BUSINESS BUSINESS ETHICSETHICS

THE CREEDTo be so strong that nothing can disturb your To be so strong that nothing can disturb your

peace of mind. peace of mind.

To talk health, happiness and prosperity to every To talk health, happiness and prosperity to every person you meet. person you meet.

To make all your friends feel that there is To make all your friends feel that there is something in them. something in them.

To look at the sunny side of everything and To look at the sunny side of everything and make your optimism come true. make your optimism come true.

To think only of the best, to work only for the To think only of the best, to work only for the best, and to expect only the best. best, and to expect only the best.

Dutch Bros. “adopted” the Optimists’ Creed as the “Dutch Creed.” Every meeting ends with reciting it to help keep a positive outlook

THE CREED

To be just as enthusiastic about the success of To be just as enthusiastic about the success of others as you are about your own. others as you are about your own.

To forget the mistakes of the past and press on to the greater achievements of the future.

To wear a cheerful countenance at all times and give every living creature you meet a smile.

To give so much time to the improvement of yourself that you have no time to criticize others.

To be too large for worry, too noble for anger, too strong for fear, and too happy to permit the presence of trouble.

BUSINESS ETHICSBUSINESS ETHICS

"Let me appeal to your sense of doing things my way""Let me appeal to your sense of doing things my way"Cartoon by P.C. Vey

Copyright 2004, Harvard Business Review

BUSINESS ETHICSBUSINESS ETHICS

Can Business (and Businesses) be Can Business (and Businesses) be “Ethical?” What does that mean?“Ethical?” What does that mean?

Do “Ethics” matter More Now than Before? Do “Ethics” matter More Now than Before?

Whose “Ethics” are They?Whose “Ethics” are They?

Isn’t the “Best Ethic” maximizing Isn’t the “Best Ethic” maximizing Shareholder Shareholder Value? What do you say to your Value? What do you say to your

“Stakeholders?”“Stakeholders?”

WHY DO ETHICS WHY DO ETHICS MATTER?MATTER?

Does “Doing the Right Thing” Matter? Does “Doing the Right Thing” Matter?

To Whom Does it Matter?To Whom Does it Matter?

What are the Costs to Business of What are the Costs to Business of Unethical Behavior?Unethical Behavior?

WHERE DO ETHICS WHERE DO ETHICS MATTER?MATTER?

In a Court Room: Legal Implications In a Court Room: Legal Implications

Financial Markets: Reliability of Financial Markets: Reliability of Information Information Human Resources Markets: How to Human Resources Markets: How to

Attract and Retain the Best Attract and Retain the Best and and BrightestBrightest

ETHICAL ISSUESETHICAL ISSUES

Three Steps for Analyzing Ethical Three Steps for Analyzing Ethical IssuesIssues

Strictly Legal Perspective

Strictly Personal Perspective

Is It Legal? If “No,” Stop and Take Action

Is It Balanced?Compare Risks and Benefits

How Does It Make Me Feel?What is your Conscience telling You?

Are You doing the “Right Thing?”

BUSINESS ETHICSBUSINESS ETHICS

After 3 months on the job, you learn an After 3 months on the job, you learn an employee falsified her employment employee falsified her employment application: she doesn’t have a college application: she doesn’t have a college degree. As her boss, what do you do?degree. As her boss, what do you do?

Fire Her Immediately Fire Her Immediately Overlook it, She’s doing a Great Job Overlook it, She’s doing a Great Job Balance the Omission's Severity with the Great Job Balance the Omission's Severity with the Great Job

she’s doing plus her Age and Ethnicityshe’s doing plus her Age and Ethnicity Contact HR and Determine Company PolicyContact HR and Determine Company Policy

BUSINESS ETHICSBUSINESS ETHICS

Your least effective employee has applied to Your least effective employee has applied to transfer to another department. And the transfer to another department. And the manager is calling you for a reference…manager is calling you for a reference…

Say the employee is the best one you’ve ever Say the employee is the best one you’ve ever had and you’re heartbroken they’re leaving had and you’re heartbroken they’re leaving Be Candid - Tell Everything - Leave out NothingBe Candid - Tell Everything - Leave out NothingTell the manager the employee might be a better Tell the manager the employee might be a better

“fit” in their department instead of yours“fit” in their department instead of yoursDuck it: Suggest the Request be handled by HRDuck it: Suggest the Request be handled by HR

BUSINESS ETHICSBUSINESS ETHICS

A Relative wants to work in your Department. It A Relative wants to work in your Department. It could be a promotion and a big pay raise. He’s could be a promotion and a big pay raise. He’s asking for your advice…asking for your advice…

Give him the benefit of your inside knowledgeGive him the benefit of your inside knowledge

Tell him not to applyTell him not to apply

Tell him that if he gets the job, he’ll have to move Tell him that if he gets the job, he’ll have to move out of your house where he’s been for 9 monthsout of your house where he’s been for 9 monthsAsk him how to deal with possible perceptions of Ask him how to deal with possible perceptions of favoritism or nepotismfavoritism or nepotism

BUSINESS ETHICSBUSINESS ETHICS

You discover your Boss lets his Children (who You discover your Boss lets his Children (who attend an expensive out-of-state college) charge attend an expensive out-of-state college) charge calls to the Firm’s Telephone Account and then calls to the Firm’s Telephone Account and then falsifies his Expense Record…falsifies his Expense Record…

Tell Accounts Payable about what you knowTell Accounts Payable about what you knowWrite a Memo reminding everyone about the policy Write a Memo reminding everyone about the policy regarding personal use of company resourcesregarding personal use of company resourcesReport it to your Boss’s BossReport it to your Boss’s BossNotify the Legal Department immediatelyNotify the Legal Department immediately

UNETHICAL BUSINESS UNETHICAL BUSINESS PRACTICESPRACTICES

1.1. Abusive or Intimidating BehaviorAbusive or Intimidating Behavior2.2. Accurate but Incomplete DisclosuresAccurate but Incomplete Disclosures3.3. Discrimination against Protected ClassDiscrimination against Protected Class4.4. Receiving/Offering Bribes, Kickbacks or Receiving/Offering Bribes, Kickbacks or

IncentivesIncentives5.5. Theft/Fraud: Expense Accounts/Personal Theft/Fraud: Expense Accounts/Personal

Use of Company PropertyUse of Company Property6.6. Sexual HarassmentSexual Harassment7.7. Termination without Fair Notice or CauseTermination without Fair Notice or Cause

BUSINESS ETHICS: BUSINESS ETHICS: APPROACHES APPROACHES

COMPLIANCE-BASEDCOMPLIANCE-BASEDPrevent, Detect and Punish Legal Prevent, Detect and Punish Legal ViolationsViolations

INTEGRITY OR VALUES-BASEDINTEGRITY OR VALUES-BASEDDefine Organizational Values and Define Organizational Values and Encourage Employee Commitment Encourage Employee Commitment to Ethical Aspirationsto Ethical Aspirations

ETHICS AND THE LAWETHICS AND THE LAWLegal Requirements often represent an Legal Requirements often represent an

Ethical MinimumEthical MinimumPersonal Ethical Standards Generally Personal Ethical Standards Generally

Exceed Legal StandardsExceed Legal Standards

ETHICS

LAW

Laws are Ethical Issues with Societal Implications as

interpreted by a Legislature; Personal Ethics have Broader Context and

Application

FORCES THAT SHAPE BUSINESS FORCES THAT SHAPE BUSINESS ETHICSETHICS

IsIsDecisionDecision

or Behavioror BehaviorEthically andEthically and

SociallySociallyResponsible?Responsible?

Beliefs and ValuesMoral DevelopmentEthical Framework

FounderHistoryDefining MomentsStories of Development

Government RegulationsCustomersSpecial Interest GroupsMarket Forces

StructurePolicies and RulesCode of EthicsReward SystemSelection and Training

External StakeholdersOrganizational Systems

Personal Ethics Organizational Culture

PERSPECTIVES ON ETHICSPERSPECTIVES ON ETHICSEthical Issues require Persons or Organizations Ethical Issues require Persons or Organizations

to choose an Action that to choose an Action that maymay get judged as get judged as Right or WrongRight or Wrong

Business Ethical Issues: ClassificationsBusiness Ethical Issues: ClassificationsConflicts of InterestConflicts of InterestFairness and HonestyFairness and HonestyCommunications Communications Organizational RelationshipsOrganizational Relationships

CONFLICTS OF INTERESTCONFLICTS OF INTEREST

DEFINITION: DEFINITION: Employee’s Personal or Employee’s Personal or Financial Interests Interfere with Employee’s Financial Interests Interfere with Employee’s

Obligations to EmployerObligations to EmployerTHREE TYPES: THREE TYPES:

Financial: Self-dealing or Insider TradingProfessional: Outside Commitments infringe on Employer ResourcesPersonal: Family/Employee Conflicts, Nepotism, Fraternization

CONFLICTS OF INTERESTCONFLICTS OF INTERESTBEST RESPONSE?BEST RESPONSE? Preventative Preventative Measures: Employees free to have Measures: Employees free to have unrelated job activities, but… unrelated job activities, but…

EMPLOYER CAN EXPECT LAWFUL AND EMPLOYER CAN EXPECT LAWFUL AND CONFLICT-FREE BEHAVIORCONFLICT-FREE BEHAVIOR

Strategically Identify and Manage Potential Strategically Identify and Manage Potential Conflicts with Written Policies, Standards, Conflicts with Written Policies, Standards, Expectations, Training, Monitoring and Expectations, Training, Monitoring and Constant CommunicationConstant Communication

STRUCTURES AND SYSTEMSSTRUCTURES AND SYSTEMS

Have a Code of Ethics (standards), but Have a Code of Ethics (standards), but more important, have a Code of more important, have a Code of Conduct (Actions)Conduct (Actions)

Communications Network: Formal and Communications Network: Formal and Informal Processes for Reinforcing Informal Processes for Reinforcing

and and RefreshingRefreshingFormal Reporting system: Ethics Formal Reporting system: Ethics Ombudsperson - Unbiased and Neutral Ombudsperson - Unbiased and Neutral

but with Authoritybut with Authority

ETHICAL ETHICAL CLIMATE/CULTURECLIMATE/CULTURE

More Important than Ethics ProgramMore Important than Ethics Program

Begins with leadership (all levels) that includes Begins with leadership (all levels) that includes Ethical Considerations in every Ethical Considerations in every

Decision: Decision: Are We Doing the Right Thing?Are We Doing the Right Thing?

Focus on What’s best for Focus on What’s best for BOTHBOTH Employees Employees and Affected Community and Affected Community

(stakeholders)(stakeholders)

Actions louder than Words/Codes: Actions louder than Words/Codes: Consistency and Follow-up ActionsConsistency and Follow-up Actions

Communities and their Businesses Organizational Responsibility. Discuss

possible roles and activities the venture might take or promote that contribute to the community’s “greater good.” Will these roles or activities make a significant, positive contribution? How will the venture sustain its commitment to these contributions?

CRITERIA GUIDING ETHICAL ACTIONSCRITERIA GUIDING ETHICAL ACTIONS

Employees won’t be Punished for Employees won’t be Punished for Questioning AuthorityQuestioning AuthorityEmployees will be held Accountable Employees will be held Accountable (Punished) for Rule Violations (Punished) for Rule Violations Focus on larger organizational/societal Focus on larger organizational/societal

Outcomes; Not Personal/self-Outcomes; Not Personal/self-InterestInterestWould You wish Others to behave in the Would You wish Others to behave in the

same Way if Action affected You?same Way if Action affected You?

BOTTOM LINE OF BOTTOM LINE OF ETHICAL LEADERSHIPETHICAL LEADERSHIP

Decision-making includes Personal, Decision-making includes Personal, Organizational and societal ValuesOrganizational and societal ValuesEthical Values always open to Discussion and Ethical Values always open to Discussion and Criticism but … Criticism but …

Must have Fire Wall between Must have Fire Wall between Immutable Immutable standards and Case-by-Case standards and Case-by-Case ExceptionsExceptionsAccept Responsibility for sound Moral Accept Responsibility for sound Moral Judgments: It’s in Everyone’s Job DescriptionJudgments: It’s in Everyone’s Job Description