Ethic Exam # 2
income inequality
"As income differences among Americans have grown larger in recent decades, so have social differences. The enduring correlation between ethnicity and income aggravates the problem, piling ethnic and cultural differences on top of class differences. Looking at each other across the chasms of class and race, many Americans see little reason to believe that they share each others' values—and little reason to trust each other." (p. 95)
ethical culture
"CULTURE is a body of learned beliefs, traditions, and guides for behavior shared among members of a group..." ETHICAL CULTURE can be defined as those aspects of an organization's culture that support or undermine ethical behavior by the company and its employees.
implict prejudice
"Implicit" means something that is not openly expressed (or possibly not even consciously known). Research shows that people often make judgments according to unconscious stereotypes and prejudices, even when they are not aware of it. This is called implicit prejudice. Data from 2.5 million online tests and other research show that: At least 75% of test-takers show some implicit bias, for example, favoring the young, the rich, and whites... ...and bias against African-Americans, Arabs, Arab-Americans, Jews, gay men, lesbians, and the poor... Research also indicates that people who show higher levels of bias on the IAT are more likely to be biased in actual face-to-face interactions In the mid-1990s, researchers developed the implicit association test (IAT), which was designed to study unconscious bias.
structure of compensation influences behaviors in organization because
"What is rewarded is what gets done." "Managers, take note of the messages you're implicitly sending to all of your workers you reward and punish (or fail to punish)." This is true for both good and bad; compensation can influence employees to act ethically OR unethically... e.g., executive compensation systems at Enron
the structure of compensation powerfully influences behavior in organization
"What is rewarded is what gets done." "Managers, take note of the messages you're implicitly sending to all of your workers you reward and punish (or fail to punish)." This is true for both good and bad; compensation can influence employees to act ethically OR unethically... e.g., executive compensation systems at Enron
medicare fraud
... "an intentional deception or misrepresentation which an individual or entity makes, knowing that the deception could result in some unauthorized benefit to the individual, entity, or some other party." ...in other words, cheating Medicare... 1992 study estimated Medicare fraud at $100 billion a year...
ethical dilemma
... is a situation where two or more "right" values are in conflict. This is referred to as "values-in-conflict..." there is a feeling of being torn or being pulled in two directions. john and harry and the test (cheating/honesty) v.s. (friendhship/loyalty) four diviers:Recent work in neuroscience shows that humans have four basic "drives:" A: the drive to acquire (greed) B: the drive to bond (loyalty) C: the drive to comprehend (belief) D: the drive to defend (fear)
moral courgae
...is the courage to enact in one's own life and actions ...the universal values of honesty, respect, responsibility, fairness, and compassion...
medicare
...is the federal health insurance program for the elderly (65+) and disabled... Established in 1965 Part A: provides hospital insurance, supported by a 2.9% payroll tax (with equal parts paid by employee and employer) Part B: covers doctor bills and outpatient expenses, supported by insurance premiums and tax dollars
ethical relavtisivism
...is the idea that ethics depend on the situation, and vary across cultures. "No culture's ethics is better than any other's." "When in Rome, do as the Romans do."
organizational hypocrisy
...occurs when an organization's formal systems say one thing, and its informal systems say another...or when some formal systems say one thing, and other formal systems say something else...(that is, when systems are not in alignment) Enron and their shreaded accounting documents.
discrimination
...occurs whenever something OTHER than qualifications affects how an employee is treated. Title VII (seven) of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, religion, sex, color, and national origin. Other laws prohibit workplace discrimination based on age, pregnancy, and disability. ...can be extremely expensive for companies. Bayer case: $100 million gender discrimination lawsuit Previous cases: Mitsubishi, Texaco, Coca Cola, Wal-Mart ...is an ETHICAL as well as a LEGAL issue because discrimination is inherently UNFAIR.Most of us know that discrimination is both illegal and unfair, and we would not knowingly act in a discriminatory way towards others. We think we are objective and unbiased. But are we
compensation
...refers to reward systems in organizations: pay, benefits, "perks" and other ways people are compensated for their organizational contributions What are some kinds of compensation you are aware of?
Sarbanes-Oxley Act (2002)
1) Protects whistle blowers in publicaly help companies if they "make a disclosure to a supervisor, law enforcement agency, or congressional invesitgator that could have a material impact on the value of company shares" 2) boards must set of procedures to hear whistle-blower concerns 3) executives who retaliate can be held criminally liable. was passed/created after downfall of Enron and WorldCom. the women or enron and world come would not be protected but mr.okimono in the midnight journal entry would have been projected.
False Claims Act "Lincoln Law"
1) allows indivudals to file legal claims against federal contractors they accuse of committing fraud against the government 2) if claims are upheld, these indivduals can recieve 15-30% of recovered damages (provides incentive for whistle-blowing) 3) includes employment protections for whistle-blowers 4) the government has recovered nearly $22 billion under this law since 1987 5) biggest payouts have been in defense countracting and health care (e.g medicare)
actors in upper big branch look at results lens (does end justify means)
1) don blankship: Benefits: $129 million over ten years in compensation. Use of a corporate jet, cars, and other perks.Social status.Power over others. Costs: Referred to himself as "vilified;" apparently widely disliked in the community and by his own employees 2). managers: Benefits: Relatively high pay and status in a low-income region. Costs: demanding job, stressful job 3) directors (board members) benefits: At least $130,000 per year in compensation for a few days of meetings. Costs: Reputational risk due to association with a company with a poor reputation for environmental impacts and worker safety 4) shareholders: Benefits: Mediocre returns during the 2000s, but not much different from industry averages. Costs: High volatility, high risk investment 5)employees: benefts: For some, a relatively high-paying job in a low-income region. Costs: Unsafe job; high risk of illness, injury, or death Intimidating, threatening workplace culture Lack of union protection For some: a violent, sudden death by incineration or suffocation For some: the trauma of experiencing the death or injury of friends and coworkers For the families of victims: loss of a loved one 6). customers: benefits: A steady supply of high-quality, relatively low-cost fuel for steel, utility, and industrial customers For utility customers: a steady supply of relatively low-cost electric power from coal-fueled power plants Costs: Risk of supply interruption from a supplier with high safety and environmental risks 7) local community: benefits: Some jobs, some taxes, some philanthropic support Benefits to the broader community of energy independence. Costs: water and air pollution and enviornmental degradation 8) union: benefts: none. Costs: comapnys high effective anti-union strategy led to declining union membership in the coal industry 9) governemnt regulators: benfits:Massey's flagrant disregard for compliance may have contributed to greater allocation of funding and positions to the regulatory agencies. Costs: Harassed, deceived and thwarted by Massey management in their efforts to enforce the law 10) enviorment benefits: none. costs: Widespread damage to ecosystems and watersheds due to mountaintop removal mining Coal sludge spill
stages of moral development (kohlberg theory)
1) ego centered resoning (1-2) Stage one: punishment-avoidance, deferral to authority Stage two: reward seeking, meeting one's own needs Age: early childhood 2) group centered resoning (3-4) Stage three: adherence to the norms of friends, school, parents, co-workers Stage four: adherence of the norms of the society, nation (laws) Age: middle childhood, adolescence, young adulthood 3) principle centered resoning (5-6) Stage five: adherence to broad principles such as social contracts, constitutional principles, universal values Stage six: adherence to universal principles of human rights, justice, fairness Age: mature adulthood
When is blowing the whistle justified?
1) the organization is doing (or will do) something that seriously harms others. (cant be a little, trival thing) (i.e) 100,000 ppl get ill from drugs, astronaunts die, shareholders harmed) 2) the WB has tried and failed to solve the problem internally. (i tried to solve this problem within the company before i went public, approached the problem to CEO or board) 3) reporting the problem publicly will probably stop or prevent the harm. 4) The harm is seriously enough to justify the probable cost of disclosure to others.
What should you ask yourself before you blow the whistle?
1) what are your intentions: are you trying to serve the great good -or just advance a personal agenda? 2) are you sure of your facts: have you researched the situation to the best of your ability? 3) do you have the power and influence to make a difference? 4) how urgent is the issue: do you need to act right away, or do you have some time to think about alternatives? 5)how can you make a difference, while minimizing risk to your own career and well-being?
Fariness: THREE components
1)Equity: something is divided among individuals according to their worth and inputs. It would be unfair, for example, if a man and woman performed the same job at the same level of performance, but did not receive equal pay. 2)Reciprocity: Doing as much for someone else as they do for you; returning a favor. It would be unfair, for example, for one person in a workplace to be expected to always prepare coffee for the team in the morning. 3)Impartiality: Treating everyone objectively and without any bias. For example, it would be unfair to assume that a woman would be more skilled at caring for young children than a man, or that a man would necessarily be a better fire fighter.
other ethical issues at C/HCA
3) Used heavy-handed tactics to pressure acquisition targets 4) Used financial incentives (doctor ownership) to induce doctors to refer patients to C/HCA hospitals (what is this called?)
if wealth was equally distributed what would be the number
448,000
B corps
A benefit corporation...is a new type of corporation which uses the power of business to solve social and environmental problems B-Lab, a nonprofit organization, certifies B Corps, the same way TransFair certifies Fair Trade coffee or the USGBC certifies LEED buildings. The purpose of the B Corp legal requirement is to expand the responsibilities of the corporation to include consideration of the interests of employees, consumers, the community, and the environment (i.e., all stakeholders). The purpose of the B Corp legal requirement is to expand the responsibilities of the corporation to include consideration of the interests of employees, consumers, the community, and the environment (i.e., all stakeholders).
rationalization
A rationalization is an "excuse" (a flawed reason) for bad behavior. It is an argument that an individual makes to show why an unethical action isn't really so bad, after all. A reason why something is OK, when it really isn't.
the golden rule
BUDDHISM: "Hurt not others in ways that you yourself would find hurtful." CHRISTIANITY: "Whatsoever you wish that men would do to you, do so to them, for this is the law of the prophets." CONFUCIANISM: "Is there one word which may serve as a rule of practice for all one's life? The Master said: Is not reciprocity such a word? What you do not want done to yourself, do not do to others." HINDUISM: "This is the sum of duty: Do naught to others which would cause pain if done to you." ISLAM: "No one of you is a believer until he desires for his brother that which he desires for himself." JUDAISM: "What is hateful to you, do not to your fellow man. This is the entire Law: all the rest is commentary."
what can be done about implict bias?
Become aware of your own biases. Take the IAT and see where your biases lie, and use this information to try to counteract them. Shape your environment, by deliberately exposing yourself to situations that challenge your biases. Broaden your decision making. Bring in extra people, and consider a broader range of options.
External factors
Can make companies behavior either more or less ethically. Unethical actions by companies will be more likely if we have... government laws, regulations, or policies that somehow encourage or incentivize bad behavior Individuals working for those companies? (the "bad apple" theory, as in the expression "one bad apple can spoil the whole barrel") The companies themselves—lack of, or poorly executed, policies, programs, codes of conduct, leadership, training, etc.? Or... something outside (external to) the company?
comany actions
Company settled with the government, paid $630 million + in fines. Together with civil suits, fraud cost C/HCA $2 billion. Biggest fraud settlement in U.S. history. Sold home health care business Eliminated cash bonus programs for managers Increased internal enforcement and auditing program Phased out physician ownership Initiated an investigation Hired a VP for ethics and compliance Developed a new code of conduct and policies, training programs, appointed compliance officer in every hospital, established a hot-line
maximize returns
Corporations are legally required to maximize returns to their owners (shareholders)... Bakan argues that the combination of limited liability + maximization of returns = PSYCHOPATHOLOGICAL BEHAVIOR
provisions of wall street reform and consumer protection act
Creates two new agencies within the Treasury Department to monitor systemic risk Sets up a process for the orderly liquidation of banks, insurance companies, and other financial institutions that fail Increases the amount of depositor's funds covered by FDIC insurance from $100K to $250K Introduces new regulations of hedge funds and other private equity funds, the insurance industry, and credit default swaps and other derivatives Expands the powers of the Securities and Exchange Commission, including its powers to regulate credit rating agencies Sets up a Public Company Accounting Oversight Board to regulate public accounting firms Sets up a Bureau of Consumer Financial Protection to regulate consumer financial products and services Sets new minimum standards for mortgages
Recent Whistle Blowers
Cynthia Cooper of WorldCom (Books being cooked, went to audit firm), Collen Rowley of the FBI (20th high jacker, tried to report to FBI, went public after 9 11) , Sherron Watkins of Enron( testified before congress, attempted to surface the idea). Roger Boisjoly (talking to congress about the challenger disaster, he was on a conference call about the weather it was to cold). Dr. Jeffrey Wigand (Senior Executive at Brown and Williamson, reveled that nicatine manipulation of his company and was fired). David Graham (Vioxx, felt that the FDA was suppresing the research he had done on the research of dangers of the drugs).
using all 4RS in upper big mine
Did the overall results for all affected stakeholders justify the means used to obtain them? Did the costs outweigh the benefits, or vice versa? What human rights were protected or violated by Massey's actions? Were Massey's actions fair and just towards all those affected? Were Massey's actions "virtuous," that is, reflective of a good corporate character?
ethical leadership
Executives and managers can influence whether their organizations act ethically or unethically by what they do, say, and support. They can do this in two main ways... by what they do ...and what they tell people to do (that is, what they say) MORAL PERSON: what they do MORAL LEADER/MANAGER: what they say
using all 4R'S
Gather the facts Define the ethical issue(s) Identify the affected stakeholders Identify the possible consequences (results) Identify the relevant rights Consider what would be fair (relationships) Consider your reputation Think creatively about possible actions Check your "gut" And if you still can't decide, try to "buy time" to think it over or talk with trusted advisors
Regulatory reform often FOLLOWS rather than PRECEDES abuses that hurt stakeholders.
Greed, self dealing in the financial service genearlly lead to hurt stakeholders which in turn creates new regulation to constrain the financial indsutry. when it should be the other way around. new reulations should be done to avoid constrains.
five universal values
Honesty (your #1) Respect (your #3) Responsibility (your #2) Fairness (only one group identified this one!) Compassion (your #5)
inequity between within organizations
In 2010, the average compensation of a CEO of a large U.S. company was $9.6 million (up from $7.5 million in 2009) In other countries, most chief executives make much less than this. All time peak was in 2000, at $13 million (height of the stock market boom of the late1990s) In 2010, CEOs in the U.S. made about 325 times what an average worker made (in 1990, it was about 100 times)
conflict of interest
In a conflict of interest situation, one person or organization exercises judgment on behalf of another person or organization. arises when the agent has some personal interest that interferes with their judgment, objectivity, or impartiality. This might cause the agent to act in their own interest, rather than in the interest of the principal. In other words, there is a conflict between the agent's interest and the principal's interest. That's why it's called a conflict of interest. Why is a conflict of interest a problem?is a problem because the principal might receive bad advice, if the agent acts to benefit himself (or herself) rather than to benefit the principal. ...is a problem even if the agent does NOT act in his own interest, because the principal might think that he has received biased advice. This undermines trust in the relationship and confidence in the advice being offered. ... is not the same as "conflicting interests," as in: "I want to go out to the movies, and you want to stay home and watch TV." It has a very specific meaning in the field of ethics. (ie) doctor and patient (ie) purchasing agent and company he works for (ie) financial advisor and client (ie) bond rating agency and investors in bonds
diagnostic criteria for a psychopath
Incapacity to form enduring relationships Reckless disregard for the safety of others Deceitfulness, chronic lying Incapacity to experience guilt Failure to conform to social norms with respect to legal behaviors
government actions towards HCA
Increased audits
When companies acut unethically, who or what is to blame?
Individuals working for those companies? (the "bad apple" theory, as in the expression "one bad apple can spoil the whole barrel") The companies themselves—lack of, or poorly executed, policies, programs, codes of conduct, leadership, training, etc.? Or... something outside (external to) the company?
External regulation of corporate behavior
Joel Bakans thesis: the influence of society's laws on the behavior of corporations The corporation as a psychopath
milgram experiments
Just how far will normal adults go to follow orders—even if it violates their own ethical standards? Stanley Milgram conducted a series of experiments in the 1961 which set out to answer this question. If a participant asked to stop, a man in a lab coat (E) said: "Please continue (or please go on)." "The experiment requires that you continue." "It is absolutely essential that you continue." "You have no other choice; you must go on (65% administred lethal shock) why do you think ppl behaved like they did? Escalation of commitment Norm was established "Slippery slope" Abdication of personal responsibility, displacement of responsibility Done in the interest of a higher good, i.e., science Authority figure instructed person to continue
"smartest guy in the room" unalignment of enron
Lack of alignment between formal and informal systems They had a good code of conduct and gave "lip service" to strong moral values, but all other systems seemed to undermine this.
the smartest guy in the room movie
Lack of alignment between formal and informal systems They had a good code of conduct and gave "lip service" to strong moral values, but all other systems seemed to undermine this.
Bakans thesis is there a soultion?
Limited liability + fiduciary responsibility to shareholders = psychopathology Is there a solution? Government provides many, many countervailing pressures to the ones Bakan describes in the form of laws and regulations that constraint corporate behavior.
what are B corps required by law to do?
Meet comprehensive and transparent social and environmental performance standards; Meet higher legal accountability standards; Be part of a business constituency for public policies that support sustainable business. There are now over 450 Certified B Corporations in 60 different industries. The following states currently have enabling legislation to permit corporations to register and be chartered as B Corps: CA, VA, HI, MD, NJ, NY, and VT
rouge organization
Most business ethicists believe that companies should follow the law as a minimum, but should in many cases go beyond compliance to achieve a higher standard of behavior. Yet, a striking feature of this case is the extent to which Massey actively sought to violate the law as a matter of corporate strategy. Companies that fall below the level of minimal compliance with the law may be considered "rogue," or "outlaw" organizations.
net worth, financial wealth
Net worth = value of all assets, minus debt Financial wealth = value of all assets except one's home, minus debt
Wall Street Reform and Consumer Protection Act (Dodd Frank) (2010)
Passed by Congress and signed by the president in the wake of the financial crisis of 2008-09 Most significant overhaul of financial regulation since the Great Depression Very complex law with 15 different sections...
percieved unfairness
Perceived unfairness is often used to rationalize an unethical action. In a "winner take all" society, people are more likely to cut ethical corners because both the costs of failure (and benefits of success) are so high
ethics
Principles, rules, and standards that define right and wrong conduct for individuals or organizations Ethical rules or principles are derived from values
what can be done about a conflict on intrest
Recusal (resignation from a role to avoid a conflict of interest). For example, the judge can remove him or herself from a case if he or she is friends with one of the attorneys. Avoidance For example, the doctor can refer all cases involving a possible need for arthroscopic surgery to another doctor who does not have an ownership interest in the clinic. Divestiture (sale of the conflict) For example, Vice President Cheney could sell all his shares in Halliburton prior to assuming his new office. Watchdog" review of decisions (getting a "second opinion") The doctor could advise the patient to get a second opinion on whether or not arthroscopic surgery is needed, and if so, where it should be performed. Or, the purchasing agent could ask his supervisor to review his decision to give business to his sister-in-law's company. Use of a blind trust For example, Vice President Cheney could put all of his investments, including his Halliburton stock, into a trust managed by someone else. During the time he was in office, he would not know what stocks had been bought or sold, or how his investment portfolio was performing. Forfeiture of benefits from the personal interest (e.g., donation to charity) For example, the professor could donate royalties from the sale of the case to her own students to charity. Disclosure For example, the financial advisor could tell the client that he will receive a commission on the sale of certain products, so the client can factor that into their decision-making. Compartmentalize conflicting roles For example, the accounting firm could require that different departments work on auditing and consulting and that they don't communicate about the same client. (This is sometimes called a "Chinese wall.") Redesign the agent's role For example, an accounting firm could mandate that an auditor never give any consulting advice.
What actions did he take to blow the whistle?
Referes to Johnson and Johnson (tylenol scare, i worked for a company that did that right thing) he came out of a corporate culture that valued ethics, it had been modeled for him. He said he was a man of science. Mentors of high integrity. He described himself as an ethical person (his self conception was the scientific truth).
"product in use" problem
Refers to a situation in which there is nothing inherently ethically wrong with the product itself, but it may be used in a way that causes harm to others... Example: Sudafed (Pfizer) Example: programmable logic chips (Xilinx
effects of great reccession
Research being done right now suggests that the rich were hurt much less by the recession than those less well-off. The median household lost 36% drop in its wealth, while the top 1% lost just 11%. Why? Because most average people's wealth is tied up in their homes, which saw a huge drop in value. SO... inequality is probably even greater now than these data indicate.
Richard Okumoto
SJSU college of Business, B.S. in Finance, 1974. Former CFoO for several Silicon Vallley Firms. Currently, adjunct professor in business. He wrote the Midnight Journal Entry.
types of compensation
Salary: pay per month or year Hourly: pay hour worked, with extra for overtime Commission: pay per sales transaction amount Piece-work: pay per unit produced, or service provided Profit-sharing, stock options, etc.: pay based on the performance of the organization or its stock Bonuses based on specific contributions ..and combinations of the above How compensation is structured, and what is rewarded, powerfully influences behavior in organizations.
sexual and racial harassment
Sexual harassment at work occurs when any employee (man or woman) experiences repeated, unwanted sexual attention or when on-the-job conditions are hostile or threatening in a sexual way. It includes both physical conduct and verbal harassment. Women are the victims of most, but not all, harassment. Sexual harassment is illegal Racial harassment at work is also illegal. Ethnic slurs, derogatory comments, and other verbal or physical harassment based on race are against the law.
whats ethical and whats legal are not always the same thing.
Ship-breaking, Bangladesh (legal but not ethical) lunch room sit in (ethical but not legal)
limited liability
That means that shareholders, managers, etc. are not personally liable (responsible) if a corporation commits a crime. The corporation itself is liable. Under law, the shareholders, managers, etc. are therefore said to have limited liability.
why do corporations act like psychopaths?
The Corporation critiques the view that immoral acts by companies are the responsibility of individuals ("bad apples") or even corporate policies. Rather, his view is that corporations are required by law to promote their selfish interests (and those of their shareholders) above all competing interests. As a result, even companies led by moral individuals—and that have good ethics policies—are drawn relentlessly to commit evil acts.
agent
The person or organization exercising judgment is called the AGENT. They use their expertise to advise the person or organization that needs their advice. In these examples, the agents are: The doctor The purchasing agent The financial advisor The bond rating agency (Moody's)
principal
The person or organization on whose behalf judgment is exercised is called the PRINCIPAL. They rely on the agent to give them accurate, unbiased advice. In these examples, the principals are: The patient The company the purchasing agent works for The financial services client The bond investors who rely on Moody's ratings to decide what bonds to buy
moral disengagment
The tendency for some individuals to deactivate their internal control system in order to feel okay about doing unethical things
Methods of ethical reasoning: REPUTATION
This method focuses more on the character of the moral actor (the person) rather than on the moral act itself. It focuses on character traits that a good or virtuous person should possess... ...and on the intentions of the actor. Reputation theories are also called virtue ethics (as in our textbook) or character ethics. virtue ethics: "An action is morally right if in carrying out the action the agent exercises, exhibits, or develops a morally virtuous character." reputation: KEY QUESTIONS: "How would your reputation be affected if your behavior or action was widely reported online or on the front page of the newspaper?" What was the intention of the decision maker? Was the decision maker a person of integrity and high moral character? think of disclosure rule: How would you feel if your behavior was reported in the newspaper (or on Facebook, or in an influential blog)...? Would you feel comfortable or uncomfortable having your behavior made public? (i.e) should government tear down three homes to build a superhighway? No, because it would tarnish the transportation secretary's reputation for considering the rights of all concerned. Yes, because the intention of the transportation secretary was to improve transportation options for the community. weakness of this reasoning: Your "relevant moral community" may be wrong! Upholding your reputation in this community might lead to poor choices (e.g., professional accountants in the Enron era, or gang members engaged in a criminal enterprise). May lead to considering your own reputation without regard for the impact of a decision on others.
methods of ethical reasoning: RIGHTS
This method focuses on the fundamental rights of the individuals and groups involved. A decision is ethical if it honors fundamental human rights. Rights theories are also called deontological theories, duties, and obligations NEGATIVE RIGHTS—The right to privacy, or the pursuit of happiness. POSITIVE RIGHTS—The right to health and safety or an education. The Golden Rule: "Do unto others as you would have them do unto you." KEY QUESTIONS: Does this action protect and honor human rights? Would I like to be treated this way? What kind of world would it be if everyone behaved this way, or made this kind of decision? (i.e) should government tear down three homes in order to build a new superhighway? NO becuase it would violate private property rights how the three homeowners. viltiontion of right in this instance, would trupm the beneift to socierty of a new road. weaknesses of rights method: Rights sometimes conflict with one another, so it's difficult to determine which right or rights should be given priority. Which right, duty, rule, or principle should take precedence? Rules sometimes conflict with other methods of reasoning, e.g., should you tell the truth to the Nazis about the Jews hiding in your attic? (You would tell a lie, but save the Jews' lives.)
Methods of ethical reasoning: RESULTS
This method focuses on the results of the action. A decision is ethical if it produces the greatest good for the greatest number of stakeholders. (In this context, a stakeholder is a person or group impacted by the decision.) Key questions: Do the ENDS justify the MEANS? Do the BENEFITS outweigh the COSTS? Results theories are also called utilitarianism, teleological, cost-benefit, or consequentialist theories (I.E) Should the government tear town three homes in order to build a major new superhighway? Yes becuase the ends (to beneift soicerty as a whole with a new super-highway) justify the means (destroy the homes of three families). Ford Pinto Case!! (used results---> cost benefit analysis, cost outweighted the benefits of fixing the problem so they didnt fix it)! weaknesses:It's sometimes very difficult to anticipate all the consequences of an action. Some things are very difficult to measure or quantify. The results method does not account for the rights of the minority. (Something can result in a greater good for a greater number but also hurt a smaller number.) Worthwhile "ends" are used to justify unethical means.
methods of ethical resoning: RELATIONSHIPS
This method focuses on whether or not the decision is just and fair to all the people concerned. If all feel they are treated fairly and justly, relationships will be protected and honored. Key questions: Are the benefits and burdens of this decision fairly distributed? Was the decision-making process fair and just? Was "due process" followed? Relationships theories are also called theories of justice and fairness (i.e) should government tear down three homes in order to build a highway? Yes, if the three homeowners were fairly compensated, e.g., by receiving the fair market value of their homes, a moving allowance, and compensation for their time and trouble. No, because it would not be fair to the 3 homeowners, whose only "crime" was to live in the way of the proposed road. weakness of reasoning It sometimes leads to an erroneous conclusion that if a process is fair, the outcome is ethical... (e.g., our system of justice)
why do business need to act ethically?
To meet the demands of stakeholders and the public. To attract and retain ethical employees and customers. To comply with legal requirements and avoid prosecution, fines, and lawsuits. To prevent or minimize harm. To promote personal morality. To enhance business performance
External factors that cause companies to behave unethically
Unethical actions by companies will be more likely if we have.... government laws, regulation, policies or company culture that somehow encourage or incentivize bad behavior. start out good, but all negative players in control, cause them to be negative. Bribery would be one. Government subsidies (oil industry), Farm Subsidies, rating agencies (housing industry), Economy as a whole, times are hard, gotta make profit (might need to be unethical).
wealth vs. income
Wealth... the net worth of everything owned by a person or family at a point in time (e.g., the value of a family's stocks, bonds, precious metals, bank accounts, home, etc., minus any debts) (also called assets) U.S. median=$93K (2004 data) Income...the amount of money earned by a person or family, usually in a year (e.g., the amount earned from wages or salary, interest and dividends from investments, and rents and royalties from things they own) U.S. median=$50,233 (2007 data) bottom 90% make 29,840. top 1% makes 1,019,089 top 0.01% makes 23,846, 950s
Was Dr. Wigand a whistleblower?
Yes because he felt he had a social responsibility, that more harm would be done. He felt compelled to speak out about the manipulation of the nicatine and the chemical that had the impact of boosting the addiction. Particularly concerned about cumadin, the chemical. His resarch was squashed, wrote a memo to the CEO about weather or not it was going to remove the carcanigan. (he tried to go internally first). When he was fired he was asked to sign a CEO a nondisclosure act. He had a serious problem. So he went public. His testimony was absolutely critical and his role very pivotal to going against the 7 dorfs.
are there protections for whistle-blowers?
Yes there is some protection. (e.g., false claim act, salasy-okley). False Claims Act Sarbanes-Oxley Act Occupational Safety and Health Act National Labor Relations Act Equal employment opportunity laws
the corporation
advances the argument that modern coprorations are so immoral that they can be characterized as psychopathic personalities.
values
are our core beliefs about what is important, what is valued, and how we should behave in across a wide variety of situations. Values are valued characteristics of a person or organization or society, such as honesty, tolerance, or generosity.
consumer confidence issues
business obligations towards their customers include: Confidentiality of information about customers. respectiving the privcy of infomraiton shared by customers the the course of transactions. Fairness towards all customers (no favoritism, or discrimination) Product (and service) safety, making sure they do everything to ensure safety. Truthfulness in advertising and marketing Fiduciary responsibility: Fiduciary responsibility refers to a relationship of trust necessary when on party (the fiduciary) manages money or property on behalf of another (who is called "the principal")—yes, that word again!
enablers of moral courage
can be many things, a network of friends and collegagues, religious training, mentors, family memebers, etcs.
rick scott
ceo of columbia/hca, now governor of florida. Scott fired, left with $10 million in severance, $350 million in stock; never prosecuted; Frist became CEO
how do you solve a conflict of intrest and why do yup need to?
deal with it It depends on the particular situation. importnat to address "The basis of every personal and corporate relationship is trust, and it exists only when individuals and corporations feel they're being treated fairly, openly, and on the same terms as everyone else. Conflicts of interest erode trust. also remember, both companies and invidual can have conflicts of intrerest.
managing for ethics and compliance: informal and formal systems
ethical culture of an orgnaization consist of informal and formal systems: formal: Codes of conduct Ethics policies Ethics Selection systems Compensation systems Performance appraisal systems informal: Role Models/Heroes Norms of behavior Rituals Myths, stories, heroes Use of language Everyday practices To create a consistent ethical message, the formal and informal systems must be aligned (i.e., be running parallel to one another in the same direction).
upper big branch mine in west virgina
explosions could have been have been prevented. mine own by masey energy and run by its subsidiary by perfomrance coal company. the report found the ocompanys ventilation system did not adequately ventitatle the mine. as a result, explosive gases were allowed to build up (those gases include methanie which is highly flamable. company failed to manage build up of coal dust, strong evidence that coal dust played a significant role in propagating the blast through the minds mesha: failed to use all hte tools at its disposal to ensure the the comapny was complient with federal laws. for example, mesha had the ability to issue flagrant violations, whith fines up to 220,000 against comapnies whhich repeatedly failedto make reasonible effots to elliminate a known violantion of a mandatory health or safety standard that that reasonably could have been expected to cause death or serious engery. and despite the fact that upper big branch mine was cited dozen of times in the year preceding the disaster for violating ventilation plan requirments MSHA never sited Upper big branch for a flagrant violation massey profoundly reckless. ultimatley the responsbility for explossion lies with the management of massey energy. the comapny broke failt with its workers by frequently and knowingly violations the laws and blatently disgreading known safety practices. response of the report massey claimed their methane monitors were fully functional. massey offers a 3 million dollar settlement for each minor killed. the settlemnet wiould bar family members form seeing the company. while at least ten companies have sued the comapny under west virgina wrongful death (10) and one surving minor is open suit against masey saying he suffers severe phyiscal and psychogical injuries. minors were concern weeks before blow. saying no air on the backside. coral shared the concern with at least three ppl the weekend before the blast. accouding to federal reecords, upper bring branc had been sited for over 1400 safety violations. Security chief indited from massey becuase he knowingly directed and trained security garts at upper big branchi mine to give them advance notice, when they were supposed to be a supprise of visits. massey continues to assert that its people ar ethe best trained most productive and safest minors. Crazy Don Blankship states that masey never placed profits over safety. blankship know for ability to turn a profit and opposition to government minor regulations
if you decide to act what do you do?
first try to deal with the issue internally (inside the organization). 1) approach your immediate supervisor or manager first, if this doesn't work take the issue to the next level 2) contact the ethics officer or ombudsperson 3) consider going outside your chain of command, (to the HR office or legal department 4) finally, your last resort is to approach the CEO, president, or board of directors (or its relevant committee, such as the audit committee).
utlrasound in asia
ge china ultrasound india: missing girls Ethical analysis (4R's): RESULTS: What are the benefits of ultrasound technology in India and China? What are the costs? RIGHTS: Are any rights being violated? Which ones? RELATIONSHIPS: Are the company's actions consistent with principles of fairness and justice? REPUTATION: Do the company's actions represent a threat to its reputation? Both China and India have passed laws outlawing the use of ultrasound machines for gender selection.
Only after you've exhausted all internal channels is it appropriate to "go public"
going public might include contacting: 1) the relevant regulatory agencies (e.g, the SEC) 2) law enforcement (e.g., the FBI) 3) the media (e.g., 60 Minutes, the local newspaper) 4) Congress, or a Congressional committee 5) Public officials (e.g., the mayor of your town)
The Corporation
incapacity to form enduring relationships, reckless disregard for the safety of others, deceitfulness or chronic lying, incapacity to experience guilt, failure to conform to social norms with respect to legal behaviors. advance the argument that modern coprations act in just this manner. Critiques the view that immoral acts by comapines are the responsibility of indiviudals (bad apples) or even corporate policies, strucutres, or cultures.
upcoding
inflating the seriousness of a treated illness to receive a higher payment from Medicare
ethical issue
involves a normative dimension: What is right and wrong behavior? Is the behavior consistent with widely held values? (i.e) "Should I pay a female employee less than a male employee?" "Should I tell my boss I worked overtime, when I didn't?" Should I "cover" for my co-worker (do her work for her without telling the manager) when she has to leave work early to deal with a family emergency?
a corporation
is a legal entity that is created under state law. A corporation is considered a legal "person" which has privileges and liabilities separate from those of its members (such as its shareholders, managers, directors, or employees
cynic
is a person who believes that only selfishness motivates human conduct...who is distrustful, contemptuous, or pessimistic, particularly about the inherent goodness of others. Cynicism... is the attitude of a cynic... or, a state of being cynical... a general distrust of the inherent goodness of others.
enablers
is something that gives power, means, competence, or ability. the world may be used as a noun, verb or adjective (i.e) ; a college degree enabled him to get the jbo he wanted.
disabler
is something that weakens or takes away power, means, competence or ability. (i.e) his fear disabled him from completing the assignment. In jeffery's case: his wife didnt want him to do it, scared of losing his health care for his daughter sakes, might get sued.
business ethics
is widely considered an oxymoron (a contradiction in terms)... from the Greek "sharp dull," e.g., deafening silence, make haste slowly behavior that is consistent with the principles, norms, and standards of conduct for business that have been defined by society. ...not a special kind of ethics, just ethics as applied to business
cost shifting
manipulating billing to shift costs from services where reimbursement is capped or prohibited (e.g., hospital in-patient, advertising) to services that are more generously compensated (e.g., out-patient, community education)
Whistle Blowing
occurs when an employee reports alleged organizational misconduct to the media, government or high-level company officials because he or she believes that the organization (or someone in it) has done (or is about to do) something wrong or harmful to the public.
compensation
refers to reward systems in organizations: pay, benefits, "perks" and other ways people are compensated for their organizational contributions What are some kinds of compensation Salary: pay per month or year Hourly: pay hour worked, with extra for overtime Commission: pay per sales transaction amount Piece-work: pay per unit produced, or service provided Profit-sharing, stock options, etc.: pay based on the performance of the organization or its stock Bonuses based on specific contributions ..and combinations of the above
ethical absolutism
the idea that there are certain absolute truths that are universal in all cultures, e.g., the five universal values. For example, the "Golden Rule" is widely believed to be a universal value...(widely held across many religions and cultures)
risk of whistle blowing
very risky, not an easly road, an act or moral courage. They are often fired or isolated to the point the often leave their jobs.
Midnight journal, what happened?
went to the board, launch internal investigation, fired CEO in two weeks. put a temp CEO in there and did their own report on what had happen. No regard to account standard, suppression of MOFo. took care of the problem and left and took another job. board reffered to SEC and SEC turned into FBI, dooley was inditied and sentenced 6 months of home, 500 hrs community service, insleman 50,000 penality charge. Dooley carrer was ruined (800,000 severance because they fired him wrongfully under his employment agreement.). They did not go over their company because of their extensive commitment to the investigation.
enablers and disablers of moral courgae
what helps people-or holds them back- from speaking out about an ethical worng? or from blowing the whistle?