Managing Responsibly in a Global Environment

1. Managing Responsibly in a Global Environment Mary Runte

2. Divergent Viewpoints • I am quite willing to pay a man an annual salary of one million dollars, provided that he knows how to glide over every moral restraint with almost childlike disregard, and be ready to kill off thousands of victims without a murmur • Friendship, family, religion, these are the 3 demons you must slay if you want to succeed in business John D Rockefeller Monty Burns

3. Corporate Responsibility Crisis... • “Opinion polls now place business people in lower esteem than politicians.” -Jennifer Merritt (2002) “For MBAs, Soul Searching 101,” Business Week, Sept. 16, p. 64. • “A W.S.J./NBC poll found that 57% of the general public believed that standards & values of corporate leaders & executives had dropped in the last 20 years.” -Eric Hellweg (2002) www.business2.0.com, Sept. 10.

4. Corporate Responsibility Crisis... • “An ABC News/Washington Post survey indicated 63% of the public felt that regulation of corporations is necessary to protect the public.” • “Seventy-five percent of those surveyed by ABC expressed limited confidence in large corporations.” -Gary Langer (2002) “Confidence in Business: Was Low and Still Is,” www.abcnews.com, Sept. 10.

5. Corporate Responsibility Crisis... • “Suddenly, investors are obsessed with lies, greed and dodgy accounting. It began with the scandal that toppled Enron. Now it has engulfed big and small companies, eroding the markets, investor confidence and America’s image as the economy to emulate.” -MSNBC “A Guide to Corporate Scandals: Companies Under the Microscope,” http://www.msnbc.com/news/corpscandal_front.asp?odm=C2ORB. Accessed 9/24/2002.

6. Board members Top management Attorneys Accounting firms Securities analysts Regulators Politicians Mass media Investors Colleges of business Developing Trust & Confidence in Business... • Individuals alone did not cause our current crisis • Many stakeholders were involved in supporting deception, fraud & destruction

7. How does ethical decision making occur in organizations? • The #1 influencer of ethical/unethical behavior is the influence of significant others & the corporate culture • Business ethics in an organization relates to a corporate culture of values, programs, enforcement & leadership • Stakeholders must support organizational ethics initiatives—it’s good business • Stop focusing on the short term!!!

8. Companies Under the Magnifying Glass… • Halliburton • ImClone Systems • Merrill Lynch • Qwest Comm. • Tyco Intl. • WorldCom • Xerox • Livent • Adelphia Comm. • Arthur Andersen • Bristol-Meyers • Computer Associates • Dynegy • Enron • Global Crossing -MSNBC “A Guide to Corporate Scandals: Companies Under the Microscope,” http://www.msnbc.com/news/corpscandal_front.asp?odm=C2ORB. Accessed 9/24/2002.

9. What does fraud cost? • Cost to corporations: > $400 billion a year • Organizations lose $9/day/employee • Median loss caused by males: $185,000 • Median loss caused by females: $48,000 “Fraud Group Warns of Theft,” Boston Sunday Globe, 2/3/2002.

10. Other issues • Environment • Kyoto • Wage equity • Third world …..

11. Where did the Enron ‘infamous’ get their degrees? • Ken Lay—bachelors and masters degree in economics from University of Missouri • Jeffrey Skilling—applied science from SMU and MBA from Harvard • Andrew Fastow—economics from Tufts and MBA from Northwestern • Robert K. Jaedicke (board member)—former Dean of the Graduate School of Business, Stanford University & Stanford graduate

12. What are schools of business doing? • Developing programs & courses to address corporate responsibility • Encouraging faculty to integrate ethics into current curriculum

13. This course • This course will examine the forces shaping management decision-making in an organizational environment characterized by the process of globalization. The interaction of the political, legal, regulatory and social environments in which an organization operates will be assessed in relation to ethical decision-making, stakeholder management, sustainability, and corporate citizenship.

14. In other words… • a) Students will be able to identify and apply ethical models to organizational decision processes • b) Students will demonstrate knowledge of the legal, regulatory, political and social frameworks, both domestic and international, within which contemporary organizations operate • c) Students will be able to critically evaluate the changing roles and responsibilities of corporations and other organizations in a globalized world.

15. Why? • Reasons for importance • Business Demands it • The role of trust • Deterring government intervention • Public demands it • Ethical investment • Human rights • Environmentalism • The Media Spotlight • Firestone • Nike • Enron • Shell

16. How • Experiential activities • Case studies • Critical readings with focus on ideas and concepts • Independent learning • Class discussion

17. Assessment • Ethics and CSR concept exam • Case exam • Participation • Group Case

18. Expectations • Critical not CRITICAL • Respect for differing views vs respect for difference. • Inclusive language

19. For next week… • Debate on the role of business • A-L: “The role of business is solely to increase profits for shareholders” • M-Z: “The role of business is NOT solely to increase profits for shareholders: • Virtue Matrix