the system holism: emphasis on the system as a whole
interconnections
relationships that hold the elements together; operate through the flow of information
Dodd-Frank Wall Street Reform and Consumer Protection Act
requires regulators to create hundreds of rules to promote financial stability, improve accountability and transparency, and protect consumers from abusive financial practices
Markets are motivated by____.
self-interest
Prisoner's Dilemma
shows why two completely rational individuals might not cooperate, even if it appears that it is in their best interests to do so. 1.Because they are self-interested, people are mini-maxers. 2.In circumstances of mutual disinterest, it will be more rational for minimaxers not to cooperate for the common good, even if cooperation seems to be in their best interest. 3.Therefore, it is sometimes more rational for people to act self-interestedly, rather than cooperate for the common good
Why do Friedman's arguments not apply to individual proprietors?
spending their own money, not someone else's
what is a stakeholder and who are the primary and secondary stakeholders of a business?
stakeholder-groups which have a stake in the activities that make up the business. Business is about how customers, suppliers, employees, financiers (stockholders, bondholders, banks, etc.), communities, and managers interact and create value. -primary: communities, financiers, customers, suppliers, employees -secondary: special interest groups, media, government, consumer advocate groups, competitors
What is a system and how does it differ from a conglomeration?
system: set of things interconnected in a way that they produce their own behavior over time; elements, interconnections, and a function or purpose conglomeration: doesn't have interconnections or function; ex: sand on the side of the road
moral individualism
the view that all claims about morality must be explained in terms of (atomic) individuals' beliefs, desires, and actions
Why does Freeman think the dominant (shareholder) model of business is no longer workable?
the world has changed so that the stability and predictability required by the shareholder approach can no longer be assured. 1)resistant to change 2)inconsistent with the law 3)inconsistent with basic ethics
What is the difference between the traditional ROE and the new ROE?
traditional ROE- return on equity new ROE- return on ethics
How does the example of trade unions illustrate Friedman's point?
union officials are asked to subordinate the interest of their members to some more general purpose. If the union officials try to enforce wage restraint, the consequence is likely to be wildcat strikes, rank-and-file revolts and the emergence of strong competitors for their jobs. We thus have the ironic phenomenon that union leaders--at least in the U.S.--have objected to Government interference with the market far more consistently and courageously than have business leaders. -people become angry and retaliate because they want to control their money
2018 Report to the Nations
§Study of 2000 Anti-Fraud Experts - Investigation of hundreds of thousands of fraud cases § Organizations Lose 5% of Annual Revenues to Fraud § Context: - $79.6 trillion: Gross World Product (2017) - $4 trillion: Projected total global fraud loss (5% loss applied to GWP)
Code of Conduct
• Principles, Values • Rules: Behavior, Organizational Relationships; Set Employee Expectations • Framework for Ethical Decision-Making • In-Depth Statement: What an Organization Believes
How a business can establish trust
• Structures / Mechanisms (Safeguard Trust) • Ethics Program - Leader: Chief Ethics & Compliance Officer - Policies & Procedures: - Code of Ethics & Professional Conduct - Ethics & Compliance Training Programs (Culture) - Integrity Hotline
What did Wells Fargo do after the scandal?
• Wells Fargo Made Changes •Tim Sloan, new CEO/Pres (after scandal) https://www.youtube.com/watch?v=CV9g1xNArw4 (optional) • Internal Regulation/Organization - Addressed Conflict of Interest: Separated HR and Ethics from Profit divisions.
whistleblower protections
•Sarbanes-Oxley Act (2002) •Financial Sector •Organizational control and accounting regulations •OSHA (Occupational Health & Safety Administration) • Manages whistleblower cases • First stop for anyone seeking whistleblower protections under Sarbanes-Oxley
