Ethics: A Challenge For All Times

September 30, 2012Morris W. Beverage Jr., EDMPresident, Lakeland Community College Kirtland, Ohio

A (Owns boat)

B (In love with D)

C (1st other person)

D (In love with B) E (2nd other person)

THE RAGING RIVER CASE

THE RAGING RIVER CASEMost liked person 1. _________________

2. _________________

3. _________________

4. _________________

Least liked person 5. _________________

Ethics The Study of right and wrong, usually including the determining and encouraging of what is right.

Ethical IssueA situation in which there is one answer or choice involving the rule of law.

People no different than you or me can do unethical

things.

Well, certainly people no different than you!

WorldCom• Largest corporate fraud in history• Inflated profits by $3.9 billion• 17,000 people were laid-off within a

week• Stock dropped from $64.50 to 20 cents• CEO Bernie Ebbers was found guilty of

fraud, conspiracy and filing false documents and faces 85 years in prison

• Bernie Ebbers was a great guy

WorldCom• At one time Bernie Ebbers was no

different than us.• At one time the CFO was no different

than us.• At one time the accountants that

made the erroneous entries were no different than us – and, they even wrote out their resignation letters and held them all the way through the fraud.

WorldCom• Accountants knew what they were

doing was wrong (Prepaid Capacity)• The belief was that it would all turn

around• They thought they were doing the right

thing in the long run by:• Protecting shareholders• Protecting workers• Protecting the economy

So, how do we get fromtoday’s session to

perpetratingthe greatest fraud in U.S.

corporate history?

THE RAGING RIVER CASEMost liked person 1. _________________

2. _________________

3. _________________

4. _________________

Least liked person 5. _________________

ValuesA tightly held belief upon which a person acts by choice, an enduring belief that one way of behaving is personally or socially preferable to the opposing way of behaving.

Ethical DilemmaA situation in which there is a conflict in the minds of people between values, or a conflict between what is right and what is wrong. You have to make a choice.

Personal Values

Accomplishment - measurable achievement, fame, career

Independence - self-reliance, self-sufficiency

Competition - winning, being #1

Leadership - exercising influence over others

Cooperation - helpfulness, being involved in team activities

Loyalty - sense of duty

Courage - standing up for your beliefs

Money - having it, financial security

Creativity - using imagination, being innovative

Recognition - respect, admiration from others

Equality - equal opportunity for all

Responsibility - feeling that others can depend on you

Excitement - adventure, challenge

Self Confidence - self-esteem, faith in your talents

Honesty - sincere, truthful, integrity

Stability - order, tranquility

Shadow of the past and the future*

* Robert Axelrod – The evolution of cooperation

Past Present

Future

Plain Dealer Big League Baseball Poll*• 19 hitters

• 13 pitchers

• Inserted questions about cheating as part of a wide-range anonymous survey

*Dennis Manoloff, The Plain Dealer, June 11, 2003

Plain Dealer Big League Baseball PollTo the 19 hitters…….Would you use a corked bat if you

were told you could hit a home run in a world series game and never be exposed?

NO: 12 “Couldn’t live with myself.”YES: 5 “If you ain’t cheatin’, you ain’t

tryin’.”

Abstention: 2

Plain Dealer Big League Baseball PollTo the 13 pitchers…Would you use a blatantly doctored

ball to record a game-ending strikeout in the world series if you were guaranteed never to be exposed?

NO: 8 “If I can’t strike the guy out playing fair, I shouldn’t be playing.”

YES: 2 “Whatever it takes to win a ring.”

Abstention:

3

Plain Dealer Big League Baseball PollTo the 19 hitters….If you knew a grounder ruled a hit

should have been ruled an error, would you urge the official scorer to change the call if it meant ending your hitting streak at 55 games?

NO: 15 “Why should I?”YES: 3 “To tie DiMaggio? I’ve absolutely

got to get it changed.”Abstentio

n:1

Plain Dealer Big League Baseball PollTo the 13 pitchers….If you knew a grounder ruled an

error in the ninth inning should have been ruled a hit, would you urge the official scorer to change the call if it meant ruining what could have been a no-hitter?NO: 8 “If one of those jokers wants to call it

an error, fine. He’s got to live with that, not me.”

YES: 4 “The last thing you want is a tainted no-hitter.”

Abstention:

1

Social Defection• Social Contract

•Maximize the capacity to do what I want while also letting OTHERS do what they want.

•Each individual will forego certain selfish, personal opportunities in exchange for profiting from the cooperation of others.

•Balancing “self-interest” with “community interest”

Social Defection• In 2000, Stephen King offered

to provide an electronic book, one chapter at a time, if at least 75% of the downloads were paid for ($1 per download)

• 120,000 downloads of the first chapter

• 40,000 downloads of the second chapter, but only 46% were paid for

• He said on his website – “If you pay, the story rolls. If you don’t, the story folds.” He folded it.

Social Defection• Defecting results in gaining at others’

expense• Cheating:

I cheat + You don’t = I winYou cheat + I don’t = You win

• Our “social contract” is only in balance if either we both cheat or we both don’t cheat.

• AKA “social reciprocity”: I will commit to NOT defect when I can, and expect others to NOT defect when they can.

Why “good” managers make bad ethical choices*

• Manville Corporation• Continental Illinois Bank• E.F. Hutton

*Saul W. Gellerman, Harvard Business Review, July-August 1986

The Four Rationalizations*

I.A belief that the activity is within the reasonable ethical and legal limits – that is, that it is not “really” illegal or immoral.

*Saul W. Gellerman, “Why ‘good’ managers make bad ethical choices,”Harvard Business Review, July-August 1986

The Four Rationalizations

II.A belief that the activity is in the individual’s or the organization’s best interests - that the individual would somehow be expected to undertake the activity.

The Four Rationalizations

III.A belief that the activity is “safe” because it will never be found out or publicized; the classic crime and punishment issue of discovery.

The Four Rationalizations

IV.A belief that because the activity helps the company, the company will condone it and even protect the person who engages in it.

So What?

So how does it happen?

How do we wake up one day and choose to do wrong things

instead of right things?

Defining Moments• Right vs. Right

Responsibility to yourself and others

Responsibility for others

Responsibility shared

So what?

Ethics: A Challenge for All Times

Thank you!