Business Ethics

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Business Ethics

• Doing the Right thing, and Making the Good Life
  Better

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Welcome and Introduction

• I am Andy Gustafson
• I teach Business Ethics at Creighton
• Son of a Farmer from Aurora, NE

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Overview of Ethics

• What is Business Ethics?
• Some moral theories
• Moral Development
• Professional Standards/Industry Paradigms
• Moral Decision Making
• Specific Cases

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Vocabulary Business Ethics

• What is Business ?
• What is Ethics ?

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Business is inherently social

• Business has its own culture
• Enron, Paypal, your office
• Business Transforms Culture
• Mutual of Omaha, FNB, community outreach
• Business is about relationships
• Insurance business is about relationships

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Business Its purpose/goal

• Lone Ranger/I am an Island View
• The purpose of business is to make me money, and
  increase stockholder value
• (Milton Friedman)

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Alternate Stakeholder View

• Business should make money, but it has many
  stakeholders groups/individuals who have a stake
  in what the business does. Owners are not the
  only ones with a stake (Freeman)

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Your business makes the world Better or Worse for
people by

• The way you treat your customers
• The way you treat your employees or coworkers
• The way you treat your boss/company
• The way you contribute to the local community

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Responsibilities in Business

• To your employer
• To Customers
• To employees
• To boss/es
• To your community
• To your family
• To your God

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The challenge Balancing Responsibilities
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What is ethics?
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Ethics isnt legal Difference between the
Law and Ethics

• Some legal issues are neither ethical or
  unethical.
• Some ethical issues have no laws to support them.
• Law often tries to encourage ethical behavior
• Federal Sentencing Guidelines
• Sarbanes-Oxley Act (SOX)
• Better to have self-regulation than more govt
  regulations

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Many think Ethics is just about what to NOT do
Dont do __!!
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But ethics is more than just what not to do

• Minimal What we shouldnt do
• Dont steal, dont kill, dont lie
• Better What we should do (justice)
• Be fair, Be honest, Fulfill duties, work hard
• Best What we could do to make things excellent
  for all of us
• Mutual of Omaha Project, Real Estate

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Business can help create an excellent life

• Example of this mindset Midland National Life
  insurance mission
• "To make life better for individuals and
  families to afford security, trust, superior
  value, and peace of mind to those we serve to
  offer the best in financial resources and
  services.

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How does Business make life better? Table
discussion (5 min)

• How do you make life better for your community
  through your business?
• What are positive things you do for the benefit
  of the many through your work?
• Do you see these things you do for others as
  being ethical?

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The Point is Realize the good you do in society!

• Businesses do have an effect on society and
  culture. Business is not just about making money.

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Moral Psychology

• WHY DO PEOPLE DO WRONG THINGS?

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Question Why do Soccer moms sometimes drive
like jerks?
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Question Why do people forge signatures and
documents?
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Why do people stretch or edit the truth, or
exaggerate?
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Moral Development Why do people do unethical
things?

• Why did the soccer mom drive like a jerk?
• Why did my student cheat on the exam?
• Why did people at Enron do unethical things?
• Why do insurance professionals cut corners?

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Some reasons people do wrong

• Ignorant
• In a hurry
• Thoughtless
• Didnt plan ahead
• Financial difficulties
• Pressure from organization
• Not clear communication from management
• Lazy
• Want a quick buck
• They are a Bad evil wicked person

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More Moral Psychology

• WHY DO PEOPLE DO THE RIGHT THINGS?

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Kohlbergs theory of moral development

• Stage 1 Obedience and Punishment
• Stage 2 For self-benefit
• Stage 3 For sake of reputation (good boy)
• Stage 4 Maintain Social order
• Stage 5 Contractual-Legalistic orientation
• Stage 6 Conscience/Principle Orientation

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moral dilemma

• In Europe, a woman was near death from a special
  kind of cancer. There was one drug that the
  doctors thought might save her. It was a form of
  radium that a druggist in the same town had
  recently discovered. the drug was expensive to
  make, but the druggist was charging ten times
  what the drug cost him to make. He paid 400 for
  the radium and charged 4,000 for a small dose of
  the drug. The sick woman's husband, Heinz, went
  to everyone he knew to borrow the money and tried
  every legal means, but he could only get together
  about 2,000, which is half of what it cost. He
  told the druggist that his wife was dying, and
  asked him to sell it cheaper or let him pay
  later. But the druggist said, "No, I discovered
  the drug and I'm going to make money from if."
  So, having tried every legal means, Heinz gets
  desperate and considers breaking into the man's
  store to steal the drug for his wife.

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Kohlbergs theory of moral development

• Stage 1 Obedience and Punishment
• Stage 2 For self-benefit
• Stage 3 For sake of reputation (good boy)
• Stage 4 Maintain Social order
• Stage 5 Contractual-Legalistic orientation
• Stage 6 Conscience/Principle Orientation

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Part 2 Ethical Principles, and how to use them

• Brief explanation of the 5 classic ethical
  theories
• Egoism
• Social Contract Theory
• Utilitarianism
• Duty-Based
• Virtue Ethics

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Egoism

• People should always do what is in their own
  self-interest.
• (ex do what it takes to get repeat business)

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Social Contract Theory

• Make concessions to others, but try to get what
  you can
• Obey the law, respect others because you want to
  be respected, etc
• When driving, slow down near other schools, not
  just your own kids school

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UtilitarianOutcome-Based

• Do what benefits the greatest number the most
• Jump on the grenade if it benefits the most.
• Do what is right if it will make for a better
  society in the long run, even if you could have
  short term maximization right now
• I can save my client on this insurance premium by
  under-reporting risks, but in the long run this
  will cause the insurance company and other
  clients to be at considerable risk.

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We can lose our moral conscience and concern!

• Capacity for the nobler feeling is in most
  natures a very tender plant, easily killed, not
  only by hostile influences, but by mere want of
  sustenance and in the majority of young persons
  it speedily dies away if the occupations to which
  their position in life has devoted them, and the
  society into which it has thrown them, are not
  favourable to keeping that higher capacity in
  exercise.

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John Stuart Mill

• Men lose their high aspirations as they lose
  their intellectual tastes, because they have not
  time or opportunity for indulging them and they
  addict themselves to inferior pleasures, not
  because they deliberately prefer them, but
  because they are either the only ones to which
  they have access, or the only ones which they are
  any longer capable of enjoying.

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Principle/Duty-Based

• Only act in a way that you could make your act a
  universal law
• Should I lie? Would I make lying a universal
  law? No. Then dont lie!
• Should I cheat on my taxes? Would I want
  everyone to do that? No. Then dont!

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Principle 2

• Treat others always as an end, not as a means to
  an end.
• Dont treat checkout person as humanoid ATM
• Dont treat other drivers as obstacles in your
  path
• Dont treat customer as a just a means to money

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Virtue Ethics/Nebraska Ethics

• What is the GOOD life,
• and how do we achieve that?
• Aim for excellence
• Moderation/Balance
• -- Vice Virtue Vice
• (Too little) (just right) (too much)
• Coward Courage Foolhardy

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Being Virtuous

• Does depend on the situation
• When to be witty
• Does depend on the individual
• Child Maestro
• Is something we must constantly strive to upkeep,
  work at
• We can lose our touch!
• It helps to have roll models WWJD?

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Virtues

• Honesty
• Integrity
• Responsibility
• Respect/Caring
• Truthfulness

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Moral Principles for Living and Working

• Banker Friend look in the mirror rule
• Showgirl from Las Vegas Grandma rule
• Golden Rule do unto others
• Silver Rule do no harm
• What rules do you use?....

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Guiding Questions

• Questions to help decide if the situation or
  decision has ethical dimensions
• Is it legal but unethical?
• Is it necessary?
• Does it involve a core ethical principle such as
  honesty, integrity, truthfulness, etc.?

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Guiding Questions Info

• Information gathering questions
• Who are the stakeholders and what are their
  rights?
• Consider the source, reliability, and accuracy of
  all relevant information.
• Who should be involved in this decision?
• Do I have enough information to make a sound
  ethical decision? If not, how do I get it?

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Guiding Questions Options

• Questions to help identify and evaluate
  alternatives
• Am I rationalizing to justify what I want to do?
• Am I using anyone for my own personal gain? (Who
  will be injured and how)
• Are there conflicting loyalties to stakeholders?
• What would result in the long run if everyone did
  this?

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Guiding Questions Conclusion

• Questions that help in reaching a decision
• Could I defend my position before the Board of
  Directors, the CEO, or the media?
• What would ______________________ do? (Fill in
  the name of the best role model you know.)
• Will this seem to be the right decision a year
  from now? Five years from mow?
• Do I have the moral courage to take the more
  ethical course of action? (Am I willing to pay
  the price for my convictions?)

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Case Simple situation

• In discussing a premium quote with a customer,
  you ask them to remind you how far they drive to
  work each way. 20 miles, they say. Oh, I put
  down 5-- Id better change that, you say. The
  client says, No, lets just leave it.
• How do you handle this?

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Final Thoughts

• Usually, doing the right thing is clear, even if
  its not easy
• We tend to cut corners for short-term apparently
  inconsequential issues, but this can come back to
  haunt us
• Having Ethical Habits takes practice, and some
  thoughtfulness.

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Summary What have we covered?

• What is Business Ethics?
• Some moral theories
• Moral Development
• Moral Decision Making

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The End