BUSINESS ETHICS "Let me appeal to your sense of doing things my way" Cartoon by P.C. Vey Copyright 2004, Harvard Business Review BUSINESS ETHICS Can Business be “Ethical?” Do “Ethics” matter More Now than Before? Whose “Ethics” are They? Isn’t the “Best Ethic” maximizing Shareholder Value? WHAT ARE UNETHICAL BUSINESS PRACTICES? Abusive or Intimidating Behavior Accurate but Incomplete Disclosures Discrimination against Protected Class Receiving/Offering Bribes, Kickbacks or Incentives Theft or Fraud: Personal Use of Company Property or Expense Account Misrepresentations Sexual Harassment Termination without Fair Notice or Cause WHY DO ETHICS MATTER? Does “Doing the Right Thing” Matter? To Whom Does it Matter? What are the Costs to Business of Unethical Behavior? ETHICS AND THE LAW • Legal Requirements often represent an Ethical Minimum • Personal Ethical Standards Generally Exceed Legal Standards ETHICS LAW Laws are Ethical Issues with Societal Implications as interpreted by a Legislature; Personal Ethics have Broader Context and Application LEVELS OF BUSINESS ETHICS What are the different levels at which issues originate and how they move to other levels?      Individual Organizational Association Societal International FORCES THAT SHAPE BUSINESS ETHICS Organizational Culture Personal Ethics Beliefs and Values Moral Development Ethical Framework Organizational Systems Structure Policies and Rules Code of Ethics Reward System Selection and Training Is Decision or Behavior Ethically and Socially Responsible? Founder History Defining Moments Stories of Development External Stakeholders Government Regulations Customers Special Interest Groups Market Forces PERSPECTIVES ON ETHICS Ethical Issues require Persons or Organizations to choose an Action that may get judged as right or wrong Classifications of Business Ethical Issues     Conflicts of Interest Fairness and Honesty Communications Organizational Relationships CONFLICTS OF INTEREST  USUAL FORM: Financial Interest or Bias  MINIMAL RESPONSE: Full Disclosure and Withdrawal from Participation “The Probability of Somebody Watching You is Directly Proportionate to the Stupidity of Your Actions” - Kelly M. O’Donnell BIAS OF BUSINESS IN ETHICAL DILEMMAS When confronting Ethical Conflicts, Businesses Seek to Preserve the Organization Customer Relationships and Employee Concerns Corporations are “Legal Fictions” created and managed by Shareholders, Directors and Employees    FORMAL ETHICS STRUCTURES AND SYSTEMS  Formal Reporting System: Ethics   Ombudsperson - Unbiased and Neutral but with Authority Code of Ethics (Standards) and… Code of Conduct (Actions) Communications Network: Formal and Informal Processes for Reinforcing and Refreshing HOW BUSINESS CAN “GET IT” Organizations that Promote an “Ethical Climate” provide an Opportunity to develop an “Ethical Culture” Starts with Organization-wide Commitment: Organizations have to WANT to “Do the Right Thing” - Obtain Commitments from CEO, President and Board of Directors With Commitment, Organizations can Define their “Right Thing” and decide How to “Do It” CRITERIA GUIDING ETHICAL ACTIONS • Is Action consistent with Organization’s Goals, not motivated by self-interest? • Does Action respect the Rights of Individuals and Groups affected by it? • Does Action satisfy Standards of Fairness and Equity? • Would You wish Others to Behave in the Same Way if Action affected You? BOTTOM LINE OF ETHICAL LEADERSHIP Decision-making includes Personal, Organizational and Societal Values Ethical Values always open to Discussion and Criticism subject to Fire Wall between Immutable Standards and Case-by-Case Exceptions Accept Responsibility for Sound Moral Judgments: It’s in Everyone’s Job Description