This Document Contains Chapters 1 to 2 Chapter 1 Introducing Straight Talk About Business Ethics: Where We’re Going and Why Contents: (Please note: the Instructor Guide for every chapter will follow this structure.) 1. Chapter Outline 2. Discussion Questions – Teaching Notes 3. In-Class Exercises 4. Homework Assignments 5. Additional Resources Chapter Outline I Introduction II The Financial Disaster of 2008 A. Borrowing Was Cheap B. Real Estate Became the Investment Of Choice C. Mortgage Originators Peddled “Liar Loans” D. Banks Securitized the Poison and Spread It Around E. Those Who Were Supposed to Protect Us Didn’t III Moving Beyond Cynicism IV Can Business Ethics Be Taught? A. Aren’t Bad Apples the Cause of Ethical Problems in Organizations? B. Shouldn’t Employees Already Know the Difference between Right and Wrong? C. Aren’t Adults’ Ethics Fully Formed and Unchangeable? • Defining ethics • Good control or bad control? V This Book Is About Managing Ethics in Business VI Ethics and the Law VII Why Be Ethical? Why Bother? Who Cares? A. Individuals Are About Ethics: The Motivation to be Ethical B. Employees Care: Employee Attraction and Commitment C. Managers Care About Ethics D. Executive Leaders Care About Ethics E. Industries Care About Ethics F. Society Cares: Business and Social Responsibility VIII The Importance of Trust IX The Importance of Values X How This Book Is Structured XI Conclusion XII Discussion Questions XIII Exercise: Your Cynicism Quotient Discussion Questions – Teaching Notes 1. Before reading this chapter, did you think of ethics as "just a fad?" Why or why not? What do you think now? Why? Probes to Stimulate Discussion • "If a roving reporter had stopped you last week on the street and asked you your opinion of the attention being given in the media to business ethics, what would you have said?" • "Would you have said the same thing if the street had been Wall Street?" • "Has your opinion changed since reading this chapter? Why?" • "What three points would you use to respond to someone who claims that business ethics is a fad?" 2. Have you been cynical about business and its leaders? Why or why not? (See the following cynicism exercise.) How does cynicism affect you, as a business student or as a manager? Probes to Stimulate Discussion • "If you are cynical, name two instances that illustrate the source of your cynicism." • "What about each of these instances makes you cynical?" • "If you don't feel cynical, what is your opinion about the lapses in ethics represented by such practices as sexual harassment disclosures, attempted bribes, or skimming profits?” • "What does your score on the "Cynicism Quotient" mean to you? Were you surprised by it?" • “How does cynicism affect you, as a business student or as a manager?” • "In what ways would the cynical attitudes of others influence your ethical behavior?" 3. Can you think of something that is legal but unethical, or something that is ethical, but illegal? Probes to Stimulate Discussion • “If something is legal but unethical, what do you think would be the best way to ‘manage’ it in the organization?” • “Is it appropriate for an individual to act on personal ethical beliefs (e.g., pro-life beliefs) in a work organization? For example, would it be appropriate to picket your company for offering health care benefits for abortion?”
4. Do you think business ethics/social responsibility is important? Why or why not? Recall what was said in Chapter 1 about the cynicism of the public regarding business and industry in light of the media coverage of their ethical lapses: a. Public holds contemptuous mistrust of many professional groups b. Prevalence of cynicism among managers and business students that employers do or will require them to compromise their ethics c. Causes of cynicism: • Businesses' preoccupation with gain • Lack of reinforcement of ethical behavior • Competition • Acceptance of unethical practices within business and industry • Perception that only results are important • Ineffective enforcement of ethics codes Although there are mixed research results regarding the claim that good ethics is good business, it behooves any intelligent organization to get and maintain an ethical image if they want to retain and increase their client base. It is the social responsibility of organizations to conduct their business ethically, because they are role models for their employees and society at large. Business ethics gives an organization the knowledge and skills necessary to: • Set ethical standards for themselves and their employees • Establish policies and practices that support ethical behavior • Provide managers the tools to manage unethical behavior Probes to Stimulate Discussion • "Regarding the responses above, what was the basis of response #1?" (Economic concern) • "What was the basis of response #2?" (Moral concern) • "Have you observed situations where business ethics was important? Describe one. What would have happened differently if the participants hadn't behaved ethically?" • "Briefly describe two different situations, one which relates an ethical behavior that you have observed, the other which relates an unethical behavior that you have observed." 5. Identify reasons why an organization would be interested in being ethical, and classify those reasons in terms of whether they represent moral motivation or economic motivation. Possible Answers with Economic Motives • Ability to attract employees • Better public image • Industry pressure • Sentencing guidelines Possible Answers with Moral Motives • The fair and right thing to do • Consistent with values of the organization Probes to Stimulate Discussion • "Let's take a poll before we answer this question. How many think there will be more reasons dealing with moral motivation and how many think there will be more reasons dealing with economic motivation?" Ask for show of hands, and then ask volunteers from each side of the question. "Why did you vote the way you did?" • "What are three attitudes that predominate in ethical decision making in your organization?" • To what extent is each level responsible?" • "Is operating on the philanthropic level an option or a responsibility?" 6. Think about the television programs and films you've seen recently in which business was portrayed in some way. How were business and business people portrayed? Is there anything business could or should do to improve its media image? Some businesses try to stay out of the limelight. Why might that be? What do you think of that strategy? Probes to Stimulate Discussion • "Describe a situation from a television show or a film in which an unethical behavior occurred. Who was involved? What were the results to others of the unethical behavior? Have you seen this kind of situation before in other shows or films? Does this represent "art imitating life" or "showing what sells?" • "Do you think the media is being responsible in the way it reports the ethical behavior of individuals and organizations?" • "Does the media teach ethics in their story lines? What kind of ethics do they teach?" • "In addition to outright unethical behavior, what are the other ways in which business contributes to the image of "profit first"?" 7. Do you believe that employees are more attracted and committed to ethical organizations? Are you? Why or why not? Make a list of the companies you would prefer to work for and the reasons why. Are there also companies that you would refuse to work for? Why? Are there “ethically neutral” companies that don’t belong on either list? Possible Answers • Research suggests that individuals are attracted to ethical organizations. • Students line up to apply for jobs at Vanguard, Google, and other highly regarded companies because of their excellent reputations for ethical management. Probes to Stimulate Discussion • "What can average employees do in an ethical environment that they can't do in an unethical one?" • "If we believe that employees are more attracted to ethical organizations, does that support the contention that moral motives are every bit as powerful as economic ones in peoples' decision making?" • "What are the flaws in thinking only about economic motives?" • "What are the flaws in thinking only about moral motives?" • "Imagine that you've been asked to describe five characteristics of an ideal organization. What would they be? Take 3 to 5 minutes to think about this so you don't just write down the first things that come to your mind. Is ethics among the top five characteristics? Why or why not?" 8. Discuss the importance of trust in business. Can you cite examples? What happens when trust is lost? Possible Answers • Trust is essential to efficient business – if there is no trust, it’s almost impossible to do business. • Without trust, one needs complicated contracts and lots of lawyers. • In situations where trust is high, business can be conducted with a promise and a handshake. • Regulators and the public are forgiving when companies try to do the right thing; they’re very unforgiving with companies that lie or stonewall. • The best insurance policy a company can have is the will to do the right thing. Probes to Stimulate Discussion • “In the wake of the financial debacle, what will it take for the investing public to regain their trust the financial markets?” • “How do you think the financial crisis has affected the reputations of financial firms such as Citigroup, Morgan Stanley, Bank of America, and Goldman Sachs? Do you think college students are as eager to be hired by one of those companies as they used to be before the crisis? Have these firms suffered as a result of the crisis. If no, why not? 9. What can we learn about business ethics from the recent financial crisis? Possible Answers: • A lot of people think, “Greed is good.” • The financial industry (Wall Street, government, regulators, rating agencies – pick your poison) is corrupt. • Unregulated business can be a recipe for disaster. • Ordinary people who invest are no match for professionals – it’s all “inside baseball.” • Huge compensation packages can cause huge problems. Probes to stimulate discussion: • Who do you think was most to blame for the financial crash of 2008? • Has anyone been punished for his or her role in the crisis? • Do you know of anyone who suffered harm as a result of this financial collapse? • Will new regulations help prevent a future crisis? • What role do you think compensation played in the crisis? • What role will the bailouts of 2008 play in future crises? In-Class Exercises Exercise #1: Who Has Integrity? As you know, it’s important to get students engaged in the subject matter of a course as soon as possible. You can begin this process of interaction in the first class by asking students to introduce themselves and describe someone they know who has high integrity. Here’s how it works: 1. Allow each student about 1 minute (give or take) to introduce himself/herself and describe a “person with high integrity” in his/her life. (Most of the time, students will talk about their parents or grandparents.) So, if you have 25 students in your class, it will take about 30 – 40 minutes to complete this exercise. 2. Ask each student for two things: a. Introduction: their name, year, and major b. Who do they know with high integrity – and describe how that person behaves that makes that obvious 3. You should start it off by describing someone YOU know who has high integrity – demonstrate what you want from your students and take a few minutes to do this. It will give them time to think about an answer. Go around the room in order. 4. As students rattle off the qualities that indicate integrity, write them on the blackboard or flip chart and try to distill the qualities they are describing. Typical responses include: consistency. honesty, high standards, kindness, focus on others (not just themselves) etc. 5. When the students have finished, the blackboard should contain an overview of the characteristics most of us think of when we consider honesty and integrity. The students’ words will have “painted a picture” of integrity. Exercise #2: Your Cynicism Quotient This is a great exercise because it will give students some idea of how they have been affected by media portrayals of business people. Of course, you can use this as a PPT slide and ask for a show of hands for each question. You can also hand out a paper survey in class and have students complete it right there as an in-class exercise and use it as a springboard for discussion. You can also use a free online web survey (like Survey Monkey) and have students complete the survey online. You can then tally their responses and use the results in the next class to spur discussion. Students will no doubt be surprised by the results. A note: In research that is currently underway – we’ll write about the results in the next edition of the book – we’re finding that about 20% of male and 10% of female undergraduates are very cynical and about 10% of males and 5% of female undergraduates are moderately cynical. You can copy the grid on the following page and use it in class. Your Cynicism Quotient Answer the following questions as honestly as you can. Circle the number between 1 and 5 that best represents your own beliefs about business.
Strongly Disagree Strongly Agree
1. Financial gain is all that counts in business 1 2 3 4 5
2. Ethical standards must be compromised in business practice 1 2 3 4 5
3. The more financially successful the businessperson, the more unethical the behavior. 1 2 3 4 5
4. Moral values are irrelevant in business 1 2 3 4 5
5. The business world has its own rules. 1 2 3 4 5
6. Business persons care only about making profit. 1 2 3 4 5
7. Business is like a game - one plays to win. 1 2 3 4 5
8. In business, people will do anything to further their own interest 1 2 3 4 5
9. Competition forces business managers to resort to shady practices. 1 2 3 4 5
10. The profit motive pressures managers to compromise their ethical concerns. 1 2 3 4 5
Scoring Procedures * Add the total number of points. The maximum is 50 points. Total _____. * The higher your score, the more cynical you are about ethical business practices. Think about the reasons for your responses. Be prepared to discuss them in class. Exercise #3 We feel that it’s important to encourage students to think about what they stand for and what “brand” or image they are communicating to the world. Here’s an exercise we’ve used with great success. This entire exercise takes about 20 - 30 minutes and students generally are very engaged while doing it. 1. Design a slide that looks something like this: Try to use famous people who are very different (who have different “brands”). Below, we have featured Laura Bush, Donald Trump, Tiger Woods, Oprah Winfrey, Paris Hilton, Barack Obama, and Bono. Just pull the images off of the Internet. 2. Divide the class into teams of 3 – 5 students per team. Either assign each team a famous person or ask each team to choose one they want to discuss. 3. Ask the class if anyone present knows any of the famous people featured. (No one will!) Even though they don’t know any of these celebrities, they can probably answer these questions based on what they have read or heard about these people. Give the class 5 – 10 minutes to discuss this in their teams. Here are some questions you might want to use, or use your own: • What three adjectives describe him or her? • What kind of car does he or she drive? • What is his/her favorite piece of jewelry? • What three artist/songs are at the top of their favorite playlist? • Where do they go for their news of the world? • Do they have a tattoo? If yes, of what and where? 4. Now have each of the teams report out. After each team announces its “guesses,” ask the entire class if they agree. (Almost everyone will!) “Does this sound about right?” When all teams have presented (combine presentations from teams who have the same celebrity), begin the discussion. 5. Why were they able to answer these questions? Was it easy? Was it difficult? In our experience, students find it very easy to “fill in the blanks” about these celebrities. The point: This happens to all of us! People extrapolate all the time based on what they already know about us. So, if you have given people the impression that you are casual about your standards, then they may well extrapolate and figure that you might cooperate with them in fudging the numbers or lying to a client, etc. The very best protection you can have in the workplace is to understand what it is you stand for and then very consciously communicate it. We communicate our “brand” all the time, in everything we do. This exercise is a good way to begin to encourage students to think about what they are projecting to others and be mindful of that personal brand and what others may assume based on it Exercise #4: What Would You Do? 1. Divide the class into teams of 4 – 5 students per team and have them consider the following case: “When your colleague, Bill, is out of town, you receive a call from his wife. She's having a crisis with one of their children and needs to reach Bill immediately. You offer to track him down for her and when you do, you inadvertently discover that he's vacationing with Marie, the chief investment officer of a prestigious college endowment fund that Bill manages. He tells you to keep his location a secret and that he will call his wife immediately. Two hours later, his wife calls back and screams that his cell phone is off and she hasn't heard from you or him. What do you do?” A) tell her you haven't been able to reach him. Then call your boss and update him on his wife's latest call. B) give his wife the number of the hotel where she can reach him. C) tell your manager's manager about the situation. D) tell her that you left an urgent message for him, but she'll have to wait for his call. 2. Ask them to spend a few minutes discussing this case as a team and deciding which course of action they would take, making sure that they have justifications for their choice. Once the teams have reached their decisions, discuss the case as a group. Possible Probes to Promote Discussion: • What are the ethical issues involved in this case? (Most students will “miss” the conflict of interest issues (for Marie and the boss) and the risk to the firm of this relationship. • Who are the stakeholders? • Who has the most to lose? • What are your obligations? • What could happen if you do nothing? 3. Then reveal the “scores.” Scores: A) tell her you haven't been able to reach him. Then call your boss and update him on his wife's latest call. (-30 -- a big lie and collusion with the boss) B) give his wife the number of the hotel where she can reach him. (10 -- deals only with the immediate crisis, not the conflict of interest) C) tell your manager's manager about the situation. (30 -- the only option that has the potential to deal with both ethical issues. D) tell her that you left an urgent message for him, but she'll have to wait for his call. (0 -- also a lie) NOTE: You can revisit this vignette several times during the semester to discuss ethical frameworks (See Chapter 2) and moral awareness (Chapter 3). Homework Assignments: Assignment #1 – Movie Review Have students choose a recent Hollywood film to watch for homework. They can watch in small groups or alone. The only requirement -- that the film portrays business in some way. Have each student write a one-page thought paper on how business was portrayed in the film. In class, have a discussion about the general portrayal of business in film. What you should find is that business is generally portrayed in negative terms. For example, most business people in these films are motivated by greed. There are exceptions. For example, in Jerry Maguire, the lead character is motivated by an ethical code. But, throughout the film, he fights the greed of others. Discuss how this generally negative portrayal feeds public cynicism, and why students are choosing to study business if this portrayal is accurate. This assignment is a great way to begin the class, especially for undergraduates who come to a business ethics class with little, if any, work experience. You can demonstrate to them how much their beliefs and attitudes may be influenced by the media. Some suggested films: Promised Land Arbitrage Something Ventured The Company Men The Devil Wears Prada Inside Job The Social Network Too Big to Fail Wal-Mart: The High Cost of Low Price Shattered Glass A Civil Action Office Space Boiler Room Class Action Michael Clayton The International Up in the Air Capitalism: A Love Story Sicko The Constant Gardener The Corporation Crash Disclosure Enron: The Smartest Guys in the Room The Firm Glengarry Glenross The Insider Jerry Maguire Norma Rae North Country Philadelphia Quiz Show Roger & Me Syriana Wall Street Working Girl Assignment #2 – Interview Someone You Respect This assignment is actually a way for students to pay a huge compliment to someone they admire and it gives them plenty to think about if they interview someone who has high standards. In our experience, many students select a parent, grandparent, or manager to interview. Instructions: • Select someone who you respect and admire. Choose an adult whom you believe has high personal standards. The interview should be approximately 15 – 30 minutes in length. • Ask the following questions or questions you select for the interview: ○ How important do you think integrity is on a scale of 1 to 10 (1 being not important; 10 being vital)? Why? ○ Who had the most important influence on the formation of your ethical character? ○ Describe a situation that you feel really tested your integrity. What are you glad you did? Is there anything you wish you had done differently? ○ In your experience, what factors can make it difficult for people to make ethical decisions? ○ How important do you think it is for someone to be vocal or open about his or her personal standards? • Write a two-three page paper about the interview. Make sure you include the following information about the person you interview: ○ Name (or an alias if you wish the person to be anonymous) ○ Relationship to you ○ Age group (e.g., 20s, or 50s, etc.) ○ How long have you known this person? ○ Why did you choose this person to interview? Additional Resources 1. Frontline on PBS Frontline has produced a number of mostly one-hour programs on the financial crisis that are excellent for use in class. A real plus is that most of them are free and can be viewed in their entirety on the Frontline website – click “Watch Video Online”: http://www.pbs.org/wgbh/pages/frontline/ Among the fascinating programs are: On the Financial Crisis: • The Retirement Gamble • The Untouchables • What Happened to the American Dream? • The Madoff Affair • The Warning • The Card Game • Inside the Meltdown • Breaking the Bank Other Programs on Ethics in General: • Poisoned Waters • Sick Around America • Black Money • The Medicated Child • A Dangerous Business Revisited 2. This American Life on National Public Radio No one tells as story as well as This American Life and there are many wonderful programs that can be assigned or listened to in class. Their website is at: http://www.thisamericanlife.org/radio-archives Among the best stories are: • Inside Job (2010 Archive – about the financial crisis and how one Chicago hedge fund made hundreds of millions of dollars for itself while making the financial crisis worse for the rest of us) • A Giant Pool of Money (2008 Archive – about the financial crisis and what caused it) • Another Frightening Show About the Economy (2008 Archive – also about the financial crisis) • NUMMI (2010 Archive – about a GM plant that could have saved GM if they had known what to do with it) • Getting Away With It (2012 Archive – about people who break the rules and try to justify their behavior) • Loopholes (2012 Archive – about people who act on technicalities in the face of tough regulations) • Take the Money and Run for Office (2012 Archive – about the deals that are made in back rooms by lobbyists and politicians) • Game Changer (2011 Archive – about fracking controversies in Pennsylvania) • There are many more shows on This American Life that explore business and personal ethics and you can easily explore them by looking through their archives. 3. Video: American Dream This is a1991 documentary film about the 1986 labor dispute between Hormel Company and Hormel's union workers. Hormel lowered employee wages and simultaneously reported $29 million in annual profit. 4. American Apparel Website (www.americanapparel.net) This is a provocative website and organization. American Apparel manufactures clothing in Los Angeles and prides itself on making profits but also treating its workers in a very humane way – and it introduces people to workers on the website. The products clearly appeal to youth – the photo collections are sexy and suggestive. That said, the website can make for some interesting discussions in class. 5. Guest Speakers: Convicted White-Collar Criminals Some people feel it is controversial to invite in a guest speaker who has served time for a white-collar crime. However, the authors’ experience in doing that has been positive. While some people feel strongly that we should not be “rewarding” ex-cons by paying them to speak to a class, we feel that it can be an excellent teaching device. In our experience, ex-cons can deliver a powerful message to students about crime if they are contrite and accept responsibility for their behavior. We have found that they generally deliver the following messages: • Ethical decision-making is a slippery slope. • Prisons – even the good ones – are no fun. In fact, they are just awful. • The effect of the whole “trial, conviction, incarceration, publicity” thing takes a terrible toll on the criminal’s family and can, in many cases, destroy family relationships. • It’s extremely difficult to get any kind of a job once you have been incarcerated. • They have paid a debt to society and they continue to pay that debt. It does not end when they are released from prison. The challenge is finding an ex-con who is contrite, professional, and is someone with whom students can identify. We can recommend Aaron Beam, former co-founder and CFO at Health South who served a short time in prison for his part in the accounting fraud. He is a good speaker and students react well to him. You can contact Aaron via his website (www.aaronbeam.net). Another possibility is Mark Whitacre, the whistleblower from the ADM price fixing case (and about whom the movie, The Informant, was made. He ended up in prison for years for fraud. His is a complicated but fascinating story. You can contact Mark via his website http://www.markwhitacre.com/adm.html. Finally, another possibility is Justin Paperny who exited federal prison in 2009 for his actions as a stockbroker with a prestigious firm in Los Angeles. According to Walt Pavlo (who used to speak for us but has now gotten on with his life), Justin is the type of person who admits his shortcomings and has learned from them. According to Walt, Justin is well spoken, humble and tells his story in a straightforward manner. Justin has a degree from the University of Southern California and was also on the baseball team at USC, appearing in the College World Series. Walt has transferred the website and the Etika business to Justin who will now carry on the work of teaching from mistakes that send too many of our business leaders to prison. For more information you can visit www.EtikaLLC.com or email Justin directly at [email protected]. We recommend that you get references and check with other business ethics professors before inviting any untried speaker. We have found some speakers to be a bit too slick for our taste. You are giving these speakers credibility by inviting them so caution is definitely in order. On the other hand, this kind of event can be a highlight of a semester. Chapter 2 Deciding What’s Right: A Prescriptive Approach Contents: (Please note: the Instructor Guide for every chapter will follow this structure.) 1. Chapter Outline 2. Teaching Notes 3. In-Class Exercises 4. Homework Assignments 5. Additional Resources Chapter Outline I Introduction II Ethical Dilemmas A. The Layoff III Prescriptive Approaches to Ethical Decision Making in Business A. Focus on Consequences (Consequentialist Theories) B. Focus on Duties, Obligations, and Principles (Deontological Theories) C. Focus on Integrity (Virtue Ethics) IV Eight Steps to Sound Ethical Decision Making in Business A. Step One: Gather the Facts B. Step Two: Define the Ethical Issues C. Step Three: Identify the Affected Parties (the Stakeholders) D. Step Four: Identify the Consequences E. Step Five: Identify the Obligations F. Step Six: Consider Your Character and Integrity G. Step Seven: Think Creatively about Potential Actions H. Step Eight: Check Your Gut V Practical Preventive Medicine A. Doing Your Homework B. When You’re Asked to Make a Snap Decision VI Conclusion VII Discussion Questions VIII Exercise: Clarifying Your Values IX: Case: Pinto Fires Teaching Notes – Discussion Questions 1. If you had to choose just one of the philosophical approaches discussed in this chapter to guide your decision making, which would you choose? Why? Or, if you had to rank them from most to least helpful, how would you rank them? Probes to Stimulate Discussion • "Think about your own ethical decision making. Do you already use any or all of these approaches? Separately or in combination?" • "Consider looking into your religious background for guidance. For example, most religions teach some form of the golden rule." 2. Some of the steps in the 8-step model might suggest very different courses of action for resolving your dilemma. How would you choose among these distinct courses of action? Why? Instructor: This question asks the student to think about situations where different approaches lead to different decisions and to begin to consider how to make these tough choices. Probes to Stimulate Discussion • “Is there one principle or obligation that is most important to you personally – that would overwhelm other principles or obligations? 3. Think about a situation where your values have been in conflict. How have you resolved those conflicts? Now that you have studied the ethical decision-making frameworks in this chapter, what should you have done? Instructor: You may have to help students to identify ethical dilemmas they've faced. An ethical dilemma is defined here as a situation where two or more values are in conflict - for example, truth and loyalty as exemplified in the layoff vignette at the beginning of the chapter. Students can probably identify a similar truth vs. loyalty vignette from their own experience. For example, should I turn in a coworker who is stealing from our employer? How about lying to a policeman to protect a friend who was speeding? 4. Think about an ethical dilemma situation that you've faced. Apply the eight steps recommended in this chapter. Does it change your thinking about the situation? Would it change your action? Instructor: You may want to select one case from those offered up by students during class. Examine the facts of the case and then ask the students to use the 8-step model to evaluate the case. What should they do? Are there any indications? 5. Some corporations and other organizations have designed ethical decision-making tests that incorporate some of the principles and systems described in this chapter. For example, Carl Skooglund, former Vice President and Ethics Director at Texas Instruments (retired), outlined the Ethics Quick Test recommended for use by Texas Instrument employees: • Is the action legal? • Does it comply with your best understanding of our values and principles? • If you do it, will you feel bad? • How will it look in the newspaper? • If you know it's wrong, don't do it, Period! • If you're not sure, ask. • Keep asking until you get an answer. Think about this list in terms of the decision-making guides discussed in the chapter. Which ones are being used here? Which are not? What recommendations, if any, would you make to alter this list? If you had to make up a list for your company, what would be on it? Why? • Is the action legal? (deontological - duty to obey the law) • Does it comply with your best understanding of our values and principles? (virtue ethics - the TI community has created values and principles it expects community members to follow) • If you do it, will you feel bad? (the check your gut approach) • How will it look in the newspaper? (disclosure rule - the New York Times test) • (Does it matter which media outlet you choose?) Should we think about social media outlets now? Which ones? • If you know it's wrong, don't do it, Period! • If you're not sure, ask. (community standards) • Keep asking until you get an answer. (community standards, again) Do the same with the Rotary International Four-Way Test. • Is it the truth? (deontological) • Is it fair to all concerned? (deontological) • Will it build good will and better relationships? (consequentialist) • Will it be beneficial to all concerned? (consequentialist) The Seneca (one of the tribes of the Iroquois Nation) people's guidelines for self-discipline also include these questions: • Am I happy in what I'm doing? (consequentialist, but limited focus only on consequences for me - consequentialism requires one to think about consequences for society) • Is what I'm doing adding to the confusion? (consequentialist) • What am I doing to bring about peace and contentment? (consequentialist) • How will I be remembered when I am gone? (virtue ethics) Could they serve as guides for ethical decision making in business? Why or why not? 6. The last question leads us to a useful exercise. If you had to write your own epitaph, what would it say? How would you like to be remembered? What kind of life do you hope to lead? Instructor: Discussion of this question usually leads to comments about the importance of people, relationships, reputation, etc. rather than how much money or how many material possessions one has acquired. People who are given a short time to live often rethink how they are going to spend their time because they want to do some good in the world before they leave it. 7. Albert Schweitzer (philosopher and mission doctor) said “Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.” What do you think? How does this relate to the prescriptive approaches discussed in the chapter? Instructor: This question seems most related to virtue ethics and the motivation to develop personal character as the basis for a good and happy life. 8. What do you think of the proposed Hippocratic Oath for managers? Probes to Stimulate Discussion: • Do you think managers would comply with such an oath? Is it realistic? • What would you add to this, if anything? • Compare this to the MBA Oath in Chapter 1. Are they aligned? Are students thinking about this differently than managers? Note: We’re not generally inclined to recommend Wikipedia as a source, but in this case, one of the authors of the oath, recommends the article. It includes additional reading and resources. http://en.wikipedia.org/wiki/Mba_oath 9. What limitations, if any, can you think of to the prescriptions provided in this chapter? Can you think of reasons why they might not work? Instructor: This question is a set-up for the next chapter. Ask students to think about the list of eight steps very carefully. Try to actually follow through on the steps. How difficult or easy is it? Students should begin to see that there are many practical obstacles (see chapter 5 for more details). Don’t get into the details here, but help students to recognize that the normative approaches do have practical limitations that they will be learning more about later. 10. If you were to design an ethical fitness program for yourself, what would you include? Probes to Stimulate Discussion: • How would your personal values fit into an ethical fitness program? • Who would you talk to for advice? • Would you do research when designing such a program? What kind? Where? • What elements would be important to such an effort? • What is the appropriate reaction when you fail to live up to your own standards? Note: The idea here is that we are all works in progress, and that includes our ethics. So, although it’s important to set high standards and do everything we can to live up to them, making mistakes is part of life and should be accepted as such. One should resolve to learn from the mistakes of oneself and others and to keep on working at improving. Practice makes perfect. In-Class Exercises Exercise #1: Pinto Fires Case by Dennis A. Gioia Note to Instructor: The Pinto Fires case should be discussed in two parts. The first discussion, associated with this chapter, will be a more or less "rational" discussion based upon the approaches and steps presented in this chapter. The next chapter provides an opportunity to question further the recall coordinator's actions in light of what we know about human information processing. Case-based Questions Put yourself in the role of the recall coordinator for Ford Motor Co. It's 1973 and a relatively small number of field reports have been coming in about rear-end collisions, fires, and fatalities. The decision you must make is whether to act immediately to recall the automobile or not. 1. Identify the relevant facts. • fires and deaths occurring (in 1973, it wasn't yet clear that fires were occurring because of the fuel tank design) • costs and benefits of making gas tank improvements (costs outweigh benefits by almost three times) • public's attitude toward safety at the time D "safety doesn't sell" • price consciousness of American public at the time • potential for lawsuits • Pinto met required safety standards set by federal government at the time • stiff competition over trunk space • cost to society of one individual's death = $200,725 • people implicitly accept risks when buying cars • competition with foreign small auto makers (especially Japan) • a decision culture that gives priority to high frequency, dangerous problems. 2. Identify the pertinent ethical issues/points of ethical conflict. • obligation to people who might be harmed • obligation/loyalty to the company • putting a financial value on human life • using cost-benefit analysis as a basis for decision to recall 3. Identify the relevant affected parties. • the company • people who have been or might be hurt in crashes • families of people in accidents • yourself? What will happen to you? • stockholders • government regulatory agencies • insurance companies (really important and often forgotten) 4. Identify the possible consequences of alternative courses of action. Recall • huge costs, including lost business (probably short-term) • lives saved • reputation (could be positive or negative) • professional credibility of recall coordinator (e.g., if this turns out to be a minor problem) • opportunity cost for recalling other problem vehicles Don't Recall • potential lawsuits, especially in the long term • additional lives lost • damage to corporate reputation (again, probably long-term) • substantial money saved (in the short term) 5. Identify relevant obligations. • to save lives, if possible • (But, where does that obligation end? To some extent, all automobiles can be considered to be lethal machines). • to provide families with cars at a price they can afford • to obey safety regulations • to produce a vehicle that conforms to standards of its class and the industry 6. Identify your relevant community standards that should guide you as a person of integrity. This is a tough one. What would the relevant community be here? Do you look within Ford for that relevant community? Within the auto industry? Can you look to your "profession?" It would be best to look to the broader community - the public - for guidance. You might suggest to students that they think about which community would be the toughest moral critic in this situation. Using the broader community gets the decision maker out of the insular world of Ford and is more likely to represent customers’ concerns. This also helps students to understand the importance of choosing the “right” moral community. Otherwise, one could easily rationalize an unethical decision by saying (well, everyone I know does this or would say it’s okay - see Chapter 7). 7. Check your gut. This question begins to move us into issues to be discussed in the next chapter. Think about the recall coordinator's job. Information about accidents comes in all day every day. Unless there was something very unusual about the Pinto fire reports, the recall coordinator's gut would probably be silent. 8. What will you decide? Instructor: Get the students to justify their decisions based upon the approaches discussed in the chapter. It may well boil down to a conflict between consequentialist and deontological approaches. The consequentialist may be more willing to accept the cost-benefit analysis that puts a value on human life. The deontologist is more likely to ask whether that's appropriate, fair, in line with placing value on all life. If not, the decision must be to recall. But, push students to think about how much the company should be willing to spend to save a life - a life that is at risk at some level in any vehicle. As a society, we make these decisions all the time. It's better to make them consciously than unconsciously. In-Class Exercises Exercise #1: Chapter 1 Vignette – Revisited Divide the class into teams of 4 – 5 students per team and have them consider the following case that they saw earlier in Chapter 1: “When your colleague, Bill, is out of town, you receive a call from his wife. She's having a crisis with one of their children and needs to reach Bill immediately. You offer to track him down for her and when you do, you inadvertently discover that he's vacationing with Marie, the chief investment officer of a prestigious college endowment fund that Bill manages. He tells you to keep his hotel location a secret and that he will call his wife immediately. Two hours later, his wife calls back and screams that his cell phone is off and she hasn't heard from you or him. What do you do?” Ask them one or more team(s) to look at this case from a consequentialist perspective; another team(s) from a deontological perspective, and yet another team(s) from a virtue ethics perspective. After they have discussed this for a few minutes within their teams, conduct a group discussion: • What did they decide and why? • What were the most important considerations given their framework? • What has changed, if anything, from their earlier discussion of the case? • What would they do if given the opportunity to add a fifth option (an “E” option) to this case? Many (if not most) groups will change their earlier answer. In our experience, most will now choose “the manager’s manager” because they will focus less on their personal risk (of losing their job or a good relationship with the boss) and more on concern for the child, the husband’s responsibility to his family and to the firm, etc. We have found that this exercise really helps students to understand that these frameworks do lead to different ways of thinking, and that they can be extremely useful when combined. Exercise #2: A Values Exercise (that can be tied to the deontological framework) CLARIFYING YOUR VALUES If you wish to be better prepared to make tough ethical decisions at work or elsewhere in your life, it can be extremely helpful to clarify your personal ethical values before they’re seriously challenged. Following is a selected list of values (in alphabetical order). Feel free to add one or more if you have a deeply held value that is not represented on this list (it is not meant to be an exhaustive list). In priority order (with 1 being the most important value), list between 3 and 6 values that are most important to you personally in making decisions. That’s the easy part. Next, think seriously about what happens when two or more of these values conflict. For example, what happens if you value both honesty and financial success and they come into conflict? Are you willing to forego financial success in order to be completely honest with customers or suppliers? Next, if you’re working, think about the values of your organization and how those are prioritized. Are there serious conflicts between your personal values and the organization’s values? Finally, list those values that you would choose to serve as the basis for business dealings in an ideal society. Be prepared to discuss.
Action orientation Altruism Authority Compassion Competence Conformity Creativity Customer Satisfaction Diversity Equality Excitement Experimentation Fairness/Justice Flexibility/adaptability Freedom Harmony Helpfulness Honesty/Integrity Honor Humility Initiative Innovation Moderation Novelty Obedience Order Power Promise-keeping Respect Risk-taking Security Self-discipline Success Status Teamwork Tradition Wealth (personal or shareholder?) Winning
This exercise can be used with students at various levels. First, ask students to identify the values that are most important to them personally. Next, ask students to identify the values that are most important to the organizations where they have worked. Then have students compare the two lists. • Are the lists different? • Does it matter that they are different? • What might happen if someone works for an organization with values that are very different from the individual’s personal values? • What might happen if the individual’s values and the organization’s values are aligned? Exercise #3: Another Short Case for Class Discussion Whenever you see a short case in the text, you can use it as an opportunity to launch a class discussion. Divide the students into teams of 3 – 5 students per team. Give them 3 – 5 minutes to discuss this in their teams and then have them report out. Who are the stakeholders? What is the ethical issue? What would we inclined to do if we looked at this through a consequentialist lens? A deontological lens? A virtue ethics lens? As a counselor in an outplacement firm, you’ve been working with Irwin for six months to find him a new position. During that time, he has completed extensive assessment work to determine if he’s in an appropriate profession or if he might benefit from a career change. The results of the assessment indicate that Irwin has low self-esteem, probably could benefit from psychotherapy, and is most likely ill-suited for his current profession. Irwin has been actively interviewing for a position that’s very similar to two others he has held and lost. He desperately wants and needs this job. The company where he is interviewing happens to be one of your most important clients. You receive a call from the head of human resources at the company, who tells you that Irwin suggested she call you for information about his abilities, interests, and personality style as measured by the assessment process. She also asks you for a reference for Irwin. Since he has, in effect asked that you share information with this woman, is it okay for you to give her an honest assessment of Irwin? What are your obligations to Irwin, who is your client in this case? Is there a way for you to be honest, yet not hurt Irwin’s changes to obtain this job? Or is that important? What will you do? You have obligations to the firms that are your clients as well as to the individuals who are searching for work. If you provide an assessment of Irwin, you have an obligation to be honest with your client about Irwin’s abilities, interests, and personality style. You also have an obligation to be honest with Irwin about your assessment. Irwin doesn’t seem to know that you are likely to provide a negative assessment. If he did, he wouldn’t have provided your name as a reference. This is one of those cases where you probably know what to do (be honest with all parties), but it’s hard to actually do it. You need to have a frank discussion with Irwin about his situation and counsel him about the types of jobs for which you could provide him with a positive reference. This would be a good case for role playing. Have students role play the roles of the counselor and Irwin. What would the counselor say? How would Irwin likely react? Exercise #4 Here is a decision that demonstrates the conflict between consequentialist and deontological thinking. At Penn State University, the newly appointed President (after the child sexual abuse scandal in 2011 involving a former football defensive coach) had to make a really tough decision. He contends (and we believe him) that the NCAA threatened to levy the “Death Penalty” against Penn State football. You can read about the last time that was done. (Southern Methodist University in the 1980s). To avoid this fate, the President agreed to accept a series of sanctions that included a $60 million fine, limits on football scholarships for several years, and no post-season play for the football team for several years. Alumni, students, and other observers were angry and incredulous. The NCAA had conducted no investigation of its own. Penn State had violated no NCAA rules and had one of the best reputations in the country for graduating athletes. The school also had NEVER had an NCAA violation. So, these observers were angry – why? Because they saw the sanctions as completely unfair (a deontological perspective). There had been no due process. And, they were angry with the President for “caving” to the NCAA. They wanted him to fight, a process that would likely have taken years. But, our analysis suggests that the President made the right decision from a consequentialist perspective. The list of stakeholders is huge. Penn State is in a college town that depends heavily on football weekends to generate business for restaurants, hotels, and Penn State paraphernalia shops. All would have been at risk. Perhaps more importantly, every other sport is financially supported by the football program. Hundreds of student athletes would have been affected – their programs likely decimated or ended. The list goes on. So, our assessment is that accepting the sanctions allowed the football team to play (and they have actually had decent seasons doing so). And, because Penn State has been so cooperative, some of the sanctions have been reduced and others may be soon (this was written in December 2013). So, this is a great example of how the deontological and consequentialist approaches will lead to very different decisions, an example you may want to use in class. Homework Assignments: Assignment #1 – More on the Ford Pinto Fires Case 1. Research Assignment Regarding the case, students could be assigned to conduct library research on the Pinto case, in part to develop sensitivity regarding how the issue was perceived at the time. The same or different students could be assigned to conduct research on other recent product safety issues and they could compare them. (Toyota’s sudden acceleration problem would be perfect for this purpose.) 2. An Ethical Decision-Making Guide Assignment We have used an expanded written assignment based upon the first discussion question. Ask students to come up with an ethical decision-making guide for themselves - standards of conduct that they can live by; a guide that will help them recognize and eliminate unethical options and select the best ethical response. It can be based upon approaches learned in the chapter (consequentialist, deontological, virtue) or others they identify based on role models (parents, teachers, coaches, religious leaders, supervisors, etc.). Most of all, it should be personally meaningful to them and something they think they can actually use in the future. Ask them to apply the guide to one or more real decisions which they have faced. It's a good idea to do this assignment in two stages. Let students take an initial crack at it. Then have them revise it based on your feedback. 3. A Values Exercise A useful exercise, based upon work by Michael Josephson, is to have students think about setting up an ideal society that is guided by a set of core values. Ask students to each come up with a list of these values on their own. Then, ask them to share their list with the class as you write them on the board. You should have a pretty long list. Then, ask the students to think about overlaps (honesty, truthfulness; fairness, justice) and ask them to try to trim the list to between five and ten values. Most groups, no matter the age or culture, will end up with a list that looks similar to the one below. Students will be surprised to know that. It means that there is a pretty strong basis for ethical understanding across organizations and cultures. It also means that we intuitively have an understanding of the deontological principles discussed in the chapter. 6 Pillars of Character (developed out of summit conference on character education, 1992, Aspen Colorado, by the Josephson Institute). 1. Trustworthiness 2. Respect 3. Responsibility 4. Fairness 5. Caring 6. Citizenship For more information on Josephson’s Institute, check the website: www.josephsoninstitute.org Additional Resources 1. More on Philosophy: For those instructors who would like a good, basic book on ethical theory, we recommend, Rachels, J. 1986. The elements of moral philosophy. Philadelphia: Temple U. Press. It could even be used as a supplementary text for those who wish to spend additional time on a more traditional approach to normative ethical theory. 2. More on Virtue Ethics To stimulate discussion about virtue ethics, and the role of professional codes, we use the powerful 60 Minutes video about the Alton Logan case which is discussed in the chapter. Somehow reading about it just doesn’t have the impact of hearing from the man who has spent more than two decades of his life in prison and from the lawyers who knew he was innocent. You can show it in class or have students watch it online for subsequent discussion in class. They are inevitably moved by it. The video is called The 26 Year Secret. http://www.cbsnews.com/news/26-year-secret-kept-innocent-man-in-prison/ 3. More on the Pinto Fires Case Additional references for background on the Pinto Fires case include: • Schwartz, G.T. 1991. The Myth of the Ford Pinto Case, Rutgers Law Review, 43: 1013. • Dowie, M. 1977. Pinto Madness. Mother Jones, Sept-October. It is useful to bring the Pinto Fires issue up to date with current events such as the story of the GM truck with side-mounted gasoline tanks. These trucks, built between 1973 and 1987 were vulnerable to rupture in a collision. Like the Pinto, GM's trucks did meet federal safety standards; the overall safety of GM trucks equaled that of other large pickups and exceeded that of most automobiles. Also, recall that in 1993, GM disputed an NBC TV investigative report on the trucks, calling into question NBC's journalistic ethics. NBC apologized publicly. Another recent example of product safety and an auto manufacturer involves Toyota. The case is featured in Chapter 10. There are also good videos that describe the problem and the recall: do a Google search for “Toyota recall.” Another recent product safety recall issue is Guidant’s failure to recall potentially fatal heart devices with electrical defects that have led to seven deaths. The company made a decision to not publicize problems, not to recall, and not to offer replacement devices. The company said it was concerned that replacement presented greater risk than leaving current devices implanted (cost-benefit analysis?) After Guidant learned of the problem, it even sold flawed units out of inventory! Over 100 cases have been filed since last year when 100,000 devices were recalled and the company’s market share has plummeted. Current market share in heart device market 24 percent down from 35 percent. Source: NY Times February 28, 2006 Yet another example is the off-market sale of Norian for use as bone cement in spinal surgeries. Norian’s manufacturer, Synthese, was specifically warned about this, sold it anyway, and three patients died as a result. This example is featured in a case at the end of Chapter 5. Reference: John Roth, FDA Voice And perhaps the most outrageous product safety case involves New England Compounding Center, which produced steroid injections in a non-sterile environment. This resulted in mold being introduced into the steroid shots, which were injected into hundreds of patients. Fifty patients died and more than 400 have been stricken with debilitating fungus infections including spinal meningitis. References: ABC News Nov 8, 2012 and March 14, 2013 References: • Lavin, D. & Pearl, D. 1994. GM may face pickup recall of $1.2 billion. Wall Street Journal, October 18, p. A3, column 1. • Samuelson, R. 1994. The regulatory juggernaut. Newsweek. November 7, p. 43. (Samuelson criticizes the government for its finding and for the proliferation of costly regulations). • Roth, J., 2013, When Conduct Becomes a Crime, FDA Voice, http://blogs.fda.gov/fdavoice/index.php/2013/06/when-conduct-becomes-a-crime/ • Lupkin, S. 2013, Compounding Pharmacists Await Changes After SpInal Meningitis Scandal, http://abcnews.go.com/Health/compounding-pharmacists-face-fungal-meningitis-outbreak/story?id=18718941 • Lupkin, S. 2012, Fungal Meningitis: Anatomy of an Outbreak, http://abcnews.go.com/Health/fungal-meningitis-anatomy-outbreak/story?id=17667058 • Even more recent events include the Ford/Firestone controversy, current discussions about SUV rollovers, etc. • You can also have an interesting discussion about valuing a human life and how decisions are being paid to compensate Sept. 11 victims’ families. See the following Fortune magazine article: Varchaver, N. 2002. What’s a life worth? Fortune, Sept. 16, 120-128. Instructor Manual for Managing Business Ethics: Straight Talk about How to Do It Right Linda K. Trevino, Katherine A. Nelson 9781118582671
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