the tao of business ethics: making good decisions in a world of competing pressures a presentation...

The Tao ofThe Tao of Business Business Ethics:Ethics:

Making Good Decisions in Making Good Decisions in a World of Competing a World of Competing

PressuresPressuresA Presentation by the A Presentation by the

Human Resource InstituteHuman Resource Institute

www.HRInstitute.infowww.HRInstitute.info

The Human The Human Resource InstituteResource Institute

HRI promotes strategic thinking HRI promotes strategic thinking about the major issues affecting about the major issues affecting the management of people today the management of people today and the trends that are shaping and the trends that are shaping

the future. the future.

www.HRInstitute.infowww.HRInstitute.info

Assertion Number OneAssertion Number One

In order to understand In order to understand business ethics on a deep business ethics on a deep

level, we have to appreciate level, we have to appreciate the tensions inherent in the the tensions inherent in the

term. Ultimately, this makes term. Ultimately, this makes it easier to create the policies it easier to create the policies

and develop the corporate and develop the corporate cultures that support ethical cultures that support ethical

actions.actions.

What do these phrases have in common?

alone togetherdemanding patientdetailed summaryeducated guessgraduate student

head butt

heavy gasinstant classic

job securityjumbo shrimpplastic glasstight slacks

Oxymoron

A figure of speech by which a locution produces an effect by seeming self-contradiction –

Random House College Dictionary

Business Ethics – one of the phrases listed at

www.oxymoronlist.com

the study and evaluation of decision making by businesses the study and evaluation of decision making by businesses according to moral concepts and judgments. Ethical questions according to moral concepts and judgments. Ethical questions range from practical, narrowly defined issues, such as a range from practical, narrowly defined issues, such as a company’s obligation to be honest with its customers, to company’s obligation to be honest with its customers, to broader social and philosophical questions, such as a broader social and philosophical questions, such as a company’s responsibility to preserve the environment and company’s responsibility to preserve the environment and protect employee rights. protect employee rights. Many ethical conflictsMany ethical conflicts develop from develop from conflicts between the differing interests of company owners conflicts between the differing interests of company owners and their workers, customers, and surrounding community.and their workers, customers, and surrounding community. Managers must balance the ideal against the practical -- the Managers must balance the ideal against the practical -- the need to produce a reasonable profit for the company’s need to produce a reasonable profit for the company’s shareholders with honesty in business practices, safety in the shareholders with honesty in business practices, safety in the

workplace, and larger environmental and social issues.workplace, and larger environmental and social issues.

The Columbia Encyclopedia, Sixth Edition. 2001.The Columbia Encyclopedia, Sixth Edition. 2001.

Business EthicsBusiness Ethics

Ethical issues in business have become more complicated Ethical issues in business have become more complicated because of the global and diversified nature of many large because of the global and diversified nature of many large corporations and because of the complexity of government corporations and because of the complexity of government regulations that define the limits of criminal behaviorregulations that define the limits of criminal behavior.. For For example, multinational corporations operate in countries example, multinational corporations operate in countries where bribery, sexual harassment, racial discrimination, and where bribery, sexual harassment, racial discrimination, and lack of concern for the environment are neither illegal nor lack of concern for the environment are neither illegal nor unethical or unusual. The company must decide whether to unethical or unusual. The company must decide whether to adhere to constant ethical principles or to adjust to the local adhere to constant ethical principles or to adjust to the local rules to maximize profits. As the costs of corporate and rules to maximize profits. As the costs of corporate and white-collar crime can be high, both for society and white-collar crime can be high, both for society and individual businesses, many business and trade individual businesses, many business and trade associations have established ethical codes for companies, associations have established ethical codes for companies, managers, and employees.managers, and employees.

The Columbia Encyclopedia, Sixth Edition. 2001.The Columbia Encyclopedia, Sixth Edition. 2001.

Business Ethics (cont.)Business Ethics (cont.)

Obey the rules... …but think outside the box.

Use stock options to get execs

to act like owners…

…but don’t reward irresponsible behaviors

Some of the “Paradoxes” Facing Many Businesses Today

Be honest with your stockholders... …but try hard to keep the

stock high

Network, network, network...

Empower employees... …but monitor them carefully because

you’re legally liable for their behaviors

Win the “war for talent”... …but don’t encourage arrogance or greed

…but beware the Old Boys’ Club that can breed corruption

Treat customers well... …but try not to let customer service cut too deeply into profit margins

Treat employees like your

most important resource...

…but in the accounting process, treat

them as expenses

More “Paradoxes”

Create a more diverse workforce... …but hire people from the most

prestigious and expensive universities

Develop codes of ethics... …even if the corporate culture

mainly rewards those who “make their

numbers”

Go global ... …but maintain the cultural

values of the home office

Source: Ethics Officer Association

Top six reasons for contacting Top six reasons for contacting corporate ethics officescorporate ethics offices

74%

57%

49%

44%

41%

38%

0% 25% 50% 75% 100%

Conflict of Interest

Inappropriate Use of Resources

Incidents of Sexual or Other Types ofHarassment

Acceptance of Gifts and Gratuities

Cases of Discrimination

Issues Related to Outside Business Activities

2000 survey of 213 members representing 150 firms (average workforce = 32,400)

These Conflicting Pressures May These Conflicting Pressures May Grow More Intense in Coming YearsGrow More Intense in Coming Years

Due to the Process of Due to the Process of “Metaconvergence”“Metaconvergence”

According to futurists Alvin and Heidi Toffler, According to futurists Alvin and Heidi Toffler, metaconvergencemetaconvergence is the tightening of connections is the tightening of connections among spheres that have hitherto been more among spheres that have hitherto been more independent. In an interview with independent. In an interview with Strategy & Strategy & LeadershipLeadership magazine, Alvin Toffler stated, "The magazine, Alvin Toffler stated, "The 'infosphere' is more tightly connected to the 'infosphere' is more tightly connected to the 'technosphere,' and the 'technosphere' is more closely 'technosphere,' and the 'technosphere' is more closely connected to the 'sociosphere' or the 'powersphere' of connected to the 'sociosphere' or the 'powersphere' of society, and so on, radically multiplying the interaction society, and so on, radically multiplying the interaction among them."among them."

More on MetaconvergenceMore on Metaconvergence

"Culture, religion, politics, environment, "Culture, religion, politics, environment, ethics, are all going to interpenetrate one ethics, are all going to interpenetrate one another to an extent never before seen, another to an extent never before seen, and they will, in turn, penetrate business in and they will, in turn, penetrate business in all sorts of strange new ways," Toffler all sorts of strange new ways," Toffler claims. One result of this is that businesses claims. One result of this is that businesses may become less and less insulated from may become less and less insulated from the sort of social pressures that have the sort of social pressures that have historically been viewed as relatively historically been viewed as relatively unimportant to the bottom line.unimportant to the bottom line.

Assertion Number TwoAssertion Number Two

Among corporations, the primary Among corporations, the primary method of trying to reduce ethics method of trying to reduce ethics violations is through formalized violations is through formalized

rules, policies and written codes. rules, policies and written codes.

Source: KPMG LLP

How do firms with overseas How do firms with overseas operations address ethics among operations address ethics among

their suppliers?their suppliers?

37.5%

25.0%

25.0%

20.8%

18.8%

18.8%

18.8%

16.7%

14.6%

14.6%

37.5%

20.8%

18.8%

18.8%

16.7%

31.3%

25.0%

14.6%

12.5%

16.7%

4.2%

4.2%

4.2%

2.1%

10.4%

12.5%

6.3%

2.1%

2.1%

2.1%

0% 20% 40% 60% 80% 100%

Bribery and Corruption

Compensation

Discrimination

Working Hours

Disciplinary Procedures

Health and Safety

Environmental Impact on Host Nations

Freedom of Association/Collective Bargaining

Child Labor

Forced Labor

Ethical Matter

Address the Matter Through Formal Policy (n = 48)

Actively Monitor the Matter (n = 48)

Report the Matter to the Board (n = 48)

Source: 2000 National Business Ethics Survey

2000 survey of 1,500 public and private employees

Percentage of U.S. companies with written Percentage of U.S. companies with written ethics standards and training programs ethics standards and training programs

focused on ethicsfocused on ethics 60%

33%

79%

95%

55%

0% 25% 50% 75% 100%

Written EthicsStandards, All

Employers

Written EthicsStandards,

Government Agencies

Specific EthicsTraining

1994

2000

Source: KPMG LLP

Among companies providing ethics Among companies providing ethics training (39% of all surveyed firms), the training (39% of all surveyed firms), the

percent giving it to these groupspercent giving it to these groups48.3%

28.9%

34.1%

60.3%

55.3%

52.3%

48.3%

57.9%

56.8%

6.9%

7.9%

13.6%

0% 25% 50% 75%

Applying Ethics Codes

Making Ethical Decisions

Incorporating Ethics intoDaily Work

New EmployeesAll StaffManagers OnlyOther Workers

2000 survey of 154 U.S. and Canadian private and public firms

Source: KPMG LLP

Most common components of written Most common components of written ethics codesethics codes

73.4%

64.9%

53.2%

51.9%

36.4%

0% 25% 50% 75% 100%

Listing of Values andPrinciples

Mission Statement

Specific Rules ofConduct

Guidelines for Practice

Letter from CEO

Percent of Respondents Including Component

2000 survey of 154 U.S. and Canadian private

and public firms

Assertion Number ThreeAssertion Number Three

Written and formalized codes Written and formalized codes are necessary but, in most are necessary but, in most

cases, not sufficient. That’s cases, not sufficient. That’s because they fail to take into because they fail to take into

consideration corporate consideration corporate culture and the ethical culture and the ethical “ecosystem” in which “ecosystem” in which companies operate.companies operate.

Source: KPMG LLP2000 survey of 2,390 working adults

What do employees believe are the What do employees believe are the origins of unethical behavior?origins of unethical behavior?

73%

70%

65%

56%

50%

22%

0% 25% 50% 75% 100%

Working in Environment with Cynicism, DiminishedMorale or Indifference

Striving to Meet Schedule or Deadlines

Trying to Achieve Unrealistic Earnings Goals

Attempting to Succeed in One’s Career or Move up theLadder

Being Improperly Trained

Harboring a Desire to Steal from or Damage theOrganization

Allen Lovell’s “Ethics as a Dependent Variable in Allen Lovell’s “Ethics as a Dependent Variable in

Individual and Organizational Decision Making.”Individual and Organizational Decision Making.”

Journal of Business EthicsJournal of Business Ethics, May 2002., May 2002.

Excerpt:Excerpt:

1) “Ethical behavior was only infrequently a 1) “Ethical behavior was only infrequently a function of personal values. Rather, it function of personal values. Rather, it appeared as a dependent variable, dictated appeared as a dependent variable, dictated by externally generated pressures, but by externally generated pressures, but most notably the fear of jeopardizing one’s most notably the fear of jeopardizing one’s current or future employment prospects current or future employment prospects and the consequences of this for the and the consequences of this for the individual’s dependents.”individual’s dependents.”




Excerpt:Excerpt:

3) “The combination of loyalty to one’s 3) “The combination of loyalty to one’s organization; loyalty to managerial organization; loyalty to managerial colleagues/superiors; and fear for one’s own colleagues/superiors; and fear for one’s own position should one refuse to ‘keep one’s position should one refuse to ‘keep one’s head below the parapet,’ led in each case to head below the parapet,’ led in each case to a personal decision to ‘do nothing.’” a personal decision to ‘do nothing.’”




Excerpt:Excerpt:4) In many cases, “ethical cynicism” 4) In many cases, “ethical cynicism” (acquiescing to internal pressures and (acquiescing to internal pressures and choosing to live with questionable choosing to live with questionable behaviors) was the norm. The implications behaviors) was the norm. The implications “pose serious concerns over the “pose serious concerns over the sustainability, or least compliance, with sustainability, or least compliance, with professional codes of conduct…” professional codes of conduct…”




Excerpt:Excerpt:

5) “Much still needs to be done to improve 5) “Much still needs to be done to improve accountability and governance practices, accountability and governance practices, but more particularly, the confidence of but more particularly, the confidence of (senior) managers to allow and tolerate (senior) managers to allow and tolerate dissent.”dissent.”




Excerpt:Excerpt:

6) “Policy statements, mission statements, 6) “Policy statements, mission statements, codes of conduct and espoused statements codes of conduct and espoused statements of corporate values are little more than fluff of corporate values are little more than fluff if actual practice flies in the face of these if actual practice flies in the face of these managerial artifacts.”managerial artifacts.”

Source: Christian & Timbers

2001 review of 7,000 executive résumés

23% of executive resumes were found to 23% of executive resumes were found to contain inaccuracies. Below are the most contain inaccuracies. Below are the most

common misrepresentationscommon misrepresentations71%

64%

60%

52%

48%

44%

41%

0% 25% 50% 75% 100%

Length of Time in FormerPosition

Extent ofAccomplishments

Size of Company Managed

Partial Academic DegreeStated as a Full Degree

Salary History

Former Positions Held

Past Positions NotIncluded

Assertion FourAssertion Four

Corporate cultures are Corporate cultures are themselves deeply affected themselves deeply affected by the changing societies in by the changing societies in

which they operate.which they operate.

Formal ethics programs and policies

are part of design intended to create

ethical infrastructure. “Bad people” disregard this

structure.

Formal ethics programs and policies

are part of design intended to create

ethical infrastructure. “Bad people” disregard this

structure.

LegislationLegislation

LegislationLegislation

Value SystemsValue Systems

Value SystemsValue Systems

Organized Labor

Organized Labor

Organized Labor

Organized Labor

Business StandardsBusiness Standards

Business StandardsBusiness Standards

Mental Model for Ethics: The Corporation as a Bathysphere Pressured by Outside Forces

Mental Model for Ethics: The Corporation as a Bathysphere Pressured by Outside Forces

Mental Model for Pressures in the Late 1990s: The Corporation as a Living Cell Amid a Larger Ecology Mental Model for Pressures in the Late 1990s: The Corporation as a Living Cell Amid a Larger Ecology

Stockholder Market Expectationsas Market Rises

Stockholder Market Expectationsas Market Rises

“War for Talent”6“War for Talent”6

Political Pressure to Restrain SEC Regulation1

Political Pressure to Restrain SEC Regulation1

Changing Demographics7Changing Demographics7

Executive Actions Executive Actions

Large Increase in Stock Option Grants3

Large Increase in Stock Option Grants3

Growing Turnover Rates for Execs2

Growing Turnover Rates for Execs2

Board Pressure

Board Pressure

Accounting Practices

Accounting Practices

Full Employment4Full Employment4

White-Collar Crime5

White-Collar Crime5

New TechnologiesNew Technologies

High-Tech Investments/New Businesses

High-Tech Investments/New Businesses

Global Mergers and CompetitionGlobal Mergers and Competition

11Political Pressure to Restrain SEC RegulationPolitical Pressure to Restrain SEC Regulation - An - An example, according to the example, according to the New York TimesNew York Times, was the , was the pressure exerted from various members of Congress to pressure exerted from various members of Congress to keep the SEC from curtailing the amount of work that keep the SEC from curtailing the amount of work that reputedly independent auditors could do for their audit reputedly independent auditors could do for their audit

clients.clients.

22Growing Turnover Rates for ExecsGrowing Turnover Rates for Execs - CEOs who were - CEOs who were appointed after 1985 were three times more likely to lose appointed after 1985 were three times more likely to lose their positions than CEOs selected before 1985, their positions than CEOs selected before 1985, according to according to MIT Sloan Management ReviewMIT Sloan Management Review..

33 Large Increase in Stock OptionLarge Increase in Stock Option GrantsGrants - - By the end of By the end of the 1990s, stock options represented half of executive the 1990s, stock options represented half of executive pay, up from just a quarter in the mid-1980s, according pay, up from just a quarter in the mid-1980s, according to to WorkspanWorkspan magazine. magazine.

44Full EmploymentFull Employment - - The unemployment rate gradually The unemployment rate gradually dipped from 7.8% in June of 1992 to a low of 3.9% in dipped from 7.8% in June of 1992 to a low of 3.9% in October of 2000. Some economists consider this October of 2000. Some economists consider this virtually full employment.virtually full employment.

55 White-Collar CrimeWhite-Collar Crime - - The number of government and The number of government and private lawsuits for securities fraud and other violations private lawsuits for securities fraud and other violations more than doubled between 1997 and 2001more than doubled between 1997 and 2001

66“War for Talent”“War for Talent” - - Notion from a McKinsey and Company Notion from a McKinsey and Company report saying there’s a scarcity of top talent and report saying there’s a scarcity of top talent and companies must battle one another for it.companies must battle one another for it.

77Changing DemographicsChanging Demographics - - The U.S. population is aging, The U.S. population is aging, and legal experts say that as this occurs, the crime of and legal experts say that as this occurs, the crime of choice for perpetrators becomes fraud.choice for perpetrators becomes fraud.

Outside of CorporationsOutside of Corporations Recent Structural/Rule-Based ChangesRecent Structural/Rule-Based Changes

Sarbanes-Oxley ActSarbanes-Oxley Act Accountants will become subject to a regulatory Accountants will become subject to a regulatory framework similar to that governing the conduct of framework similar to that governing the conduct of broker-dealers and others in the financial services broker-dealers and others in the financial services industryindustry Public Company Accounting Oversight Board - Public Company Accounting Oversight Board - promulgates rules and regulations governing promulgates rules and regulations governing accountant conduct and responsibilityaccountant conduct and responsibility Executive Certification - CEO and CFO certification of Executive Certification - CEO and CFO certification of periodic reportsperiodic reports Creates new crimes related to corporate behavior as Creates new crimes related to corporate behavior as well as increases penalties for existing white-collar well as increases penalties for existing white-collar criminal actscriminal acts

Enhanced disclosure and reporting Enhanced disclosure and reporting requirementsrequirements Forfeiture of bonuses and profits in some cases Forfeiture of bonuses and profits in some cases of misconductof misconduct Potentially bars corporate officers or directors Potentially bars corporate officers or directors of public companies that have violated the law of public companies that have violated the law from serving in similar capacities in other from serving in similar capacities in other companiescompanies

Proposed New York Stock Exchange RulesProposed New York Stock Exchange Rules The majority of board members should be The majority of board members should be independentindependent Non-executive directors hold regular meetings Non-executive directors hold regular meetings separately from managementseparately from management Shareholders vote on all stock-option plansShareholders vote on all stock-option plans

Changes in the Internal CorporateChanges in the Internal CorporateEnvironmentEnvironment

43% of corporate executives responding to a 43% of corporate executives responding to a Kennedy Information poll said they were changing the Kennedy Information poll said they were changing the way they do businessway they do business Over 80 companies have announced they will treat Over 80 companies have announced they will treat stock options as a cost of doing business, according to stock options as a cost of doing business, according to FortuneFortune magazine (Sept. 16) magazine (Sept. 16) Corporate Example: Krispy Kreme - formed a Corporate Example: Krispy Kreme - formed a governance committee of independent board governance committee of independent board members, corporate loans to executives have been members, corporate loans to executives have been banned, and the top five executives can sell stock banned, and the top five executives can sell stock options only in preplanned, immediately disclosed options only in preplanned, immediately disclosed blocks.blocks. Corporate Example: Diebold - Developed an online Corporate Example: Diebold - Developed an online “hot line” to give dissenting voices a chance to express “hot line” to give dissenting voices a chance to express concerns anonymously.concerns anonymously.

Assertion Number FiveAssertion Number Five

With a more holistic With a more holistic perspective, we might be perspective, we might be

better able to foresee future better able to foresee future ethical problems. As it stands, ethical problems. As it stands, business people have a spotty business people have a spotty record in terms of predicting record in terms of predicting

the ethical areas on which we the ethical areas on which we should be most focused in the should be most focused in the

near future.near future.

On one hand, HRI surveys suggest that large U.S. firms are On one hand, HRI surveys suggest that large U.S. firms are aware that the subject of ethics in business is one of the top aware that the subject of ethics in business is one of the top issues affecting people management these days. Out of 92 issues affecting people management these days. Out of 92 issues, it has been ranked in the top 10 for years.issues, it has been ranked in the top 10 for years.

1

2

3

4

5

6

7

8

9

10

2001

Leadership

Focus on the Customer

Managing/Coping with Change

Improving Productivity

Information Technology

The Information Super Highway

Healthcare Costs

Rate of Economic Growth

Enhancing Quality

Ethics in Business

1999

Leadership

Managing Change




Employee Communications

Enhancing Quality


Healthcare Costs

Ethics in Business

1997

Leadership

Managing Change




Enhancing Quality


Electronic Transfer of Information

Ethics in BusinessSkill Level of the Workforce

On the other hand, it’s seldom seen as a very important On the other hand, it’s seldom seen as a very important issue in the future. When asked to list the top issues issue in the future. When asked to list the top issues affecting people management 10 years hence, business affecting people management 10 years hence, business ethics doesn’t make it to the top of the list.ethics doesn’t make it to the top of the list.

1

2

3

4

5

6

7

8

9

10

21

2001

Leadership

Managing/Coping with Change


Healthcare Costs


Skill Level of the Workforce


Stimulating Innovation/Creativity

Portal Technology

Your Country’s Global

Competitiveness

..................................................

Ethics in Business

1999

Leadership




Managing Change



Healthcare Costs



.........................................................

13 Ethics in Business

1997


Leadership



Managing Change





Quality of Technical Education

.....................................................

20 Ethics in Business

Ethics in BusinessEthics in BusinessImportance Today

2001 1999 1997Rank 10 10 9Extremely Important 40.5% 48.5% 43.3%Important 41.8 36.0 37.5Somewhat Important 16.5 14.0 6.0Not Important 1.3 1.5 3.2

Importance in Ten Years2001 1999 1997

Rank 21 13 20Extremely Important 43.2% 55.6% 48.5%Important 40.7 31.8 34.8Somewhat Important 12.3 11.6 13.7Not Important 3.7 1.0 3.0

Ethical matters predicted to be key over Ethical matters predicted to be key over the next three to five yearsthe next three to five years

Source: KPMG LLP

Percent of Respondents Identifying as Emerging Issue

23.4%

16.9%

13.6%

13.0%

12.3%

10.4%

9.7%

9.1%

0% 5% 10% 15% 20% 25%

Security of Information

Worker and Client Privacy

Environmental Issues

Governance

Conflicts of Interest

Sexual Harassment

Global Operations

Discrimination


Source: KPMG LLP

Ethical matters predicted to be key over Ethical matters predicted to be key over the next three to five years (cont.)the next three to five years (cont.)

Percent of Respondents Identifying as Emerging Issue

9.1%

7.8%

7.1%

7.1%

6.5%

6.5%

4.5%

3.2%

0% 5% 10% 15% 20% 25%

Downsizing

Executive Salaries and Perks

Safety in the Workplace

Financial Management Procedures

Gifts and Entertainment

Competitive Practices

Product Safety

Fraud and Theft


Ethical matters that have turned out to Ethical matters that have turned out to be key over the last several yearsbe key over the last several years

Corporate governanceCorporate governance - Alleged misconduct at the - Alleged misconduct at the executive levels of various organizationsexecutive levels of various organizations Conflicts of interestConflicts of interest -- Alleged insider trading; firms Alleged insider trading; firms with accounting & consulting interestswith accounting & consulting interests Fraud and theftFraud and theft -- Accounting rules have been bent Accounting rules have been bent or broken to mislead stockholders. The number of or broken to mislead stockholders. The number of government and private lawsuits for securities fraud government and private lawsuits for securities fraud have grown in recent years.have grown in recent years. Executive salaries and perksExecutive salaries and perks - Stock options raising - Stock options raising exec salaries and, some say, tempting execs to exec salaries and, some say, tempting execs to unethically affect stock pricesunethically affect stock prices Global operationsGlobal operations - Growing debate on globalization, - Growing debate on globalization, world poverty - e.g., WTO protestsworld poverty - e.g., WTO protests

Source: Ethics Officer Association

Comparison of factors influencing Comparison of factors influencing corporate commitment to ethicscorporate commitment to ethics

44%

23%

44%

51%

54%

32%

33%

41%

0% 20% 40% 60%

Meeting BestPractices Standards

Following IndustryTrends

Responding to aGovernmentInvestigation

Boosting the Firm’sPublic Image

1997

2000

2000 survey of 213 members representing 150 firms (average workforce = 32,400)

Assertion SixAssertion SixDeception is associated with Deception is associated with the worst types of corporate the worst types of corporate

ethical violations. In a ethical violations. In a socioeconomic system that is socioeconomic system that is

increasingly based on increasingly based on information, deception will information, deception will probably be viewed as a probably be viewed as a

serious ethical violation for serious ethical violation for some time to come.some time to come.

Source: World Bank Institute 2002 international survey of 1,482 people

Factors influencing the public’s Factors influencing the public’s impression of an organizationimpression of an organization

28.9%

16.3%

12.6%

9.9%

9.5%

7.3%

7.0%

4.3%

4.3%

0% 10% 20% 30%

Corporate Reputation

Financial Matters

Management Brand Quality

Size of Company

Responsibility to Society

Business Strategy

Business Ethics

Labor Practices

Environmental Matters

Source: Society of Financial Service Professionals and Walker Information

2001 study of 557 employers and employees

Deceiving workers is the corporate action Deceiving workers is the corporate action most commonly cited as a serious ethics most commonly cited as a serious ethics

violation...violation...

84%

82%

64%

60%

59%

50%

97%

94%

68%

69%

52%

42%

0% 25% 50% 75% 100%

Making Deceptive Promises to Workers

Making Deceptive Promises to Customers

Giving Supervisors Access to Workers’Personal Health Records

Utilizing Résumé Filters to DiscriminateAgainst Applicants

Conducting Personal Credit Checks onWorkers

Monitoring Workers’ Voice Mail

EmployeesEmployers

Company Actions Seen as Serious



47%

44%

39%

32%

29%

16%

41%

33%

34%

28%

28%

19%

0% 25% 50% 75% 100%

Searching Employees’ Lockers or WorkAreas

Monitoring Workers’ E-Mail Messages

Utilizing Video Cameras to Monitor Workers

Monitoring Which Web Sites EmployeesAccess

Performing Workforce Drug Testing

Restricting Workers’ Internet Access

EmployeesEmployers

...while performing drug testing is ...while performing drug testing is considered a serious ethics violation by considered a serious ethics violation by

fewer than a third of respondentsfewer than a third of respondentsCompany Actions Seen as Serious



Substance abuse on the job is considered Substance abuse on the job is considered

a serious ethics violation by most...a serious ethics violation by most... 94%

94%

93%

93%

92%

91%

89%

91%

91%

85%

85%

82%

81%

80%

0% 25% 50% 75% 100%

Taking Drugs or Drinking on the Job

Harassing a Fellow Worker by E-Mail

Distributing Child Pornography Through CompanyE-Mail

Making False Statements About Work Status

Misrepresenting Education on a Résumé

Misrepresenting Work Experience on a Résumé

Sharing Proprietary Company Information

Employers

Employees

Worker Actions Seen as Serious Ethics Violations



88%

83%

81%

59%

50%

25%

79%

78%

71%

60%

45%

32%

0% 25% 50% 75% 100%

Making Deceptive Statements to Customers AboutBusiness Matters

Making Deceptive Reports to Supervisors AboutWork Performance

Concealing a Coworker’s Violations fromManagement

Bringing Home Office Supplies for Personal Use

Utilizing Company Equipment or Time to SendPersonal E-Mail

Reporting Illegal or Unethical Company Actions

Employers

Employees

...while whistle-blowing is not viewed by ...while whistle-blowing is not viewed by

many as a serious ethics violationmany as a serious ethics violation

Review of Major Points:Review of Major Points:1) There’s a natural tension in the term “business ethics,” 1) There’s a natural tension in the term “business ethics,” a tension that must be examined and understood.a tension that must be examined and understood.

2) Among corporations, the primary method of trying to 2) Among corporations, the primary method of trying to reduce ethics violations is through formalized rules, reduce ethics violations is through formalized rules, policies and written codes. policies and written codes.

3) But formal codes aren’t usually sufficient because they 3) But formal codes aren’t usually sufficient because they fail to take into consideration corporate culture and the fail to take into consideration corporate culture and the ethical “ecosystem” in which companies operate.ethical “ecosystem” in which companies operate.

4) Corporate cultures are themselves deeply affected by 4) Corporate cultures are themselves deeply affected by the changing societies in which they operate.the changing societies in which they operate.

5) With a more holistic perspective, we might be better 5) With a more holistic perspective, we might be better able to foresee future ethical problems. able to foresee future ethical problems.

6) For example, in a socioeconomic system that is 6) For example, in a socioeconomic system that is increasingly based on information, it’s likely that increasingly based on information, it’s likely that deception will be viewed as a serious ethical violation for deception will be viewed as a serious ethical violation for some time to come.some time to come.

First and foremost, we must stand firmly on a basis of good, First and foremost, we must stand firmly on a basis of good, sound ethics. We intend to do what is right for the ample sound ethics. We intend to do what is right for the ample and sufficient reason that it is right. If business is hurt by the and sufficient reason that it is right. If business is hurt by the stern exposure of crookedness and the result of efforts to stern exposure of crookedness and the result of efforts to punish the crooked man, then business must be hurt, even punish the crooked man, then business must be hurt, even though good men are involved in the hurting, until it so though good men are involved in the hurting, until it so adjusts itself that it is possible to prosecute wrong-doing adjusts itself that it is possible to prosecute wrong-doing without stampeding the business community into a terror-without stampeding the business community into a terror-struck defence of the wrong-doers and an angry assault struck defence of the wrong-doers and an angry assault

upon those who have exposed them.upon those who have exposed them. Theodore Roosevelt (1858–1919). Theodore Roosevelt (1858–1919).

History as LiteratureHistory as Literature. 1913.. 1913.

Conclusion: A Historical Perspective on Conclusion: A Historical Perspective on the Matter of Business Ethicsthe Matter of Business Ethics

the tao of business ethics: making good decisions in a world of competing pressures a presentation...

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