Ethics: A Challenge For All Times

1. Ethics: A Challenge For All Times September 30, 2012 Morris W. Beverage Jr., EDM President, Lakeland Community College Kirtland, Ohio

2. THE RAGING RIVER CASE C (1st other person) A (Owns boat) B (In love with D) D (In love with B) E (2nd other person)

3. THE RAGING RIVER CASE Most liked person 1. _________________ 2. _________________ 3. _________________ 4. _________________ Least liked person 5. _________________

4. Ethics The Study of right and wrong, usually including the determining and encouraging of what is right. Ethical Issue A situation in which there is one answer or choice involving the rule of law.

7. People no different than you or me can do unethical things. Well, certainly people no different than you!

8. WorldCom • Largest corporate fraud in history • Inflated profits by $3.9 billion • 17,000 people were laid-off within a week • Stock dropped from $64.50 to 20 cents • CEO Bernie Ebbers was found guilty of fraud, conspiracy and filing false documents and faces 85 years in prison • Bernie Ebberswas a great guy

9. WorldCom • At one time Bernie Ebbers was no different than us. • At one time the CFO was no different than us. • At one time the accountants that made the erroneous entries were no different than us – and, they even wrote out their resignation letters and held them all the way through the fraud.

10. WorldCom • Accountants knew what they were doing was wrong (Prepaid Capacity) • The belief was that it would all turn around • They thought they were doing the right thing in the long run by: • Protecting shareholders • Protecting workers • Protecting the economy

11. So, how do we get from today’s session to perpetrating the greatest fraud in U.S. corporate history?

12. THE RAGING RIVER CASE Most liked person 1. _________________ 2. _________________ 3. _________________ 4. _________________ Least liked person 5. _________________

13. Values A tightly held belief upon which a person acts by choice, an enduring belief that one way of behaving is personally or socially preferable to the opposing way of behaving. Ethical Dilemma A situation in which there is a conflict in the minds of people between values, or a conflict between what is right and what is wrong. You have to make a choice.

14. Personal Values

15. Shadow of the past and the future* * Robert Axelrod – The evolution of cooperation

16. Plain Dealer Big League Baseball Poll* • 19 hitters • 13 pitchers • Inserted questions about cheating as part of a wide-range anonymous survey *Dennis Manoloff, The Plain Dealer, June 11, 2003

17. Plain Dealer Big League Baseball Poll To the 19 hitters……. Would you use a corked bat if you were told you could hit a home run in a world series game and never be exposed?

18. Plain Dealer Big League Baseball Poll To the 13 pitchers… Would you use a blatantly doctored ball to record a game-ending strikeout in the world series if you were guaranteed never to be exposed?

19. Plain Dealer Big League Baseball Poll To the 19 hitters…. If you knew a grounder ruled a hit should have been ruled an error, would you urge the official scorer to change the call if it meant ending your hitting streak at 55 games?

20. Plain Dealer Big League Baseball Poll To the 13 pitchers…. If you knew a grounder ruled an error in the ninth inning should have been ruled a hit, would you urge the official scorer to change the call if it meant ruining what could have been a no-hitter?

21. Social Defection • Social Contract • Maximize the capacity to do what I want while also letting OTHERS do what they want. • Each individual will forego certain selfish, personal opportunities in exchange for profiting from the cooperation of others. • Balancing “self-interest” with “community interest”

22. Social Defection • In 2000, Stephen King offered to provide an electronic book, one chapter at a time, if at least 75% of the downloads were paid for ($1 per download) • 120,000 downloads of the first chapter • 40,000 downloads of the second chapter, but only 46% were paid for • He said on his website – “If you pay, the story rolls. If you don’t, the story folds.” He folded it.

23. Social Defection • Defecting results in gaining at others’ expense • Cheating: I cheat + You don’t = I win You cheat + I don’t = You win • Our “social contract” is only in balance if either we both cheat or we both don’t cheat. • AKA “social reciprocity”: I will commit to NOT defect when I can, and expect others to NOT defect when they can.

24. Why “good” managers make bad ethical choices* • Manville Corporation • Continental Illinois Bank • E.F. Hutton *Saul W. Gellerman, Harvard Business Review, July-August 1986

25. The Four Rationalizations* I. A belief that the activity is within the reasonable ethical and legal limits – that is, that it is not “really” illegal or immoral. *Saul W. Gellerman, “Why ‘good’ managers make bad ethical choices,” Harvard Business Review, July-August 1986

26. The Four Rationalizations II. A belief that the activity is in the individual’s or the organization’s best interests - that the individual would somehow be expected to undertake the activity.

27. The Four Rationalizations III. A belief that the activity is “safe” because it will never be found out or publicized; the classic crime and punishment issue of discovery.

28. The Four Rationalizations IV. A belief that because the activity helps the company, the company will condone it and even protect the person who engages in it.

29. So What? So how does it happen? How do we wake up one day and choose to do wrong things instead of right things?

30. Defining Moments • Right vs. Right • Responsibility to yourself and others • Responsibility for others • Responsibility shared

31. So what?

32. Ethics: A Challenge for All Times Thank you!