Ethikos Weekly Editor’s Picks – April 1, 2014



Ethikos Weekly Editor’s Picks

Examining ethics and compliance issues in business since 1987

Editor’s Top Choice:

Ethics gone AWOL at Toyota, GM
Mark Willen of Talking Ethics writes, “I was cleaning out some old files today when I came across a seven-year-old article reporting that top business schools were adding more ethics courses in the wake of the 2007 Enron scandal. The article, by Jeffrey MacDonald in the Christian Science Monitor, went on to quote critics saying the courses wouldn’t do much good. Boy, did that turn out to be true.

What could be more depressing than the twin scandals at Toyota and General Motors?

Within days of each other, Toyota agreed to pay a $1.2 billion fine to settle a four-year criminal investigation that found the company had concealed vital information about a defect that caused many of the firm’s top-selling cars to accelerate on their own, while General Motors recalled 1.6 million cars to replace ignition switches that the company has known were faulty for years…” Read more

Other Featured Picks of the Week

Business Ethics: To be an ethical leader, you must learn how to break the rules

From Jim Nortz, contributor to The Business Journals, “As our senior management team settled around the board-room conference table, I called our quarterly compliance committee meeting to order. In accordance with my duties as the company’s chief compliance officer, I opened with a report on the status of various compliance initiatives and issues we were managing.

In the midst of my report, I mentioned that an environmental audit of our chemical manufacturing plant in Brazil revealed that it was operating out of compliance with its air emissions permit. Before I could continue with a description of the emission exceedance and our planned responsive actions, our CEO asked a colleague for a telephone and the number for the plant.

As he began to dial, I asked the CEO what he was doing. He said, ‘You just told me that we are operating in violation of our permit. I am calling the plant to tell them to shut down immediately and to only restart after we know we can run the facility in full compliance with the law.’ I gently pulled the telephone away from the CEO and suggested that we talk about it a bit before he made that call…” Read more

Business ethics in Asia: Lost in translation?Justin Kent, contributor for Forbes writes, “Should companies care about ethical behavior? Does it really make any difference to their bottom line? Simply put, yes. Yes, consumers and stockholders can and do care. And, yes, it does filter through to the bottom line. That was the consensus from a panel consisting of Barry Stowe, CEO of Prudential Corporation Asia, Marjorie Yang, chairman of the Esquel Group, and William E. (Chip) Connor, chairman and CEO of the Connor Group, at the inaugural Asia Ethics Summit held in Hong Kong late last year.

At the behest of their moderator, Turney Stevens, Dean of the College of Business at Lipscomb University, the group elaborated on some of the nuances of managing an ethical business environment in the East versus the West.

The headline issues do not differ, according to Connor. The notions of self-dealing, corruption and theft do not change from place to place. Pollution, for example, is recognized as such virtually everywhere. Approaches to the challenges, however, may differ, but the substance of the challenge remains unchanged. ‘In Asia, the need to preserve a harmonious work environment, to preserve ‘face’ ranks as a high priority,’ he said. ‘This usually demands a less direct approach to the problem. It doesn’t, however, change the problem itself.’” Read more

Yes, business ethics can be measuredLeanne Hoagland of The Post Tribune writes, “When small businesses to even much larger ones look at metrics, one of the very rare and overlooked ones is the adherence to business ethics.

There is documented research from organizations, such as Ethics Resource Center, Gallup and various universities measuring the impact of business ethics or lack thereof on everything from employee morale to the negative impact on workplace productivity. So the reluctance to avoid business ethics as a key metric or key performance indicator (KPI) is illogical.

This begs the question of, ‘How does one measure ethical behavior within the workplace without being viewed as judgmental or worse yet getting sued?’” Read more

Ethical responsibilities of the board of directorsFrom Business Day:

“‘A leader takes people where they want to go. A great leader takes people where they don’t want to go but ought to be’. – Rosalynn Carter, Former First Lady of the United States.

Successful corporate performance is founded on commitment to basic ethical principles aligned as much as possible to the interests of all stakeholders. The corporate failures witnessed in the recent past which resulted in stricter regulatory oversight, have their root in unethical conduct. Ethical responsibility is not limited to conflict of interest and disclosure obligations of Directors as it entails compliance with all relevant laws and regulations.

The role of the Board in overseeing and supporting a strong corporate culture is a fundamental one. It starts with the Board setting the appropriate ‘tone at the top’, which will over and above any documented Code of Ethics, guide ethical behavior in the organization. It also entails the Board defining a set of core ethical values that are infused into policies, processes and practices as well as a formal ethics program…” Read more

Ethics crisis as “robotically compliant” managers stop caring at workFrom the Chartered Management Institute, “Too many managers are robotically following rules rather than making decisions with their hearts and minds, according to new research published today by CMI (the Chartered Management Institute) and MoralDNA™. It warns that workplace cultures dominated by rules, bureaucracy and targets mean that managers are switching off their sense of care for others.

The report, Managers and their MoralDNA, follows City scandals over mis-sold debt, PPI and rate fixing, plus crises in the NHS and the police, damaging public trust and employee engagement alike. It finds that 74%* of managers are at risk of overlooking the impact of their decisions at work on others – 28% more than among the general population…” Read more

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