Transcript Management Communication About Ethics

Management
Communication About
Ethics
The Difficulties of Managing for
Ethics
Vocabulary: “Business Ethics”
•What is “Business” ?
•What is “Ethics” ?
Business is inherently social
• Business has its own culture
• Enron, Paypal, your office
• Business Transforms Culture
• Kiewit, FNB, community outreach
• Business is about relationships
• Workers, subcontractors, suppliers
Business: Its purpose/goal
• Lone Ranger/I am an Island View:
The purpose of business is to make me
money, and increase stockholder value
(Milton Friedman)
Alternate Stakeholder View:
• Business should make money, but it has many
stakeholders– groups/individuals who have a stake in
what the business does. Owners are not the only one’s
with a stake (Freeman)
Your business behavior makes the
world Better or Worse for people:
• The way you treat your customers
• The way you treat your employees or
coworkers or patients
• The way you treat your boss/company
• The way you contribute to the local
community
Responsibilities in Business:
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To your employer
To Customers
To employees
To boss/es
To your community
To your family
To your God
“Ethics” isn’t “legal”
Difference between the Law and Ethics:
• Some legal issues are neither ethical or
unethical.
• Some ethical issues have no laws to
support them.
• Law often tries to encourage ethical
behavior:
– Better to have self-regulation than more gov’t
regulations
Compliance
with Laws
SWEET
SPOT
Compliance and Ethics Program
Ethical
Behavior
Ethics and Regulation
• Government regulation often is designed
to promote ethical behavior:
– SOX
– OSHA Regulations
– EPA Regulations
– Federal Sentencing Guidelines
Federal Sentencing Guidelines
• 1. Having Standards
• 2. Assigned Responsibility - Adequate
Resources
• 3. Due diligence in Hiring
• 4. Communications and Training
• 5. Monitoring, Auditing, Reporting
• 6. Promotion and Enforcement of Ethical
Conduct
• 7. Reasonable Steps to Prevent Misconduct
Company Ethics
• 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
• Minimal: What we shouldn’t do
• Don’t steal, don’t kill, don’t lie
• Better: What we should do (justice)
• Be fair, Be honest, Fulfill duties, work hard
• Best: What we could do to make things
excellent for all of us…
• Mutual of Omaha Project, Real Estate
The Point is: Realize the good
you do in society!
• Businesses do have an effect on
society and culture. Business is not
just about making money.
Moral Psychology
WHY DO PEOPLE
DO WRONG
THINGS?
Milgram Experiment
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?
• 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 subcontractors 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
More Moral Psychology:
WHY DO PEOPLE
DO THE RIGHT
THINGS?
Kohlberg’s theory of moral
development
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Stage 1: Obedience and Punishment
Stage 2: For self-benefit
Stage 3: For sake of reputation (good boy)
Stage 4: Maintain Social order
Stage 5: Contractual-Legalistic orientation
Stage 6: Conscience/Principle Orientation
Moral Principles for Living
and Working
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Banker Friend: “look in the mirror rule”
Showgirl from Las Vegas: Grandma rule
Golden Rule: do unto others…
Silver Rule: do no harm…
What rules do you use?....
Business Ethics Issues
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Fraud
Abusive Behavior/Harassment
Conflicts of interest
Defective products
Bribery
Theft (patents, copyrights, etc)
Guiding Questions
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Questions to help decide if the situation
or decision has ethical dimensions
– Is it legal but unethical?
– Is it necessary?
– Does it involve a core ethical principle such
as honesty, integrity, truthfulness, etc.?
Guiding Questions: Info
• Information gathering questions
– Who are the stakeholders and what are their
rights?
– Consider the source, reliability, and accuracy
of all relevant information.
– Who should be involved in this decision?
– Do I have enough information to make a
sound ethical decision? If not, how do I get
it?
Questions to help identify and
evaluate alternatives
– Am I rationalizing to justify what I want to do?
– Am I using anyone for my own personal gain? (Who
will be injured and how)
– Are there conflicting loyalties to stakeholders?
– What would result in the long run if everyone did this?
Guiding Questions: Conclusion
• Questions that help in reaching a decision
– Could I defend my position before the Board of
Directors, the CEO, or the media?
– What would ______________________ do? (Fill in
the name of the best role model you know.)
– Will this seem to be the right decision a year from
now? Five years from mow?
– Do I have the moral courage to take the more ethical
course of action? (Am I willing to pay the price for my
convictions?)
Moral Muteness
• The fact that managers rarely talk about
ethics directly. Managers talk instead
about:
– a. organizational interests
– b. practicality
– c. economic good sense
In reality, many of their decisions
are actually guided by
• a. morally defined standards codified in
law
• b. professional conventions
• c. social mores
And they defend moral activities
such as:
• a. service to customers
• b. effective cooperation among personnel
• c. use of resources for company’s benefit
Go it Alone:
• Managers struggle with ethical issues, but
don’t talk to one another about it much:
• “Morality is a live topic for individual
managers but it is close to a non-topic
among groups of managers.”
Communication& Follow-Through
are Essential
• While normative expectations are
explicitly given through legal rulings,
regulatory agencies decrees,
professional codes, organizational
policies and social mores, if these are
not communicated well, and acted upon,
the message will not get out.
What is communicated?
Ethics Materials:
Mission
Values
Code of conduct/ethics
Policies
Decision methods
Your culture
Ethics program:
Who is the Ethics Officer? How to
make contact?
Senior Management
Commitment to Ethics:
Why organizational ethics matters?
Methods of Communication
Evaluate current ethics communication lines
– Formal and informal
– downward, upward, and two way
Clear, consistent, credible messages across
communication lines
More about Methods of
Communication
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Hiring Announcements
Website
Email
Brochures
Meetings – Formal & Informal
Orientation sessions
Newsletters
Manuals
Code Handbooks w/certifications
Badges and Wallet Cards
Key Fobs
Causes of Moral Muteness:
• 1. Threat to Harmony: moral talk often
requires some challenge and confrontation
Causes of Moral Muteness:
• 2. Threat to efficiency:
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a. if done with ideological exhortations it
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i. does not facilitate problem solving
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ii. doesn’t usually clarify issues
iii. seems self-serving
Causes of Moral Muteness:
• Threat to Efficiency (cont’d):
• b. moral talk adds an extra burden to
business decisions—seen as distraction
• c. Adds additional rules and regulations,
may hinder quick decisions
Causes of Moral Muteness:
3. Threat to image of Power and Effectiveness
• a. moral ideals highlight imperfections in
current practices
• b. managers don’t want to expose their own
moral illiteracy
• c. lower managers are expected to solve
their own problems
Consequences of Moral
Muteness
• 1. Moral Amnesia: forget that ethics is part of
business
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Ex: Milton Friedman acts as though business
should be concerned only with profit, not social
responsibility, yet he alludes to 8 important
ethical issues: no fraud, no deceit, fair
competition, respect law, respect contracts,
recognize employee and investor rights,
maximize consumer satisfaction and freedom
Consequences of Moral
Muteness
• 2. Narrowed conception of morality:
Discuss business only in terms of strategy
and common sense, and avoid discussing
the ethical reasons for the decision.
Ethics is construed to be only for the
severely immoral—rules to punish
breakers.
Consequences of Moral
Muteness
• 3. Moral Stress: managers who don’t
discuss the ethical issues will have more
stress that they internalize
Consequences of Moral
Muteness
• 4. Neglect of Abuses: Many moral issues
are simply not organizationally recognized
and addressed. “Many moral abuses are
ignored, many moral ideals are not
pursued, and many moral dilemmas
remain unresolved.”
Consequences of Moral
Muteness
• 5. Decreased authority of moral standards:
The less we talk about it, the less those
standards will seem real.
Not Just Cheerleading
• Charismatic Leadership and forceful
commands bring about short term change,
but long term changes require shared
values which provide a common
vocabulary for identifying and resolving
problems.
How to make Changes
• Must provide an opportunity for open
discussion without any danger of
retribution or corporate punishment.
Making Changes
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2. Important to help all involved realize
that they hold similar long-run objectives
and value common principles
– Help make shared commitments seem
basic/core
– Less likely to become contentious if unity is
emphasized
– Legitimate dissent will be more cordial and
controlled if ground-rules are set up first.
Making Change Happen
3. Role of Senior Managers:
– Must demand that these ethical
conversations take place
– Need to build these into fabric of
organizational life
– Interventions require patience
Management Creates a Culture
Management is All About Ethics
• “Typically, unethical business practice involves
the tacit, if not explicit, cooperation of others and
reflects the values, attitudes, beliefs, language,
and behavioral patterns that define an
organization’s operating culture. Ethics, then, is
as much an organizational as a personal issue.
Managers who fail to provide proper leadership
and to institute systems that facilitate ethical
conduct share responsibility with those who
conceive, execute, and knowingly benefit from
corporate misdeeds.”
WHAT GREAT LEADERS DO MOST
- the most commonly expressed demands
Gallup Organization
VISIONING
7
D
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N
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MENTORING
BUILD A CONSTITUENCY
CHALLENGING EXPERIENCES
MAKING SENSE OF EXPERIENCES
STABILIZING VALUES
KNOWING SELF
Values
Gallup Organization
“The true test of character is
how we behave when we don’t
know what to do.”
John Holt
Communication
Gallup Values
We have an obligation to communicate. Here, we take the time to talk with one another
and to listen. We believe that information is meant to move and that information moves
people.
Respect
We treat others as we would like to be treated ourselves. We do not tolerate abusive or
disrespectful treatment.
Integrity
We work with customers and prospects openly, honestly, and sincerely. When we say
we will do something, we will do it. When we cannot or will not do something, then we
won’t do it.
Excellence
We are satisfied with nothing less than the very best in everything we do. We will
continue to raise the bar for everyone. The great fun here will be for all of us to
discover just how good we can really be.
Tone at the Top
Gallup Organization
The challenge at the top is to lead
in accordance with the true values
of the organization.
If your organization does not have
an entrenched value system,
don’t claim that you do. Just
writing it down doesn’t make it so.
Enforcement
• Reality: Codes and rules without
enforcement and adherence are useless.
• Question: How do we ensure compliance
with legal rules and corporate policies?
Types of Enforcement
The best policy is to prevent wrongdoing
1. Getting Compliance (preventative)
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Training and Education (‘I didn’t know’)
Review: Audit for compliance and quality
Incentives: compensation and recognition
Model: Leadership talks, and walks the talk
2. Punishment (responsive)
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Clear Sanctions in place
Ethics Committee (method in place)
Someone with oversight responsibility
Summary
• Avoid Moral Muteness through
Communication
• Good leadership will help create a strong
corporate culture of ethics/compliance
• Talking the talk and walking the walk both
are essential
Final Thoughts
• Often, doing the right thing is clear, even if
its not easy
• We tend to cut corners for short-term
apparently inconsequential issues, but this
can come back to haunt us
• Having Ethical Habits takes practice, and
some thoughtfulness.