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INTRODUCTION
"Whenever you do a thing, act as if all
the world were watching."
Thomas Jefferson
Will you help create a moral code of business ethics based on honesty,
integrity, and quality?
This is about changing the world! About creating a climate where businesses
are expected to behave ethically, and where executives who try to drag
their companies into the unethical swamplands find that nobody's willing to
carry out their orders.
I believe that if I can get 25,000 business leaders25,000 people to make
a commitment to spread the ideas in Principled Profit: Marketing That Puts
People first, that we can change the culture of business. Following the ideas
expressed in the book The Tipping Point, and the story of the 100th
Monkey, I feel, deep in my heart, that once a critical mass embraces the
idea that high ethical standards are not only possible, but actually more
profitable, society will change.
Amazing
things
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can
happen
when
all
stakeholders
(employees,
Line employees, managers, and even CEOs need support to show that
ethical principles will help their businesses succeed, and that they
won't be penalized by the marketplace for taking an ethical stand.
All of these struggles started with a few people, but spiralled outward to
become an unstoppable movement for justice once enough people started to
believe and to act. Ordinary people in Montgomery, in Gdansk, in Soweto, in
so many other places, decided that things had to changeand they changed!
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Ethics of production:
This area of business ethics deals with the duties of a company to ensure
that products and production processes do not cause harm. Some of the
more acute dilemmas in this area arise out of the fact that there is usually
a degree of danger in any product or production process and it is difficult
to define a degree of permissibility, or the degree of permissibility may
depend on the changing state of preventative technologies or changing social
perceptions of acceptable risk.
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Examples include:
Stories:
The most important business ethics story of 2004 is about what did not
happen. As we end this year, with our diverse cultural celebrations of
redemption and hope, it is worthwhile to note the absence of this event.
But before I tell you what didn't happen, let's look at what did.
The main business ethics stories of 2004 were further chapters of the
financial frauds that ended the 1990s. Wealth was being created at
incredible rate. Even the staid Alan Greenspan thought we were entering a
new phase of economics. For the first time in history, we could
communicate instantly and cheaply to every country in the world.
However, the new business models and the technology that made our
exuberance possible created expectations that fuelled a speculative bubble.
When it burst, tens of millions of stockholders, suppliers and employees felt
the pain. Dickens' description of the end of the 18th century fits well: It
was the best of times, it was the worst times. Let's look at four of these
chapters.
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July on 11 counts of securities and wire fraud. Why did it take three years
to bring these indictments? Cynics cite Enron's connections to President
Bush and the energy industry. Accountants and finance professionals argue
that the financial schemes constructed by CFO Andrew Fastow were so
complicated that it took this long for the government to build a winning
case. Whatever the reason for the delay, everyone expects Messrs.
Skilling and Lay to fight these indictments with all the resources at their
disposal, as is their right. But, should they?
auditors are
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corporate
fraud
have
stepped
forward
to
acknowledge
their
American
forgiveness;
business
billions
of dollars.
am not asking
for
influencing hiring
and
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reasons;
issuing
phony
most--would
answer
"yes"
to
both
these
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The idea of this article is that business and ethics are not contradictory.
Indeed, good ethics is synonymous with good management. Two principles
based on ethical theory are presented that give ethical purpose to
management while at the same time making managers more effective. The
perception that business and ethics are contradictory is based on a
generally accepted view of what managers are supposed to do and, thus,
how they are supposed to act. We begin by examining that view.
to
of the society, both those embodied in law and those embodied in ethical
custom.
In a similar vein are Albert Carr's comments "Is Business Bluffing Ethical?"
(1968):[A]s long as a company does not transgress the rules of the game
set by law, it has the legal right to shape its strategy without reference to
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anything but its profits. If it takes a long-term view of its profits, it will
preserve amicable relations, so far as possible, with those with whom it
deals. A wise businessman will not seek advantage to the point where he
generates dangerous hostility among employees, competitors, customers,
government, or the public at large.
These two statements define the manager's role on the basis of two
principles:
* Profit maximization is the exclusive goal of business management.
* The expectations of others (as reflected in law, ethical custom and
potentially hostile reactions) serve as constraints on a manager's ability to
achieve the exclusive goal of profit.
It is from this traditional view of the managerial role that people conclude
that business ethics is an oxymoron. Business is seen to encompass the
pursuit of self-interest, and ethics is recognized as involving consideration
of others. Concern for self and concern for others clash; hence, business
and ethics clash.
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maximization.
However,
participants
in
business
activities
are
interdependent on each other for success. They need to cooperate with one
another to achieve their objectives. For example, a company cannot succeed
without the help of its employers, suppliers, and customers. Managers
cannot succeed without the help of superiors and subordinates.
Situations of interdependence are referred to as non-zero-sum games. A
zero-sum game is one in which there must be a winner and a loser. In nonzero-sum games, however, there can be a winner and a loser (win-lose),
two losers (lose-lose), or two winners (win-win).
Certainly, most managers recognize the existence of interdependence and
create
win-win
situations
daily.
For
instance,
most
managers
don't
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others are seen as constraints, they are apt to be seen as adversaries with
whom one should compete rather than cooperate.
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todays
highly
competitive,
performance-driven
business
climate,
regulations are not enough; professional ethics codes are not enough; the
old model of business ethics is not enough.
According to a 2003 survey of corporate directors and general counsel
conducted by the National Association of Corporate Directors and the
American Corporate Counsel Association, the two groups overwhelmingly
agree
that
the
single
measure
that
would
most
improve
corporate
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problems that can carry some serious repercussions; For example the case
of the failed computer chip at Company X. When both the employee and
company are found at fault, the question arises of how extensive should the
repercussions be? Is the company as a whole liable or do you look into
individual employees within that company? From an ethical perspective one
would have to look at the available information of both the employees and
their superiors along with the role of others in the situation. Next you
would have to analyze the final outcome from a corporate perspective and
then examine the corporate responsibility as a whole in order to find a
resolution for cases such as this. The first mitigating factor involved in the
Company X case is the uncertainty, on the part of the employees, on their
duties that they were assigned. It is possible that during the testing
procedure, an employee couldn't distinguish between the parts they were to
test under government standards and commercial standards. In some cases
they might have even been misinformed on the final product that they
tested. In fact, ignorance on the part of the employees would fully excuse
them from any moral responsibility for any damage that may result from
their work. Whether it is decided that an employee is fully excused, or is
given some moral responsibility, would have to be looked at on an individual
basis. The second mitigating factor is one of threats that an employee
might suffer if they do not follow through with their assignment. After the
bogus testing was completed in the Company X labs, the documentation
department also had to falsify documents stating that the parts had more
than met the governments testing standards. From a legal and ethical
standpoint, both the testers and the writers of the reports were merely
acting as agents on direct orders from upper management. The writers of
the reports were well aware of the situation yet they acted in this manner
on the instruction of a supervisor. Acting in an ethical manner becomes a
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should have been clear on their employment duties and aware of which parts
were intended for government use. Uncertainty is not an excuse for moral
responsibility in the case of the workers. Also, the fact that some
employees failed to act in an ethical manner gives even more moral
responsibility to that employee. While some are definitely more morally
responsible than others, every employee has to carry some burden of weight
in this case. In fact, when the government reached a final resolution, they
decided to further impose repercussions and certain employees of Company
X were banned from future work in any government office (Velazquez, 54).
Looking at the case from the standpoint of Company X, the outcome was
favourable considering alternate steps in which the government could have
taken. As explained before, it is ideal for a company to be able to conduct
its own investigation as well as its own punishment. After all, it would be
best for a company to determine what specific departments are responsible
rather than having a court of law trying to decide which employee is to be
blamed. Yet, since there were ethical issues of dishonesty and secrecy
involved, Company X should have conducted a thorough analysis of their
employees as well as their own practices. It is through such efforts that a
corporation can raise the ethical standard of everyone in the organization.
This case brings into light the whole issue of corporate responsibility. The
two sides that must ultimately be balanced are the self interests of the
company, with main goal of maximum profit, and the impacts that a
corporation can cause on society (Sawyer, 78). To further strengthen this
need, one could argue that there are very few business decisions that do
not have an affect on society in one way or another. In fact, with the vast
number of growing corporations, society is being affected on various fronts;
everything from water contamination to air bag safety is becoming a major
concern. Every decision that a business makes is gauged by the financial
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can
have
outweighs
their
bottom
line.
In
other
words,
corporations have to start moving away from the thought of instant profit
and start realizing both the long term effects and benefits. These long
term benefits can include a stronger sense of ethics in the work force as
well as a better overall example to society. In conclusion, I agree with the
use of mitigating factors in determining moral responsibility. A company, as
defined by law, is only a name on a piece of paper. The company acts and
conducts itself according to the employees that work for it. I use the word
employee because in ethical thinking there should be no distinction of rank
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within a company. There are times when executives can be held directly
responsible and at the same time, there are cases where employees are
acting unethically without the executives knowing. Neither title of executive
or employee is always morally perfect. Therefore, when a company has
acted irresponsibly, its employees must be held liable in a proportionate
amount. As for the future of ethics in business I would speculate that if
employees started to think more in long term benefits and profits, many of
the ethical dilemmas that we face today would be greatly reduced. As
mentioned
before,
businesses
today
uses
the
measuring
stick
of
Cited
Pave,
Moses.
"Corporate
Responsibility
and
Financial
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TOP 10 MISTAKES:
Top 10 Mistakes that Organizations Make in Developing Global Ethics
Programs
1) Lacking consensus on the objectives for globalization
2) Not integrating international personnel into the development process
3) Discounting the importance of promoting the program as a competitive
advantage
4) Basing company policies on legal requirements in the domestic market
5) Not establishing ethics offices or resources in international locations
6)
Appointing
headquarters
staff
or
expatriates
(i.e.,
non-
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Fer
tility Clinic Errors:
This one's got everything it takes to soak up public attention: race,
healthcare, and paternity. It's like a perfect storm. Add in the word
"lawsuit"
and
you've
got
everything
good
scandal
needs.
The story is about a couple suing a New York fertility clinic for a sperm
mix up that resulted in a baby racially unlike its supposed parents.
As one faithful reader of this bloc asked, "Is this a business ethics issue,
or
bioethics
issue,
or
are
the
parents
just
being
jerks?"
Here's the story as reported by one NBC affiliate: Fertility Clinic Sued
over Too-Dark Baby
After they saw a baby girl they had gone to a fertility clinic to conceive,
her parents became convinced something was wrong, according to court
papers.
The girl's skin was darker than either parent's, a judge wrote in allowing
the parents to proceed with a lawsuit that claims the clinic botched the
insemination of the wife's eggs.
The title of the story obviously refers to the fact that the reason the
girl's paternity came into question in the first place is that she's darker
skinned than either parent. But the point here isn't that the clinic gave the
parents a black baby. The point is that the clinic did such sloppy work that
they gave the couple a baby that's not related to her own supposed father.
(The parents have actually tried to sue both for malpractice and for
emotional distress, etc. The court is proceeding with the former, but not
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the
latter)
Now, certain corners of the web have been awash in commentary about the
parents being jerks. And it's easy enough to sympathize with that
conclusion. It might not exactly be great for this kid to know she was at
the centre of this kind of controversy. The girl (whom the parents say they
love dearly) is too young to understand now, but she'll understand
eventually.
(Paging
Dr.
Phil...!)
But we shouldn't let that distract us from the fact that the clinic was
seriously sloppy and completely botched the job they were paid to do. They
should be held accountable. It seems unlikely that we want fertility clinics
to be the only commercial entities that still get to resort to the old
standard of "caveat emptor." Are the parents supposed to not hold the
clinic
accountable,
out
of
fear
for
this
little
girl's
dignity?
Of course, this double-bind is fodder for the folks who argue against the
COM modification of fertility services. "Tsk, tsk, parents! You wouldn't
have unseemly little binds like this, if you weren't out buying babies to
start with." I'm not saying that would be my conclusion, but this case is a
pretty good example of a few of the consequences of commercializing
repro-medicine. At very least, this stuff ought to be foreseen & dealt with
preemptively.
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The
team involved knew that they could say nothing and no one would ever know
and there would be no actual harm done.
They asked their CEO what to do, and he said: We will meet with the
hospital and take it on the chin. Well look like foolsits a silly error. The
hospital has had a lot of bad press lately and the last thing they need is
any kind of environmental error going to the press.
Up until now, the relationship with the hospital had been a great one
(representing a $0.5 million account) and admitting this mistake could
become a real thorn in Acmes side, making them look incompetent. They
could lose the account and the word of mouth publicity that would follow
would hurt future business in health care circles.
Acmes CEO decided to meet with the client, bringing along to the meeting
the whole team who had worked on the project form the most senior
person to the most junior. He revealed the error and told the client that
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thing.
Another firm may have elected to go honest route as well, but may have
been reluctant to do so with their juniors as an audience. By witnessing all
of this first hand lessons in professionalism are usually learned first hand
this was better than any training session. The juniors had a taste of what
owning the problem really means.
Acmes young workers saw first hand the meaning of ethics in action.
They saw the CEO take it on the chin rather than be anything less than
completely excellent to very high standards. They also saw that because of
this, they had probably obtained a client who will work with them (and
advocate them to others) with total trust.
Now heres another interesting question. A CEO might take the decision to
handle things this way, but would a middle manager inside a company ever
feel empowered enough to make a similar decision (absorb a significant
expense to make right an error that no-one outside the company would ever
know about?)
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Or is this kind decision, which requires guts, courage and ethics, always
kicked upstairs? Are any companies so ethical that a middle manager
wouldnt need to ask permission to do the right thing?
Within the role of issues in business ethics, image is everything. Image
issues in business ethics means a lot. It's like you're on the cover of a
business ethics magazine. Your business ethics problems reflect a great deal
on the importance of business ethics you have in your workplace. Your
physical appearance is just as important as your sales pitch. This is why you
pay homage to the mirror each morning, picking out the right outfit,
grooming, to show the world by your outward appearance that you are a
serious professional. There is no questioning the fact that physical
appearance is a critical component in how you are perceived, but what about
your ethical appearance? This is where the role of ethics in business comes
into play. The importance of business requires you to pay close attention to
it.
Make no mistake; the ethical impression you leave with others communicates
volumes about your character and the importance of business ethics you
have. People will judge you more quickly and more deeply based on your
actions rather than your clothes. No matter how clean your suit, leaving a
soiled perception of your ethics can negate whatever outward impression you
attempt to make. All it takes is one simple act or oversight to start the
ball rolling. It can cause an unfortunate chain of events that may tarnish
your reputation forever. Improving business ethics may be impossible
afterward. Perhaps you found yourself in the wrong place at the wrong
time? Maybe you're caught with your hand in the cookie jar? Or possibly
you did something truly foolish and wish you could start over. Whatever the
transgression, an indelible impression has been made and now you're trying
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A crisis of ethical perception is not only a problem for liars, cheaters, and
bad guys; it's a problem for everyone. The first line of defence with
regard to ethics issues in workplace and business is to understand that
you're not above the fray. Just because you're an honest person doesn't
mean that you won't wake up tomorrow and find yourself in full-fledged
ethical dilemma. We all have bouts of mistakes, sloppiness, miscalculation,
panic, or bad judgment. Understanding our fallibility and being ethically
cognitive of our day-to-day behaviour helps enormously. If you're lucky,
your conscience will do most of the watchful work for you. But beware that
you
don't
close
your
eyes
and
let
your
guard
down.
Another line of defence is to truly care about how others perceive your
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business ethical behaviour. At any given time, even in the most mundane and
insignificant actions of your workday, you are being judged. Think of your
co-workers as judges at an Olympic-style event holding up numbers to
evaluate your ethical performance. It's like you're in that ethics magazine
again. Your business ethics problems are there for the entire world to see.
When all is said and done, you hope to perform so that they will hold up
tens and not ones. You should care what people think and want others to
see you do the right thing because ethics important in business. You want to
be
defined
on
the
basis
of
your
good
character.
Finally, you should avoid the appearance of impropriety all costs. Just
as an attorney looks at every possible angle or potential problem, you too,
must judge your business ethics actions in the same way. Leave no stone
unturned. Cover your bases. Be transparent and open to scrutiny. Take time
with careful consideration to make sure that your ethical position appears
sound
from
every
angle.
Don't leave others to second guess you. Perception is everything, not only in
your looks but in your character. Understand the role of ethics in business.
Treasure and protect your ethical reputation like a priceless commodity.
Tomorrow, as you prepare and primp in the mirror for your best physical
appearance at work, don't forget your ethical appearance. It costs you
nothing
to
put
on,
but
costs
you
dearly
to
lose.
Ethics issues in workplace and business arenas are Global Ethics University's
specialty. Business ethics issues are such a large part of the image that
your company portrays. Business ethics problems cost you dearly if you
don't understand the importance of business ethics for sake of your image
and health of your company. Improving business ethics and raising the
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ethical bar is what a Global Ethics University course can do. You might
wonder, is ethics important to business? Yes, it is. Issues in business ethics
are vital. You can't just read about it in a business ethics magazine or read
about the most important business research of our day in some academic
journal, it is about the real issues in business ethics that your employees
face every day. Let Global Ethics University is your partner in improving
business ethics for your company today.
Workplace Ethics:
The Importance of Workplace Ethics Training
As far as workplace ethics goes, employers must do their part to make ethical
expectations clear and trust the employee to deliver. Sometimes ethics training works
and sometimes ethics training doesn't. Work place ethics shouldn't be a guessing game
if the employer has truly done all he or she can do to set employees up for ethical
success. There should not be a disconnect between the work ethics that employer has
and the work ethic of the employee. Understand that one's ethic is his or her system
of moral standards or principles that may or may not agree with the company's
professional work ethics standards. Despite the differences, promoting professional
work ethics requires the employer to do everything in his or power to set up employees
for success.
In the context of ethics in the work place employers lead the employees to ethical
success by requiring them to read the ethics manual, attend a training session, and
sign a document swearing to uphold the rules. With that done, employers sit back and
rely on the integrity, understanding, and self-discipline of each employee. This is
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where many ethics in workplace programs fall short. They demand the highest
standards of self-discipline possible yet do little to promote them in the long run.
The following four questions can be asked by both employees and employers who want
to seriously assess how well their company promotes self-discipline:
1. Are the work place ethics expectations in my organization clearly communicated?
People need to know what is expected of them. It's human nature. Some employers
cloud expectations in vague concepts to accommodate Gray areas, while others
promote distrust by controlling every aspect of the employee's existence. Clarity in
ethics training is the key. If the ethical issue is black and white, the employer must
leave no room for interpretation. If the issue relies on human judgment, the
expectation must be logical and be grounded in principle. Most people want to know
what's expected so they can get on with their job good work ethics.
2. Are the ethical expectations in the ethics training of my organization based in common
sense and reality?
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3. Does the system of dealing with ethical problems show respect and due process to
people involved?
In a nutshell, how are people treated once they are caught or accused of unethical
conduct? Our legal system operates under the assumption of innocence, in contrast to
the workplace, which operates on the assumption of guilt. Although the administration
of justice is the prerogative of the company, it must always be done with fairness and
respect for everyone involved. Using disciplinary action to punish or intimidate people
is in itself unethical and hypocritical. Employers must listen to all the facts. Discipline
is something that no one likes, but the process can work toward the good of the
organization if justice is genuinely sought and lessons are learned.
4. Is ethics a positive or negative issue in my organization?
It's no surprise that ethics is predominantly viewed in a negative light. Turning this
perception around requires a different way of thinking about what makes an
organization successful. There's more to ethics in workplace situations than just
preventing loss of assets. It's about making the company a better place to work and
conduct business. A positive ethics approach looks out for the best interests of both
the employees and the company with positive workplace ethics training. People want to
go to work every day knowing that they won't be harassed, that co-workers play by
the rules, supervisors treats them with respect, and the company will honour the
ethical principles they hold dear. A serious ethics program will attract and keep good
employees not scare them away. Try to see ethics as a vital component in building
something great. It can be framed as something that makes life better for everyone
not worse.
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It was one of the biggest bankruptcy cases in U.S. history, and many employees were
left without retirement savings while executives and higher management made a profit
(Cuplan 59). I think after reading about Enron and scandals like it we all have
wondered how could this happen? What was it that led them to believe that it was
okay to misrepresent their financial records? In the ethics community many people are
talking about these very questions and attributing unethical behaviour to personal
background, the business environment and the undergraduate business programs.
All three have their own arguments and solutions, whether it is better ethical training
or different business environments. Although it is a complex undertaking, something
must be done to improve conditions to prevent such scandals in the future. This
prevention is important as business ethics affect not only employees and undergraduate
business majors but also everyday consumers and investors.
If certain steps are taken in both the business world and the education of
business students, corporate scandals are likely to decrease noticeably.
With many different debates going on about ethical behaviour, one
argument stands out as the definitive contributor to ethical behaviour-- a
persons convictions. These personal convictions can be due to a persons
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upbringing, culture and other life experiences, but the general consensus in
the ethics community seems that this will override any sort of ethics
training or business structure. The logic to this argument is that in real life
situations with multiple pressures and responsibilities, a person is going to
perform based on the type of person they are and their personal value
system.
In a study of business students in Taiwan and American, the culture
of the student seemed to have an impact on how well they performed on
ethics reasoning tests (Venezia 204). Obviously moral values and attitudes
are going to differ between cultures. Because Taiwanese students are
taught to save face as part of their culture they are much less like likely
to behave dishonestly because of the values placed on doing your best for
the group (Venezia 200). In contrast to American culture, Taiwan has an
overriding need to blend in with a group and participate within that group
whereas in American culture the focus is on individualism and independence
(Venezia 200). The focus on the individual gain by American students often
resulted in them picking an alternative during the study that would be
beneficial to them rather than beneficial to the group (Venezia 200). In
some cases this focus led to them marking unethical behaviour as acceptable
as long as the benefits were high enough. This study supports the theory
that culture has an impact on how students respond to ethical situations.
Other studies have looked at how gender affects ethical reasoning
abilities. Female students tended to be more conservative and harsh in how
they scored each situation causing them to be less tolerant of dishonesty
(Fischer). The male students in the study tended to be more tolerant of
where the line was between ethical and unethical behaviour (Fischer). The
study offered no explanation other than females are traditionally more
empathetic than males and would look at how other people would be
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effected more so than how it would advance their careers (Fischer). This
same study also looked at how age affected each persons score, which was
also shown to be a factor: students under 21 scored the lowest and the
scores went up consistently as age increased (Fischer). In the article
Schools for Scandal the author says becoming a successful leader of men
and women in a turbulent business world requires maturity and wisdom.
These results certainly show that the experience and maturity that come
with age affect how students scored in this study. Maturity and wisdom are
something an individual has to acquire outside of their college education and
workplace instruction, so this is something every person must come to terms
with on a personal level of what they believe is acceptable. There havent
been any long term studies to see if ethics training was presented to
students of a younger age, perhaps in junior high or high school, it would
help override personal experience and age. Children are often more open to
ideas and instruction, so it is my belief that earlier introduction might make
students receive their ethical training at the college level as more of a core
value than merely as a theory or practice.
Although most people in the business and ethics community believe
personal conviction to be the overriding determining factor in ethical
behaviour, there are several credible people who believe that business
structures are almost entirely responsible for corporate scandals. In Dr.
Joseph
Castillos
article
How
Corporate
Culture
Impacts
Unethical
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and targets are set without statistically determining whether they are
beyond the capability of the existing process. Hence, employees are often
held accountable for results that cannot be achieved without distortion of
figures or they system (38). Giving employees unrealistic goals and
penalizing them for not reaching these goals is laying the groundwork for
an unhealthy climate through the use of MBO/MBR (Castillo 38).
An
example of how unrealistic goals led to scandal can be seen in the 1992
Sears Roebuck & Company auto service settlement of about $60 million in
refunds to its customers (Paine). Lynn Paine discusses this particular
instance in her article Managing for Organizational Integrity saying that
the main reason for the unethical business practices was a new set of
organizational pressures and incentives with few options for meeting their
sales legitimately, some employees judgment understandably suffered.
Even the CEO at the time, Edward Brennan, stated that the fault lay with
the managers because they created an environment in which mistakes did
occur. (Paine). Of course the danger I see in blaming business structures
and managers is that it diminishes a persons accountability for their
actions, which have already been argued to be the biggest factor in
whether a person is ethical or unethical in their behaviour.
In the coverage of the Enron scandal, MBAs and higher management
were blamed for most of the scandal (Cuplan 59). This caused the media to
start looking at the MBA certification and teachings in undergraduate
programs to try and place blame on the lack of ethics training. In Sumantra
Ghoshals
article
Bad
Management
Theories
Are
Destroying
Good
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are expecting their employees to come into the business world prepared to
deal with the pressures involved in being honest in the business environment
discussed above, then undergraduate programs need to step up and work on
the best methods for teaching their students.
Right now at Western there is a three-hour corporate governance and
ethics class specifically for business majors, but it is a primarily a webbased class. This class is not required by accounting majors, but from the
discussion above should most certainly be to make sure students are
equipped with moral reasoning tools that their employers expect. There are
more
ethics
classes
offered
at Western
under
the
philosophy
and
psychology genres but they are not required for accounting majors. To be
fair many of the upper management courses have sections dealing with
ethical
issues.
However
Dr.
Stape
observed
in
his
research
on
reasoning
in
business
graduates
from
liberal
arts
and
public
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semesters, he found the most effective method was not case studies or
context-specific instruction but rather that personal, real life discussions
and debates got students thinking and engaged in the material (143). For
example, instead of talking about Enron and analyzing where the executives
went wrong, the instructors would put students into groups and give them a
situation more applicable such as having trouble paying for their education
with ethical dilemmas along the way (Kohen 143). The students would then
debate among themselves the pros and cons of certain questionable actions
that they could take. The students who participated in this exercise
improved their scores significantly over a semester more than students who
received traditional case study instruction (Koehn 143). Dr. Earley did a
similar study with discussion-based approaches and found that results
indicate that educational interventions are capable of increasing students
moral reasoning, regardless of the specific case context or other current
event (Earley 61). It seems that whatever part undergraduate education is
failing to reach students with their ethical training is not from a lack of
effort but merely a bad approach. No long-term studies have been done to
see if the discussion based approaches carry over better to graduates in
the business world, but it seems that the personal and engaging method
seems to have a better chance of overriding past and cultural experiences.
Some universities have come up with other creative approaches such as
having an ex-con come in and talk to students about white collar crimes
(Schools for Scandal). This is an excellent approach to reach students as
I think it would bring home the gravity of the consequences they face if
they choose to behave unethically in business. As Elliot says, Business
schools arrive late in the development of our students. We cannot undo
formative influences of family, religion, pop culture, environment and
heredity on the future behaviour of our students (573). However from
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can be
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budget goals that can be met with reasonable effort and dedication. Their
compensation and bonuses should not be based on how well they did
according to unrealistic standards but on how hard they worked and what
they did with what they had to work with. Obviously the biggest motivator
in the business world is keeping ones job, so companies need to be stricter
when unethical behaviour is discovered and definitely stop promoting the
offenders. Yet another problem is that there is really no good way for
employees to report unethical business practices. Many companies have
anonymous hotlines for things such as safety violations or harassment but no
such system for other unethical behaviour like financial dishonesty. I see
this as an added addition to any business because it allows employees to
bypass their managers, who from above are very interested in making their
finances look good, and do what they think is right without fear of being
fired or hurting their careers.
Ethics is an important issue within the business community. All the
business and educational factors are ones that can be improved and
hopefully reduce scandal in the future. I think that even though personal
experience and conviction is the overall contributor to ethical behaviour,
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this does not mean we should give-up and accept another Enron. There are
specific fairly simple solutions: start ethics teaching before college, change
the ethics instruction to a more interactive and personal format, require
ethics courses as a graduation requirement, stop managing for the bottom
line, and have harsher punishments for violators of ethics in the workplace.
If these changes are made, I am confident that corporate scandals will
decrease and we will not have to see another Enron.
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is nothing in the Act that indicates how organizations should make certain
their reporting is accurate. Its like a coach teaching athletes how to win
the Olympics by admonishing them to run faster. Report well! insists the
Act, leaving the how up to the company.
(3) Its not about reporting accurately. While there may have been 50 or so
major scandals, the remaining top 1,000 companies are generally honest in
their statements. You can totally mismanage your company, but as long as
you report your terrible results accurately, you are in ethical and legal
compliance.
(4) Its not about financial control. The classic financial control techniques
were founded in the era of Scrooge & Marley, but are now inadequate in
the age of empowerment, restructuring, outsourcing, and the Internet.
So whats the real issue? Our research found that the most important
concern for investors should be corporate waste and inefficiency. You can
pick up any edition of the Journal and find a number of articles where
companies needlessly lost revenue and incurred unnecessary costs.
For example, Ford Motor took a $1 billion raw materials write-off (and lost
nearly a quarter of its market capitalization) because R&D wasnt talking to
purchasing. The U.S. government wasted millions due to government
employees purchasing among other thingslap dances! Having to honor
incorrect online air fares, paying more than retail for statewide PC
database software, fines for incorrect utility charges the list of blunders
is endless. These are affecting investors far more than the lurid reporting
scandals. What organizations need today are effective business controls!
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This is a level above traditional financial or process controls, and covers the
organization from boardroom to front-line.
There are standard early warning signs of control problems. We have
identified
six
out-of-control
incubators
that
provide
the
business
and
merger/acquisition/divestiture.
When
that
business
control
is
new
organization-wide
core
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Performance management Business control must make its way into the
organizations
policy
manual,
competency
models,
job
descriptions,
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While these activities may currently provide a competitive edge, they will
ultimately be a standard requirement. Its only a matter of time before
some analyst during a briefing or some stockholder with microphone in hand
asks about the companys status in these areas. Why invest in a company
that isnt properly under control?
Idealistically, we wish that controls of any sort were not needed and that
we could rely on human integrity, i.e., ethics. Realistically, letting
employees get into situations where they have to make ethical decisions
simply means that the controls are inadequate. The only way to stop the
haemorrhaging is to treat the true cause of the bleeding poor business
controls.
Business by example:
Imagine the employee who works loyally for the firm but sees a senior
manager engaged in fraud or some other unlawful action. If employee blows
the whistle and exposes the senior manager they may - even as the angel may lose their job. Crier opportunities may be severely dented. Turning a
blind eye is easier. It may be difficult to see anyway that anyone in
particular has been substantially hurt from the fraudulent activity.
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business
Old
choose to enjoy a good day out at the circus with captives on the lions'
menu. Friends and family label our Roman as a "party-pooper" if he had
stayed at home muttering such barbarity....is unethical".
Today - Monty Python visiting a Spanish bull-fight or bull-baiting in a local
town festival - might be disgusted. Few holiday-makers seeking the sun,
sangria and the good life would be prepared to boycott Spanish holidays.
Furthermore most Spanish people would not agree with the argument that
the obsession with frightening, mutilating and killing bulls in a public
spectacle - a centuries old local tradition which outsiders do not appreciate
- is unethical.
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