Applied Business Ethics

Mike Gustavsson

Mike is a retired lecturer from Malmo, Sweden. Mike taught Business Ethics at a well-regarded University for many years, and has been an active member of Greenpeace since 1992. Mike had believed that ethical behaviour of corporations is set by the behaviour at the top of the organisation, if you have good people at the top of the company, making good decisions, and using good rules, then the company itself will be ethical. Alongside this, Mike had argued that a virtuous set of rules for directors, and effective oversight of these rules, were key to producing good behaviour.

In recent years Mike has become a little disillusioned with this viewpoint. Mike’s daughter Anna graduated from the Stockholm School of Economics in 2005 and has since quickly risen to the role of a hedge fund manager at Alfaraft AB (an international profitable hedge fund). Mike has found himself in fierce arguments with his daughter who, since taking on the job, has changed greatly in his eyes. To him, she has changed from someone who used to care about the environment and social problems, to someone who works tremendously long hours and now seems utterly focused on her next bonus payment. Worse (to Mike), now that Anna is a part of management, Anna seems to be strongly espousing (advocating) is “get-rich-quick” bonus making message to her subordinates.

Mike is aware that Alfaraft AB has a well-written corporate ethics and governance code, and even donates to several local Swedish charities, but now wonders at what kind of company they are. Mike was at first extremely happy that his daughter had a good job, but now he’s worried at the type of business environment which is generated at companies which takes idealistic young graduates fresh out of Business Schools and turns them into bonus seeking executives. Where are these good governance guidelines acted upon, how is the company actually led? Why do young executives seem to “mouth” the words of corporate codes, but not act the actions?

Mike participated in his first Occupy protest on 16th October 2011. The protesters occupied the ground floor of the Alfaraft AB building in Goteborg, Sweden, in protest of their heavy financial investment into major companies who were supplying dubious third world regimes.

Jan Edwards

Jan is the CEO (Chief Operating Officer) and founder of Clean Solutions Inc., an industrial building maintenance company based in Kansas, Missouri with substantial operations across seven states in the Midwest of the USA. Jan employs a total of 927 people in a business she founded after finishing her Social History degree in 1997 at University of Kentucky. Clean Solutions Inc. has fifty shareholders, mainly local small Kansas investors, and Jan is very proud that these investors have been well rewarded for their initial trust in her.

Jan is an active member of the True Vine Baptist Church, and through this, she has become involved in a programme to provide educational facilities in Guatemala. Given Jan’s success as an entrepreneur and small businesswoman, she often finds herself donating her time to advising Guatemalan small businesses on how best to manage their businesses to encourage job creation in the local Guatemalan region. With her husband Ken and their four daughters Jan has made five trips to the villages around Petapa in recent years. Jan feels passionately that people gain self-respect, self-reliance and self-motivation through gainful employment, and she sees the act of entrepreneurship, and the creation of new job opportunities, as a powerful step towards helping the Guatemalan people. For many years, Jan has run a programme to encourage workers at Clean Solutions Inc. to donate their time to helping people more disadvantaged than themselves, and she is proud that last year her company donated a total of 1020 working days of time to charitable works, more than one day per employee (the company doesn’t market or advertise this fact).

Jan has become increasingly concerned in recent years at the nature of graduates she is employing out of business schools onto her in-house graduate development programme (the internal management scheme). Many of the graduates seem extremely focused on profitability and working their way up the company ladder rather than on good people management skills, being well-rounded citizens and good, genuine people. Jan feels let down by the educational system, and business schools in particular, who seem to be geared to producing graduates who are merely “meat-for-the-grinder” for larger international companies who are utterly focused on shareholder wealth development. Jan has commented to her Vice-President of HR on a number of occasions that these graduates seem “institutionalised” before they even get to her. Schooled in thinking of the functional areas of a business, on profit, wealth and budgetary systems, and they seem ignore the importance of the first word “good”, in the words “good businessperson”.

Jan’s Vice-President of HR has made it clear to Jan that these new graduate managers are amongst the lowest contributors to the company’s charitable time donation scheme, donating only a quarter of the time, as a grouping, when compared to the whole workforce. Jan sees it as her duty as CEO to change this trend.

Mei-Hua Felung

Mei-Hua is a successful Senior Manager at International Pharmaceuticals Company WCP, one of the largest firms in the world (Headquarters Luxemburg for tax reasons). A successful Accountancy graduate of a leading UK business school she was delighted to accept an invitation to come to an Alumni event recently where she was asked to participate in a debate on whether her business school should continue the teaching of ethics and ethical leadership to students.

Mei-Hua feels strongly on this issue. She feels that professionals have had in recent years a very poor and negative image from the press as to their ethical conduct. While she won’t argue that accountancy in particular has deserved some of the bad press it has received, she feels this has gone too far in many cases. Accountancy as a profession has strict codes of conduct and strict rules, and Mei-Hua has always adhered (worked within) these rules, and she believes both she, and her fellow professionals are very ethical and moral people who are being treated unfairly. In her company, for example they have a strict corporate code of conduct, especially on financial issues such as fraud, and she has always been impressed at the way that this code of conduct is reinforced in corporate induction and in the company literature.

Mei-Hua believes that many people are actually unaware of how ethical some companies actually are, or at least, they are highly cynical. The Directors of WCP have an engagement strategy with charities in a number of third world countries, and while they do use this extensively in their marketing literature, Mei-Hua sees no harm in this; after all, it is the shareholders money. Mei-Hua believes that strong ethical codes of conduct and strong codes of professional behaviour lead to a more moral and ethical business, and that profit and wealth generation, as well as those ethics, can work alongside each other.

Mei-Hua is sure at the debate that a recent tax case which was in the news regarding WCP will be mentioned. WCP recently had to come to a large settlement with the US Government’s Internal Revenue Service (IRS) regarding a certain scheme, and paid a $7bn out-of-court settlement to prevent the case going to prosecution. As a Senior Manager and Accountant at WCP Mei-Hua has been involved in developing a number of entirely legal (never prosecuted successfully) tax avoidance schemes which have saved the company literally millions in potential tax payments, routing transactions though tax havens such as Hong Kong, Dublin and Singapore. Mei-Hua believes there is nothing wrong with this. It is governments which create the tax rules, not her. She and the other accountants are merely “playing within the rules”; not breaking them.

Deshi Chen

Deshi was born in the Lincang, in Yunan Province of China near the border with Laos. The city has a population of nearly 2.3 million and its economy grew last year by 15%. Deshi’s parents’ dream of him working one day for one of the major international companies which have been setting up joint ventures in the city, and Deshi himself desperately wants to gain an education to get a good job. Deshi, who is 20, is concerned that without a good office job he will never be able to provide a stable home environment to start a family, and that he’ll not be attractive to prospective fiancées. Deshi’s parents are the first of their family to have reached a comfortable “middle class” lifestyle, and Deshi’s Dad has worked hard all his life as a factory foreman (frontline supervisor) to provide for his son. Deshi’s grandparents are both uneducated farm workers, and while he and his family provide as much care and support for them as they can, they also serve as a constant reminder to Deshi and his family of their humble beginnings. Deshi has worked hard all his life in his education, and has tried hard to build himself some good business experience doing office gopher work (go-for) in the city during his summer. Deshi’s parents have saved a long time to send him to a western UK-based university Business School to finalise his education, and they hope that Deshi can gain both the language and business knowledge there to get him that all important job in the city.

Deshi has become a little disillusioned with one of his courses while at this UK university however; Business Ethics. Simply put, he doesn’t see the point of it, and he doesn’t see why it should be on the curriculum of a business school. In his summer job in the city Deshi often saw the “cut-and-thrust” of modern business, and he can’t remember anyone pondering long philosophical words while there. Deshi can’t see the point in wondering about “ethical leadership”. To Deshi, leadership is about getting things done and creating a profitable, successful business. Deshi can’t see the point of these various “codes of corporate governance” as they seem constraints that get in the way of good business. To him some of these even seem ridiculous why would someone intentionally sign up to codes which will stop you making money? Anyway, to Deshi, the bottom line is that “everyone knows” that western companies are hypocrites who say one thing and mean another when they operate in China. Profit and market share are what are important, and being a profit making manager is what will take Deshi from being a new graduate starter in an office job at a big company to being a well-paid middle exec.

In short, Deshi is unhappy at the teaching of ethics, and ethical leadership, on his degree course, and would like to express that unhappiness in an upcoming debate he’s been asked to participate in. He’s in danger of failing this Business Ethics course, which, to him, seems to have very little to do with “real business”. If he fails this course, he knows he’ll be endangering his degree as well, which means not only the end of that dream of that that nice safe office job, but especially the dream of being attractive to a prospective fiancée because of that job. Deshi doesn’t see why those dreams should suffer because of this “pointless” ethics course, and would like to see it removed from his programme of study.