BA 325 - Part A

1 - Unethical Behaviors in Organizations and Human Nature

OVERVIEW

Businesses significantly improve the quality of life by providing goods and services that fulfill consumer needs. Service to others, one of the most admirable ethical standards, is at the heart of business operations.  Providing goods and services is just one ethical aspect of organizational operations. Doing business also involves a network of human interactions – employees, customers, suppliers, other organizations, and government. Some of these people may have high ethical standards, some may not. Federal, state, and local governments, along with regulatory agencies, create new rules and regulations to ensure that stakeholders are treated appropriately.

This chapter discusses why appropriately managing ethics is essential for every organization. The prevalence and costs of unethical behaviors at work can be substantial. In addition, appropriately managing ethics provides ethical organizations with many competitive advantages. Despite these competitive advantages, however, unethical behaviors continue to occur because every person is morally imperfect. The chapter reviews different theories of human nature and Kohlberg’s six stages of moral development, and explores why good people occasionally behave unethically.

After completing this chapter, students should be able to:

• Explain the competitive advantages of creating and maintaining an ethical organization
• Appreciate that unethical behaviors occur in all organizational operations
• Identify common types of unethical behaviors
• Understand that unethical behaviors can be very costly to organizations
• Describe different theories of human nature and the stages of moral development
• Discuss why good people occasionally behave unethically

KEY WORDS

Action sequence: consists of the motivation behind the act, the act itself, and the consequences of the act.

Altruistic behaviors: the deliberate pursuit of actions intended to benefit the interests or welfare of others.

Cognitive dissonance: when an individual holds inconsistent or contradictory attitudes and beliefs, which creates an unpleasant state of mind.

Conscience: the inner sense of pure goodness that guides people when deciding that something is right or wrong; many religions attribute it to the voice of God within us.

Ethics: set of principles a person uses to determine whether an action is good or bad.

Good Samaritan: someone willing to assist a stranger.

Human nature: the moral, psychological, and social characteristics of human beings.

Inherited sin: religious belief that a morally damaged soul joins the body at birth, the damage attributed to Adam and Eve or previous ancestors.

Kohlberg, Lawrence: Harvard psychologist (lived 1927–1987), influenced by the writings of Jean Piaget, who sought to answer how children and adults from many cultures formed moral judgments in response to a series of ethical dilemmas.

Moral imperatives: principles originating in a person’s mind that compel people to action.

Piaget, Jean: among the first psychologists (lived 1896-1980) to outline stages of cognitive development based on patterns he observed in children, including his own.

Stages of moral development: an individual’s moral reasoning can sequentially progress through six distinct stages – obedience-and punishment orientation (stage 1), instrumental orientation (stage 2), good boy—nice girl orientation (stage 3), law-and-order orientation (stage 4), social contract orientation (stage 5), and universal ethical principles orientation (stage 6).

Stakeholder: any person or organization that is affected by, or could affect, an organization’s goal accomplishment.

Tabula rasa: the mind as a blank slate on which people store moral rules and knowledge based on life experiences.

WHAT IS ETHICS?

ETHICS DEFINED

When an organization employs someone, that individual brings to work not only unique job skills, but also his or her ethics. Ethics is the set of principles a person uses to determine whether an action is good or bad. Interactions involving owners, customers, employees, lenders, suppliers, and government officials have an ethical dimension. Human beings possess free will and can choose to behave ethically or unethically in a particular situation. Even if the decision-maker believes he or she is being ethical, someone harmed by the action may think otherwise.

 

ACTION SEQUENCE

Ethical analysis takes into consideration all aspects of an action sequence. An action sequence consists of the motivation behind the act, the act itself, and the consequences of the act. Decisions are initiated by motives and result in consequences: Are the motives and intentions behind the decision good or bad? Are the consequences and outcomes of the decision good or bad?  There is nothing inherently right or wrong with a manager speaking to an employee. It is the motivation that led to the act, and the consequences of an act, that carry ethical weight. In this sense, actions and behaviors are surrounded, or sandwiched, by ethics.

• An ideal ethical situation is one in which a person has good motives and the act results in good consequences. When this alignment occurs people often do not realize the act has an ethical dimension.
• On the other extreme, the most unethical situation is one where a person has bad motives and the act results in bad consequences. Those committing these acts often realize what they are doing is wrong, but do so anyway, maybe to achieve some personal gain at the expense of others.
• Many action sequences fall within these two ethical extremes, and either motives or consequences fall short of the ideal.

 

Sometimes, good motives can generate bad consequences. Trying to help a colleague perform one task, for example, might distract the person from meeting an important deadline. Sometimes, bad motives can generate good consequences. An employee’s selfish refusal to assist an annoying colleague may result in the colleague obtaining assistance from an even more qualified person. When evaluating these less-than-ethically-ideal situations, some people place greater ethical weight on having proper motives, while others place greater weight on achieving favorable consequences.

 

 

HOW OFTEN DO EMPLOYEES EXPERIENCE ETHICAL DILEMMAS?

 

 

DAILY OCCURRENCE

People experience ethical dilemmas at work every day. Just about every decision made during a day has ethical ramifications. The decision can be based on good-bad motives and result in good-bad consequences.

Examples of daily ethical dilemmas:

• Should you arrive at work early, on time, or late?
• Should you submit adequate work that meets a deadline, or submit the highest quality work possible and miss the deadline?
• Should you inform your boss about your colleague’s questionable work habits?
• Should the organization incur additional costs for environmental protection technologies not required by law?
• Should you leave work at the designated time or cancel after-work plans and stay late to finish a project? 

 

Each of these decisions and actions is subject to ethical analysis that considers competing obligations and outcomes. Even if an employee does not think the decision is an ethical issue, the person benefitted or harmed may think so. Arriving late to work may seem deserving after laboring hard the previous day. But other employees may be waiting for essential information that only the late arrival possesses.

WHAT ARE THE MOST COMMON TYPES OF UNETHICAL BEHAVIORS IN ORGANIZATIONS?

EXTENT OF UNETHICAL BEHAVIORS AT WORK

- Every organization is confronted with ethical and unethical behaviors. The Ethics Resource Center survey results about work-related ethical issues:

- Approximately 50% of the more than 3,010 respondents observed at least one type of major ethical misconduct in the workplace during the past year (2009 survey)

- Nearly half of the observed major ethical misconducts violated the law (2009 survey)

 

In 2003, 25% of respondents reported that their peers were not committed to ethics. The number of respondents claiming that their peers were not committed to ethics rose to 34% in 2005 and 39% in 2007.

In 2009, the types of ethical misconduct survey respondents observed most within the previous 12 months include:

- Company resource abuse (23%)

- Abusive or intimidating behavior towards employees (22%)

- Lying to employees (19%)

- Email or Internet abuse (18%)

- Conflicts of interest (16%)

- Discrimination (14%)

- Lying to outside stakeholders (12%)

- Employee benefit violations (11%)

- Employee privacy breach (10%)

- Improper hiring practices (10%)

- Falsifying time or expenses (10%)

 

These ethical misconducts were observed in:

- Both large firms (27%) and small firms (16%)

- All sectors examined, including government agencies (29%), nonprofit organizations (26%), publicly traded for-profit firms (25%), and privately held for-profit firms (25%).

During a five and a half year period, 2000 to mid-2005, forty Fortune 100 companies either pled guilty to a crime, were found guilty of a crime, or agreed to settle a case out of court for acts such as fraud, discriminatory practices, undisclosed executive pay, antitrust violations, and patent infringements.

In 2009 Gallup Poll, only 16% of the respondents expressed confidence in “Big Business,” compared to 82% in the military and 67% in small businesses.

 

In 2008 Gallup Poll, when asked to evaluate the honesty and ethical standards of different professions, the scores for having high or very high ethical standards for some professions were:

- 83% for nurses

- 66% for pharmacists

- 12% for business executives

- 10% for insurance salespeople

- 9% for stockbrokers

- 7% for car salesmen

 

MANAGERS AS VICTIMS

Managers and owners are also victims of unethical behaviors:

- 20–44% of all resumes contain lies about work histories, educational background, or other credentials.

- 33% of employees calling in sick are really tending to personal needs, family needs, stress, or feel entitled to a day off.

- 24% of the government’s unemployment system overpayments are due to fraud.

 

The percentage of employees engaged in theft is a staggering 60%. In addition to the usual pilfering of pens and paper, the most common employee misuses of corporate assets for personal use are:

- Email: 63%

- Web Browser: 45%

- Fax Machine: 45%

- Software: 33%

- Mail/Overnight Delivery: 23%

- Wireless Phone: 22%

- Digital Copier: 18%

 

PROFESSION AND INDUSTRY ISSUES

Every profession and industry experiences ethical problems.

In the accounting/auditing profession:

- falsifying reimbursement or time reports

- working slowly without concern for budget limits

- excessively surfing the web

- using company resources for personal purpose

- ignoring manager input

Legal profession, along with accountants and auditors: Billable hours. One egregious case involved a lawyer charging a client 3,500 billable hours for one year’s work, which averages out to almost 10 hours a day, 7 days a week, every week of the year.

In the construction industry, 84% of survey respondents reported that they personally experienced, encountered, or observed unethical industry-related acts or transactions during the past year, with 34% claiming this happened many times. The top five major issues were:

- bid shopping

- change orders

- over-billing

- unreliable contractors

- questionable claims

Public relations and sales professions: According to a survey of 1,700 public relations executives:

- 25% lied on the job

- 39% exaggerated the truth.

A survey of sales and marketing representatives revealed that:

- 79% heard a salesperson make an unrealistic promise on a sales call

- 78% caught a competitor lying about their company’s products and services.

Government agencies: According to the 2007 Ethics Resource Center survey, on whether the responded observed at least one form of ethical misconduct within the previous twelve months:

- 52% of federal government employees did

- 57% of state government employees did

- 63% of local government employees did

 

OPERATION AREAS

Every employee level and operational area is confronted with ethical issues. Unethical discriminatory practices based on race or gender can occur in dealings with suppliers, employees, customers, the government, or the public. Unethical discrimination can occur at any level of the organization—Board of Directors, executives, middle managers, staff, or production employees—or in any department—accounting, finance, human resources, or marketing:

- Among Chief Financial Officers: 67% had been pressured to misrepresent corporate results.

- Among Middle Level Managers: 25% admit to having written a fraudulent internal report.

- Among Secretaries:

57% had either been asked, or observed someone else being asked, by their boss to lie

43% were asked to sign someone else’s name to a legal document

36% were asked to prepare a document that included false or misleading information

36% report that they were verbally harassed

21% sexually harassed at work

17% shared confidential information about an employee’s salary

15% shared confidential information about hirings, firings, and layoffs

 

 

IN WHAT WAYS DO UNETHICAL BEHAVIORS INCREASE ADDITIONAL COSTS?

Managers often underestimate the costs associated with unethical behaviors. The most direct cost is lost business. It only takes one unethical behavior for an organization to lose a key customer or find itself sued by an aggrieved party.

Arthur Andersen’s $9.3 billion revenue stream evaporated after the federal government indicted the accounting firm for its involvement in the Enron scandal.

 

LEGAL COSTS

• Lawsuits are one of the most easily quantifiable costs associated with unethical behaviors.
• In a 2007 survey, 40% of the 250 largest U.S. corporations had at least one new lawsuit filed against them worth $20 million within the past year, and 20% spent at least $5 million for outside counsel.
• The median award for employment civil rights cases settled in U.S. District Courts between 2006 and 2007 was $158,000.
• The Equal Employment Opportunity Commission (EEOC) maintains an annual database of charges filed and resolved under various antidiscrimination laws, such as age discrimination or sexual harassment.
• Totals for fiscal year 2009 and offers a comparison to fiscal year 1997.

 

EMPLOYEE THEFT

• Theft represents a cost directly incurred by the organization for hiring untrustworthy employees. 
• Employees can steal money, products, or time.
• Theft-related costs that are individually minimal – doing personal emails, Internet searchers, and phone calls on company time – become substantial when aggregated across an entire workforce.
  • For instance, the U.S. Department of Interior calculated that non-work related Internet usage by its employees cost taxpayers $2 million and a loss of 104,221 work hours annually.
• The biggest source of retail industry theft is employees, not customers. Missing product is five times more likely the result of an employee than a professional thief, and fifteen times more likely the result of an employee than a shoplifter.
• According to an annual survey conducted for the National Retail Federation:

• Retail stores lost more than $41 billion from theft and fraud in 2006, 1.5% of total sales.
• Approximately $20 billion of the losses, or 50%, were attributed to employees.
• Theft can occur at all levels of an organization. Dennis Kozlowski, one of the highest paid CEOs in the world, and other Tyco executives defrauded shareholders of more than $600 million.

 

MONITORING COSTS

Organizations incur monitoring costs when they employ, or do business with, unethical individuals. According to an electronic monitoring and surveillance survey conducted by the American Management Association:

• 76% of the responding organizations monitor and review email
• 51% use video surveillance
• 36% monitor employee computer time

 

REPUTATION COSTS

• An organization’s reputation is one of its most important assets.
• Reputation management is a high priority for many corporations and accounts for 63% of their market value.
• An organization’s reputation can be severely damaged when lawsuits and accusations of unethical behavior appear in the media, or when customers register complaints with the Better Business Bureau.
• Continuous negative publicity creates substantial barriers for consumer engagement.
• Goldman Sachs announced a $3.46 billion profit for the first quarter of 2010, a time when Wall Street investors anxiously sought good news. But instead of being rewarded, Goldman Sachs stock price declined by 2% because of negative publicity surrounding the sale of bonds brokers expected to decline in value.

 

ABUSIVE TREATMENT COSTS

Researchers attribute a wide range of costs to less egregious unethical behaviors, such as a verbally abusive manager:

• Abusive supervision affects approximately 13% of U.S. workers.
• Costs in terms of absenteeism, healthcare costs, and lost productivity have been estimated to be $23.8 billion annually.
• Some employees “get even” with the abusive boss by stealing money or product from the organization. Others may work less diligently when the abusive supervisor is not closely monitoring their activities.
• Employees can also release the abuse they incur on others, such as on colleagues, subordinates, or customers requesting help.
• The stress associated with working for an abusive boss can lead to reduced productivity, additional health care costs, absenteeism, and turnover.
• Customers who have been mistreated by a belligerent manager or employee also have a variety of ways to “get even.” According to medical malpractice research studies, the most prevalent predictor of lawsuits is not the doctor’s skills or training. Instead, it is the quality of the relationship between doctor and patient. Potential litigants tend not to sue doctors they like.

 

RECRUITMENT AND TURNOVER COSTS

As will be discussed in the following section, unethical organizations incur greater costs recruiting employees, customers, suppliers, and investors, and must provide some premium to offset their ethical deficiencies.

The lack of loyalty between an unethical organization and its key constituents is mutual, resulting in higher turnover among employees, customers, suppliers, and investors.

These same ethical problems and costs can be found in small businesses. Some businesses are more likely to employ high school and college students on a part-time basis, a group of employees susceptible to unethical peer pressure and less committed to the organization. In addition, they may be more prone to bullying from a large unethical customer or supplier.

 

 

WHAT ARE THE COMPETITIVE ADVANTAGES OF CREATING AND SUSTAINING AN ETHICAL ORGANIZATION?

A growing amount of research on organizational performance has shifted the theoretical debate from choosing between ethical performance and financial performance to choosing ethical performance because of its contributions to financial performance. List of 11 competitive advantages.

 

ATTRACT AND RETAIN HIGH QUALITY EMPLOYEES

If you were a job applicant, would you rather work for an ethical or an unethical organization?

- Ethical organizations, compared to unethical organizations, are more likely to attract high-quality employees, have higher levels of employee satisfaction, and greater employee commitment to both the organization and product or service quality.

- If the pay is similar, job candidates consistently choose the ethical organization rather than the unethical organization. Individuals only choose job offers from unethical organizations if pay and benefits are substantially higher. 

 

ATTRACT AND RETAIN HIGH QUALITY CUSTOMERS

If you were a customer, would you rather purchase products or services from an ethical or unethical organization?

- A stellar ethical reputation is priceless marketing and leads to higher levels of customer satisfaction and loyalty.

- When product price and quality are similar, potential customers consistently choose the ethical organization over the unethical organization.

 

ATTRACT AND RETAIN HIGH QUALITY SUPPLIERS

If you were a supplier, would you rather sell your products and services to an ethical or unethical organization?

- An ethical organization attracts high-quality suppliers and has higher levels of supplier satisfaction and loyalty.

- Potential suppliers consistently choose to sell to the ethical organization that pays a fair price rather than the unethical organization. 

- Suppliers depend on their customers to pay their bills on time and prefer to partner with customers they trust.

 

ATTRACT AND RETAIN HIGH QUALITY INVESTORS

If you were an investor, would you rather do business with an ethical or unethical organization?

- High-quality investors are attracted to ethical organizations, which lead to higher levels of investor satisfaction and loyalty.

- If anticipated return-on-investments (ROIs) are similar, potential lenders and investors consistently choose the ethical organization rather than the unethical organization.

 

EARN GOOD WILL WITH COMMUNITY MEMBERS AND GOVERNMENT OFFICIALS

If you were a community leader or government official, would you rather interact with an ethical or unethical organization?

- Ethical organizations honestly communicate with stakeholders and pay their fair share of taxes.

- In return, ethical organizations earn the respect of, and gain access to, community leaders and government officials.

- When problems arise between a company and powerful constituency groups, politicians are more likely to provide a sympathetic perspective to the company if it has a stellar community service reputation.

 

PERFORMANCE BENEFITS

A host of performance benefits that ethical organizations achieve because they attract high-quality employees and are trusted by customers, suppliers, investors, and government officials:

• Greater trustworthy information for decision making
• Higher product and service quality
• Higher levels of employee productivity
• Less employee theft
• Less need for employee supervision

 

TIPS AND TECHNIQUES emphasizes the importance of providing a business case (impact on profit, revenue, and performance) for persuading employees about the importance of being ethical.

 

BEST PRACTICE IN USE: STARBUCKS 2009 GLOBAL REPSPONSIBIILTY REPORT demonstrates how the company monitors its socially responsible behaviors in five key areas: ethical sourcing, environment, community service, customer wellness, and diversity.

 

 

WHAT ARE THE DIFFERENT PERSPECTIVES ON HUMAN NATURE?

HUMAN NATURE

• Given the many financial benefits associated with ethical behavior, and the many costs associated with unethical behavior, why don’t all organizations excel in ethics? The core of the problem can be found in the nature of human beings.
• Human nature refers to the moral, psychological, and social characteristics of human beings. It is very difficult to understand the mental and moral state of babies.
• Philosophers, theologians, anthropologists, sociologists, and psychologists have explored and debated for centuries the moral dimensions of human nature at birth. No consensus has been achieved.
• Their responses, derived through both reason and faith, can be categorized into four areas: Infants are born with prior knowledge of right and wrong, good, with inherited sin, and/or morally neutral.

 

BORN WITH PRIOR KNOWLEDGE OF RIGHT AND WRONG

• Among the ancient Greek philosophers, Socrates (469-399 BC) and Plato (427-347 BC) theorized that individuals are born with a soul – consisting of mind, emotions, and desires – that forms an individual’s inner essence.
• The mind, filled with ideas, pre-existed in a spiritual realm and joined the body at birth.
• With age and experience, individuals rediscover what they already knew about the world at the time of birth.

 

BORN GOOD

• The second perspective on human nature tends to be grounded in religious faith.
• Theologians in a variety of faith traditions – including branches of Christianity, Judaism, and Islam – maintain that all individuals are born in the image of God, or with a conscience, which is good.
• The soul is pure and sinless at birth, and seeks perfect goodness.
• Conscience, in this context, is the voice of God, or pure goodness, within us.
  • Individuals possess free will and can act in accordance with the goodness embodied within their soul or conscience, or choose to do wrong.
• According to the philosopher Jean-Jacques Rousseau (1712-1778), children are born good and then learn immoral behaviors from morally corrupt adults and institutions.
• University of Virginia Psychology Professor Jonathan Haidt maintains that infants are born with a “moral sense” consisting of four groups of emotions that help individuals differentiate right from wrong: (1) other-praising emotions: gratitude and moral awe; (2) other-condemning emotions – contempt, anger, and disgust; (3) other-suffering emotions: sympathy, compassion, and empathy; and (4) self-conscious emotions: guilt, shame, and embarrassment.
  • These emotions are developed over time, inform our sense of right and wrong, and guide people along a moral path.

 

BORN WITH INHERITED SIN

• Others believe that individuals are born morally imperfect, or with inherited sin.
• This does not mean individuals are born evil, just morally imperfect.
• Due to inherited sin, a morally damaged soul joins the body at birth and needs to be healed.
• Roman Catholics and many Protestants trace inherited sin to Adam and Eve’s disobedience to God’s will.
• Hindus and Buddhists believe that a morally imperfect soul is reincarnated from one individual to another.
• The individual currently embodying the soul is challenged to purify the inherited moral imperfections of the individual who previously embodied the soul.

 

BORN MORALLY NEUTRAL

• Lastly, some philosophers maintain that individuals are born morally neutral.
• Aristotle (384–322 BC) disagreed with his teacher Plato’s view that infants possessed pre-existing ideas, and argued that at birth the mind is an “unscribed tablet”.
• Many centuries later, John Locke (1632-1704) referred to this as a “tabula rasa,” or blank slate, on which people store moral rules and knowledge based on life experiences.
• Infants are born with moral capacities, but are not pre-programmed with a set of moral principles.
• Their sense of morality is shaped by culture.
• Moral principles are learned through parental influence, experiences, and reason.

 

 

DESCRIBE THE SIX STAGES OF MORAL DEVELOPMENT.

COGNITIVE DEVELOPMENT

Whether born morally perfect, imperfect, or neutral, children are born into a particular family, neighborhood, and culture that influence their moral judgment. Parents are a child’s most direct role model and shape the child’s environmental experiences. A child’s brain receives and analyzes information, and formulates decisions. With the passage of time, these decisions tend to form a pattern.

Jean Piaget (1896-1980) was among the first psychologists to outline stages of cognitive development based on patterns he observed in children, including his own.

- During the first two years of life, the child has an egocentric understanding of the world – the belief that what he or she sees, hears, feels, and thinks is what everyone else sees, hears, feels, and thinks.

- Infants express a social smile by 6 weeks of age, laughter and curiosity by 3 months, anger by 8 months, and fear of social events, strangers, and separation from caregiver by the age of one, when they are also able to speak their first coherent words.

- At 18 months, children exhibit self-awareness, and feelings of pride, shame, and embarrassment.

- Around age 2, through play and other activities, the child becomes more socio-centric and realizes that other people see, hear, feel and think differently.

- By 2.5 years of age the child understands what it means to be good or bad, and by age three can empathize with another child’s situation. As the child’s conscience forms, the child becomes more capable of self-regulating emotions and behaviors.

 

STAGES OF MORAL DEVELOPMENT

Everyone has the potential to be kind or cruel to others. Harvard psychologist Lawrence Kohlberg (1927-1987), influenced by the writings of Jean Piaget, analyzed how children and adults from many cultures formed moral judgments in response to a series of ethical dilemmas.  The most famous of these ethical dilemmas is a situation involving Heinz, a fictional person who stole a highly priced rare drug from a pharmacist to save his dying wife.

 

• Based on extensive research, patterns emerged in terms of how people reasoned through the ethical dilemmas.
• According to Kohlberg, people sequentially progress through a continuum of six stages of moral development, beginning with egocentric punishment avoidance and culminating at the level of universal ethical principles.
• An individual might stop progress at any point along the stages of moral development.
• The six stages are subdivided according to three levels: Preconventional, Conventional, and Postconventional.

 

PRECONVENTIONAL LEVEL: Moral reasoning is based on what benefits the individual. Only my interests exist and matter. Moral determination is based on my own needs and wants.

STAGE 1: OBEDIENCE-AND-PUNISHMENT ORIENTATION. Right is determined by obeying rules from a superior authority and avoiding punishment.

STAGE 2: INSTRUMENTAL ORIENTATION. Right is determined by a selfish desire to obtain rewards and benefits from others. You should be nice to other people so that they will be nice to you.

 

CONVENTIONAL LEVEL: Moral reasoning is based on applying a social role or group membership analysis. The interests of other people must be considered. Moral determination is based on performing good or right roles, pleasing others, and maintaining societal order.

STAGE 3: GOOD BOY – NICE GIRL ORIENTATION. Right is determined by winning the approval, and avoiding the disapproval, of others. You should be concerned about the feelings of other people and keep loyalty and trust with partners.

STAGE 4: LAW-AND-ORDER ORIENTATION. Right is being a dutiful citizen who follows societal rules and maintains social order.

 

POSTCONVENTIONAL LEVEL: Moral reasoning is based on applying abstract universal principles. There are societal and beyond societal perspectives that matter. Moral determination is based on abiding by abstract principles applied to society.

STAGE 5: SOCIAL CONTRACT ORIENTATION. Right is determined by preserving mutually agreed upon human rights and changing unjust laws for the sake of community welfare. Individual freedom should be limited only when such freedom interferes with other people’s freedom.

STAGE 6: UNIVERSAL ETHICAL PRINCIPLES ORIENTATION. Right is determined by following abstract universal ethical principles (such as justice, the Golden Rule, equality, and respect for life). These principles represent a universal consciousness that all humanity should follow.

 

An individual’s sequential passage through the six stages of moral development is influenced by three factors: age, respect for people at the next higher stage, and moral discomfort.

 

First, progression is somewhat dependent on age because the mind becomes more capable of understanding abstract thoughts over time.

- Most children under the age of nine, some adolescents, and some adults (particularly criminals) reason at the preconventional level. All pleasure seeking pursuits are good until the pain associated with a scolding parent or authority figure outweighs the pleasure.

- Most adolescents and adults reason at the conventional level, which is why this level is called conventional or ordinary. They want others to perceive them as being good, and understand the importance of laws for maintaining societal order and peace.

- Some adults, and a few adolescents, reason at the postconventional level. They are compelled to follow the dictates of their conscience, which is based on universal ethical principles.

 

Second, people predominantly apply one stage of moral reasoning, are comfortable applying lower stages, admire people one stage higher, and consider people two stages higher ethically naïve.

- A manager who reasons primarily at the “Good Boy-Nice Girl” stage will occasionally justify actions based on concern for punishment and rewards, admires managers who apply “law and order” concerns, and thinks managers who apply concern for universal human rights to decision-making do not understand how businesses should operate.

 

Third, moral discomfort plays a key factor in explaining why some adults never progress beyond the preconventional level (stages one and two), and most adults stop moral reasoning progress at being a good group member (stage three) or law-abiding citizen (stage four).

• If an individual is always content with the conclusions a particular level of moral reasoning generates, then there is little motivation to advance to the next higher sequential stage.

 

Cognitive dissonance occurs when an individual holds inconsistent or contradictory attitudes and beliefs, which creates an unpleasant state of mind. Individuals relieve this moral discomfort by reasoning at the next higher stage of moral development, which they admire.

 

WHAT IS THE EXTENT OF LIES AND CHEATING IN SOCIETY?

LIES AND CHEATING

- Managers need honest information from other employees and stakeholders to achieve optimal organizational performance. Yet, truthfulness is particularly challenging for many people.

- “Do not lie” and “do unto others as you want done to you” are two moral imperatives, principles compelling people to action, found in all cultures and major world religions.

- Despite these often repeated moral messages, children and adults conceal and falsify the truth on a daily basis and lie when it is to their advantage. For instance, people commonly lie about health issues, alcohol consumption, income level, weight, age, and sexual encounters to impress others, avoid punishment, or protect the feelings of others.

- At what age do individuals begin to lie? Children lie and deceive others as soon as they can formulate and articulate alternative strategies, which is soon after they can speak.

• A child will deny having eaten forbidden food if the consequence of truth telling is punishment.
• If a forbidden activity is fun, children try to experience the forbidden activity beyond parental observation and then deny having done so if asked. This pattern remains a challenge throughout life.
  • Researchers report that 96% of children videotaped while engaged in play on two observations lied at least once.
  • As a child ages, lying to help a peer group member avoid punishment outweighs being honest with a parent, teacher, or anyone in authority.
  • Within the past year, 82% of high school students have lied to a parent about something significant and 62% lied to a teacher.
  • Among high-achieving high school students, 80% cheated at least once the past year.
  • 52% of college business students surveyed cheated on a test or written assignment
  • Adults lie on average once a day and tell one lie for every five social interactions lasting more than ten minutes.
  • The IRS estimates that more than 10 million Americans purposely underpay their income taxes.

 

Results of a nationwide adult telephone survey:

• 91% lied regularly
• 35% stole office supplies
• 33% lied on a job application
• 31% cheated on his or her spouse

• 25% cheated on income taxes
• 22% lied to the boss
• 22% stole from a store

• 20% exaggerated an insurance claim

 

ALTRUISM

Moral imperfection, however, is just a small aspect of human activity. If adults lie once a day, then they are honest and truthful hundreds or thousands of times every day. At any given moment, hundreds of millions of acts of kindness take place around the world.

According to developmental psychologist Michael Tomasello, helping behaviors are also innate because preverbal children exhibit them prior to being taught rules of polite behavior by their parents.

- By 18 months of age toddlers exhibit altruistic behaviors, the deliberate pursuit of actions intended to benefit the interests or welfare of others.

- People open doors for strangers, set aside time to help friends and family-members, and make philanthropic donations, sometimes anonymously.

- Nearly half of all Americans perform a volunteer service

- 30% of Americans volunteer at least once a month.

- In 2008, Americans donated $229 billion to nonprofit organizations, which is an average of 2.2% of personal disposal income.

 

WHY DO GOOD PEOPLE BEHAVE UNETHICALLY?

- Ethics would be easy to manage if it were simply a matter of detecting and dismissing evil people. But that is not the nature of life in organizations.

- Most employees are good people; otherwise they would be in jail rather than being employed.

- Good people occasionally make ethical mistakes, which at times can be very costly for an organization.

 

 

UNINTENDED UNETHICAL BEHAVIORS

- Sometimes the unethical outcome was not intended. The person may have good motives, but insufficient knowledge or awareness.

- Sometimes the ethics of a situation are ambiguous or complex.

- The unintended unethical behavioral outcome could result from a misaligned management system rather than the fault of a particular employee.

 

CHOOSING BETWEEN COMPETING VALUES

- Sometimes ethical dilemmas arise and the decision maker must choose between two competing values, both of which are morally appropriate. But in choosing one set of moral values over another, those not benefitted from the decision can claim the choice was unethical.

- Rushworth Kidder notes that “The really tough choices, then, don’t center upon right versus wrong. They involve right versus right.”

- Kidder identifies four classic ethical dilemmas based on competing values. All four of these ethical dilemmas represent hard choices where an aggrieved party can claim the decision maker has behaved unethically even though the decision maker thoughtfully made what he or she considered to be a highly ethical decision:

• Truth versus Loyalty
• Individual versus Community
• Short-Term versus Long-Term
• Justice versus Mercy

 

INTENTIONAL UNETHICAL BEHAVIORS

- The most basic justification for behaving unethically, as suggested by Kohlberg’s theory of moral development, is to avoid punishment and receive praise.

- On a broad contextual level, some good people attribute their occasional unethical misbehaviors on an organizational culture that either encourages or tolerates them.

- Some good people behave unethically as a result of feeling pressured to do so.

- A survey conducted by the Society for Human Resource Management and the Ethics Resource Center found that 24% of the respondents were pressured to compromise ethical standards either periodically, fairly often, or all the time. Of those feeling pressured, the top five organizational sources were:

1.   Following the boss’s directives (experienced by 49%)

2.   Meeting overly aggressive business or financial objectives (48%)

3.   Helping the organization to survive (40%)

4.   Meeting schedule pressures (35%)

5.   Wanting to be a team player (27%)

- Stanley Milgram, a professor of social psychology, conducted a series of troubling social experiments demonstrating how good people are capable of physically harming others if directed to do so by someone in authority willing to take responsibility for the act.

The results: 65% of the research subjects proceeded, at 15 volt increments of increasing severity, to the maximum 450 volts of punishment despite the learner’s agonizing pleas to stop.

During the post-experiment debriefing, research subjects reported that they continued to obey the experimenter’s commands even though their own conscience urged them to stop physically harming the learner.

- Behaving unethically to be a team player highlights the importance of an employee’s sense of belongingness.

- Lastly, a good person may behave unethically because the end goal is so essential that the ends justify the means.

Executives may provide false financial statements to the public because they believe this is the only way their companies can survive a difficult financial situation.

An employee might provide a boss with false performance information so as to protect his or her job status.

 

FAILURE TO REPORT UNETHICAL BEHAVIORS

Based on in-depth interviews with employees, researchers found that 85% had not raised an important issue or concern to their bosses on at least one occasion. The top reasons for not informing a manager about unethical behaviors were:

- Fear of being labeled or viewed negatively by others, such as being considered a troublemaker, tattletale, or complainer

- Fear of damaging relationships with the person committing the unethical act

- Fear of retaliation or punishment from the person committing the unethical act

- Fear of negatively impacting the life of the person committing the unethical act

- Fear of being blamed for the problem

- Belief that management would not act on the issue if informed

The justifications provided earlier for unintended unethical behaviors and intentional ethical behaviors also justify remaining silent.

- These justifications for inaction are apparent in “Good Samaritan” research studies that examine whether a person’s willingness to assist a stranger is based on personality characteristics, issue sensitivity, or a contextual factor, such as time.

- Researchers examined what attributes best predicted which seminarians ignored the person’s pleas for help.

- Seminarians in a hurry were the least likely to help, even if they had scored highly for serving others or had just practiced giving a sermon on the Good Samaritan.

- Time pressures, and other situational factors, can blind good people to the ethical ramifications of their decisions or influence them to behave unethically.

 

Best Place to Work – SAS

 

“The Spill,” Frontline, about the BP Oil Spill, October 26, 2010, 54 minutes

 

Born with Blank Slate Mind and Innate Traits: Steven Pinker talks about his book The Blank Slate which argues that all humans are born with some innate traits; February, 2003, 22 minutes

Human Beings Compared to Animals: Jane Goodall, the primatologist, says the only real difference between humans and chimps is our sophisticated language; March 2002, 28 minutes

A conversation about how the brain controls social behavior; January 19, 2010, 53 minutes

 

A conversation with former Secretary of Education William Bennett about his book "Our Sacred Honor", which offers pieces of moral wisdom from the country's founding fathers; October 1, 1997, 31 min

2 - An Historical Perspective on Business Ethics

OVERVIEW

Business ethics must be understood from an historical perspective to appreciate how the current economic system and regulatory system has evolved over time. The movement of history has been toward is toward the creation of a wealthy and just society, which requires balancing economic growth and respect for people. Our current mix of ethical issues in the business sector has grown out of the nation’s unique historical evolution.

Throughout the history of the United States, progress in business ethics has been achieved by extending “rights” to an increasing number of stakeholders, and by the maturation of democracy and the justice system.

This chapter describes the business dimension of Christopher Columbus’ arrival, colonial settlements at Jamestown and Plymouth, and the build up to the Revolutionary War. The philosophically-inclined founders of the United States, wanting to create the most just political and economic system in the world, chose capitalism for the new nation’s economy because of its emphasis on liberty. The nation’s historical struggle to develop an ethical business sector is examined through the Industrial Revolution, formation of labor unions, wage issues, expansion of stakeholder rights, and culminates in the 1991 Federal Sentencing Guidelines. 

After completing this chapter, students should be able to:

- Describe salient business ethics issues in pre-capitalist America

- Understand the ethical foundation of capitalism as argued by Adam Smith in the 1700s

- Appreciate the delicate balance between economic growth and stakeholder rights, particularly labor issues, throughout U.S. history

- Benchmark an organization to the Ethics Compliance Program best practices outlined by the Federal Sentencing Guidelines

- Conceptualize how to maximize ethical behaviors in organizations based on an Optimal Ethics Systems Model 

KEY WORDS

B Corporation: a certification process for branding a business as being ethical, sustainable, and socially responsible.

Bill of Rights: 1791 amendments to the U.S. Constitution establishing the fundament rights of U.S. citizens – right to freedom of speech, press, religion, etc.

Boston Tea Party: action taken in December 1773 by colonists in response to East India Company’s monopolistic business practices; 8 percent of tea consumed in colonial America dumped into Boston Harbor.

Capitalism: an economic system based on freedom and competition in both product and labor markets.

Charters: document granted by the British government that allowed several people to create an organization by pooling their financial resources, which enabled bigger and riskier business projects to be undertaken.

Federal Sentencing Guidelines: a set of rules established in 1991 for determining company fines that encourages, though not requires, managers to implement policies and procedures that reinforce ethical behaviors.

Government regulation: binding rules established by government that restrict business freedom.

Industrial Revolution: Technological innovation based on the division of labor that spread from Great Britain to the United States in the early 1800s; features include hand tools replaced by machines and concentration of business in factories and large firms.

Labor union: an association of employees that advances its members interest, such as wages, benefits, work rules, and other conditions of employment, through collective bargaining with employers.

Living wage: the amount of money a full-time employee needs to either afford the basic necessities in life or exceed the poverty threshold.

Marx, Karl: co-author of Communist Manifesto (published 1848) that declared the workers of the world should unite against greedy capitalists and take over ownership of the means of production.

Mercantilist policies: British economic system based on sanctioning monopolies, quotas, and strict regulation of product and labor markets.

Minimum wage: the lowest wage determined by Congress that an employer can legally pay an employee.

Optimal Ethics Systems Model: a model that synthesizes various best practices approaches for reinforcing ethical behaviors, and reducing ethical risks, throughout the workplace.

Plymouth Company: an association of merchants in England that obtained a charter to establish a trading colony on the northeast coast of America.

Sherman Antitrust Act of 1890: Congressional legislation that outlawed monopolies.

Slavery: labor system where individuals are owned by other people and subject to the whims of their owners.

Smith, Adam: prominent Scottish enlightenment thinker (1723-1790) who conceptualized free market capitalism in Wealth of Nations, published in 1776.

Virginia Company of London: granted charter by King James to search for gold and gems, and trade in furs and spices in now modern-day Virginia and North Carolina.

WHAT ARE SEVERAL SALIENT BUSINESS ETHICS ISSUES IN PRE-CAPITALIST ISSUES?

This section spotlights four pivotal historical periods leading up to the formation of the United States: Christopher Columbus’ arrival, Roanoke and Jamestown settlements, Plymouth settlement, and build up to the Revolutionary War.

- These events were associated with economic growth and entangled in a web of ethical issues prior to, during, and after their occurrence.

- Their culmination led political leaders to choose capitalism as the economic system for the newly formed United States.

 

CHRISTOPHER COLUMBUS’ ARRIVAL

Why did Christopher Columbus risk his life to be the first person to sail west to get to India?

- In 1453, the Ottoman Turks conquered Constantinople. The overland spice trade routes linking Europe to India fell under the auspices of Ottoman government officials who began charging European traders exorbitant taxes for business passing through the city.  Products were confiscated when Europeans resisted payment.

- The Christian rulers of Europe declared it unethical to enrich an Islamic military power that already controlled land in southern Spain and wanted to conquer the rest of Europe.

- The Italian navigator Christopher Columbus proposed an alternative trade route based on sailing west to India rather than east by land or sea.

 

What was Columbus’ business arrangement?

- Columbus secured financial funding for the never before undertaken risky adventure from King Ferdinand and Queen Isabella, who had developed Spain into a commercial leader and military power.

- The monarchs provided Columbus three boats and 39 crewmembers and agreed to fund half the remaining costs, with the other half coming from Italian private investors.

- King Ferdinand’s instructions to Columbus were straightforward: “Get gold, humanely if possible, but at all hazards – get gold.” Columbus signed a lucrative contract that entitled him the rank of Admiral, governor of any new lands discovered, and 10 percent of the revenues generated by the new lands.

 

Ethical Issues?

- Columbus concluded that the indigenous people would be relatively easy to conquer, enslave, and Christianize.

- Columbus kidnapped twenty indigenous people and boarded them on his return ship to Spain. Only eight indigenous people survived the voyage.

- Some Spanish sailors were left behind to establish a trading outpost on Haiti. They raped indigenous women and enslaved their husbands and children. The indigenous people responded by attacking the Spanish fort and killing all of its inhabitants.

- Columbus shipped five hundred slaves back to Spain, of which two hundred died on the trip. The surviving slaves were sold at auctions. Within two years of Columbus’ initial contact, half of Haiti’s 250,000 indigenous population died, mostly from new diseases caused by European viruses.

 

ROANOKE SETTLEMENT

Creation of Charters

- England, France, and the Netherlands competed with Spain to find riches in “America.”

- In the 1580s, Queen Elizabeth I of England granted Walter Raleigh and his business associates a charter to establish a colony in the area of modern-day Virginia and North Carolina to trade, search for minerals, and plunder Spanish merchant ships.

- Charters granted by the British government allowed several people to create an organization by pooling their financial resources, which enabled bigger and riskier business projects to be undertaken. Chartered organizations had to serve a specific public good, such as transportation or insurance, and were limited in terms of function, size, and longevity. Owners of chartered organizations were exempt from debtor’s prison if the business venture failed.

 

Ethical Issues?

- English colonists stole from indigenous tribes when food supplies ran low. Warfare ensued when indigenous tribes realized that the Europeans intended to settle on the land, rather than merely trade.

- By 1591, all English settlers [employees] on the island had died as a result of bad weather conditions, or from an attack by indigenous people or Spanish sailors.

 

JAMESTOWN SETTLEMENT

Creation

- King James succeeded Queen Elizabeth and chartered the Virginia Company of London to search for gold and gems, and trade in furs and spices in the same geographic area.

- One hundred and fifty Virginia Company employees landed in April 1607 and created the Jamestown settlement, named in honor of King James.

 

Ethical Issues?

- The laborers consisted mostly of indentured servants required to serve their masters for seven years in exchange for transportation, food, clothing, lodging, and eventual freedom.

- The indentured servants came from England’s “excess population” of landless tenants, beggars, and criminals.

- Many Jamestown colonists died from starvation or in military battles with indigenous tribes who opposed encroachment on their lands and the kidnapping of their children to Christianize them.

- The colonists began exporting tobacco to England in 1614. Lacking a sufficient number of laborers, the colonists enslaved indigenous men and women to work the tobacco plantations.

- The market for tobacco continued to grow in England and, in 1619, plantation owners began importing slaves from Africa to meet labor needs.

 

PLYMOUTH SETTLEMENT

Background Information

- The Pilgrim settlement at modern-day Plymouth, Massachusetts was also a business venture. The Plymouth Company, an association of merchants in England, obtained a charter to establish a trading colony on the northeast coast of America and recruited the Pilgrims as its settlers. The Pilgrims were willing to take on the risk for religious and economic reasons.

- The Pilgrims were a radical group within the Puritan movement who sought total separation from the Church of England, which they considered corrupt. The Plymouth Company owners, some of whom were Puritans, offered the Pilgrims shares of company stock and transportation to “New England” where they could create their god-centered community in the American wilderness. In return, the Pilgrims had to work off their travel and relocation debts by exporting goods back to England.

- The Mayflower left England in September 1620 with 102 adults and children. Twenty-seven of the 70 adults on the ship were Pilgrims. The other passengers were explorers and indentured servants.

 

Ethical Issues?

- The Mayflower eventually anchored in southeastern Massachusetts, near corn fields that had been harvested by indigenous tribes for thousands of years. Peaceful relations with indigenous tribes ended when, following a harsh winter, Pilgrims violated fur trading pacts and land agreements, stole food, and failed in an effort to broker hostilities between warring indigenous tribes.

- By 1640, 20,000 people from England pursued new business opportunities and religious freedom on land previously inhabited by indigenous people.

 

BUILD UP TO THE REVOLUTIONARY WAR

Background Information

- By 1774, more than 2.3 million European colonists participated in highly regulated business activities along the eastern section of America.

 

Ethical Issues?

- Business and tax policies exacerbated anti-England sentiments. The British government placed restrictions on entrepreneurship, trade, travel, and political activities.

- The Currency Act of 1764 restricted the power of colonies to issue paper money. The Sugar Act of 1764 made colonialists accountable to judicial and tax administrators the British controlled in Nova Scotia. The British Parliament passed the Stamp and Quartering Act of 1765 and Townsend Acts of 1767 to fund continually increasing colonial administrative costs.

- Wealthy colonial farmers and merchants protested that they wanted greater say in self-government. Britain’s taxing polices were unethical, they claimed, because no elected colonialist served in British Parliament. Taxation without representation violated the British Constitution. British troops occupied Boston to silence colonial dissent, which worsened the situation.

- The Boston Tea Party was the result of the East India Company’s monopolistic business practices. In 1773, a worldwide financial panic threatened to bankrupt the company. Parliament passed the Tea Act of 1773, which allowed the East India Company to sell tea on consignment directly to select, and usually politically well-connected, colonial merchants at prices below that of Dutch tea smugglers. The colonial tea merchants not part of the East India Company’s distribution network now faced bankruptcy.

- In mid-December 1773, three British ships packed with tea cargo anchored in Boston Harbor. A large mob of politically agitated colonialists demanded that the ships return the tea cargo to England, which is what happened at harbors in Philadelphia, New York, and Charleston. The Massachusetts governor, loyal to England, refused to let the ships depart. During the standoff, a group of radical colonialists snuck on the ships late at night and dumped the tea, which accounted for 8 percent of the tea consumed in colonial America, into Boston Harbor.

- Acts of civil disobedience intensified and, within two years, the colonialist declared war against their English ancestors.

- On July 4, 1776, colonial leaders declared political independence from Britain, an act of treason punishable by death.

 

 

 

HOW DID ADAM SMITH JUSTIFY THE ETHICS OF CAPITALISM?

ADAM SMITH’S CAPITALISM

James Madison, Benjamin Franklin, and Alexander Hamilton relied on the writings of Scottish philosopher Adam Smith for the economic evidence and ethical justifications of capitalism, a free market economy.

           

Background Info

- Adam Smith (1723-1790), a prominent member of the Scottish enlightenment, applied the concepts “reason” and “liberty” to a wide range of endeavors, including philosophy, politics, economics, and law. Smith had favored colonial representation in British Parliament and was very critical of East India Company’s market monopoly.

- Smith recommended abandoning mercantilist policies that sanctioned monopolies, put quotas on imports, and regulated tradesmen. Key management positions were filled based on family and political connections rather than individual merit. The lack of competition under mercantilism, Smith argued, led to high prices, low-quality products, and shortages.

- Smith formulated capitalism as an economic system ethically superior to government-controlled mercantilism. He insisted that a successful economic system could be devised based on freedom and competition in both product and labor markets.

- In Theory of Moral Sentiments (1759), published seventeen years prior to Wealth of Nations (1776), Smith maintained that individuals typically exercise their free will within the confines of morality.

 

Adam Smith’s ethical defense of capitalism rests on the following beliefs:

- Freedom and liberty are essential values.

- A free people naturally pursue their self-interests and respect the interests of others.

- People will choose to enter product and labor markets where there is the greatest need and opportunity.

- People morally self-regulate their actions based on their conscience, belief in God, concern for the well being of others, and reason.

- A strong system of justice is essential to punish those who do not appropriately self- regulate their behaviors, and to enforce contracts.

 

 

- Government intervention in the marketplace is only needed under three conditions:

1. when contracts are violated
2. when merchants abuse their freedom by committing injustices against others, such as in the case of slavery, and
3. when the pursuit of self-interest does not generate highly desired social welfare benefits, such as national defense and certain public works, such as roads.

 

SMITH ON LABOR ISSUES

Smith highlighted three problems that could occur if owners, in pursuit of greater profits, did not rely on moral sentiments when dealing with laborers.

1. due to an overabundance of labor, owners could drive wages below subsistence amounts because of their ability to “hold out much longer” during wage conflicts. Laborers would become ill-fed and sick.
2. excessive application of piece-rate incentives, could increase productivity in the short-term, but damage a worker’s health in the long-term.
3. excessive application of division of labor could also increase productivity in the short-term, but damage a worker’s intellectual abilities in the long-term.

 

 

DESCRIBE HOW THE US ECONOMY GREW BETWEEN THE REVOLUTIONARY WAR AND WORLD WAR 1

Over the past 200 years industrialized society has doubled life expectancy, eliminated famine, and developed a non-ending list of technological innovations that enhance the quality of life.  Purchasing power increased ten-fold during the twentieth century.

- In slightly more than a century, the United States economy grew from family farms and general merchants offering a wide range of products into the world’s largest economy.

- The nation’s economic system uniquely blends entrepreneurial and large-firm capitalism.

- Individuals are free to create or offer just about any product or service, and large-firms provide mechanisms for bringing new product and service innovations to a global market at affordable prices.

 

THE INDUSTRIAL REVOLUTION

- The Constitution provided patent rights to inventors, which helped fuel innovation. The U.S. Constitution, Article I, Section 8, authorized Congress "to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." People could patent their inventions.

- The Industrial Revolution spread from Britain to the United States in the early 1800s. Technological innovation and the division of labor significantly increased productivity and reduced the price of products.

- For instance, Elias Howe’s sewing machine in 1846 made clothing affordable for more people. Sewing machines initially replaced laborers, but more laborers were eventually needed due to the increased demand generated by lower prices.

- The growth in the number of factories attracted more European immigrants seeking an alternative to the poverty they had been experiencing.

- Westward expansion required the transportation of goods to new markets, and resulted in the creation of integrated industries, cheaper products, and job growth; technologies needed to more quickly connect suppliers and buyers.

• Transportation systems needed iron and steel, and manufacturers of all these products needed coal, oil, and electricity as sources of cheap energy.
• Telegraphs, telephones, postal services, and computers provided faster means of communication over greater distances.
• Apartments and houses were needed to shelter people, schools and colleges to educate them, and movies and television to entertain them.
• Businesses needed accountants to document revenues and expenses, and lawyers to address legal issues.

 

ANTI-TRUST LAWS

- Capitalism has an inherent contradiction.

• Competition is good in part because it forces companies to become more efficient and effective at providing quality goods at affordable prices.
• Successful companies increase market share and unsuccessful companies go bankrupt or are acquired by successful companies.
• As market share increases, some successful small businesses evolve into medium-sized businesses and then large corporations.
• The formerly highly competitive market becomes an oligopoly, where a handful of large businesses compete against each other.
• The best competitor acquires more companies, runs less efficient competitors out of business, and evolves into an anti-competitive monopoly, an end result that is not good.

- By the late 1800s, over fifty industries were characterized by one corporation controlling at least 60 percent of market share.

- The federal government attempted to counteract these anti-competitive trends by creating the Interstate Commerce Commission in 1886, which determined reasonable railway rates.

- A few years later Congress passed the Sherman Antitrust Act of 1890, which outlawed monopolies. Businesses could grow to a certain extent, and then any further growth was illegal. Large corporations wanting additional growth had to apply their skills and expertise in other industries.

 

 

CHARTERS

- Chartering laws changed in response to corporate growth, complexity, and political power, but not always as anticipated.

- In the late 1800s, states competed against each other by simplifying rules for obtaining a corporate charter and eliminating restrictions to attract corporations that could increase a state’s employment levels and tax revenues.

- In 1889, New Jersey, seeking to attract businesses away from neighboring New York City, lowered corporate tax rates and provided corporations the right to purchase stock in other corporations through a holding company, which led to corporate growth through mergers and acquisitions.

- When New Jersey raised corporate tax rates, Delaware became the most corporate-friendly state. Half of all publicly traded corporations are now incorporated in Delaware.

 

CORPORATE LIABILITIES

- Corporate complexity made it necessary to hold corporations, rather than specific individuals, legally accountable. Who should be held accountable for the collapse of a bridge that kills people? Should the harmed parties sue the employees who built the bridge, the manager who established unreasonable work deadlines, or the product supplier?

- Changes in charter laws allowed those harmed to collect financial damages by suing the corporation in addition to, or instead of, a particular employee. As a result, corporations gained some obligations, and rights, previously limited to individuals.

- The continual growth in corporate size led to the passage of shareholder “limited liability” laws. If a small business is sued or fails, the owner is responsible for paying off the lawsuit or debts. But potential purchasers of stock would not invest if personally held liable for paying off a large corporation’s lawsuits or debt.

- The new law limited an individual shareholder’s financial liability to the amount invested.

 

WHAT PROMINENT LABOR ISSUES CHALLENGED THE FAIRNESS OF FREE MARKET CAPITALISM?

Contrary to Adam Smith’s reasoned arguments, some people who benefitted the most from capitalism misused their dominant positions to the detriment of laborers. The most notable ethical problems included slavery, working conditions, and income and wage inequality.

 

SLAVERY

- Slavery, the worst form of labor exploitation, predates capitalism and can be found in almost all ancient societies.

- Slavery is a system where individuals are owned by other people and subject to the whims of their owners. Owners tortured slaves for not meeting work expectations and sexually abused salves for their amusement.

- The number of slaves grew dramatically just prior to the Revolutionary War, from 120,000 in 1756 to 500,000 in 1776.

- The founders of the United States sidestepped the obvious contradiction between liberty and slavery to obtain agreement of southern states to adopt the Constitution. In 1802, when his wife died, George Washington still owned more than 300 slaves.

- The number of slaves picking cotton and other tasks during the same time period grew to 4 million in 1859.

- Slaves received emancipation during Civil War, where more than 620,000 soldiers died, and new ethical issues arose including just compensation, land rights, voting rights, and civil rights.

 

STRIKES AND LABOR UNIONS

- A labor union is an association of employees that advances its members interests, such as wages, benefits, work rules, and other conditions of employment, through collective bargaining with an employer. Unions reduced power imbalances between owners and laborers by organizing employees to speak with a single voice against what they considered unethical treatment. 

- Philadelphia shoemakers formed the first local union in 1792, but thirteen years later a jury composed of merchants found eight members of the shoemakers union guilty of engaging in a criminal conspiracy to raise wages. Business owners claimed that unions violated their property rights and put their companies at a competitive disadvantage because paying higher than market wage rates forced them to charge higher prices for their products.

- Boston factory labor force consisted of newly arriving immigrants, including boys and girls under the age of twelve, who worked from 5 o’clock in the morning to 7 o’clock at night. In addition to long hours, features of factory life included low wages, poor ventilation, payment in scrip redeemable only in the factory store, and a severe fine system for the purpose of maintaining discipline.

- In 1840, Philadelphia strikers won the right to work only ten hours a day. This became the standard for federal employees. But most still worked at least 10 hours a day.

- In the Communist Manifesto, published in 1848, Karl Marx and Engels declared that the workers of the world should unite against greedy capitalists and takeover ownership of the means of production.

- Union leader Samuel Gompers opposed the radical action proposed by Marxists to secure worker rights in the United States and in 1881 helped found the Federation of Organized Trades and Labor Unions to unite independent labor unions. Five years later the union became the American Federation of Labor (AFL).

- On May 1, 1886 unions across the nation went on strike for the eight hour work day. Proponents maintained that a day should be equally divided into three parts: eight hours for work, eight hours for personal interests, and eight hours for rest.

- In 1905, many laborers in the United States still worked 12 hour days. Henry Ford reduced his assembly line shifts to eight hours in 1914 and two years later the Adamson Act established an eight-hour day for railroad workers.

- The passage of the National Labor Relations Act (NLRC) of 1935 during the Great Depression legally obligated employers to negotiate with duly elected unions and codified regulations governing the process for forming a union.

- The Taft Hartley Act of 1947 placed limits on strikes and prohibited Communist Party members from holding union offices.

- The union movement has been hampered by the stigmas of violence and corruption. Violence became a union strategy in response to some business owners hiring thugs to beat up union organizers. People with criminal records rose to union leadership positions and extorted money from businesses in exchange for either not striking or striking a competitor. Managers resisting the extortion were threatened with physical violence and non-delivery of goods.

- Union membership steadily declined from a high of 35 percent in 1955 to 12.3 percent in 2009.

- The highest unionization rates are in the public sector (37 percent), namely employees in government, education, and protective services, such as fire fighters and police officers.

- In the private sector, 7.2% of employees are union members.

 

WAGES AND COMPENSATION

Income Inequality

- Income inequality is not unique to capitalist societies, found in all economic systems.

- Capitalism’s emphasis on liberty has increased national wealth more than any other economic system. In the United States, median family income, adjusted for inflation, increased from $47,400 in 1977 to $58,400 in 2005. Median income declined during the 2007-2010 financial crisis, dropping to $49,777 for 2009.

- But, the wealthiest 1% of the population possesses more wealth than the bottom 90% combined.

- Between 1976 and 2007, the share of total income going to the top 1 percent of earners increased from 8.9 percent to 23.5 percent, whereas the average inflation-adjusted hourly wage declined by more than 7 percent.

- In 2008, Bill Gates had a net worth of $50 billion, and four Wal-Mart heirs were worth an accumulated $80 billion.

- Education, which correlates with wealth, plays an important factor in income inequality. The more education a person receives the higher his or her income, with a slight decline occurring at the doctorate level.

- Median annual salary for a high school graduate is $33,801. About 40% of population has at most a high school degree.

- Median annual for a college undergraduate degree is $55,656.

- 19% of population has Bachelors degree, and only 10% has more education than that.

 

 

Minimum Wage

- The “minimum wage” refers to the lowest wage an employer can legally pay an employee, an amount higher than what the market would otherwise establish.

- In 2008, approximately 2.2 million American wage earners were paid wages at or below (such as waiters/waitresses) the minimum wage [$7.25 an hour in 2011]. This represents 3 percent of the nation’s 75.3 million hourly wage earners aged 16 and over, a significant decrease from 13.4 percent in 1979.

- Established federally by the Franklin Roosevelt Administration’s Fair Labor Standards Act of 1938.

- The ethical principle guiding the legislation was “a fair day’s pay for a fair day’s work.”

- The initial legislative bill proposed for certain industries and extended to other occupations.

- It is periodically increased by Congressional vote, not indexed to inflation.

- The minimum wage’s purchasing power peaked in the mid-to-late 1960s and has declined steadily since then.

- Some free market advocates oppose minimum wage laws because the:

• violate the constitutional right of employers and employees to freely enter into contracts
• artificially raising wages above free market rates, hurting those it is intended to benefit by increasing unemployment, contributing to inflation, and discouraging business investment and growth
• the extra labor costs force employers to hire fewer low-skilled employees and/or increase their prices

 

Living Wage

- A full-time employee earning a minimum wage does not derive enough income to exceed the poverty threshold.

- A “living wage” refers to the amount of money a full-time employee needs to either afford the basic necessities in life or exceed the poverty threshold.

- It is based on the principle that people working full-time should earn enough money to financially support their families.

- Living wage proponents typically recommend indexing the minimum wage to the poverty threshold. In 2006, prior to the 2008 recession, more than 29 million employees earned wages below the official poverty threshold, defined as $9.91 an hour for a full-time employee.

- Most living wage initiatives are local municipal ordinances. Many, but not all, of them apply to private companies providing city services.

- Proponents argue that city government should not contract services from private employers who pay below poverty-level wages.

- In 2003, San Francisco mandated a living wage for all city businesses with at least 10 employees. By 2007, 134 municipalities had some type of living wage ordinance.

 

 

Executive Compensation

- The average compensation for a Fortune 500 Chief Executive Officer in 2008 was $11 million, which includes stock options.

- Assuming a CEO worked 12 hours a day, six days a week, and took a one week vacation, that amounts to approximately $30,000 a day. Motorola’s 45-year old CEO Sanjay Jha’s $104 million compensation in 2008 translates into $23,901 an hour, or $286,813 a day.

- At publicly held companies, the ratio of CEO pay to that of an average employee increased over a period of 50 years from 24:1 (the average employee worked 24 days to equal the daily wage of a CEO) to 275:1 (the average employee worked 275 days to equal the daily wage of a CEO).

- In the 1980s, Ben & Jerry’s addressed the compensation fairness issue by establishing a five-to-one salary ratio between the highest and lowest paid employees. However, the compensation plan was abandoned in the 1990s due to difficulties Ben & Jerry’s experienced trying to recruit skilled senior-level managers willing to accept this pay limitation.

- Why have the salaries of top executives increased exponentially compared to the salaries of average workers over the past fifty years?

• Typically, a compensation consultant presents the company’s Board of Directors with compensation and benefits packages of other CEOs in the same industry.
• Board members, who are also highly-paid executives and often hand-picked by the CEO, choose a compensation package toward the high end of the scale so as not to lose the CEO to a competitor.
• Companies that do not match CEO compensation increases consider themselves at a bargaining disadvantage because the CEO could switch to a competitor and offer higher paying jobs at their new companies to the best members of their former executive team.

- In 2009, the federal government tried to determine “fair compensation” for the twenty-five top executives at any large financial firm that accepted some of the $700 billion federal bailout money.

Kenneth Feinberg, appointed by the U.S. Treasury Department, proposed a maximum of $500,000 base salary, no cash bonuses, and the remainder compensation in “salarized stock” payable in one-third installments between two to four years from when earned. For instance, a $9.5 million salary for 2010 is disbursed as $500,000 in cash and $9 million worth of company stock.

One-third of the salarized stock becomes available for sale in 2012

one-third in 2013

and one-third in 2014

 

 

HOW HAVE STAKEHOLDER RIGHTS BEEN EXPANDING SINCE THE 1960S?

Since the 1960s, profit maximization and the rights of owners came under attack by social activists who believed business was a detriment, rather than a contributor, to improving the quality of life. Student radicals, some sympathetic to communism, claimed corporate philanthropy was a public relations effort that hid business transgressions. Political alliances formed to restrict business freedom by establishing legally binding rules through increased government regulation.

 

CONGRESS UNDER A DEMOCRATIC PARTY PRESIDENTIAL ADMINISTRATION

Protecting Consumers, Employees, and Communities

Congress approved the Food, Drug, and Cosmetic Act Amendments (1962), Air Pollution Control Act (1962), Equal Pay Act (1963), Civil Rights Act (1964), Equal Employment Opportunity Commission (1964), Cigarette Labeling and Advertising Act (1965), Fair Packaging and Labeling Act (1966), Child Protection Act (1966), Traffic Safety Act (1966), Coal Mining Safety Amendments (1966), Flammable Fabrics Act (1967), Age Discrimination in Employment Act (1967), Consumer Credit Protection Act (1968), and Interstate Land Sales Full Disclosure Act (1968).

 

CONGRESS UNDER REPUBLICAN PARTY PRESIDENTIAL ADMINISTRATION

Protecting Consumers, Employees, and Communities

Congress, under Richard Nixon and Gerald Ford’s Republican Party presidential administrations, approved a similarly large number of regulations and federal agencies to protect consumers, employees, and communities from unethical business practices. These regulations and regulatory bodies included the Securities Investor Protection Act (1970), Poison Prevention Packaging Act (1970), Environmental Protection Agency (1970), Occupational Safety and Health Administration (1970), Consumer Product Safety Commission (1971), Employee Retirement Income Security Act (1974), and Toxic Substances Control Act (1976).

 

ECONOMIC DEREGULATION

- In the 1980s, Republican President Ronald Reagan argued that the high costs associated with the onslaught of government regulations outweighed the benefits.

- The Reagan and George H. W. Bush Administrations began to deregulate the economy, as did the administrations of Democratic President William Clinton and Republican President George W. Bush.

 

FOUR TYPES OF SOCIAL RESPONSIBILITIES

As noted by Professor Archie Carroll, there is general consensus that businesses have four types of social responsibilities:

• Economic
• Legal
• Ethical
• Philanthropic

 

 

EXPLAIN THE FEDERAL SENTENCING GUIDELINES?

In 1991, President George H. W. Bush issued new Federal Sentencing Guidelines with the intention of encouraging, though not requiring, managers to implement policies and procedures that reinforce ethical behaviors.

- Discussions about the need for guidelines were initiated during Jimmy Carter’s presidential administration and further developed during the Reagan presidency.

- The sentencing guidelines are based on the best practices for Ethics Compliance Programs which, if implemented, could reduce the occurrence of unethical and criminal activity.

- The Federal Sentencing Guidelines are applicable to nonprofits, unions, partnerships, trusts, and universities as well as businesses.

 

BEST PRACTICES

The 16 best practices suggested by the Federal Sentencing Guidelines, divided into 6 categories:

Organizational Personnel Issue

- Substantial authority is not given to any employee known to have engaged in illegal activities

Compliance/Ethics Program Personnel

- A specific high-level manager oversees the program

- A specific individual is accountable for the program’s day-to-day operations

Content of the Compliance/Ethics Program

- Code of Ethics      

- Procedures for preventing and detecting criminal misconduct or unethical behavior

- Mechanism for employees to anonymously or confidentially seek guidance on, or report, criminal or unethical  conduct without fear of retaliation

Management of the Compliance/Ethics Program

- Program training for all employees

- Program content is communicated throughout the organization

- Criminal risks common to the profession or industry are periodically assessed

- Periodically assess the program’s effectiveness

Rewards and Punishments

- Employees are provided incentives for performing in accordance with the program’s provisions

- Incentives for ethical behavior and legal compliance are consistently enforced

- Employees violating the program’s provisions, or who fail to take reasonable steps to prevent or detect criminal activity, are disciplined

- Disciplinary measures for unethical behavior or criminal misconduct are consistently enforced

After Criminal Conduct Detected

- Reasonable steps are taken to respond appropriately to the criminal conduct

- Reasonable steps are taken to prevent similar criminal misconduct in the future

 

CULPABILITY FINE

- The judge refers to a standardized chart listing fines for specific types of crime and organizational size, and then adjusts the fine by a culpability multiplier

- If an organization has not implemented any of the best practices, the fine can be assessed a culpability multiplier of 4.0.

- If the organization has exhibited a good faith effort by implementing the best practices, if the fine can be assessed a multiplier of 0.05.

- If some, but not all, of the best practices have been implemented, the fine will be between these two amounts.

 

 

WHAT IS A B CORPORATION?

In 2007, B Lab, a nonprofit organization, initiated a third-party Benefit Corporation (B Corporation) certification process for branding a business as being ethical, sustainable, and socially responsible.

- The multi-stakeholder obligations of a B Corporation contrasts with the typical C Corporation designation, where managers have a primary obligation to act in ways that maximize shareholder wealth.

- B Corporation has been created in hopes of becoming a new legal entity recognized by federal, state, and municipal governments that permits managers to consider the interest of employees, communities, and the environment, not just the owners, when making decisions.

- They envision the IRS eventually creating a class of tax benefits for B Corporations, such as taxing them at a 20 percent rate, which is between that of C Corporations (taxed at 40 percent) and nonprofits (not taxed).

- In 2009, Philadelphia established the first favorable legislation by providing B Corporations with a $4,000 tax deduction.

- B Lab staff members, business leaders, and other experts have developed a 160 question “B Impact Ratings System” survey that is graded on a 200 point scale to determine whether an organization meets the criteria of a B Corporation (see Exhibit 2.6).

 

 

WHAT IS THE OPTIMAL SYSTEMS MODEL?

The Optimal Ethics Systems Model synthesizes these various approaches into a systematic “best practices” framework for reinforcing ethical behaviors, and reducing ethical risks, throughout the workplace.

Creating and sustaining a culture of trust can be achieved through the multiple support systems in the Optimal Ethics Systems Model.

 

 

Best Place to Work – REI - Video

 

“Inside the Meltdown,” Frontline, about 2008 financial crisis; February 17, 2009, 57 minutes

 

Evolution of Compassion: Robert Wright uses evolutionary biology and game theory to explain why we appreciate the Golden Rule ("Do unto others..."), why we sometimes ignore it, and why there’s hope that, in the near future, we might all have the compassion to follow it; October 2009, 17 minutes

 

Responding to Being Told You’ll Die Soon: Carnegie Mellon professor Randy Pausch, who was dying of pancreatic cancer, delivered a “last lecture” on how to really achieve your childhood dreams; September 2007,76 minutes

 

A conversation about the indictment of Jeffrey Skilling, former CEO of Enron; February 19, 2004, 20 minutes

 

A conversation with Kurt Eichenwald of "The New York Times" about the collapse of Enron in his book "Conspiracy of Fools;" March 17, 2005, 38 minutes

 

3 - Hiring Ethical People

OVERVIEW

Sometimes, after dismissing an employee for an ethical breach, a manager might wonder: How did this person get through the hiring process? There are millions of good-hearted and well-intentioned people, but this person was not one of them. The best safeguard against unethical activities at work is hiring people of high integrity.

This provides a six-step process for determining the ethics of job candidates.  First, notify job candidates about the ethics job screen and then diligently gather information in a way that does not violate the Civil Rights Act of 1964. Potential sources of ethics information about job candidates include resumes, reference checks, background checks, personality tests, interview questions, and drug tests. 

After completing this chapter, students should be able to:

• Screen job candidates for their ethics
• Understand what job candidate factors are illegal to consider when hiring
• Obtain accurate behavior information from resumes, reference checks, background checks, and integrity tests
• Use personality tests scales that measure ethics
• Ask interview questions that address ethical issues
• Understand when drug and polygraph tests can be administered

OTHER LEGAL ISSUES

Title VII of the Civil Rights Act has been supplemented with legislation prohibiting discrimination based on age, pregnancy, and disability.

 

AGE DISCRIMINATION

The Age Discrimination in Employment Act of 1967, amended in 1978 and 1986, prohibits organizations from not hiring someone because he or she is over the age of forty.

 

PREGNANCY DISCRIMINATION

The Pregnancy Discrimination Act of 1978 clarified that unlawful sex discrimination included not hiring a woman because of a visible pregnancy or the likelihood of becoming pregnant.

 

MENTAL AND PHYSICAL DISABILITIES

The Americans with Disabilities Act of 1990 extended civil rights protections to qualified job applicants with disabilities (defined as “a physical or mental impairment that substantially limits a major life activity”).

 

For Mental Disabilities

- According to the EEOC, do not ask job applicants whether they have been treated for any mental health conditions or certain diseases.

- Instead, ask applicants if they are able to perform all job functions and meet the job’s attendance requirements.

- With proper medication, people diagnosed with manic-depression or other mental health disabilities can be excellent employees.

- Mental health and other medical tests to job candidates can be administered after a bona fide job offer has been made.

- Mental health tests are recommended, and at times mandated by law, for jobs involving high levels of stress, personal risk, and responsibility, such as nuclear power plant operators, armed security guards, or air traffic controllers.

- If a mental health test reveals a disability, the company must provide accommodations unless doing so is burdensome.

- Mental health tests such as the Minnesota Multiphasic Personality Inventory (MMPI) are not a valid way to determine the ethics of job candidates. A person with a manic-depression disorder who takes the appropriate medication is likely to behave as ethical as anyone else in the general population.

 

ALCOHOLISM

- Questions about being an alcoholic are illegal under the Americans with Disabilities Act because alcoholism is categorized as a disability.

- You can ask about work attendance. Alcoholics and problem drinkers are absent from work four to eight times more often than other employees.

- If job related, employers can ask applicants about drunken driving arrests.

 

ILLEGAL IMMIGRANTS

- An increasing number of immigrants from a variety of nations illegally enter the United States because of immigration quota restrictions.

- Hiring an illegal immigrant violates federal law.

- Employers must carefully approach this topic because asking only Latino job applicants if they are illegal immigrants discriminates based on national origin.

- Employment lawyers recommend that all job applicants be asked if they are legally authorized to work in the United States on a full-time basis.

 

 

JOB SELECTION RULE CHECKLIST

Review a checklist for determining the viability of a job selection rule. A “Yes” response to any of the three rules could result in a discrimination lawsuit. Require integrity and personality test vendors to affirm in writing that, based on use by other clients, the instrument has been proven not to violate any of the rules.

 

WHAT IS AFFIRMATIVE ACTION?
ARE AFFIRMATIVE ACTION PLANS ETHICAL?

AFFIRMATIVE ACTION

An organization may implement an affirmative action plan if its gender or racial profile does not reflect the gender or racial profile of people living in the geographical region qualified to perform the job task.

- Affirmative action plans remedy past discriminatory behaviors by actively seeking, hiring, and promoting minority group members and women to equalize opportunities previously limited to white males.

- People with disabilities and certain veterans of the armed forces are also targeted recipients of affirmative action plans.

- The EEOC requires federal contractors and subcontractors to have affirmative action plan that demonstrates commitment to the government’s goal of equality employment opportunity. The requirement usually targets companies with at least 50 employees and contracts in excess of $50,000. Some states and municipalities have similar requirements.

 

ETHICAL ISSUES

- Affirmative action plans remain controversial.

- Some people claim that affirmative action plans are an unconstitutional form of “reverse discrimination,” where white males are discriminated against based solely on their race and gender.

- Others oppose affirmative action plans on the grounds that they are no longer necessary because historical forms of racial and gender discrimination have been eliminated, or remediation for discrimination can be addressed through the justice system.

- Some employers try to avoid litigation by instituting a protected class quota system. For instance, an organization may need ten African Americans to meet the community’s racial profile because qualified African Americans are applying for job openings elsewhere. But employing ten unqualified African Americans sets protected class quota recipients up for failure, reinforces negative stereotyping, and damages employee morale.

 

 

WHAT LEGAL OBLIGATIONS DO JOB CANDIDATES HAVE WITH THE ORGANIZATIONS INTERVIEWING THEM?

The legal system is equally demanding about the obligations job candidates owe the employer. Job candidates are legally required to respond truthfully to all job-related questions on application forms and submitted materials, such as resumes. Highlight this obligation by inserting a sentence directly above the job candidate’s signature line stating that:

1.   All answers provided by the job candidate are truthful.

2.   Any false or purposely omitted information will lead to the job candidate’s disqualification.

3.   Any false or purposely omitted information that becomes known after employment will lead to job termination.

 

 

WHAT ARE SIX SOURCES OF BEHAVIOR INFORMATION ABOUT A JOB CANDIDATE’S ETHICS?

WHAT ARE THE STRENGTHS AND WEAKNESSES OF EACH INFORMATION SOURCE?

STEP 3: Behavioral Information

Behavioral information about a job candidate’s ethics is more reliable than attitudinal survey results or responses to hypothetical dilemmas.

Review summary the strengths and concerns for the six types of behavioral information sources discussed in this chapter.

KEY WORDS

Affirmative action: plan to remedy past discriminatory behaviors by actively seeking, hiring, and promoting minority group members and women to equalize opportunities previously limited to Caucasian males.

Attraction-Selection-Attrition Cycle: highlights how individuals are attracted to organizations that reflect their values and goals, organizations select applicants with personal attributes that “fit” the work culture, and then individuals depart (attrition) if the fit is inappropriate.

Conscientiousness: Big Five personality trait that describes a person who is responsible, dependable, and hard working; correlates highly with ethical behavior.

Disparate impact: occurs when members of a protected class rarely make it through all the job-screening filters, suggesting that one of the decisions rules could be unintentionally discriminatory.

Equal Employment Opportunity Commission (EEOC): created in 1965 to oversee provisions of Title VII of the Civil Rights Act.

 “Four-fifths” rule: method applied by the EEOC that consists of determining the acceptance rate for two groups of job applicants and, if nondiscriminatory, the acceptance rates would be within 80% of each other.

Integrity tests: tests that gather information about the job candidate’s behaviors and attitudes toward unethical workplace activities, such as theft.

Organizational Citizenship Behavior: refers to work-related helping behaviors that go beyond normal job requirements.

Polygraphs: collects data on at least three physiological systems associated with honesty and lying: respiration, sweat gland activity, and blood pressure; detects nervousness, not lying.

Protected classes: the groups that cannot be discriminated against according to Title VII.

Realistic Job Preview: an honest description of daily work activities that highlights both the exciting and tedious aspects of the job.

Social Dominance Orientation: the belief that an individual’s particular group membership (defined in terms of race, gender, religion, or ethnicity) is superior to membership in other groups; usually associated with racism and sexism.

Title VII of the Civil Rights Act of 1964: federal law that prohibits business from discriminating among job applicants based on the person’s race, color, religion, gender, or national origin; later extended to cover age, pregnancy, and physical and mental disabilities.

Unaccredited diploma mill: business that provides credentials without taking courses.

 

WHAT ARE THE SIX STEPS OF AN ETHICS JOB SCREEN?

 

 

The most important factor for developing and reinforcing a high integrity work culture is hiring ethical job applicants. Employing someone whose ethics does not match that of a high-integrity work culture can contaminate an organization.

• Hiring someone is inviting the person into your home, if your organization is small, or your community, if the organization is large.
• Some people are kind, helpful, trustworthy, and friendly, while others are mean-spirited, irritating, dishonest, and annoying.
• One bad hire can make the daily life of many employees miserable and contaminate an organization’s work culture.
• Personal integrity and high ethical standards are indispensible attributes to possess.

 

1. ETHICS SCREEN NOTICE

Inform potential job applicants about the organization’s ethics job screen.

 

2. LEGAL GROUND RULES

Gather and use information in a way that does not discriminate against job candidates based on their race, color, religion, gender, national origin, age, or disability.

 

3. BEHAVIOR INFORMATION

Review behavioral information from resumes, reference checks, background checks, and integrity tests.

 

4. PERSONALITY TRAITS AND RELATED CHARACTERISTICS

Obtain measures for personality traits and related characteristics such as conscientiousness, Organizational Citizenship Behavior, Social Dominance Orientation, and bullying.

 

5. INTERVIEW QUESTIONS

Interview job finalists about their responses to ethical dilemmas experienced at previous workplaces and how they would respond to ethical dilemmas experienced by current employees. In addition, clarify inconsistencies and ambiguities that arose during the previous two steps.

 

6. POST-INTERVIEW TESTS

Where appropriate, conduct drug and polygraph tests.

 

BUT WHAT IF I’M A SMALL BUSINESS?

Some students do not plan on working for a large business and may wonder if any of this is relevant for a small business. Address this early on.

- Including ethics as part of the job screening process is even more important for small businesses.

- By ensuring that new employees are ethical, small business owners can confidently delegate tasks without having to worry about monitoring for theft or other unethical behaviors.

- Similar to large companies, a small business owner can obtain ethical behavior data from well-designed job applications and a reference check, ideally from the job applicant’s previous supervisor.

- Background checks can be easily conducted via Internet searches.

- Then ask the job applicant how he or she has responded, or would respond, to common ethical issues, such as a friend demanding free products or services.

- Inform job applicants that unethical behaviors will not be tolerated and result in termination

 

WHAT ARE THE BENEFITS OF NOTIFYING JOB APPLICANTS ABOUT A COMPANY’S ETHICS FOCUS?

STEP 1: Ethics Screen Notice

ATTRACTION-SELECTION-ATTRITION CYCLE (ASA)

Industrial psychologist Benjamin Schneider’s Attraction-Selection-Attrition cycle (ASA) highlights how individuals are attracted to organizations that reflect their values and goals, organizations select applicants with personal attributes that “fit” the work culture, and then individuals depart if the fit is inappropriate.

 

OUTREACH TO ETHICAL APPLICANTS

Include a sentence in the job announcement noting that background and reference checks will be conducted and ethics is part of annual performance appraisals.

- Notifying potential job candidates about the organization’s ethics screen attracts ethical applicants and discourages morally egregious people from applying.

- People who behave ethically want to be members of ethical organizations. Notifying job applicants that ethics matters provides ethical people with additional job-related information they find appealing. Ethical people want to report to ethical managers, work with ethical colleagues, manage ethical subordinates, and represent ethical organizations in the broader community.

- People who behave unethically, on the other hand, are not likely to apply for jobs with organizations that advertise the strength of their ethics job screening process. The ethics notice informs unethical people that previous unethical behaviors will be revealed, which puts them at a significant disadvantage to equally skilled applicants who behaved ethically at previous places of employment.

- Some job applicants may be concerned that the ethics screen is an invasion of privacy. Clarify that the ethics screen focuses on job-related issues and not activities unrelated to work. Inform job candidates that the information gathered will be used to assess the applicant’s workplace ethics and remain confidential between the applicant and employer.

 

BEST PRACTICE BEN & JERRY’S

- Ben & Jerry’s takes an extra step by broadcasting the organization’s progressive social mission throughout its website in hopes of attracting like-minded people.

- The company’s three-part corporate mission focuses employees on achieving profit and growth (economic mission) by making high quality ice cream (product mission) while improving the quality of life for all stakeholders (social mission).

- Review BEST PRACTICE BEN & JERRY’S

 

 

DESCRIBE THE IMPORTANCE OF TITLE VII OF THE CIVIL RIGHTS ACT AND HOW TO DETERMINE IF AN ORGANIZATION’S JOB SCREENING PROCESS RESULTS IN DISPARATE IMPACTS

STEP 2: Legal Ground Rules

BACKGROUND

- For nearly two centuries, employers could use any selection criteria they desired. Explicit discrimination was widespread. Some employers displayed signs that read: “X” Need Not Apply” with “X” being anyone of a different gender (usually women), religion (usually Jews, atheists, and Catholics), race (usually African Americans and Asians), or ethnicity (usually the latest group of immigrants).

- During the 1950s, classified advertisements in newspapers were often segregated according to “Male” and “Female” jobs.

• Secretarial and airline stewardess job openings noted preference would be given to young and attractive women applicants, who were then questioned about their child-rearing plans and spousal jobs.

- Many federal and state laws now govern the types of information an employer can gather on job candidates and the reasons an employer can invoke for selecting one job candidate over another.

• Gather and use information in a way that does not discriminate among job candidates based on their race, color, religion, gender, national origin, age, or disability.
• Employers signal good ethics to job candidates by respecting the law when recruiting and selecting employees.

 

TITLE VII OF THE CIVIL RIGHTS ACT

- In 1964, President Lyndon Johnson pressured Congress to pass the far-reaching Civil Rights Act. Title VII of the Civil Rights Act of 1964 prohibits businesses from discriminating among job applicants based on the person’s race, color, religion, gender, or national origin. These groups of previously discriminated people are referred to as “protected classes.”

- Title VII has been expanded to prohibit employers from discriminating based on age and physical or mental disabilities. Some states and municipalities have passed legislation that includes “sexual orientation” as a protected class, but not at the federal level.

- The Equal Employment Opportunity Commission (EEOC) was created in 1965 to oversee provisions of the Civil Rights Act.

• The EEOC’s scope extended with the passage of the Age Discrimination in Employment Act of 1967 and the Americans with Disabilities Act of 1990.
• The federal agency investigates discrimination complaints, seeks negotiated solutions to violations, and litigates when conciliation does not occur.

- There are four major exemptions to Title VII:

- If an organization employs less than 15 people – small businesses are exempted from many regulations so as not to overwhelm them with regulatory compliance burdens

- If an organization serves a religious purpose

- If it is a bona fide occupational qualification where the discrimination relates to the “essence” or “central mission” of the employer’s business (i.e., preference for a Chinese person as a waiter in a Chinese restaurant)

- If a direct relationship exists between a protected class and an inability to perform the job task

- Managers can refuse to hire people they do not like, but the dislike cannot be based on the job candidate being a member of a protected class.

 

DISPARATE IMPACTS

- Unlawful discrimination can occur on the front end or the back end of the hiring process.

- Front end job discrimination occurs when members of protected classes are excluded from the job candidate pool. This can be intentional or unintentional.

• Word-of-mouth recruiting, such as recommendations from other employees or colleagues, is often a very effective means of attracting high quality employees. But if the organization has a homogenous workforce consisting of white males, this could result in a job application pool of only white males.

- Back end job discrimination can be intentional or unintentional.

• Intentional job discrimination would occur if a male manager decides not to hire a woman finalist because the other men in the office are sexist and would not follow orders from a woman.
• A job selection rule that does not explicitly discriminate against a protected class, but results in a “disparate impact,” may violate the Civil Rights Act.
• Disparate impacts occur when members of a protected class rarely make it through all the job screening filters, suggesting that one of the decision rules could be unintentionally discriminatory.
• Most disparate impact challenges are associated with written tests, height and weight requirements, educational requirements, and subjective procedures that are not associated with the specific tasks required to perform the job.

- An organization’s gender, racial, and ethnic employee profile should reflect the gender, racial, and ethnic profile of people living in the geographical region qualified to perform the job task.

- The Equal Employment Opportunities Commission (EEOC) recommends applying a “four-fifths” rule to determine whether an apparently nondiscriminatory selection process may result in disparate impacts.

• The method consists of determining the acceptance rate for two groups of job applicants and, if nondiscriminatory, the acceptance rates would be within 80 percent of each other.
• This is calculated by dividing the percentage of “protected class” acceptances by the percentage of majority group (white or male) acceptances. A disparate impact calculator is available online.

 

RESUMES

- The best predictor of future performance is past performance.

- Serving on high profile committees at work suggests that a job candidate is trustworthy, dependable, and well-respected.

- Volunteer activities in the community suggest that the individual is concerned about the welfare of others.

- College Students:

• Reid Psychological Systems reported that 40% of college students pursuing jobs had lied on their resumes and job applications, and 95% were willing to make at least one false statement to obtain a job.
• 20% of the students who submitted resumes to the Rutgers University Career Services inflated their grade point averages.

- Executives:

• The same problem is apparent among those applying for the highest-level job openings.
• Jude W. Werra, owner of a headhunting company, publishes a Liar’s Index twice a year. Werra reviews the resumes his firm receives for CEO and Vice President job openings and calculates the percentage that contain false educational information. The Liar’s Index usually ranges between 10 and 20%.
• Marilee Jones, Dean of Student Admissions at Massachusetts Institute of Technology, whose job duties included reviewing student resumes, was fired in 2007 after school officials learned her resume contained lies about her academic degrees.

- False information or inconsistencies on resumes and job applications suggests a lack of ethics and trustworthiness.

- If detected, notify the job candidate and ask for an explanation of the discrepancy. Correct and forgive innocent mistakes or misunderstandings, but carefully monitor the new hire to ensure the mistake is not part of a larger pattern.

- More serious infractions indicate a job candidate’s willingness to circumvent the truth to gain a competitive advantage.

 

REFERENCE CHECKS

- The previous supervisor’s perspective of the job candidate’s strengths and weaknesses is probably the most relevant information source. Behavioral indicators of the job candidate’s ethics include the applicant’s attendance record, ability to follow directions, assisting co-workers, timeliness, and disciplinary record.

- If the previous supervisor is not listed among the references, ask the job candidate why. Maybe the supervisor is upset the job candidate quit or the job candidate had accused the supervisor of unethical behaviors.

- For management positions, request the names of previous subordinates as references. An excellent manager would welcome the opportunity to do so.

- Ask the previous subordinate whether he or she would want to work for this manager again. If it is not possible to contact the subordinate, ask the candidate how a previous subordinate would classify the applicant’s strengths and weaknesses.

- If a former employer or supervisor will only confirm dates of employment, then quickly ask: “Would you hire this person again?”

• Supervisors are usually willing to share positive information about a former employee, even if their organization has a strict policy not to divulge anything beyond the basic employment facts.
• If the supervisor hesitates, or refuses to answer, then ask the candidate follow-up questions during the interview session.

- References are legally protected from a defamation lawsuit as long as the information being conveyed is truthful. A signed release statement by the job candidate provides the reference with greater confidence of legal protection against a defamation lawsuit.

- Review TIPS AND TECHNIQUES – LEGAL PROTECTIONS FOR CONTACTING REFERENCES

 

BACKGROUND CHECKS

General Information

- A background check is more objective than a reference check, integrity test, or personality test.

- Conduct background checks to verify a job candidate’s academic accomplishments, prior work responsibilities, and other work-related issues.

- Extensive background checks are legally required for certain high-security jobs, such as those in the financial securities, law enforcement, or healthcare industries.

- Background checks are also highly recommended when the job entails interacting with the public.

- Some online background check service providers are untrustworthy. A test of these providers showed that many were unable to recognize that a job candidate had criminal and civil records because their databases were out-dated or incorrect.

 

Academic Accomplishments

- Academic accomplishments are a common resume problem.

- A background check could reveal that a workshop attended at a local college or university has been inflated to the status of coursework taken toward an advanced degree, or whether the listed higher education institution is an unaccredited diploma mill that provides credentials to people without taking courses.

 

Criminal Records

- Other sources of information are criminal records, motor vehicle reports, Social Security verification, and credit checks.

- McDonald’s paid $200,000 in damages for hiring a janitor who sexually assaulted a three-year old customer. The court ruled against McDonald’s because it would have been relatively easy for the company to search a public criminal records database.

• Access to a nationwide list of district court, circuit court, and bankruptcy court records is available on the Internet.
• States also administer their own public records databases.
• Advocacy groups, such as Family Watchdog, provide free Internet searches on sex offenders that are updated daily.
• Creditworthiness and previous arrests must be job related if a determining factor for denying someone employment. Speeding tickets and drunken driving citations may be relevant for travelling salespeople but not retail clerks.

 

Credit Records

- Notify the job candidate that a credit check will be conducted, and provide an opportunity for applicants to explain any information that raises questions about the individual’s credibility.

• The Fair Credit Reporting Act requires that job applicants be notified if their rejection is based on credit report information.

 

Facebook

- In 2010, after just six years of operation, more than 500 million people were active Facebook users, one out of every fourteen people in the world.

- Approximately half of human resource managers surveyed perform due diligence by inserting a job candidate’s name in an Internet search engine. These searches can result in a list of Web sites highlighting a potential employee’s ethical, or unethical, activities.

- Be careful when reviewing this information. The Internet is easy to abuse and may contain false information about an individual.

- Searching these sites raises invasion of privacy concerns.

- Due diligence dictates asking a job candidate who writes about having urges to hurt elderly people about these sentiments before hiring him or her to assist elderly people with disabilities.

- Provide job candidates an opportunity to respond to any questionable background check information during the interview process.

 

 

INTEGRITY TESTS

- Integrity tests, also referred to as honesty tests, typically gather information about the job candidate’s behaviors and attitudes toward unethical workplace activities, such as theft.

- Three popular integrity tests are portions of the Reid Report, the Stanton Survey, and the Personnel Selection Inventory (PSI).

- Integrity tests may take any of the following four approaches:

1. Direct admission of performing an illegal or questionable activity: “I stole money from my previous employer.”

2. Opinions regarding illegal or questionable behavior: “It is okay for people to steal from employers.”

3. Personality traits related to dishonesty: “I constantly think about stealing from my employer.”

4. Reaction to a hypothetical situation featuring dishonest behavior: “If I saw an employee steal money, I would ignore the situation and wait for the boss to find out.”

- In 1990, with more than 5,000 businesses using integrity tests, the federal government’s Office of Technology Assessment (OTA) published a report summarizing research on the validity (did the tests really measure integrity or something other than integrity?) and reliability (would the same person taking the test twice receive similar scores?) of integrity tests.

• The findings noted that 94 to 99 percent of the individuals who passed an integrity test (and thus classified as honest) did not later steal from their employer.
• However, 73 to 97 percent of the individuals who were hired despite being classified by test results as dishonest also did not steal.
• The OTA report concluded that research neither proved nor disproved whether integrity tests measured an individual’s propensity to steal.

- More recent research, however, has found that individuals with low integrity test scores at the time of employment, compared to those with higher scores, are more likely to later engage in theft, have high absenteeism, break rules, cheat, and become disciplinary problems.

- Despite these impressive findings, using self-report integrity tests as the sole criterion for hiring people may deny organizations the services of some very honest individuals.

• Tutorials and coaches are available to help individuals score high on integrity tests.
• The “best” integrity test answer is often obvious and, as a result, dishonest individuals who lie by providing the answer an employer wants can score higher than honest individuals.

 

PERSONALITY TESTS

INTERVIEW QUESTIONS

DRUG AND POLYGRAPH TESTS

 

WHICH OF THE “BIG FIVE” PERSONALITY FACTORS ARE THE MOST RELEVANT FOR UNDERSTANDING A JOB CANDIDATE’S ETHICS?

STEP 4: Personality Traits and Related Characteristics

BIG FIVE PERSONALITY MODEL

Personality tests offer a much broad psychological understanding of the job candidate and can identify characteristics associated with ethical or unethical behaviors.

Personality theorists and researchers have reached a general consensus on a “Big Five Model” consisting of five broad dimensions or factors that describe human personality:

• extraversion (talkative, assertive, energetic, ambitious)
• agreeableness (likeable, friendly, easy to get along with)
• conscientiousness (responsible, dependable, hard-working),
• emotional stability (calm, low anxiety, secure), and
• openness to experience (curious, independent-minded, imaginative).

Scores on three of the Big Five personality factors – (1) agreeableness, (2) conscientiousness, and (3) emotional stability – correspond to integrity test scores.

• Of these three Big Five personality factors that correlate with integrity test scores, conscientiousness is the strongest predictor of ethical behavior.
• In terms of the two non-related Big Five personality factors, ethical behavior is not related to being extroverted or introverted, nor is it related to being imaginative or pragmatic.

 

CONSCIENTIOUSNESS

- Individuals who behave ethically are also responsible, dependable, and hard-working. This is particularly noteworthy because conscientiousness is also a strong predictor of job performance.

- Researchers have also found a high correlation among conscientiousness, trustworthiness, and integrity.

- Many ethical problems begin as minor deceptions, and then escalate. Conscientious people are more likely to feel dissatisfied or guilty about deceiving others and less likely to participate in escalating deceptions or cover-ups.

 

Review survey statements used to measure conscientiousness.

- As with integrity tests, personality tests can be prone to eliciting socially desirable answers because the character trait being measured is somewhat obvious. For example, individuals may report that they are careful not to make mistakes when that is not the case. - This can be verified when a reference check is conducted.

 

 

WHAT IS ORGANIZATIONAL CITIZENSHIP BEHAVIOR?

WHAT DOES IT TELL US ABOUT JOB CANDIDATES?

Organizational Citizenship Behavior (OCB) refers to work-related helping behaviors that go beyond normal job requirements, such as aiding others with job-related problems. Researchers report that individuals who score high on OCB also score high for performance quantity, performance quality, and customer service.

OCB is typically measured based on seven factors:

• Helping Behavior: Voluntarily helping others with, or preventing the occurrence of, work-related problems.
• Organizational Compliance: Internalizing and accepting the organization’s rules, regulations, and procedures.
• Individual Initiative: Voluntarily going above and beyond what is minimally required or generally expected by one’s job description.
• Organizational Loyalty: Promoting the organization to outsiders, protecting and defending it against external threats, and remaining committed to it even under adverse conditions.
• Civic Virtue: Willingness to engage in organizational governance activities, monitoring the environment for threats and opportunities, and looking out for the best interests of the organization.
• Self Development: Voluntarily improving one’s knowledge, skills, and abilities.
• Sportsmanship: Maintaining a positive attitude even when things do not directly benefit the person, and willing to sacrifice personal interest for the good of the work group.

Researchers have developed shorter OCB scales that tap into some of these factors. Review 5-item overall OCB scale.

Review 7-item “Helping Behavior” scale, a prominent OCB factor.

 

 

WHAT TWO MEASURES SUGGEST THAT A JOB APPLICANT MIGHT BE PRONE TO UNETHICAL BEHAVIOR?

SOCIAL DOMINANCE ORIENTATION

- Ethics demands sincere, open-minded, respectful conversations with a wide variety of people about alternative actions under consideration.

- Social Dominance Orientation (SDO) is the belief that an individual’s particular group membership (defined in terms of race, gender, religion, or ethnicity) is superior to other groups. Researchers have found that high SDO scores are associated with racism and sexism.

- Review survey items for Social Dominance Orientation. Individuals expressing these sentiments can damage employee morale and diversity efforts in high-integrity organizations.

 

 

BULLYING

- A survey of U.S. workers found that approximately 30% were bullied by a boss or co-worker. Researchers report that a predisposition to bullying others is associated with racial and gender discrimination.

- The two most common forms of bullying were (1) having information withheld that affected job performance and (2) being exposed to an unmanageable workload. Information about a person’s bullying tendencies can be obtained through a reference check.

- Researchers have developed a 22-item bullying scale, but it measures whether an employee has been bullied rather than whether a job applicant has bullying tendencies.

- Questions from the bullying scale that could be asked include has the job applicant:

• Purposely withheld information from others that negatively affected their performance
• Assigned unmanageable workloads
• Ordered subordinates to do work beyond their competence level
• Given tasks with unreasonable/impossible targets/deadlines
• Excessively monitored the work of subordinates
• Humiliated and ridiculed subordinates

 

 

WHAT TYPES OF QUESTIONS WOULD YOU ASK JOB CANDIDATES DURING AN INTERVIEW TO UNDERSTAND THEIR ETHICS?

HOW WOULD YOU KNOW IF THE CANDIDATES WERE RESPONDING THRUTHFULLY?

STEP 5: Interview Questions

BACKGROUND

- The in-person interview provides another opportunity to obtain relevant information about a job candidate’s ethics. The interviewer can ask for clarifications on the ethics-related information already gathered and probe information gaps and inconsistencies.

- Question job applicants about how they responded to previous ethical dilemmas, be sensitive to false cues that might indicate the candidate is lying, and provide a realistic preview of the job environment.

 

PREVIOUS ETHICAL DILEMMAS

- Asking job candidates to describe how they managed an ethical dilemma at a previous employer can be very useful. Human beings are creatures of habit and the job candidate will bring these response patterns to work.

- Some individuals do not know what is meant by the words “ethics” or “ethical dilemma.” Ask probing questions that highlight specific ethical issues – such as observing theft, sexual harassment, and legal violations.

• Tell me about a time when you observed an employee or customer stealing product. How did you respond?
• Tell me about a time when you observed an employee sexually harassing another employee or customer. How did you respond?
• Tell me about a time when you observed anything at work, or did anything at work, that violated industry standards or the law. How did you respond?
• Tell me about a time when you were asked by a boss, co-worker, customer, or supplier to do something unethical. How did you respond?
• Tell me about a time when you observed anything at work, or did anything at work, that bothered your conscience. How did you respond?

- If the individual has not experienced any ethical dilemmas, then transform the issue into a hypothetical situation: “Would you accept a free lunch from a client wanting to do business with the organization?”

- Sensitize job candidates to real-life ethical dilemmas current employees have experienced and ask how they would respond. The job interviewer can develop ethical dilemmas based on his or her own experience, or have current employees compose them as an ethics training workshop activity (see Chapter 6).

 

 

VISUALLY DETECTING FOR LIES

According to researchers, there is no particular “Pinocchio Effect,” where, similar to the Walt Disney character, an individual’s nose grows whenever he or she tells a lie. Researchers examined 1,338 estimates of 158 different bodily and verbal cues for lying, and found no single cue compelling. Behavioral responses assumed to be cues for detecting a lie include:

- Bodily Tendencies: Less eye contact, increased blinking, pupil dilation, fidgeting, shaking knee, tapping fingers, sweating, pressing lips together, display fewer gestures (tightly wound), deep breaths, gulps, and less pleasant facial features.

- Verbal Tendencies: Hesitancy in responding, frequent speech disturbances (“um,” “ah,” “da”), sighs, higher pitch, longer response before answering (trying to figure out a consistent lie), provide less details, and less certain in responses.

There is some truth that these bodily and verbal tendencies, or a combination of them, may suggest lying, but not enough truth to generalize to the specific person being interviewed.

- Sometimes honest individuals exhibit the assumed tendencies of liars. For instance, a person might avoid eye contact with the interviewer because she or he is shy, nervous about not getting the highly desired job, or lost in thought.

- On the other end of the interviewee behavior spectrum, a confident person looking directly into the interviewer’s eyes might be a well-trained liar trying to deceive the interviewer.

 

 

REALISTIC JOB PREVIEWS

- Present finalists with a “Realistic Job Preview,” an honest description of daily work activities that highlights both the exciting and tedious aspects of the job.

- If only the most exciting aspects of the job are discussed, the new employee will experience “entry shock” regarding the tedious aspects of work and conclude s/he has been misled or managers cannot be trusted.

- Researchers have found that an honest and balanced presentation of the actual job experience does not reduce acceptance rates, which is what interviewers fear. Instead, realistic job previews lead to higher levels of employee satisfaction and lower levels of turnover because the new employee’s expectations are more aligned with reality.

 

WHAT TYPE OF DRUG TEST WOULD YOU USE FOR JOB APPLICANTS?

STEP 6: Post-Interview Tests

After interviewing the finalists, some organizations make the job offer contingent on passing a drug test and polygraph test. When appropriate, conduct drug and polygraph tests as a final test of the job finalist’s integrity. Some jobs, such as those at a nuclear reactor facility, require these tests.

 

BACKGROUND

According to the U.S. Department of Health and Human Services, 9.4 million working Americans use illicit drugs.

- The typical illegal drug user is a low-paid white male between the ages of 18 and 25.

- Industries with the highest rates of illicit drug use are food preparation, restaurants and bars, construction, and transportation.

- Workplace substance abuse is estimated to cost employers $120 billion a year.

- Millions of Americans are tested for drug use as a pre-employment screen or condition of continued employment. Some companies in the transportation industry, and those with large federal contracts, are required by law to conduct drug tests. Drug tests are easy to administer and relatively inexpensive.

 

DRUG TESTING OPTIONS

- Drug use can be determined by an analysis of blood, urine, hair, or saliva.

- Marijuana, the most commonly tested-for drug, can be detected in the blood system for two days, in urine from 2–14 days, and in hair follicles for up to 90 days.

- Urinalysis is the most often used method for pre-employment drug testing.

• Weakness: It is the most personally invasive. A closely observed urine collection process can be a degrading experience. But if not closely observed, job candidates can switch samples or change the composition of the urine through detox products.

- Hair testing is less invasive than urinalysis and has greater validity. A strand of hair contains an individual’s drug history during the lifetime of that hair.

• Weakness: It takes longer to obtain laboratory results from hair tests.

- Analyzing saliva is noninvasive, easy to collect, and results can be obtained in a few minutes.

• Weakness: Saliva is useful only for determining drug use during the previous two days, after which drug traces are no longer contained in saliva.

 

 

UNDER WHAT CONDITIONS CAN A JOB CANDIDATE BE GIVEN A POLYGRAPH TEST?

BACKGROUND

Polygraphs, also known as lie detectors, can be used as a job screen by federal, state, and local government agencies, as well as businesses, engaged in national security issues.

The Department of Defense has an annual polygraph budget of $200 million, with $3 million allocated to the Polygraph Institute for instruction and research.

 

HISTORY

- The first lie detector machine, designed in 1917 by a Harvard-trained psychologist, measured an individual’s blood pressure.

• The machine’s capabilities were expanded to simultaneously measure three physiological factors – blood pressure, pulse rate, and skin changes. These measures were graphed on a piece of paper, thus the formal name of the machine, a polygraph.
• But the results were unreliable, with accuracy rates only in the 40-55 percent range, on par with flipping a coin.

- The scientific community concluded that polygraphs detected anxieties, not lies.

- The court system agreed with the scientific community in United States v. Frye (1923) and ruled that polygraph results could not be presented in a court of law.

- Nonetheless, the lie detector market expanded from police department to private employers wanting to determine the source of employee theft, and then as a job screening tool.

- The heightened use of polygraphs by private employers in the 1980s, due to escalation in Cold War espionage, created a backlash.

- Research reviews conducted by the federal government’s Office of Technology Assessment and the American Psychological Association both concluded that the research results were mixed, with most polygraph tests prone to errors.

 

EMPLOYEE POLYGRAPH PROTECTION ACT OF 1988

- These findings led to the passage of the Employee Polygraph Protection Act of 1988, which prohibits most companies from using polygraph testing as a pre-employment tool.

• The prohibition does not apply to federal, state, and local governments.
• Private sector exemptions to the law include pharmaceutical and related firms that manufacture and distribute controlled substances, and armored car and other security industry firms.
• The federal government can require private subcontractors engaged in national security issues to include polygraph tests as part of the job screening process.

 

RECENT EVENTS

- Polygraph testing has improved since the 1980s and, with a skilled operator, accuracy rates range from 81-98 percent.

- The modern polygraph collects data on at least three physiological systems associated with honesty and lying: respiration, sweat gland activity, and blood pressure.

- As these measures suggest, the polygraph still only detects for nervousness, not lying.

- A new type of polygraph test being developed by brain researchers uses functional magnetic resonance imaging (fMRI) scanners.

• Researchers have isolated the section of the brain where lying occurs.
• When an individual answers truthfully, the brain image is consistent.
• When an individual lies, neurological activities can be detected because the person is deciding not to tell the truth and then thinking about what would be a believable lie to tell.
• The initial research results suggest that fMRIs are more accurate than traditional polygraph tests for detecting lies.
• The cost of using MRIs for lie detection, however, is exorbitant
• Lawsuits will likely be filed by the American Civil Liberties Union for invasion of privacy.

- Given polygraph inaccuracies, provide job candidates who contest the findings an opportunity to explain any questionable results.

 

U.S. Department of Labor, Employment Law Guide

 

Disparate Impact Calculator

 

Diploma Mills

Accreditation verification

Personality Measures

- Five-Factor Personality Model

- MMPI 

 

Sex Offender Websites

- U.S. Department of Justice

- Family Watchdog

Best Place to Work Video

The Ben & Jerry’s Story told by co-founders Ben Cohen and Jerry Greenfield, 10 minutes

Business Ethics Issue Video

“The Madoff Affair,” Frontline, about Bernie Madoff $65 billion ponzi scheme; May 12, 2009, 55 minutes

 

TEDTalks Videos

Nice People Becoming Bad: Philip Zimbardo shares insights on how easy it is for nice people to turn bad and how easy it is to be a hero; February 2008, 24 minutes

 

Human Commonality: Geneticist Spencer Wells talks about how his Genographic Project will use this shared DNA to figure out how we are -- in all our diversity -- truly connected;  June 2007, 21 minutes

 

Conversations with Charlie Rose

A conversation about WorldCom and business ethics in corporate America, 60 minutes, June 27, 2002

A conversation with Arthur Levitt, the former chairman of the Securities and Exchange Commission, about reform in the accounting profession and greater fiscal accountability in corporate America, 60 minutes, October 18, 2002

4 - Codes of Ethics and Codes of Conduct

OVERVIEW

An organization’s Code of Ethics and Code of Conduct minimize ethical ambiguities by communicating clear ethical guidelines for employees to apply when making decisions. These codes serve as the organization’s conscience.

This explains the differences between a Code of Ethics and a Code of Conduct, summarizes the purpose and content of codes, and describes how to use a Code of Ethics an assessment tool for improving ethical performance.

 

After completing this chapter, students should be able to:

• Understand the difference between a Code of Ethics and a Code of Conduct
• Explain the importance of code awareness and expectations
• Describe the content found in most Codes of Ethics and Codes of Conduct
• Create and implement an effective Code of the Ethics communication strategy
• Conduct an annual employee assessment of the Code of Ethics

 

KEY WORDS

Bribe: providing someone with a monetary incentive or object of value to do something contrary to his or her job description.

Business gratuity: a present, gift, hospitality, or favor for which fair market value is not paid by the recipient.

Caux Principles for Responsible Business: a collaborative effort by an international network of business leaders that articulates seven principles for conducting business in any nation in the world.

Code of Conduct: more extensively describes acceptable behaviors for specific situations that are likely to arise; provides substance to the Code of Ethics.

Code of Ethics: briefly describes broad ethical aspirations – such as respecting all owners, customers, employees, suppliers, community members, and the natural environment.

Ethical hypocrisy: the gap between an organization’s formal ethical proclamations and its actual heavier; damages employee morale.

Facilitating payments: providing someone with a monetary incentive or object of value to expedite performance of routine government action, such as obtaining permits or loading and unloading cargo; these are legal under the Foreign Corrupt Practices Act.

Mission statement: describes what an organization does and for whom.

Strategic planning: integrates an organization’s mission with its vision and provides clear direction on how the organization will progress from its current situation to a highly desired future situation.

Vision statement: describes what an organization aspires to become in the future.

 

WHAT IS THE DIFFERENCE BETWEEN A CODE OF ETHICS AND A CODE OF CONDUCT?

The terms “Code of Ethics” and “Code of Conduct” are often mistakenly used interchangeably. They are two unique documents.

 

CODE OF ETHICS

- A Code of Ethics briefly describes broad ethical aspirations.

- A Code of Ethics, sometimes referred to as a Values Statement, is similar to the Ten Commandments, a few general principles to guide behavior that could fit on a business card.

- The general principles embodied in a Code of Ethics—such as respecting all owners, customers, employees, suppliers, community members, and the natural environment—represent aspirations.

- These principles describe the kind of people we want to be – someone who treats others as he or she wants to be treated.

 

CODE OF CONDUCT

- A Code of Conduct more extensively describes acceptable behaviors for specific situations that are likely to arise.

- A Code of Conduct, often developed by an employee with legal expertise, provides substance to the Code of Ethics and is usually several pages long.

- A Code of Conduct applies the Code of Ethics to a host of relevant situations.

- Whereas one principle in the Code of Ethics might state that all employees will obey the law, a Code of Conduct might list several specific laws relevant to different areas of organizational operations that employees will obey.

 

 

WHY ARE CODES OF ETHICS AND CONDUCT IMPORTANT?

WHAT PURPOSES DO THEY FULFILL?

ORGANIZATIONAL SIZE AND TYPE OF ETHICS PROGRAM

A Code of Ethics is usually the first step in formalizing an ethics program. The extent of an organization’s ethics program is often related to its size.

- In small organizations the ethics code is embodied within the owner, and a formal one is unnecessary because employees typically interact with each other on a regular basis.

- Begin drafting a Code of Ethics when the number of employees reaches about ten, a point when employees may not interact with each other or the owner as much. Ethical hazards and risks increase as organizations grow in complexity.

 

Review Ethics Program Growth and Organizational Size

1-9 Employees: Orient employees to relevant laws and regulation; share stories about ethical decisions

10-49 Employees: Develop and review a Code of Ethics and Code of Conduct

50-199 Employees: Appoint an Ethics Officer, create an ethics steering committee, and develop formal annual ethics training sessions

200-999 Employees: Develop ethics monitoring and reporting systems

1,000-4,999 Employees: Implement an ethics assist line and whistle-blowing procedures

More than 5,000: Create an Ethics Office

 

DEMONSTRATES MANAGERIAL CONCERN FOR ETHICS

- Discuss the organization’s Code of Ethics and Conduct with new employees to establish ethical expectations.

- Begin the meeting by demonstrating awareness of job-related ethical issues and public perceptions about business ethics.

 

CONVEYS A PARTICULAR SET OF VALUES AND OBLIGATIONS

- Codes convey a set of values and obligations that clarify appropriate behaviors and provide employees with clear and consistent moral guidance.

- Codes of Ethics articulate and reinforce a moral consensus, rather than just one person’s opinion

- Codes legitimize dialogue about ethical issues when challenging situations arise.

- Codes signal that employees will be held personally accountable for their ethical choices

- Codes provide an additional safeguard against pressures from managers, peers, or external constituents to behave unethically.

- From a practical perspective, ethics codes are essential because a manager may be unavailable when an ethical issue arises among subordinates.

 

MEETS LEGAL REQUIREMENTS AND INDUSTRY TRENDS

- Codes are sometimes required by law, such as the Sarbanes-Oxley Act of 2002

- The New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ) require that all listed firms must have a Code of Ethics for directors, officers, and employees.

- Banks, healthcare firms, and organizations doing business with municipal, state, and federal governments are also required to have an ethics code.

- The 1991 Federal Sentencing Guidelines provide financial benefits to organizations that have Codes of Ethics.

- Many industry associations and professional organizations develop codes as a self-regulating strategy that deflects government regulation.

 

POSITIVE IMPACT ON EMPLOYEE BEHAVIORS

- Researchers report that organizations with Codes of Ethics have higher levels of employee commitment and greater tolerance for diversity.

- Employees are proud to be associated with ethical organizations and desire to work for honest and trustworthy managers.

- Employees are more likely to trust managerial decisions, and managers are more likely to trust employee decisions. The cycle of trust contributes to higher levels of employee morale and job satisfaction.

 

WHAT VALUES ARE CONTAINED IN MOST CODES OF ETHICS?

A Code of Ethics expresses the principles that define an organization’s ideal moral essence.

- Keep the language simple and avoid legalese or professional jargon.

- The best codes are easy to understand and inspirational, something that unites employees regardless of their particular religion, ethnicity, gender, or geographical location.

- Make the Code of Ethics an affirmative statement of how employees should act, not how they should not act.

- An extensive scholarly review of corporate Codes of Ethics, global Codes of Ethics, and the business ethics literature found the following six values continually expressed:

1.   Trustworthiness

2.   Respect

3.   Responsibility

4.   Fairness

5.   Caring

6.   Citizenship

 

 

ARE THERE UNIVERSAL CODES OF CONDUCT FOR INTERNATIONAL BUSINESS?

FOREIGN CORRUPT PRACTICES ACT

In 1977, Congress responded to U.S. corporations paying bribes in foreign countries by passing the Foreign Corrupt Practices Act (FCPA), making it illegal for U.S. businesses to directly pay bribes in other nations or thorough intermediaries, such as joint venture partners or agents.

In addition, under the FCPA foreign corporations whose securities are listed in the United States must maintain accounting ledgers that reflect these transactions.

- The FCPA differentiates bribery from facilitating payments.

- A bribe is typically defined as providing someone with a monetary incentive or object of value to do something contrary to his or her job description.

- Facilitating payments, which are legal, expedite performance of “routine governmental action,” such as obtaining permits, processing governmental papers, loading and unloading cargo, and scheduling inspections to transit goods across borders.

- Facilitating payments do not include being awarded new business or continuing business with a particular government official.

 

ANTI-BRIBERY CONVENTION

- Some businesses headquartered in the U.S. argued that the FCPA puts them at a competitive disadvantage because businesses headquartered in other nations continue to pay bribes as a cost of doing business. As a result, the U.S. government pressured other nations to adopt similar anti-bribery legislation.

- In 1999, the Organization for Economic Co-operation and Development (OECD), representing thirty developed nations, ratified the Anti-Bribery Convention which requires member nations to enact legislation criminalizing the payment of bribes in developing nations.

- A growing number of non-OECD members have signed this agreement, including Brazil, Estonia, Israel, and South Africa.

 

CAUX “PRINCIPLES FOR RESPONSIBLE BUSINESS”

- Attempts have been made to create a moral level playing field worldwide through an International Code of Ethics, where principles such as integrity and honesty are adopted by all organizations conducting business, independent of locale.

- The Caux Round Table, an international network of business leaders from a variety of nations and cultures, spearheaded a collaborative effort to develop the Caux Principles for Responsible Business for conducting business worldwide.

Review Caux “Principles for Responsible Business”

• Principle 1: Respect Stakeholders Beyond Shareholders
• Principle 2: Contribute to Economic, Social and Environmental Development
• Principle 3: Respect the letter and the spirit of the law
• Principle 4: Respect Rules and Conventions
• Principle 5: Support Responsible Globalization
• Principle 6: Respect the Environment
• Principle 7: Avoid Illicit Activities

 

 

HOW WOULD YOU CREATE A CODE OF ETHICS FOR AN ORGANIZATION?

BACKGROUND

- It is relatively easy to copy another organization’s Code of Ethics. After all, how many different ways can one say treat all stakeholders with utmost respect and integrity? But this would be a missed opportunity to enhance employee ownership of the Code of Ethics.

- Instead, have employees construct the code.

- Do as a team building activity

- The Ethics Resource Center offers a “Code of Ethics Toolkit” that guides organizations and industry associations in developing a Code of Ethics.

 

13-STEP PROCESS

Step 1: Obtain approval from executives.

Step 2: Create a code writing team.

Step 3: Gather list of ethical issues from relevant stakeholders.

Step 4: Define a “Code of Ethics”.

Step 5: In groups gather a list of ethical behaviors from participants.

Step 6: Determine common themes.

Step 7: Draft a Code of Ethics.

Step 8: Compare to Other Codes and Modify.

Step 9: Compare to Other Groups participating in creating the code.

Step 10: Align code with organizational mission or broader code.

Step 11: Review code by presenting it to legal counsel and executives.

Step 12: Create a code communication strategy.

Step 13: Annual assess code awareness and relevance, and revise as needed

 

 

WHAT SHOULD BE THE RELATIONSHIP BETWEEN A CODE OF ETHICS AND STRATEGIC PLANNING?

The Code of Ethics can be a key aspect of an organization’s strategic plan. Strategic planning integrates an organization’s mission with its vision and provides clear direction on how the organization will progress from its current situation to a highly desired future situation. Connecting the code to an organization’s mission and vision, rather than keeping it separate, establishes credibility and visibility for the Code of Ethics.

- Ideally, an organization’s mission statement, vision statement, and Code of Ethics communicate a “cause” that employees and other stakeholders can rally around, and potential customers want to be a part of.

- An organization’s mission statement describes what an organization does and for whom.

- A vision statement describes what an organization aspires to become in the future.

- The shared values embodied in a Code of Ethics provide relationship consistency between the organization and its stakeholders in the present and future. General Motor’s mission and vision may fluctuate, but the way the company treats stakeholders will be consistent.

- Review how to craft a cause-based strategic message

- Review the chain of events connecting an organization’s mission and values to increased profits and shareholder value

Codes of Ethics

- Corporate Code of Ethics example 1 

- Society for Human Resource Management

- Journalism

- Engineers

- City and County Government

 

 

WHAT TOPICS SHOULD BE ADDRESSED IN A CODE OF CONDUCT?

BACKGROUND

- A Code of Conduct expands on the moral principles embodied in a Code of Ethics. A Code of Ethics principle such as “We will treat everyone fairly,” for example, can be clarified in a Code of Conduct as “All information about an employee is considered confidential and is to be released only to authorized personnel.”

- Creating a Code of Conduct requires input from top-level executives, corporate lawyers, and human resource personnel. A Code of Conduct addresses the wide range of legal expectations and ethical risks unique to an organization or job title.

- Develop different Codes of Conduct for different business units, work functions, or stakeholders as an organization grows in complexity.

 

TOPICS

The New York Stock Exchange recommends that a Code of Conduct address the following seven topics:

1.   Conflicts of Interest. Avoid conflict or potential conflict between an individual’s personal interests and those of the organization.

2.   Corporate Opportunities. Do not use corporate information or assets for personal gain.

3.   Confidentiality. Do not disclose nonpublic information that could benefit competitors or harm the organization.

4.   Fair Dealing. Abstain from any unfair treatment of customers, suppliers, competitors, and employees, such as concealment, abuse of privileged information, and misrepresentation of material facts.

5.   Protection and Proper Use of Assets. Use assets efficiently and avoid theft, carelessness, and waste.

6.   Compliance with Laws, Rules, and Regulations. Proactively promote compliance.

7.   Encouraging the Reporting of Any Illegal or Unethical Behavior. Proactively promote ethical behavior and do not allow retaliation for reports made in good faith.

 

Review TIPS AND TECHNIQUES, Starbucks’ Code of Conduct for Suppliers

 

 

Use Codes of Conduct to highlight specific issues of major importance. Two problem areas many organizations have in common are the giving and receiving of gratuities and e-mail use. The former pertains primarily to relationships with external stakeholders and the latter with internal stakeholders.

BUSINESS GRATUITIES

A business gratuity is a “present, gift, hospitality, or favor for which fair market value is not paid by the recipient, … including such items as gifts, meals, drinks, entertainment (including tickets and passes), recreation (including golf course and tennis court fees), door prizes, honoraria, transportation, discounts, [or] promotional items.”

- A fine line exists between a business gratuity/courtesy and a bribe. Did the buyer purchase the product because of its quality or had the buyer changed his or her mind after receiving an expensive gift?

- Gratuities can be problematic when received from suppliers or given to customers.

- The general guideline for when a gratuity evolves into a bribe is when the object of value unduly influences buying decisions.

- Even if not a bribe, a business gratuity can cause problems for an organization if it creates an appearance of impropriety or could embarrass the organization if the transaction became public knowledge.

- Review BEST PRACTICE IN USE about the Gap’s Code of Conduct on Gratuities

 

 

E-MAIL

- Electronic mail (e-mail) is one of the most prominent forms of communication within and outside organizations.

- Typically, e-mail use during work hours is limited to company business only.

- Organizations are concerned that employees will use e-mail for non-work related purposes, thus a drain on workplace productivity, and confidential information might be sent to unintended recipients.

- Some employees mistakenly assume they have a “reasonable expectation of privacy” to the content of their workplace e-mail communications.

- Judges continually rule in favor of employers who own and maintain the computer and network systems.

- Review summary of 8 key provisions about e-mail use

 

 

HOW WOULD YOU IMPLEMENT AN EFFECTIVE CODE OF ETHICS AND CONDUCT COMMUNICATION STRATEGY?

BACKGROUND

Codes cannot be effective if employees are unaware they exist or if rumors spread that the code was created merely to appease legal or regulatory authorities. Enron also had a sixty-page Code of Conduct, a list of prohibitions ignored by some traders and high level executives.

- Ethical hypocrisy, the gap between an organization’s formal ethical proclamations and its actual behavior, damages employee morale.

- Moral confusion arises when the Code of Ethics declares employees must be honest while a supervisor expects an employee to lie to a customer about a missed delivery deadline.

- Develop a strategy for communicating the Code of Ethics and Conduct to all employees and key constituents. Assign the responsibility to a particular person who can champion the cause.

 

ELEMENTS OF A COMMUNICATION STRATEGY

Elements of the communication strategy include:

- Connect the code to the organization’s strategy

- Mention the Code of Ethics in job announcements

- Introduce the codes during employee orientation

- Annually distribute the Code of Ethics with a letter signed by a high-level executive emphasizing the importance of applying the codes on a daily basis

- Display the Code of Ethics in newsletters, highly traveled areas, and on stationary and websites

- Discuss the codes during ethics training workshops

- Mention the Code of Ethics in correspondences with suppliers and customers

- Evaluate employees on code adherence in performance appraisals

- Link code adherence to promotions and merit raises

- Annually assess how well the organization embodies the code

 

OBSTACLES FOR AN EFFECTIVE CODE

- Social pressure can be a major obstacle to code effectiveness.

- Employees are hesitant to report code violations committed by their friends, peers, or manager.

- Unethical employees accuse peers who enforce the code of being “tattle-tales” to discourage them from reporting violations.

- Employees are more likely to report a code violation if others in the organization disapprove of the violation, they do not fear retribution for reporting, or the person committing the violation has been given a previous warning.

- Times of market and organizational turbulence

 

ANNUAL CODE OF ETHICS ASSESSMENT

- The last phase of implementation is probably the most important—use the code as an organizational assessment tool. Make the Code of Ethics a living document by annually assessing how well the organization and its employees live up to it.

- Review the ten-step process for assessing an organization’s ethical performance based on its Code of Ethics. The employee activity can be accomplished within 60 to 90 minutes.

 Step 1: Form small groups around common job tasks and have participants read the organization’s Code of Ethics.

 Step 2: Each group member independently evaluates how well the organization meets each of its ethical aspirations using a 5-point Likert scale.

 Step 3: Each group member independently highlights one weak area and writes down strategies and action steps that can be taken to improve that score.

 Step 4: Group members share their survey scores with each other and determine similarities and differences.

 Step 5: Each group member shares a story about the survey item with the highest score. What happened during the past year that exemplifies why the organization is doing so well in that category?

 Step 6: Each group member shares a story about a survey item with a low score.

 Step 7: Each group member shares a strategy and action steps that would improve the low score, and integrates ideas and suggestions from other group members to develop a more detailed continuous improvement plan.

 Step 8: The group summarizes its scores and suggestions for improvement, and submits the information to the facilitator for the purpose of continuous improvement follow-up.

 Step 9: The facilitator forwards the information to the responsible manager.

 Step 10: Management or the facilitator updates employees about progress made regarding the suggested improvements.

 

Review how to transform a Code of Ethics into an assessment survey instrument.

 

Code of Conduct

- Microsoft

- Gap, Inc.

Caux Round Table - “Principles for Business”

 

Ethics Resource Center - “Ethics Toolkit”

 

Vision and Mission Statement Examples

 

Best Place to Work Video

Build-A-Bear Workshop

 

Business Ethics Issue Video

“The Card Game,” Frontline, about trying to reform the credit card industry, November 24, 2009, 57 minutes

 

TEDTalks Videos

Predictable Irrationality: Behavioral economist Dan Ariely explains studies examining the hidden reasons we think it's sometimes OK to cheat or steal, and why we're predictably irrational;  February 2009, 17 minutes

Purpose of Life: Pastor Rick Warren, author of The Purpose-Driven Life, reflects on his own crisis of purpose and his belief that God's intention is for each of us to use our talents and influence to do good; February 2006, 21 minutes

 

Conversations with Charlie Rose

A conversation with Jon Huntsman, US Ambassador to China, about China; December 17, 2010, 30 minutes

A conversation about the ramifications of the BP Oil spill; May 14, 2010, 30 minutes

 

Sarah Nilsson, J.D., Ph.D., MAS

 

602 561 8665

 

sarah@sarahnilsson.org

 

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The information on this website is for EDUCATIONAL purposes only and DOES NOT constitute legal advice. 

While the author of this website is an attorney, she is not YOUR attorney, nor are you her client, until you enter into a written agreement with Nilsson Law, PLLC to provide legal services.

In no event shall Sarah Nilsson be liable for any special, indirect, or consequential damages relating to this material, for any use of this website, or for any other hyperlinked website.

 

 

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