1. CS 305 An Overview of Ethics

2. Example: Altria Group’s Code of Conduct Integrity: Doing what is right The Code of Conduct deals with –Work Environment –Conflict of Interest –Conducting Business –Dealing with company information, including financial documents –Dealing with the community –Where to seek help in case of questions http://www.altria.com/en/cms/Responsibility/Compliance/Code_of_Conduct_Policy_Guidance/Images_PDFs/responsibility_Altria_ Code_of_Conduct.pdf.aspxhttp://www.altria.com/en/cms/Responsibility/Compliance/Code_of_Conduct_Policy_Guidance/Images_PDFs/responsibility_Altria_ Code_of_Conduct.pdf.aspx

3. Example: Intel’s Code of Conduct Intel conducts business with Honesty and Integrity Intel follows the letter and spirit of the law Intel employees treat each other fairly Intel employees act in the best interests of Intel and avoid conflict of interest Intel employees protect company’s assets and reputation Intel employs ask questions and report concerns http://download.intel.com/intel/finance/code-of-conduct.pdf Note: If you start a company or if you work for a small company, it’s a good idea to develop at least a bare-bones Code of Conduct document.

4. Things to Keep in Mind as we Study this Chapter What is ethics? Why should we act ethically as individuals as well as part of organizations and institutions? Why is ethics becoming important in the work place? What are corporations and institutions doing to improve ethics in the work place? Why are corporations and institutions interested in fostering ethics in the work place? What approaches can one take to make ethical decisions?

5. What is Ethics? Morality: The idea of morality is the basis of ethics. Social conventions about right and wrong that are generally accepted. Ideas of morality vary by age, cultural group, ethnic background, religion, gender Variations across cultures, even within a culture, e.g., death penalty, abortion, homosexuality, etc.

6. Definition of Ethics Ethics is a set of beliefs about right and wrong behavior. These beliefs are guided by morality. Ethical behavior of an individual is influenced by family upbringing, life experiences, education, religious beliefs, peer influences… Virtues: What is acceptable, e.g., honesty, generosity Vices: What’s not acceptable, e.g., vanity, excessive greed Value system: One’s virtues and vices

7. Integrity An ethical individual behaves with integrity. Moral principles: Statements of what one believes to be right rules of conduct, e.g., don’t lie, cheat or steal. Integrity: Acting according to one’s moral principles Conflicts arise when one wants to act with integrity, e.g., when two individual’s moral principles conflict, or the situation is such that it is difficult to make a clean judgment, etc. Conflicts may arise in right vs. right situations: Should we drill in Alaska or save the pristine environment and the wildlife?

8. Ethics in the Business World Concepts of ethics apply to businesses and employees of businesses as well. A business exists to make profit Ethics has become a hot topic in the corporate world since there have been many recent incidents of unethical behavior and risks of such behavior have increased To be in business and to make profit, a corporation has to behave ethically; otherwise, punishments can be stringent

9. Examples of Unethical Corporate Behavior WorldCom (2002-): Inflated earnings by $11 billion. Made to pay $500 million. Chairman Bernard Ebbers went to jail. Qwest Communications (2002-): Misstated earnings by $3 billion. Adelphia Communication (2004): Hid $2.3 billion in debt. Computer Associates (2000-): Inflated revenues by $110 million. CEO Sanjay Kumar recently went to jail.

10. Examples of Unethical Corporate Behavior Satyam computers in India (2008-09). R. Raju founded Satyam two decades ago. It grew to be the 4 th largest computer company in India. He has siphoned up to $1 billion to pay for secret real estate deals. Non-IT case: Mixing melanine in milk products consumed by children in China (2008). Swift Justice: A CEO is going to be put to death (January, 2009). Non-IT case: Bernard Madoff’s Ponzi scheme may have defrauded investors by up to $50 billion (2008- 09)

11. Why is Good Business Ethics Important? To gain goodwill of the community To create an organization that operates consistently To produce good business To protect the business and its employees from legal action To avoid unfavorable publicity

12. Gaining Goodwill of the Community A company’s primary goal is to make profit In this goal, good relation with the community helps Expressing goodwill: Make contributions to charitable organizations, provide good benefits to employees, choose socially desirable economic opportunities Goodwill helps the company conduct business, e.g., a company that treats employees well gets best job candidates Lack of goodwill may lead to government action, law suits, reduce sales, etc.

13. Creating an organization that operates consistently Consistent operation under various circumstances is important so employees, shareholders, customers, suppliers, etc., know what to expect of the company Consistency comes from values such as: defining corporate principles and policies and following them; striving to be best in a few selected areas; accepting personal responsibility for actions; valuing diversity, etc.

14. Good ethics is good business A company that produces safe products, has fewer recalls and lawsuits. A company that provides excellent customer service retains employees. A company that treats employees well has less turnover and better employee morale and commitment.

15. Protecting corporation and its employees from legal action US Sentencing Guidelines (1991): More lenient treatment for company executives if the companies have ethics programs. Fines can be reduced by 80%. Company must identify commit to comply with letter and spirit of the law. Understand strengths and weaknesses of the company culture and organization. Conduct studies to determine pressures the company faces with regards to possible criminal conduct and violation of applicable laws Design, implement and enforce a program to prevent, detect and report criminal conduct, etc.

16. Protecting corporation and its employees from legal action Serbanes-Oxley Act (2002): CEO and CFO are liable for financial reports. The company must submit to an audit to show that it has controls in place to ensure accurate information. The fines for false attestation can include up to 20 years in jail and significant monetary fines for senior executives.

17. Avoiding Unfavorable Publicity Stock prices depend a lot on good publicity, how consumers regard its products and services, the degree of oversight it has from government agencies, etc. Sales depend on good publicity. Bad publicity may initiate government investigation and prosecution.

18. Improving corporate ethics Appoint a Corporate Ethics Officer (a high level manager): Develop standards, build awareness, handle internal reports Ethical Standards to be set by Board of Directors Establish a corporate Code of Ethics: Formal written statements with employee, management participation Conduct Ethical Audits from time to time: Find ethical lapses and correct them Require employees to take ethics training Include ethical criteria in employee evaluation

19. Ethical Decision Making Get the facts Identify stakeholders and their positions Consider the consequences of a decision Weigh various guidelines and principles Develop and evaluate options Review a decision Evaluate the results of a decision

20. Philosophical Theories of Ethics: Guidelines and Principles Virtue Ethics Approach: The ethical choices reflect moral virtues of oneself and one’s community. When faced with a complex ethical dilemma, people either do what they are most comfortable with or what they think a person they admire will do. Utilitarian Approach: One should choose the action or policy that has the best overall consequences for all the people who are directly or indirectly affected.

21. Philosophical Theories of Ethics: Guidelines and Principles Fairness Approach: One treats everyone the same and shows no favoritism or discrimination. Still, most people are influenced by personal biases toward a particular group, even without knowing. Common Good Approach: Take actions or make choices that does good for the the community. Community members work together to achieve a common set of goals and values.

22. Ethics in Information Technology Public concern about the ethical use of information technology includes: –E-mail and Internet access monitoring –Peer-to-peer networks violation of copyright –Unsolicited e-mail –Hackers and identify theft –Plagiarism –Cookies and spyware

23. Ethics in Information Technology (continued) Information technology is everywhere, it impacts everyone in society now. The general public has not realized the critical importance of ethics as applied to IT Important technical decisions are often left to technical experts They must be an environment in which ethical dilemmas can be discussed openly, objectively, and constructively.