Ethics: Why They Are Important, Why We Hate to Talk About Them, and What To Do About Them

NASACT

November 3, 2004

Professor Marianne M. Jennings

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Why the Focus on Ethics?

Why Does Ethics Have Such a Bad Reputation?

How Do I Resolve Ethical Dilemmas?

Why the focus on ethics?

Part I

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1. It hurts and it costs when ethics fall short

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Examples of Fall-Out When Ethics Fall Short

Clark County, Nevada N.J. and the stock deals Darlene Druyun and Boeing Illinois, Ryan and contracts Bruce Babbitt Robert Citron and Orange County The Assessor and the Property Owner List Stadium Site and the FAA NASA and O-rings and Space Shuttles

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2. The State of Ethics Is Not So Great

74% of high school students cheated on an exam in the last year (61% in 1992); 45% said they did it at least twice in the last year

93% lied to their parents in the past year; 79% say they lied twice

78% have lied to their teachers 37% said they would lie to get a job 38% took something from a store in the last year

Josephson Institute 2002

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Thoughts on cheating per high school students

“Students who cheat do so on their own terms. Of course there has been no penalty, but they know there is a risk, and apparently it seems like it’s worth taking.”

“Just about everyone is cheating in some way or another. It is a common thing among society that is seemingly accepted.”

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Thoughts on cheating from a high school teacher

“Cheating is done on a daily basis and there is little effort to curb it. Kids will ditch class by having their parents excuse them during the period they are to take a test, and then the kids find out from their friends what is on the test. Kids can then take the test the next day. . . . The new camera cell phones are now being used to take pictures of tests and also they are using instant messaging to cheat.”

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3. The State of Ethics in College

70% have cheated at least once on a test

87% have cheated on written work 52% have copied work from others 56% have plagiarized Rutgers University survey

75% have cheated in college in some way

Center for Academic Integrity, Duke

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Thoughts on cheating from college students

“If people can lie and get away with it, good for them.”

“Honestly, I would probably do nothing.”

[response of students to hypothetical asking what action they would take if they learned an executive of their company had lied under oath]

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Ethics at Work

76% of employees in business have observed a high level of illegal or unethical conduct at work in the past 12 months

49% of employees in business have observed misconduct that, if revealed, would cause their firms to “significantly lose public trust”

- KPMG 2000 Organizational Integrity Survey

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Most Ethically Vulnerable Area at Work - IT

100% of IT employees say they have lied at work in the past year

Some IT Tidbits 60% of all online purchases are done during the

hours from 9 AM to 5 PM 70% of all pornographic site visits are made

during those same hours Only 10% say they use work computer to visit

porn sites

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State of Ethics

MOST (65%) DON’T REPORT 96% feared being accused of not being a

team player 81% feared corrective action would not be

taken 68% feared retribution from their

supervisors (Society of Human Resource Managers, 1999)

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State of Ethics

None thought their ethical standards were lower than those of their peers in their organization (1%)

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3. Fear – You Will Be Caught

The Fish Bowl Existence of Government

Congressman J.D. Hayworth and the forged signature on the re-election petition

FTC, Time Warner and the memoGood intentions are not a substitute for goodactions.

M.M. Jennings

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The Newspapers and Revelations

The Laws of Probability Do Not Apply When it Comes to the Surfacing of Unethical or Illegal Conduct

If one person knows . . . Three people can keep a secret if two are dead.

Hell’s Angels’ motto (borrowing from B. Franklin)

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Truth and Its Percolating Quality

Lying is good. It’s the only way we ever get at the truth.

Dostoevsky

Circumstances beyond your control will cause bad acts to be discovered.

Anonymous

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Despite the odds, ethical risk-takers abound. . .

•The city truck and the beer stop•The council man and the threats•The assistant fire chief and the contracts•The art museum director and employees•The museum and the audit

Truth Percolates Like a Natural Force

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Examples of the Risk-Takers

Zoe Baird and Kimba Wood Henry Cisneros Fife Symington Scottsdale School District and the bids The government witness in the Martha Stewart

trial“It’s not the first mistake the gets you. It’s the

second, the cover-up, that will.”M. M. Jennings

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4. The Role of Ethics in Maximizing the Potential of Individuals and Organizations: Reputation

The Baggage-Free Existence The Marathon vs. The Sprint The Meteorites with Success: Judge Stephen Miretti and the Vegas Connection

Always tell the truth. That way you don’t have to remember anything.

Mark Twain

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4. Ethics and Reputation

A reputation, good or bad, is tough to shake.

Richard Teerlink

Former CEO, Harley-Davidson

A bad reputation is like a hangover. It takes a while to get rid of, and it makes everything else hurt.

James Preston

Former CEO, Avon

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The reputation of a thousand years is determined by the conduct of one hour.

Japanese Proverb

What goes around comes around. M.M. Jennings’ Grandmother

Ethics and Reputation

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5. Ethics and Leadership

Leadership is the ability to see around corners

Leadership is the ability to see the problem before others

Leadership is the ability to fix the problem before it becomes a headline

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Social/Regulatory/Litigation Cycle

Opt

ions

TimeLatency Awareness Activism Regulation/Litigation

Public

Moves

the

Cycle

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6. Ethics as a Management Tool- Morale

Motto 1: “Let’s get out there and not break the law today.” (Compliance and code adherence)

Motto 2: “Let’s aim for no ill-will among employees, suppliers, citizens and observers.”

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7. Ethics and Liability

You don’t make legally incorrect turns if you make ethically correct choices.

The Could vs. Should Issue Jurassic Park ethics

There is a big difference between what we have a right to do and what is right to do.

Justice Potter Stewart

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Avoid Jurassic Park Ethics

Could I do this? -- The Codified Society

Legalisms, litigiousness and its costs

Should I do this? -- The Ethical Society

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--Ethics and Conscience

It’s the Right Thing to Do

Trust as the basis for all organizations, systems and relationships

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8. Ethics and Trust

The Interdependence of Government, Business, Citizens and Ethics

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The Interdependence of Trust, Business, and Government

Relationships

Customers

Government

Investors RegulationFairness

Business

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Corruption Perception Index (Transparency, Int’l 2002)

Least Corrupt Finland Denmark New Zealand Iceland Singapore Sweden Canada Luxembourg Netherlands United Kingdom Australia Norway Switzerland Hong Kong Austria USA

Most Corrupt Bangladesh Nigeria Paraguay Madagascar Angola Kenya Indonesia Azerbaijan Uganda Moldova Haiti Ecuador Cameroon Bolivia Kazakhstan Vietnam

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Martha Stewart, ImClone and Omnimedia and Ethics

Dec. 27, 2001 – Martha’s sale of ImClone shares ($229,002)

If she had sold the shares after FDA problems with ImClone announced: $189,495

Overall savings for Martha: $39,507

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Martha’s Omnimedia shares Martha Stewart Omnimedia: Every $1 drop in share price cost

Martha $30 million Dec. 27, 2001: $70 per share June 25, 2002: $13.60 November 25, 2002 : $5.26 October 10, 2003 : $9.86 December 19, 2003: $9.11 March 5, 2004 (pre-verdict) -- $12.52 March 5, 2004 (trading halted after verdict) $10.18 March 16, 2004 - $9.97 May 16, 2004 -- $9.29 July 15, 2004 (new trial denied) -- $8.64 July 16, 2004 (sentencing) -- $11.81 Sept. 2004 -- $12.03

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The Irony of Martha and ImClone

Value of ImClone shares March 5, 2004 (verdict day): $164,976

One day after Martha’s announcement that she would serve her sentence without continuing appeal (Sept. 2004) Martha Stewart -- $12.03 ImClone shares – $54.10

Martha’s ImClone shares were sold for $58 each on Dec. 27, 2001

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9. Ethics and Survival

For exactly at the time when the fatal knowledge of how to destroy the entire human race has fallen forever into our hands, the knowledge of morality has fallen out. Exactly when the vehicle of our history has gotten a souped-up engine, we have lost the road map. Exactly when our toys have grown up with us from bows and arrows to thermonuclear bombs, we have become moral infants.

Peter Kreeft

Why does ethics have such a bad reputation?

Part II

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Why Does Ethics Have Such a Bad Reputation?

1. Urban Legend “You have to play the game.” “You can’t get ahead without cutting a

few

corners.” “You’ll be eaten alive.” “Ethics is for wimps.” “It’s a poker game. We’re all bluffing.”

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2. Lack of Enforcement

What you are thunders so loudly that I cannot hear what you say to the contrary.

Ralph Waldo Emerson

Ethics and Its Bad Reputation

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Ethics and Its Bad Reputation

3. The Myth of the Lonely, Dysfunctional Whistle-Blower

Hesitancy to pass judgment Hesitancy to raise issues

4. Theoretical

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Ethics and Its Bad Reputation

5. DifficultI would never suggest that ethics is simple.

Not only does one have to know the right thing to do -- one must also have the moral fortitude to do it.

Norman R. Augustine Former Chairman

Lockheed Martin

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Ethics and Its Bad Reputation

Let us have faith that right makes might, and in that faith let us to the end dare to do our duty as we understand it.

Abraham Lincoln

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The Hesitancy to Speak Up – The Assistant Principal and Glowing Recommendations: The Ethics of Confrontation

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6. We prefer rationalizing

“Everybody else does it.”

What is right is right even if no one is doing it.

What is wrong is wrong even if everyone is doing it.

Source unknown

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Rationalizing

“That’s the way they do it at Stanford.”

Benchmarking as an ethical standard

The Tragedy of Donald Kennedy and Government Grants Funds Use at Stanford

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Stanford and Benchmarking

Overhead funds from federal grants used for $3,000 cedar-lined closet for Kennedy’s home $2,000 flowers $2,500 grand piano refurbishing $7,000 sheets $4,000 wedding reception $184,000 yacht depreciation

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The Language of An EthicalBreach

December 18, 1990 “What was intended as government policy to

build the capacity of universities through reimbursement of indirect costs leads to payments that are all too easily misunderstood. Therefore, we will be reexamining our policies in an effort to avoid any confusion that might result. At the same time, it is important to understand that the items currently questioned, taken together, have an insignificant impact on Stanford’s indirect-cost rate.”

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The Language of An Ethical Breach

December 18, 1990 (cont’d) “Moreover, Stanford routinely charges the

government less than our full indirect costs precisely to allow for errors and allowances.”

From a university statement

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The Language of an Ethical Breach

January 14, 1991 “I don’t care whether it’s flowers, or dinners

and receptions, or whether it’s washing the table linen after it’s been used, or buying

an antique here or there, or refinishing a piano when its finish gets crappy, or repairing a closet and refinishing it -- all those are

investments in a university facility that serves a whole array of functions.”

From an interview with the Stanford Daily

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The Language of An Ethical Breach

January 23, 1991 “Because acute public attention on these

items threatens to overshadow the more important and fundamental issue of the

support of federally sponsored research, Stanford is voluntarily withdrawing all general administration costs for operation of Hoover House claimed for the fiscal years since 1981.”

University statement

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Evolutionary Progress

February 19, 1991 “I am troubled by costs that are perfectly

appropriate as university expenditures and lawful under government rules but I

believe ought not be charged to the taxpayer. I should have been more alert to this policy issue, and I should have insisted on more intensive review of these transactions.”

Remarks to alumni

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More Progress

March 23, 1991 “Our obligation is not to do all the law

permits, but to do what is right. Technical legality is not the guiding principle. Even in matters as arcane as government cost accounting, we must figure out what is appropriate and act accordingly. With respect to indirect-cost recovery, we pursued what was permissible under the rules, without applying our customary standard

of what is proper . . .” Remarks to alumni

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Kennedy’s Demise

July, 1991

“It is very difficult for a person identified with a problem to be a spokesman for its solution.”

Donald Kennedy

Letter of Resignation

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Recognizing Ethical Dilemmas - Language

“If we don’t do it, someone else will.”

The causes of ethical lapses: Job pressures Financial pressures Political pressures

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Recognizing Ethical DilemmasThe Language

“That’s the way it’s always been done.”

Is there a better way? Who is being protected by this?

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Recognizing Ethical Dilemmas -Language

“It doesn’t really hurt anyone.” Systemic implications of individual conduct Public trust “Corruption benefits a few at the expense of many.”

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Recognizing Ethical Dilemmas -Language

“The system is unfair.” All virtue is summed up in dealing justly.

Aristotle

“Who’s to know?”

“Rankings/ratings will suffer.”

“For all I do around here...”

“I was just following orders.”

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Actions

12. Balancing ethical dilemmas.Family vs. Work

Constituency conflicts

How do I resolve ethical dilemmas?

Part III

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Resolving Ethical DilemmasDevelop Your Ethics Stance

R e la t iv ism

A bso lu t ism

P ragm a tic Idea lis t ic

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What would you choose for values if it were your money, your business, and your name?1.

2.

3.

4.

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Value-Based Decision-Making

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Defining the Issue: Define Dilemmas by Values, Not Circumstances

Avoid the either/or conundrum and its false security

1. The ease of resolution vs. The long-term implications

2. Failure to define the issue properly

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Draw Your Lines

Stick to them Take action consistent with those lines Draw the line once for employees and you

are good for five years Group Think and the Asch Studies

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The Seduction of Habit

George Lefcoe , former commissioner of the Los Angeles County Regional Planning Commission on his retirement and the seduction of public office.

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The Boss on The Moving Line of Right and Wrong

And what once seemed black and white turns to so many shades of gray.

We lose ourselves in work to do and bills to pay.

Bruce Springsteen

“Blood Brothers”

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Simple Tests for Resolving Ethical Dilemmas

Categorical Imperative: How would you want to be treated?

Are you comfortable with a world with your standards?

Christian principle: The Golden RuleDo unto others as you would have them do unto you.

Luke 6:29-38 Thou shalt love thy neighbor as thyself.

Luke 10:27

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Resolving Ethical Dilemmas

Confucius:What you do not want done to yourself, do not do to

others.

Aristotle:We should behave to our friends as we wish our friends to

behave to us.

Judaism:What you hate, do not do to anyone.

Buddhism:Hurt not others with that which pains thyself.

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Resolving Ethical Dilemmas

Islam:No one of you is a believer until he loves for his

brother what he loves for himself.

Hinduism:Do nothing to thy neighbor which thou wouldst

not have him do to thee.

Sikhism:Treat others as you would be treated yourself.

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Resolving Ethical Dilemmas

Plato:May I do to others as I would that they should do unto me.

TREAT PEOPLE THE WAY YOU WANT THEM TO TREAT YOU