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PRACTICAL ETHICS
Danny M. Goldberg, Founder
INTRODUCTION
Danny M. Goldberg • Founder, GOLDSRD
(www.goldsrd.com)
• Former Director of Corporate Audit/SOX at Dr Pepper Snapple Group
• Former CAE - Tyler Technologies
• Published Author (Book/Articles)
• Texas A&M University – 97/98
• Chairman of the Leadership Council of the American Lung Association - North Texas – Calendar Year 2012
• Served on the Audit Committee of the Dallas Independent School District (CY 2008)
• Current Dallas and Fort Worth IIA Programs Co-Chair
• Fort Worth IIA Board Member • IIA North America Learning
Committee Member Certifications: • CPA – Since 2000 • CIA – Since 2008 • CISA – Since 2008 • CGEIT - Since 2009 • CRISC - Since 2011 • CRMA – Since 2011 • CCSA – Since 2007 • CGMA – Since 2012
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Danny M. Goldberg • Highly-Rated, Internationally Recognized Speaker
– Asked to Speak @ 2015 IIA All-Star Conference (October, 2015) – One of the Top Rated Sessions, 2015 GAM Conference – 8th Rated Speaker, 2015 MISTI AuditWorld – 10th Rated Speaker, 2015 ISACA CACS – One of the Top Rated Speakers, 2014 IIA All-Star Conference – 7th Rated Speaker, 2014 ISACA ISRM Conference – One of the Top Rated Speakers, 2014 IIA Mid-Atlantic
Conference – 3rd Rated Speaker, 2014 ISACA CACS – One of the Top Rated Speakers, 2014 IIA Gaming Conference – 6th Highest Rated Speaker (out of 116), 2013 IIA International
Conference – 3rd and 5th Rated Sessions, 2013 IIA Central Regional
Conference – 8th Rated Speaker (out of 120), 2012 IIA International
Conference
People-Centric Skills • Added to IIA and ISACA Bookstores, Summer 2015 • Published August 2014 (Wiley Publications) • Coauthored with Manny Rosenfeld
– Chief Audit Executive with four global F500 Cos. and a global Financial Services organization.
• First book specific to internal audit communications and personal interactions
• This is not a reference book! – Story book format – Character development – Fictional Internal Audit Department – Fictional Professional Coach/Trainer – Situational
GoldSRD Snapshot
Staff Augmentation:
§ Market leader in locating cost-effective, recognized resources in accounting, finance, audit and IT
§ All requests filled within 72 hours
Professional Development:
§ Nationally-Recognized Leader in Audit and People-Centric Skill Training
§ Over 100 Full-Day Courses on Audit, Accounting, Finance and People-Centric Skills
§ Registered with NASBA to offer CPE’s for all courses in course catalog
§ Competitive Pricing
§ Interactive and Educational Courses for all levels
Executive Recruiting:
§ Unique approach to filling positions, including personality assessment for candidate and organization
§ Expansive network of qualified candidates actively looking
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PPT Business Card Danny M. Goldberg Founder – GoldSRD [email protected] P: (214) 514-8883
www.linkedin.com/in/dannymgoldberg
https://twitter.com/DannyMGoldberg
I. What are Ethics? II. Moral Philosophies III. Ethical Dilemmas IV. Why Should we be Concerned with
Ethics? V. Complex Ethical Decisions VI. 4 Methods to Resolve Ethical
Dilemmas VII. Conclusion
Table of Contents
GROUP EXERCISE
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Exercise Instructions • Walk through the following scenarios
as a group and state how you would handle this situation.
• Define ethics and the biggest single influence on a person’s ethical behavior.
• Determine the difference between ethics and morals.
• My boss told me that one of my employees is among several others to be laid off soon, and that I'm not to tell my employee yet or he might tell the whole organization which would soon be in an uproar. Meanwhile, I heard from my employee that he plans to buy a new house. What should I do?
To RIF or not to RIF
WHAT ARE ETHICS?
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• Study of what is good and evil, right and wrong (based on societal norms), just and unjust
• Ethical dilemmas can be obvious to some and oblivious to others
• Ethics are viewed differently by age, background and value system
Ethics: Generally Speaking
WHAT ARE SOME ETHICAL DILEMMAS WE RUN INTO DAILY?
What Is Business Ethics?
Employees
Shareholders and investors
Customers
Community
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• Study of what is good and evil, right and wrong (based on societal norms), just and unjust in an organization.
• Comprised of the principles and standards that guide behavior in the world of business.
• Determined by key stakeholders in an organization or, to an extent, rules and regulations (government agencies, public companies).
Business Ethics
• Is fraud ethical? • Is fraud immoral? • What is the difference between ethics
and morals?
Business Ethics
Benefits of Managing Ethics
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Ethics Vs. Morals • Ethics and morals both relate to “right”
and “wrong” conduct. However, ethics refer to the series of rules provided to an individual by an external source. e.g. their profession. On the other hand, morals refer to an individual’s own principles regarding right and wrong.
Ethics Morals What are they? The rules of conduct recognized in respect
to a particular class of human actions or a particular group, culture, etc. It defines how thing are according to the rules.
Principles or habits with respect to right or wrong conduct. Defines how things should work according to an individuals' ideals and principles.
Where do they come from?
Social system - External Individual - Internal
Why we do it? Because society says it is the right thing to do.
Because we believe in something being right or wrong.
What if we don't do it?
We may face peer/societal disapproval, or even be fired from our job.
Doing something against one's morals and principles can have different effects on different people, they may feel uncomfortable, remorse, depressed etc.
Flexibility Ethics are dependent on others for definition. They tend to be consistent within a certain context, but can vary between contexts.
Usually consistent, although can change if an individual’s beliefs change.
The "Gray" A person strictly following Ethical Principles may not have any Morals at all. Likewise, one could violate Ethical Principles within a given system of rules in order to maintain Moral integrity.
A Moral Person although perhaps bound by a higher covenant, may choose to follow a code of ethics as it would apply to a system. "Make it fit"
Origin Greek word"ethos" meaning"character" Latin word"mos" meaning "custom"
Acceptability Ethics are governed by professional and legal guidelines within a particular time and place
Morality transcends cultural norms
• The minimum basis from which we can begin ethical reflection.
• These help us to find common ground between different political, ideological, and cultural views.
• It, thus, provides the basis for a dialogue on the ethical issues that arise in a given practice.
• It does this without forcing consensus or agreement.
The Moral Minimum/Majority
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• International Survey of more than 300 companies worldwide – top ethical issues: – Employee conflict of interest 91% – Inappropriate gifts 91% – Sexual Harassment 91% – Unauthorized Payments 85%
• Wall Street Journal Survey – 1400 working women
• Managers lying • Expense-account abuses • Office nepotism • Taking credit for other’s work
Survey Says….
• WSJ Survey – Unethical behavior by industry – Government: 66% – Sales 51% – Law 40% – Media 38% – Finance 33% – Medicine 21% – Banking 18% – Manufacturing 14%
Survey Says…. (cont.)
MORAL PHILOSOPHIES & SOCIAL RESPONSIBILITY
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• Teleology (Bentham & Mill’s utilitarianism) – Egoism – Utilitarianism
• Deontology – Kant’s categorical imperative
• Relative Perspective – The Golden Rule, laws, etc
• Virtue Ethics – Bravery, generosity, justice, pride, and honesty
Moral Philosophies
• Act is considered morally right or acceptable if it produces desired result, i.e., pleasure, knowledge, career growth, a self-interest, or utility – Bob can go and drink excessively and party
and be late to work the next day and not productive but that is ok since it provided him pleasure and self-worth.
• Assessing the moral worth of a behavior by looking at its consequences (consequentialism)
Teleology
• Egoism: Acceptable behavior in terms of consequences for the individual – Maximize your own self-interest – Concerned with consequences – Seek alternative that contributes the most to self-interests
• Utilitarianism: concern with consequences in terms of seeking the greatest good for the greatest number of people – looking for the greatest benefit for all those
affected by a decision
Teleological Philosophies
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• “Greatest happiness principle” – actions are right in proportion as they
tend to promote happiness; wrong as they tend to produce the reverse of happiness.
• Utilitarians have placed the superiority of mental over bodily pleasures chiefly in the greater permanency, safety, uncostliness, etc.
Utilitarian Theory
• Utilitarianism is committed to the maximization of the good and minimization of harm and evil
• Society ought to produce the greatest balance
• of positive value or minimum balance of negative value for all affected – Cost and benefit analysis – Risk assessment – Management by objectives
• Efficiency is key
Utilitarianism Features
• The act utilitarian believes that each individual action is to be evaluated directly in terms of the utility principle, i.e., consider the consequences of each action. – Will your action generate the greatest amount of
happiness for the greatest number of people involved?
• The rule utilitarian believes that behavior is best evaluated by rules that, if universally followed would lead to the greatest good for the greatest number. – We must consider the consequences of a rule if it
were applied universally.
Act vs. Rule Utilitarianism
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• Ignores distribution of good – is it uniformly distributed or favors specific groups?
• No common definition of what is ‘good’ – personalized.
• Assumes that all can be measured in a common numerical scale – What about the minority?
• Ex: What if society decides that it is in the best interest of the public to deny health insurance to those testing positive for AIDS?
Problems with Utilitarianism
• Focus on the rights of the individual and on the intentions associated with behavior not on the consequences – Believe there are some things we should
not do regardless of the utility
Deontology
Universal Duty
• One should act only on that maxim whereby it should become a universal law of nature applicable to everyone.
• Consequences are regarded as morally irrelevant.
• What matters is respect for the human being.
• People must NOT be treated exclusively as a means to an end
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• Difficult to think of all humanity each time a decision has to be made
• Places emphasis on the welfare of every person, but does not really draw a line (how can you affect the welfare of every person)
• Hard to resolve conflicts when criteria has to treat everyone equally – decisions typically involve conflicts of interests
Weaknesses
• Ethical behavior is defined by experiences of the individual and group – Relativist or significant others are the basis
for defining ethical standards – Beliefs may change over time (i.e.,
advertising in the pharmaceutical industry)
Relative Perspective
Personal Virtue Ethics (Aristotle)
• One should live one’s life virtuously. • Virtues of honesty, openness, pride,
and generosity. • Because these types of behaviors,
when practiced in one’s life, will make it easier for one to know the right thing to do in situations of moral conflict.
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• Consists of: – Trust – Self-control – Empathy – Fairness – Truthfulness
• What is moral is determined by current societal norms
Virtue Ethics
• You are a widget maker graduate from a small town in Mexico and have started working in your first job as a member of a research and development team charged with designing a new generation of widgets for a market leader in this area. The company you work for wants to maintain its leadership. It also wants to respond to the emerging environmental problem caused by the disposal of the widgets used in its current model. However, these widgets are made in your hometown. If the new generation of printers does not use disposable widgets, then this plant will close, putting friends and family out of work. Your company is a leader in empowering its employees.
• Which moral philosophy do you follow? • Apply your philosophy to this case; what should you do
with this newly found power?
Widget Maker Case
1. Resign from the R&D team because you have a conflict of interest 2. Use your position on the team to argue that the company does not need to develop a new generation of printers. In this way guarantee that your friends and family will keep their jobs 3. Sit back and see what the senior members of the team want. Then enthusiastically embrace this 4. Advocate designing a recyclable cartridge that could be manufactured in the hometown plant 5. Design your own solution
Widget Maker Solutions
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• You are the CEO of a company contemplating closing a plant in a city in Nebraska. Your options include: – Close the plant and relocate/fire employees – Keep the plant and continue operations
• Questions – Using utilitarianism, discuss how you reach a
decision and which decision? – Using Universal Duty, discuss rationale and which
decision makes sense? – Using Personal Virtue and Deontology, discuss
rationale and which decision makes sense? – What are some problems with each approach?
Plant Case
• You are the CEO of a company contemplating closing a plant in a city in Nebraska. Your options include: – Close the plant and relocate/fire employees – Keep the plant and continue operations
• Questions – Using egoism – maximize own self interests -
CLOSE – Using utilitarianism – maximize good – which is it? – Using Deontology – do the best – Using Universal Duty – universal law – which is it? – Using Personal Virtue – societal norms – which is
it?
Plant Case
Employer/Employee Rights Employers need to remember that they are obligated to provide employees with a safe work environment that is free from harassment, and this may require what some people consider an invasion of privacy
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Business & Social Responsibilities
• Most successful businesses operate with socially responsible business practices
• Being socially responsible requires companies to integrate the needs of their stakeholders into the values and operations of their organizations
• Stakeholders typically include investors, customers, employees, the community and the environment
• Social responsibility strives to consider all of these needs in their business practices
Identifying Types of Responsibilities
Handling Conflicting Social and Business Responsibilities
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Module Seven: Whistle Blowing
Whistle blowing is either seen as a public service or a petty act of tattle telling. Blowing the whistle is not an easy decision to make. While legally protected, whistleblowers take on serious personal risks by informing on their employers
Criteria and Risk
The Process
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Module Eight: Managerial Ethics
Managers have a responsibility to behave ethically and manage ethically. They set the example for all employees and will determine how effective ethics management can be. Ethical management provides a number of benefits, both to the company culture and financial gain of the organization
Ethical Management
Profit
People
Planet
Principles
Identifying the Characteristics
• The manager behaves with integrity and leads by example. Integrity
• The company and its managers are transparent and do not hide their actions.
Transparency
• The organization and manager considers the happiness of the people involved in the organization.
Utilitarianism
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Ensuring Ethical Behavior
Develop an ethics
management program
Develop a code of ethics
Develop a code of conduct
Create policies and procedures
with ethics in mind
ETHICAL DILEMMAS
• Individual values and the company – Receiving or offering kickbacks – Stealing from the company – Questionable business expenses (T&E) – Confidential information/trade secrets – Utilizing company property for personal use – Conflict of interest
Examples of Ethical Dilemmas
Ethics Law
Frequent Overlap
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• The Company and Individual Rights – Whistle-blower fired – Employee screening vs. privacy – Sexual harassment – Affirmative action – Employee rights – Due process
Examples of Ethical Dilemmas (cont.)
• Business Operations – Workplace safety – Business environment and practices in
other countries(pay-offs, etc.) – Procedures (financial, cash
management) – Environment issues
Examples of Ethical Dilemmas (cont.)
• Federal Sentencing Guidelines for Organizations (FSGO) – Standards and procedures (code of
ethics) – High level oversight – Care in delegation of authority – Effective communication (training) – Systems to monitor, audit and report – Consistent enforcement – Continuous improvement
Legalization of Business Ethics
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• Sexual & racial discrimination
• Human rights
• Price discrimination
• Bribery
• Harmful products
• Pollution
Global Ethical Issues
• U.S. law prohibits American businesses from discriminating on the basis of sex, race, religion, or disabilities in their hiring, firing, & promotion decisions
• Globally, discrimination is culturally embedded in many countries/regions
Sexual & Racial Discrimination
• Concern for the well-being of employees
– Use of child labor
– Payment of low wages
– Abuses in foreign factories
Human Rights
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• Occurs when a firm charges different prices to different groups of customers (these differences are legal if they do not reduce competition, or can be justified on the basis of cost) – eg, gas and water during Hurricane
Katrina
Price Discrimination
• Facilitating payments are acceptable in many cultures
• U.S. law addresses this issue with the Foreign Corrupt Practices Act: – Prohibits American corporations from
offering or providing payments to officials of foreign governments to obtain or retain business abroad
Bribery
• Lack of monitoring and training • Organizational pressure to meet sales
quotas • Belief that bribery is a cost of doing business • Vendor pressures for bribery • Political involvement in decision making • Appreciation • Gaining entrance in to new markets • Displacing major competitors
Causes of Bribery
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• Pesticides • Tobacco products • Dumping of waste materials • Cultural pressures
Harmful Products
• No physical boundaries on the extent of the damage resulting from environmental abuse
• Key concern areas: – carbon dioxide (greenhouse gas) – methane gases – overall water & air quality
Pollution
KEY INFLUENCES ON ETHICAL BEHAVIOR
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• How you grow up • Personal moral and values • Influence of meaningful people (mentors)
– supervisors, parents, family, etc. • Influence of senior management • Personal drive • Performance pressures • Lack of consequences • Law
Key Influences on Ethical Behavior
Other Determinants of Ethical Behavior
• Religious convictions – Reciprocity – Fairness – Charity – Responsibility
• Moral philosophy • Ethical philosophy
• Everybody else does it • If I do not do it, someone else will • It is the way its always been done • Lets wait until someone tell us it is
wrong – Legality has nothing to do with ethical
behavior
• We are not hurting anyone • The system is unfair
The Justification Dynamic
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• Conflict of interest • Do one to others….. • Communication • Organizational relationships
Ethical Issue Types
• Exists when an individual must choose whether to advance his/her own interests, the organization’s, or others’ – Examples include bribes or personal
• Payments, gifts, or special favors intended to influence decision making
Conflict of Interest
• Treat all with honest and fairness • Following applicable laws and
regulations & not knowingly harming stakeholders – Is advertising prescription drugs on TV and
in magazines fair?
Do One to Others…..
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• Transmission of information and the sharing of meaning – Examples: deceptive advertising, product
safety information, & product composition
Communications
• Behavior of organizational members toward stakeholders – Includes confidentiality, meeting
obligations & deadlines, not pressuring others to behave unethically
Organizational Relationships
WHY SHOULD WE BE CONCERNED WITH ETHICS?
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Why Should We Be Concerned With Ethics?
• Laws can be viewed as insufficient and do not cover all aspects or gray areas of a problem
• Free-market and regulated-market mechanisms do not effectively inform owners and managers about how to respond to complex crises
• Cost/benefit • Whatever come around, goes around
COMPLEX ETHICAL DECISIONS
Us Versus Them • A customer asked for a product from
us today. After telling him our price, he said he could not afford it. I know he could get it cheaper from a competitor. Should I tell him about the competitor -- or let him go without getting what he needs? What should I do?"
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• Our company prides itself on hiring minorities. One Hispanic candidate fully fits the job requirements for our open position. We are concerned that our customers will not understand his limited command of the English language. What should I do?
Minority Report
FOUR METHODS TO RESOLVE ETHICAL DILEMMAS
1. The Golden Rule • Do one to others as you would want
others to do to you – Treat all work situations the same as you
would a personal situation – Do you normally fly first class? – Do you normally go to a first class steak
house when out of town?
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• Are you confident that your position will be as valid over a long period of time as it seem now?
• Could you disclose without qualm your decision or action to your boss, your CEO, the board of directors, your family, society as a whole?
• Would you feel comfortable discussing via subpoena?
• How would you feel if the issues was in the newspaper?
2. The Right Questions
• How is the situation perceived by peers? – Does not matter reality; it is how it is spun
and perceived.
• Logic Test – Does this make sense?
• Do not over think the situation – Simplify
3. Perception Can Be Reality
• Not what feels good but right • If you would be embarrassed by it, you
should not do it • You know in your heart what should be
done
4. Do What Feels Right
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Words from the Wise
• A person educated in mind and not morals is a menace to society
Juanita Kidd Stout
• The most important persuasion tool you have in your entire arsenal is integrity
Zig Ziglar
• Divorced from ethics, leadership is reduced to management and politics to mere technique
James MacGregor
Burns
Summary - Ethics is Personal • If you are unsure if it is a problem, it
usually is. • Ethics will always be important,
especially in these trying economic times, which is driving survival and greed.
• Use common sense; if it does not feel right, it probably is not right.