ETHC 301 – C1 – Wednesday, September 29 2010 Read “ an ethical dilemma in chapter one “ Read “ Monsanto attempts to balance stakeholder's interests case study. Business Ethics: The study of human conduct. Business Ethics comprises the principles, values, and standards that guide behavior in the world of business. Business Ethics: An inquiry into the nature and grounds of morality where the term morality means more judgment, standards, and rules of conduct. Principles: values are specific boundaries for behavior that are universal and absolute. Values: are used to develop norms that socially enforced like integrity, trust and credibility. Insider Trading: is getting inside information and using it to ones' own interest. (Unethical) Code of Ethics: Nepotism = واﺳطﺔStudying Business Ethics is an awareness programs. It let us recognize what is right from wrong. You may identify ethical issues when they arise and use the approaches available for resolving them. You will also learn more about the ethical decision making process and about the ethical decision making process and about ways to promote ethical behavior within your organization. You will be able to cope with conflicts between your own personal values and those of the organization in which you work. The Benefits of Business Ethics 1- Employee commitment. 2- Investor loyalty. 3- Customer satisfaction These three within an ethical culture will eventually lead to: 4- Ethics contribute to profit.
Transcript
ETHC 301 – C1 – Wednesday, September 29 2010
Read “ an ethical dilemma in chapter one “
Read “ Monsanto attempts to balance stakeholder's interests case study.
Business Ethics: The study of human conduct.Business Ethics comprises the principles, values, and standards that guide behavior in the world ofbusiness.
Business Ethics: An inquiry into the nature and grounds of morality where the term morality meansmore judgment, standards, and rules of conduct.
Principles: values are specific boundaries for behavior that are universal and absolute.
Values: are used to develop norms that socially enforced like integrity, trust and credibility.
Insider Trading: is getting inside information and using it to ones' own interest. (Unethical)
Code of Ethics:
Nepotism = واسطة
Studying Business Ethics is an awareness programs. It let us recognize what is right from wrong. Youmay identify ethical issues when they arise and use the approaches available for resolving them. Youwill also learn more about the ethical decision making process and about the ethical decision makingprocess and about ways to promote ethical behavior within your organization. You will be able to copewith conflicts between your own personal values and those of the organization in which you work.
These three within an ethical culture will eventually lead to:4- Ethics contribute to profit.
ETHC 301 – C2 – Monday, October 04 2010
The development of business ethics: business ethics have evolved along with other businessprinciples over the years.
The industrial revolution started by misusing people and taking people in the wrong way. Treatingpeople like machines. There is also a reaction to an action, if you have certain force. There will be areaction to that force.
Code of ethics were created to set principles that are made out of good conduct, in which followingthem would result in a positive ethical behavior.
Three School of Thoughts: (Evolved From One Thought to Another)
Classical Management School
Behavior Management School
Human Relation Management School
Environmental Stability & Sustainability Management School
Ch.2 Stakeholder Relationships, Social Responsibility, and corporate governanceMain Elements:
Stakeholders: Are the external & Internal Audience for the organization. They could be fromemployees to perspective customers, or analysts. Primary Stakeholders: Customers, Employees,Shareholders, and Community. Secondary Stakeholders: Mass Media, Competitors, Special InterestGroup.
Social Responsibility: The responsibilities that falls under each person in regards to the society aswhole. Maximize Positive Impacts, Minimize Negative Impacts.
Corporate Governance: It is the governing body of the organization, they are the body that set rulesand principles within the organization in which it must be followed.
Stockholders: Are the shareholders of the organization, or the internal audience such as people whoowns stocks in the company, or employees, and managers.
Relationship between Stakeholders and Ethics? Ethics are highly linked to the reaction for thestakeholders of the company. An unethical behavior may and will create a negative impact on thestakeholders towards the organization. While a positive behavior, will create a positive impact on thestakeholders as whole towards the organization.
ETHC 301 – C3 – Wednesday, October 06 2010
Read Ethical Dilemma in Chapter 2 and answer its questions:
Jack 17 years with the company bossCarla 2 years with the company where her boss is jack
Jack personal feelings took over him to do unethical behaviorshis son needs money for school so he had to go unethicalStole the company software (he thinks it is not stealing)worked alone with clients off site without the company acknowledgment
He started working unethically after turning him down.
Carla doesn't know what to do? Should she tell the managers about it? Will they believe her wordsover jack the old employee?? would she be willing to sacrifice her job…......................
answer Monsanto case on page 66 next class.
Altruism = إیثار
Read About:
أبوالعیشابراھیمیونسمحمد
You can use your cleverness in creating either an Ethical or Unethical Businesses.You can use your capability in Ethical or Unethical means.You are driven Ethically, or driven Unethically.
The shortcuts are not always efficient, and most likely they will be unethical. However, takingshortcuts could be necessary sometimes. So, if you must take shortcuts, then ensure to make it as lessharmful as possible to yourself and also to others.
Read The Ethical Dilemma Beginning in Chapter 3.
Talk about Integrity: Define it, How it relates to Ethics.
ETHC 301 – C4– Wednesday, October 13 2010
Ch: 3 - Emerging Business Ethic Issues
Recognizing an Ethical Issue
Ethical Issues and dilemmas in business
The challenge of determining an ethical issue in business
Not recognizing an ethical issue is very dangerous for business organizations if business istreated as a game in which ordinary rules of fairness don't apply.
When you think of just making profit and increase sales then.
“Business is business” Mentality.
Check table 3-1 and tick the most observable issues in the table.
Honesty: truthfulness or trustworthiness to tell the truth and nothing but the truth. Business is not agame, Business is not a warfare.
Fairness: being just equitable, and impartialEquityReciprocity: Give as much as you take, don't take without giving back.
Integrity: Being whole, credible, honest and reliable.Its uncompromising adherence to ethical values. Integrity is very important value for business peoplein the 21st century organization. (High chance to come in exam). Integrity is about being ethical all thetime.
Other issues: Abusive or intimidating behavior is Very bad for employees. It begins by physical threatto false accusation, insults, harshness, roundness, profanity (curse), sweating.
Have your intentions at the center.
Watch bullying, it could be illegal now.
Read Article “ Changing others through changing one self “On Dr. Melhem Website the article file is called “ACT” - You can download it from the downloadsection.
Lying
Distorting the truth, some is related to joking. Lying by commission - like gimmicks in advertising andlying by omission.
ETHC 301 – C5 – Saturday, October 16 2010
Ethical Issues related to the Arabic Culture:
- Nepotism have a higher impact.
- It takes longer to process information than what it usually takes outside the the Arabs World Becauseof (Unnecessary Delays)
Arriving on Time (Arriving Late)
Leaving Workplace Early
Tribal Discrimination
Bribes and بخشیش
Integrity Issues
There is no anti- التجاريللغشفعالةمكافحةیوجدال
No effective work for anti-piracy... Pirated Software found everywhere easily.
Most Ethical Issues in the Arabic cultures are mostly directed towards human resources.
ETHC 301 – C6 – Monday, October 18 2010
Types of Fraud:
Accounting Fraud: To evade taxes for example
Marketing Fraud: Producers Misleading consumers in relation to the 4p's
Consumer Fraud: When consumers commit fraud such as lying or shoplifting or changing pricetags.
Other Ethical Issues:
Insider trading
Intellectual property rights
Privacy issues
The Challenge of determining and ethical issue in business
(Look up the book; Chapter 5 and case study: Arthur Anderson)
ETHC 301 – C7 – Wednesday, October 20 2010
Chapter 5: Ethical Decision Making and Ethical Leadership
Important: Fame Work for Ethical Decision Making in Business. Check figure 5-1.
Habits of strong Ethical Leaders:
Ethical leaders have strong personal character.
Read more on book......................................................
Ethical issue intensity. What is it? And what is moral intensity?
The answer to the first question lies in the following:To what extent you view certain ethical issue as critical, problematic with negative consequences ornot. It's the important you (or the team or the organization) attach to a certain ethical issue.
Are you concerned and anxious or cheating. Two people have different levels of concern. Put a weightfrom 1 to 10 on the level of your concern to the issue of cheating.
The instructor believes that “The Family” has the highest influence on intensity.
Others to follow are:
The Workplace
Religion
Legal System
Community
Profession
Read on the internet about Locus of Control
ETHC 301 – C8 – Saturday, October 23 2010
1. Describing the legal and ethical issues surrounding Anderson's Auditing of companiesaccused of accounting improprieties.
2. What evidence is there that Anderson's corporate culture contributed to its downfall?3. How can the provisions of the Sarbanes-Oxly Act help minimize the likelihood of auditors to
identify accounting irregularities?
Arthur Anderson Case: Ideas and Lessons:
- Once exemplified the rock solid character and integrity that was synonymous with theaccounting profession.
- Accounting, auditing and consulting and independency.
- Investors lost about $300 Billion.
- Hundreds of thousands of people los their jobs.
- Closed in 2002, after 90 years of business.
- Auditing is the process of checking and examining the organization financial statements.
- What happens when growth becomes the highest priority?A: Grow moderately, or grow without sacrificing the organization integrity or quality.
- Growth became Arthur Anderson's culture, growth was aggressively promoted… BAD!
- The company lost 100s of millions of dollars just to settle claims brought by clients andinvestors.
- News that Enron had overstated earnings became public, sending shockwaves through thefinancial markets.
Arthur Andersons corrupted others and got corrupted by:
1. Baptist Foundation of Arizona2. Sunbeam3. Waste Management4. Enron5. WorldCom & Telecoms
Enron was forced to restate five years worth of financial statements that Anderson had signed offShredding Enron Statements.
Anderson's CEO had viewed the $1 million a week in audit fees from Enron paid to Anderson alongwith the consulting fees it paid to Anderson's Spin off firm, Accenture, as a significant opportunity toexpand revenues at Andersons.
Culture what matters most!
- Growth and making short Money was the only language spoken at this big company with manythings to hide and cover up.
- Trust then, was destroyed.
- Billions of Dollars were lost.
- Many people lost their jobs.
- Again distrust prevailed.
Lookup:
Culture – Corporate Governance: How would they relate to ethical standards?
ETHC 301 – C9 – Monday, October 25 2010
Moral Intensity: Refers to a person's perception of social pressure and the harm the decision will haveon others.
- Common concern regarding ethical issue in the organization is important. So managers need tocreate a common concern to avoid ethical conflict.
Individual Factors: (related to intensity issues & decisions made)
- Gender
- Education
- Nationality
- Age
- Locus of Control: To which extent you control the destination of your life. It is when youbelieve that your destiny is controlled by yourself or external forces such as fate or luck.
Internal Locus of Control: When a person believes that his behavior / actions are guided by hisown personal decisions and efforts.
External Locus of Control: When a person believes that his behavior / actions are guided byexternal forces such as fate, luck, etc…
Organizational Factors: (related to intensity issues & decisions made)
- A corporate culture
- Ethical culture
- Significant others
- Obedience to authority
Q) Define Locus of Control? Explain the differences between internal and external locus of control?Provide Example. (Important)
ETHC 301 – C10 – Wednesday, October 27 2010
Major One Review:Chapters: 1, 2, 3.
Multiple Choices - True/False - Three Essay; Choose Two
- Cases not included
- Focus on the book main context (Principles)
ETHC 301 – C11 – Monday, November 01 2010
Hypocrisy: نفاق
Moral Intensity: refers to a person's perception of social pressure and the harm the decision will haveon others.
Common concern regarding ethical issue in the organization is important. So managers need to createa common concern to avoid ethical conflict.
Individual Ethical Factors: Age, Gender, Etc…
Organizational Ethical Factors:
- A corporate Culture
- Ethical Culture
- Significant Others
- Obedience to Authority
Opportunity: Relation to Ethical Behavior?
- Intrinsic Rewards
- Extrinsic Rewards
The Role of Leadership in a Corporate Culture:
- Leadership – Define Leadership?
- Are you a leader or a manager?
- Can you as a leader create programs to maintain ethical culture?
- Planning, Organizing, Directing, and implementing an ethical program.
H.W. Q) what are the differences between a Manager and a Leader?
ETHC 301 – C12 – Wednesday, November 03 2010
Leadership:
- Transformational vs. Transactional Leadership.
- Do you know other forms of leadership?
- Level Five leaders,
- Visionary Leaders.
- Authentic Leaders.
Successful Leaders:
- Professional
- Humility
3M Leader was shy and full of humility???
Habits of strong ethical leaders:
1. Have strong personal character.2. A passion to do right3. Proactive4. Consider stakeholder's interest5. Role Models6. Transparent and actively involved in org D-M7. Competent managers who take a holist view of the firm's culture.
ETHC 301 – C13 – Saturday, November 06 2010
Read Case: Case No. 3 – Enron – P. 76
Book: In Search of Management
Q) What is the impact of using legitimate / coercive / referent … and expert / referent power?
ETHC 301 – C14 – Monday, November 08 2010
Q) What is the impact of using legitimate / coercive / reward … and expert / referent power?
A) Compliance and Commitment…….
Positional Sources of Power: Legitimate / Coercive / Reward (Compliance): I will do what you askedme to do.
Personal Sources of Power: Expert / Referent (Commitment): I will do what you asked me to do andextra.
P.289: Framework of Organizational Culture Typologies (Understand It)
ETHC 301 – C15 – Wednesday, December 01 2010
Defining Corporate Culture:
Three Main Elements:1- Culture is shared among organization members.2- Culture is formed over a long period of time.3- Culture is relatively stable.
If ethics is a major component of corporate culture, employees will be rewarded for observing ethicalbehavior. HR will hire people based on ethical standards and measures, marketing and sales will doaccordingly, finance will do so and so on and so forth.
Managing culture is very important. When managed effectively, culture will be the source of success.Culture will be the secret behind that success.
Managing culture means what?Planning and directing the organization to have the right culture, healthy culture and effective culture.An ethical culture that does not compromise its ethical values under whatever circumstances.
Managing Culture includes creating an ethical culture by determination, planning, organizing, andleading that culture.
Rewarding people and disciplining people according to their compliance to he right ethical standardsapplied by the organization.
Compliance vs. Value based ethical cultures
Use of legal departments to determine ethics, auditing departments, monitoring systems. Theproblem with this is that its short-term approach rather than a long term one.
Value based ethics culture is based on clear mission statement that defines the firm as well as howcustomers and employees should be treated. The focus here is on valued not rules. The first isconsistent with single loop learning whereas the second is consistent with double loop learning(explaining why not just what).
Differential Association:Differential Association refers to the idea that people learn ethical or unethical behavior whileinteracting with others who are part of their role-sets or belong to other intimate personal groups.Also, superiors have a strong influence on the ethics of their subordinates.
Whistle – Blowing
Exposing an employer's wrongdoing to outsiders.
Two forms of whistle blowing:1- Internal: means inside the organization.2- External: to outside the organization.
Protect whistle blower against retaliation.
ETHC 301 – C16 – Saturday, December 04 2010
Motivating Ethical Behavior:What is Motivation?What is job performance?Do you know about Maslow's hierarchy?
Some people may overbill time worked on projects to satisfy their family basic needs.
Once people continue up the ladder, they might become tempted by obeying company rules andpolicies and concerned with internal recognition and achievement over their family needs.
ETHC 301 – C17 – Monday, December 06 2010
Motivating Ethical Behavior
- What is meant by Frustration-Regression theory in Maslow's hierarchy of needs?
- Individual's personal ethics and needs will significantly affect his or her ethical decisions.
- What is higher order needs and lower order needs in Maslow's hierarchy?
Lookup: Cons and Pros of Centralization vs. Decentralization
Centralization affects ethical issues:
- Behaving according to the "letter of the law" rather than spirit. Strict rules and regulations.
- Little upward communication makes top managers unaware of unethical issues down thehierarchy. Including sweatshop, labor and forced labor. Enslaved in sweatshops and migrantlabor working on farms and building homes.
- Blame shifting or scapegoating.
- System thinking problem.
What is decentralized organization?Empowered lower level managers and employees might misuse authority and get engaged inunethical problems and sometimes disasters like the Bhopal disaster in India…
Select 3 to 5 key words which you may empower your employees without misusing empowerment:1- Trust2- Character3- Knowledge and Skill4- Rewards5- Information Sharing
Which one more ethical, centralization or decentralization?
There are cases where centralization creates the grounds for unethical behavior and there are caseswhere decentralization is. Rules are necessary for central organization and culture is necessary fordecentralization.
Group Dimensions of corporate structure and culture:Type of groups:
1- Formal Groups2- Informal Groups
Formal Groups:1- Committees: What is groupthink?Ethical committees are good for recent ethical crisis in the business. They need to be independentand avoid politics. Also, the committee needs to have guidelines and policies and rules to avoidpersonal conflict. Texas Instrument is a good example.2- Work Groups3- TaskforceEtc…
Informal Groups:
- Friends
- Fan Groups
ETHC 301 – C18 – Saturday, December 11 2010
Which one more ethical centralization or decentralization?
Answer: There are cases where centralization creates the grounds for unethical behavior and thereare cases where decentralization is. Rules are necessary for central organization and culture isnecessary for decentralization. Why?
Ch. 8 – Developing an Effective Ethics Program
- The responsibility of the corporation as a moral agent.
- The need for organizational ethics programs.
- An effective ethics program.
- An ethics program can help avoid legal problems.
- Codes of Conduct.
- Ethics Officers.
- Ethics training and communication.
- Systems to monitor and enforce ethical standards.
ETHC 301 – C19 – Saturday, December 18 2010
Which one more ethical centralization or decentralization?
Answer: There are cases where centralization creates the grounds for unethical behavior and thereare cases where decentralization is. Rules are necessary for central organization and culture isnecessary for decentralization. Why?
Ch. 8 – Developing an Effective Ethics Program
- The responsibility of the corporation as a moral agent.
- The need for organizational ethics programs.
- An effective ethics program.
- An ethics program can help avoid legal problems.
- Codes of Conduct.
- Ethics Officers.
- Ethics training and communication.
- Systems to monitor and enforce ethical standards.
Discuss the rest of chapter 8 – Teamwork Discussion
Ethics Training and Communication:One of the important steps in designing an ethics program is the design of an effective ethicstraining program. There are many key-factors that must be taken into consideration in order tohave an effective ethical training program, and they are:
1- The training program must identify the risk areas that the employees are currently facing orwill face in the future.
2- The training must also provide how to deal with these risk areas… by providing real examplecases and developing options.
3- The training program must emphasize that wrongdoings will not be accepted in theorganization, by informing them that they will be individually responsible for their actions.
4- Allow the employees to voice their concerns. If necessary, make it anonymous… and make sureto provide feedbacks for them.
ETHC 301 – C20 – Saturday, December 25 2010
Factors that Determine Ethical Behaviors:
- The personal Social Culture (Verify)
- Organizational Culture
- Unrealistic Expected Performance
- Decision Making Process
- Leadership
Firms influence their employees…
↓ Chapter: 9 ↓
2- Benefits of Ethics Auditing:- For the Organization.- For Stakeholders.- Identify potential risks and liabilities.- Improve its compliance with the law.- Improve relationship with stakeholders.- Enron could have been saved!- Trust Creation and Building…
ETHC 301 – C21 – Monday, December 27 2010
Major 2 Notes:
How to read the case study?
Independence vs. Combining Auditing and Consulting,Doing so will create a conflict of interest… combining auditing and consulting was a major factor forArthur Anderson's Corruption. When auditing and consulting get combined, independency is lost.
What happens when growth becomes the highest priority?Growth becomes their culture, growth becomes promoted and the people who provided growth werepromoted… Having growth as the only aim without considering other factors will eventually triggerunethical behaviors… This is true as growth could be achieved by any means necessary… Grow shouldbe a future aim or a future goal… but it should never be as the only and highest priority for a company(Important Question) A company needs a strong ethical infrastructure that shapes a strong ethicalculture which will eventually lead to achieving the growth in the correct manner.
Arthur Anderson Corrupted and Got Corrupted by:1- Baptist Foundation of Arizona2- Sunbeam3- Waste Management4- Enron5- Telecoms and WorldCom
Culture is what matters most!
If Growth was the Culture of the firm, trust will be destroyed (as people knew their true aim is growth,this may let people think that they may not provide the needed tasks in the correct manner) …andwhen trust goes down… Money will be lost… This would lead to people losing their jobs… EventuallyDistrust will prevail in the economy.
Type of Questions:
- Multiple Q's
- True & False
- Essay
ETHC 301 – C22 – Saturday, January 01 2011
Chapter 9: implementing and Auditing Ethics Programs
The Auditing Process – 7 Steps
1. Secure commitment of top managers and board of directors – this is very clear and self
evident.
2. Establish a committee to oversee the ethics audit – who do you suggest?
3. Define the scope of the audit process: (for example, environmental issues, employee rights,
discrimination, fraud, legal compliance)
4. Review Organizational mission, values, goals, and policies, and define ethical priorities. Why?
5. Collect and analyze relevant information: this is to identify the tools or methods for measuring
the firm's progress in improving employees' ethical decisions and conduct.
6. Verify results by an independent party.
7. Report findings via the ethics audit report to the board o directors, and external stakeholders.
The strategic importance of ethics auditing:
- Auditing ethical performance can generate many benefits. The ethics audit provides anassessment of a company's overall ethical performance as compared to its core values, ethicspolicy, internal……………………………………. (Book)
……….….......In summary, ethics audit is a tool to ensure the health of the system and its overall effectiveness anddevelopment.
