Transcript What Are Unethical Business Practices?

BUSINESS
ETHICS
BUSINESS ETHICS
"Let me appeal to your sense of doing things my way"
Cartoon by P.C. Vey
Copyright 2004, Harvard Business Review
BUSINESS
ETHICS
Is this a “Good” Code of Ethics?
Would it help your Employees do the “Right Thing?”
What Company published this Code of Conduct and
got an Award for it?
“Relativity applies to
Physics, not Ethics”
To be “Successful,” does a Business
have to “Act Ethically?”
How does a Business “Act
Ethically?”
Who decides whether a Business
is “Acting Ethically?”
A new Product has not yet been formally approved
nor have funds been allocated, but everything
looks fine. Meeting the delivery schedule won’t be
easy. Wanting to get started, you start negotiating
with a supplier. What do you tell that supplier?
This is a 'hot' program for both of us. Approval is imminent.
Let's get the preliminary work underway now…
The program is a 'go'. I want you under contract as soon
as possible…
Start work now and we’ll cover your costs when Administration
finishes the paperwork…
If you want to be part of the team important great new
product, you’ll have to shoulder some of the start-up costs…
BUSINESS
ETHICS
Is this the Right Answer? Maximize
Shareholder Value and Everything will
be Fine!
Doesn’t Solving Ethical Dilemmas use
Time that is better spent making Sales?
If We tell our Shareholders that We’ll
Maximize their Value, What do We tell
our “Stakeholders?”
WHERE DO
ETHICS MATTER?
In a Court Room: Legal Implications
Financial Markets: Reliability of
Information
Human Resources Markets: How to
Attract and Retain the Best and
Brightest
After 3 months on the job,
you learn an employee
falsified her employment application: she
doesn’t have a college degree. As her boss,
what do you do?
Fire Her Immediately
Overlook it, She’s doing a Great Job
Balance the Omission's Severity with the Great
Job she’s doing plus her Age and Ethnicity
Contact HR and Determine Company Policy
UNETHICAL BUSINESS PRACTICES
1.
2.
3.
4.
Abusive or Intimidating Behavior
Accurate but Incomplete Disclosures
Discrimination against Protected Class
Receiving/Offering Bribes, Kickbacks or
Incentives
5. Theft/Fraud: Expense Accounts/Personal
Use of Company Property
6. Sexual Harassment
7. Termination without Fair Notice or Cause
ETHICAL ISSUES
Three Steps for Analyzing Ethical Issues
Strictly Legal
Perspective
Is It Legal?
If “No,” Stop and Take Action
Is It Balanced?
Compare Risks and Benefits
How Does It Make Me Feel?
Strictly Personal
Perspective
What is your Conscience telling You?
Are You doing the “Right Thing?”
When one of your male supervisors talks to
any female employee, he always calls her,
"Babe.” You have overheard him use this
term several times. As his manager,
should you do anything?
No, since no one has complained
Yes. Explain to the supervisor that, while he may have
no sexual intention, use of “Babe” may cause resentment
Yes. Order the supervisor to call an all-hands meeting and
apologize for the unintended slights
No, because there is nothing wrong with calling a female
employee “Babe" or other endearment
BUSINESS ETHICS: APPROACHES
COMPLIANCE-BASED
Prevent, Detect and Punish Legal
Violations
INTEGRITY OR VALUES-BASED
Define Organizational Values and
Encourage Employee Commitment
to Ethical Aspirations
CONFLICTS OF INTEREST
DEFINITION: Employee’s Personal or
Financial Interests Interfere with Employee’s
Obligations to Employer
THREE TYPES:
Financial: Self-dealing or Insider Trading
Professional: Outside Commitments
infringe on Employer Resources
Personal: Family/Employee Conflicts,
Nepotism, Fraternization
CONFLICTS OF INTEREST
BEST RESPONSE? Preventative
Measures: Employees free to have
unrelated job activities, but…
EMPLOYER CAN EXPECT LAWFUL AND
CONFLICT-FREE BEHAVIOR
Strategically Identify and Manage Potential
Conflicts with Written Policies, Standards,
Expectations, Training, Monitoring and
Constant Communication
Your “Least Effective” Employee
has Applied to Transfer to another
Department. And the Manager is
Calling you for a Reference…
Say the employee is the best one you’ve ever
had and you’re heartbroken they’re leaving
Be Candid - Tell Everything - Leave out Nothing
Tell the manager the employee might be a better
“fit” in their department instead of yours
Duck it: Suggest the Request be handled by HR
STRUCTURES AND SYSTEMS
Have a Code of Ethics (Standards), but
More Important, have a Code of
Conduct (Actions)
Communications Network: Formal and
Informal (Use the ‘Grapevine’) Processes
for Reinforcing and Refreshing
Formal Reporting System: Ethics
Ombudsperson - Unbiased and Neutral
but with Authority
THE BOTTOM LINE
Decision-making includes Personal,
Organizational and Societal Values (“Layers”)
Ethical Values always open to Discussion
and Criticism but …
Build a Fire Wall between “Immutable
Standards” and Case-by-Case
Exceptions
Accept Responsibility for sound Moral
Judgments: It’s in Everyone’s Job Description
Communities and their Businesses
Organizational Responsibility. Discuss possible
roles and activities the venture might take or
promote that contribute to the community’s
“greater good.” Will these roles or activities
make a significant, positive contribution?
How will the venture sustain its commitment
to these contributions?
ETHICS AND THE LAW
Legal Requirements often represent an
Ethical Minimum
Personal Ethical Standards Generally
Exceed Legal Standards
ETHICS
LAW
Laws are Ethical Issues with
Societal Implications as
interpreted by a Legislature;
Personal Ethics have
Broader Context and
Application
BUSINESS ETHICS
A Relative wants to work in your Department. It
could be a promotion and a big pay raise. He’s
asking for your advice…
Give him the benefit of your inside knowledge
Tell him not to apply
Tell him that if he gets the job, he’ll have to move
out of your house where he’s been for 9 months
Ask him how to deal with possible perceptions of
favoritism or nepotism
PERSPECTIVES ON ETHICS
Ethical Issues require Persons or Organizations
to choose an Action that may get judged as
Right or Wrong
Business Ethical Issues: Classifications
Conflicts of Interest
Fairness and Honesty
Communications
Organizational Relationships
WHY DO ETHICS MATTER?
Does “Doing the Right Thing” Matter?
To Whom Does it Matter?
What are the Costs to Business of
Unethical Behavior?
ETHICAL CLIMATE/CULTURE
More Important than Ethics Program
Begins with leadership (all levels) that includes
Ethical Considerations in every Decision:
Are We Doing the Right Thing?
Focus on What’s best for BOTH Employees
and Affected Community (stakeholders)
Actions louder than Words/Codes:
Consistency and Follow-up Actions
CRITERIA GUIDING ETHICAL ACTIONS
Employees won’t be Punished for
Questioning Authority
Employees will be held Accountable
(Punished) for Rule Violations
Focus on larger organizational/societal
Outcomes; Not Personal/self-Interest
Would You wish Others to behave in the
same Way if Action affected You?
FORCES THAT SHAPE BUSINESS ETHICS
Organizational Culture
Personal Ethics
Beliefs and Values
Moral Development
Ethical Framework
Organizational Systems
Structure
Policies and Rules
Code of Ethics
Reward System
Selection and Training
Is
Decision
or Behavior
Ethically and
Socially
Responsible?
Founder
History
Defining Moments
Stories of Development
External Stakeholders
Government Regulations
Customers
Special Interest Groups
Market Forces