Management Communication About Ethics - Andy Gustafson

Management Communication About Ethics - Andy Gustafson

Management Communication About Ethics The Difficulties of Managing for Ethics Vocabulary: Business Ethics What is Business ? What is Ethics ?

Business is inherently social Business has its own culture Enron, Paypal, your office Business Transforms Culture Kiewit, FNB, community outreach Business is about relationships Workers, subcontractors, suppliers

Business: Its purpose/goal Lone Ranger/I am an Island View: The purpose of business is to make me money, and increase stockholder value (Milton Friedman) Alternate Stakeholder View: Business should make money, but it has many stakeholders groups/individuals who have a stake in

what the business does. Owners are not the only ones with a stake (Freeman) Your business behavior makes the world Better or Worse for people: The way you treat your customers The way you treat your employees or coworkers or patients The way you treat your boss/company The way you contribute to the local

community Responsibilities in Business:

To your employer To Customers To employees To boss/es To your community To your family To your God Ethics isnt legal

Difference between the Law and Ethics: Some legal issues are neither ethical or unethical. Some ethical issues have no laws to support them. Law often tries to encourage ethical behavior: Better to have self-regulation than more govt regulations

Compliance with Laws SWEET SPOT Compliance and Ethics Program Ethical

Behavior Ethics and Regulation Government regulation often is designed to promote ethical behavior: SOX OSHA Regulations EPA Regulations Federal Sentencing Guidelines

Federal Sentencing Guidelines 1. Having Standards 2. Assigned Responsibility - Adequate Resources 3. Due diligence in Hiring 4. Communications and Training 5. Monitoring, Auditing, Reporting 6. Promotion and Enforcement of Ethical Conduct 7. Reasonable Steps to Prevent Misconduct

Company Ethics Company Policy often has some basis in the compliance regulations and legal statutes and fine schedules set up by government. But Personal ethics requires personal decision-making, rooted in values. Many think Ethics is just about what

to NOT do: Dont do __!! But ethics is more than just what not to do Minimal: What we shouldnt do Dont steal, dont kill, dont lie Better: What we should do (justice) Be fair, Be honest, Fulfill duties, work hard

Best: What we could do to make things excellent for all of us Mutual of Omaha Project, Real Estate The Point is: Realize the good you do in society! Businesses do have an effect on society and culture. Business is not just about making money.

Moral Psychology WHY DO PEOPLE DO WRONG THINGS? Milgram Experiment Question: Why do Soccer moms sometimes drive like jerks?

Question: Why do people forge signatures and documents? Why do people stretch or edit the truth, or exaggerate? Moral Development: Why do people do unethical things? Why did the soccer mom drive like a jerk? Why did my student cheat on the exam?

Why did people at Enron do unethical things? Why do subcontractors cut corners? Some reasons people do wrong:

Ignorant In a hurry Thoughtless Didnt plan ahead

Financial difficulties Pressure from organization Not clear communication from management Lazy Want a quick buck They are a Bad evil wicked person More Moral Psychology: WHY DO PEOPLE

DO THE RIGHT THINGS? Kohlbergs theory of moral development

Stage 1: Obedience and Punishment Stage 2: For self-benefit Stage 3: For sake of reputation (good boy) Stage 4: Maintain Social order Stage 5: Contractual-Legalistic orientation Stage 6: Conscience/Principle Orientation Moral Principles for Living

and Working Banker Friend: look in the mirror rule Showgirl from Las Vegas: Grandma rule Golden Rule: do unto others

Silver Rule: do no harm What rules do you use?.... Business Ethics Issues

Fraud Abusive Behavior/Harassment Conflicts of interest Defective products Bribery Theft (patents, copyrights, etc) Guiding Questions

Questions to help decide if the situation or decision has ethical dimensions Is it legal but unethical? Is it necessary? Does it involve a core ethical principle such as honesty, integrity, truthfulness, etc.? Guiding Questions: Info Information gathering questions

Who are the stakeholders and what are their rights? Consider the source, reliability, and accuracy of all relevant information. Who should be involved in this decision? Do I have enough information to make a sound ethical decision? If not, how do I get it? Questions to help identify and

evaluate alternatives Am I rationalizing to justify what I want to do? Am I using anyone for my own personal gain? (Who will be injured and how) Are there conflicting loyalties to stakeholders? What would result in the long run if everyone did this? Guiding Questions: Conclusion Questions that help in reaching a decision Could I defend my position before the Board of

Directors, the CEO, or the media? What would ______________________ do? (Fill in the name of the best role model you know.) Will this seem to be the right decision a year from now? Five years from mow? Do I have the moral courage to take the more ethical course of action? (Am I willing to pay the price for my convictions?) Moral Muteness

The fact that managers rarely talk about ethics directly. Managers talk instead about: a. organizational interests b. practicality c. economic good sense In reality, many of their decisions are actually guided by a. morally defined standards codified in

law b. professional conventions c. social mores And they defend moral activities such as: a. service to customers b. effective cooperation among personnel c. use of resources for companys benefit

Go it Alone: Managers struggle with ethical issues, but dont talk to one another about it much: Morality is a live topic for individual managers but it is close to a non-topic among groups of managers. Communication& Follow-Through are Essential

While normative expectations are explicitly given through legal rulings, regulatory agencies decrees, professional codes, organizational policies and social mores, if these are not communicated well, and acted upon, the message will not get out. What is communicated? Ethics Materials:

Mission Values Code of conduct/ethics Policies Decision methods Your culture Ethics program:

Who is the Ethics Officer? How to make contact? Senior Management Commitment to Ethics: Why organizational ethics matters? Methods of Communication Evaluate current ethics communication lines

Formal and informal downward, upward, and two way Clear, consistent, credible messages across communication lines More about Methods of Communication

Hiring Announcements Website Email Brochures Meetings Formal & Informal Orientation sessions Newsletters Manuals Code Handbooks w/certifications Badges and Wallet Cards

Key Fobs Causes of Moral Muteness: 1. Threat to Harmony: moral talk often requires some challenge and confrontation Causes of Moral Muteness: 2. Threat to efficiency: a. if done with ideological exhortations it

i. does not facilitate problem solving ii. doesnt usually clarify issues iii. seems self-serving Causes of Moral Muteness: Threat to Efficiency (contd):

b. moral talk adds an extra burden to business decisionsseen as distraction c. Adds additional rules and regulations, may hinder quick decisions Causes of Moral Muteness: 3. Threat to image of Power and Effectiveness a. moral ideals highlight imperfections in current practices b. managers dont want to expose their own

moral illiteracy c. lower managers are expected to solve their own problems Consequences of Moral Muteness 1. Moral Amnesia: forget that ethics is part of business Ex: Milton Friedman acts as though business

should be concerned only with profit, not social responsibility, yet he alludes to 8 important ethical issues: no fraud, no deceit, fair competition, respect law, respect contracts, recognize employee and investor rights, maximize consumer satisfaction and freedom Consequences of Moral Muteness 2. Narrowed conception of morality:

Discuss business only in terms of strategy and common sense, and avoid discussing the ethical reasons for the decision. Ethics is construed to be only for the severely immoralrules to punish breakers. Consequences of Moral Muteness 3. Moral Stress: managers who dont

discuss the ethical issues will have more stress that they internalize Consequences of Moral Muteness 4. Neglect of Abuses: Many moral issues are simply not organizationally recognized and addressed. Many moral abuses are ignored, many moral ideals are not pursued, and many moral dilemmas

remain unresolved. Consequences of Moral Muteness 5. Decreased authority of moral standards: The less we talk about it, the less those standards will seem real. Not Just Cheerleading Charismatic Leadership and forceful

commands bring about short term change, but long term changes require shared values which provide a common vocabulary for identifying and resolving problems. How to make Changes Must provide an opportunity for open discussion without any danger of retribution or corporate punishment.

Making Changes 2. Important to help all involved realize that they hold similar long-run objectives and value common principles Help make shared commitments seem basic/core Less likely to become contentious if unity is

emphasized Legitimate dissent will be more cordial and controlled if ground-rules are set up first. Making Change Happen 3. Role of Senior Managers: Must demand that these ethical conversations take place Need to build these into fabric of organizational life

Interventions require patience Management Creates a Culture Management is All About Ethics Typically, unethical business practice involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organizations operating culture. Ethics, then, is

as much an organizational as a personal issue. Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds. WHAT GREAT LEADERS DO MOST - the most commonly expressed demands Gallup Organization

7 D E M A N D S

VISIONING MENTORING BUILD A CONSTITUENCY CHALLENGING EXPERIENCES MAKING SENSE OF EXPERIENCES STABILIZING VALUES KNOWING SELF Values Gallup Organization

The true test of character is how we behave when we dont know what to do. John Holt Communication

Gallup Values We have an obligation to communicate. Here, we take the time to talk with one another and to listen. We believe that information is meant to move and that information moves people. Respect We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Integrity We work with customers and prospects openly, honestly, and sincerely. When we say

we will do something, we will do it. When we cannot or will not do something, then we wont do it. Excellence We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be. Tone at the Top Gallup Organization

The challenge at the top is to lead in accordance with the true values of the organization. If your organization does not have an entrenched value system, dont claim that you do. Just writing it down doesnt make it so. Enforcement Reality: Codes and rules without

enforcement and adherence are useless. Question: How do we ensure compliance with legal rules and corporate policies? Types of Enforcement The best policy is to prevent wrongdoing 1. Getting Compliance (preventative)

Training and Education (I didnt know) Review: Audit for compliance and quality Incentives: compensation and recognition Model: Leadership talks, and walks the talk 2. Punishment (responsive)

Clear Sanctions in place Ethics Committee (method in place) Someone with oversight responsibility Summary Avoid Moral Muteness through Communication

Good leadership will help create a strong corporate culture of ethics/compliance Talking the talk and walking the walk both are essential Final Thoughts Often, doing the right thing is clear, even if its not easy We tend to cut corners for short-term apparently inconsequential issues, but this

can come back to haunt us Having Ethical Habits takes practice, and some thoughtfulness.

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