MBA 635 Best Practices of Self Regulation Ethics Programs Discussion 1.Review the text material for best practices of self-regulated ethics programs. Summa

MBA 635 Best Practices of Self Regulation Ethics Programs Discussion 1.Review the text material for best practices of self-regulated ethics programs. Summarize the material of corporate self-regulation ethics programs. Explain the major challenges and issues to enforce these programs as well as the business ethics training portion, such as codes of conduct, peer review, and the readiness checklists. 2.Analyze three features and benefits of internal self-regulation business ethics. Do you agree with the challenges of and issues of self-regulation? Why or why not? Use citations and references in APA style to support your post. Copyright © 2014. Berrett-Koehler Publishers. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under
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6
TH E CO RPO R ATI O N AN D
I NTERNAL STAKEH O LD ERS
Values-Based Moral Leadership,
Culture, Strategy, and Self-Regulation
6.1 Leadership and Stakeholder
Management
Ethical Insight 6.3
Chapter Summary
Ethical Insight 6.1
Questions
Ethical Insight 6.2
Exercises
6.2 Organizational Culture,
Compliance, and Stakeholder
Management
Real-Time Ethical Dilemmas
Cases
17. Kaiser Permanente: A Crisis of
Communication, Values, and
Systems Failure
18. Social Networking and Social
Responsibility
6.3 Leading and Managing Strategy
and Structure
6.4 Leading Internal Stakeholder
Values in the Organization
6.5 Corporate Self-Regulation and
Ethics Programs: Challenges and
Issues
Notes
OP E N I NG CAS E
Two Leaders’ Ethical Styles
Warren Buffet, Berkshire Hathaway
Founder and chief executive of?cer (CEO) of Berkshire Hathaway, Warren Buffett has taken unprecedented steps in recent years to ensure
that his messages about investing, ethics, and philanthropy reach an
audience that will survive him. He didn’t invent the light bulb, but he’s
had lots of bright ideas. He didn’t devise the mass-production assembly line, but his companies have sold masses of goods. And Warren
Buffett didn’t originate the concept of money, but he has more of it than
most—he has been listed as the second most wealthy business person
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6
The Corporation and Internal Stakeholders
by Forbes for several years. So what will be the Omaha investor’s legacy? Or, rather, his legacies? Observers say the 83-year-old’s ideas
and philosophy of business and life will last far beyond his own. “Somebody from this group will learn something that will affect their lives,”
Buffett told a group of graduate students during a 2005 visit to Omaha.
“Buffett’s emphasis on working with ethical people is already in?uencing business leaders and business schools, a change that could
last far into the future,” said Bruce Avolio, director of the University of
Nebraska-Lincoln’s Leadership Institute. “He buys the culture when he
invests in an organization,” Avolio said, “valuing a business’s human condition as much as its ?nancial condition. That’s shifting people’s thinking,
and it has a huge impact. It’s a model that’s replicable—treating people
fairly. Integrity underlies not only Warren Buffett’s investments but also
his philosophy of life.” Keith Darcy, head of the 1,400-member Ethics and
Compliance Of?cers Association in Waltham, Massachusetts, said Buffett has played a hand in “a ?ight to integrity” by investors, executives,
employees, suppliers, and customers, who want to be involved with companies that do business correctly. “It’s essential to him to be working with
people he trusts,” Darcy said. “Without that level of trust, it’s not worth
doing business. Certainly he has been an exemplar for understanding
that when you make investments, character and reputation are everything.” In meetings with students, Darcy said, Buffett “speaks from his
heart. He certainly is a mythological ?gure, except he’s not a myth, he’s
real—a man of enormous success who always has believed in investing
in companies with inherent value, but in particular the people in those
businesses.” Darcy believes Buffett will be a role model far into the future.
Buffett himself has stated: “I want employees to ask themselves whether
they are willing to have any contemplated act appear on the front page
of their local paper the next day, to be read by their spouses, children,
and friends. . . . If they follow this test, they need not fear my other message to them: Lose money for the ?rm, and I will be understanding; lose
a shred of reputation for the ?rm, and I will be ruthless.”1
Ratan Tata, Former Chairman of the Indian
Corporation Tata Group
Ratan Tata retired on his 75th birthday after leading the Indian corporate conglomerate, the Tata Group. He assumed leadership from his
uncle in 1991. The so-called House of Tata owns over 100 companies
in 80 countries, including the Taj Group of luxury hotels and the exclusive Tata Nano car. The group’s holdings exceed those of Wal-mart or
ExxonMobil. The Tata Group was the ?rst Indian company to obtain
$100 billion in revenues, half of which is from abroad. Ratan Tata
helped acquire signi?cant European enterprises, including Jaguar Land
Rover and Corus, the Anglo-Dutch steelmaker. Under his leadership,
this group is now “perceived to represent Indian capitalism at its best,
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350
Business Ethics
enjoying the goodwill of millions of customers, the loyalty of more than
400,000 employees and the investments of 3.8 million shareholders,
while also reinvesting a substantial part of its pro?ts into philanthropic
work overseen by a set of trusts.”2 His ethical beliefs are embodied in
the company’s policies, as stated in the company’s Article and Rules
for Sustaining CSR, Clause No. 10:
A Tata Company shall be committed to be a good corporate citizen
not only in compliance with all relevant laws and regulations but also
by actively assisting in the improvement of the quality of life of the
people in the communities in which it operates with the objective of
making them self-reliant. Such social responsibility would comprise,
to initiate and support community initiatives in the ?eld of community
health and family welfare, water management, vocational training, education and literacy and encourage application of modern scienti?c and
managerial techniques and expertise. This will be reviewed periodically in consonance with national and regional priorities. The company would also not treat these activities as optional ones but would
strive to incorporate them as integral part of its business plan. The
company would also encourage volunteering amongst its employees
and help them to work in the communities. Tata companies are encouraged to develop social accounting systems and to carry out
social audit of their operations. 3
6.1 Leadership and Stakeholder Management
Leadership is the ability to influence followers to achieve common goals
through shared purposes.4 Leaders, with the help of followers, are responsible
for enacting an organization’s vision, mission, and strategies, and for achieving goals in socially responsible ways.5 Leaders also help defi ne the culture
and model the values of organizations that are essential for setting and modeling the legal and ethical tone and boundaries. Warren Buffett, founder and
CEO of Berkshire Hathaway and Rajan Tata, former chairman of the Tata
Group, are two exemplary leaders among many others, who embody the ethical leadership values, characteristics, and actions this chapter addresses.
The CEO or president, who sometimes is also the chair of the board of directors, is the highest-ranking leader in a company. However, in both for- and
not-for-profit organizations, the CEO reports to and is advised by the board
of directors, which also serves leadership and governance roles. Leadership is
not only limited to a few individuals or teams at the top of organizations. Individuals throughout an organization exert leadership responsibilities and influence in their roles and relationships to direct and guide their organizations.
Leadership also requires active involvement with and alignment of internal
and external stakeholder relationships. Business relationships involve transactions and decisions that require ethical choices and, many times, moral courage.
Building new strategic partnerships, transformational restructuring and lay-
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The Corporation and Internal Stakeholders
351
offs, consumer lawsuits, environmental crises, bold new “green” initiatives,
and turning around corporate cultures damaged by the effects of harmful
products are examples of situations that require leadership business and ethical
decisions. Leaders are responsible for the economic success of their enterprises
and for the rights of those served inside and outside their boundaries. Research on leadership demonstrates that moral values, courage, and credibility
are essential leadership capabilities.6 James Collins’ five-year research project
on “good to great” companies found that leaders who moved from “good to
great” showed what he called “Level 5” leadership. These leaders “channel
their ego needs away from themselves and into the larger goal of building a
great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious—but their ambition is first and foremost for the
institution, not themselves” (emphasis added).7 Collins also concluded that Level
5 leaders build “enduring greatness through a paradoxical blend of personal
humility and professional will.”8
This chapter focuses on the challenges that values-based leaders face
while managing internal stakeholders, strategy, and culture in organizations.
From a stakeholder management approach, an organization’s leaders are responsible for initiating and sustaining an ethical, principled, and collaborative orientation toward those served by the firm.9 Leaders model and enforce
the values they wish their companies to embody with stakeholders.10 One of
an organization’s most prized assets is its reputation, as noted earlier in the
text. Reputations are built through productive and conscientious relationships with stockholders and stakeholders.11
A stakeholder, values-based leadership approach determines whether or
not the organization and culture:
•
•
•
•
•
Are integrated or fragmented.
Tolerate or build relationships.
Isolate the organization or create mutual benefits and opportunities.
Develop and sustain short-term or long-term goals and relationships.
Encourage idiosyncratic dependent implementation based on division,
function, business structure, and personal interest and style or encourage
coherent approaches, driven by enterprise, visions, missions, values, and
strategies.12
Effective leaders guide the ethical and strategic integration and alignment
of the internal organization with the external environment. As the following
sections show, competent leaders demonstrate different competencies in
guiding and responding to their stakeholders and stockholders.
De?ning Purpose, Mission, and Values
Leading an organization begins by identifying and enacting purpose and
ethical values that are central to internal alignment, external market effectiveness, and responsibility toward stakeholders. As Figure 6.1 shows, key
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352
Business Ethics
Figure 6.1
Strategic Alignment Questions
What business are we in?
Vision
(Who are we? Who
will we become?)
What is our
product or
service?
Mission
(What is our strategic purpose
for operating?)
Values
(What do we stand for and
believe in? What standards
can be used to
evaluate and
judge us?)
Who is our
customer?
What are our core
competencies?
Source: Joseph W. Weiss. © 2014.
questions executives must answer before identifying a strategy and leading
their firm are centered on defining the organization’s vision, mission, and values: What business are we in? What is our product or service? Who are our customers?
What are our core competencies?
A values-based leadership approach is exemplified by Chester Barnard,
who wrote in 1939 that effective leaders and managers “inspire cooperative
personal decisions by creating faith in common understanding, faith in the
probability of success, faith in the ultimate satisfaction of personal motives,
and faith in the integrity of common purpose.”13 In the classic book Built to
Last,14 authors James Collins and Jerry Porras state, “Purpose is the set of fundamental reasons for a company’s existence beyond just making money. Visionary
companies get at purpose by asking questions similar to those posed by David
Packard [cofounder of Hewlett-Packard]: ‘I want to discuss why a company
exists in the first place. . . . Why are we here? I think many people assume,
wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real
reasons for our being.’ ”
JetBlue’s founder and former CEO, David Neeleman, said:
For our company’s core values, we came up with five words: safety, caring,
fun, integrity, and passion. We guide our company by them. But from my
experience— and I’ve had a lot of life experiences that were deep religious
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6
The Corporation and Internal Stakeholders
353
experiences—I feel that everyone is equal in the way they should be treated
and the way they should be respected. I think that I try to conduct myself in
that way. I treat everyone the same: I don’t give anyone more deference because of their position or their status. Then I just try to create trust with our
crewmembers. I know if they trust me, if they know I’m trying to do the best
things I think are in their long-term interest, then they’ll be happier and
they’ll feel like this is a better place to work. The top five tips for landing a
job at JetBlue include 1. Do your homework! Study JetBlue’s history and their
current happenings and their five core values, 2. Know your story: Be prepared
for the interview by reviewing your own challenging situations and how you
handled them, 3. Show your passion: People at JetBlue are very passionate about
the company and what they do. Showing passion for the company and role
you are applying for is important, 4. Be open and honest, and 5. Be yourself! “We
are a fun company, and we just want you to be you!”15
Ethical companies may also include a “social mission” in their formal
mission and values statements. A social mission is a commitment by the organization to give back to their community and external stakeholders who make
the organization’s existence possible. Ben and Jerry’s (now a division of the
Anglo-Dutch Unilever conglomerate), Lands’ End, Southwest Airlines, and
many other companies commit to serving their communities through different types of stewardship outreach, facility sharing (e.g., day care and tutoring
programs), and other service-related activities.
A starting point for identifying a leader’s values is a foundational vision
and mission statement of the company. Levi Strauss & Co.’s, shown in Figure 6.2, exemplifies an inspirational vision with ethical values.
The classical visionary, “built-to-last” companies “are premier
institutions—the crown jewels—in their industries— several are still ‘lasting’
today—widely admired by their peers, and have a long track record of making a significant impact on the world around them . . . a visionary company
is an organization— an institution . . . visionary companies prosper over long periods of time, through multiple product life cycles and multiple generations of
active leaders.”16 Such companies include 3M, American Express, Boeing,
Citicorp, Ford, General Electric, Hewlett-Packard, IBM, Johnson & Johnson,
Marriott, Merck, Motorola, Nordstrom, Philip Morris, Procter and Gamble,
Sony, Wal-Mart, and Disney. These visionary companies, Collins and Porras
discovered, succeeded over their rivals by developing and following a “core
ideology” that consisted of core values plus purpose. Core values are “the organization’s essential and enduring tenets— a small set of general guiding
principles; not to be confused with specific cultural or operational practices;
not to be compromised for fi nancial gain or short-term expediency.” Purpose is “the organization’s fundamental reasons for existence beyond just
making money— a perpetual guiding star on the horizon; not to be confused
with specific goods or business strategies.”17 Excerpts of core ideologies from
some of the classic visionary companies are instructive and are summarized
here:18
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Figure 6.2
Levi Strauss & Co. Values and Vision Statement
VALUES
Our values are fundamental to our success. They are the foundation of our company, de?ne
who we are and set us apart from the competition. They underlie our vision of the future, our
business strategies and our decisions, actions and behaviors. We live by them. They endure.
Four core values are at the heart of Levi Strauss & Co.: Empathy, Originality, Integrity and
Courage. These four values are linked. As we look at our history, we see a story of how our
core values work together and are the source of our success.
Empathy—Walking in Other People’s Shoes
Empathy begins with listening . . . paying close attention to the world around us . . . understanding, appreciating and meeting the needs of those we serve, including consumers,
retail customers, shareholders and each other as employees.
Levi Strauss and Jacob Davis listened. Jacob was the tailor who, in the 1870s, ?rst fashioned heavy cotton cloth, thread and metal rivets into sturdy “waist overalls” for miners seeking durable work pants. Levi in turn met Jacob’s needs for patenting and mass production of
the product, enthusiastically embracing the idea and bringing it to life. The rest is history: The
two created what would become the most popular clothing…
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