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Ethics 101 From Theory to ApplicationWhat Would Kant Think About Tarnatino Flix?PAUL FIORELLI, J.D., M.B.A. CCEPProfessor of Legal StudiesXavier UniversityFIORELLI@XAVIER.EDUBRAD AGLE, Ph.D.Professor of Ethics and LeadershipBrigham Young UniversityBRADAGLE@BYU.EDUAgenda Introduction to Ethical Theory Legal v. Ethical Duties Utility, Rights, Justice, StakeholderThe Parable of the SadhuApplied Ethics Grey Areas, Reputation, Stewardship1
The Federal Sentencing Guidelines Fiorelli, 2003Sentencing Guidelines7 Minimum Requirements of an EffectiveEthics & Compliance l culture that encourages ethicalconduct and a commitment to compliance withthe law.”USSG § 8B2.1(a)(2) (November 1,2004)2
INTRODUCTION TO ETHICAL THEORYMORAL - principlesor standards aboutwhat is right andwrong, good v. evilbehaviorAPPROACHES TO MORALREASONING UTILITARIANISM - look at the net welfare produced forall stakeholders RIGHTS - Emphasize rights and duties of stakeholders VIRTUE - Strive to moral excellence JUSTICE - Focuses on fair processes and an equitabledistribution of the benefits and burdens imposed by anaction or policy on stakeholders3
UtilitarianismRIGHTS CRITERIA Immanuel Kant Act as if you were a member of a moralcommunity governed by moral principles ofuniversality and respect for persons4
Kant - Never LieVirtue Aristotle advancedthe theory Habits of virtue– Ethical Musclememory What is the“culture” of anorganization Aaron Feuerstein Malden Mills5
JUSTICE CRITERIA John RawlsDISTRIBUTIVE JUSTICE– Equal distribution of benefits andburdens of society to everyoneexcept when there are relevantdifferences in people.– What is “Nepotism” and whatwould Rawls think about it?– (not to dismiss the difficulty ofsuccession planning in familybusinesses)VEIL OFIGNORANCE-How would you dealwith people if you did notknow what yourbargaining power, orcharacteristics were?6
JUSTICE CRITERIA -I’m not treatedfairly, so I’ll takematters into my ownhands.COGNITIVE ONVENTIONAL7
PARABLE OF THE SADHUHOW COULD BUZZ MCCOY EVEN CONSIDER LEAVING THESADHU? IS HE INHERENTLY EVIL?WHAT ARE SOME OF THE FACTORS GOING THROUGHBUZZ’S MIND WHEN HE’S MAKING A DECISION WHETHER TOSAVE THE SADHU?HOW WAS THE SADHU DRESSED? DID HE ACCEPTRESPONSIBILITY FOR HIS OWN ACTS?HOW OFTEN WILL YOU GET A 6 MONTH SABBATICAL?PARABLE OF THE SADHUIS THERE A LEGAL DUTY TO RESCUE ?WHAT ABOUT AN ETHICAL DUTY?WHAT'S THEDIFFERENCE Fiorelli, 20038
LAW & ETHICSCOMPLIANCE ACTIONVIOLATIONLAW & ETHICSL AWFUL9
LAW & ETHICS“Laws are made to instruct thegood, and in the hope thatthere may be no need of them;also to control the bad, whosehardness of heart will not behindered from crime.” [Laws,“Its an old adage of a FASBBook IX]Accounting Standards Board)(Financialrule. It takes four years towrite. It takes four minutesfor an astute investmentbanker to get around it.”LAW & ETHICS“Our schools of business must beprincipled teachers of right and notsurrender to moral confusion andrelativism.”George Bush - Remarks on Corporate ResponsibilityJuly 9, 2002 (3 weeks before Sarbanes-Oxley passed). Fiorelli, 201810
LAW & ETHICS JUST SKIMMING THE SURFACE OF LEGALCOMPLIANCE DOESN’T LEAVE ROOM FORERROR IF LAWS ARE WHAT WE MUST DO, THENETHICS ARE WHAT WE OUGHT TO DO Fiorelli, 2018PARABLE OF THE SADHUWHO WAS THE "LEADER" OF THE GROUP?WHAT ARE THE CHARACTERISTICS OF A"LEADER"?“Leadership is a potent combination of strategyand character. But if you must be without one, bewithout the strategy.” - Norman Schwarzkopf.11
PARABLE OF THE SADHUSTANFORD PRISON EXPERIMENTGroups can get us to do things weordinarily might not do on our own, buttheir influence is often indirect, simplymodeling the normative behavior that thegroup wants us to imitate and practice.(The Lucifer Effect: Undestanding HowGood People Turn Evil,” by PhillipZimbardo)GROUPTHINK/AUTHORITYMILGRAM EXPERIMENTProd 1: Please continue.Prod 2: The experiment requires you to continue.Prod 3: It is absolutely essential that you continue.Prod 4: You have no other choice but to continue.65% willing to shockup to 450 voltsPRE-TEST MILGRAM SURVEYED 14 YALESENIOR PSYCHOLOGY MAJORSTHEY PREDICTED 0-3% WOULD SHOCK35%65%12
AUTHORITY RESPECTFULLYQUESTIONAUTHORITY ASK FOR ANEXPLANATION “THAT’S HOW WEDO IT HERE”, OR“THAT’S HOWWE’VE ALWAYSDONE IT” ISN’TGOOD ENOUGHSHEPARD FAIREYGROUPTHINK13
How tough is it tochallenge groupnorms?gRoom“If everyone has a sense of long-term stewardship over our assets every day,then people will also start to speak up more if they have concerns. I want us tosharpen our everyday attitude to operational and technical risk, to ensure it is thenorm for people on the frontline to speak about risk, and for managers to listen.”Bob Dudley, CEO of BPReplaced former CEO, Tony HaywoodJuly 27, 2010“I don’t assume that I always know the answer to something. I can draw on yearsof experience and intuition, but we need to be constantly enquiring and learningand listening to everyone – including the quietest voice in the room. We have tokeep thinking the unthinkable – be it operational, financial or compliance risk.Nobody has all the answers. Only by working together and making the most ofeveryone’s capabilities will we begin to move the company forward.”14
ALL THAT IS NECESSARYFOR EVIL TO TRIUMPH ISFOR GOOD MEN (ANDWOMEN) TO DO NOTHING.EDMUND BURKEVALUES15
THE VALUE OF VALUESDO THEY HIRE FORMISSION?PROMOTEFOR MISSION?DISCIPLINE FOR MISSIONVIOLATIONS?CAN THEY SPELL THEWORD M-I-S-S-I-O-N?IF THE CEO TAPPED ANEMPLOYEE ON THESHOULDER, COULD THEYEXPLAIN THE MISSION?ETHICAL ISLANDSRAISE YOUR HAND IF YOU CONSIDER YOURSELF ETHICALDO YOU THINK YOU ARE “MORE ETHICAL” THAN YOUR COWORKERS?DISCUSSING ETHICS IS DIFFICULT, BUT TALKING ABOUT ITALLOWS YOU TO SEE YOUR COLLEAGUES ARE ALSOCONCERNED ABOUT ETHICSTHIS CAN EMPOWER PEOPLE TO “PUSH” BACK, WHENASKED TO DO SOMETHING YOU BELIEVE IS IMPROPERLynn Brewer Confessions ofAn EnronExecutive: itute.org/16
Relevant FactsEthical IssuesAlternativesPlan of action17
ANALYZEAnalyzeR ELEVANT FACTS?E THICAL ISSUESA LTERNATIVES?P LAN?FRAMEWORK FOR ETHICAL DECISIONMAKINGAPPLYQUESTIONS TO ASK?– IS MY ACTION RIGHT– IS IT LEGAL– DOES IT FOLLOW COMPANY POLICY– HOW WOULD IT LOOK TO THOSE OUTSIDE THE COMPANY?REMEMBER THESE RULES– KNOW THE LEGAL AND COMPANY STANDARDS THAT APPLYTO YOUR JOB– FOLLOW THESE RULES AND STANDARDS - ALWAYSApplyACT OR SEEK ADVICEActOrSEEK ADVICE IF YOU ARE UNSUREHR, LEGAL, COMPLIANCE, IA, HOTLINEKEEP ASKING UNTIL YOU GET THE ANSWER THEN ACTSeekAdviceActANALYZE YOUR ACTIONS35REPUTATION18
REPUTATIONWarren Buffett: It takes 20 years to build a reputation and fiveminutes to ruin it.We can afford to lose money, but not our reputation.How would you feel about your actions, if your family readabout them on the front page of the newspaper?If you lose money for the firmI will be understanding. If you lose a shred of reputationfor the firm, I will be ruthless.19
GREY AREASILLEGALLEGALBLACKWHITEWRONGRIGHTEVILGOOD20
SharesValuesType IIIValuesNo NumbersDoesType IINotNo ValuesShareNoNumbersValuesDoes not make the NumbersType IValuesNumbersType IVNo ValuesMakes NumbersMakes the Numbers21
INTEGRITYINTEGRITY22
STEWARDSHIPSTEWARDSHIPMILITARYMERCENARIESGOD, COUNTRY, CORPSDUTY & HONORLONG TERMHOW DO I SERVE OTHERSSELL SERVICES TO THEHIGHEST BIDDERSHORT TERM VIEWWHAT’S IN IT FOR ME?Rakesh Khurana, Professor Harvard Business School, NPR Weekend Edition, 2/14/0923
PARABLE OF THE SADHU Groups can get us to do things we ordinarily might not do on our own, but their influence is often indirect, simply modeling the normative behavior that the group wants us to imitate and practice. (The Lucifer Effect: Undestanding How Good People Turn Evil,” by Phillip Zimbardo) STANFORD PRISON EXPERIMENT 65 % 35 % 65% willing to shock up to 450 volts Prod 1: Please .
