A634.9.5.RB - A Reflection of Our Learning

There are three key lessons I take away from this course MSLD 634 Leadership Ethics and Corporate Social Responsibility: virtues values, corporate social responsibility and the golden rule. 

Some philosophers believe that the ancient Greeks, specifically Plato and Aristotle, developed the first ethical theory, which was based on values and personal character. Continuously referred to as virtue ethics, it focuses on character traits that a good person should possess, theorizing that moral values will direct the person toward good behavior. Virtue ethics is based on a way of being and on valuable  characteristics rather than on rules for correct behavior. Moral virtues are habits that enable a person to live according to reason, and this reason helps the person  avoid extremes. Aristotle argued, "Moral virtue is a mean between two vices, one of excess and the other of deficiency, and it aims at hitting the mean in feelings, desires and actions." (Lawrence and Weber, 2014) 

I have learned values during my life at home from parents, church, Boy Scouts and also from sports leaders and role models: Tom Landry, Roger Staubach, John Wooden and Larry Bird. Tom Landry "The Man of Character" was a man who by his very character inspired those who knew him to be better people in every facet of their lives. Roger Staubach "Captain America" and Heisman Trophy winner led the US Naval Academy and Dallas Cowboys football teams. John Wooden, the legendary basketball coach from Indiana State and UCLA, created the "Pyramid of Success" for his players, education and business. And Larry Bird "Mr Basketball" from Indiana State and the Boston Celtics led by example. They all were values-based and lived them.       

The Golden Rule states, "Do unto others as you would have them do unto you" or "treat others as you would like to be treated." Many people have claimed that many of the world's religious and cultural systems includes something like the Golden Rule. John Hick argues that, "all great traditions teach the moral ideal of generous goodwill, love, compassion, epitomized in the Golden Rule. Every religion emphasizes human improvement, love, respect for others, sharing other people's suffering. On these lines, every religion has more or less the same viewpoint and the same goal." Mohandas Gandhi even made a similar point. (MacKinnon and Fiala, 2015)

I learned the Golden Rule early in life at home from parents, church, Boy Scouts and also at my employers. The learning lesson is: always help others (not expecting anything in return). The Boy Scout saying "do a good deed daily" is powerful to live by and to apply too.   

Corporate social responsibility (CSR) means that a corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment. This concept is based in the root of the term responsibility, meaning "to pledge back," creating a commitment to give back to society and the organization's stakeholders to have a positive social impact. In a worldwide survey of CEO's, for example, 72 percent of executives polled said they sought to embed social and environmental issues into the organization's core strategies and operations. (Lawrence and Weber, 2014) 

 

For example, some of the wealthiest business leaders became great philanthropists who gave much of their wealth to education and charitable institutions. For example, the steelmaker Andrew Carnegie founded Carnegie-Mellon University in Pittsburg with the motto "My heart is in the work" and donated much of his fortune to charity. Other examples are the "Giving Pledge" made by 16 billionaires, including Facebook's Mark Zuckerberg and Oracle's Larry Ellison, who publicly pledged to give away a majority of their wealth to charitable causes or organizations. And promoting well-being and health, automaker Henry Ford developed paternalistic programs to support the recreational and health needs of their employees. These business leaders believed that business had a responsibility to society that went beyond or worked along with their efforts to make profits. (Lawrence and Weber, 2014) 

 

Several charities that I am involved active with at work and in Washington state include Northwest Harvest (hunger relief and food bank), World Vision (Books & Backpacks) and Goodwill. The learning lesson is: become active and involved in your organization,  the community and make yourself and the world a better place.   

 

References

Lawrence, Anne T. and Weber, James (2014). Business and Society: Stakeholders, Ethics, Public             Policy (14th ed.). New York, NY: McGraw-Hill.

MacKinnon, Barbara and Fiala, Andrew (2015). Ethics: Theory and Contemporary Issues (8th ed.). Stamford, CT: Cengage Learning.

A634.8.3.RB - Gun Control What is the Answer?

Yes, citizens have a right to bear arms to a certain extent and not the extreme.

The US Constitution and specifically the Second Amendment states, “A well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.” No other passage of the US Constitution is as intensely debated and scrutinized as the Second Amendment. (Morris, April 21, 2013)

Most debates, arguments and discussion focus on the "bear arms" part, however, the most important and key word is "militia." In 1791, no one knew if the whole "Union" thing was going to work out. Most people distrusted the government and many of the States distrusted one another. Many feared an invasion from Europe and the Second Amendment was enacted to make sure that a citizen's militia could defend the principles of the constitution. (Morris, April 21, 2013)

However, what the Second Amendment didn't do was allow any person on drugs, with medical conditions, a criminal convicted felon, etc. the right to walk into a store or gun shop and purchase arms without a background check. In 1939, the Supreme Court ruled:  

“The Second Amendment must be interpreted and applied with the view of its purpose of rendering effective Militia.” (Morris, April 21, 2013)

By 2008, the Supreme Court extended that to cover self-defense in the home—something else that doesn’t require a high-capacity magazine along with the right and the ability to kill everything within a three block radius. However, that's all they extended it to. There’s no constitutional “right” to carry a concealed weapon, no “right” to use armor-piercing bullets—just the right to defend yourself against intruders. Stephen King famously said: “if you can’t kill an intruder with ten rounds, you need to go back to the shooting range.” (Morris, April 21, 2013)  

And honestly, a very small number of those supporting gun control guys want a complete ban on weapons. From my own point of view and thought (critical thinking), if someone wants to buy rifle and go sport hunting, it's their business and has nothing to do with me. And if you feel safer knowing that you have a shotgun in your home to defend yourself and family, fair enough.

For a fact, at least 54% of Americans support strict gun laws with this percentage rising to an incredible 91% including common sense stuff like background checks. Unfortunately, Congress recently shot this down in what could be assumed as an effort by political lobbyists, e.g., the National Rifle Association (NRA) and an effort by Congress to become even more unpopular. This support for gun control, by the way, is pretty bipartisan: even with controversial stuff like reinstating the assault weapons ban, roughly half of Republicans are in favor, along with a majority of Democrats and Independents. In summary, people are largely pro-gun control—it’s the politicians who aren’t. (Morris, April 21, 2013)

Gun control critics argue if the government is to start monitoring citizens at this level, then what would stop them from monitoring other aspects while further intruding and violating civil liberties? Political lobbying including from the NRA and gun manufacturers, e.g., Smith & Wesson, Remington etc., to Congress provides a foundation that weapons will be available to anyone who wants one. And then there is the American Civil Liberties Union (ACLU) too whose mission is "to defend and preserve the individual rights and liberties guaranteed to every person in this country by the Constitution  and laws of the United States (Wikipedia, 2015)." And most of their staff is made up of attorneys too. So, based on strong lobbying efforts, gun control will be split for years in Congress.

 

References

Gun Laws: Make Sure You Know Your Gun Control Arguments For and Against. Retrieved http://listverse.com/2013/04/21/10-arguments-for-gun-control/

LaFollette, Hugh (2007). The Practice of Ethics. Malden, MA: Blackwell Publishing.

Morris, M. (April 21, 2013). 10 Arguments for Gun Control. Retrieved http://listverse.com/2013/04/21/10-arguments-for-gun-control/

Wikipedia (2015). Retrieved http://en.wikipedia.org/wiki/American_Civil_Liberties_Union

A634.7.4.RB - Ethics and Behaviors

Boeing is a company of incredible, fascinating and amazing people working in one of the most exciting industries in the world - aerospace. Considering the many accomplishments, creativity and building a foundation of innovation, from designing and building the earliest biplanes to creating and supporting today's supersonic aircraft and spacecraft, one might think Boeing would be content with how far the company has come. But a company of  Boeing's size (166, 000 employees worldwide) and scope ($95 billion 2014 revenue) doesn't succeed by resting on its laurels and being complacent; Boeing is constantly re-examining capabilities and processes to ensure that the company is as strong and vital as heritage. In fact, the culture mirrors the heritage of aviation itself, built on a foundation of innovation, aspiration and imagination. (Boeing, 2015)

The Boeing Vision is: People working together as a global enterprise for aerospace industry leadership. How will we get there?

• Operate as One Boeing
• Deliver customer value
• Lead with innovation
• Fuel growth through productivity
• Leverage global strength

In order to realize our vision, Boeing considers where it is today and where it would like to be tomorrow. There are certain business imperatives on which Boeing places a very strong emphasis.

• Detailed customer knowledge and focus
• Technical and functional excellence
• Large-scale systems integration
• Lifecycle solutions
• Lean global enterprise

Boeing Values

Boeing is committed to a set of core values that not only define who it is, but also serve as guideposts to help the company become what it would like to be. Boeing aspires to live these values every day.

Integrity

We take the high road by practicing the highest ethical standards and honoring our commitments. We take personal responsibility for our own actions.

Quality

We strive for first-time quality and continuous improvement in all that we do to meet or exceed the standards of excellence stakeholders expect of us.

Safety

We value human life and health above all else and take action accordingly to maintain the safety of our workplaces, products and services. We are personally accountable for our own safety and collectively responsible for each other's safety. In meeting our goals for quality, cost and schedule, we do not compromise safety.

Diversity & Inclusion

We value the skills, strengths and perspectives of our diverse team. We foster a collaborative workplace that engages all employees in finding solutions for our customers that advance our common business objectives.

Trust & Respect

We act with integrity, consistency, and honesty in all that we do. We value a culture of openness and inclusion in which everyone is treated fairly and where everyone has an opportunity to contribute.

Corporate Citizenship

We are a responsible partner, neighbor and citizen to the diverse communities and customers we serve. We promote the health and wellbeing of Boeing people, their families and our communities. We protect the environment. We volunteer and financially support education and other worthy causes.

Stakeholder Success

By operating profitably and with integrity, we provide customers with best-value innovation and a competitive edge in their own markets; enable employees to work in a safe, ethical environment, with a highly attractive and competitive mix of pay and benefits, and the ability to further share in the company's success; reward investors with increasing shareholder value; conduct business lawfully and ethically with our suppliers; and help to strengthen communities around the world.

(Boeing, 2015)

Boeing believes that the same behaviors that drive strong performance – leadership, openness, accountability and inclusion – also enable a robust and effective ethics and compliance program. Ensuring that the Boeing values remain foundational to our work reflects a daily commitment from every employee who wears a Boeing badge. This message is delivered by the chairman each year with a videotaped message to every employee, and in numerous external remarks given by senior leaders in various forums.

While each employee is accountable for upholding our Code of Conduct and following all applicable laws, regulations and company policies, Boeing advances its unified approach to ethics and compliance through the integration of four key functions: Ethics and Business Conduct, Global Trade Controls, Corporate Audit and Compliance Risk Management. These organizations constitute the Boeing Office of Internal Governance (OIG).

This integrated group creates a sustainable advantage for Boeing by enabling compliant company performance while building on its legacy of integrity. The nearly 500-person team of professionals focuses on:

• Advancing an open, accountable and transparent culture;
• Independently and objectively evaluating processes and controls;
• Leveraging One Boeing through strong integration and collaboration;
• Applying expertise, business acumen and strong functional discipline; and
• Educating, training and informing Boeing employees worldwide.

(Boeing, 2015)

Speaking up is a cornerstone for building an open and accountable workplace culture. Boeing believes that creating an environment where employees are comfortable raising issues and concerns without fear of retaliation enables openness which can lead to improved business performance and inspire greater innovation. Boeing maintains policies and procedures to encourage employees to report concerns and seek guidance, using confidential and, when preferred, anonymous methods, including contacting local ethics advisors, using toll-free phone numbers and accessing web-based portals. Retaliation against employees who raise concerns is not tolerated and is cause for appropriate corrective action, up to and including dismissal.

(Boeing, 2015)

Unfortunately, there are several examples of unethical leadership.

 

In 2003, Mike Sears, CFO, and Darlene Druyun, Vice-President and Deputy General Manager of the Missile Defense Systems unit, were fired and both received prison terms – he for four months and she for nine. She sought and received a $250,000 a year job at Boeing while she was working as an Air Force procurement officer at the Pentagon. She and Mike Sears negotiated her position along with a $22 billion contract to supply the US Air Force with (100) 767 refueling tankers. Congress later cancelled the contract after the scandal was disclosed and went public. (Boeing, 2015)

 

In December 2003, the board of Boeing announced that it had accepted the resignation of Chairman and CEO, Philip Condit. Condit stated, “Accountability begins at the top”. (Boeing, 2015)   

 

The tanker program competition was reopened for re-evaluation and proposals to all airframe manufacturers including European Airbus. After an intense review and evaluation for several years, the 767 was selected as the winner. 

         

Harry Stonecipher, former Boeing vice chairman and COO, who also headed McDonnell Douglas when it merged with Boeing in 1997, was brought out of retirement to run Boeing. Stonecipher soon restored credibility to the aerospace giant along with increasing market valuation by over 50%. He also promoted corporate ethics as a top priority. However, it was then disclosed that Stonecipher was having an extramarital affair with a female company executive. The board ordered him to stop but he refused. He was then asked by the board to resign. The relationship violated Boeing’s code of conduct which ironically Stonecipher implemented and all employees must sign once a year. His “poor judgment… impaired his ability to lead.” "His downfall was that he failed to practice what he preached. ” (Boeing, 2015)           

So, what is the root cause of all these examples? It is entitlement, greed, self-interest and focus on oneself along with human nature and ego. And these examples do not demonstrate leadership in fact just the opposite. This is white-collar crime (WCC) and fraud. What is the fix? Ethics training, ethics curriculum and code of conduct and most importantly leadership by example. And regulation monitoring too, e.g., Sarbanes-Oxley Act.      

References

Boeing (2015). Available http://www.boeing.com/

YouTube (Poster, The Ethics Guy; Uploaded August 24, 2012)

https://www.youtube.com/watch?v=eLxbHBpilJQ

 

YouTube (Poster, Chuck Gallagher; Uploaded January 27, 2013)

https://www.youtube.com/watch?v=gUJ00vNGCPE

 

A634.6.3.RB - What are Virtues_RutbellGreg

Select three of Franklin's virtues and reflect upon them in your blog. Ask yourself, how can I include them in my daily life?

Ben Franklin's virtue of temperance includes eating and drinking in moderation. This is the foundation virtue for the other 12 because self-discipline and control are developed along with confidence to start making improvements in other areas of my life. Unfortunately, when people are stressed, frustrated and avoid dealing with their real problems, they turn to food and drink instead of exercise, reading and talking about it to a friend, mentor or coach. Manning up involves facing one’s issues head on. Hunger and thirst are some of the most primal human of urges, and are some of the hardest to control. When developing self-discipline and control, one must start with the most basic appetites and work up from there. I must first harness this inward urge, before tackling the more external virtues. A clear mind and a healthy body are prerequisites to the pursuit of the virtuous life. Another good philosophy is to let food be your medicine and nutrition. Eat the right kinds and quantities of food. Don't binge eat and drink or be a pig or a hog! Remember, if you don't look after and take care of yourself, no one else will either. Others can offer you advice but only you can do it and make it happen.        

Frugality is creating a financial budget, developing a financial plan and having the discipline to live and stick to it along with savings. Today, Americans' savings rate is poor and negative. Americans are spending more than they're saving along with getting into large credit card debt. And then there is interest and bankruptcy for those who can't meet their financial obligations. There are many financial institutions, e.g., banks and credit card companies, and Internet blogs that can go into detail about living frugally, however, it all comes down to one basic principle: spend less than you earn. It's too easy or is it? However, when the economy goes on a downhill slide, e.g., recession and financial, Americans usually tighten their wallets and purses, however, usually run up more credit card and loan debt. Many have become complacent and set in their ways of a comfortable lifestyle along with believing in entitlement. Based on world history, too much luxury can make a nation weak and be its collapse. The Greeks and Romans are a good examples of the negative effects of what happens to a nation when it lets propensity go unchecked with temperance and frugality. It can be its downfall and ruin. And although wealthy, Ben Franklin lived a relatively simple life. He made an effort to eat and dress simply and plainly.

The virtue of industry can be summed up as "be all that you can be" similar to the US Army motto and Abraham Maslow's Hierarchy of Needs "self-esteem and self-actualization." You get out of life what you put into it. What are your education, professional and personal goals? What is the plan to accomplish these? When I hike along a beautiful Cedar River in Renton, Washington which runs from the Cascade Mountains to Lake Washington,  I noticed that the parts of the river where the water moved the fastest ran pure and clean. The parts of the river where the current slowed and stalled were stagnant and cloudy. It is the same with life; to keep ourselves happy and motivated, we must always keep moving. Otherwise we will languish and become depressed. Reflection can be used daily when having a cup of coffee or exercising to plan a daily schedule with goals. Use the past as a learning lesson, the present time if a gift from God to accomplish your goals and the future is your motivation.  

References

Ben's 13 Virtues (2015). Retrieved http://www.pbs.org/benfranklin/pop_virtues_list.html

A634.5.4.RB - Is Marketing Evil

Fraud includes when individuals engage in intentional deceptive practices to advance their own interests over those of the organization or other group. Fraud is any purposeful communication that deceives, manipulates or conceals facts with the intent to harm others. Fraud can be a crime and convictions can result in fines, imprisonment or both. Globally, fraud costs organizations over $3.5 trillion a year. The average organization loses about 5 percent of annual revenues to fraud. Some major ways fraud is detected include: tip, management review, internal audit, by accident, document examination and external audit. The majority of fraud detection is due to tips. Types of fraud include: accounting, marketing, puffery and implied falsity. (Ferrell, Fraedrich, and Ferrell, 2015)

Marketing fraud is the process of dishonesty creating, distributing, promoting and pricing products and services and is a business area that generates potential ethical issues. False and misleading marketing communications destroys customers' trust in a company. Lying, a major ethical issue involving communication, is a potentially significant problem. For both internal and external communications, it causes ethical predicaments because it destroys trust. For example, the Securities and Exchange Commission (SEC) charged two units at financial services firm Oppenheimer & Company with misleading investors about the value of their private equity funds. They agreed to pay more than $2.9 million to settle the lawsuit. Misleading  marketing can also cost consumers hard-earned money. (Ferrell, Fraedrich, and Ferrell, 2015)

False and deceptive advertising is a key issue in marketing communications. One set of laws common to many countries concerns deceptive advertising - that is, advertisements not clearly labeled as advertisements. In the US, Section 5 of the Federal Trade Commission (FTC) Act identifies deceptive advertising. Abuses in advertising range from exaggerated claims and concealed facts to outright lying, although improper categorization of advertising claims is the critical point. Courts place false or misleading advertisements into three categories: puffery, implied falsity and literal falsity. (Ferrell, Fraedrich, and Ferrell, 2015)

Puffery can be defined as exaggerated advertising, blustering and boasting upon which no reasonable buyer would rely and is not actionable under the Lanham Act (1946). For example, in a lawsuit between two shaving cream companies, the defendant advertised the moisturizing strip on its shaving razor was "six times smoother" than its competitors' strips, while showing a man rubbing his hand down his face. The court rejected the defendant's argument that "six times smoother" implied that only the moisturizing strip on the razor's head was smoother. Instead, the court found the "six times smoother" advertising claim implied that the consumer would receive a smoother shave form the defendant's razor as a whole, a claim that was false. Implied falsity means the message has a tendency to mislead, confuse, or deceive the public. Advertising claims that use implied falsity are those that are literally true but imply another message that is false. An example of implied falsity could be a company's claim that its product has twice as much of an ingredient in its product, implying that it works twice as well, when in reality the extra quantity of the ingredient has no effect over performance. Literally false includes two categories: tests prove (establishment claims), when the advertisement cites a study or test that establishes a claim; and bald assertions (nonestablishment claims), when the advertisement creates a claim that cannot be substantiated, as when a commercial states a certain product is superior to any other on the market. Literally false also includes "weasel word" expressions such as "helps prevent," "helps fight," and "helps make you feel." (Ferrell, Fraedrich, and Ferrell, 2015)

Ethical guidelines can have a positive impact to marketers, however, it makes more of an impact when you have to sign something, e.g., ethics training (yearly), an ethics commitment (yearly) and a code of conduct. This makes more of an impact because it is in writing and documented and not "hearsay." This can also help companies "balance" the need to win with being ethical. Above all, ethics should be a company value that is embedded in culture to help manage and lead marketing efforts.

No, it is not ethical to track my buying habits or web visits to target me for marketing purposes. Why, because it is an invasion of privacy and personal information from public scrutiny and violation of my constitutional rights (the right to be left alone). However, there are some websites that track my information automatically based on searches and purchases, e.g., Amazon and Barnes & Noble, and make recommendations of what I would be interested in. And unfortunately, some of this information goes out to marketers for further action on their part.

From a leadership perspective, I would lead by example, e.g., words and actions, along with the "Golden Rule" of respect, trust and understanding.     

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

Is Marketing Evil? Marketing Viewed as a tool by German University in Cairo students Hala El Sayed and Ingy El Ghazaly (n.d.)

A634.4.4.RB - Is Affirmative Action Ethical

One way to promote equal opportunity and correct past discrimination is through affirmative action. Since the mid-1960s, major government contractors have been required by presidential executive order to adopt written affirmative action plans including goal, actions and timetables for promoting better equality in the workplace. The purpose is to reduce job discrimination by encouraging organizations to take positive, i.e., affirmative, action steps to overcome past employment practices and traditions that may have been discriminatory. (Lawrence and Weber, 2014)

Affirmative action became increasingly controversial in the 1990s and early 200s. For example, new laws such as Proposition 209 in California were passed banning or limiting affirmative action programs in public hiring and university admissions. The issue was also debated in Congress and in the courts. Proponents of affirmative action argued that these programs provided an important tool for achieving equal opportunity. In this view, women and minorities continued to face discriminatory barriers and affirmative action was necessary to balance the playing field. Some large corporations backed affirmative action programs, finding them helpful in monitoring their progress in providing equal job opportunity. For example, General Electric (GE), AT&T and IBM said that they would continue to use affirmative action goals and timeframe schedules even if they were not required by law. (Lawrence and Weber, 2014)

Some organizations use quotas, goals, and timeframes schedules for affirmative action. This includes training programs to meet the needs of employees who have been discriminated against in the past, and in some cases less qualified applicants may have to be hired or promoted in order to accomplish affirmative action. In addition, when employees retire, resign or are fired, they should be replaced - at all level, including management, by members of those groups that have been discriminated against. Some organizations feel the government should mandate affirmative action employment practices and enforce them fully in all businesses by withholding government contracts and funding and imposing fines and prison sentences when and where necessary. (Thiroux and Krasemann, 2015)

Reverse discrimination is a term that describes the plight of some, mostly white males, who have in turn been discriminated against when affirmative action programs have been implemented. For example, reverse discrimination would occur if a company hired an African American man or woman who was less qualified than a white person, either because of the person's  race or sex. However, reverse discrimination occurs when one group (ethnic, race) is unintentionally discriminated against in an effort to help another group. For example, if a more qualified white man were passed over for a job as a police officer in favor of a less qualified Hispanic man to remedy past discrimination in a police department, this might be unfair to the white candidate. (Thiroux and Krasemann, 2015)

In 2009, the US Supreme Court heard a case brought by Frank Ricci, a white fireman in New Haven, Connecticut. Earlier, Ricci had taken an exam for promotion to lieutenant and had scored sixth among 77 candidates. However, the city decided to discard the results, because none of the 19 African-Americans who took the test qualified for promotion. Ricci and 19 other firemen (one who was Hispanic) then sued the city, saying they had been the victim of reverse discrimination. The city defended its action, saying the test was flawed. The Supreme Court ruled in favor of the firemen plaintiffs, saying they had been subjected to race discrimination "solely because the higher-scoring candidates were white." (Lawrence and Weber, 2014)

Critics of affirmative action also argued that these programs could actually stigmatize or demoralize the very groups they were designed to help. For example, if a company hired a woman for a top management post, other people might think she got the job just because of affirmative action preferences, even if she were truly the best qualified. This might undermine her effectiveness on the job (along with organization) or even cause her to question her own abilities. For this reason, some women and persons of color called for less emphasis on affirmative action, preferring to achieve personal success without preferential treatment. (Lawrence and Weber, 2014)

Additional arguments for discrimination, a business's employment practices are its own affair. If employers want to hire white males, then they have the right to do so without interference because they are the owners of their businesses. In addition, even if one accepts the notion that there has been discrimination in the past, this is seldom the fault of present employers, therefore they should not have to correct deficiencies they did not cause. Employers should not have to hire less qualified people in order to "integrate" their businesses, nor should they have to provide additional training to people who are unqualified simply in order to make up for past discrimination. (Thiroux and Krasemann, 2015)

References

Lawrence, Anne T. and Weber, James (2014). Business and Society: Stakeholders, Ethics, Public Policy (14th ed.). New York, NY: McGraw-Hill.

Thiroux, Jacques P. and Krasemann, Keith W. (2015). Ethics: Theory and Practice (11th ed.). New York: Pearson Education, Inc.            

 

 

A634.3.5.RB - The Harder They Fall

I can share some insights on dilemmas that happen in society, work and in my life.

I have worked for Boeing for about 18 years now and I also worked for Lockheed Martin for 9 years. Boeing headquartered in Chicago is the world’s largest aerospace company. Several conflicts of interest, ethics, leadership and organizational problems rocked the aerospace giant about twelve years ago. Lockheed Martin is the world's largest defense contractor and is headquartered in Bethesda, Maryland.

 

In 2003, Boeing was sued by competitor Lockheed Martin, for having proprietary rocket launch documents belonging to Lockheed Martin. Several Boeing employees (who were former Lockheed Martin employees) were fired and received prison terms. The Pentagon cancelled contracts worth over $1 billion awarded to Boeing and the company was also banned from bidding on future rocket launch defense contracts in July 2003. In 2005, the two year ban and penalty was lifted by the Air Force. (Boeing, 2015)         

           

In 2003, Mike Sears, CFO, and Darlene Druyun, Vice-President and Deputy General Manager of the Missile Defense Systems unit, were fired and both received prison terms – he for four months and she for nine. She sought and received a $250,000 a year job at Boeing while she was working as an Air Force procurement officer at the Pentagon. She and Mike Sears negotiated her position along with a $22 billion contract to supply the US Air Force with (100) 767 refueling tankers. Congress later cancelled the contract after the scandal was disclosed and went public. (Boeing, 2015)

 

In December 2003, the board of Boeing announced that it had accepted the resignation of Chairman and CEO, Philip Condit. Condit stated, “Accountability begins at the top”.  (Anonymous, 2005)   

 

The tanker program competition was reopened for re-evaluation and proposals to all airframe manufacturers including European Airbus. After an intense review and evaluation for several years, the 767 was selected as the winner.  

         

Harry Stonecipher, former Boeing vice chairman and COO, who also headed McDonnell Douglas when it merged with Boeing in 1997, was brought out of retirement to run Boeing. Stonecipher soon restored credibility to the aerospace giant along with increasing market valuation by over 50%. He also promoted corporate ethics as a top priority. However, it was then disclosed that Stonecipher was having an extramarital affair with a female company executive. The board ordered him to stop but he refused. He was then asked by the board to resign. The relationship violated Boeing’s code of conduct which ironically Stonecipher implemented and all employees must sign once a year. His “poor judgment… impaired his ability to lead.” "His downfall was that he failed to practice what he preached. ” (Ached & O’Donnell, 2005)              

           

Not only did these scandals shake Boeing as far as jobs, contracts and reputation but the Pentagon and Congress as well. There were several changes for the Air Force leadership too. In 2004, Air Force Secretary James Roche and Assistant Secretary for Acquisition (chief weapons buyer) Marvin Sambur resigned because of the Boeing tanker scandal and public embarrassment of the procurement strategy. Congress lead by Senator John McCain (R-Arizona) highly criticized the scandal along with the Pentagon procurement strategy and how the deal came together. Secretary of Defense Donald Rumsfeld put the tanker deal on hold and promised to revamp the procurement process with major changes. Congress and several US government agencies including the Justice Department investigated the scandal. McCain stated, “The chapter on the tanker lease proposal cannot be closed until all the stewards of taxpayer funds who committed wrongdoing are held accountable.” (Wolf, 2004)      

Lockheed Martin had multiple bribery and fraud scandals along with financial contributions made by officials of the US aerospace company from the late 1950s to the 1970s in the process of negotiating the sale of aircraft.

According to Ben Rich, former director of Lockheed's Skunk Works:

"Lockheed executives admitted paying millions in bribes over more than a decade to the Dutch (Prince Bernhard, husband of Queen Juliana, in particular), to key Japanese and West German politicians, to Italian officials and generals, and to other highly placed figures from Hong Kong to Saudi Arabia, in order to get them to buy our airplanes. Kelly (Clarence "Kelly" Johnson, first team leader of the Lockheed Skunk Works) was so sickened by these revelations that he had almost quit, even though the top Lockheed management implicated in the scandal resigned in disgrace." (Rich and Janos, 1994)

The scandal caused considerable political controversy in West Germany, Italy, the Netherlands and Japan. In the U.S. the scandal nearly led to the corporation's downfall, as it was already struggling due to the commercial failure of the L-1011 TriStar airliner. (Rich and Janos, 1994)

So, what is the root cause of all these examples? It is greed, self-interest and focus on oneself along with human nature and ego. And these examples do not demonstrate leadership in fact just the opposite. What is the fix? Ethics training, ethics curriculum and code of conduct and most importantly leadership by example. And regulation monitoring too, e.g., the Foreign Corrupt Practices Act which makes it illegal for American persons and organizations to bribe foreign government officials and the Sarbanes-Oxley Act.  

References

Ached, Byron & O’Donnell, Jane (2005, March 7). Extramarital affair topples Boeing CEO.         USA Today – Money. Retrieved

            http://www.usatoday.com/money/industries/manufacturing/2005-03-07-boeing-     stonecipher_x.htm

 

Anonymous (2005, May 25). Boeing Under Phil Condit. Retrieved            

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A634.2.4.RB - Theories of Ethics

According to LaFollette, there are two categories (styles) of ethical theory, reasoning and critical thinking which have developed the contemporary understanding of ethics: 1. consequentialism which emphasizes the consequences of our actions, and, 2. deontology which emphasizes rules and principles to follow separately of consequences. Consequentialism is defined as "choosing the available action with the best overall consequences" and deontology states that "we should act in ways circumscribed by moral rules or rights, and that these rules or rights are at least partly independent of consequences." (LaFollette, 2007)   

Teleology (Greek word for "end" or "purpose") means reference to moral philosophies in which an action or behavior is considered morally right if it produces a desired outcome or result including: pleasure, knowledge, career development, the realization of self-interest, utility, wealth and fame. Teleological theories assess the moral implications of an action or behavior by looking at its consequences, and moral philosophers today consider these theories as consequentialism. Two important teleological theories that usually guide decision making in individual business decisions are egoism and utilitarianism. (Ferrell, Fraedrich, and Ferrell, 2015)

Egoism defines right and acceptable behavior in terms of the consequences for the individual. Egoists believe that they should make moral decisions that will maximize their own self-interest and worth, which is defined differently by each person. Self-interest and worth can include: physical well-being, power, pleasure, fame, a satisfying career, good family life, good social life, and wealth. From an ethical decision-making perspective, an egoist will usually choose the alternative that contributes most to his/her self-interest. Many in society and the business world believe egoistic people and companies are inherently unethical, short-term oriented and willing to take advantage of any opportunity for gain. For example, some telemarketers demonstrate egoism when they prey on elderly consumers who are usually vulnerable because of age, medical issues, loneliness and fear of losing their financial independence. Unfortunately, thousands of senior citizens fall victim to fraudulent telemarketers each year including losing their homes, real estate, cars and financial savings. (Ferrell, Fraedrich, and Ferrell, 2015)

However, enlightened egoism takes a long term focus and enables the well-being of others even though their own self-interest remains important. An example of enlightened egoism is an individual helping a turtle across a highway because if it were hurt or killed in the process the person would feel distressed. Enlightened egoists may follow professional codes of ethics, control pollution, avoid cheating on taxes, help create jobs and support community projects not because these actions not because these actions benefit others but because it helps them achieve an individual goal such as self-esteem, self-actualization or advancement within the organization. An example is an enlightened egoist could call management's attention to a co-worker who is making false accounting financial reports, but only to protect the organization's reputation and the egoist's own job security. Another example, an enlightened egoist could become a whistle-blower and report misconduct to a regulatory agency to receive an award for exposing misconduct. (Ferrell, Fraedrich, and Ferrell, 2015)

Utilitarianism is like egoism and is concerned with the consequences, however, the difference is the utilitarian seeks the greatest good for the greatest number of people. Utilitarians believe they should make decisions that result in the greatest total utility, or the greatest benefit for all those affected by a decision. For example, a utilitarian might argue for organizations that legally sell harmful products such as tobacco, guns or alcohol. It has been argued that despite their drawbacks, allowing them to be sold legally is less harmful than having them sold illegally and unregulated. This approach influenced similar forms of legislation, such as the recent laws in Colorado and Washington legalizing the regulated sale of medical marijuana. Utilitarian decision making relies on a standard systems comparison of costs and benefits to all affected parties. The US Supreme Court has made several decisions on organizational sexual harassment stating to employers that "one of the costs of doing business" is to prevent sexual harassment for the better of employees and society. Rule utilitarians believe behavior is based on principles or rules designed to promote the greatest utility, e.g., "bribery is wrong" and adhere to strict rules. Act utilitarians believe specific actions instead of specific rules promote the greatest utility. Rules such as "bribery is wrong" serve only as general principles for act utilitarians. They would agree that bribery is wrong not because there is anything inherently wrong with bribery, but because the total amount of utility decreases when one's personal interests are placed ahead of those in society. (Ferrell, Fraedrich, and Ferrell, 2015)

 Deontology refers to moral philosophies that focus on the rights of individuals and the intentions associated with a certain behavior rather that consequences. Contemporary deontology has been greatly influenced by German philosopher Immanuel Kant who developed categorical imperative: "Act as if the maxim of thy action were to become by thy will a universal law of nature." This means if you feel comfortable allowing everyone in the world to see you commit an act and if your reasoning for acting in a certain manner is acceptable to become a universal principle guiding behavior, then committing the act is ethical. Fundamental to deontological theory is the idea that equal respect must be give to all persons. In contrast to utilitarians, deontologists argue that there are some things we should not do even to maximize utility. For example, deontologists would consider it wrong to kill an innocent person or commit a serious injustice against  someone, no matter how much greater social utility would result from doing this, because this action would infringe on individual rights. On the other hand, a utilitarian might consider such an act acceptable if that action lead to some greater benefit. Deontologists believe individuals have certain absolute rights including: freedom of conscience, freedom of consent, freedom of privacy, freedom of speech and due process. To decide if behavior is ethical, deontologists look for conformance to moral principles. For example, if a manufacturing worker becomes ill or dies as a result of conditions in the workplace, a deontologist would argue that the organization must change its production processes to correct the condition no matter what the cost, even if it means going bankrupt and all the workers lose their jobs. However, a utilitarian would analyze all the costs and benefits of changing the production processes and make  a decision on that basis. In summary, teleological philosophies consider the ends associated with an action, whereas deontological philosophies consider the means. (Ferrell, Fraedrich, and Ferrell, 2015) (MacKinnon and Fiala, 2015)

Rule deontologists believe conformance to moral principles based on logic determines ethicalness. Examples include Kant's categorical imperative and the Golden Rule of Judeo-Christian tradition: "Do unto others as you would have them do unto you." Act deontologists believe that actions are the standard basis to judge morality and ethicalness. Act deontology requires an individual to use equity, fairness and impartiality to make and enforce decisions. Past experiences are more important than rules and rules serve only as guidelines in the decision-making process. People know that certain acts are right or wrong regardless of consequences. And act deontologists consider the unique characteristics of a specific act, situation or point in time take precedence over any rule. (Ferrell, Fraedrich, and Ferrell, 2015)

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

LaFollette, Hugh (2007). The Practice of Ethics. Malden, MA: Blackwell Publishing. 

MacKinnon, Barbara and Fiala, Andrew (2015). Ethics: Theory and Contemporary Issues (8th ed.). Stamford, CT: Cengage Learning.

 

A634.1.6.RB - The Buck Stops and Starts With You

The MBA curriculum has remained almost standard for decades, but, ethics curriculum has been added as a new topic. Ethics is institutionalized as an academic requirement and not elective at leading business schools including Harvard, Wharton (Pennsylvania)  and Darden (Virginia). With the criminal convictions of insider traders in the 1980s, business schools identified a new opportunity and started focusing on ethics in the 1990s. The business and leadership collapses of Enron, WorldCom, Arthur Andersen, etc. have kept ethics a hot and important issue. Ethical case study scenarios usually make for engaged classroom discussions including research, casework, re-enactments and role-playing for future workplace applications. The top business schools train their future champions of business and industry to deal with any challenge. The focus of  ethics in the MBA curriculum is not to make students role model citizens but to make students and future business leaders aware of the ethical implications of business decisions including: anti-trust actions, predatory pricing, insider trading, environmental issues, corporate restructuring, employee privacy issues, diversity issues, sexual harassment and conduct of multinational corporations. (Silbiger, 2012)

Discussions and curriculum about ethics rests on the foundation that businesses should adhere to a socially responsible approach to decision making called the social responsibility approach. Proponents of this approach believe that companies have societal obligations that go beyond making profits. Business schools teach students to adopt this "politically correct" philosophy. It is argued that because companies are so powerful with impacts on society, they have an obligation to assume social responsibilities. Companies should be managed for the benefit of their stakeholders: customers, suppliers, employees, communities and owners (stockholders). Company leaders bear a fiduciary responsibility to all stakeholders. (Silbiger, 2012)

Just opposite of  the "politically correct" philosophy espoused at mist institutions is a competing school of thought led by Milton Friedman at the University of Chicago. Friedman's philosophy is that business's sole duty is to make profits. "Businesses are in the business of maximizing shareholders' value by a prudent use of scarce organizational resources, as long as the activities of the businesses are within the letter of the law." Friedman believes it is up to government to determine what the laws should be. A profitable business benefits society by creating jobs, improving the standard of living of its owners and employees. Corporations pay taxes that support government's social action. Friedman's theory and philosophy is regarded as one of the proponents of capitalism in economics courses (Silbiger, 2012)  

What is the feedback from business school students? Students give several responses to whether ethics can be taught. "If it can't be taught, why am I taking this class?" "Look at the behavior of certain corporate executives who have been found guilty of criminal conduct. They surely haven't learned proper ethical values." Students summarize the learning lesson is this: "although certain ideals or types of knowledge can be taught, ethical behavior (actions) cannot because it is a matter of individual choice." (MacKinnon and Fiala, 2015)

Even several leadership, management and business books, e.g., The Guerilla Marketing Handbook, and Sun Tsu: The Art of War for Managers use the common theme that surprise attacks, guerilla warfare, and other warlike tactics are necessary to win the battle for American consumer and sales. Unfortunately, this business-as-war reasoning and philosophy fosters the idea that honesty is unnecessary in business. Boeing and European Airbus is the biggest business rivalry and competition in the world. Several books document this including The Sporty Game and Boeing versus Airbus: The Inside Story of the Greatest International Competition in Business by John Newhouse. (Ferrell, Fraedrich, and Ferrell, 2015)

In addition, The Goal: A Process of Ongoing Improvement (Theory of Constraints) business novel by Eli Goldratt emphasizes that the goal of any business is to make money. The theory, philosophy and novel is used by many companies and business schools. (Goldratt, 2012)

Podolny suggests that business focus is too much quantitative (numbers) and needs more focus and emphasis on qualitative (soft skills) including ethics and corporate social responsibility. This includes a holistic approach to business problems and case studies. Faculty from both the "hard" and "soft" disciplines must discuss material in the same classroom, e.g., teaching teams. When business schools teach leadership, emphasis is on the big picture and not the hands-on practical details. Podolny recommends business schools adopt a code of ethics similar to the medical (doctors) and bar (lawyers attorneys) associations to develop codes of conduct for MBAs and to withdraw the degrees of those who break the manager's code including conduct, behavior and actions. (Podolny, 2009)

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

Goldratt, Eliyahu M. (2012). The Goal: A Process of Ongoing Improvement. Great Barrington, Massachusetts: The North River Press Publishing Corporation.

MacKinnon, Barbara and Fiala, Andrew (2015). Ethics: Theory and Contemporary Issues (8th ed.). Stamford, CT: Cengage Learning.

Podolny, Joel M. (2009). The Buck Stops (and Starts) at Business School. Harvard Business Review (June 2009). Boston, Massachusetts: Harvard Business School Publishing.

Silbiger, Steven (2012).  The Ten Day MBA: A Step-By-Step Guide To Mastering The Skills Taught In America's Top Business Schools (4th ed.). New York, NY: HarperCollins Publishers.