1 MSETM 5110 – Ethics for Practicing Engineers Recap of Session 1 Setting the Stage Scope of Seminar—Awareness, Strategies and Techniques Course Materials and Assignments Fundamental Underpinnings—Values and Guiding Principles What Constitutes Ethical Behavior? What Does Ethical Behavior “Look Like?” Technology, Globalization, and Competition A Framework for Ethical Behavior and Integrity Codes of Conduct and Expected Behavior Examples of Companies and CEO’s in the News Ethics as a Corporate Responsibility Ethics as a Personal Responsibility The Four Categories of Corporate Values Next Step in Our Ethics “Journey”

2 MSETM 5110 – Ethics for Practicing Engineers Due Date Assignment “0”- Personal Profile8/28/02 Assignment 1- Read HBR Articles: 1.George Iwaki and Oscar Hauptman, Final Voyage of the Challenger. HBR Product Number (11/28/90). 2.Linda Trevino, Gary Weaver, David Gibson, and Barbara Ley Toffler, Managing Ethics and Legal Compliance: What Works and What Hurts. HBR Product Number CMR146 (11/01/99). 3.Lynn Paine, Managing for Organizational Integrity. HBR Product Number (03/01/94). Assignment 2 - TBA

3 MSETM 5110 – Ethics for Practicing Engineers Purpose Connectivity Relevancy Application Science: “what is” Engineering: “creating what has never been”

4 MSETM 5110 – Ethics for Practicing Engineers The Journey Leadership (Mission/Values) Management (Operating Principles) Business Model (Structure) Culture for Excellence (Energy/Innovation) Right Metrics (Stakeholder Value) Sustained Success (Performance Measures)

5 MSETM 5110 – Ethics for Practicing Engineers Attributes of a Successful Company Vision/Mission/Values Alignment Around Values People Systems Around Values Organize for Success Effective Integration and Communication Clarity of Responsibility and Accountability

6 MSETM 5110 – Ethics for Practicing Engineers Our Virtual Walk in the Woods or Moral Compass

7 MSETM 5110 – Ethics for Practicing Engineers “If you don’t know where you’re going, any road will get you there.”

8 MSETM 5110 – Ethics for Practicing Engineers What’s Happened Since September 11? Re-Examined Our Values Confronted Terrorism – Military and Homeland Defense Defined Threats –Chemical/Biological /Agricultural –Cyber –Weapons of Mass Destruction (WMD) Development and Deployment of Innovative/Next Generation Science and Technology –Sensor, Imaging, Surveillance –Energy Policy and Alternatives –Multidisciplinary Approach (Broad Cross Section of All Engineering Areas, Behavioral Scientists, Politicians, Economists, Military, and Business Leaders) Enron Happened

9 Three Priorities for the United States Economic Security Homeland Security Win the War on Terrorism President Bush Portland, OR August 22, 2002

10 MSETM 5110 – Ethics for Practicing Engineers The Four Disciplines of a Healthy Organization Build and Maintain a Cohesive Leadership Team Create Organizational Clarity Over-Communicate Organizational Strategy Reinforce Organizational Clarity Through Human Systems Source: Patrick Lencioni, “The Four Obsessions of an Extraordinary Executive.”

11 MSETM Ethics for Practicing Engineers Are There Dueling Agendas? Competitive vs. Ethical Conduct Flexibility/Adaptability vs. Sound Business Practice Binary vs. Degrees of ("Bend But Don't Break") Rules/Policy/Practice/Guidelines/"Generally Accepted" Company Values vs. Personal Value System Mergers and Acquisitions and Cultural Integration Defining Right vs. Expedient Responsibility/Accountability

12 MSETM 5110 – Ethics for Practicing Engineers What Effective Ethics Programs Accomplish* Detect Unethical/Illegal Behavior Create Awareness of Ethical/Legal Issues That Arise at Work Assist With Finding Ethics/Compliance Advise Within the Company Delivering Bad News to Management Ensuring That Ethics/Legal Compliance Are Reported in the Organization Enhance Better Decision Making in the Company Promote Employee Commitment to the Organization *Trevino, et al., Managing Ethics and Legal Compliance: What Works and What Hurts, HBR

13 MSETM Ethics for Practicing Engineers What Works and What Hurts in Ethics/Compliance Management: Prescriptions for Action* Tap the Trenches --Employee Perceptions Matter Build A Solid Ethical Culture Create a Values-Based Program That Incorporates Accountability and Cares for Stakeholders Focus on Formal Program Follow-Through Answers to Practical Questions About Effective Ethics/Compliance Management -Who Should Manage Ethics/Compliance Programs? -How About Off-the-Shelf Ethics/Compliance Programs? Who Should Conduct Training? Who Should Answer Telephone Reporting Lines? What Do the Study Results Imply for Public Policy? *Trevino, et al., Managing Ethics and Legal Compliance: What Works and What Hurts, HBR

14 MSETM Ethics for Practicing Engineers What Influences Ethics/Compliance Program Effectiveness?* Program Orientation -Compliance-Based Approach -Values-Based Approach Formal and Informal Ethics/Compliance Program Characteristics -Formal Program Characteristics Are Relatively Unimportant -Program Follow-Through Is Essential Ethical Culture in the Organization -Executive and Supervisory Leadership -Fair Treatment of Employees -Ethics in Discussions and Decisions -Reward Systems that Support Ethical Conduct -Organizational Focus -Summary of Ethical Findings *Trevino, et al., Managing Ethics and Legal Compliance: What Works and What Hurts, HBR

15 MSETM Ethics for Practicing Engineers So, What’s at Stake? “By supporting ethically sound behavior, managers can strengthen the relationships and reputations their companies depend on.” Paine, Managing for Organizational Integrity.

16 MSETM Ethics for Practicing Engineers Goal: Each employee/member of the organization acts with integrity to define the operating culture of the organization. This assumes, and is dependent upon, each individual's fundamental value system, attitude, beliefs, language, and behavior patterns. And, it assumes that the organization has clearly defined its values and has a formal program to foster the desired behavior and to manage compliance. _____________________________________________________________ Are there rogue individuals? Are there rogue individuals at all levels of the organization? Are there lapses in ethics focus--awareness, expectations, and compliance? Are there tangible and intangible costs of unethical behavior? -Stakeholder expectations -Lost business -Legal costs -Detraction from mission/strategy/business focus -The potential multiplying effect of a "bad" employee

17 MSETM Ethics for Practicing Engineers The Hallmarks Of An Effective Integrity Strategy* The guiding values and commitments make sense and are clearly communicated. Company leaders are personally committed, credible, and willing to take action on the values they espouse. The espoused values are integrated into the normal channels of management decision making and are reflected in the organization's critical activities. The company's system and structures support and reinforce its values. Managers throughout the company have the decision-making skills, knowledge, and competencies needed to make ethically sound decisions on a day-to-day basis. *Paine, Managing for Organizational Integrity.

18 MSETM Ethics for Practicing Engineers Federal Sentencing Guidelines Factors Used in Determining Fines: Situations beyond the CEO's control, e.g., existence of a prior record of similar misconduct; Reporting and accepting responsibility for the crime; Cooperating with authorities; Effective program in place to prevent and detect unlawful behavior.

19 MSETM 5110 – Ethics for Practicing Engineers What Constitutes Ethical Behavior?

20 MSETM 5110 – Ethics for Practicing Engineers Ethics: (1) the discipline dealing with what is good and bad and with moral duty and obligation; (2a) a set of moral principles or values; (2b) a theory or system of moral values; (2c) the principles of conduct governing an individual or a group; (2d) a guiding philosophy. Ethical: (1) of or relating to ethics; (2) involving or expressing moral approval or disapproval; (3) conforming to accepted professional standards of conduct.

21 MSETM 5110 – Ethics for Practicing Engineers “Do the Right Thing”

22 MSETM Ethics for Practicing Engineers Personal “Mini Survey” 1.My company acts ethically and with integrity: a.consistently b.occasionally c.rarely or not evident 2.My company promotes acting with integrity: a.strongly b.somewhat c.not evident 3.I act with honesty and integrity: a.consistently b.most of the time c.occasionally

23 MSETM Ethics for Practicing Engineers Personal “Mini Survey” (cont’d.) 4.Place your company on the following continuum: Lowest IntegrityAverage IntegrityHighest Integrity _________________________________________________________ 5.Place yourself on the following continuum: Lowest IntegrityAverage IntegrityHighest Integrity _________________________________________________________ 6.Your comfort level with your company’s behavior and commitment to ethical behavior: a.very comfortable b.somewhat comfortable c.uncomfortable

24 MSETM Ethics for Practicing Engineers Personal “Mini Survey” (cont’d.) 7.Your comfort level with your own behavior: a.very comfortable b.somewhat comfortable c.uncomfortable 8.I am familiar with my company’s values statement: a.yes b.no 9.I am familiar with my company’s strategic/business plan: a.yes b.no 10.There is clear linkage/integration of values and strategic/business plan: a.yes b.no