Individual and Organizational Ethics:
Challenges and Opportunities
Lawrence Kalbers, Ph.D., CPA
R. Chad Dreier Chair in Accounting Ethics
Chair, Department of Accounting
Director, Center for Accounting Ethics, Governance, and the Public Interest
Loyola Marymount University
[email protected]
February 15, 2017
Overview
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Ethics
Using an ethical decision making model
Ethical culture and management
Aligning ethics, values, and governance
Why is it so hard to be ethical?
IMA Ethics
AICPA revised Code of Professional Conduct
Consequences of unethical behavior
Improving individual and organizational ethics and
decisions
Ethics
• Personal (Individual)
• Professional (AICPA, IFAC, etc.)
(Individual and Professional
Organizations)
• Organizational (mission, values,
codes)
Applied Ethical Decision Model
• Recognize an Ethical Issue Consultation/
Collaboration
• Get the Facts
• Evaluate Alternative Actions
– Consider and prioritize:
• Professional principles and standards
• Consequences (stakeholder analysis)
• Personal and organizational values
• Make a Decision and Test It
• Act and Reflect on the Outcome
Give Voice
To Values
Adapted from an ethical decision model developed by the Markkula Center for Applied Ethics:
http://www.scu.edu/ethics/practicing/decision/making.pdf.
Corporate Culture
Ethical Culture
“Ethical culture has been conceptualized as the
multidimensional interplay between an organization's
formal and informal systems that promote ethical or
unethical behavior”
Source: Warren, Gasper, and Laufer, 2014, “Is Formal Ethics Training Merely Cosmetic? A Study of
Ethics Training and Ethical Organizational Culture” Business Ethics Quarterly, p. 94.
Corporate Culture
Think of an organization that might fit the descriptions
below for “corporate culture.”
• The Good
• The Bad
• The Ugly
Aligning Ethics, Values, and Governance
Values
Ethics
Governance
Organizational Culture
Organizational “Behavior”
Negative Causes and Consequences of Organizational Culture
• Product safety and recalls
• Poor governance
Recent product recall example
Volkswagen product recall (corporate culture/governance)
• Worldwide repair needed for 11 million “clean” diesel vehicles
with “defeat devices”
• "The scandal clearly also has to do with structural issues at
VW . . . There have been warnings about VW's corporate
governance for years, but they didn't take it to heart and now
you see the result," says Alexander Juschus, director at IVOX,
the German proxy adviser.
• A former chairman of a large German industrial company says
"Germany has corporate governance problems but VW has
long been uniquely awful“ http://www.cnbc.com/2015/10/04/volkswagens-uniquely-awfulgovernance-at-fault-in-emissions-scandal.html
• VW has a “culture of arrogance” http://fortune.com/2015/09/27/volkswagen-culture-scandal/
Volkswagen scandal consequences
“VW has already agreed to pay drivers up to $10 billion in
compensation and another $4.7 billion into remedial programs
approved by the EPA to offset the excess emissions of its diesels.
It has also shelled out $1.2 billion to smooth the ruffled feathers of
its U.S. dealers and agreed another $600 million with various state
attorneys general. The deal over 3.0-liter cars would thus bring the
running total up to $17.5 billion.”
Source: Geoffrey Smith, “Volkswagen Is Close to Another Billion Dollar Settlement,” Fortune Magazine, December
19, 2016 http://fortune.com/2016/12/19/volkswagen-is-close-to-another-billion-dollar-settlement/
Volkswagen AG reached a landmark agreement with workers to cut as many
as 30,000 jobs globally and save 3.7 billion euros ($3.9 billion) in expenses
as the company tries to claw back from the emissions-cheating scandal and
invest in electric vehicles.
Source: Christoph Rauwald, “VW Said to Cut 30,000 Jobs, Save $3.9 Billion in Labor Pact, Bloomberg, November
18, 2016, https://www.bloomberg.com/news/articles/2016-11-18/vw-said-to-cut-23-000-jobs-save-3-9-billion-withlabor-pact
Recent Corporate Culture/Governance Case
http://www.commondreams.org/news/2016/10/13/wells-fargo-ceo-steps-down-warren-its-not-real-accountability
The Case of Wells Fargo
September 8: CFPB, Los Angeles City County
Attorney, and OCC announce $185 million fine.
November 9: “Wells Fargo Leads Banks Up
as Trump Win Seen Curbing Warren”
(Bloomberg Headline)
Comparison of VFH, BAC, and WFC
VHF=Vanguard Financials ETF; BAC=Bank of America; WFC=Wells Fargo
Wells Fargo: Vision and Values
https://www08.wellsfargomedia.com/assets/pdf/about/corporate/code-of-ethics.pdf
Wells Fargo: Making the Right Choice
https://www08.wellsfargomedia.com/assets/pdf/about/corporate/code-of-ethics.pdf
Tony Menendez—Halliburton Whistleblower
Best known as the “Accountant Who Beat
Halliburton,” Tony Menendez spoke on Tuesday,
September 29, 2015 at LMU College of
Business Administration as part of the Center for
Accounting Ethics, Governance, and the Public
Interest’s Distinguished Speaker Series.
In his lecture, Tony recounted events leading up
to the 2006 investigation into Halliburton’s
questionable accounting practices and share
what it took to fight against a powerful
organization. Tony has 20+ years of experience
working at, auditing or providing technical
accounting and reporting guidance to some of
the largest public and private companies. His
story gives tremendous insight into what it takes
to be a corporate whistleblower in America.
Tony Menendez—The Lone Dissenter
Menendez: About a month-and-a-half ago, I attended an ethics
training [course] at General Motors. I was sitting in there in the class,
and I remember one executive stood up. He was a CFO. And he
asked, “What do we do in the situation where there is the lone
dissenter?” I believe it was a lawyer that was doing the presenting,
and she replied, “Well, if that’s the case, the person has a choice to
make.” And then in the back of the room, one of the individuals that’s
responsible for investigating whistleblower complaints stood up and
said, “Well, if that person can’t get onboard, their choice is either you
can get onboard or leave GM.” I was floored. I sat back and thought,
“Every major catastrophe that’s ever probably occurred in human
history probably had a lone dissenter, and that person’s decision was
either get onboard or leave.” And since then, I have left General
Motors.
Source: The Ethical State of the Accounting Profession: An Interview with Tony Menendez and Steven Mintz. (December
2016). The CPA Journal, pp. 6-9.
Why is it so hard to be ethical?
• Professional responsibilities
• The fraud triangle
• Conflicts of interest and cognitive biases
The Accountant’s Professional Role
Consulting
Tax
Auditing
Advocacy
Client
Duty
Integrity
Objectivity
Ethics
Professional
Skepticism
The Public
The Fraud Triangle
Pressure/Need
Opportunity
Rationalization
Rationalization Tactics
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Legality*
Denial of responsibility*
Denial of injury*
Denial of victim*
Social weighting*
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Appeal to higher loyalties*
Balancing the ledger*
Everyone else is doing it**
Entitlement**
*Source: Blake Ashforth and Vikas Anand, “The Normalization of Corruption in Organizations,” Research in Organizational
Behavior, 2003, Vol. 25: 1-52.
**Source: Joseph Heath, “Business Ethics and Moral Motivation: A Criminological Perspective,” Journal of Business Ethics, 2008,
Vol. 83: 595-614.
Auditor Independence Research
Source: Bryan K. Church, J. Gregory Jenkins, Susan A. McCracken, Pamela B. Roush, and Jonathan D. Stanley. (2015), Auditor Independence in
Fact: Research, Regulatory, and Practice Implications Drawn from Experimental and Archival Research, Auditing Horizons, Vol. 29, No. 1:pp. 217-238.
Cognitive Biases Likely to Affect Auditors’ Decisions
Confirmation Bias: The tendency to search for and favor evidence that confirms one’s
beliefs, research hypotheses, or other expectations.
Availability Bias: A phenomenon that causes decision makers to estimate or forecast the
likelihood of an event based upon how readily they can recall an example or instance of that
event.
Familiarity Bias: The tendency to choose the same decision alternative in a new decisionmaking context that is identical or similar to a decision context faced in the past.
Anchoring and Adjustment Bias: Applies to situations in which an individual must arrive at
a numerical estimate by starting from an initial value that is subsequently adjusted to arrive at
the final estimated value. In such cases, the adjustments made from the initial “anchor” tend
to be insufficient.
Uncertainty Aversion: The tendency for decision makers to be averse to circumstances and
decision alternatives involving uncertainty.
Framing Bias: The format used to present information relevant to a decision might influence
the decision alternative subsequently chosen.
Halo Bias: The tendency for one observed or known trait of a person or object to positively
(or negatively) influence an individual’s perception of other traits of that person or object.
Irrational Escalation: A decision maker’s inclination to make irrational decisions to justify
rational decisions made in the past.
False Consensus Bias: The tendency for decision makers to overestimate the degree to
which other individuals agree with them.
Source: Michael C. Knapp and Carol A. Knapp. (2012). Cognitive Biases in Audit Engagements, The CPA Journal, June, pp. 40-45.
Other Cognitive Biases
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Selective Attention: We tend to selectively see some things but not others depending on the
context (e.g., pregnant women are more likely to notice other pregnant women).
Diagnosis Bias: The propensity to label people, places, and things, based on our first
impression irrespective of evidence put before us.
Pattern Recognition: The tendency to sort information based on prior experience.
Value Attribution: The inclination to infuse a person or thing with certain qualities based on
initial perceived value (i.e. judge someone’s importance based on what they are wearing).
Priming Effect: The implicit tendency to respond to something based on expectations
created by a previous experience or association.
Commitment Confirmation: The tendency to become attached to a particular point of view
even when it may be obviously wrong.
Stereotype Threat: The experience of anxiety or concern in a situation where a person has
the potential to confirm a negative stereotype about their social group.
Group Think: The influence of group associations and beliefs on our thoughts and behaviors.
Source: H. Ross (2014a). Everyday bias: Further explorations into how the unconscious mind shapes our world at work: Cook Ross Inc. and H.
Ross, H. (2014b). Everyday Bias: Identifying and Navigating Unconscious Judgments in Our Daily Lives. Lanham, MD: Rowman & Littlefield
(ideas presented in Cheryl Staats, Kelly Capatosto, Robin A. Wright, and Danya Contractor (2015) State of the Science: Implicit Bias Review2015).
Modes of Thinking—Fast and Slow
• System 1 operates automatically and quickly,
with little or no effort and no sense of voluntary
control.
• System 2 allocates attention to the effortful
mental activities that demand it, including
complex computations. The operations of
System 2 are often associated with the
subjective experience of agency, choice, and
concentration.
Source: Daniel Kahneman (2011). Thinking, Fast and Slow.
https://www.youtube.com/watch?v=JiTz2i4VHFw
Blind Spots in Ethical Dilemmas
• False Assumption: Individuals recognize an ethical dilemma when it
is presented to them (they often do not)
• Bounded Awareness: The systematic failure to see information that
is relevant to professional obligations—we favor our own self-interest
at the expense of the interests of others (also, “motivated blindness”)
• Ethical Fading: Focusing on an issue as a “business decision” rather
than an “ethical decision” (also see next slide)
• Identifiable Victims: People tend to be more concerned with and
show more sympathy for identifiable victims than statistical victims
• Time Pressure: Time pressure causes more System 1 (fast) thinking
• Informal Culture: The power of informal cultures trumps formal
systems
• “Want” Self vs. “Should” Self: There is a conflict between what we
“want” and what we “should” do
Source: Max H. Bazerman and Ann E. Tenbrunsel. (2011). Blind Spots: Why We Fail to Do What’s Right and What
to Do About It.
“Ethical Fading”: The Role of Self-Deception
Avoiding or disguising moral implications
of a decision in favor of self-interest
• Language euphemisms
• The slippery slope
– “Numbing” through repetition
• Errors in perceptual causation
– Individuals, systems
Source : A. Tenbrunsel and D. Messick, “Ethical Fading: The Role of Self-Deception in Unethical Behavior,” Social Justice
Research, 2004, Vol. 17, No. 2: 223-236.
How Lying Takes Our Brains Down a ‘Slippery Slope’
• “Telling small lies desensitises our brains to
the associated negative emotions and may
encourage us to tell bigger lies in future.”
• “They found that the amygdala, a part of the
brain associated with emotion, was most
active when people first lied for personal
gain. The amygdala’s response to lying
declined with every lie while the magnitude
of the lies escalated. Crucially, the
researchers found that larger drops in
amygdala activity predicted bigger lies in
future.”
Source: http://neurosciencenews.com/lying-emotion-psychology-5345/ Original research paper: “The brain adapts to
dishonesty” by Neil Garrett, Stephanie C Lazzaro, Dan Ariely and Tali Sharot in Nature Neuroscience. Published online
October 24 2016
Examples of De-biasing Tactics
• Using structured decision aids to guide decision makers’
judgments and to facilitate the review of those judgments
• Using a brief, nontechnical tutorial to illustrate the impact
that cognitive biases can have in a specific decision-making
context
• Making a decision process more transparent by converting
large tasks into a series of discrete, smaller tasks
• Requiring decision makers to develop alternative
explanations that are contrary to their a priori
explanation for circumstances or events that impact
decisions they must make
• Ensuring that decision makers explicitly consider the
impact that their decisions will have on relevant third
parties
Source: Michael C. Knapp and Carol A. Knapp. (2012). Cognitive Biases in Audit Engagements, The CPA Journal, June, pp. 40-45.
Psychological Safety on Audit Teams
Psychological safety: “The perceptions both individuals and teams hold about the
consequences of interpersonal risks in a work environment. The concept encompasses
beliefs about how others will respond when an individual assumes the risk in a group
environment of asking a question, seeking feedback, offering a new idea, or admitting to a
mistakes…individuals in group settings calculate the risks associated with such actions
and that those calculations are important factors in assessing their willingness to engage
in a behavior.”
“Examples of learning behaviors involve seeking feedback; sharing information; asking
questions; seeking help; admitting mistakes; and being willing to experiment, innovate,
and try new ideas and processes.”
“[T]raining of those who will assume supervisory roles on audit teams (seniors) should
emphasize three important aspects of leader behavior that will be important in promoting
psychological safety: being available and approachable, encouraging input and
feedback, and being an example of openness and fallibility.”
Source: Susan Lightle, Joseph Castellano, and Bud Baker. “Why Audit Teams Need the Confidence to Speak Up,” Journal of
Accountancy, January 1, 2017, http://www.journalofaccountancy.com/issues/2017/jan/psychological-safety-for-auditteams.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=03Jan2017
Implicit Bias
Source: Cheryl Staats, Kelly Capatosto, Robin A. Wright, and Danya Contractor (2015) State of the Science:
Implicit Bias Review2015
Source: AICPA 2015
TRENDS IN THE SUPPLY
OF ACCOUNTING
GRADUATES AND THE
DEMAND FOR PUBLIC
ACCOUNTING RECRUITS
Ways to Disengage from Implicit Bias
1) Recognize that bias is a normal part of the human experience
2) Develop the capacity for self-observation by enhancing our
metacognitive capacity—our capacity to learn and observe our
somatic responses to our thoughts as a mechanism of assessing our
thinking
3) Practice constructive uncertainty by allowing ourselves to
assess, acknowledge, understand, dissect, and alter our
automatic responses
4) Explore awkwardness and discomfort by questioning the source of our
discomfort with different groups of people
5) Engage with people in groups you may not know very well, or about
whom you harbor biases
6) Get feedback and data where possible
7) Engage in deliberate processing*
Source: H. Ross (2014a). Everyday bias: Further explorations into how the unconscious mind shapes our world at work: Cook Ross Inc. and H.
Ross, H. (2014b). Everyday Bias: Identifying and Navigating Unconscious Judgments in Our Daily Lives. Lanham, MD: Rowman & Littlefield
(ideas presented in Cheryl Staats, Kelly Capatosto, Robin A. Wright, and Danya Contractor (2015) State of the Science: Implicit Bias Review2015).
*Various, as reported in Stats, Capastosto, Wright, and Contractor (2015), p. 66.
Corporate Stakeholder Accountability
Shareholders
Activists
Governments
Creditors
Lenders
Employees
Corporation
Customers
Suppliers
Others, including the Media,
who can be affected by or who can
affect the achievement of the
corporation’s objectives
Source: Leonard J. Brooks, Business & Professional Ethics, 4th Edition
IMA Statement of Ethical Professional Practice
• Principles
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Honesty
Fairness
Objectivity
Responsibility
• Standards
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Competence
Confidentiality
Integrity
Credibility
• Resolution of Ethical Conflict
IMA Resolution of Ethical Conflict
When faced with ethical issues, you should follow your organization's established policies on the
resolution of such conflict. If these policies do not resolve the ethical conflict, you should
consider the following courses of action:
•Discuss the issue with your immediate supervisor except when it appears that the supervisor is
involved. In that case, present the issue to the next level. If you cannot achieve a satisfactory
resolution, submit the issue to the next management level. If your immediate superior is the
chief executive officer or equivalent, the acceptable reviewing authority may be a group such as
the audit committee, executive committee, board of directors, board of trustees, or owners.
Contact with levels above the immediate superior should be initiated only with your superior's
knowledge, assuming he or she is not involved. Communication of such problems to authorities
or individuals not employed or engaged by the organization is not considered appropriate,
unless you believe there is a clear violation of the law.
•Clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics
Counselor or other impartial advisor to obtain a better understanding of possible courses of
action.
•Consult your own attorney as to legal obligations and rights concerning the ethical conflict.
AICPA Code of Professional Conduct Principles
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Responsibilities principle. In carrying out their responsibilities as professionals,
members should exercise sensitive professional and moral judgments in all their
activities (ET 0.300.020.01).
The public interest principle. Members should accept the obligation to act in a way
that will serve the public interest, honor the public trust, and demonstrate a
commitment to professionalism (ET 0.300.030.01).
Integrity principle. To maintain and broaden public confidence, members should
perform all professional responsibilities with the highest sense of integrity (ET
0.300.040.01).
Objectivity and independence principle. A member should maintain objectivity and
be free of conflicts of interest in discharging professional responsibilities. A member
in public practice should be independent in fact and appearance when providing
auditing and other attestation services (ET 0.300.050.01).
Due care principle. A member should observe the profession’s technical and ethical
standards, strive continually to improve competence and the quality of services, and
discharge professional responsibility to the best of the member’s ability (ET
0.300.060.01).
Scope and nature of services principle. A member in public practice should
observe the Principles of the Code of Professional Conduct in determining the scope
and nature of services to be provided (ET 0.300.070.01).
AICPA Conceptual Framework for Members in Public Practice
• New addition to revised AICPA Code of Professional
Conduct
• Was effective December 15, 2015
• When the rules and interpretations in the Code do not
address a particular relationship or circumstance, the
conceptual framework should be applied.
Steps of the Conceptual Framework
Source: AICPA, ttp://www.aicpa.org/interestareas/professionalethics/community/pages/aicpaconceptual-framework.aspx
AICPA Conceptual Framework for Members in Public Practice
Definitions
.04 Acceptable level. A level at which a reasonable and
informed third party who is aware of the relevant
information would be expected to conclude that a
member’s compliance with the rules is not compromised.
.05 Safeguards. Actions or other measures that may
eliminate a threat or reduce a threat to an acceptable
level.
.06 Threats. Relationships or circumstances that could
compromise a member’s compliance with the rules.
AICPA Conceptual Framework for Members in Public Practice
.10 Adverse interest threat. The threat that a member will not act with
objectivity because the member’s interests are opposed to the client’s
interests.
.11 Advocacy threat. The threat that a member will promote a client’s
interests or position to the point that his or her objectivity or independence is
compromised.
.12 Familiarity threat. The threat that, due to a long or close relationship
with a client, a member will become too sympathetic to the client’s interests
or too accepting of the client’s work or product.
.13 Management participation threat. The threat that a member will take
on the role of client management or otherwise assume management
responsibilities, such may occur during an engagement to provide nonattest
services.
AICPA Conceptual Framework for Members in Public Practice
.14 Self-interest threat. The threat that a member could benefit,
financially or otherwise, from an interest in, or relationship with, a client or
persons associated with the client.
.15 Self-review threat. The threat that a member will not appropriately
evaluate the results of a previous judgment made or service performed or
supervised by the member or an individual in the member’s firm and that
the member will rely on that service in forming a judgment as part of
another service.
.16 Undue influence threat. The threat that a member will subordinate
his or her judgment to an individual associated with a client or any
relevant third party due to that individual’s reputation or expertise,
aggressive or dominant personality, or attempts to coerce or exercise
excessive influence over the member.
Example of a Familiarity Threat (1)
“This matter arises from a close personal relationship between a former EY partner and
the former chief accounting officer of an EY audit client (the “Issuer”) that caused EY to
violate the auditor independence rules. Between March 2012 and June 2014, Pamela Hartford,
then an EY partner, and Robert Brehl, then the Chief Accounting Officer of the Issuer,
maintained a close personal and romantic relationship while Hartford was a partner—
and later the coordinating partner—on the EY engagement team that performed audit and
review services for the Issuer.
From approximately early 2013 through June of 2014, Michael Kamienski, the coordinating
partner on the engagement team for the Issuer in 2012 and 2013, was aware of facts
suggesting a possible romantic relationship between Hartford and Brehl. Kamienski
should have identified those facts as red flags but did not. He failed to perform a
reasonable inquiry regarding the extent of the relationship between Brehl and Hartford or to
raise concerns internally to EY’s U.S. Independence group.”
“Respondent EY shall, within 10 days of issuance of this Order, pay disgorgement of
$3,168,500 in audit fees, prejudgment interest of $198,151, and a civil money penalty in the
amount of $1,000,000, for a total of $4,366,651…Respondents Hartford and Brehl shall, within
10 days of the entry of this Order, each pay a civil money penalty in the amount of $25,000…”
Source: SECURITIES EXCHANGE ACT OF 1934 Release No. 78873 / September 19, 2016
Example of a Familiarity Threat (2)
“Bednar repeatedly violated the above policies throughout 2012, 2013, and 2014 by
developing and maintaining a close personal relationship with the CFO and members
of the CFO’s family that was inappropriate for an independent auditor. Bednar spent
extensive leisure time, including frequent overnight, out-of-town trips, with the CFO and his
family. In all, Bednar and the CFO took at least seven out-of-town trips together during the
relevant period, all of which were social in nature and did not have a valid business
purpose, as that phrase was defined in EY’s independence and hospitality and gifts policies.
In addition to these trips, Bednar and the CFO attended sporting events and socialized near
the Issuer’s headquarters in the greater New York City area to an excessive degree. Bednar
also gifted tickets to sporting events and other things of value to the CFO.”
“Respondent Bednar is denied the privilege of appearing or practicing before the
Commission as an accountant.”
“Respondent EY shall, within 10 days of the entry of this Order, pay disgorgement of
$3,562,400, together with prejudgment interest thereon of $212,600, and a civil money
penalty of $1,200,000, for a total of $4,975,000…” “Respondent Bednar shall, within 10
days of the entry of this Order, pay a civil money penalty in the amount of $45,000…”
Source: SECURITIES EXCHANGE ACT OF 1934 Release No. 78872 / September 19, 2016
Applied Ethical Decision Model
• Recognize an Ethical Issue Consultation/
Collaboration
• Get the Facts
• Evaluate Alternative Actions
– Consider and prioritize:
• Professional principles and standards
• Consequences (stakeholder analysis)
• Personal and organizational values
• Make a Decision and Test It
• Act and Reflect on the Outcome
Give Voice
To Values
Adapted from an ethical decision model developed by the Markkula Center for Applied Ethics:
http://www.scu.edu/ethics/practicing/decision/making.pdf.
Potential Applied Ethical Approaches
• Professional Principles and Standards (Deontological)
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Accounting principles
Auditing standards
IRC, Circular 230, cases, etc.
Professional and regulatory codes and rules of conduct
Fiduciary responsibilities
Legal responsibilities
Organizational rules and procedures
Other relevant standards of practice, codes, or rules
• Consequences (Consequentialism)
– Stakeholders and their interests
• Personal and organizational virtues/values (Virtue Ethics)
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Integrity
Responsibility
Commitment
Objectivity
Courage
Etc.
Negative Consequences of Unethical Behavior
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Self (reputation, job, license, family)
Firm
Clients
Profession
Selcer’s Reputational Lament
“A lifetime of good deeds
is vitiated by a single
ethical lapse”
Charles Selcer, CPA, CMGA, Managing Shareholder,
Schechter Dokken Kanter Andrews & Selcer (SDK),
Minneapolis, Minnesota
Consultation/Collaboration
• In applying the ethical decision model, DON’T GO IT
ALONE!
• Find others to get their feedback (consultation)
• Work with others toward a solution (collaboration)
Giving Voice to Values (GVV)
• Seven Pillars of GVV Curriculum
– Acknowledging shared values
– Choosing to act
– Normalizing values conflicts
– Defining professional purpose
– Understanding the self
– Using one’s voice
– Preparing responses (“scripts”)
Source: Mary C. Gentile, Voicing Values, Finding Answers, BizEd, July/August 2008, pp. 40-45.
Stakeholder Analysis
Stakeholders: Now you are at a stage to identify the interested parties
(i.e., stakeholders) based on the compiled facts and alternatives.
• Who is affected by our decision or any of the alternatives?
• What are their relationships, their priorities to me, and what is their
power over my decision?
• Who has a stake in the outcome?
• Do not limit your inquiry only to those stakeholders to whom you
believe you owe a duty; sometimes a duty arises as a result of the
impact. For instance, you might not necessarily first consider your
competitors as stakeholders; however, once you understand the
impact of your decision on those competitors, an ethical duty may
arise.
Source: Laura P. Hartman, Perspectives in Business Ethics, Third Edition, McGraw-Hill Irwin, New York, 2005.
Simple Approaches to Ethical Decisions
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The sniff test
The gut test
The momma test
The Wall Street Journal test
Improving Organizational Ethics and Decisions
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Mission
Tone at the top
Leadership (at all levels)
Culture, shared values, shared responsibilities
Appreciation of cultural differences
Policies and procedures, including zero tolerance of
unethical behavior
Ethical decision models, including consultation/
collaboration
The power of stories
Proper reward structure
Training and reinforcement
Hiring and retention practices
Questions?