ETHICS IN BUSINESS:

ETHICS OR ETHICAL

LAW,WHAT COMES

FIRST ?

Ethics/Ethical lawEthics/Ethical law

�� IntroductionIntroduction

�� DefinitionDefinition

�� HistoryHistory

�� ContentContent

�� ExamplesExamples

�� Employee relationshipEmployee relationship

�� Role of Ethics in Employee RelationshipRole of Ethics in Employee Relationship

�� ExamplesExamples

�� SuggestionsSuggestions

�� ConclusionConclusion

Introduction :Introduction :

�� Ethics described by known personalities:Ethics described by known personalities:

�� Ethics is knowing the difference between what Ethics is knowing the difference between what

you have a right to do,and what is the right you have a right to do,and what is the right

thing to dothing to do

�� Justice Potter StewartJustice Potter Stewart

�� It takes less time to do a thing right than to It takes less time to do a thing right than to

explain why you did it wrong.explain why you did it wrong.

�� -- Henry Wadsworth Henry Wadsworth

LongFellowLongFellow

Definition:Definition:

�� The discipline dealing with what is good and bad with The discipline dealing with what is good and bad with moral duty and obligation. moral duty and obligation.

�� (or)(or)

�� A set of moral principles or values.A set of moral principles or values.

�� (or)(or)

�� A theory or system of moral values.A theory or system of moral values.

�� (or)(or)

�� Principles of conduct governing an individual or a group.Principles of conduct governing an individual or a group.

�� (or)(or)

�� A guiding philosophy.A guiding philosophy.

Characteristics:Characteristics:

�� -- Tells people what they ought to do.Tells people what they ought to do.

�� -- Set of Principles or Rules.Set of Principles or Rules.

History:History:�� Business ethics has only existed as an academic field Business ethics has only existed as an academic field

since the 1970s. During the 1960s, corporations found since the 1970s. During the 1960s, corporations found themselves increasingly under attack over unethical themselves increasingly under attack over unethical conduct. As a response to this, corporations conduct. As a response to this, corporations -- most most notably in the US notably in the US -- developed social responsibility developed social responsibility programmes which usually involved charitable donations programmes which usually involved charitable donations and funding local community projects. This practice was and funding local community projects. This practice was mostly ad hoc and unorganised varying from industry to mostly ad hoc and unorganised varying from industry to industry and company to company.industry and company to company.

�� ““A selfA self--aware person will act completely within their aware person will act completely within their capabilities to their pinnacle, while an ignorant person capabilities to their pinnacle, while an ignorant person will flounder and encounter difficulty.will flounder and encounter difficulty.””

-- SocratesSocrates

�� ““SelfSelf--realizationrealization, the awareness of one's nature and the , the awareness of one's nature and the development of one's talents, is the surest path to development of one's talents, is the surest path to happiness.happiness.””

-- AristotleAristotle

Types of ethics:Types of ethics:

�� MetaMeta--ethicsethics::

what the fundamentalwhat the fundamental semantic, ontological semantic, ontological andand epistemicepistemic nature of ethics or morality is.nature of ethics or morality is.

�� Normative EthicsNormative Ethics::

how moral values should be determined.how moral values should be determined.

�� Applied Ethics:Applied Ethics:

how a moral outcome can be achieved in specific how a moral outcome can be achieved in specific situations.situations.

�� Moral Psychology:Moral Psychology:

how moral capacity or moral agency develops and what how moral capacity or moral agency develops and what its nature is.its nature is.

�� Descriptive Ethics:Descriptive Ethics:

what moral values people actually abide by.what moral values people actually abide by.

Why Study Ethics:Why Study Ethics:

Objectives:Objectives:�� -- Describe the code of ethics and professional conduct Describe the code of ethics and professional conduct

and give examples that illustrates its meaningand give examples that illustrates its meaning

�� -- Discuss the steps of the problem solving process for Discuss the steps of the problem solving process for resolving ethical dilemmasresolving ethical dilemmas

�� -- Demonstrate the ability to apply the problem solving Demonstrate the ability to apply the problem solving process to make ethical decisions when faced with a process to make ethical decisions when faced with a variety of challenging ethical dilemmas.variety of challenging ethical dilemmas.

�� -- Explain where to obtain help when ethical dilemmas Explain where to obtain help when ethical dilemmas arise arise

�� -- Describe how to provide support for other personnel Describe how to provide support for other personnel who are facing an ethical dilemmawho are facing an ethical dilemma

�� -- Handle the critical ethics conversations when faced Handle the critical ethics conversations when faced with a dilemma.with a dilemma.

Ground Rules:Ground Rules:

�� -- Respect the opinions of your colleagues.Respect the opinions of your colleagues.

�� -- Keep classroom discussions confidential.Keep classroom discussions confidential.

�� -- Donot discuss any actual live situations Donot discuss any actual live situations

involving company their personnel,their clientsor involving company their personnel,their clientsor

other third parties.other third parties.

�� -- However if you have a specific concern or have However if you have a specific concern or have

witnessed wrong doing the most appropriate witnessed wrong doing the most appropriate

place to raise that issue is to one of the place to raise that issue is to one of the

resources provided by the company.resources provided by the company.

Ethical Principles:Ethical Principles:

�� -- Honesty and Integrity: Employer and Employee should Honesty and Integrity: Employer and Employee should act with Honesty and Integrityact with Honesty and Integrity

�� -- Professional Behaviour: Employer and Employee Professional Behaviour: Employer and Employee operate within the letter and spirit of applicable laws.operate within the letter and spirit of applicable laws.

�� -- Competence: Employer and Employee bring Competence: Employer and Employee bring appropriate skills and capabilities to every client appropriate skills and capabilities to every client assignment.assignment.

�� -- Objectivity: Employer and Employee are objective in Objectivity: Employer and Employee are objective in forming our professional opinions and the advice we forming our professional opinions and the advice we give.give.

Ethical Principles:Ethical Principles:

�� -- Confidentiality: Employer and Employee must respect Confidentiality: Employer and Employee must respect the confidentiality of informationthe confidentiality of information

�� -- Fair business practices: Employer and Employee are Fair business practices: Employer and Employee are committed to fair business practices.committed to fair business practices.

�� -- Responsibility to Society: Employer and Employee Responsibility to Society: Employer and Employee recognize and respect the impact we have on the world recognize and respect the impact we have on the world around us.around us.

�� -- Respect and fair treatment: Treat all our colleagues Respect and fair treatment: Treat all our colleagues with respect, courtesy and fairness .with respect, courtesy and fairness .

�� -- Accountability and Decision Making: Employer and Accountability and Decision Making: Employer and Employee lead by examples using our shared values as Employee lead by examples using our shared values as our foundation.our foundation.

How Business Ethics is different from How Business Ethics is different from

social issues:social issues:

1. Business ethics provided an ethical framework for evaluating1. Business ethics provided an ethical framework for evaluatingbusiness and the corporate world.business and the corporate world.

2. It allowed critical analysis of business and development of 2. It allowed critical analysis of business and development of new and new and different methods. (This also made business ethicists unpopular different methods. (This also made business ethicists unpopular in in certain circles.) certain circles.)

3. Business ethics fused personal and social responsibility tog3. Business ethics fused personal and social responsibility together and ether and gave it a theoretical foundation. In this way, business ethics hgave it a theoretical foundation. In this way, business ethics had a ad a somewhat broader remit than its predecessor (the social issues somewhat broader remit than its predecessor (the social issues course) and was a good deal more systematic and constructive. course) and was a good deal more systematic and constructive. Business ethics also recognised that the world of business raiseBusiness ethics also recognised that the world of business raised d new and unprecedented moral problems not covered by personal new and unprecedented moral problems not covered by personal systems of morality. Commonsystems of morality. Common--sense morality is sufficient to govern sense morality is sufficient to govern judgments about stealing from your employer, cheating customers judgments about stealing from your employer, cheating customers and tax fraud. It could not provide all the necessary tools for and tax fraud. It could not provide all the necessary tools for evaluating moral justification of affirmative action, the right evaluating moral justification of affirmative action, the right to strike to strike and whistleand whistle--blowing.blowing.

�� Is It Legal Test?Is It Legal Test?

Quadrant IIEthical and Illegal

Quadrant IVUnethical and Illegal

Quadrant IEthical and Legal

Quadrant IIIUnethical and Legal

Ethical

Unethical

LegalIllegal

Codification

Manifestation

Corporate Decisions

�� Is it legal?Is it legal?

�� I Ethical I Ethical –– LegalLegal

�� II Ethical II Ethical –– IllegalIllegal

�� III Unethical III Unethical –– LegalLegal

�� IV Unethical IV Unethical –– IllegalIllegal

��

�� I and IV EasyI and IV Easy

�� II and III DifficultII and III Difficult

EmployeeEmployee--Employer Relationship:Employer Relationship:

Responsibilities of an EmployeeResponsibilities of an Employee

�� 1. A Duty to know, understand and comply, it is the duty of all 1. A Duty to know, understand and comply, it is the duty of all firm firm personnel to know, understand and comply with the code of ethicspersonnel to know, understand and comply with the code of ethicsand professional conduct. and professional conduct.

�� 2. A Duty to report.2. A Duty to report.

-- the ethics and compliance program is designed to educate and the ethics and compliance program is designed to educate and foster an atmosphere where open communication of ethics and foster an atmosphere where open communication of ethics and compliance inquiries and issues is encouraged and to provide alcompliance inquiries and issues is encouraged and to provide all l personnel with a reasonable understanding of how to identify anpersonnel with a reasonable understanding of how to identify and d report potential violations.report potential violations.

�� 3. Where to go for help and how to report3. Where to go for help and how to report

-- for assistance with ethics and compliance matters and to reportfor assistance with ethics and compliance matters and to reportpotential violations employee should contact his/her Supervisor potential violations employee should contact his/her Supervisor or or Office or Regional Leader.Office or Regional Leader.

Code of Ethics and Professional Conduct Code of Ethics and Professional Conduct

for Employees:for Employees:

They mainly depend on the followingThey mainly depend on the following

�� a. the shared values of any Organization are as follows integrita. the shared values of any Organization are as follows integrityy

�� Outstanding Value to clientsOutstanding Value to clients

�� Commitment to each otherCommitment to each other

�� Strength from cultural diversityStrength from cultural diversity

�� In complying with the above standards,employee should ask In complying with the above standards,employee should ask himself/herself the following questions to aid in making the righimself/herself the following questions to aid in making the right ht decision about a possible course of actionsdecision about a possible course of actions

�� Are my actions illegal or unethical?Are my actions illegal or unethical?

�� Am I being Fair and Honest?Am I being Fair and Honest?

�� Put someones life health safety or reputation be endangered by Put someones life health safety or reputation be endangered by my action?my action?

b. Sustaining the Public Trustb. Sustaining the Public Trust

�� IntegrityIntegrity-- a core valuea core value

�� Quality of work productQuality of work product

�� Independence and Objectivity of professional advice and Independence and Objectivity of professional advice and conclusionsconclusions

�� Responsibility to society and community involvementResponsibility to society and community involvement

�� rendering high quality professional services with the utmost intrendering high quality professional services with the utmost integrityegrity

�� providing a work place that contributes to the professional growproviding a work place that contributes to the professional growth th development and personal success of our people.development and personal success of our people.

�� Helping others and sharing is simply the right thing to do Helping others and sharing is simply the right thing to do

�� Community Involvement is a manifestation of our shared values.Community Involvement is a manifestation of our shared values.

�� Healthy Community depends on the active involvement of all who Healthy Community depends on the active involvement of all who live and work therelive and work there

�� Community involvement helps people become better professionals Community involvement helps people become better professionals by enhancing their skills and leadership abilities outside the by enhancing their skills and leadership abilities outside the workplaceworkplace

�� Truth in CommunicationsTruth in Communications

�� Respect for CompetitionRespect for Competition

�� Records Accuracy and managementRecords Accuracy and management

Fulfilling Obligations to ClientsFulfilling Obligations to Clients

�� Independence from clients Independence from clients

�� Scope of services Scope of services

�� Billing for Professional servicesBilling for Professional services

�� Confidential and proprietary informationConfidential and proprietary information

�� disclosure of confedential client information is prohibited to disclosure of confedential client information is prohibited to

�� anyone who works outside the clientanyone who works outside the client’’s organization s organization

�� anyone within client organization without a need to knowanyone within client organization without a need to know

�� anyone within the company or other firms unless there is legal oanyone within the company or other firms unless there is legal or r professional right or duty to disclose or a written client conseprofessional right or duty to disclose or a written client consent has nt has been obtained. been obtained.

�� Insider tradingInsider trading

�� Gifts and entertainmentGifts and entertainment

�� Professional Competence and due careProfessional Competence and due care

�� Supplier Contractor and alliance partner relationshipsSupplier Contractor and alliance partner relationships

Meeting Commitments to Each Other Meeting Commitments to Each Other

EmployeeEmployee--EmployerEmployer--ClientClient--Customer:Customer:

�� Honesty and trustHonesty and trust

�� Diversity and InclusionDiversity and Inclusion

�� Respect and fair treatmentRespect and fair treatment

�� Consultation Consultation

�� Conflicts of nterestConflicts of nterest

�� Licensure and professional certificationsLicensure and professional certifications

�� Personal relationshipsPersonal relationships

�� Health safety and environmentHealth safety and environment

�� Communication SystemsCommunication Systems

�� Use of Company AssetsUse of Company Assets

�� Policies and ProceduresPolicies and Procedures

Employee Rights / DutiesEmployee Rights / Duties

�� Individuality; Privacy; Freedom of conscience; Right to report Individuality; Privacy; Freedom of conscience; Right to report wrong.wrong.

�� Individuals Join and leave the firm through contracts.Individuals Join and leave the firm through contracts.

�� Every employee is an agent of the firm.Every employee is an agent of the firm.

�� He/She is to accept the purpose and structure of the firm in reHe/She is to accept the purpose and structure of the firm in return for a turn for a wage.wage.

�� EmployeeEmployee’’s primary moral obligation is to obey the employer.s primary moral obligation is to obey the employer.

�� Right to participate in management and to organize.Right to participate in management and to organize.

�� The employee must work for the achievement of the goals of the The employee must work for the achievement of the goals of the organization and not for his personal interest.organization and not for his personal interest.

�� An employee is to remain impartial (benefit thecorporation) if aAn employee is to remain impartial (benefit thecorporation) if a conflict of conflict of interest arises.interest arises.

�� The individual employee must expect to be treated withconcern anThe individual employee must expect to be treated withconcern and d respect.respect.

�� He/She should be paid a fair wage.He/She should be paid a fair wage.

�� That wage should be freely accepted by the employee,and not forcThat wage should be freely accepted by the employee,and not forced upon ed upon him.him.

�� Job design should aim at increasing meaningfulness,responsibilitJob design should aim at increasing meaningfulness,responsibility and y and consequential awareness of employees.consequential awareness of employees.

Employer Rights / DutiesEmployer Rights / Duties

�� The employer is to provide remuneration for the services of the The employer is to provide remuneration for the services of the employee.employee.

�� An Employer cannot pay a wage below the An Employer cannot pay a wage below the ‘‘minimum levelminimum level’’determined (not by state but) by state support payments to the determined (not by state but) by state support payments to the unemployed.unemployed.

�� Legislation has been institutionalized in most capitalist countrLegislation has been institutionalized in most capitalist countries that ies that requires the employers to have a minimum health and safety requires the employers to have a minimum health and safety standards (at the work place).standards (at the work place).

�� The Employer should not force the employee into accepting a wageThe Employer should not force the employee into accepting a wage..

�� The employer should adequately compensate the employee for the The employer should adequately compensate the employee for the risk taken.risk taken.

�� The employee doesnThe employee doesn’’t elect the manager (employer) and therefore t elect the manager (employer) and therefore has no rights to limit his authority.has no rights to limit his authority.

Capitalist Organization are dedicated to Capitalist Organization are dedicated to

profitprofit\\wellbeing maximisation.wellbeing maximisation.

�� There are conflicts between Individuals and groups within the cThere are conflicts between Individuals and groups within the capitalist apitalist organization,organization,

�� –– Individuals are pursuing their own interest.Individuals are pursuing their own interest.

�� –– Different views regarding profit maximization.Different views regarding profit maximization.

�� –– Different views about the strategy of the firm so the firm syncDifferent views about the strategy of the firm so the firm synchronies with hronies with the national strategy.the national strategy.

�� Individual seeking for prestige and power doesn't perceive the Individual seeking for prestige and power doesn't perceive the best interest best interest of the organization.of the organization.

�� •• Typical selfTypical self--promotional tactics are:promotional tactics are:

�� –– Blaming others for failures.Blaming others for failures.

�� –– Denying information to others.Denying information to others.

�� –– Promotion of onePromotion of one’’s ideas and interests.s ideas and interests.

�� –– Image building of himselfImage building of himself

�� –– Ingratiation and flatiery.Ingratiation and flatiery.

�� –– Creating networks of mutual obligations.Creating networks of mutual obligations.

�� –– Acquiring control over scarce resources.Acquiring control over scarce resources.

�� Using political tactics is justified in utilitarian point of vieUsing political tactics is justified in utilitarian point of view if it contributes to w if it contributes to increasing efficiency and wellbeing.increasing efficiency and wellbeing.

•• It is unethical on utilitarian grounds if it has been practicedIt is unethical on utilitarian grounds if it has been practiced for achieving for achieving personal goals and it damages the organization.personal goals and it damages the organization.

�� •• An employee has a utilitarian duty not to participate in such pAn employee has a utilitarian duty not to participate in such practices.ractices.

�� Political tactics which exploit others emotions are unethical onPolitical tactics which exploit others emotions are unethical on Kantian Kantian grounds, unless it has been voluntarily accepted by all members.grounds, unless it has been voluntarily accepted by all members.

•• The use of these tactics are unethical if,The use of these tactics are unethical if,

�� –– The person doesnThe person doesn’’t accept participation.t accept participation.

�� –– If he doesnIf he doesn’’t has any other option except leaving the firm.t has any other option except leaving the firm.

�� –– He canHe can’’t use the same tactics against you.t use the same tactics against you.

According to ethics of care,According to ethics of care,

�� –– Firms may be seen as networks of relationships bFirms may be seen as networks of relationships b\\w individuals therefore w individuals therefore a caring organization should focus on the nurturing a caring organization should focus on the nurturing of personal of personal relationships.relationships.

�� –– Authors of business ethics argue that caring firms also have hiAuthors of business ethics argue that caring firms also have high level of gh level of efficiency.efficiency.

�� –– But there should be a balance.But there should be a balance.

Downsizing And The Employment Downsizing And The Employment

Contract:Contract:

�� Employees are loosing their jobs due to privatization and downsiEmployees are loosing their jobs due to privatization and downsizing .zing .

�� Business ethics recognizes that employees are not free to chooseBusiness ethics recognizes that employees are not free to choose..

�� If the workers are loyal to organization they have a right to exIf the workers are loyal to organization they have a right to expect fair pect fair treatment.treatment.

�� Due process gives right to employee to present his point of viewDue process gives right to employee to present his point of view..

�� Business ethics recognizes the moral rights of employees which sBusiness ethics recognizes the moral rights of employees which should be hould be taken into account when downsizing:taken into account when downsizing:

�� Workers should be informed of decisions.Workers should be informed of decisions.

�� Representative of workers should be allowed to participate in thRepresentative of workers should be allowed to participate in the above e above decisions.decisions.

�� The cost should in principle be borne by the ownersThe cost should in principle be borne by the owners

�� The contractual rights of employees should be fully respected.The contractual rights of employees should be fully respected.

�� Workers should also be financially compensated.Workers should also be financially compensated.

�� WorkersWorkers’’ right to participate in the above decision should also be right to participate in the above decision should also be recognized.recognized.

Examples, scandal, frauds,scams:Examples, scandal, frauds,scams:

�� In recent years there have been several business In recent years there have been several business scandals that caused serious damage to the credibility of scandals that caused serious damage to the credibility of the companies involved, occasionally the entire industry the companies involved, occasionally the entire industry in which they operate, and the numerous stakeholders of in which they operate, and the numerous stakeholders of the business. One such example is the collapse of the business. One such example is the collapse of Barings Bank Barings Bank -- the actions of one rogue trader incurred the actions of one rogue trader incurred losses of almost US$1 billion. It has been discovered that losses of almost US$1 billion. It has been discovered that many high profile people (at home and abroad) are many high profile people (at home and abroad) are involved in taxinvolved in tax--evasion, insider trading and fraud, Charlie evasion, insider trading and fraud, Charlie Haughey and Martha Stewart are two such examples of Haughey and Martha Stewart are two such examples of people with considerable wealth and public standing who people with considerable wealth and public standing who have been involved in questionable business dealings.have been involved in questionable business dealings.

The Whistleblowers:The Whistleblowers:Time MagazineTime Magazine’’s 2002 Persons of the Years 2002 Persons of the Year

•Cynthia Cooper of Worldcom

•Coleen Rowley of the FBI

•Sherron Watkins of Enron

Cynthia Cooper of WorldComCynthia Cooper of WorldCom

�� Cynthia Cooper was ViceCynthia Cooper was Vice--president of MCI internal audit. president of MCI internal audit. During a 2002 audit, Cooper discovered that some of During a 2002 audit, Cooper discovered that some of WorldCom's financial practices were shady. The WorldCom's financial practices were shady. The company had been classifying operating costs as capital company had been classifying operating costs as capital expenditures, thereby inflating its profits. She took her expenditures, thereby inflating its profits. She took her findings to the audit committee of WorldCom's board. findings to the audit committee of WorldCom's board. Within days, the board fired WorldCom's highWithin days, the board fired WorldCom's high--flying CFO, flying CFO, Scott Sullivan, and revealed that the company had Scott Sullivan, and revealed that the company had overstated its profits by what ultimately proved to be overstated its profits by what ultimately proved to be $11 billion. It was the biggest fraud in U.S. corporate $11 billion. It was the biggest fraud in U.S. corporate history. WorldCom declared bankruptcy in July 2002, history. WorldCom declared bankruptcy in July 2002, after its stock's value had declined by $180 billion and its after its stock's value had declined by $180 billion and its founder, Bernard Ebbers, had left the company.founder, Bernard Ebbers, had left the company.

Coleen Crowley of the FBIColeen Crowley of the FBI

�� Coleen Rowley was chief counsel of the FBI's Coleen Rowley was chief counsel of the FBI's Minneapolis field office. In a 13Minneapolis field office. In a 13--page memo, she page memo, she outlined how FBI headquarters thwarted agents' outlined how FBI headquarters thwarted agents' attempts to investigate Zacarais Moussaoui, the alleged attempts to investigate Zacarais Moussaoui, the alleged 20th hijacker. The 20th hijacker. The ““bombshell memobombshell memo”” led bureau chief led bureau chief Robert Mueller to reorganize the agency. Rowley Robert Mueller to reorganize the agency. Rowley testified before the Senate Judiciary Committee about testified before the Senate Judiciary Committee about the FBI bureaucracy that frustrates agents' attempts at the FBI bureaucracy that frustrates agents' attempts at innovative investigation and mires them in paperwork. innovative investigation and mires them in paperwork.

Sherron Watkins of EnronSherron Watkins of Enron

�� Sherron Watkins was vice president, Enron Corp. An Sherron Watkins was vice president, Enron Corp. An accountant, she tried to warn Enron chairman Ken Lay in accountant, she tried to warn Enron chairman Ken Lay in a sixa six--page memo that the financial partnerships set up page memo that the financial partnerships set up by the huge Houston energy company would prove by the huge Houston energy company would prove disastrous and potentially destroy Enron. After meeting disastrous and potentially destroy Enron. After meeting with Lay, Watkins says Lay assured her "that he would with Lay, Watkins says Lay assured her "that he would look into my concerns." But Lay only asked Vinson & look into my concerns." But Lay only asked Vinson & Elkins, Enron's outside law firm, to investigate. Nothing Elkins, Enron's outside law firm, to investigate. Nothing happened. Enron declared bankruptcy. Since she lived in happened. Enron declared bankruptcy. Since she lived in Texas where whistleblowers are not protected by law. Texas where whistleblowers are not protected by law. She was demoted 33 floors from her mahogany She was demoted 33 floors from her mahogany executive suite to a "skanky office" with a rickety metal executive suite to a "skanky office" with a rickety metal desk and a pile of makedesk and a pile of make--work projects. Then she quit. work projects. Then she quit.

�� HealthSouth CorporationHealthSouth Corporation (NYSE:(NYSE: HLS), based in HLS), based in Birmingham, Alabama, is one of the US largest Birmingham, Alabama, is one of the US largest healthcare services providers. Best known for its healthcare services providers. Best known for its rehabilitation services, HealthSouth has more than 200 rehabilitation services, HealthSouth has more than 200 facilities in United States and Puerto Rico. The company facilities in United States and Puerto Rico. The company operates 100 inpatient rehabilitation hospitals, 15 longoperates 100 inpatient rehabilitation hospitals, 15 long--term acute care hospitals, 60 outpatient rehabilitation term acute care hospitals, 60 outpatient rehabilitation satellites facilities and 25 home health agencies. satellites facilities and 25 home health agencies. HealthSouth was involved in a corporate accounting HealthSouth was involved in a corporate accounting scandal in which its Chief Executive Officer, Richard M. scandal in which its Chief Executive Officer, Richard M. Scrushy, was accused of directing company employees Scrushy, was accused of directing company employees to falsely report grossly exaggerated company earnings to falsely report grossly exaggerated company earnings in order to meet stockholder expectations.in order to meet stockholder expectations.

�� At the company's height, it recorded nearly $4.4 billion At the company's height, it recorded nearly $4.4 billion in revenue, dominated the rehabilitation services market in revenue, dominated the rehabilitation services market and employed more than 50,000 people at 2,000 and employed more than 50,000 people at 2,000 facilities in every state of the U.S. along with its facilities facilities in every state of the U.S. along with its facilities in the United Kingdom, Canada, Australia, Puerto Rico in the United Kingdom, Canada, Australia, Puerto Rico and Saudi Arabia.and Saudi Arabia.

Suggestions:Suggestions:

�� How To Stop Unethical BehaviorHow To Stop Unethical Behavior

�� A combination of external regulations and compliance programs anA combination of external regulations and compliance programs and d voluntary corporate ethics programs is the most effective way tovoluntary corporate ethics programs is the most effective way to combat combat inappropriate corporate behavior (Trevino, Weaver, Gibson, & Tofinappropriate corporate behavior (Trevino, Weaver, Gibson, & Toffler, fler, 1999). 1999).

�� External RegulationsExternal Regulations

�� SarbanesSarbanes--Oxley Act (SOX)Oxley Act (SOX)�� Requires CEOs and CFOs to sign statements making them personallyRequires CEOs and CFOs to sign statements making them personally responsible responsible

for the accuracy of the quarterly financial statements for the accuracy of the quarterly financial statements

�� Knowingly misrepresenting the financials opens them up to punishKnowingly misrepresenting the financials opens them up to punishments ments including fines and jail time including fines and jail time

�� Protection for whistleblowers Protection for whistleblowers

�� Other external regulations include regulations related to:Other external regulations include regulations related to:�� Minimum wageMinimum wage

�� Overtime compensation Overtime compensation

�� Discrimination Discrimination

�� Health and SafetyHealth and Safety

�� PrivacyPrivacy

Organizational ResponsesOrganizational Responses

�� Codes of ethics including:Codes of ethics including:�� Explicit standards of rules to be followedExplicit standards of rules to be followed

�� Corporate values statementsCorporate values statements

�� Explicit standards define precisely acceptable and Explicit standards define precisely acceptable and unacceptable conduct such as accepting gifts and the unacceptable conduct such as accepting gifts and the amount allowableamount allowable

�� Guidelines for Fostering an Ethical CultureGuidelines for Fostering an Ethical Culture

�� Have a well developed policy and procedures manual Have a well developed policy and procedures manual

�� Enforce policiesEnforce policies

�� Reward complianceReward compliance

�� Recruit ethical employeesRecruit ethical employees

�� Create a division to oversee ethicsCreate a division to oversee ethics

Conclusion:Conclusion:

We conclude with a lovely little puzzle suggested by Donald GottWe conclude with a lovely little puzzle suggested by Donald Gotterbarn.43erbarn.43

There are clearly many devices that have had a significant impacThere are clearly many devices that have had a significant impact on society overt on society over

the centuries. The invention of the printing press was a pivotalthe centuries. The invention of the printing press was a pivotal event in the historyevent in the history

of the transmission of culture, but there is no such thing as Prof the transmission of culture, but there is no such thing as Printinginting--press Ethics.press Ethics.

The locomotive revolutionized the transportation industry, but tThe locomotive revolutionized the transportation industry, but there is no suchhere is no such

thing as Locomotive Ethics. The telephone forever changed the wathing as Locomotive Ethics. The telephone forever changed the way wey we

communicate with other human beings, but there is no such thing communicate with other human beings, but there is no such thing as Telephoneas Telephone

Ethics. The tractor transformed the face of agriculture around tEthics. The tractor transformed the face of agriculture around the world, but therehe world, but there

is no such thing as Tractor Ethics. The automobile has made it pis no such thing as Tractor Ethics. The automobile has made it possible for us toossible for us to

work at great distances from our local neighborhoods, but there work at great distances from our local neighborhoods, but there is no such thing asis no such thing as

Commuter Ethics.Commuter Ethics.

Then why should there be Employee Then why should there be Employee

Ethics?Ethics?

�� Abdul HafizAbdul Hafiz --hafizj@gmail.comhafizj@gmail.com

�� Mohammed Imran Mohammed Imran --imran2385@gmail.comimran2385@gmail.com