A Definition of Ethical Business DecisionMaking

1
A Definition of Ethical Business Decision-Making

• Ethical business decision-making creates value by
  promoting sustainable networks of stakeholders
  (individuals, relationships, and groups) in a
  context of human dignity and environmental
  integrity

2
Managing for Organizational Integrity
3
Introduction

• Organizations help shape individual behavior
• Fed Sent. Guidelines an impetus for ethics
  programs
• Compliance? Integrity?

4
How Organizations Shape Individuals Behavior

• Sears Auto Center
• Lack of corp. guidance plus consumer ignorance
• Cost 60 million
• Beech-Nut Nutrition Corporation
• Corp culture
• Johnson and Johnson
• Tylenol recall
• False dichotomyeither individual or organization
  is responsible

5
The Limits of a Legal Compliance Program

• Ethical Lapselegal, cash, reputational, and
  market share problems
• If its legal, its ethical. Not.
• Solomon Brothersloss 1 billion
• Deterrence is not as effective as commitment to
  good laws
• Is our goal to get through the day without being
  indicted?
• Main points of Fed. Sent. Guidelines of 1991.

6
Integrity as a Governing Ethic

• Ethics as excellence and self-governance
• The search for opportunities
• The design of organizational systems
• Decision making
• Integrity Approach can emphasize
• Ethical values honesty, respecting rights of
  others
• Aspirations good customer service, diversity
• Integrity Approach includes compliance
• Compliance/iron integrity/steel analogy
• Integrity Approach is broader and deeper

7
Hallmarks of Integrity Strategy

• Core values (CV) and commitments make sense and
  are communicated
• Company leaders are personally committed to CV
• CV are integrated normal channels of mgmt
  decision-making and critical activities
• Company systems structures support and
  reinforce CV
• Mgrs have the commitment, decision-making skills,
  knowledge to make ethically sound decisions

8
Martin-Marietta Emphasizing Core Values

• Legal compliance within a company
• do-it-right campaign
• Top management and significant resources devoted
  to program
• Encouraging reporting by mitigating retaliation
• Has changed mgr perceptions and priorities

9
NovaCare Building Shared Aspirations

• Turn-over, hiring problemssymptoms of deeper
  problem
• Huge disconnect between clinicians and managers
• Solution common frame of reference
• Seek informationfocus groups
• Focus on four values
• Respect of individual
• Service to the customer
• Pursuit of excellence
• Commitment to personal integrity
• Varied reactions of employeeseffective over time
• Turn-over rate down
• More successful hiring

10
Wetherill Associates Defining Right Action

• Manual combination of philosophy text, conduct
  guide, tech manual, company profile
• CEO is ethics officer, delegates tech issues to
  others
• Rejects the dualism of self-interest v. ethics
• Does not view itself in competitionan approach
  to practice, not reality
• Is scrupulously honest, especially when
  deceptions cannot easily be detected
• Had an impact on industry?
• See figures 4.1 and 4.2, p. 169.

11
Integrity Strategy

• Create a culture that aims at exemplary behavior
• Such a culture will increase compliance because
  it goes beyond compliance
• Paul ONeill, Alcoa, and workplace safety

12
A Definition of Ethical Business Decision-Making

• Ethical business decision-making creates value by
  promoting sustainable networks of stakeholders
  (individuals, relationships, and groups) in a
  context of human dignity and environmental
  integrity