Ethics: Why They Are Important, Why We Hate to Talk About Them, and What To Do About Them NASACT November 3, 2004 Professor Marianne M. Jennings

2 Why the Focus on Ethics? Why Does Ethics Have Such a Bad Reputation? How Do I Resolve Ethical Dilemmas?

Why the focus on ethics? Part I

4 1. It hurts and it costs when ethics fall short

5 Examples of Fall-Out When Ethics Fall Short Clark County, Nevada N.J. and the stock deals Darlene Druyun and Boeing Illinois, Ryan and contracts Bruce Babbitt Robert Citron and Orange County The Assessor and the Property Owner List Stadium Site and the FAA NASA and O-rings and Space Shuttles

6 2. The State of Ethics Is Not So Great 74% of high school students cheated on an exam in the last year (61% in 1992); 45% said they did it at least twice in the last year 93% lied to their parents in the past year; 79% say they lied twice 78% have lied to their teachers 37% said they would lie to get a job 38% took something from a store in the last year Josephson Institute 2002

7 Thoughts on cheating per high school students Students who cheat do so on their own terms. Of course there has been no penalty, but they know there is a risk, and apparently it seems like its worth taking. Just about everyone is cheating in some way or another. It is a common thing among society that is seemingly accepted.

8 Thoughts on cheating from a high school teacher Cheating is done on a daily basis and there is little effort to curb it. Kids will ditch class by having their parents excuse them during the period they are to take a test, and then the kids find out from their friends what is on the test. Kids can then take the test the next day.... The new camera cell phones are now being used to take pictures of tests and also they are using instant messaging to cheat.

9 3. The State of Ethics in College 70% have cheated at least once on a test 87% have cheated on written work 52% have copied work from others 56% have plagiarized Rutgers University survey 75% have cheated in college in some way Center for Academic Integrity, Duke

10 Thoughts on cheating from college students If people can lie and get away with it, good for them. Honestly, I would probably do nothing. [response of students to hypothetical asking what action they would take if they learned an executive of their company had lied under oath]

11 Ethics at Work 76% of employees in business have observed a high level of illegal or unethical conduct at work in the past 12 months 49% of employees in business have observed misconduct that, if revealed, would cause their firms to significantly lose public trust - KPMG 2000 Organizational Integrity Survey

12 Most Ethically Vulnerable Area at Work - IT 100% of IT employees say they have lied at work in the past year Some IT Tidbits 60% of all online purchases are done during the hours from 9 AM to 5 PM 70% of all pornographic site visits are made during those same hours Only 10% say they use work computer to visit porn sites

13 State of Ethics MOST (65%) DONT REPORT 96% feared being accused of not being a team player 81% feared corrective action would not be taken 68% feared retribution from their supervisors (Society of Human Resource Managers, 1999)

14 State of Ethics None thought their ethical standards were lower than those of their peers in their organization (1%)

15 3. Fear – You Will Be Caught The Fish Bowl Existence of Government Congressman J.D. Hayworth and the forged signature on the re-election petition FTC, Time Warner and the memo Good intentions are not a substitute for good actions. M.M. Jennings

16 The Newspapers and Revelations The Laws of Probability Do Not Apply When it Comes to the Surfacing of Unethical or Illegal Conduct If one person knows... Three people can keep a secret if two are dead. Hells Angels motto (borrowing from B. Franklin)

17 Truth and Its Percolating Quality Lying is good. Its the only way we ever get at the truth. Dostoevsky Circumstances beyond your control will cause bad acts to be discovered. Anonymous

18 Despite the odds, ethical risk-takers abound... The city truck and the beer stop The council man and the threats The assistant fire chief and the contracts The art museum director and employees The museum and the audit Truth Percolates Like a Natural Force

19 Examples of the Risk-Takers Zoe Baird and Kimba Wood Henry Cisneros Fife Symington Scottsdale School District and the bids The government witness in the Martha Stewart trial Its not the first mistake the gets you. Its the second, the cover-up, that will. M. M. Jennings

20 4. The Role of Ethics in Maximizing the Potential of Individuals and Organizations: Reputation The Baggage-Free Existence The Marathon vs. The Sprint The Meteorites with Success: Judge Stephen Miretti and the Vegas Connection Always tell the truth. That way you dont have to remember anything. Mark Twain

21 4. Ethics and Reputation A reputation, good or bad, is tough to shake. Richard Teerlink Former CEO, Harley-Davidson A bad reputation is like a hangover. It takes a while to get rid of, and it makes everything else hurt. James Preston Former CEO, Avon

22 The reputation of a thousand years is determined by the conduct of one hour. Japanese Proverb What goes around comes around. M.M. Jennings Grandmother Ethics and Reputation

23 5. Ethics and Leadership Leadership is the ability to see around corners Leadership is the ability to see the problem before others Leadership is the ability to fix the problem before it becomes a headline

24 Social/Regulatory/Litigation Cycle Options Time Latency Awareness Activism Regulation/Litigation Public Moves the Cycle

25 6. Ethics as a Management Tool- Morale Motto 1: Lets get out there and not break the law today. (Compliance and code adherence) Motto 2: Lets aim for no ill-will among employees, suppliers, citizens and observers.

26 7. Ethics and Liability You dont make legally incorrect turns if you make ethically correct choices. The Could vs. Should Issue Jurassic Park ethics There is a big difference between what we have a right to do and what is right to do. Justice Potter Stewart

27 Avoid Jurassic Park Ethics Could I do this? -- The Codified Society Legalisms, litigiousness and its costs Should I do this? -- The Ethical Society

28 --Ethics and Conscience Its the Right Thing to Do Trust as the basis for all organizations, systems and relationships

29 8. Ethics and Trust The Interdependence of Government, Business, Citizens and Ethics

30 The Interdependence of Trust, Business, and Government Relationships Customers Government Investors Regulation Fairness Business

31 Corruption Perception Index (Transparency, Intl 2002) Least Corrupt Finland Denmark New Zealand Iceland Singapore Sweden Canada Luxembourg Netherlands United Kingdom Australia Norway Switzerland Hong Kong Austria USA Most Corrupt Bangladesh Nigeria Paraguay Madagascar Angola Kenya Indonesia Azerbaijan Uganda Moldova Haiti Ecuador Cameroon Bolivia Kazakhstan Vietnam

32 Martha Stewart, ImClone and Omnimedia and Ethics Dec. 27, 2001 – Marthas sale of ImClone shares ($229,002) If she had sold the shares after FDA problems with ImClone announced: $189,495 Overall savings for Martha: $39,507

33 Marthas Omnimedia shares Martha Stewart Omnimedia: Every $1 drop in share price cost Martha $30 million Dec. 27, 2001: $70 per share June 25, 2002: $13.60 November 25, 2002 : $5.26 October 10, 2003 : $9.86 December 19, 2003: $9.11 March 5, 2004 (pre-verdict) -- $12.52 March 5, 2004 (trading halted after verdict) $10.18 March 16, $9.97 May 16, $9.29 July 15, 2004 (new trial denied) -- $8.64 July 16, 2004 (sentencing) -- $11.81 Sept $12.03

34 The Irony of Martha and ImClone Value of ImClone shares March 5, 2004 (verdict day): $164,976 One day after Marthas announcement that she would serve her sentence without continuing appeal (Sept. 2004) Martha Stewart -- $12.03 ImClone shares – $54.10 Marthas ImClone shares were sold for $58 each on Dec. 27, 2001

35 9. Ethics and Survival For exactly at the time when the fatal knowledge of how to destroy the entire human race has fallen forever into our hands, the knowledge of morality has fallen out. Exactly when the vehicle of our history has gotten a souped-up engine, we have lost the road map. Exactly when our toys have grown up with us from bows and arrows to thermonuclear bombs, we have become moral infants. Peter Kreeft

Why does ethics have such a bad reputation? Part II

37 Why Does Ethics Have Such a Bad Reputation? 1.Urban Legend You have to play the game. You cant get ahead without cutting a few corners. Youll be eaten alive. Ethics is for wimps. Its a poker game. Were all bluffing.

38 2. Lack of Enforcement What you are thunders so loudly that I cannot hear what you say to the contrary. Ralph Waldo Emerson Ethics and Its Bad Reputation

39 Ethics and Its Bad Reputation 3. The Myth of the Lonely, Dysfunctional Whistle-Blower Hesitancy to pass judgment Hesitancy to raise issues 4. Theoretical

40 Ethics and Its Bad Reputation 5. Difficult I would never suggest that ethics is simple. Not only does one have to know the right thing to do -- one must also have the moral fortitude to do it. Norman R. Augustine Former Chairman Lockheed Martin

41 Ethics and Its Bad Reputation Let us have faith that right makes might, and in that faith let us to the end dare to do our duty as we understand it. Abraham Lincoln

42 The Hesitancy to Speak Up – The Assistant Principal and Glowing Recommendations: The Ethics of Confrontation

43 6. We prefer rationalizing Everybody else does it. What is right is right even if no one is doing it. What is wrong is wrong even if everyone is doing it. Source unknown

44 Rationalizing Thats the way they do it at Stanford. Benchmarking as an ethical standard The Tragedy of Donald Kennedy and Government Grants Funds Use at Stanford

45 Stanford and Benchmarking Overhead funds from federal grants used for $3,000 cedar-lined closet for Kennedys home $2,000 flowers $2,500 grand piano refurbishing $7,000 sheets $4,000 wedding reception $184,000 yacht depreciation

46 The Language of An Ethical Breach December 18, 1990 What was intended as government policy to build the capacity of universities through reimbursement of indirect costs leads to payments that are all too easily misunderstood. Therefore, we will be reexamining our policies in an effort to avoid any confusion that might result. At the same time, it is important to understand that the items currently questioned, taken together, have an insignificant impact on Stanfords indirect-cost rate.

47 The Language of An Ethical Breach December 18, 1990 (contd) Moreover, Stanford routinely charges the government less than our full indirect costs precisely to allow for errors and allowances. From a university statement

48 The Language of an Ethical Breach January 14, 1991 I dont care whether its flowers, or dinners and receptions, or whether its washing the table linen after its been used, or buying an antique here or there, or refinishing a piano when its finish gets crappy, or repairing a closet and refinishing it -- all those are investments in a university facility that serves a whole array of functions. From an interview with the Stanford Daily

49 The Language of An Ethical Breach January 23, 1991 Because acute public attention on these items threatens to overshadow the more important and fundamental issue of the support of federally sponsored research, Stanford is voluntarily withdrawing all general administration costs for operation of Hoover House claimed for the fiscal years since University statement

50 Evolutionary Progress February 19, 1991 I am troubled by costs that are perfectly appropriate as university expenditures and lawful under government rules but I believe ought not be charged to the taxpayer. I should have been more alert to this policy issue, and I should have insisted on more intensive review of these transactions. Remarks to alumni

51 More Progress March 23, 1991 Our obligation is not to do all the law permits, but to do what is right. Technical legality is not the guiding principle. Even in matters as arcane as government cost accounting, we must figure out what is appropriate and act accordingly. With respect to indirect-cost recovery, we pursued what was permissible under the rules, without applying our customary standard of what is proper... Remarks to alumni

52 Kennedys Demise July, 1991 It is very difficult for a person identified with a problem to be a spokesman for its solution. Donald Kennedy Letter of Resignation

53 Recognizing Ethical Dilemmas - Language If we dont do it, someone else will. The causes of ethical lapses: Job pressures Financial pressures Political pressures

54 Recognizing Ethical Dilemmas The Language Thats the way its always been done. Is there a better way? Who is being protected by this?

55 Recognizing Ethical Dilemmas - Language It doesnt really hurt anyone. Systemic implications of individual conduct Public trust Corruption benefits a few at the expense of many.

56 Recognizing Ethical Dilemmas - Language The system is unfair. All virtue is summed up in dealing justly. Aristotle Whos to know? Rankings/ratings will suffer. For all I do around here... I was just following orders.

57 Actions 12.Balancing ethical dilemmas. Family vs. Work Constituency conflicts

How do I resolve ethical dilemmas? Part III

59 Resolving Ethical Dilemmas Develop Your Ethics Stance

60 What would you choose for values if it were your money, your business, and your name?

61 Value-Based Decision-Making

62 Defining the Issue: Define Dilemmas by Values, Not Circumstances Avoid the either/or conundrum and its false security 1. The ease of resolution vs. The long- term implications 2. Failure to define the issue properly

63 Draw Your Lines Stick to them Take action consistent with those lines Draw the line once for employees and you are good for five years Group Think and the Asch Studies

64 The Seduction of Habit George Lefcoe, former commissioner of the Los Angeles County Regional Planning Commission on his retirement and the seduction of public office.

65 The Boss on The Moving Line of Right and Wrong And what once seemed black and white turns to so many shades of gray. We lose ourselves in work to do and bills to pay. Bruce Springsteen Blood Brothers

66 Simple Tests for Resolving Ethical Dilemmas Categorical Imperative: How would you want to be treated? Are you comfortable with a world with your standards? Christian principle: The Golden Rule Do unto others as you would have them do unto you. Luke 6:29-38 Thou shalt love thy neighbor as thyself. Luke 10:27

67 Resolving Ethical Dilemmas Confucius: What you do not want done to yourself, do not do to others. Aristotle: We should behave to our friends as we wish our friends to behave to us. Judaism: What you hate, do not do to anyone. Buddhism: Hurt not others with that which pains thyself.

68 Resolving Ethical Dilemmas Islam: No one of you is a believer until he loves for his brother what he loves for himself. Hinduism: Do nothing to thy neighbor which thou wouldst not have him do to thee. Sikhism: Treat others as you would be treated yourself.

69 Resolving Ethical Dilemmas Plato: May I do to others as I would that they should do unto me. TREAT PEOPLE THE WAY YOU WANT THEM TO TREAT YOU