Ethic in Leadership

1. Ethic in Leadership David A. Walker AAI, CIC, LIC, ARM, CRM President-Hartland Insurance Agency Inc. Chairman-IIABA DavidWalker@hartlandinsurance.com

2. With the SEC and Federal Government regulating the big guys ….. It is the marketplace that regulates small business

3. Small to Medium Size Business rely on a very delicate network of business connections

4. Changing Attitudes • Gallup poll – # of people who said a strict moral code is important. • 1981 – 47% • 1989 – 60% • Josephson Institute – Survey of U.S. Students (1991-1992) • 78% said cheating on exams is wrong • 90% said being “kind and caring” is important • 2008 Josephson Institute Survey revealed • 64% cheated on exams • 42% lied to save money • 30% stole something from a store

5. American Workers • 1 in 6 drink or use drugs while on the job • 1 in 2 say they can get ahead by politics or cheating vs. work • 1 in 4 expect to compromise personal beliefs to get ahead • Admit they “goof off” 20% of time • Feel #1 cause of business decline is low executive ethics

6. Ethics ETHIKOS = morals ETHOS = character

7. What are Ethics? • Standards of conduct based on moral duties and virtues • Applying principals of right and wrong • Discipline dealing with good and evil with moral duty

8. What are Morals? • Of or relating to principles of right and wrong • Conforming to a standard of right behavior

9. Values vs. Ethics • Values • What you believe or hold important • Ethics • What you do

10. Core Ethical Principals • Honesty and integrity • Respect and caring for others • Recognize stakeholders rights • Promise keeping • Trustworthiness • Fairness • Personal responsibility

11. Ethically Neutral Values A • Happiness • Wealth • Status • Power • Appearance • Ego • Ethical values must always trump ethically neutral values A

12. Why People Act Unethically • Meet deadlines • Cut cost / increase production • Meet immediate self-interest • Gain short term benefits • Protect someone • Avoid punishment • Win admiration / interest • Avoid embarrassment

13. Schools of Ethical Thought • Virtue Ethicist • Deontologist • Relativist • Egoist • Utilitarianist

14. Virtue Ethics • Person of “good” moral character deems appropriate • Born with virtue, but can lose • Can be enhanced by belief, knowledge • Above and beyond

15. Deontology • Focus on rights of individuals • Freedom of conscience • Freedom of consent • Freedom of privacy • Freedom of speech • Due Process • Intentions of behavior rather than consequences

16. Relativist • From experiences of individuals and groups • Use self as basis for ethical decision • Actions based on group consensus

17. Utilitarianism • Seeking greatest good for the greatest number • Comparison of costs to benefits for all parties • Select alternative that results in greatest utility

18. Egoists • Consequences for self • Maximize own self interest • Career growth • Power • Pleasure • Fame • Physical well being • Wealth

19. What is a Code of Ethics? • A statement of core values and ethical principals designed to guide behavior and/or provide inspiration

20. Why is Ethics Important?

22. Virtually every number in a corporate financial report is created by judgments and estimates made by corporate insiders whose cash bonuses depend upon meeting pre-set earnings targets. William S. Lerach Enron Class Action Lawyer

23. Why be Ethical? It’s Good Business

24. Why be Ethical?Utmost Good Faith Uberrima Fides

25. Business Ethics • Corporations and individuals doing “the right thing” • Core ethical principals • Honesty • Integrity • Responsibility • Promise keeping • Fairness • Ethics place in business

26. Factors for Poor Image • Lack of leadership • Poor communication • Lack of consumer focus • Burdensome bureaucracies • Unhealthy competition

27. Dilemma: Clashing of Values • Truth vs. Loyalty • Individual vs. Community • Short-term vs. Long-term • Justice vs. Mercy

28. Ethical Dimensions • Is it legal, but unethical? • Does it involve a core ethical principle?

29. Gathering Information • Who are stakeholders? • Source, reliability of information • Who should be involved in making the decision? • Do I have enough information?

30. Identify & Evaluate Alternatives • What alternative can I eliminate? • Am I rationalizing? • Am I using anyone for my gain? • Conflicting loyalties? • Long term result

31. Reaching the Decision10 Questions to ask Yourself • 10. Could the decision become habit forming? • 9. Is it legal? • 8. Is it safe? • 7. Is it the right thing to do? • 6.Will this stand the test of public scrutiny? • 5. If something terrible were to happen, could I defend my actions? • 4. Is it just, balanced, and fair? • 3. How will it make me feel about myself? • 2. Does this choice lead to the greatest good for the greatest number? • 1. Would I do this in front of my mother?

32. After the Decision • Taking action easier than making the decision • What if it was the wrong decision?

33. The Pinto

34. The Ford Pinto Low-cost sub-compact Weight less than 2000 lbs. Cost less than $2,000.00 To market in 2 years instead of 4

36. Ford Pinto

37. Engineers Response • Met all legal and government standards • Car was comparably safe • To modify design on 12.5 million autos • $11 per unit x 12.5 million = $137 million

38. Actuaries/Accountants Position • 180 burn deaths ($200,000 x 180) • 180 serious burn injuries ($67,000 x 180) • 2100 burned vehicles ($700 x 2100) • Total of $49.15 million

39. The Four Way Test Is it fair for all? Will it build good will? Is it true? Is it beneficial to all?

40. Three Principals • We judge others by their worst behavior • We judge ourselves by our best intentions • There is no single “right” answer to many ethical dilemmas • It’s easier when you don’t need it

42. Thank you for attending! Questions????????