Focus Question: How important a role should ethics play in running a business?

Transcription

1 L E S S O N 1 7 : B U S I N E S S E T H I C S The business f America is business. Calvin Clidge Fcus Questin: Hw imprtant a rle shuld ethics play in running a business? Objectives Students will be able t: Discuss sme f the recent ethics scandals invlving U.S. cmpanies. Analyze suggestins fr creating a mre ethical business envirnment. Examine an existing cde f ethics adpted by ne business. Prpse a mdel cde f ethics fr their VE firm. Standards NES: 4 ELA: 1,2,3 Time Frame/Ntes t Teacher One day, duble perid Teaching Strategies I. What Wuld Yu D? As hmewrk prir t this lessn, distribute Wrksheet 17A, What Wuld Yu D? As part f the intrductry discussin t this lessn, have students explain their answers t the fllwing: Hw did yu answer these questins? T what extent wuld actual businesspeple answer these questins the same way? Hw cncerned shuld we be abut the ethics f American businesspeple as a whle? What issues d these questins raise fr discussin? II. Timeline f the Tyc Internatinal Scandal Distribute Wrksheet 17B, Timeline f the Tyc Internatinal Scandal. Have students explain their answers t the fllwing: What d we learn abut business ethics frm this newspaper article? What is yur reactin t this stry? Hw can yu explain these unethical actins n the part f business peple? T what extent is the lack f business ethics reprted in these stries typical f the way mst business peple act? III. Rebuilding Cmpany Ethics: Distribute Wrksheet 17C, Rebuilding Cmpany Ethics: A Five-Pint Agenda. Have students explain their answers t the fllwing: What are sme f the ideas expressed by the authr abut hw t make cmpanies behave mre ethically? What s yur reactin t his ideas? With which d yu agree mst? Hw wuld yu as the leader f a crpratin react t this article? What are sme f the suggestins yu gave as t hw t incrprate the ideas in this article int yur VE firm? Distribute Wrksheet 17D, United Technlgies Crpratin -- Crprate Principles. Have students cmplete the exercise n the wrksheet. Then, as part f the whle-class discussin, have them explain their answers t the fllwing: What s yur reactin t this cde f ethical principles? Which f these is mst imprtant? Which f these principles is mst difficult t implement? Hw shuld thse wh vilate crprate ethics cdes be punished? Summary/Assessment: Research a current cmpany/persn (such as, Martha Stewart, Enrn, Adelphia Cmmunicatins, WrldCm) that has been in the news ver the past few years because f an ethical scandal. Prepare a reprt answering the fllwing questins. Wh/What cmpany was invlved? What was the issue/scandal? What was the utcme?

2 Wrksheet 17A What Wuld Yu D? The business f America is business. Calvin Clidge Exercise. Tell whether yu agree with the three statements belw as members f yur VE leadership team by placing an X in ne f the three bxes t the right. Explain yur answer belw, discussing hw yu believe mst peple wh run actual businesses wuld respnd. Questins Agree Disagree Nt Sure 1. In setting prices, yur majr cncern shuld be maximizing prfits r keeping the prduct affrdable fr custmers wh need it badly. Explanatin: 2. Is it better t exaggerate the quality f yur prduct rather than lse a sale. Explanatin: 3. In paying taxes, yu shuld pay exactly what yu are suppsed t rather than trying t get away with whatever yu can. Explanatin:

3 Wrksheet 17B The business f America is business. Calvin Clidge Timeline f the Tyc Internatinal scandal Key dates and events that led t the cnvictins f frmer Tyc CEO L. Dennis Kzlwski and CFO Mark Swartz: March 13, 2001: Tyc annunces $9.2 billin cash and stck deal t purchase the CIT Grup, a cmmercial finance cmpany. Tyc directr Frank Walsh helps arrange the deal. Dec. 5, 2001: Tyc shares clse at a high f $59.76 n the New Yrk Stck Exchange. Jan. 14, 2002: Business Week magazine lists Tyc CEO L. Dennis Kzlwski as ne f the tp 25 crprate managers f Jan. 22, 2002: Kzlwski annunces plans t split Tyc int fur independent, publicly traded cmpanies. The annuncement starts a slide in the price f Tyc shares. Jan. 29, 2002: Tyc shares drp sharply, ne day after the cmpany filed a prxy reprt with the Securities and Exchange Cmmissin disclsing that Walsh gt a $10 millin fee n the CIT Grup deal, and that anther $10 millin went t a charity where he was a directr. Jan. 30, 2002:The New Yrk Times reprts that Kzlwski and Tyc CFO Mark Swartz sld mre than $100 millin f their Tyc stck the previus fiscal year despite public statements that they rarely sld their stck. Kzlwski and Swartz say they will buy 1 millin shares with their wn mney. June 3, 2002: Kzlwski resigns unexpectedly as The New Yrk Times reprts he is the subject f a sales tax evasin investigatin by Manhattan District Attrney Rbert Mrgenthau's ffice. June 4, 2002: Mrgenthau annunces a criminal indictment accusing Kzlwski f cnspiring t evade mre than $1 millin in state and city sales tax n fine art purchases. Sept. 12, 2002: Mrgenthau annunces a criminal indictment accusing Kzlwski and Swartz f enterprise crruptin fr allegedly stealing mre than $170 millin frm Tyc and btaining $430 millin by fraud in the sale f cmpany shares. Frmer Tyc crprate cunsel Mark Belnick is charged separately with falsifying recrds t cnceal mre than $14 millin in cmpany lans. Dec. 17, 2002: Frmer Tyc bard member Frank Walsh pleads guilty in an alleged scheme t hide the $20 millin in fees fr the CIT Grup deal. Oct. 7, 2003: The first trial f Kzlwski and Swartz begins with pening statements in which prsecutrs characterize them as crime bsses wh lted Tyc. Defense lawyers call them hnest executives wh deserved and disclsed all crprate payments and perks. Oct. 28, 2003: The jury is shwn a vide f a birthday party Kzlwski threw fr his wife at a resrt in Sardinia. Tyc paid rughly half the $2 millin cst f the event, which featured entertainers clad in tgas and an appearance by singer Jimmy Buffett.

4 Wrksheet 17B, page 2 Nv. 25, 2003: Prsecutrs shw the jury a vide f the $6,000 shwer curtain and ther lavish furnishings that decrated Kzlwski's Tyc-wned apartment in Manhattan. April 2, 2004: A mistrial is declared after a jurr says she received a letter pressuring her t cnvict Kzlwski and Swartz. Sme bservers said the jurr, Ruth Jrdan, had previusly appeared t make an "O.K." sign t defense lawyers. She subsequently denied making any gesture tward the defense team. July 15, 2004: In a separate trial, frmer Tyc crprate cunsel Mark Belnick is acquitted f charges that he received millins in lans frm the cmpany and failed t disclse the payments. Jan. 26, 2005: The secnd trial f Kzlwski and Swartz begins with pening statements in which prsecutrs switch tactics t fcus n mney the tw allegedly stle frm Tyc. They d nt mentin Kzlwski's $6,000 shwer curtain r the Sardinia birthday party fr his wife. April 27, 2005: Kzlwski, wh did nt testify at his first trial, takes the stand and testifies that the millins f dllars in Tyc payments and perks he received had been prperly authrized and disclsed. June 17, 2005: A Manhattan jury finds Kzlwski and Swartz guilty f stealing mre than $150 millin frm Tyc. They each culd face 25 years in prisn. Surce: USA TODAY research Find this article at:

5 Wrksheet 17C Rebuilding Cmpany Ethics: A Five-Pint Agenda Exercise. Read the article belw and write a respnse t the mem that fllws. The business f America is business. Calvin Clidge T build an ethical, excellent business enterprise successfully, serius attentin must be given t five interrelated principles: 1. Mtivatin T build an ethical enterprise, everyne, frm the Bard f Directrs thrugh executive management t emplyees at all levels, must understand and embrace the belief that: 1) we must take ethics very seriusly 2) there are substantial csts f ethical neglect and 3) there are imprtant benefits f sund ethics. 2. Missin Each cmpany needs an inspiring and shared missin that can mbilize peple tward ethics and excellence. Ethical values and principles must be understd as integral aspects f all strategies and plans t achieve the cmpany missin. 3. Culture Culture refers t the characteristic traits, habits, and custms that define the rganizatin. In each firm there must be a healthy "value-embedded culture," Withut such a culture, ethical decisins and practices are endangered. Just as a physically weak, ut-f-shape sprts team cannt successfully carry ut even the mst brilliantly cnceived set f plays, s an ethically weak cmpany culture cannt live up t its stated principles and its cde f ethics. 4. Practices When a cmpany has addressed its mtivatin, missin, and culture, it is time t ask what the cmpany actually "des." What are the basic practices f the cmpany? What are the primary activities, behavirs, and prcesses undertaken as the cmpany pursues its missin? Here is where cmpanies need actin-guiding rules and principles ften stated in the frm f a cde f ethics. When principles have a nice "fit" with basic business practices and activities, they are nt viewed as a set f rules telling us what we cannt d but rather as a set f plays helping us get int the end zne. 5. Dilemmas Even in the best f circumstances, hard cases and crises in business are ging t arise. An exclusive emphasis n crisis-reslutin, "damage-cntrl" ethics is a mistake because it allws negative challenges and crises t set the ethics agenda and fails t mve upstream t deal with the surces f these challenges. Nevertheless, ethical dilemmas and challenges are inescapable and ethically healthy cmpanies must put in place a ready, effective truble-shting and crisis-reslutin methd. Adapted frm Permissin pending. T: All VE Emplyees Frm: Bard f Directrs Subject: Business Ethics MEMORANDUM On a separate sheet f paper, please cmment n this article abut business ethics. Hw can we incrprate these ideas int ur VE firm?

6 Wrksheet 17D United Technlgies Crpratin Crprate Principles The business f America is business. Calvin Clidge Exercise. Read this statement f crprate principles. Write the letters MI in frnt f the principle that yu believe is mst imprtant and a MD in frnt f the ne mst difficult t put int place. nited Technlgies is cmmitted t the highest standards f ethics and business cnduct. This encmpasses ur relatinship with ur custmers, ur suppliers, ur sharewners, ur cmpetitrs, the cmmunities in which we perate, and with each ther as emplyees at every rganizatinal level. These cmmitments and the respnsibilities they entail are summarized here. 1) Our Custmers: Our primary respnsibility is t thse wh use ur prducts and services. We are cmmitted t prviding high quality and value, fair prices and hnest transactins. We will deal bth lawfully and ethically with all ur custmers. 2) Our Emplyees: We are cmmitted t treating ne anther fairly and t maintaining emplyment practices based n equal pprtunity fr all emplyees. We will respect each ther's privacy and treat each ther with dignity and respect irrespective f age, race, clr, sex, religin, r natinality. We are cmmitted t prviding safe and healthy wrking cnditins and an atmsphere f pen cmmunicatin fr all ur emplyees. 3) Our Suppliers: We are cmmitted t dealing fairly with ur suppliers. We will emphasize fair cmpetitin, withut discriminatin r deceptin, in a manner cnsistent with lng-lasting business relatinships. 4) Our Sharewners: We are cmmitted t prviding a superir return t ur sharewners and t prtecting and imprving the value f their investment thrugh the prudent utilizatin f crprate resurces and by bserving the highest standards f legal and ethical cnduct in all ur business dealings. 5) Our Cmpetitrs: We are cmmitted t cmpeting vigrusly and fairly fr business and t basing ur effrts slely n the merits f ur cmpetitive fferings. 6) Our Cmmunities: We are cmmitted t being a respnsible crprate citizen f the wrldwide cmmunities in which we reside. We will abide by all natinal and lcal laws, and we will strive t imprve the well-being f ur cmmunities thrugh the encuragement f emplyee participatin in civic affairs and thrugh crprate philanthrpy. Permissin pending.