Transcript CPCU Nebraska 2010 Ethics

“Integrity, Honesty, and Ethics”
CPCU Ethics 2010
Welcome and Introduction
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I am Andy Gustafson
I teach Business Ethics at Creighton
Son of a Farmer from Nebraska
Overview of Ethics
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Summary:
Ethics Quotes
Business, Ethics, and the Law
Examples involving rationalization, self-deception
Moral Decision Making
Case studies principles
Professional Standards/Industry Paradigms of CPCU
Case Studies applying guidelines
Conclude
Ethics Quotes
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Which of these quotes is your favorite,
and why?
Which of these quotes seem especially
relevant in the insurance business?
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ETHICS QUOTES
1. When I do good, I feel good; when I do bad, I feel bad. That’s my religion. (Abraham Lincoln)
2. A man does what he must.. in spite of personal consequences, in spite of obstacles and dangers, and pressures.. and that
is the basis of all human morality. (JFK)
3. If you don't have integrity, you have nothing. You can't buy it. You can have all the money in the world, but if you are
not a moral and ethical person, you really have nothing. (Henry Kravis)
4. Always do right – this will gratify some and astonish the rest. (Mark Twain)
5. Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws. (Plato)
6. Associate with men of good quality, if you esteem your own reputation; for it is better to be alone than in bad company.
(George Washington)
7. To educate a person in mind and not in morals is to educate a menace to society. (Theodore Roosevelt)
8. A good name is more desirable than great riches; to be esteemed is better than silver or gold. (Pr 22:1)
9. Two wrongs don’t make a right. (old english proverb)
10. Its not enough to be busy– so are the ants! The question is– what are we busy about? (thoreau)
11. What does it profit a man to gain the whole world, yet forfeit his soul?
12. It takes less time to do a thing right than to explain why you did it wrong. (longfellow)
13. “Live so that when your children think of fairness and integrity, they think of you.” (H.J. Brown)
14. “The most important persuasion tool you have in your entire arsenal is integrity” (Zig Zigler)
15. “A man without ethics is a wild beast loosed upon this world.” (Albert Camus)
16. Ethics or simple honesty is the building blocks upon which our whole society is based, and business is a part of our
society, and it's integral to the practice of being able to conduct business, that you have a set of honest standards. And it's
much easier to do business with someone when you look them in the eye and say, "This is what we're going to do," and
you understand what you each mean, and you can go away and get it done. (Kerry Stokes)
17. If you can’t find time to do it right, when will you do it over? (Jeffrey Mayer)
Exemplary Ethics Code:
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"As officers and Enron Corp, its subsidiaries,
and its affiliated companies, we are
responsible for conducting the business
affairs of the companies in accordance with
all applicable laws and in a moral and honest
manner...We want to be proud of Enron and
to know that it enjoys a reputation for
fairness and honesty and that it is respected."
Exemplary Code Continued:
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"Compliance with the law and ethical standards are
conditions of employment and violations will result in
disciplinary action, which may include termination...in
addition to responding to the Act, we are adopting
this Policy Statement to avoid even the appearance
of improper conduct on the part of anyone employed
by or associated with the Company...We have all
worked hard over the years to establish our
reputation for integrity and ethical conduct. We
cannot afford to have it damaged."
Loosing your Moral
Aspirations
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“Men lose their high aspirations as they lose
their intellectual tastes, because they have
not time or opportunity for indulging them;
and they addict themselves to inferior
pleasures, not because they deliberately
prefer them, but because they are either the
only ones to which they have access, or the
only ones which they are any longer capable
of enjoying.” – J.S. Mill
We can lose our moral
conscience and concern!
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“Capacity for the nobler feeling is in most
natures a very tender plant, easily killed, not
only by hostile influences, but by mere want
of sustenance; and in the majority of young
persons it speedily dies away if the
occupations to which their position in life has
devoted them, and the society into which it
has thrown them, are not favourable to
keeping that higher capacity in exercise.”
--J.S. Mill
Stay Fit!
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Being ethical is like staying in
shape, you have to be diligent
about it and practice to keep it
up. If you don’t use it, you will
loose it…
ETHICS
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QUIZ
Question 1
1. Which of the following has been found to be a true statement
regarding ethics and the insurance industry?
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a.) On average, insurance practitioners are more likely to act
unethically in business practices than in purely personal
situations.
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b.) More than 50 percent of people in business indicate having
observed one or more unethical or illegal acts in the past twelve
months.
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c.) Insurance practitioners believe that management’s emphasis
on the bottom line is one of the main factors leading to
unethical decision-making.
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d.) All of the above are true statements.
Question
2. A strong organizational culture is one in which there is a high
expectation of conformity with the organization’s beliefs, values,
and purpose. All of the following are true statements regarding
organizational culture EXCEPT:
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a.) In general, members of organizations having strong cultures
are more likely act ethically.
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b.) In general, members in organizations with weak cultures
are more likely to base their ethical decisions on the norms and
values of small groups within the organization.
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c.) In general, members of large organizations feel less
responsibility for their actions than those in small organizations.
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d.) In general, higher level employees have less ethical beliefs
and their ethical decision-making is less than lower level
employees.
Question
3. All of the following are true statements EXCEPT:
 a.) Individuals see themselves as more ethical than
their coworkers or supervisors.
 b.) The ethical behavior of supervisors strongly
influences the ethical behavior of their subordinates.
 c.) In general, supervisors’ and management’s
actions have little influence over individuals’ ethical
behavior because individuals form their ethical values
outside of the work environment.
 d.) Supervisors who are successful performers have
greater influence over their subordinates’ ethical
behavior.
Question
4. Which one of the following is a true statement?
 a.) Most employees report that a company’s ethical
position is stated in their training courses.
 b.) The existence of a formal code of ethics is a
strong deterrent to unethical behavior.
 c.) The awareness of a formal code of ethics is a
strong deterrent to unethical conduct rather than just
the mere existence of one.
 d.) The most successful ethical training programs are
ones that emphasize how to make ethical decisions
rather than setting clear, uncompromising rules.
Vocabulary: “Business Ethics”
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What is “Business” ?
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What is “Ethics” ?
What is Business?
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Money Making Opportunity
Social/Cultural Power
What is ethics?
“Ethics” isn’t “legal”
Difference between the Law and Ethics:
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Some legal issues are neither ethical or
unethical.
Some ethical issues have no laws to
support them.
Legal Route to Ethics
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The Insurance Industry is Highly
Regulated
Law often tries to encourage ethical
behavior:
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Federal Sentencing Guidelines
Sarbanes-Oxley Act (SOX)
Better to have self-regulation than more
gov’t regulations
How to encourage ethics:
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External Sanctions:
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Positive: (evaluation criteria, bonuses)
Negative: Regulations, Rules & Enforcement
Internal Sanctions:
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Establishing a corporate culture or office Culture
through vision and leadership
Your Business is social
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Business has its own culture
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Business Transforms Culture
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Paypal, Google, your office
Financially, community outreach
Business is about relationships
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Insurance business is about relationships
Company vs Personal Ethics
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Company Policy often has some basis in
the compliance regulations and legal
statutes and fine schedules set up by
government.
But Personal ethics requires personal
decision-making, rooted in values.
Many think Ethics is just about
what to NOT do: “Don’t do __!!”
But ethics is more than just
what not to do
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Minimal: What we shouldn’t do
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Better: What we should do (justice)
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Don’t steal, don’t kill, don’t lie
Be fair, Be honest, Fulfill duties, work hard
Best: What we could do to make things
excellent for all of us…
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Mutual of Omaha Project, Real Estate
Our actions do affect others…
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61% of taxpayers say it's okay to cheat
on your taxes
Every person spends $250 more per
year due to Auto Insurance Fraud.
Our Nation spent $1.7 TRILLION dollars
on health care in 2003. Some estimate
that 20-35% of that was fraudulent.
Question: Business & Ethics??
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Can making a healthy profit and being
ethical go together?
MUST they go together??
Moral Psychology:
WHY DO PEOPLE
DO THE RIGHT
THINGS?
Different Types of Motives
(kohlberg)
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Stage
Stage
Stage
Stage
Stage
Stage
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Obedience and Punishment
For self-benefit
For sake of reputation (good boy)
Maintain Social order
Contractual-Legalistic orientation
Conscience/Principle Orientation
Motivation
Each of us and each person under us
might have different motivations for
doing the right thing. Its helpful to
realize that and encourage right
behavior, however it is motivated.
Moral Psychology
WHY DO PEOPLE
DO WRONG
THINGS?
Question: Why do Soccer mom’s
sometimes drive like jerks?
Question: Why do people forge
signatures and documents?
Why do people stretch or edit
the truth, or exaggerate?
Moral Development: Why do
people do unethical things?
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Why did the soccer mom drive like a
jerk?
Why did my student cheat on the
exam?
Why did people at Enron do unethical
things?
Why do insurance professionals cut
corners?
Some reasons people do wrong:
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Ignorant
In a hurry
Thoughtless
Didn’t plan ahead
Financial difficulties
Pressure from organization
Not clear communication from management
Lazy
Want a quick buck
They are a Bad evil wicked person
BASICS of Decisionmaking
Brief explanation of the 5 classic
ethical theories:
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Egoism: Do it to benefit YOU
Social Contract: We all covenant…
Utilitarianism: Greater Good
Deontologial: Duty-Based (universalizable?)
Virtue Ethics: Golden Mean/Excellence
Egoism
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People should always do what is in their
own self-interest.
(ex: do what it takes to get repeat business)
Social Contract Theory
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Make concessions to others– you want
them to do it, so you should too.
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Obey the law, respect others because you want
to be respected, etc
Rake your yard
When driving, slow down near other schools,
not just your own kid’s school
Utilitarian:Outcome-Based
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Do what benefits the greatest number the
most
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Jump on the grenade if it benefits the most.
Do what is right if it will make for a better
society in the long run, even if you could have
short term maximization right now
I can save my client on this insurance premium
by under-reporting risks, but in the long run
this will cause the insurance company and
other clients to be at considerable risk.
Principle/Duty-Based:
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Duty #1: Only act in a way that you could
make your act a universal law
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I cheat on my taxes? Would I want everyone
to do that? No. Then don’t!
Should I lie? Would I make lying a universal
law? No. Then don’t lie!
Kant’s Duty #2
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Treat others always as an end, not as a
means to an end.
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Don’t treat checkout person as humanoid ATM
Don’t treat other drivers as obstacles in your
path
Don’t treat customer as a just a means to $$
Virtue Ethics
What is the GOOD life,
and how do we achieve that?
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Aim for excellence
Moderation/Balance
-- Vice
Virtue
++Vice
(Too little)
(just right)
(too much)
Coward
Courage
Foolhardy
Being Virtuous:
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Does depend on the situation
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Does depend on the individual
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Child ‘Maestro’
Is something we must constantly strive
to upkeep, work at
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When to be witty
We can lose our touch!
It helps to have roll models: WWJD?
Virtues
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Honesty
Integrity
Responsibility
Respect/Caring
Truthfulness
How do people lose their
virtuousness???
Moral Principles for Living
and Working
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Banker Friend: “look in the mirror rule”
Showgirl from Las Vegas: Grandma rule
What rules do you use?....
Breaktime!!