As part of a "short course" on introductory business ethics, Center Executive Director Kirk O. Hanson explores the question, "Am I responsible?" The video offers five tests for business people to determine whether, in any particular case, they are responsible for acting.
Three CEOs from high tech companies talked about "tone at the top," and how leadership can impact the ethical culture of an organization at the February meeting of the Center's Business and Organizational Ethics Partnership.
Radha Basu, chair and CEO of Support Staff , Ken Denman, CEO of Openwave Systems, and Robert "Bo" Ewald, CEO of Silicon Graphics discussed the importance of modeling ethical behavior and dealing with employees who stray from company values. The panel was moderated by Ken Lonergan whose firm, Lonergan Partners, specializes in CEO and board placements in technology companies.
While corporate social responsibility and compliance are common terms associated with business ethics, the idea of human rights is less often yoked to business. Ursula Wynhoven, policy and legal head for the UN Global Compact, argues that there are many natural intersections. Wynhoven visited the Center's Business and Organizational Ethics Partnership this week to discuss the UN's "Protect, Respect, and Remedy" Framework for addressing human rights issues for transnational companies.
If, as Lord Acton tells us, "power tends to corrupt, and absolute power corrupts absolutely," then what effect does power have on the ethics of C-level business executives? Dennis Moberg, Wilkinson Professor of Management and Ethics at SCU, reviewed recent research on how power impacts behavior at the February meeting of the Markkula Center for Applied Ethics Business and Organizational Ethics Partnership (BOEP). The partnership includes business executives who are tasked with ethics and compliance in their organizations as well as business ethics scholars from Bay Area universities.
Moberg cited four different areas of difference between powerful and powerless people—inhibition, rules, hypocrisy, and “sucking up”—and led the group in exploring the implications of this research for businesses.
A study by Keltner and Gruenfeld in the Psychological Review (2003) found that when powerful people communicate with their subordinates, they are often uninhibited. They may fail to exercise self-control, with frequent outbursts and violations of social norms. Moberg discussed how businesspeople could apply this information in their organizations to control this potential abuse of power. He suggested:
Reminding the powerful about the consequences of overly candid or inappropriate communications, such as leaks and false innuendos
Making sure the CEO has subordinates who are willing to call executives on inappropriate behavior and recall them to their better selves
In a finding that surprised many of the attendees, Lammers and Stapel reported in The Journal of Personality and Social Psychology (2009) that powerful people rely on rules, policies, or codes when deciding right from wrong, while powerless people rely on “consequences, outcomes, and results.” Moberg pointed out that both these modes of ethical reasoning are legitimate, but that the different approaches may cause misunderstandings between bosses and employees.
Several participants noted that in their own experience, powerful people tended rather to bend the rules or to think that the rules did not apply to them, which proved a perfect segue to Moberg’s next area of difference, hypocrisy.
Another study by Lammers and Stapel (Psychological Science, 2010) found that while powerful people condemn other people’s cheating , they themselves may be guilty of this behavior,” Moberg said. So, while C-level executives may be strict when dealing with rule violators, they “tend to be oblivious to their own rule violations.”
As one of the partners noted, that description probably applies to most people, although the study’s findings suggested hypocrisy is a particular problem for the powerful. Since no one likes to see him or herself as hypocritical, the group discussed ways to approach executives about the problem, including talking about the double standard as if it had been noted by others or telling stories about other executives who had acted hypocritically in the hope that the boss would recognize the application of the story to him or herself.
Many executives think they are immune to flattery, but Moberg described the results of a study that suggested powerful people can be swayed by “sophisticated interpersonal influence behavior,” which Moberg rechristened, “sophisticated sucking up.” The research, by Stern and Westphal (Administrative Science Quarterly, 2010), looked at who was appointed to boards of directors at companies and what behaviors led to that result. Where outright flattery might be perceived as insincere, framing flattery as advice-seeking or complimenting the person to a colleague who would pass on the flattery can be very effective. Where being a “yes man” might be seen as manipulative, arguing prior to agreeing or agreeing “referencing common social affiliations” before agreeing seemed to massage the ego of the person in power and left a positive impression. In the business context, Moberg suggested that organizations alert the powerful to these tactics to make them more aware of when they are being manipulated.
Although acknowledging the difficulty of fostering a work environment where criticism is welcomed, many of the BOEP members saw “speaking truth to power” as critical to maintaining an ethical organizational culture where the tendency for power to corrupt is held in check.
Four different strategies for managing ethics are analyzed by Center Executive Director and nted business ethicist Kirk O. Hanson. He reviews relying on employee values, compliance, ethics exhortation, and managing values.
Center Executive Director Kirk O. Hanson addressed the ethical challenges of doing business in Asia at a seminar, "Worlds in Collision?" that was co-sponsored yesterday by the Center and Morrison & Foerster.
Hanson's remarks included these observations on why there is a growing interest in ethics in China, India, and other Asian countries:
The increasing expectations of American and European companies that they be able to operate in an manner ethically consistent with practices in their home country. Part of this is that they be able to select business partners and agents who share their ethical values and practices. These Western companies are being encouraged to achieve this consistency by their own governments, by media in their home countries, and by public sentiment.
The desire of Asian companies, and increasingly even Chinese companies, to deploy capital abroad by forming joint ventures with American and European companies or by buying Western companies . This leads to substantial pressures for those firms to exhibit "Western" ethical practices - from their business partners and from Western governments.
A company needs to buy T-shirts for a promotion. Should they purchase inexpensive shirts from China, where they don't know the wages and working conditions of the employees or the quality of the fabric? Or should they buy from a local, worker- and eco-friendly T-shirt vendor at a much higher cost?
What are the ethical challenges to starting up a company? To putting together your team? To meeting with venture capitalists when the financials aren't as promising as you'd like? To creating a company culture? Bryan Wargo and Kevin Beals, both SCU grads, will speak Nov. 17 in Lucas Hall about the ethical challenges in their extensive experiences over the last 15 years in start-up companies in Silicon Valley.
Wargo is CEO of Nearbuy. Before founding Nearbuy, he served as the general manager of Aruba’s AirWave product line. Prior to AirWave, Wargo founded 2Roam to address the proliferation of mobile Internet devices. He also served as senior business development manager for VeriFone's e-commerce software products and was a territory manager for Hewlett-Packard's Unix division.
Beals, CFO of Nearbuy, was formerly the Worldwide Sales Controller for Aruba Networks.He joined Aruba after they acquired his previous company, AirWave Wireless, where he was the VP of Finance. Beals got his entrepreneurial start as co-founder and CFO of 2Roam Inc., which was sold in 2002.He started his career in public accounting, where he earned his CPA license and was an audit manager at Frank, Rimerman and Co.
This event is co-sponsored by SCU's Center for Innovation and Entrepreneurship and the Markkula Center for Applied Ethics. The event is also associated with the Hackworth Fellowship of Meghan Skarzynksi, a senior finance major and Hackworth Fellow at the Ethics Center.