1. MANAGING BUSINESS ETHICS Introduction Referencing Chapters 1 & 2 Trevino & Nelson, Managing Business Ethics. NY: Wiley, 1999.

2. What is Ethics ?  Ethics can be understood as sets of formal and informal standards of conduct that people use to guide their behavior.  These standards are based in part on principles derived from core values such as honesty, respect and trust. Ethics Resource Center

3. Legal Liability and Ethics: Due Diligence and Effective Compliance 1)Establish compliance standards reasonably capable of preventing criminal misconduct. 2)Assign specific high-level individuals to oversee compliance standards. 3)Take care to whom you delegate discretionary authority involving sensitive responsibilities 4)Communicate standards & procedures to all employees (emphasis on formality: training & manuals) 5)Detect non-compliance w/ written standards (monitoring, auditing, systems); including retribution free reporting. 6)Consistently enforce written standards through disciplinary mechanism (including failure to detect). 7)After detecting offense, act to respond & prevent repeat.

4. Ethics vs. Law Law reflects society’s MINIMUM norms and standards of business conduct. There is a great deal of OVERLAP between what’s legal & what’s ethical. Law-abiding behavior is generally believed to also be ethical. There are many particular situations not covered strictly by law that fall under the umbrella of “ethical dilemmas.” ETHICS LAWLAW

5. “Ethical Dilemmas”...................... a textbook definition Situations concerning right and wrong where values are in conflict. Trevino & Nelson, Managing Business Ethics. NY: Wiley, 1999. P.4

6. An Ethical Dilemma.........arises in a situation when each alternative choice or behavior is undesirable because of potentially harmful ethical consequences. Right or wrong cannot be clearly identified. (Daft & Marcic, p.137)

7. The Management Challenge "Many companies proclaim the creation or expansion of business ethics and compliance programs with great fanfare and the best of intentions. But often businesses are unable to maintain the credibility of their programs over the long run, with devastating consequences for employees, shareholders, and others.” Jeffrey M. Kaplan, The Conference Board Program Director.The Conference Board

8. A Workplace Perspective “What values should we live by? What are we here to do? Modern workplaces offer little help in finding answers to these perplexing queries. As a result, too many of us drift along with little sense of direction and without a moral compass to guide us through the ethically slippery world of work. This deepens our discouragement about work and, ultimately, about life. You probably know people who are situationally smart but spiritually bankrupt. Lee G. Bolman & Terence E. Deal, Escape from Cluelessness: A Guide for the Organizationally Challenged. American Management Association, 2000.Escape from Cluelessness: A Guide for the Organizationally Challenged.

9. Survey of Workplace Ethics found that employee perceptions and key ethics outcomes are more positive when:  Organizations have ethics programs in place,  Employees see ethical values like honesty, respect and trust applied frequently at work, and  Organizational leaders and supervisors are seen as modeling ethical behavior. 2000 National Business Ethics Survey

10. About one in every three employees observe misconduct at work. The five types of misconduct observed most frequently include: 1)Lying; 2)Withholding needed information; 3)Abusive or intimidating behavior toward employees; 4)Mis-reporting actual time or hours worked; and 5)Discrimination.

11. TWO OPPOSING VIEWS Managers are professionals They don’t own the business Employees are responsible only to shareholders Must operate in best interests of shareholders Interests = FINANCIAL RETURN Corporations are chartered by states Corporations are not independent entities Responsibility to larger society that endorses their creation Company’s first priority = SURVIVAL CLASSICAL/ECONOMIC SOCIO- ECONOMIC

12. Can Business Ethics Be Taught in College Programs? Felix Rohatyn - “No, not past the age of 10” Lester Thurow - “Not unless students have already learned ethics from families, clergy, previous school or employers”

13. Should Employees Know the Difference between Right & Wrong? “Bad Apples” Individuals of good character should be able to choose well without special training. “Bad Barrels” Good character doesn’t prepare individuals to deal with very special ethical problems unique to their particular occupation or organization.

14. Factors that Affect Ethical Behavior Ethical Dilemma Stages of Moral Development MODERATORS Individual Characteristics Issue Intensity Structural Characteristics of Organization Organizational Culture Ethical/ Unethical Behavior

15. CON... Ethics Violates Profits Maximization Lack of Skills Dilution of Purpose Lack of Accountability Too Much Power Cost

16. PRO... Ethics Prevention over Cures Balance Responsibility & Power Better Environment Discourage Government Regulation Possession of Resources Long-run Profits Public Image Ethical Obligations Public Expectations Stockholder Interests