Business 303 Sheppard

1. Business 303 Sheppard Business Society & Ethics, Week 8: Organizational Ethics

2. BUSINESS ETHICS WEEK 8: MAIN QUESTIONS • What are the individual failures that lead to organizational problems with the truth? • What is a lie? • What would make lying acceptable? • Is business a special case? • Does it pay to lie? • Are privacy & secrecy a special case?

3. 1a. Autocracy: Symptoms/Side-effects(1of6) • Workaholism • Not just a work ethic • Relations to others • Business schools? • Physical & psychological harm • Ethics • Fixed focus on work lends itself to faulty moral decision making. A “success at any cost!” attitude prevails. Others are seen as means to a desired end. The obsession is justified by pointing out how success at work makes the individual a major contributor to the greater good.

4. 1b. Autocracy: Symptoms/Side-effects(2of6) • Groupthink(1/2) • Grandiosity • Management will solve it • Scapegoating • Ethics & Loyalty • Over-conforming nature the groupthink process lowers the quality of moral decision making. • The groupthink process internalizes its own expertise and fails to assess its own moral position from outsider’s perspective.

5. 1b. Autocracy:Symptoms/Side-effects(3of 6) Groupthink:(2/2) Principles to reduce it: • Foster critical thinking in members • Don’t proselytize about a preferred outcome • Assign the devil's advocate role to 1 or 2 (Their duty: challenge assumptions & reveal costs) • Insist upon full & open participation by all • Emphasize reality testing over consensus as a test of the solution to be implemented • Have a second-look meeting • Foster, at set times, the group’s examination of its problem-solving processes

6. 1c. Autocracy: Symptoms/Side-effects(4of6) • Escalation (1/2) • Love of conflict • Self-destructiveness • Denial • Ethics • An entrapped administrator in an escalation processes fails to deal with threatening situations since these will prove that a previous decision by the decision maker was wrong. In covering up, decision maker plays loose with the facts

7. 1c. Autocracy:Symptoms/Side-effects(5of6) Escalation(2/2) results from: • Situational & behavioral entrapment traits: • A prior investment in the pursuit of the goal • A choice between, getting into or out of a situation • Conditions of uncertainty surrounding the decision • A repeated series of investment decisions. • The behavioral or response components: • At each decision, continue debate over future steps increases / highlights “avoid” & “attract” features • Trapped administrators will shift from rational & econ. to social psych. involvement in the situation • Behavior self-perpetuates as added investments increase degree of commitment over-commitment

8. 1d. Autocracy:Symptoms/Side-effects(6of6) • Diffusion of responsibility • Result of autocracy • Indifference • Ethics • Tragedy of commons • Case of WorldCom [615-619] • Kitty Genovese @ Kew Gardens • Breann Voth @ the Coquitlam River? • Moral dilemmas in business are particularly susceptible to diffusion of responsibility. • Few see their prime task in the firm as attending to the moral portfolio. Attention often lapses or is taken seriously only when it becomes a crisis.

9. 2. A Short Story (or what is a lie?)(1 of 3) “ A certain abstemious ascetic was known for his probity, propriety, asceticism, and worship, and became famous for this. “ He feared the tyrannical sovereign and decided to run away from his city. “ The sovereign’s command went out that he is to be searched for and arrested wherever he is found. “ He could not leave from any one of the city’s gates and was apprehensive lest he fall into the hands of the sovereign’s men.

10. 2. A Short Story (or what is a lie?)(2 of 3) “ So he went and found a dress that is worn by vagabonds, put it on, carried a cymbal in his hand, pretended to be drunk early at night, and came out to the gate of the city singing to the accompaniment of that cymbal. “ The gatekeeper said to him, ‘Who are you?’ ‘I am so and so, the ascetic?’ he said in a jocular vein. “ The gatekeeper thought he was poking fun at him and did not interfere with him. So he saved himself without having lied in what he said. ” -Alfarabi, Plato’s Laws

11. 2. A Short Story (or what is a lie?)(2 of 3) • Really, did he lie? • Is there a falsehood involved? • When does a misleading statement become a lie?

12. 3. Three thinkers on Honesty [58] • Aristotle – Truth as Virtue • Kant – Lies as a violation of the Categorical Imperative • Mill – Lying as having long term bad consequences

13. 4. Does it Pay to Lie? (1/3) Business Bluffing? • Is there a special case for Business? • Built-in obsolescence • Pressure to deceive • The poker analogy • ‘We don’t make the laws’ • Cast illusions aside

14. 4. Does it Pay to Lie? (2/3) • Adversarial Relationships [67] • Internal and External costs [68] • Is it ever right to lie[69-72]? • The effort (& cost) of lying • The diminishing of trust • The duty not to lie Do you really expect politicians to tell the truth. Do you really expect politicians to tell the truth.

15. Break Time 4. Does it Pay to Lie? (3/3) • Types of Lies [71] • Less than the whole truth • The biased truth with self interest • Idealizing ones own product or service • Misleading information • True statements intended to be misinterpreted • Stating obvious falsehoods • Stating vicious falsehoods • Planned responses [85] • The zombie image [71] • Groupthink

16. TrustKenny Lie 3 years each in Jail $7 benefit each per transaction Ken 1 yearKyle 10 yrs. Ken $10benefit Kyle $ 1 benefit per transaction Trust Kyle Lie SilenceKenny Rat Ken10 yrs.Kyle 1 yrs. Ken $ 1benefit Kyle $10 benefit per transaction 5 Years each in Jail $3 benefit each per transaction Silence Kyle Rat 5. The Logic of Trust • Game theory and the Prisoners' Dilemma • Transactions Cost • Tit for tat (Axelrod)

17. 6.Privacy,Secrecy&Transparency(1/2) • Definition of privacy [73] • Deception versus Secrecy [75, 77] • Equality • Partial individual control • Full control

18. 6. Privacy,Secrecy&Transparency(2/2) • Working on transparency • 3 types of feedback [79] • Evaluative • Interpretive • Descriptive • What makes feedback effective [79-81] • The Potemkin village problem • ‘Potemkin village’ as any hollow or false construct, physical or figurative, meant to hide an undesirable or potentially damaging situation • Transparency International [88] • The need for mutual trust beyond law [65] • ISO to the Rescue?

19. 7a. Problems: (1 of 2)Why Lies Fail [85-91] • Betrayal by clues • Lack a practiced lie / Poor lie / Body lang. • Detection apprehension • Lying about Feelings / Feelings about lying • Fear of punishment • Psychopathy (Should we train ‘em?) • Shame versus guilt

20. 7b. Problems: (2 of 2)Can there be too much trust? • Types of trust [91-93] • Simple Trust • Blind Trust • Authentic Trust • Dialogue that creates trust [94] • Case 3.3 [96]:Blindsided by Bankruptcy

21. 8. Management Gurus = Liars? • The ‘Japan craze’ of the 1980s • And the Hollowing out of the Corporation • Science or a quick fix? [83] • Risk awareness

22. Myth of Amoral (not Immoral) Business • Business and Ethics don’t mix • Morals are out of place in a profit making world • Ethical Businesses are successful • Ethics as a good business practice • The ‘practice’ of business ethics for long term survival (a professional way of life) • Be aware of the 3 Cs of Business Ethics • Compliance with the rules • Contributions bus. can make to society • Consequences of business activity 9. Solomon on Business Ethics(1 of 2)

23. Thinking of Ethics as rules of the game • Consider other peoples’ well being • Think as a member of the business community (not as an isolated individual) • Obey, but don’t depend solely on the law • Think of you & your corp. as part of society • Obey moral rules • Think Objectively (from others’ perspectives) • Ask: What sort of person would do such a thing • Respect the customs of others but not at the expense of your own ethics 9. Solomon on Business Ethics(2 of 2)

24. B y e B y e