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Chapter 11: Why Ethics Still Matter

“What counts in life—including our choice of profession as well as the way we live our personal lives—is the manner in which we apply wisdom, education, and experience in forming the decisions we make and in becoming the person we wish to be” (p.325).

11.1: Business Ethics in an Evolving Environment

Rajat Gupta grew up in India, earned an MBA from Harvard, and prospered for years as managing director of McKinsey & Company, a preeminent management consulting firm. A respected business leader and cofounder of the Indian School of Business and the American Indian Foundation, Gupta served on many corporate and philanthropic boards. Born to humble circumstances, he became a pillar of the consulting community and a trusted advisor to the world’s leading companies and organizations. In 2009, Gupta provided hedge-fund manager and longtime friend Raj Rajaratnam with insider information about investor Warren Buffet’s

agreement to purchase shares of Goldman Sachs, an investment bank for which Gupta served as a corporate director. Gupta was convicted of felony securities fraud relating to insider trading (three counts) and conspiracy (one count) and sentenced to two years in jail plus $5 million in fines. He chose to breach his fiduciary duty as a corporate director. (p.326).

Virtuous actions often do not make the news. Unethical behavior is considered newsworthy. A good manager strives to achieve moral excellence that includes honesty, fairness, prudence, and courage. GM (General Motors) has climbed out of a 2009 bankruptcy and sold divisions (Oldsmobile and Pontiac), but the automaker was hiding a big problem: The ignition switch in many of its cars was prone to malfunction, causing injury and even death (124 deaths and 273 injuries). GM was finally brought to federal court and in 2014 the company settled the lawsuits

for $900 million and recalled 2.6 million cars. Is the only goal of business profit? (p.327). GM

failed to consider its stakeholders by failing to disclose an inherent danger built into its cars. Customers are entitled to be treated with honesty and accorded fair value for their money.

Technology has changed the business environment and our lives, but not our core values. We need to expand the application of our ethical standards to new situations (p.327). The big

ethical issues in the 21st century include cybercrimes and privacy issues. Identity theft is a big issue moving forward with computer technology and the internet. Business is today responsible for securing transactions and keeping customer information private.

11.2: Committing to an Ethical View

Issues with Wal-Mart: minimum wage pay with few raises of very little; no health coverage for those working less than 29 hours (?) per week; failure to promote female employees no matter how good they are; hiring only males for store manager and up.

11.3: Becoming an Ethical Professional

Costco ranked high on best employers to work for. Why? (p.333) How is it different from Wal-Mart? Insurance coverage for part-time workers, higher than average pay, overall satisfaction rating is higher. Where does In-n-Out rank?

Link to Learning: The relationship between money and happiness by Michael Norton (p.335): he

starts off well: He debunks the idea that money can’t buy happiness; if you spent money differently you might be happy. Some spending of money doesn’t make us happy. Winning the lottery doesn’t make everyone happy long-term: debt over time, pressure from friends and family asking for money. But this depends on people knowing your rich, so maybe winning the lottery is an outlier. Fantasies about being rich can be mistaken. Money can make us selfish, depending on our level of money. There is a massive difference between $1 million and $1 billion. The video makes people spend money to see the results. Spend the money on yourself, on others, etc.

Cases from the Real World: Bill Swanson, former CEO of Raytheon, published Swanson’s Unwritten Rules of Management, but it was later discovered he plagiarized. The book was discontinued and Swanson lost a few million dollars off his retirement package (footnote 30: How much?) His reputation declined as he retired after 42 years, extremely wealthy. (p.335)

UPS is ranked high to work for, and they earned 4.9 billion in profit in 2017. Xerox earned only 195 million in 2017, but is also considered a good company to work for. (p.336)

Identify your values as you make a choice what career path you wish to take. Link to Learning: Write your own mission statement (p.338). A good idea to add to your resume and other hiring materials. Tedx talk: How to Know your Life Purpose in 5 minutes. Adam Liepzig speaks. He discusses his 25thhigh school reunion. 80% of his friends from high school were unhappy with their lives. They felt they wasted their lives and they are half done. These were privileged people with money, power graduates of Harvard or Yale. 20% were happy: they studied art and humanities; taken classes for the joy of learning. Liepzig: Find your life purpose. Do what you love (but what you love might alter over time). Thousands of books are about finding your life purpose. Who you are? What do you love to do? (What can you teach others?) Who you do it for? What do the people you serve or sell want or need? How do they change after you do your job?