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C H A P T E R 7 Employee’s Ethics: Making the Best of the Job You Have as You Get from 9 to 5 CHAPTER OVERVIEW Chapter 7 examines some ethical decisions facing employees. It considers the values guiding choices made over

the course of a workday.

1. TAKING ADVANTAGE OF THE ADVANTAGES: GIFTS, BRIBES, AND KICKBACKS

L E A R N I N G O B J E C T I V E S

1. Define a conflict of interest. 2. Show how gifts in the business world may create conflicts of interest. 3. Delineate standard practices for dealing with gifts. 4. Consider how receiving gifts connected with work may be managed ethically. 5. Define bribes and kickbacks in relation to gifts. 6. Show how the ethics of bribes and kickbacks can be managed inside the ethics of gifts.

1.1 Living the High Life If you’re young, looking for work, and headed toward a big city (especially New York), then you could do a lot worse than landing a job as a media buyer for an advertising agency. According to an article in New York magazine, it’s working out well for twenty-four-year-old Chris Foreman, and it’s working out despite a salary so measly that he can’t afford his own place, a ticket to a movie, or even to add meat to his homemade spaghetti.[1]

This is what makes the job click for Foreman: as a media buyer, he oversees where big companies like AT&T place their advertisements. And because those ads mean serious money—a full page in a glossy, top-flight magazine costs about five times what Foreman earns in a year—the magazines line up to throw the good life at him. Thanks to the generosity of Forbes magazine, for example, Foreman spends the occasional evening on the company’s vast Highlander yacht; he drinks alcohol almost as old as he is, munches exquisite hors d’oeuvres, and issues orders to white-suited waiters. While guests ar- rive and depart by helicopter, Foreman hobnobs with people the rest of us see only on movie screens. A scan of the Highlander guest book turns up not just celebrities but serious power too: Margaret Thatch- er was a guest once.

A night on the Highlander is a good one, but it’s far from the only event lighting up Foreman’s glitzy life. A few of his other recent outings are listed in the article, with some estimated cash values at- tached: An all-expenses-paid ski weekend (worth almost $1,000, in Foreman’s estimation); tickets to see Serena Williams at the US Open ($75 each); invites to the Sports Illustrated Swimsuit Issue party, where he chatted with Heidi Klum and Rebecca Romijn-Stamos; prime seats for sold-out Bruce Spring- steen concerts ($500 each); dinners at Cité, Sparks, Il Mulino, Maloney & Porcelli, and Monkey Bar, to name a few of his favorites ($100 a pop).

conflict of interest

An employee in a situation—especially as a result of being offered a gift—where his or her interest in personal welfare may corrupt his or her ability to serve the employer’s interest.

agent

Someone acting on behalf of an organization and its interests.

Foreman observes the irony of his life: “It’s kind of crazy, I had dinner at Nobu on Monday [the kind of restaurant few can afford, even if they’re able to get a reservation], but I don’t have enough money to buy socks.”[2]

The Highlander’s spectacularly wealthy owner is Steve Forbes. If he invites former British prime minister Margaret Thatcher aboard for a holiday weekend, you can understand why: she’s not just an interesting person; she’s living history. Serena Williams would be an interesting guest, too, in her way. The same goes for Heidi Klum and Ms. Romijn-Stamos, in a different way. What they all have in com- mon, though, is that you know exactly what they’ve got, and why a guy with a big bank account would treat them to an evening. But what, exactly, does Mr. Forbes expect to get in return for inviting media buyer Chris Foreman? The answer: “We media buyers are the gatekeepers—no one at AT&T actually purchases the ads. If at the end of a buying cycle, your budget has an extra $200,000, you’ll throw it back to the person who treated you best.”[3]

The answer, in a word, is money.

1.2 What’s Wrong with Gifts and Entertainment? The fundamental problem with the gifts Foreman received and the free entertainment he enjoyed is that they create a conflict of interest, a conflict between professional obligations and personal wel- fare. As a paid media buyer, it’s Foreman’s job and obligation to buy ads in the magazines that will do his clients the most good, that’ll deliver the biggest bang for the buck. But against that, as a single twenty-four-year-old guy in New York City, it’s in his personal interest to purchase ads in Forbes magazine since that probably gets him invited back to the Highlander with its free drinks, exquisite dinners, and, if he’s lucky, some face time with women he’s already seen quite a bit of in Sports Illus- trated. This is a tough spot, and there are two broad ways it can play out:

1. Foreman can do the parties at night, go home, sleep, wake up with a clear head, and buy the best ads for his client. Let’s say the advertising money he’s spending belongs to AT&T and they’re trying to attract new clients in the forty-five to fifty-five demographic of heavy cell phone users. He takes that target, checks to see what magazine those people like to read more than any other, and buys a full pager there. If the magazine happens to be Forbes, great, if not, then Forbes doesn’t get anything back for its party. In this case, Foreman knows he’s done right by AT&T and his employer. To the best of his ability, he guided advertising money to the spot where it’ll do the most good. There remains a potential problem here, however, which is the appearance of a conflict of interest. Even though Foreman didn’t let the parties affect his judgment, someone looking at the whole thing from outside might well suspect he did if it happens that Forbes gets the ad buy. This will be returned to later on in this chapter.

2. The darker possibility is that Forbes isn’t the best media buy, but they get the ad anyway because Foreman wants to keep boarding the Highlander. In this case, Foreman is serving his own interest but failing his obligations to his employer and to his client.

In pure ethical terms, the problem with the second possibility, with selling out the client, can be re- duced to an accusation of lying. When Foreman or any employee signs up for a job, shows up for work, and then accepts a paycheck, they’re promising to be an agent for the organization, which is formally defined in commercial law as someone acting on behalf of the organization and its interests. In some situations it can be difficult to define exactly what those interests are, but in Foreman’s it’s not. He does well for his employer when he gives the clients the best advice possible about spending their advertising dollars. That’s his promise and he’s not fulfilling it.

Redoubling the argument, in the case of the typical media buyer, there’s probably also an explicit clause in the employment contract demanding that all media advice be objective and uncorrupted by personal interest. Even without that formal step, however, the shortest route to an ethical condemna- tion of buying ads because a night on the Highlander (or some other gift) has been received is to un- derline that the act turns the media purchaser into a liar. It makes him or her dishonest every time they come into work because they’re not providing the objective and impartial advice they promise.

In discussing conflicts of interests, it’s important to keep in mind that those who find themselves caught up in one haven’t necessarily been corrupted. Just because Foreman finds himself torn between giving impartial advice to his client and giving the advice that gets him good parties doesn’t mean his judgment is poisoned. That said, it’s extremely difficult to walk away from a conflict of interest un- stained: any time serious gifts or rich entertainment gets injected into a business relationship, suspi- cious questions about professionalism are going to seep in too.

Finally, there are two broad ways of dealing with gifts, especially those creating conflicts of interest. They can be flatly refused, or rules can be formulated for accepting them responsibly.

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appearance of a conflict of interest

An appearance of conflict exists when a reasonable person will conclude from the circumstances that the employee’s ability to perform his or her duties may be compromised by personal interest.

1.3 Refusing Gifts and Entertainment One way to avoid the gift and conflict of interest problem altogether for Chris Foreman or anyone in a similar situation is to simply refuse any gifts from business partners. Far more frequently than private businesses, government organizations take this route. The approach’s advantage, obviously, is that it wipes out the entire question of wrongdoing. The disadvantage, however, is that it dehumanizes work; it seems to forbid many simple and perfectly appropriate gestures of human interaction.

Here’s an example of what can happen when efforts to eradicate conflicting interests go to the ex- treme: it’s from a New York Times front-pager about the state governor:

Governor David A. Paterson violated state ethics laws when he secured free tickets to the opening game of the World Series from the Yankees last fall for himself and others, the New York State Commission on Public Integrity charged on Wednesday.[4]

So, the governor is in trouble because he got some tickets to watch his home team play in the base- ball championship? That’s going to make Chris Foreman’s head swim. Without getting into the details of the Paterson case, accepting these tickets doesn’t seem like a huge transgression, especially for someone whose job pays well and is already packed with gala events of all kinds. It’s not as though, in other words, Peterson’s going to be blown away by the generosity or become dependent on it. In the case of Foreman who could barely afford to eat, it’s reasonable to suspect that he may come to rely on his occasional trip to the Highlander, but it just doesn’t seem likely that the governor’s judgment and ability to fulfill professional obligations are going to be distorted by the gift provided by the New York Yankees baseball club. More, as the state’s elected leader, a case could probably be made that the gov- ernor actually had a professional responsibility to show up and root for the home team (as long as the visitors aren’t the Mets). As a final note, since the now former governor is legally blind, the value of the gift seems limited since he couldn’t actually see the game he attended.

Despite this case’s apparent frivolity, the general practice of eliminating conflict of interest con- cerns by simply banning gifts can be justified. It can be because so many gifts, just by existing, create the appearance of a conflict of interest. An appearance of conflict exists when a reasonable person looking at the situation from outside (and without personal knowledge of anyone involved) will con- clude from the circumstances that the employee’s ability to perform his or her duties may be com- promised by personal interest. This is different from an actual conflict because when there’s really con- flict, the individual feels torn between professional obligations and personal welfare. Almost certainly, Foreman was tempted to help out Forbes because he really liked the parties. But the case of Governor Paterson presents only the appearance of a conflict of interest because we don’t know whether he even wanted the tickets to the Yankees game. Given the fact that he’s blind, he may well have preferred stay- ing home that night. Still, for those of us who can’t know his true feelings, it does seem as though there might, potentially, be some incentive for Paterson to return the Yankee favor and provide them some special advantage. It’s almost certain that at some time in the future, the baseball club will have an issue up for debate by the state government (perhaps involving the construction of a stadium or maybe just a license to sell beer inside the one they currently have), and as soon as that happens, the appearance of conflict is there because maybe Paterson’s response will be colored by the tickets he got.

Conclusion. Refusing to accept any gifts from business associates is a reasonable way of dealing with the ethical dilemma of conflicting interests. By cutting the problem off at the roots—by eliminat- ing not only conflicts but the appearance of them—we can go forward with confidence that a worker’s promise to represent the organization faithfully is uncorrupted by the strategic generosity of others.

1.4 What Other Remedies Are Available for Conflict of Interest Problems Stemming from Gifts? Categorically refusing gifts may be recommendable in some cases, but in most economic situations a total ban isn’t realistic. People make business arrangements the same way they make friendships and romance and most other social things—that means invitations to the Highlander if you’re lucky, or just to a few Budweisers in the hotel bar. And if you turn everyone down every time, it’s probably going to dampen your professional relationships; you may even lose the chance to get things done because someone else will win the contract between drinks.

So where does the line get drawn for accepting gifts with ethical justification? Whether you happen to be a renowned politician in a large state or someone just out of school trying to make a go of it in the world, there are a number of midpoints between Governor Paterson’s obligation to refuse tickets to a

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 157

game he couldn’t see anyway and Chris Foreman’s raucous partying on the Highlander. Three of the most common midpoints are

1. transparency, 2. recusal, 3. organizational codes.

Transparency, as the word indicates, manages the acceptance of gifts by publicly recognizing their ex- istence. The idea is that if Foreman is willing to openly acknowledge exactly what he’s getting from Forbes magazine, then we can trust that there’s nothing underhanded going on, no secret agreements or deals. Of course the gifts may still influence his judgment, but the fact that they’re public knowledge at least removes the sense that he’s trying to get away with something.

Recusal is abstaining from taking part in decisions contaminated by the appearance of a conflict of interest. Foreman could, for example, keep going to Highlander parties but not manage any media buy- ing for the demographic that reads Forbes. It’s fairly easy to imagine a team of media buyers working together on this. Every time something comes up that might be right for Forbes, Foreman passes the decision on to Sam Smith or whoever and so removes himself from the conflict.

In the public sphere, especially politics and law, it’s common for judges and legislators to remove themselves from considering issues bearing directly on their welfare. A judge who owns stock in the Omnicom communications group may recuse herself from hearing a civil case brought against the company. Legislators deciding what the salary should be for legislators may ask for recommendations from an independent panel.

Organizational codes are one of the theoretically easiest but also one of the more practically diffi- cult ways to handle gifts. The advantage of a code is that it can provide direct responses for employees trying to decide whether they can accept a gift. In Oregon, for example, legislators are prohibited from accepting gifts valued at more than fifty dollars. Assuming the code is reasonable—and in this case it was judged so by the state’s supreme court—legislators may assert that by implication accepting a gift valued under that amount is, in fact, ethical.[5]

However, the problem with codes is that, like laws, they frequently leave gray areas. That’s espe- cially true in a media buyer’s world where so much is spent on entertaining. In that kind of reality, it’s very difficult to put a specific price on everything. A night on the Highlander, obviously, is worth a lot to Foreman, but how does it appear in the accounting books of dollars and cents? Because it’s hard to know, monetary limits provide only vague ethical guidance for those in Foreman’s line of work.

The broader lesson is that gifts come in so many forms—and with values that can be so difficult to accurately measure—that it’s virtually impossible to write something encompassing all the specific pos- sibilities. Many codes of conduct, therefore, end up sounding noble but are really just saying, “Figure it out for yourself.” Take a look at the last lines from the Code of Conduct from Omnicom, a massive group of companies including many leading advertising firms that purchase ads in Forbes:

We expect each employee to exercise good judgment and discretion in giving or accepting any gift. No set of specific rules can anticipate or capture every possible instance in which an ethical issue may arise. Instead, all of us must be guided by the overarching principle that we are committed to fair and honest conduct and use our judgment and common sense whenever confronted with an ethical issue.[6]

1.5 Questions to Ask before Accepting a Gift In their book Moral Issues in Business, authors William Shaw and Vincent Barry formulate a list of questions that, when answered, can provide support and clarity for making decisions about whether a gift may be accepted. They’re not going to tell you what to do—there’s no magic guide—but they can help you see things more clearly. In modified form and with some additions and subtractions, here’s the list.[7]

< Is there a conflict of interest, or the appearance of a conflict, that arises because of the gift? Not every gift raises conflict of interest concerns. Maybe a marketer at Forbes gets a late cancellation for a Highlander night and can’t find any targeted media buyer to fill the spot, so the invite gets handed off to a buyer specializing in purchasing ads for young teenagers. Why not? It’d just go to waste otherwise. And should that lucky media buyer say yes? It’s difficult to find an ethical reason not to since no conflict of interest concerns seem to arise.

< What’s the gift’s value? This can be an easy one. When Foreman was invited to a Springsteen concert he could just look at the tickets and see that he’d been offered something worth $500. On the other hand, getting the chance to chat up a Sports Illustrated swimsuit model on the

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Highlander is going to be harder to quantify. In those cases where a value can be set, the number allows a clean dividing line: anything above the a specified amount gets categorized as potentially influencing a decision and so causing a conflict of interest, while any gift worth less may be considered nominal, too small to threaten professionalism. What’s the magic number? That depends on who’s involved and the general context, but many organizations are currently setting it at $25, which is, not incidentally, the limit the IRS sets for business deductions for gifts to any single person during one year.

< Is the gift provided out of generosity or for a purpose? No one can peer into the soul of another, but something offered during the holiday season may be more acceptable than the same thing offered just before a major advertising buy is being made.

< What’s the gift’s purpose? Just because a gift isn’t an outpouring of generosity so much as an expression of self-interest doesn’t mean there’s a corrupting intent. For example, if Forbes magazine sends Foreman a free copy of each issue, that’s more like advertising for themselves than an attempt to buy the guy off. Almost all of us have had the same experience: we’ve received calendars or notepads in the mail from a local real estate agent or insurance seller. These aren’t attempts to buy us, just ways to present their services. On the other hand, it’s hard to see how tickets to a Springsteen concert given by a magazine can be anything but an attempt to induce the receiver to give a gift back by throwing some ad money the publication’s way.

< Is it a gift or entertainment? Traditionally, a distinction has been drawn between giving gifts and paying for entertainment. As a rule of thumb, the former is something you can take home and the latter is enjoyed on the spot. Presumably, entertainment raises fewer ethical concerns because it isn’t a payoff so much as a courtesy extended to a media buyer in exchange for hearing a pitch. If someone from Forbes wants to convince Foreman that her magazine is the best place for advertising dollars, then it doesn’t seem so bad, buying him a lunch or a few beers while he hears (endures) the pitch. After all, it’s her job to sell the magazine and it’s his to know the advantages all the magazines offer. This is just normal business. Gifts, on the other hand, seem much more like bribes because they don’t exist in the context of normal business conversations. Take the tickets to a Springsteen concert; they have nothing to do with business and can’t be justified as a courtesy extended within the boundaries of normal exchanges between magazines and ad buyers. Finally, with respect to the parties on the Highlander, those are technically entertainment since Foreman can’t take the yacht home afterward. It doesn’t sound, though, like a lot of business talk was going on.

< What are the circumstances? There’s a difference between Forbes magazine handing concert tickets to media buyers to mark the launching of a new column in the magazine and their constant, ongoing provisioning. As part of the launch campaign, it’s much easier for Foreman to accept the gift without feeling trapped by an obligation to throw business Forbes’ way since he can respond to the gesture simply by being aware that the new column is there and taking it into account when he makes future buying decisions.

< What power do I have to bestow favors in return for gifts? Foreman’s job title is assistant media buyer, meaning he probably doesn’t actually decide which magazine gets the business. He just gathers research data and makes a recommendation to the boss. Does this free him to enjoy the Highlander nights guilt free? Hard to be sure, but it definitely helps him fulfill his professional obligations: it’s just much easier to do the data mining and recommendation writing in the back office than it is to be the guy sitting out front telling Forbes magazine the answer’s “no,” even though the parties were great. If that’s the way things go, Foreman may be a coward for letting his boss deliver the bad news to Forbes, but that’s a personal ethical failure, not a business one.

< What’s the industry accepted practice? In New York state government, as the Paterson case shows, the accepted practice is no gifts, period. In the looser world of Manhattan media business, New York magazine sums things up: “Everybody in our industry is guilty of it. Many of those who travel for work take their boyfriends and call it a vacation.”[8] Care should be taken here to avoid the conclusion that whatever everyone else is doing is OK. That’s not it at all. But it is true that if everyone’s guilty—if all the magazines are lavishing gifts on media buyers, and all the buyers are accepting—it’s going to be much easier for Foreman to satisfy his professional obligations. It’s going to be easier for him to tell Forbes “no” (assuming the demographic facts recommend that) when all the magazines are gifting about equally and everyone’s accepting than it would be if Forbes were the only magazine giving the gifts and he was the only one accepting.

< What’s the organization’s policy? As the Omnicom Code of Conduct illustrates, sometimes policy provides words but no guidance. As the New York government policy (which prohibits all gifts) shows, however, sometimes there is guidance. When true guidance is provided, an employee may fairly reason that following it is fulfilling professional obligations to the employer.

< What’s the law? Generally, laws on gift giving and receiving apply to public officials and those working with them (politicians, judges, lawyers, businesses doing work for the government). As is

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 159

bribe

Something of value given to an individual to corrupt his or her professional judgment.

kickback

Something of value given to an individual in return for having corrupted his or her professional judgment.

always the case, the legal right doesn’t in itself make ethical right. It can, however, provide the foundation for making an ethically recommendable decision, assuming other factors—many of which will come up through the set of questions just listed—have not been ignored.

Conclusion. Gifts cause a conflict of interest when they threaten to corrupt an employee’s judgment on business matters related to the interests of the person or organization providing the gift. Sometimes gifts are given with that intention, sometimes not. Regardless, and no matter what the law or corporate philosophy may be, it’s frequently the employee who ends up deciding whether a gift will be accepted. If it is, a responsibility follows to justify accepting it.

1.6 What’s the Difference among Gifts, Bribes, and Kickbacks? One advantage of the developed framework for thinking ethically about gifts in the midst of advertising business relationships is that it provides a compact way to manage the ethics of bribes and kickbacks.

Bribes are gifts—everything from straight cash to entertainment—given to media buyers with the direct purpose of corrupting their professional judgment by appealing to their personal welfare. When a representative from Forbes magazine gives Chris Forman tickets to the Springsteen show with the in- tention of spurring Foreman to consider buying ad space in Forbes, that’s a gift; it’s left to Foreman to decide whether he can accept it without betraying his obligation to serve his employer’s interests. When, on the other hand, the rep gives the same tickets with the intention of getting Forman to directly buy the space, that’s a bribe. A bribe, in other words, is an extreme conflict of interests where the indi- vidual’s personal interest completely overwhelms the professional responsibilities implied by his job. If Foreman accepts this kind of gift—one where he knows the intention and accepts that the objectivity of his judgment will be blinded—then he’s crossed into the zone of bribery. Receiving bribes, finally, seems unethical for the same reason that accepting gifts can be unethical: it’s betraying the promise to act as an agent for the organization.

Kickbacks resemble bribes except that instead of the gift or entertainment being given over first and then the ad space getting purchased, the ad space is purchased and then a portion of that revenue is sent back to the media buyer as cash or Springsteen tickets or whatever. Regardless of whether the me- dia buyer gets his reward first and then buys the ad space, or buys the space and then gets rewarded, what’s happening on the ethical level doesn’t change. Personal interest is being exploited to corrupt professional judgment. That means accepting the reward becomes a form of lying since it’s a betrayal of the implicit promise made to do the job right when you sign the contract.

1.7 In the Real World, What’s the Difference among Gifts, Bribes, and Kickbacks? In actual day-to-day business it can be extremely difficult to distinguish among gifts, bribes, and kick- backs because at bottom all of them spark conflicts of interest. All of them, consequently, are also going to incite at least remote suspicions of corruption. Of course it’s always easy to find examples at one ex- treme or the other. On the safe side, if a woman seeking your business pays for one cup of coffee for you once, it’s unlikely that you’ll give her proposal any special consideration, and it’s doubtful that she’d expect it. If she offers to make your car payments on the other hand, it’s pretty clear something’s going on. Usually, however, the lines are blurry and the reality more like the one Foreman lived through. The exact monetary value of what he received wasn’t certain. Did he get the invitations with the intention of having his judgment tainted or were they extended as a courtesy and in accordance with the industry’s common practice? Would he get more and better invitations if he sent Forbes magazine some extra dollars? While these questions don’t have certain answers, the ethics can be rendered in straightforward form. Agents of an organization have a duty to act in favor of the organiza- tion’s interests regardless of what happens after hours.

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third party

A person exposed to, and caught up in a situation of conflict or ethical tension between others.

K E Y T A K E A W A Y S

< Conflicts of interest arise when an individual’s professional judgment is challenged by an appeal to personal interest, as occurs when a prospective client offers a gift.

< Because suspicions of unethical practices arise almost immediately when a conflict of interest exists, even appearances of a conflict of interest present problems in business.

< Standard practices for dealing with gifts include outright refusal, acceptance of gifts with only nominal value, acceptance in accord with industry practices, and good sense within a clearly understood situation.

< In certain contexts, gifts of significant value may be accepted ethically, as long as they don’t corrupt professional judgment.

< Bribes and kickbacks can be managed ethically within the framework constructed for gifts. Both bribes and kickbacks function as gifts that do, in fact, corrupt an employee’s professional judgment.

R E V I E W Q U E S T I O N S

1. Why do gifts create conflicts of interest?

2. What is the main advantage and disadvantage of dealing with gifts and conflicts of interest by prohibiting the acceptance of gifts?

3. What questions could you ask yourself to help frame the question as to whether you can ethically accept a business-related gift?

4. What’s the difference between a conflict of interest and the appearance of a conflict?

5. What’s the difference between a gift and a bribe?

6. What’s the difference between a bribe and a kickback?

2. THIRD-PARTY OBLIGATIONS: TATTLING, REPORTING, AND WHISTLE-BLOWING

L E A R N I N G O B J E C T I V E S

1. Define third-party obligations. 2. Elaborate three standard responses to third-party obligations. 3. Define whistle-blowing. 4. Consider justifications and requirements for whistle-blowing.

2.1 Caught in the Crossfire A hypothetical situation. You work at Omnicom, at the desk next to Chris Foreman. Like him, you’re an assistant media buyer. Though your area of concentration is distinct (you’re in charge of placing ads on radio stations) you team up with him from time to time to run numbers, and you know enough about how it all works to recognize when something’s going wrong. In your opinion, it is. Chris is sending ads to Forbes that would deliver more for the client if they’d been placed in BusinessWeek. Fur- ther, you believe he’s doing it in exchange for the gifts. You can’t prove that but you do know this: he’s occasionally supplementing his lousy income by selling some of what he’s receiving—concert tickets, vouchers for limo service, things like that—on eBay. You’ve tried talking about it, bringing the subject up one way or another, but he doesn’t want to talk back. And when you say it directly, when you ask whether it’s right to accept gifts from Forbes and convert them to money, he laughs. “Everyone does it,” he says.

This situation is different from most of those discussed so far for an important reason: you’re not directly faced with an ethical dilemma; you’re not the one placing the ads or accepting the gifts. Still, you do work with Chris, sometimes even sending over marketing data that he uses for his accounts. You’re a third party, which in this situation means you’re not directly responsible for what’s going on but you’re caught in the cross fire between Foreman and Forbes magazine.

There are infinite variations on this kind of predicament. The financier-fraudster Bernie Madoff asked his secretary to cover up his affairs by answering his wife’s phone calls and saying he was in a

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third-party obligation

An obligation by a third party to respond to an ethical tension directly caused by others.

tattling

Using a third-party obligation as an excuse for sabotaging a workmate.

weaponized ethics

Using ethical rules against the interests of others for personal gain.

reporting

Bringing to light only within the organization information about misdeeds by the organization or by an individual within the organization.

meeting and couldn’t be interrupted. In the student union of your campus, maybe the breakfast menu offers omelets cooked with fresh eggs, but you work there and know the manager occasionally messes up the stocking order and so ends up selling omelets made from a preordered mix of egg-like chemic- als. What do you do? It can be a hard call and at least two questions arise on the way to making it:

1. You need to decide if something truly unacceptable is happening. 2. You’ve got to determine whether it’s any of your business.

If, finally, something unacceptable is happening and you should do something about it, you’re facing a third-party obligation. This is an ethical responsibility to correct something you’re not actually doing.

2.2 Why Should I Get Involved? Ethics and Self-Interest When confronted with a third-party obligation, employees may get involved for a number of reasons. One is as a response to an ethical responsibility. Another: as an opportunity to benefit themselves.

Tattling, as any child knows, is revealing an ethical transgression involving others, and revealing it for your own benefit. Take the case of assistant media buyer Chris Foreman and another assistant me- dia buyer who learns that Foreman is shortchanging the ad agency’s client for personal benefit. If you’re that other assistant media buyer and you’re crafty, you may see not only an ethical lapse here but also your own personal chance. Every senior media buyer has several assistants underneath, and when the time comes for promotion, there’ll be space, presumably, for only one assistant to advance. Getting Foreman out of the way may not be a bad career move.

It’s an extremely ambiguous ethical move, however. On one hand, there’s solid justification for getting the truth known about Foreman. He’s clearly not fulfilling his professional obligations to the company. However, if you turn him in because that’ll give you a leg up on the promotion ladder, you can hardly say that ethical righteousness has driven your action. On the other side, this should also be noted: the fact that you may benefit from revealing unethical behavior probably can’t justify keeping everyone in the dark.

Typically, we think of ethical restrictions as painful, as obstacles you put between yourself and what you really want. That’s not always the case, though; they don’t necessarily make you suffer, they may make others suffer and serve your interests. When they do, you have weaponized ethics—that is, perfectly reasonable moral dictates used to attack others and benefit yourself. Tattling, finally, is the use of weaponized ethics, it’s doing the right thing for selfish reasons.

2.3 Responding to a Third-Party Obligation: Reporting Regardless of the motivation for responding to a third-party obligation, there are two broad paths the response can take: reporting and whistle-blowing.

Reporting ethical transgressions means bringing them to light, but only within the organization. In most situations, this route is the most direct way for third parties to balance their basic and immedi- ate obligations. Staying with the advertising scenario where you believe Foreman is essentially accept- ing bribes from Forbes, you have an obligation not only to halt the bribery but also to protect the agency’s interests. Obviously, a noisy public blowup about Foreman misspending a client’s money is going to damage the advertising company’s business. Reporting—because it stays inside agency walls—promises to rectify the bribery without causing larger publicity problems.

Bringing this into the real world, because reporting ethical problems does allow them to be ad- dressed without harming the agency, the Omnicom Code of Conduct includes this:

All reports of possible violations about which management becomes aware will be promptly considered. We will not punish any employee or representative for making any report in good faith.[9]

It’s in Omnicom’s interest to get ethical dirty laundry washed in-house. Up to here, the situation’s resolution has come easily. But there’s another, potentially complicat-

ing, obligation to consider: the human link to Chris Foreman. Almost all organizations rely on and seek to nurture bonds of shared responsibility and dependence between employees: in working life, when someone’s sick or just having a bad day, the others have to pick up the slack. That nurturing ex- plains why anyone who’s entered a fast-food restaurant knows the workers aren’t “coworkers” but “teammates.” In most organizations, some form of the camaraderie holds, and you can’t just break those bonds from one moment to the next. That means if you’re working with Foreman and you know

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whistle-blowing

Bringing to light outside the organization information about misdeeds by the organization or by an individual within the organization.

he’s doing wrong, you may well feel an obligation to not report anything because you don’t want to cause him problems. Reporting, the conclusion is, a coworker for ethical lapses is easy. But in the real world there are no coworkers; there are only flesh and blood people.

Next, even if those human connections to others don’t move you, you also have obligations to yourself and your own welfare to consider, and turning others in to company authorities can ultimately come back against you. By giving rise to distrust and possibly resentment among other colleagues who fear they may be the next ones to get reported, you may be in essence isolating yourself in your own cubicle.

In the end, seeing what Foreman is doing and stretching ethical obligations through the situation, you may find yourself torn between reporting him and not. There’s no automatic resolution to this di- lemma, only the attempt to weigh the obligations and get a sense of which outweigh the others.

2.4 Responding to a Third-Party Obligation: Whistle-Blowing Whistle-blowing is bringing ethical transgressions to light publicly outside the organization. A recent case involved one of the many advertising agencies gathered under the Omnicom umbrella, Leo Bur- nett. Two employees—Vice President Greg Hamilton and Comptroller Michelle Casey—alleged, and a subsequent federal investigation backed them up, that Leo Burnett was overbilling the government for their work on the US Army’s “Army of One” recruiting campaign.

The agency was supposed to calculate its hourly rate with a formula dividing charges between the more expensive work done directly in Leo Burnett’s offices and the less costly hourly labor performed by subcontractors. What Leo Burnett did was simple: they billed subcontractor work at the higher in- house rate. The accounting in these massive campaigns—TV, radio, and print ads as well as sponsor- ships and events—is so knotted that a virtual army of accountants is required to keep track of where all the money is going. In that kind of numerical chaos, the agency could expect that switching a few hours from one column to another deep inside the mountain of paperwork would go unnoticed by outside auditors. It did go unnoticed—until Hamilton and Casey told the government what was going on.

Almost inevitably a lot of dust gets kicked up when employees turn on their employers noisily and publicly. In this case, the US Justice Department lawyers rode in, and they probably wanted a scalp on their wall: they have limited resources, limited time and money, and when they take something on they want to win, and they want people to know about it. Back on the agency’s side, they’re going to defend themselves, and that typically entails attacking their accusers, maybe labeling them disgruntled, incom- petent, or worse. In this case, there was also a tug-of-war over money. The agency obviously wanted to keep as much as it could, the government wanted money back, and thanks to the False Claims Act, Hamilton and Casey also demanded their share, which came to almost $3 million.

The False Claims Act is a federal law designed to encourage whistle-blowing on private contractors who are attempting to defraud the government. Whistle-blowers are entitled, under the law, to 30 per- cent of the damages the government obtains. The incentive doesn’t apply to situations involving only private companies, but even there whistle-blowers may encounter suspicions that ulterior motives—not a dedication to doing the right thing—finally spurred their loud assertions about misdeeds.

Finally, with respect to the Leo Burnett fraud, the full details will never be known. Because the case never went to trial, there was little public exhibition of evidence and testimony. To head the whole mess off, Leo Burnett agreed to settle. In the words of a published report, “Leo Burnett denied any wrongdoing and said in a statement that it agreed to the settlement ‘to avoid the distraction, burden and expense of litigation.’”[10]

Every case of whistle-blowing is different, but a few questions get to the heart of most instances: < What, exactly, is whistle-blowing? < What justifies whistle-blowing? < What weighs against whistle-blowing? < Can the whistle-blower expect protection? < Is whistle-blowing morally required?

2.5 What Is Whistle-Blowing? Whistle-blowing is bringing an organization’s ethical transgressions to public light. Spilling the beans to the family over dinner, however, doesn’t count; the truth must be exposed to an authority or institu- tion capable of taking action. In the case of the advertising agency, Hamilton and Casey took their in- formation to the federal government. They also could have selected one of the important industry pub- lications—say, Advertising Age magazine. Any information published there would draw attention from those involved and give the client (in this case the US Army) the opportunity to act on behalf of its own

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interests. The news media—a newspaper, a TV station—may have been a possibility in this case, given the large scope of the fraud and the national interest underneath it. Other possibilities could be listed, but what’s important is that the report of misdeeds goes to someone who can do something about it (or at least provoke others to do something). Finally, whistle-blowing may be anonymous. However, in practical terms, that’s frequently not a real option because government authorities, like private ones (editors of industry publications and so on), are far less likely to spend time tracking down the truth about accusations when even the accuser is unwilling to stand behind them.

2.6 What Justifies Whistle-Blowing? Whistle-blowing needs careful justification because it requires violating the obligation any employee has to protect the interests of the employer. Here are five items that could be checked before publicly lighting up an organization’s misdeeds from the inside. Importantly, the fact that the items may all be checked doesn’t oblige action, but it does raise the possibility as ethically justifiable.

1. There is clear evidence of continuing wrongdoing by the organization or continuing effects of past wrongdoing. In the business world, actions that are entirely locked in the past are the subject of history, not ethics.

2. The wrongdoing must be serious. In the case of Leo Burnett, the case wouldn’t cross this threshold if only one hour of labor had been attributed to the higher-cost office. But the threshold would be crossed if the agency significantly overcharged many hours for years, bleeding the account of its resources and ultimately damaging the army’s ability to recruit new, top-flight soldiers.

3. The organization’s established, internal channels for reporting and correcting problems have been exhausted. Most organizations provide clear ways for employees to voice concerns internally. A conversation with a supervisor is an obvious example. At larger organizations, sometimes an entire internal department has been mounted to receive and act on the concerns of employees. Here’s the web page of a typical example; it links to Walmart’s internal department for ethics: http://ethics.walmartstores.com/Statementofethics/RaiseAConcern.aspx. Whether, finally, there’s a clear, formal route for internal reporting or not, employees have a responsibility to try to resolve problems in ways that benefit—or do the least possible damage to—the organization, and therefore the possibility of raising concerns internally needs to be explored fully. (As always, there are special cases. If, for example, the CEO of a small advertising company is robbing its client’s money, there may be no internal route to resolution, leaving external whistle-blowing as the only moral corrective. Also, though whistle-blowing is defined as taking action outside the organization, the definition could be stretched to include the act of bringing wrongdoing to light directly before high officials within an organization by skipping over the normal chain of authority.)

4. There’s unmistakable and convincing evidence of misconduct. The evidence must be unmistakable in the sense that it clearly indicates wrongdoing; it can’t be that an innocent explanation seems as likely as a guilty one. In the Leo Burnett accounting books, if it turns out that on one page all the internal hours are in the external hours column and vice versa, that may be an attempt to defraud the government, or it may just be that the data-entry guy came to work one morning hung over and ended up confusing the numbers. Further, the evidence must also be compelling in the sense that there’s enough of it for a reasonable person to conclude the misdeeds are actually occurring. So even if you’re certain numbers are being entered incorrectly intentionally, but it turns out that the difference—the amount of extra money Leo Burnett is making—is trivial, then it’s going to be hard to justify creating a stink. It may be, for example, that someone in the accounting department is making small adjustments in order to balance errors found elsewhere in the giant balance sheet.

5. There’s reason to believe that whistle-blowing will resolve the problem. In the case of Leo Burnett—or any business that’s overcharging a client—you can be pretty sure that bringing the fraud to light will spark action, at least by the defrauded client. On the other hand, if you’re in the production department of the advertising agency (in other words, you’re actually filming commercials) and you regularly get shipped down to Mexico to shoot campaigns because everything’s cheaper down there and you learn that some of the extras in the commercial’s background are working longer hours than local regulations allow, you might reasonably figure that you can talk all you want in public, but it’s not going to make any difference.

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confidentiality clause

A clause in many work contracts wherein employees promise not to share certain information with those outside the organization.

Sarbanes-Oxley Act

Passed in 2002 by the federal government, the legislation regulates some businesses’ finances and transparency. The act also provides some protection to some whistle-blowers.

2.7 What Weighs against Whistle-Blowing? The three heaviest arguments against whistle-blowing are

1. legal requirements for confidentiality, 2. prudential concern for one’s career and personal welfare, 3. an employee’s sense of loyalty to the organization.

A legal requirement for confidentiality may weigh against whistle-blowing by binding employees to not share a company’s internal information. The requirement traces back to a section contained in many work contracts. Called a confidentiality clause, here’s a basic version:

Employees may have access to records and other information about customers and other employees, including proprietary information, trade secrets, and intellectual property to which the Company holds rights. Employee agrees to keep all such information strictly confidential and to refrain from discussing this information with anyone else without proper authority.

While this is most directly aimed at protecting consumer information (say, credit card numbers) and company trade secrets (Coke’s secret formula), it may also be read as safeguarding the kind of in- formation a whistle-blower wants to make public. In the case of the Leo Burnett agency, what Vice President Hamilton and Comptroller Casey told the government did, in fact, involve “records and oth- er information about customers.”

The second major argument against whistle-blowing, self-interest, operates in both the profession- al and personal sense. Turning against the company may be the right thing to do, but it’s almost inevit- ably a painful thing to do, at least according to a survey published in the New York Times. What condi- tion, the study sought to determine, do whistle-blowers find themselves in a few years afterward?

< One hundred percent who worked for private business were fired. < Twenty percent could still not find work at the time this survey was taken. < Seventeen percent lost their homes. < Fifty-four percent had been harassed by peers at work. < Fifteen percent viewed their subsequent divorce as a result of whistle-blowing. < Eighty percent suffered physical deterioration. < Eighty-six percent reported significant emotional stress (depression, anxiety). < Ten percent reported having attempted suicide.[11]

It doesn’t sound good. Of course every case is different, and if you look on the other side of these num- bers, they leave room for the possibility that at least some people do the right thing and get on with their lives just fine. Still, there are no guarantees and ethics isn’t only about duties to others and the world outside, all of us have equal duties to ourselves: duties to maximize our potential, protect those nearest to us, and defend our own welfare.

Finally, the values and reasons supporting loyalty as a reason for not blowing the whistle will be considered in their own section further on.

2.8 Protecting the Whistle-Blower As the survey data about whistle-blowers reveal, there’s not a lot of protection for them. That isn’t for a lack of trying, however. At both the state and federal levels, reams of laws have been enacted to protect those who expose wrongdoing organizations. Perhaps the most notable is the Sarbanes-Oxley Act. Passed in 2002 by the federal government as a response to a series of disastrous accounting frauds at large companies, Sarbanes-Oxley is a massive piece of legislation intervening in many parts of the busi- ness world, and especially in aspects connecting to an organization’s finances and transparency.

Specifically with respect to whistle-blowers, the law attempts to encourage it by protecting whistle- blowers at publicly traded companies that report activities to government agencies. (The act doesn’t ap- ply to privately held firms dealing exclusively with other private firms.) Employers are prohibited from taking retaliatory action (firing, demoting, harassing), and whistle-blowers are provided clear avenues for lawsuits should such retaliation occur. Here’s the legislative language: “In order to establish a case

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 165

under Sarbanes-Oxley, an employee must prove that she (1) reasonably believed that her employer was breaking the law; (2) engaged in whistleblowing activity as defined by the statute; (3) suffered an ad- verse employment action; and (4) that there was a causal connection between the whistleblowing activity and the adverse employment action.”[12]

The problem is that last clause. Everyone who’s ever had a job knows that mistakes happen every day. Deadlines are missed, projects contain errors, goals aren’t met. Bosses who have it in for you aren’t going to have many difficulties converting those mishaps into reasons for denying wage hikes and even outright firing. In your heart you may know—everyone may know—that you’re suffering retaliation for reporting the company, but proving it can be difficult.

The bottom line is—and as the previous survey shows—if you publicly divulge information seri- ously damaging your employer, you’re probably going to be gone. And even if you find some protec- tion in one or another law, it’s difficult to imagine that your career is going anywhere inside the com- pany. Worse still, prospective new employers are, very likely, going to hesitate before extending a job to someone who has already caused serious problems for a former employer. Taken all together, the bleak reality is that in most cases whistle-blowers can’t count on getting back the life they had before they publicly disclosed their organization’s misdeeds.

2.9 Is Whistle-Blowing Morally Required? Given the abundant reasons—financial, professional, emotional, and ethical—against whistle-blowing, are there any cases where a moral argument can be formed to require publicizing an organization’s un- ethical actions? Probably, but they’re few. Here’s a possible rule of thumb: whistle-blowing is required when the act can prevent harm to others in ways that are serious and go beyond the bottom line. If someone is getting ripped off, the reasoning goes—if an advertising company is overcharging its clients—whistle-blowing may be justified, but not required. All that’s at stake is money. On the other hand, if a nuclear power plant is being constructed near a residential area and you learn the contracting company you work for is using cheap cement to boost the profit margin, it seems as though you have little choice—the weight of elementary personal integrity in the face of potentially lethal wrongdoing probably requires personal sacrifice.

What about the hypothetical Chris Foreman situation? You’re working with him and have ac- quired sufficient evidence to know that he’s selling out his client by sending their ad dollars to Forbes magazine in exchange for Highlander nights. You’ve reported the matter internally and received no re- sponse. Do you go public? You’d certainly be justified in taking the story to Ad Age magazine. Just run- ning down the list of conditions justifying whistle-blowing, they all get checked:

1. There’s clear evidence of continuing wrongdoing by the organization. 2. The wrongdoing is serious (at least in the world of advertising). 3. The organization’s established, internal channels for reporting and correcting problems have

been exhausted. 4. There’s unmistakable and convincing evidence of misconduct. 5. There’s reason to believe that whistle-blowing will resolve the problem.

The question remains, however, whether the issue affects life beyond business and the bottom line. It doesn’t appear to. At bottom, this is the case of a client—AT&T mobile phone services—getting poor service from an Omnicom company. That should be corrected, and presumably market forces will cor- rect it sooner or later, but whether they do or don’t, there’s no requirement here to seriously jeopardize your own financial, professional, and emotional welfare.

What about the case of Leo Burnett? Again here a client is getting a raw deal, but there’s an im- portant difference: this is the army, not a telephone company. If it’s true that the recruiting budget is being seriously hindered, the situation may be crossing the line from justified whistle-blowing to justified and required. If it does cross that line, the reason will be that protecting your own financial and emotional welfare is trumped by the responsibility to help soldiers in war resist mortal danger as totally as possible. The fact that the army isn’t getting the best recruits possible doesn’t just affect people in the pocketbook, it threatens those on a live battlefield. Faced with that reality, it will be hard for individuals including Burnett employees Hamilton and Casey to keep quiet just because they don’t want to lose their jobs.

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narrow company loyalty

An employee’s willingness to stick with an employer instead of seeking work elsewhere.

broad company loyalty

An employee’s conviction that an organization—it’s ideals and actions—has intrinsic value distinct from its ability to serve the employee’s interests by providing a paycheck and associated benefits.

K E Y T A K E A W A Y S

< Third-party obligations arise when you know of wrongdoing by an organization or by individuals within it, and though you aren’t directly at fault, you’re in a position to correct the problem.

< In some cases, third-party obligations can be opportunities to sabotage a fellow worker for personal gain.

< Responses to third-party obligations include reporting the problem inside the organization for correction and publicizing the problem, also known as whistle-blowing.

< Because whistle-blowing harms the organization, employees must take into account their responsibility to defend the organization’s interests before publicly decrying the wrongdoing.

< In some cases whistle-blowing is not justified, in some it is, and in some extreme cases, whistle-blowing may be ethically required.

< In practical terms, whistle-blowing can be devastating for the employee.

R E V I E W Q U E S T I O N S

1. Create a hypothetical third-party obligation involving an employee of a major company.

2. What does it mean to deploy weaponized ethics?

3. What questions can be asked to help determine whether whistle-blowing is justified?

4. What questions can be asked to help determine whether whistle-blowing is ethically required?

5. Why might an employee hesitate before whistle-blowing?

6. The Sarbanes-Oxley Act tries to protect whistle-blowers. Why is it not very effective?

3. COMPANY LOYALTY

L E A R N I N G O B J E C T I V E S

1. Define company loyalty. 2. Elaborate three degrees of company loyalty.

3.1 Two Kinds of Loyalty There is narrow company loyalty and broad company loyalty. The narrow definition pertains to employment: the loyal employee sticks with the company instead of looking for work elsewhere, espe- cially during economic booms when jobs are plentiful and moving on is easy.

This kind of loyalty, however, is in trouble according to an article from the Harvard Business School: “The very nature of the relationship between employers and employees has undergone a funda- mental shift: Today, workers not only don’t expect to work for decades on end for the same company, but they don’t want to. They are largely disillusioned with the very idea of loyalty to organizations.”[13]

Part of the reason for the shift—and part of the reason employees don’t stay at companies for dec- ades—is that many employers don’t hesitate to fire their workers at the drop of the hat when it serves the company’s interest. On the other side, according to the article, it’s also true that today’s workers don’t hesitate to move on to a new job when a better one, or maybe just a different one, comes along. Regardless of who went first, the fact is company loyalty—whether it’s going from the company to the worker or the worker to the company—isn’t what (we are told) it once was.

The broad definition of company loyalty goes beyond employment questions and measures an em- ployee’s willingness to sacrifice income, leisure time, personal relationships, family responsibilities, and general life aspirations in the name of the organization. To create this dynamic of sacrifice, two distinct kinds of relationships with the organization are required:

1. Attachment to the organization that is noninstrumental. This means the attachment isn’t maintained only because it serves the employee’s concrete interests, such as the need for a salary to pay the rent and grocery bills.

2. A deposited value in the organization that goes beyond any individual and their attachment; the organization’s value continues even without those who currently feel it.

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 167

obedience loyalty

Within the field of broad company loyalty, the feeling that the organization’s existence and goals are far more valuable than the employee’s welfare.

balanced loyalty

Within the field of broad company loyalty, the feeling that the organization’s existence and goals are valuable and independent of the employee’s welfare, but the employee’s welfare is also valuable and independent of the organization’s existence and goals.

Probably, there’s not a lot of this kind of deep loyalty in the advertising field. Agencies are constantly stalking new clients, even trying to steal them from others. For their part, most clients are constantly looking for better deals and ways to refresh their image, and they are usually open to proposals from new firms interested in handling their communication. More, companies that employ advertising agen- cies constantly “put their account up for review,” which means the current account holder has to com- pete with new entrants just to maintain the business. There are exceptions, of course, but for the most part advertising agencies are constantly clinging to the business they have, seeking new opportunities, and always on the lookout for fast money. In that kind of cutthroat environment—one where it’s your job to sing the praises of Burger King one day and McDonald’s the next—it’s going to be difficult for workers to feel as though they should (or even can) be true to their current employer.

Other kinds of organizations seem more likely to instill feelings of loyalty. A religious hub—a church, a synagogue, a mosque—is one obvious example. Most priests are attached to, and deeply con- cerned by, the welfare of their church; they serve their institution and aren’t working there for the money (which probably isn’t great). Further, most also believe their institution has value beyond them: the importance was there before they arrived (or were even born) and will continue after they leave. Taken together, these elements create space for true employee loyalty to the organization. Something similar—the existence of a space for labor that’s not about money and similar rewards—could be found surrounding many who work for Greenpeace, Doctors Without Borders, political parties, the CIA, the United Nations.

Other professions open on both sides of the line—that is, there’s ample space for an instrumental relationship (I keep this job because it makes me happy) and one based on broad loyalty. Some medical doctors are in it for the money but others for the care, for the principle that bringing health to others is a good cause. Law is another example. Ambulance-chasing lawyers just want payoffs, but some judges believe in the law as something larger than themselves and a basic force for civilization that’s worth serving. Moving down to street level, there are police officers who just like a steady paycheck and oth- ers in the field to serve and protect: they see their work as improving the lives of others and the general community.

3.2 Three Degrees of Loyalty Within a dynamic of employee loyalty, there are three levels of dedication: obedience loyalty, balanced loyalty, and free agency.

Obedience loyalty, which is an extreme case, works from the idea that the organization is worthy and the employee is comparatively worthless or only worthwhile to the extent he or she serves the or- ganization. This extreme will be reached only rarely, but there are glimmers of it in some professional activities. One quick way to identify these kinds of labors is to check whether the truly dedicated are willing to sacrifice even their lives for the cause their organization embodies. The armed forces come to mind here. Some political organizations command this devotion, especially in revolutionary times. Some workers’ devotion to their labor union has been sufficient to put their lives in danger. The explor- ing scientist Charles Darwin believed in accumulating knowledge and put his life at risk in the field as he tracked rare species and ecosystems.

Not so dramatic or extreme, some professions and organizations can suck the emotional life out of employees. Or they may take vast chunks of the employee’s time. Undercover police work exemplifies by requiring a loyalty reflected as self-sacrifice to an extent few of us would contemplate. April Leather- wood, for instance, went undercover in Memphis for an entire year. Almost entirely separated from family and friends, she lived on the street, wore the same clothes every day, went without brushing her teeth, and rarely bathed. That was an ugly year of her life, one sacrificed for the job.[14]

Balanced loyalty is a situation where both the employee and the organization recognize in each other an independent value. In this case, the employee can be expected to make sacrifices—possibly even do things he or she would normally consider unethical—in the name of serving the larger organ- ization. One example would be a lawyer working in a public defender’s office, one who believes that the system of law and the rules of its enforcement are noble and should be respected to some important ex- tent that is independent of the particular lawyer’s welfare and beliefs. The loyalty can be reflected in a number of ways. First, it’s simply the case that most public defender positions don’t pay as well as sim- ilar posts in private firms. Pushing further, the public defender may be asked to represent and defend a client she knows (or strongly suspects) is guilty. In this case, presumably, she’s being asked to do something she wouldn’t do in her day-to-day life—that is, serve the interests of a guilty man. More, presenting a full-blown legal case for the defendant’s innocence would essentially be lying and, again, something the lawyer might not typically do.

At the same time, this lawyer probably won’t be sacrificing everything; she’ll recognize that her life and aspirations have value also, and there may come a point where she decides the sacrifices demanded by the job are too great to bear. Perhaps she’s just had a child and needs to up her income, or, maybe a man she helped set free has committed a gruesome crime. However the situation might be, when the

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free agency

Within the field of broad company loyalty, the feeling that the organization’s existence and goals are valuable only insofar as they serve the employee’s welfare.

lawyer leaves the office of the public defender for a higher paying job at a large private firm, she has demonstrated a balanced sense of loyalty. She’s willing to sacrifice in the name of a larger organization she respects. But only up to a point.

Other demonstrations of balanced loyalty to the organization could include < buying the company’s products (though they aren’t the personal preference), < evangelizing in public life (telling your friends how great the company or its products are), < voting for the political candidate the company affirms will best serve its interests, < moving for the company.

Free agency is the extreme on the bottom end: the absence of loyalty. Some theorists propose that this should be the default state for most employees for this reason: it’s ultimately impossible to be loyal to a typical company because profit-making institutions just aren’t the kinds of things that can properly de- mand or receive any loyalty. The entire idea of loyalty, the argument goes, only exists in a reality where individuals stand by others to some extent without conditions (example: parents who love each other and their children unconditionally). Money-making businesses, on the other hand, are incapable of that kind of unconditional fidelity. On the contrary, the only desire most private enterprises know is the one to serve its own interests by making more profits. If that’s right—if companies have no loyalty to give—then its employees can’t enter into that kind of relationship. Instead, in the business world at least, you and I are forced to pursue our own interests—a higher salary or whatever—just as the larger company pursues its own.

Translating this into the working world, the absence of company loyalty is the idea that workers find value in their organization only because it serves their own interests. Of course it’s impossible to know the souls of others, or exactly what their deepest values are, but there might be a hint of this free- agent loyalty in the Leo Burnett case. Two high-level and highly paid workers served the company well—and were compensated well—until they turned whistle-blower against the firm. When vice pres- ident Hamilton and comptroller Casey alleged that Leo Burnett was overbilling the government for their work for the US Army, they weren’t just doing the right thing, they were doing a lucrative thing for themselves since the False Claims Act promised 30 percent of damages the government obtained. If the money is the reason they turned on the agency, they exemplify free-agent loyalty. They worked hard for the organization because the pay was good, but the moment they saw the chance to get even more money by turning against it, they jumped. At bottom, that means, their loyalty is only to themselves.

K E Y T A K E A W A Y S

< Company loyalty defined narrowly concerns employees sticking with the organization instead of looking for work elsewhere.

< Company loyalty defined broadly emerges from the idea that the organization possesses nobility that’s worth serving, even if employees don’t benefit personally from the contribution.

< The three degrees of company loyalty are obedience loyalty (the worker exists to serve the organization’s interests), balanced loyalty (workers and organizations share interests), and free agency (the organization exists to serve the worker’s interests).

R E V I E W Q U E S T I O N S

1. Name an organization that might inspire obedience loyalty. Why is obedience inspired? What does the loyalty look like?

2. Name an organization that might inspire balanced loyalty. Why is it inspired? What does the loyalty look like?

3. Name an organization that might inspire an attitude of free agency. Why is it inspired? What does the free agency look like?

4. Take a career you’re (considering) pursuing. On the scale from obedience loyalty to free agency, where do you imagine most employees in that line of work are located? Why?

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 169

high-stress job

A job in which the anxiety of the workday consistently washes over into the employee’s nonwork life.

4. STRESS, SEX, STATUS, AND SLACKING: WHAT ARE THE ETHICS OF MAKING IT THROUGH THE TYPICAL WORKDAY?

L E A R N I N G O B J E C T I V E

1. Consider ethical questions attached to several issues commonly arising during the workday.

4.1 Bringing the Office Home: High-Stress Work No book can cover the ethics of everything happening on every job, but four issues arising in most workplaces sooner or later are stress, sex, status, and slacking off. Starting with stress, what happens if the workday doesn’t end when the workday ends? For those enduring—or choosing—high-stress jobs, there’s no five o’clock whistle; even if they’re shopping or watching a baseball game, the job’s effects hum in the background. One simple example—and also one all of us see on the street every day—comes from an article in the USA Today. It recounts an academic journal’s finding that over- weight people pack on still more pounds when their work continually produces serious anxiety. If you’re overweight, the study shows, and you’re stressed in the office, there’s a high likelihood your stomach or your thighs are going to keep growing.[15]

One of the central arguments Aristotle made in ancient Greece was that doing right isn’t the highest goal of ethics. The careful understanding of our values and purposes centers on, ultimately, liv- ing a good life. Doing the right thing is part of that goodness, but happiness is there too, so one of the issues stress at work brings forward is this: how is my decision to accept stressful employment affecting my happiness and the happiness of those around me? Here are some more specific questions that could be asked on the way to pinning down the ethics of stress:

< What positive returns, exactly, am I getting from my stressful job? < Are there prospects for reduced stress in the future? < What are the costs of the stress? Is it affecting my weight, my leisure time, my friends, my

marriage and family? < Who is affected? Is anyone else suffering stress because I’m stressed out? Are people suffering

from my stress in other ways? Stress at work isn’t only a psychological problem or a medical one—it’s also laced with questions about value. It’s the most fundamental ethics: what’s worth doing and what isn’t? It’s impossible to know, of course, exactly where the line should be drawn and when stress is worth accepting. Any answer that will be justifiable, however, will have to begin with a clear understanding of exactly what the costs and benefits are.

4.2 Office Romance Hooking up at work is one eternal way of making the time fly, but what’s going on in today’s offices is somewhat different from the past. An article from the Wall Street Journal indicates how the meaning of sex in the office is shifting: “Marriage is a priority for most Americans—more than 90 percent of Amer- ican adults eventually marry—but these days it may not happen, as it so often did before, in the immediate post-high-school or post-college years. The truth is that we’re marrying later.”[16]

When marriages were typically celebrated at the end of the schooling years, work-related romances went hand in hand with infidelities. In that environment, questions arose about the organization’s role in any affair that may be occurring during company time.

The entire context of discussion changes, however, when a large number of people flowing into the workforce are unmarried and are looking to wed. Inevitably, the office is going to become a mating ground—people pass eight hours a day there—and one of the questions young workers are going to start asking when they think about jobs and careers is, will I be able to meet someone if I get into one or another line of work?

The aspiration to connect introduces a thorny dimension to employment decisions made by young people (and some older ones too). If you’re a guy working on a heavy construction job, the pay may be good, but there’s probably not going to be a woman in sight. On the other hand, doing the coursework

170 THE BUSINESS ETHICS WORKSHOP

status

As attached to the economic world, the special privileges and respect one receives because one holds a certain position.

personal slacker

An employee dedicated to doing the least work possible and who adopts the attitude for his or her own reasons.

context slacker

An employee dedicated to doing the least work possible because the incentive system of the labor contract—or some other external factor—encourages the attitude.

to earn paralegal certification may be a headache, but getting into the field isn’t a bad way to meet suc- cessful and interesting women.

What’s going on here is that as society changes—as marriage and family life get pushed back into time that used to be reserved for work—the factors shaping the way we think about which jobs are more desirable than others simply on a day-to-day basis are changing, and part of your responsibility to yourself is to keep track of what you really want from your 9 to 5 time. One of the standard moral obligations we share is the responsibility to be sincere not only with others but also with ourselves about important decisions touching the business part of life. And if romance is part of what you want from work, then the possibilities have to be taken into account just like salary and other benefits.

4.3 Status Chris Foreman, the media buyer who enjoyed yacht evenings on the Highlander and tickets to all kinds of major events, received a piddling salary. He thought about changing jobs but decided not to. One reason was that all the entertainment added a lot of indirect money to his income. There was another reason too—the special, VIP privileges he constantly received from his benefactors: “There’s a feeling of superiority. When you pass by a line at a screening because you’re on the list you do get that ego boost. You’re thinking, Ha, ha! I’m not a chump.”[17]

Status on the job makes a difference in quotidian working life, but it’s hard to quantify; it’s not like a salary, which is an objective number and can be directly compared with others on a pay scale. How much is it worth, the question is, to wing by others forced to stand in line?

Knotting matters further, defining exactly what counts as status isn’t easy, and any answer is going to move and slide depending on who you talk to. For some, being a lawyer is impressive and lucrative, for others it’s dirty and, well, lucrative. For some, being a test pilot is exciting and respectable, for oth- ers it’s scary and weird. Many people seated in first class on an airplane rush to get on early so that all the economy travelers get to see them as they file past. Some of those people headed toward the back of the plane see the first-class passengers as legitimate power elites, but others get the feeling that most of them are really chumps: the reason they’re in first class is because they used frequent-flyer miles to bump up, and the reason they have a lot of those is because their bosses always make them take the trip to see clients instead of bothering to do it themselves.

More generally, in the world of New York City media buyers, status seems linked with superiority, with being visibly more privileged than those forced to stand in lines. For others, however, status will be quieter. The teacher, the nurse—they find status not as superiority but as social importance.

Conclusion. Status means different things to different people, but anyone looking to get it from a job should ask how much is really there, and how much is it going to help me get out of bed in the morning and want to go to work?

4.4 Slacker’s Paradise Typical ways of getting through the day include throwing yourself into your work (frequently with the hope of a promotion or pay raise), firing up an office romance, and enjoying the status a post allows. Another way of making it from 9 to 5 is by trying to avoid doing work, by working to do as little as pos- sible. This is the slacker reality, and there are two routes into it: Personal slackers adopt the attitude for their own private reasons. The context slacker is dedicated to not working because the incentive system of the labor contract—or some other external factor—encourages slacking off.

Beginning with the personal slacker, the attitude starts with a decision: You take a typical job and make it your project to expend as little effort as possible. The reasons for adopting this stance depend on the person. Maybe there’s a passive-aggressive element, some personal frustration with life or per- haps a somewhat idealistic attempt to make a statement. In any case, the motives behind this kind of behavior should be pursued in a psychology course. Here all that matters is that for one reason or an- other the private decision gets made to get through the day by working to not work.

The second slacker pathway starts with a context. Here’s an example from an online discussion board: “Haha I worked in a union job and they were there to punch in…take a lunch…take 2 15min breaks…and punch out. They had 0 incentive to work hard because they would get a 0 dollar raise.”[18]

The key here is the incentive, the idea that working hard doesn’t benefit the worker because labor agreements are so protective and constricting that, on one side, it’s almost impossible to fire a worker, and on the other, it’s nearly impossible to reward one for superior performance. That means there are islands in the general economy where the traditional rule regarding performance and reward—the rule that doing well gets you ahead—doesn’t apply very well.

One of the curiosities of these islands is that it’s not right to conclude that there’s no incentive to do anything. Actually, there is an incentive system in place even when, as the discussion board poster writes it, “hard work gets a 0 dollar raise.” In this case, the incentive is negative. If union rules (or

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 171

whatever rules happen to be in effect) mean workers can’t compete against each other with the best performer winning a better post, the workers can still compete. It’s just that since wages are fixed, the competition turns negative: the most successful worker is the one who manages to do the least work. It makes perfect sense: if you do less work than anyone else, and you’re paid the same amount as every- one else, you have, in fact, found a way to win. You get the highest salary; you’re the one paid most for the least work.

Is slacking ethically acceptable? Whether someone is a contextual or personal slacker, when suc- cess is defined not as how well you do but how little you do, two basic questions arise:

1. Is someone or some organization being cheated? 2. Is there something fundamentally unethical about being a slacker?

The first question applied to those trapped—willingly or not—in contextual slackerism leads quickly to the conclusion that the organization bears at least as great a burden of responsibility as the employee for deficient work motivation. Applied to the personal slacker, the question about whether an employer was cheated becomes more difficult. There does seem to be an element of reneging on implicit or expli- cit pledges to fulfill responsibilities here, but it’s also true that most employment contracts in the Un- ited States (though not so much in Europe where this question would require more prolonged consid- eration) leave the organization broad latitude for dismissing workers whose performance is inadequate.

Next, is there something fundamentally unethical about slacking off? Most basic ethical theories are going to return some form of a yes verdict. From a utilitarian perspective—one trying to maximize the common good and happiness—it seems like problems are going to arise in most workplaces when coworkers are forced to pick up assignments the slacker was supposed to complete or could have com- pleted easily with just a bit more effort. Similarly, basic ethics of duties include the one we all have to maximize our own potential and abilities, and rigorously avoiding work seems, in most cases, to run against that aspiration. Probably, a satisfying ethical defense of the slacker lifestyle would need to be founded on a personal project going well beyond the limited economic world. Slacking off, in other words, would need to be part of someone’s life ambition, and therefore its questions belong to general ethics, not the more limited field of economic values treated here.

K E Y T A K E A W A Y S

< Stress at work invites ethical considerations of workers’ obligations to their own happiness.

< Office romance may broaden the range of values applying to career choices.

< Status deriving from one’s work can be an important compensation, but it is difficult to quantify.

< Slacking off—working to not work—may result from an employee’s work environment or it may be a personal choice.

R E V I E W Q U E S T I O N S

1. What are some of the ways stress at work can cause unhappiness in life?

2. Why is the office an important scene of romance in today’s world?

3. What do you imagine the rewards of status to be?

4. What kind of work contract would encourage slackerism?

172 THE BUSINESS ETHICS WORKSHOP

5. CASE STUDIES

5.1 Payola and the iPhone App

Source: Photo courtesy of Cat Sacdalan, http://www.flickr.com/photos/permanent3rdgrade/3509251547/.

The word payola traces back to rock and roll’s early days, back when the only large-scale way new acts could get their name and music out was on the radio. Deejays in the 1960s controlled their own playlists much more than today, so a band could drive into town, play a few concerts, and pay off a few deejays to get their songs into the rotation. When they rolled out toward the next stop, they left behind the impression that they were the next big thing.

It’s not illegal for a deejay, radio station, or anyone at all to accept money in exchange for playing someone’s music, but US law does make pay for play illegal if the sponsorship isn’t openly divulged, if the song isn’t treated, in other words, as a commercial.

Today’s media world provides almost infinite ways for musicians, video commentators, moviemakers, and iPhone app developers to get word out about what they’re doing. Anyone can post a video on YouTube or give away software on a web page. Payola is still out there, though. Wired magazine ran a story about it in the world of iPhone apps.

It works like this. You invent an iPhone app but can’t get anyone to notice. What do you do? One possibility is offer money to one of the well-known iPhone app review sites in exchange for a review of your creation. That gets the word out pretty well, so developers are starting to pay up. This modern payola scheme is enraging the iPhone community, however. Jason Snell, who works for Apple’s own app-review website complains, “Readers need to know that true editorial reviews are fair, and aren’t the product of any quid pro quo involving money or any other favors.”[19]

Michael Vallez, owner of the app-review site Crazy Mike’s Apps, disagrees. He charges for reviews without dis- closing that to his readers, but he doesn’t guarantee a positive report. If he thinks the app isn’t worth buying, he sends the money back and cancels the review.

The Wired article concludes with an opinion from Kenneth Pybus, a professor of journalism and mass commu- nication: “Undisclosed paid reviews are indisputably unethical because they manipulate the public. That’s an easy call to say it’s ethically wrong because that is a disservice to readers. It ought to be information that ap- plies to readers and not information that advances yourself financially.”

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 173

Q U E S T I O N S

1. Professor Pybus believes there’s a conflict of interest operating when Vallez accepts money to write reviews for his website Crazy Mike’s Apps. What, exactly, is the conflict?

2. Vallez says that his actions do not cause a conflict of interest, only the appearance of a conflict.

< What’s the difference between a conflict of interest and the appearance of a conflict of interest?

< How could Vallez argue that in his case there’s only an appearance, and, on close inspection, there really is no conflict here?

3. Three standard strategies for alleviating ethical concerns surrounding conflicts of interest are

< transparency,

< recusal,

< organizational codes.

How could each of these strategies be applied to the conflict-of-interest issue at Crazy Mike’s Apps? 4. You develop an iPhone app and you pay Vallez to review it. He tries the app, likes it, and writes up a

positive paragraph.

< Make the case to defend the payment as an ethically acceptable gift. Are there limits to how much you could give before it would shift from a gift to a bribe? If there is a limit, how was the number chosen?

< Vallez says that if he doesn’t like an app he returns the money and refuses to review it. Does this fact interfere with the possibility of justifying the payments as a standard, business-type gift?

5. Old style payola—paying to get a rock band on the airwaves isn’t dead. According to a story from ABC News, the practice is alive and well; the only difference is that it’s no longer the deejays who get the cash, it’s high-level executives because they’re the ones who set today’s playlists. Here’s a comment from Foo Fighters drummer Taylor Hawkins: “I think back in the ’70s they used to pay people with hookers and cocaine, and now they’re just doing it with straight-up money. So they can all go out and buy their own hookers and cocaine.”[20]

There’s a difference in the business world between providing entertainment and giving gifts. What is the distinction?

< Why might entertainment be considered less ethically objectionable than gifts?

< Leaving aside moral concerns about hookers and drugs, ethically, is there a difference between a rock group’s manager inviting radio executives out on a hooker and cocaine evening on one side and just sending them cash on the other? If there’s a difference, what is it? If not, why not?

5.2 The Decorator’s Kickback

Source: Photo courtesy of Cara Fealy Choate, http://www.flickr.com/photos/carabou/139790339/.

On a message board, Ms. G. C. from Miami writes,

174 THE BUSINESS ETHICS WORKSHOP

Here’s the problem: an interior decorator’s bid is broken down into two parts-(A) the decorator’s services and (B) the cost of labor and supplies. Most customers think (B) is a fixed cost-they forget it’s not the decorator’s fault if cabinetmakers charge an arm and a leg. So, where do customers look the closest when they’re comparing costs? That’s right, (A)-the decorator’s fee.

Well, decorators are creative people and for years they’ve been doing some very creative bidding. They’ve been lowballing (A) and padding (B), expecting the laborers to kick back a percentage of their inflated fees to the decorator. Surprised? Everyone’s doing it. Everyone, that is, except me. It’s deceptive. And as a Christian, I think it’s just plain wrong.

The customer’s final cost is about the same either way you cut it, so most decorators don’t feel they’re doing anything wrong. Are they right?

Needless to say, “blowing the whistle” on such a widespread and accepted practice would only damage my professional reputation.[21]

Q U E S T I O N S

1. Mrs. G. C. confronts a third-party obligation. What is it?

2. Ethics can be weaponized—that is, used in your personal interest. Show how this could be the case here. Does the fact that she would benefit by getting these kickbacks eliminated somehow make her position less morally respectable? Why or why not?

3. Typically, according to Mrs. G. C, a client contracts an interior decorator. Later that decorator hires a laborer, and the laborer gives the designer a kickback. There’s a conflict of interest here, what is it? What is the ethical case against this kickback scheme?

4. Consequence theories of ethics represent the point of view that acts themselves are not good or bad; all that matters are the consequences. Therefore, lying isn’t bad if it happens that a fleeing criminal is asking you which way is the best escape route, and you point him down the street leading to the police station. Duty theorists, by contrast, believe that certain acts including lying and stealing are wrong regardless of the context and consequences.

< Do you suppose Mrs. G. C. adheres to a consequence ethics or a duty ethics? Why?

< Could you use the idea of consequence ethics to try to convince her to simply join the crowd and do what everyone else is doing? What would that case look like?

5. If you wanted to put an end to this pervasive kickback practice in the interior decorating world and only had time to present one argument, which of the following would you choose?

< The practice should be stopped because it involves unethical kickbacks.

< It should be stopped because it’s dishonest in the sense that consumers are misled.

< It should be stopped because the straight shooter is getting the shaft.

Why did you choose that argument and how could it be elaborated more fully?

6. Imagine that Mrs. G. C. from Miami reveals her name and makes a whistle-blowing cause out of her unhappiness with the standard practice in her profession.

< What kind of reprisals and negative effects might she expect?

< Do you believe whistle-blowing is justified in this situation? Why or why not?

< Is it required? Why or why not?

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 175

5.3 Sex, Money, and Whistle-Blowing

Source: Photo courtesy of j9sk9s, http://www.flickr.com/photos/j9sk9s/4128778346/.

Like all recent NBA All-Star players, Kevin Johnson made a lot of money during his pro basketball career. It drained out fairly quickly too. A few hundred-thousand went to the family of a sixteen-year-old high-school girl in Phoenix after a he-said, she-said sex accusation. A decade later, a similar story emerged, but at a differ- ent place: this time it was three girls in Sacramento, California, who attended St. Hope Academy. They took their stories—each told of a similar incident involving Johnson—to the recruitment advisor, Jacqueline Wong- Hernandez. Soon after, Ms. Wong-Hernandez was gone. Her resignation was a protest over the way the com- plaints were handled internally at the school, which was by dismissing them. Not only did St. Hope Academy take no action, the local police also decided not to press any charges in a case that essentially came down to one person’s word against another’s.

St. Hope Academy, as it happens, wasn’t a public school but a private business, and Kevin Johnson was the founder and CEO. A lot of the money flowing into the young institution came from the federal government as grants from the AmeriCorps program. After accusations surfaced that the grant money wasn’t spent appropri- ately, the school agreed to pay back $423,836.50 to the government (about half of what the school had re- ceived). The first payment, about $73,000, was made by Kevin Johnson himself.

So things probably would have ended, except for an AmeriCorps inspector general named Gerald Walpin. He believed Johnson had gotten way too good a deal: the school should have been forced to pay back much more of the grant money it had received. On May 5, 2009, he took the accusation to a California congressman who in turn brought public attention to the issue. On June 10, Mr. Walpin was fired. In an editorial statement, the Washington Times complained, “Mr. Walpin was fired with no explanation and no warning to Congress, even though the act governing inspectors general says IGs can be removed only after the president gives Congress 30 days’ notice and a reason for the firing. Rather than investigate the IG’s serious complaints, Mr. Obama fired him. In short, he snuffed out the whistleblower rather than heed the whistle.”[22]

A local Sacramento TV station doing some follow-up uncovered a report detailing hush money payments at St. Hope and noted that the former NBA All-Star “often described himself as a personal friend” of another avid basketball player, President Obama.[23]

176 THE BUSINESS ETHICS WORKSHOP

Q U E S T I O N S

1. How were the following two faced with a third-party obligation?

< Jacqueline Wong-Hernandez

< Gerald Walpin

2. In general, there are three possible responses to third-party obligations, do nothing, report the problem, become a whistle-blower. How would you categorize the response made by

< Wong-Hernandez?

< Walpin?

3. What questions can be asked to help determine whether whistle-blowing is justified? How might they be answered in the case of

< Wong-Hernandez?

< Walpin?

4. What questions can be asked to help determine whether whistle-blowing is ethically required? How might they be answered in the case of

< Wong-Hernandez?

< Walpin?

5.4 Loyal to the Badge

Source: Photo courtesy of Daniel Lobo, http://www.flickr.com/photos/daquellamanera/3250853982/.

When police officer April Leatherwood went undercover in Memphis, she changed her name to Summer Smith. She didn’t change her socks for a year—no showers or brushing her teeth either.

Her daily routine was to hang out on the street smoking and trying to befriend drug addicts. They’d take her to their dealers, where she’d make a buy and then try to find out who was the next person up the ladder. Her work resulted in about three hundred arrests, everyone from two-bit drug sellers to major movers who organ- ized the street-level crime from luxury apartments.

Why’d she do it? According to the newspaper article relating her story, she loved the camaraderie of the de- partment and its protect-and-serve mission.

When she emerged from the undercover program, she was promoted to detective. Unfortunately, her three- year romantic partner had moved on, and it was difficult to get the bad memories out of her mind. Still, when the reporter asked whether she’d do it again, she said, “Yeah.”[24]

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 177

Q U E S T I O N S

1. The two ideas on which company loyalty—or organizational loyalty to broaden the title—is built are the following:

< An attachment to the organization that is noninstrumental, meaning the attachment is not maintained only because it serves the employee’s concrete interests, such as the need for a salary.

< A deposited value in the organization that goes beyond any individual and their attachment: the organization’s value continues even without those who currently feel it.

How are these ideas manifested in the case of April Leatherwood?

2. Three measures on the scale of loyalty intensity are obedience loyalty, balanced loyalty, and free agency. Given what you’ve read about Leatherwood, where would you put her on this scale? Why?

3. Think about one of the career lines you’re considering, or the one you’re currently on, and imagine your company loyalty was similar to Leatherwood’s.

< What kinds of sacrifices do you imagine you’d make for the organization?

< Thinking about yourself, really, would you be able to make those sacrifices?

4. Leatherwood’s pay is not high, about $50,000 a year. That works out to about $7 an hour for the twelve undercover months. Obviously she enjoyed no status while she was undercover. Now, however, she has appeared in the newspaper and made detective grade in the department. In your opinion from what you’ve read, do you believe she has acquired a level of status through her work?

< If she has acquired a status, how would you describe it, what is it based on, how is it different from the status enjoyed by, say, a senator or a movie star?

< Does this status—assuming she’s acquired it—compensate what she suffered? Explain.

5.5 The Gawker Sex Tape

Source: Photo courtesy of Johan Larsson, http://www.flickr.com/photos/johanl/3619258199/.

All kinds of things happen in advertising agencies. Part of the reason is the diversity: a typical medium-to-large agency requires many different kinds of work, and that brings together a rainbow of people. There are suited, business types in the client services section. They work with budgets and bulleted lists and connect the agency with the corporate client. Down the hall the planners dress more casually and study demographics and culture. They invent market segments with names like soccer moms and then devise strategies for appeal- ing to soccer moms’ distinct interests and tastes. Further down the hall, there are the agency’s actual commer- cial makers. They call themselves creative talent and are free to appear for work in jeans and ratty t-shirts. For their paycheck, they plan the short films the rest of us call TV commercials. The typical large agency also needs some HR people, accountants, computer techs, and lawyers.

Most advertising agencies have a pretty good mix of men and women, and in general, there are a lot of young people in the field because the long hours and short deadlines tend to lead workers to seek employment else- where eventually.

Most agencies are good places for romance. The chemicals are right: young workers, long hours, the excite- ment of million-dollar accounts, and lots of different types of people for different tastes. Those are also, as it happens, good ingredients for sex, as people at BBDO (an Omnicom agency) in New York City discovered when a grainy cell phone movie went viral. Shot by a guy in the creative department, he stuck his camera over the top of a cubicle and caught a nude couple wedged into the back corner.

178 THE BUSINESS ETHICS WORKSHOP

As far as the scandal went, it didn’t take long for industry insiders to figure out who’d been caught, and from there, the information spread that they were both married to other people. The website Gawker.com followed the action closely, posting the original film and then running follow-ups. In a nutshell, this is what happened. The romantic couple continued at their jobs. No word about how their marriages are doing. The filmer got fired. He downloaded the footage onto his computer and then sent it around to a few friends. He had nothing to do—he says—with the fact that a few weeks later it was all over the web. In his words,

It ended up on Gawker and Mediabistro and then the word got back to me that all the creatives were sending it around. I freaked. I thought it was amazing how something could go viral and end up online so quickly when I had nothing to do with it really.[25]

Well, he was the one who filmed and originally distributed it.

The discussion posted on the Gawker web page is probably hotter than the sex that got everything going. Many issues come up, including: Why did the filmer get fired while the adulterers got to keep their jobs? One an- swer someone wrote in is that filming and distributing a sex tape is unethical (and possibly illegal if minors end up seeing it). A poster who calls himself BritSwedeGuy responds:

How could you be sacked for filming something you could see at work?

Would he have been sacked if he’d taken the video to HR?

Probably not.

So is he being sacked for withholding evidence then?

That only makes sense if the evidence was of a sackable offence.

Has he been sacked for passing the video on? Surely he’s a whistle-blower in that case and ought to be protected.

This is his argument. First, it doesn’t make sense to fire the filmer for recording the sex, since the act took place in public, and anyone (tall) could’ve seen it. The perpetrators couldn’t reasonably object to being filmed if they were exhibiting themselves so openly. Second, if the filmer had taken the film to HR to report the fact that sex was going on, he probably wouldn’t have been fired, and the entire episode would’ve been managed internally (and quietly) inside the agency. That means the only justifiable reason for firing the guy was that he digitalized the video and, in essence, made it possible for others to beam it across the Internet. If that’s what he did, though, then he’s a whistle-blower and should be protected.

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 179

Q U E S T I O N S

1. If the filmer did take the video to the human resources department, what would he be reporting? What ethical misdeeds are happening?

< With respect to those misdeeds, where does the line get drawn between flirting for a second and stripping down for a fifteen-minute frolic?

2. On the question of whistle-blowing—and the possibility that the filmer’s action was ethically justifiable as a form of whistle-blowing—a poster named BadUncle isn’t buying it. He writes, “OK, I’ll be less glib. I don’t see how f***ing someone is a major ethical violation worthy of whistle-blowing (fnar)…it’s hardly damaging to a company, its clients, or its employees. Wake me when their monotonous thrusting implants the seed of fraud into an earnings statement.”

BadUncle doesn’t think the filmer could defend himself by claiming to be a whistle-blower. In your own words, why not? Do you agree? Explain.

3. Do you believe the filmer sensed a company loyalty? Would a stronger sense of company loyalty have encouraged him to erase the tape instead of disseminating it? Why or why not?

4. Advertising agencies are notorious for fast money and little loyalty to their employees. Many agencies, if they lose an account, straight off fire many of those who worked on the account even if the loss had nothing to do with the employee’s work performance (the client may have discontinued a line of products, for example, and for that reason discontinued the advertising). Given that business attitude, does the company have a right to demand that employees think of the agency’s interests when doing things like filming? Why or why not?

5. Work in advertising—especially in the creative department where people often have to actually make ads for air right now—is very stressful. There’s a lot of money involved and a lot of competition among creatives. Do you believe sex at work is an ethically defensible way of alleviating the stress comparable with taking a cigarette break or just a quick walk around the block? How could the argument be made in favor?

6. If someone told you they wanted to work in advertising because it’s a good spot to meet someone and get married (which is probably true at most agencies), do you believe that’s a reasonable decision, one in harmony with the ethical responsibility to pursue one’s happiness and welfare? Why or why not?

7. If someone told you they were going to work in advertising because they’d heard it’s a good place for fast, cheap sex (which it probably is at most agencies), do you believe that’s a reasonable decision, one in harmony with the ethical responsibility to pursue one’s happiness and welfare? Why or why not?

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1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12. 13.

14.

15.

16. 17.

18.

19.

20.

21. 22.

23.

24.

25.

ENDNOTES

Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.

Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.

Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19, 2011, http://nymag.com/nymetro/news/media/features/2472.

Nicholas Confessore and Jeremy “Paterson’s Ethics Breach Is Turned Over to Prosec- utors,” New York Times, March 3, 2010, accessed May 19, 2011, http://www.nytimes.com/2010/03/04/nyregion/04paterson.html?hp?hp.

Bill Graves, “Oregon Supreme Court Upholds $50 Gift Limit for Legislators, Public Offi- cials,” OregonLive.com, December 31, 2009, accessed May 19, 2011, http://www.oregonlive.com/news/index.ssf/2009/12/ oregon_supreme_court_upholds_5.html.

“Code of Conduct,” OmnicomGroup, last updated October 16, 2008, accessed May 19, 2011, http://www.omnicomgroup.com/corporategovernance/codeofconduct.

William Shaw and Vincent Barry, Moral Issues in Business (Belmont, CA: Thomson Wadsworth, 2007), 398–99.

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Survey cited in Manuel Velasquez, Business Ethics: Concepts and Cases, 6th ed. (Upper Saddle River, NJ: Pearson, 2006), 378.

Welch v. Cardinal Bankshares Corp., 2003-SOX-15 at 35 (ALJ 2004).

Lauren Keller Johnson, “Rethinking Company Loyalty,” Harvard Business School Working Knowledge, September 19, 2005, accessed May 19, 2011, http://hbswk.hbs.edu/item/5000.html.

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Ms. G. C. from Miami, “The Case of the Casual Kickback,” Urbana.org.

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Kristina Goetz, “A Year of Living Dangerously Takes a Toll on Undercover Memphis Officer,” Commercial Appeal, August 30, 2009, accessed May 19, 2011, http://www.commercialappeal.com/news/2009/aug/30/ year-of-living-dangerously-takes-its-toll.

Hamilton Nolan, “The Cameraman Speaks: He’s Fired but the Sex Tape Couple Keep Their Jobs,” Gawker, November 26, 2008, accessed May 19, 2011, http://gawker.com/ 5099143/the-cameraman-speaks-hes-fired-but-the-sex-tape-couple-keep-their-jobs.

CHAPTER 7 EMPLOYEE’S ETHICS: MAKING THE BEST OF THE JOB YOU HAVE AS YOU GET FROM 9 TO 5 181

182 THE BUSINESS ETHICS WORKSHOP

C H A P T E R 8 Manager’s Ethics: Getting, Promoting, and Firing Workers CHAPTER OVERVIEW Chapter 8 examines some ethical decisions facing managers. It considers the values that underlie and guide the hir-

ing, promoting, and firing of workers.

1. HIRING

L E A R N I N G O B J E C T I V E S

1. Locate ethical tensions affecting the breadth of a hiring search. 2. Define applicant screening and mark its ethical boundaries. 3. Define applicant testing and consider what makes an appropriate test. 4. Draw the lines of an ethical interview process.

1.1 Help Wanted, but from Whom? The Central Intelligence Agency’s hiring practices are widely known and well depicted in the movie The Recruit. After discretely scouting the special capabilities of a young bartender played by Colin Fer- rell, Al Pacino catches him at work, orders a drink, carries on a one-sided and cryptic conversation, performs a magic trick with a ripped newspaper, announces that “things are never quite as they ap- pear,” and finally admits that he’s actually a job recruiter.

Ferrell seems annoyed by the man’s presence. Pacino returns to the newspaper, pulls out a page covered by an ad announcing “Two Day Spe-

cials.” He circles the letters c, i, and a in “Specials” and walks out. Colin Ferrell follows.[1] Actually, that’s not true. The CIA doesn’t hire that way. They advertise on CareerBuilder just like

any other company. You can understand, though, why they wouldn’t mind scouting out their applic- ants even before allowing people to apply; they don’t want to end up hiring double agents.

Something like that happened soon after Procter & Gamble grew jealous of a competitor’s hair- care products. Salon Selectives, Finesse, and Thermasilk were all doing so well for Unilever that P&G contracted people to get hired over at Unilever and bring back secrets of their success. The corporate espionage—which P&G executives characterized as a “rogue operation”—led to a multimillion-dollar settlement between the companies and left behind the lesson that when you’re the boss and you’re hir- ing, you’ve got to make sure that the people you bring in will be loyal to the company.[2]

The problem is you’ve also got to make sure that they’re going to do good work, the best work possible.

Between the two requirements there’s a tension stretching through every decision to hire a new worker. On one side, you want to limit the people you even consider to those few who, for one reason or another, you know won’t be a total disaster. On the other side, no company can survive playing it safe all the time; generally, the corporations able to hire the best talent will win over the long run. And one way to get the best talent is to cast as large a net as possible, let a maximum number know that a position is available, and work through the applications carefully no matter how many pour in.

nepotism

In the case of hiring, announcing an open position only to members of the extended family.

Conclusion. Hiring employees can be safe or risky depending on how broadly you announce a job opening.

1.2 Three Strategies for Announcing a Job Opening: Nepotism, Internal Public Announcement, Mass Public Announcement Start on the safe side of hiring. Nepotism is granting favored status to family members. In the case of hiring, it means circulating information about open jobs only to your relatives. Naturally this happens at many small businesses. A sales representative at a small firm importing auto accessories meets a wo- man at work. She’s also a rep. Marriage follows. A year later he decides to quit his job and strike out on his own with a new website project that reviews and sells the same kind of car products. Things go well, page hits climb, sales increase, and soon he needs help so he hires…his wife. They’ve worked together before, and they both know the field. Most important, the risk is minimal. Since he’s waking up with her in the morning he can figure she’s not going to skip out on work just because it’s a nice spring day. And is she going to steal office supplies? A little money from the payroll? An important client? Prob- ably not. This is a case where nepotism makes sense.

But what about the other way? What if the husband’s solo venture flops, and at the same time, his wife’s career flourishes. Now he needs a job, and she’s got the power to hire. A job opens up. Probably, she’s got junior staff ready for the post, but can she push them aside and bring her husband in?

There is some justification: she’s worked with him before, and she knows he performs well. Plus, as a boss of his own (failed) business, he’s obviously got leadership experience and he has demonstrated initiative. All that counts for something. But if she goes with him she’s going to breed resentment in her group. You can hear it:

“Hey, what do you need to get a promotion around here?”

“A last name.”

And

Now you might be asking why nepotism bugs me so much. It’s the presumption. It’s the attitude. It’s just one more example of how life isn’t fair. Am I jealous? I don’t know. I guess I take advantage of the company in other ways…LOL. What can I learn from this? That life is good if you’re born into the right family? That I need to control my attitude and stop letting petty crap drive me to drink?[3]

That last paragraph comes from a blog entry titled “Nepotism Sucks.” It does for his company too: few firms can be successful with employees musing about how they “take advantage of the company” while they’re punctuating comments about their work with LOL. As for the central issue, he’s right. Basic fairness isn’t being honored: people are getting considered for a job because of who they’re re- lated to, and it’s not this blogger’s fault that his last name is wrong.

On the other hand, “Is Nepotism So Bad?” titles an article on Forbes.com that compiles a list of large companies—including Forbes—where nepotism has been the norm…and successful. According to the article, experts estimate that executive-level nepotism works out about 40 percent of the time. What are the advantages to bringing in your own? Familiarity with the business and trust are noted. Another advantage is also underlined: frequently, relatives don’t want to let their own relatives down. Sons work harder for fathers, cousins for cousins, brothers for sisters. There’s a productivity advantage in nepotism. Arguably, that factor weighs more heavily than the bitterness arising when deserving workers already employed don’t get a chance to apply for a job because it already went to the boss’s sister-in-law.[4]

Finally, at least theoretically, there’s a creative solution to the bitterness caused by nepotism: make virtually every post a nepotism-first position. Oil-Dri, a producer of absorbent materials, celebrated its fiftieth anniversary with a party for all employees. “Would everyone,” the group was asked at one point, “who is related to someone else in the company please stand up?” Of the seven hundred employees, about five hundred left their seats.

184 THE BUSINESS ETHICS WORKSHOP

internal public job announcements

Announcing an open position only to individuals already closely linked to an organization.

mass public job announcements

Announcing an open position widely and indiscriminately with the idea of maximizing knowledge of the available post and applications for it.

Internal public job announcements occupy a middle spot on the continuum between playing it safe (only letting selected people you’re certain will be loyal and at least moderately capable know when a job is available) and going for the best talent (broadcasting the post as broadly as possible and accepting applications from anyone).

An example of an internal public job announcement comes from the National Review, a political magazine and website run by the kind of people who wear suits and ties to baseball games. Their blog is called The Corner, and the magazine’s editors fill it with thoughts and arguments about the day’s polit- ical debates in Washington, DC. There’s also a bit of insider humor, provocation, and satire tossed back and forth between posters. If you keep reading for a few weeks, you’ll start to sense an intellectual soap opera developing along with the libertarian-conservative politics; there’s an undercurrent of shift- ing alliances, snarkiness, and thoughtful jabs.

You’ll also notice that National Review places job announcements on The Corner blog. There aren’t a lot of openings, but every couple of weeks a little announcement appears between posts.

The National Review Online is seeking an editor with web capabilities. Send applications to [email protected].

It’s pretty ingenious. The only people who are going to be reading The Corner are < sincerely interested in the wonkish subjects these guys publish about; < not out there just looking for any job (at the time they see the announcement, they’re not looking

for a job at all because it’s not a job site); < compatible on a personal level with the National Review crew. The posters let personalities shine

through, and if you don’t have chemistry with their style of humor and talk, you’re simply not going to be reading them.

What an internal public job announcement seeks to do is get the most applications in the hopper as possible, and so the announcement is published on a free Internet page that anyone can see. That’s the public part. But because the page is only commonly followed by people who are already inside the world of public policy defining the employees at National Review, the bosses don’t need to worry about the wrong kind of people sending in résumés. That’s the “internal” part. Recruiters can get a lot of ap- plicants—increasing their chances of finding really talented people—without worrying too much about a bunch of lefties who really prefer websites like Daily Kos trying to fake their way into the organization.

Mass public job announcements are just what they sound like. You need someone and you post the position at Monster, CareerBuilder, TheLadders. Here you’re giving up confidence that applic- ants will fit into the organization naturally, and you’re even risking corporate spying moles like those that infested Unilever. In exchange, however, you’re getting the broadest selection possible of people to toss their hat into the ring, which maximizes your chances of finding stellar work performance.

Beyond the advantage of many applicants, there are good ethical arguments for mass public job announcements. The simplest is fair play: everyone should get an equal opportunity to take a run at any job. Just past that, there are concerns about discrimination that are eased by mass announcements. While there’s no reason to launch charges of inherent racism at nepotistic hiring practices, it might well be true that if a small business is initiated by an Asian family, and they start hiring relatives, the result at the end of the day is a racial imbalance in the company. Again, no one is equating nepotism with racism, but the appearance can develop fairly easily whenever job announcements are not publi- cized as widely as possible. The parallel case can be made with respect to internal public job announce- ments. If 90 percent of the people who come in contact with the “help wanted” message happen to be women, sooner or later, there’s going to be some guy out there who complains. So, one argument in fa- vor of mass announcements is the stand it helps take against illegal and unethical discrimination.

Another argument for mass announcements is reciprocity. If a company is trying to sell a product to the general public, to anyone who’s willing to pay money for it, then shouldn’t they allow everyone a shot at becoming an employee? It doesn’t seem quite right to profit from anyone—to try to sell, say, a car to anyone who walks in the door—and then turn around and not give all those consumers a decent chance at earning a living there at the dealership.

Conclusion. Announcing a job opening is not automatic. You can announce the spot more pub- licly or less so. There are advantages and disadvantages to the various approaches, but there’s always an ethical responsibility to clearly account for the reasons why one approach is selected over another.

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 185

applicant screening

Reducing a large pool of applicants to a manageable selection for serious consideration. Filters—for example, a certain educational level—eliminate inadequate applications rapidly.

1.3 Ethical Perils of Job Announcements Ethical perils of job announcements include

1. describing a position in ways that don’t correspond with the reality, 2. announcing a post to people who really have no chance for the job.

Once you’ve identified the demographic pool you’d like to recruit from, it’s easy to oversell the job in the announcement you post. The most blatant cases—You can earn $300 per hour working from home!—are obvious frauds, but even sincere attempts can cause misunderstandings. Say a job requires “occasional travel.” Fine, but does that mean occasionally during the year or occasionally during the month?

The much more severe case of insincerity in job announcements is posting one before an audience that has no reasonable chance of getting the job. When Hooters posts a “server wanted” sign, we all know what they’re looking for just like when the rough bar next door advertises for a bouncer. But what if it’s a formal restaurant advertising for a waiter? If the place is across town, you can’t just drop in to check out the kind of people they hire. So maybe you go through the application process and make the telephone calls and finally go in for the interview. As you walk through the door, the first thing they check out is your weight profile. Then your jawline, haircut, eyes, and the rest. They want to see how you compare with the other waiters who all look like they model on the side.

If you’re lucky, you see yourself fitting right in, but if you’re like most of us, you know the inter- view’s over before it started; the whole thing has been a huge waste of time.

Now put yourself on the other side. As the restaurant manager trying to fill the position, you know you should put the requirement that applicants be devastatingly handsome into the ad. The duty to be honest requires it. The duty to treat others as an end and not a means requires it. The idea that our acts should be guided by the imperative to bring the greatest good to the greatest number requires it. Al- most every mainstream ethical theory recommends that you tell the truth about what you’re looking for when you announce a job. That way you don’t waste peoples’ time, and you spare them the humili- ation of being treated as irrelevant. So you should want to put in the ad something about how only po- tential movie stars need apply.

But the law virtually requires that you don’t put the line in. If you explicitly say you’ll only consider exceptionally attractive men for your job, you open yourself to a slew of lawsuits for unfair and dis- criminatory hiring practices. In fact, even Hooters isn’t safe. In 2009 the chain was sued by a Texas man named Nikolai Grushevski because they refused to hire servers who looked, well, like him. When it gets to that point—when hairy guys can get away with calling lawyers because they aren’t hired to serve food in short shorts and halter tops—you can understand why restaurants don’t want to publicly admit exactly what they’re looking for.[5]

Bottom line: if Hooters just comes out and states what it is that makes their kind of employee, they can get sued. So they’re much better off just making the announcement ambiguous. That way, when it turns out that no hairy guys ever seem to get hired, they can always say it’s because they didn’t seem so adept at dodging tables while shooting around with trays of beers and sandwiches. Or whatever. One lie is as good as another so long as it keeps the restaurant out of the courtroom.

For managers, this is a tight spot. They’re caught between what’s right and the law. In ethical terms, they’re stretched between two conflicting duties: to tell the truth and to get the famous Hooters Girls into the restaurant.

1.4 Screening Reducing a large pool of applicants to a manageable selection of people for serious consideration is ap- plicant screening, sometimes referred to as filtering. Screening begins with the job announcement. Requirements like “three or more years of experience” and “willingness to work the night shift” go a long way toward eliminating applicants.

It’s impossible, though, to completely define the perfect applicant beforehand, and even if you could, there’s almost always going to be someone like Nikolai Grushevski who shows up. So screening continues as the preliminary review of applications and applicants to see who can be quickly crossed off the list without any serious consideration.

Legally, who can be crossed out? The default response is no one. In its broadest form, civil rights employment law guarantees equal opportunity. All applicants deserve to be considered and evaluated solely on their ability to do the job, and the federal government’s Equal Employment Opportunity Commission is stocked with lawyers who are out there doing their best to make sure the rules are up- held. For managers, that means they’ve got to take all applicants seriously; they’ve got to pursue inter- view questions about ability, training, experience, and similar. Now, this is where a guy like Grushevski can come in the door and say, “Look, I can deliver a round of burgers and beer as well as any woman.”

186 THE BUSINESS ETHICS WORKSHOP

bona fide occupational qualifications (BFOQs)

Exceptions granted to equal opportunity requirements when a specific qualification is essential to the job.

educational screening

Screening job applications by eliminating those not meeting educational requirements. The candidate may be either undereducated or overeducated for the post.

high-risk lifestyle screening

Screening job applications by eliminating those whose lifestyles pose risks to work performance. Smoking is a common example.

He’s probably right. Still, he’s not the right person for the job; there’s no reason for a manager to lose valuable time dealing with him.

Similarly, a wheelchair-bound man shouldn’t be a beach lifeguard; an eighty-year-old shouldn’t be flying commercial jetliners; the seven foot one and 330-pound Shaquille O’Neil isn’t going to be a horse jockey. There is a legal way for companies to summarily screen out inappropriate applicants: by appeal- ing to bona fide occupational qualifications (BFOQs). BFOQs are exceptions granted to equal op- portunity requirements. A form of legalized discrimination, they let managers cross off job applicants for reasons that are normally considered unfair: gender, physical size, religious belief, and similar. (As a note, race isn’t allowed to be considered a BFOQ.)

When do bosses get this easy way out? When they can show that the otherwise discriminatory practices are required because of a business’ nature. So while it’s clear that Shaquille O’Neil’s intimidat- ing size doesn’t mean he’ll be a bad accountant, the nature and rules of horse racing require that riders be diminutive, and that means Shaq would be a disaster. A horse owner can show that the job requires a physically little person to be successful. Thus size becomes a BFOQ and a legitimate way of screening applicants for that particular job.

A maker of men’s clothes can reasonably screen out women from the applicant pool for mod- els—but they can’t eliminate female applicants from consideration for a sales position. Or they could, but only if they could show that maintaining a masculine public image was integral to the success of the company. For example, you could imagine a company called Manly Incorporated, which sold products based on the premise that every employee was a quality control officer.

Along similar lines, a Catholic school may screen atheists from the search for a teacher, but it’s harder to justify that filter for janitors. At the airport security line women can be assigned to pat down women and men to men, but either may apply for the job to hand check the carry-on bags.

Another common screen is education. Imagine you have just opened a local franchise of Jan-Pro, which offers commercial cleaning services to car dealerships, gyms, banks, churches, and schools.[6] What level of education will you be looking for in potential employees? Since the job involves mixing chemicals, it seems like requiring some basic education is a fair demand, but is a college degree neces- sary for the work? You may have one as a manager, but that doesn’t mean you should necessarily de- mand that much from employees. And on the other side, is it fair to screen out someone who’s got too much education, say a master’s degree in chemistry? It does seems reasonable to suspect that this kind of person will soon become bored pushing a vacuum over carpets.

Then again, do you know that will happen? Is it fair to screen based on what you suspect might occur?

Another type of screening catches high-risk lifestyles. Smoking is one of the most often cited, and the Humana company in Ohio is one of a growing number that’s directly banning smoking—on or off work—by new employees.[7]

These healthy lifestyle policies set off firestorms of ethical debates. With respect to smoking and in broad strokes, the company has an interest in prohibiting smoking because that should mean healthier workers, fewer sick days, lower health insurance premiums, and higher productivity. In short: better working workers. On the other side, job applicants (at least the smokers) don’t believe that they’re less productive than everyone else, and anyway, they resent being excluded for a recreational habit pursued on their own time. In long discussion boards—there are hundreds online—the debate plays out. Here’s one exchange from a typical board:

bonos_rama: I wouldn’t hire anyone that has a habit of leaving their desk every hour to stand outside for 10 minutes. Doesn’t matter if it’s to smoke, drink coke, or pass gas that they’re leaving, it’s bad for productivity.

Mother of a Dr.:

But it’s OK to stand by the coffee pot and discuss sports and politics? Productivity actually improves when you get away from the computer every hour.

matt12341: Even discounting the productivity argument, smokers tend to have more long-term health problems, leading to higher insurance premiums so companies end up paying more.

jamiewb: What if we apply this logic to people who are overweight? What about people who have a family history of cancer? Or a higher incidence of diabetes? As long as it doesn’t impact job performance, I don't think it’s fair to refuse to hire smokers.

happily- retired:

I think it is a great idea to not hire smokers. Up next should be obesity, as it leads to diabetes, heart problems, joint problems, etc. Companies following that path would be demonstrating good corporate citizenship by fostering a healthier America.

Zom Zom: Yes, the good citizenship of fascism. Now my employer has the right to dictate what I do with my body? “Land of the free,” unless your boss doesn’t like the choices you make.[8]

You can see that underneath the back-and-forth, this is ultimately a debate about ethical perspectives. One side tends toward a utilitarian position: the greater good in terms of health and related issues

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 187

criminal record screening

Screening job applications by eliminating those whose past crimes suggest risks in performing job duties.

social media screening

Screening job applications whose social media pages—Facebook and similar—suggest irresponsibility or unfitness for a post.

applicant testing

Applying exams that are designed to predict an applicant’s success in a post.

justifies the filtering of smokers in hiring decisions. The other side tends toward a fundamental rights position: what I do with my time and body is my decision only. Both sides have strong arguments.

Criminal record screening is another common filter for job applicants. Most states won’t allow employers to deny someone fair consideration for a job only because of a prior criminal conviction. There’s wiggle room, though. In New York, Article 23-A of the correction law certifies that employ- ment may be denied if

< there’s a direct relationship between the criminal offense committed and the employment sought, < the applicant would pose an unreasonable risk to property or the safety or welfare of others.

Those are big loopholes. The first one means the Brinks armored car company can legally refuse to consider ex-bank robbers for a position. It may also apply to the shoplifter who wants to be a cashier or the drug dealer who wants a job in the pharmacy.

The second exception is still broader and applied in Grafter v. New York City Civil Service Commis- sion.[9] In that case, the Fire Department of New York refused to hire Grafter because he’d been caught drunk driving on his last job. A potentially drunken fireman does seem like a risk to the welfare of oth- ers. Pushing that further out, the same would probably go if he applied to be a taxi driver. In fact, the list of jobs that may seem dangerous for others if the worker is drunk extends a long way, probably everything in construction, transportation, or anything with heavy equipment. So the law does allow employers to resist hiring convicts across a significant range of wrongdoing.

Finally, the basic ethical tension pulls in three competing directions for any manager facing a criminal hiring decision:

1. The ethical responsibility to recovering criminals. Rehabilitation (via honest work) is good for ex-convicts.

2. The manager’s responsibility to the company. Managers need to avoid problems whenever possible and keep the machine running smoothly so profits flow smoothly too.

3. The company’s responsibility to the general public. If a taxi syndicate is hiring ex-drunk drivers, you’ve got to figure something’s going to go wrong sooner or later, and when it does, the person who put the driver behind the wheel will be partially responsible.

Social media is another potential filter. Fifty-six percent of millennials believe that the words and pic- tures they put on Facebook and Twitter shouldn’t be allowed to factor into hiring decisions.[10] Recruit- ment officers, they’re saying, shouldn’t be going through online photo albums to check out the kinds of things you and your buddies do on Friday nights.

From the employers’ side, however, the argument in favor of checking the pages is simple. If an ap- plicant is sufficiently incautious to leave pictures of massive beer funnel inhalations available for just anyone to see—and if they do that while they’re trying to put their best face forward as job seekers—then God knows what kind of stuff will be circulating once they’ve got a job. As a manager, it’s part of your job to protect the company’s public image, which means you’ve got to account for cli- ents and others maybe running the same Google and Facebook searches that you are.

It’s an easy scenario to imagine: you hire someone with a flamboyant online life. Soon after, a cli- ent working with her gets nosey, does a Google image search, and what comes in at the top of the list is a picture of your new employee slamming beers, chain-smoking cigarettes, or maybe inhaling something that’s not legal. This isn’t good and the person who looks really bad is the supposedly ma- ture manager who allowed the whole thing to happen by hiring her.

Of course there’s always the standard but still powerful argument that what employees do after hours is their own business, but one of the realities inherent in the Internet is that there is no such thing as “after hours” anymore. Once something goes online, it’s there all the time, forever. Managers need to take account of that reality, which might mean rethinking old rules about privacy.

1.5 Testing Once an ad has been placed, and applicants have been pooled, and the pool has been screened, the real hard work of hiring begins: choosing from among apparently qualified people. One tool used in the se- lection process is applicant testing. There are various sorts of tests, but no matter the kind, for it to be legitimate, it should itself pass three tests. It ought to be

< Valid. The test must measure abilities connected to the specific job being filled. A prospective roadie for Metallica shouldn’t be asked to demonstrate mastery of Microsoft Excel, just as there’s no reason to ask an accountant to wire up his cubicle with speakers blasting 115 decibels.

< Normalized. The test must be fair in the sense that results are adjusted for the circumstances of the testing session. If you’re checking to see how frequently applicants for the post of TV weatherman have predicted sunshine and it turned out to rain, and one woman gets tested in

188 THE BUSINESS ETHICS WORKSHOP

skill tests

Applicant tests that reproduce jobs tasks.

psychological and personality tests

Applicant tests attempting to measure mental state and suitability for job tasks.

Phoenix while another takes Seattle, it’s pretty easy to see who’s going to win in terms of raw numbers. Those numbers need to be adjusted for the divergent levels of difficulty.

< Constant. The results any test taker achieves over time should be similar. Just like a broken clock is right twice a day, an applicant for an interior design job who happens to be color-blind might once in a while throw together a carpet-sofa combination that doesn’t clash. A good test eliminates the lucky hits, and also the unlucky ones.

Of the many kinds of hiring tests now in use, the most direct try to measure the exact skills of the job. Skill tests can be simple. They’re also relatively easy to control for validity, normalization, and con- stancy. For example, applicants for a junior-level position in copyediting at a public relations firm may be given a poorly written paragraph about a fictional executive and asked to fix up the spelling and grammar.

Psychological and personality tests are murkier; it’s more difficult to show a direct link between the results and job performance. On one side, you’ve got a test that probes your inspirations and fears, your tastes and personal demons. On the other side, the test’s goal is to reveal how well you can handle plain work assignments. Here’s an example of the disconnect. The following is a true-or- false question that Rent-A-Center placed on one of its employee application tests: I have no difficulty starting or holding my bowel movement.[11]

Well, it’s hard to see the link between bathroom performance and the ability to rent washer and drier sets. Rent-A-Center wouldn’t be asking, though, if they didn’t think the link was there. And they could be right; there may be some connection. One of the firmest sources of belief in the link between personality profile and job performance is the very interesting Minnesota Multiphasic Personality In- ventory (MMPI). That specific test is the origin of the bathroom question. Other true-or-false choices on the long test include the following:

< I am very attracted to members of my own sex. < Evil spirits possess me sometimes.

Now, the MMPI is a real test with a long and noble history. One of the things it tries to do is establish correspondences. That is, if we take a group of successful executives at Rent-A-Center and we discover that they nearly universally have trouble in the bathroom, then it may make sense to look for people who suffer this discomfort when looking to recruit future company leaders. As for the why ques- tion—as in why is there a link between bathroom habits and success?—that doesn’t matter for a corres- pondence test; all that matters is that some link is there. And if it is, then you know where to look when you’re hiring.

Theoretically, correspondence testing makes sense. Still, it’s hard to know how applicants are going to react to questions about sexual attraction and evil spirits. Obviously, some are going to find the whole thing too weird and not turn in responses that actually match their profile. As for applicants and employees of Rent-A-Center, they filed a lawsuit.[12]

Inescapably, correspondence-type personality tests are vulnerable to lawsuits because they’re expli- citly based on the premise that no one knows why the results indicate who is more and less suitable for a post. The administrators only know—or at least they think they know—that the correspondence is there. It’s not obvious, however, like it is with a simple skill test, so it makes sense to imagine that some are going to doubt that the test is valid; they’re going to doubt that it really shows who’s more and less qualified for a job.

So the problems with psychological tests include validity failure and lawsuits. Problems with con- stancy and normalization could also be developed. Added to that, there are invasion of privacy ques- tions that are going to get raised whenever you start asking perspective employees about their bath- room habits and bedroom wishes.

On the other hand, it needs to keep being emphasized that the tests do happen, and that’s not a co- incidence. At the Universal Studios Hollywood theme park, recruiter Nathan Giles reports that the tests he administers—with true-or-false questions including “It’s maddening when the court lets guilty criminals go free”—actually do produce valuable results. They correlate highly, he says, with personal interviews: if you do well on the test, you’re going to do well face to face. And though the application and interpretation of these tests are expensive, in the long run they’re cheaper than interviewing every- one. Finally, if that’s true, then don’t managers have a responsibility to use the tests no matter how heated the protests?[13]

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 189

honesty tests

Psychological tests attempting to measure honesty.

medical tests

Testing for specific medical problems that may impede work performance.

drug test

Questioning about and testing for illegal drug usage.

intelligence quotient (IQ) testing

Testing for intelligence.

Lie detectors in the Hollywood sense of wires hooked up to the fingers for yes-or-no interroga- tions are illegal except in highly sensitive and limited cases, usually having to do with money (bank guards) and drugs (pharmaceutical distribution). Written honesty tests are legal. Generally, the ques- tions populating these exams resemble those found on psychological tests, and deciphering the results again works through correlation. Obviously, the test can’t work directly since both honest and dishon- est people will answer “yes” to the question “are you honest?” Here are some typical questions that do get asked:

< I could help friends steal from my company. < I’m not an honest person and might steal. < I return quarters I find on the street to the police station.

Medical tests are generally only considered appropriate when the specific job is labor intensive. As al- ways, there’s a difference between testing and prying, and it’s your responsibility as a manager to limit the questioning to specifically work-related information. Questions about past physical problems are generally considered off limits as are future problems that may be indicated by family health history. A simple example of an appropriate medical test would be a vision examination for a truck driver.

When Michael Phelps—the thick-grinned Olympic swimming hero—got photographed pulling on a bong, he immediately failed the drug test with one of his employers: Kellogg’s breakfast cereal. He wouldn’t be hired again, the company explained, because smoking pot “is not consistent” with the company’s image.

The National Organization for Reform of Marijuana Laws rushed to disagree, insisting that the problem’s not that the drugs are bad; it’s the law that’s outdated and wrongheaded. They were suppor- ted, NORML claims, by the Washington Post and Wall Street Journal.[14]

However that might be, it’s seems difficult to object to Kellogg’s argument. The reason they’d hire Michael Phelps in the first place is to brand their product with the image of beaming, young health, not zoning out in front of the TV eating Doritos. Whether it’s legal or not, pot smoking is going to clash with the job description.

But what if he hadn’t been caught by someone with a camera? Would Kellogg’s have the right to demand a drug test before signing Phelps up as a representative? It depends where you are. Because there’s no broad federal law on the subject, the rules change depending on your state, even your city. If you’re looking for a job and you share a pastime with Michael Phelps, you may be in trouble in Alaska where any employer can test any applicant at any moment. In Arizona, on the other hand, you have to get written warning beforehand, which might allow for some cleanup. And if you’re applying for a gov- ernment job in Berkeley, California, you can party on because a local ordinance prohibits testing.[15]

Looking at the Berkeley law allows a sense of the central ethical conflict. On one side, the employ- ers’, the obvious and strong argument is that drug use negatively affects work performance, so evaluat- ing job prospects in terms of their future productivity implies, it almost requires, making sure they’re not distracted or disoriented by drug habits. In contrast, the Berkeley ordinance persuasively states that mandatory drug testing fails two distinct tests:

1. It assumes guilt instead of innocence. 2. It invades the individual’s privacy.

Deciding about drug tests seems to come down to deciding whose legitimate rights deserve higher billing: the employer’s or the employee’s.

In 1971 the US Supreme Court banned intelligence quotient (IQ) testing except in very limited circumstances after finding that the tests disparately affected racial minorities. Further, serious IQ tests (as opposed to seven-question Internet quizzes) are extremely expensive to apply, so even if it were leg- al, few employers would use the test with any frequency.

Conclusion. Tests applied by employers to job applicants include those probing skills, psychologic- al profile, honesty, medical condition, and drug use.

1.6 Interviewing In 1998 the Indianapolis Colts had a very good problem. Holders of the top pick in the National Foot- ball League draft, they had to choose between two exceptional players: two that everyone agreed radi- ated Super Bowl talent. Both were quarterbacks. Peyton Manning had a better sense of the field and smoother control of the ball; Ryan Leaf had a larger frame and more arm strength. Which would make the better employee? The call was so close that the team with the second choice, the San Diego Char- gers, didn’t care much who the Colts selected; they’d be happy with either one.

The Colts didn’t have the luxury of letting the choice be made for them, and as draft day ap- proached they studied film of the players’ college games, poured over statistics, measured their size,

190 THE BUSINESS ETHICS WORKSHOP

fair questioning

Asking similar and similarly challenging questions to all applicants for a post.

pertinent interview questions

Interview questions relating to job performance.

speed, and how sharply and accurately they threw the ball. Everything. But they couldn’t make a decision.

So they decided to interview both candidates. The key question came from Colts coach Jim Mora. He asked the young men, “What’s the first thing you’ll do if drafted by the Colts?” Leaf said he’d cash his signing bonus and hit Vegas with a bunch of buddies. Manning responded that he’d meet with the rest of the Colts’ offense and start going over the playbook. Mora saw in Manning a mature football player ready for the challenges of the sport at its highest level. In Leaf he saw an unpredictable kid.

More than a decade later, Peyton Manning heads into another season as starting quarterback. Hav- ing won the Super Bowl, set countless team and NFL passing records, and assured himself a spot in the NFL Hall of Fame, you can understand that the Colts are happy with their selection.

Ryan Leaf has recently been indicted on burglary and drug charges in Texas. He got the news while in Canada at a rehab clinic. As for football, after a rocky first few seasons, his performance collapsed entirely. He hasn’t been on a field in years.

Interviews matter. Grades, recommendation letters, past successes, and failures on the job—all those numbers and facts carry weight. But for most hiring decisions, nothing replaces the sense you get of a candidate face to face; it’s the most human part of the process.

Because it’s so human, it’s also one of the most ethically treacherous. Two factors usually weigh heavily in deciding which questions should and shouldn’t be asked:

1. Fairness 2. Pertinence

Fair questioning means asking similar questions to all applicants for a post. If the position is entry level, many candidates will be young, inexperienced, and probably easily flustered. That’s normal. So too there’s nothing necessarily wrong with trying to knock applicants off rhythm with a surprise or trick question. The problem comes when one candidate gets pressed while another gets softballs.

What do tough questions look like? One answer comes from Google. There are always blog entries circulating the Internet from applicants talking about the latest weird questions asked by that success- ful and unpredictable company:

< How many golf balls can fit in a school bus? < You are shrunk to the height of a nickel and your mass is proportionally reduced so as to

maintain your original density. You are then thrown into an empty glass blender. The blades will start moving in 60 seconds. What do you do?

< How much should you charge to wash all the windows in Seattle? < Every man in a village of 100 married couples has cheated on his wife. Every wife in the village

instantly knows when a man other than her husband has cheated, but does not know when her own husband has. The village has a law that does not allow for adultery. Any wife who can prove that her husband is unfaithful must kill him that very day. The women of the village would never disobey this law. One day, the queen of the village visits and announces that at least one husband has been unfaithful. What happens?

< Explain a database in three sentences to your eight-year-old nephew.[16]

We’re a long way from “why do you want to work at Google?” and even further from “what was your biggest accomplishment or failure in your last job?” Those are softballs; anyone going into Google for an interview is going to have prepared answers to those. It’s like reading from a script. But looking at the hard questions Google actually poses, there is no script, and you can see how things could go south quickly. You can’t figure out about golf balls and school buses, and you start to get nervous. Next, the blender question seems odd and threatening, and it’s all downhill from there. Some interviews just don’t go well and that’s it. As an applicant, you probably don’t have too much to complain about as long as the next guy gets the same treatment. But if the next guy gets the softballs, the fairness test is getting failed. As a manager, you can go hard or soft, but you can’t change up.

On the question of pertinent interview questions, the Google queries seem, on the face, to be troublesome. Is there any job that requires employees to escape from a blender? No. But there are many jobs that require employees to solve unfamiliar problems calmly, reasonably, and creatively. On that ground, the Google questions seem perfectly justifiable as long as it’s assumed that the posts being filled require those skills. By confronting prospective employees with unexpected problems demanding creative solutions, they are, very possibly, rehearsing future job performance.

When the Colts were interviewing Peyton Manning and Ryan Leaf, something similar happened at the key moment. At first glance, it seems like the question about the first thing each player would do after draft day wouldn’t reveal much about all the other days to come. But the guys probably weren’t prepared for the question, and so they had to reveal how they’d face a rapidly shifting reality that they had no experience in dealing with, a reality just like the one they’d face the day after the draft when they’d go from being college students on campus to wealthy adults in the big world. That makes the

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 191

behavioral interview

In a behavioral interview, applicants are asked to talk about how they have responded to specific—generally stressful—situations.

question pertinent. And that explains why the answers that came back were telling. They distinguished a great hire from one of the sports world’s monumental bungles.

On the other side, what kinds of questions reveal employees’ personalities but not their job skills? Interview consultants typically warn managers to avoid asking about these subjects:

< Sex life < Opinions about homosexuality < Beliefs about contraception < Personal finances < Religious faith < Political affiliations

Except in special circumstances (a job is with a church, a political party, or similar), these kinds of questions fall under the category of privacy invasion.

Finally, there are legal red lines to respect. While managers should ensure that applicants are old enough to work and so can confirm that people are, say, eighteen or older, it’s discriminatory in the legal sense to hire one person instead of another because of an age difference. This means asking “how old are you?” is an off-limits question. It’s also illegal to ask about citizenship, though you can ask whether applicants are legally authorized to work in the United States. It’s illegal to ask about disabilit- ies, except as they relate directly to the job. It’s illegal to ask about past drug and alcohol use, though you may ask applicants whether they are now alcoholics or drug addicts.

The interviewer’s fundamental responsibility is to choose the best applicant for the job while giv- ing everyone a fair shot. Being fair isn’t difficult; all you need to do is just ask everyone the standard questions: Why do you want to work for our company? What are your strengths? How do you work with others? Do you stay cool under pressure? The problem here, though, is that it’s easy to get gamed. It’s too easy for applicants to say, “I love your company, I’m a team player, and I never get mad.” Since everyone knows the questions and answers, there’s a risk that everything will be fake. And that makes identifying the best applicant nearly impossible.

One response to this is to junk the standard questions and come up with surprising and (seemingly) crazy questions like they do at Google. Another strategy is a different kind of interview. A situational or behavioral interview asks candidates to show how they work instead of talking about it.

Here’s how it goes. Instead of asking an applicant, “Do you stay cool under pressure?” (the correct response is “yes”), the question gets sharpened this way:

You know how jobs are when you need to deal with the general public: you’re always going to get the lady who had too much coffee, the guy who didn’t sleep last night and he comes in angry and ends up getting madder and madder…at you. Tell me about a time when something like this actually happened to you. What happened? How did you deal with it?

It’s harder to fake this. Try it yourself, try inventing a story. Unless you’re a real good liar, you’re going to hear the slipperiness in your own voice, the uncertainty and stammering that goes with mak- ing things up. Probably, most people who get hit with situational questions are going to opt for the easiest route, which is tell the truth and see how it goes. So the advantage to this kind of interview is that it helps sort out qualified candidates by giving an unvarnished look at how they confront prob- lems. On the other side, however, there’s also a disadvantage here, one coming from the fairness side. If candidate A has spent years at the counter of Hertz and candidates B through G have all been working in the Hertz back office, of course the counter person is going to do better.

192 THE BUSINESS ETHICS WORKSHOP

wage confidentiality

The policy that salaries of employees within an organization will not be disclosed to third parties.

K E Y T A K E A W A Y S

< In publicizing a job opening, a tension exists between limiting the job announcement to ensure that applicants are appropriate, and widely publicizing the announcement to ensure that applicants include highly qualified individuals.

< Decisions about how broadly to publicize a job opening can be implemented through nepotism, internal public job announcements, and mass public job announcements.

< Screening job applicants makes the hiring process more efficient but raises ethical concerns.

< Common screening techniques involve BFOQs, educational requirements, high-risk lifestyles, criminal record, and an applicant’s social media history.

< Testing allows applicants’ suitability for a post to be measured but raises ethical concerns.

< Common tests include skill tests, psychological and personality tests, honesty tests, medical tests, and drug tests.

< Applicant interviewing provides valuable information for evaluating job candidates, but questions ought to be fair and pertinent to job-related concerns.

R E V I E W Q U E S T I O N S

1. Why might an employer opt for nepotism when hiring?

2. What is an advantage of a mass public job announcement?

3. Invent a job description that would allow applicants to be screened by a BFOQ.

4. Why might an applicant pool be screened for use of social media?

5. List the three requirements for a fair and legitimate job-applicant test.

6. How do psychological and personality tests work through correspondence?

7. Imagine a job and then an interview question for applicants that would not be pertinent and one that would be pertinent.

8. Why might a behavioral interview be used?

2. WAGES

L E A R N I N G O B J E C T I V E S

1. Explore the limits of wage confidentiality. 2. Delineate the uses and ethics of wages as a work incentive.

2.1 Two Salary Issues Facing Managers Two salary issues facing managers are wage confidentiality and the use of wages as a work incentive. Starting with wage confidentiality, in the private sector it’s frequently difficult to discover what an organization’s workers are paid. Because of freedom of information laws, many salaries in government operations and contracting are available for public viewing, but in the private sector, there are no laws requiring disclosure except in very specific circumstances.

The main ethical reason for keeping wage information concealed is the right to privacy: agree- ments struck between specific workers and their company are personal matters and will likely stay that way. Still, ethical arguments can be mounted in favor of general disclosure. One reason is to defend against managerial abuse. In a law firm, two paralegals may have similar experience, responsibilities, and abilities. But Jane is single and living in a downtown apartment while John has just purchased a home where his wife is living and caring for their newborn. Any boss worth his salt is going to see that Jane’s got no local commitments and, who knows, she may just up and decide to spend a few months traveling, and then make a run at living in some different city. Maybe she likes skiing and a few years in Denver doesn’t sound bad. John, on the other hand, is tied down; he can’t just walk away from his job. He can always get a new one, of course, but if money’s tight and a recession is on, there’s an incentive to raise Jane’s salary to keep her and not worry so much about John who probably won’t be going any- where anyway. That seems to be taking unfair advantage of John’s personal situation, and it also seems

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 193

work incentive

Money or other benefit offered to workers to increase the quality or volume of their work.

bonus

A payment to an employee above the agreed upon salary for a job well done.

like paying someone for something beyond the quality of the work they actually do. But if no one knows what anyone else is making, the boss may well get away with it.

Stronger, the boss may actually have an obligation to try to get away with it given his responsibility to help the company maximize its success.

Another argument against confidentiality is the general stand in favor of transparency, and in this case, it’s transparency as a way of guaranteeing that ethical standards of equality are being met. Since the signing of the Equal Pay Act in 1963, the ideal of “equal pay for equal work” has become a central business ethics imperative in the United States. But it’s hard to know whether the equality is really hap- pening when no one knows how much anyone else is making.

Of course, workers do frequently know how much other people are getting. In an extreme case, if you’re laboring in a union shop, it’s probable that your wage scale will be set identically to those of your companions. Even if you’re not unionized, though, people still talk at the water cooler. The result is, in practice, that some wage transparency is achieved in most places. From there, arguments can be moun- ted for the expansion of that transparency, but in most cases, the weight of privacy concerns will carry the day.

Another wage issue concerns its use to provide a work incentive. Many sales positions have the incentive explicitly built in as the employees receive a percentage of the revenue they generate. (That’s why salespeople at some department stores stick so close after helping you choose a pair of pants; they want to be sure they get credit for the sale at checkout.) In other jobs, generating a motivation to work well isn’t tremendously important. The late-night checkout guy at 7-Eleven isn’t going to get you out of the store with cigarettes and a liter of Coke any faster just because his salary has been hiked a dollar an hour. Between the two extremes, however, there are significant questions.

Probably, the main issue involving the use of wages as a carrot in the workplace involves clarity. It’s quite common, of course, for managers to promise an employee or a team of workers a pay hike if they win a certain account or meet productivity goals. Inevitably, the moment of the promise is warm and fuzzy—everyone’s looking forward to getting something they want, and no one wants to sour things by overbearingly demanding specifics. The problems come afterward, though, if the terms of the agreement have been misunderstood and it begins to look like there’s an attempt to worm out of a promised salary increase. It is management’s responsibility as the proposers of the accord to be sure the terms are clearly stated and grasped all around:

< What, exactly, needs to be accomplished? < How much, exactly, is the wage hike?

The mirror image of promised wage hikes to encourage improved worker performance is the bonus paid at year’s end to employees marking a job well done. In a letter to the editor of the Greensboro News-Record in North Carolina, a teacher cuts to the central ethical problem of the bonus: on the basis of what do some employees receive one while others don’t? Some teachers, the writer states, “at schools with high ‘at-risk’ populations and students coming from homes where education is just not valued, work themselves into a tizzy every year, but because of the clientele they serve, will never see that bonus money. Inversely, schools with middle-class clienteles have teachers who work hard, but also others who merely go through the motions but usually can count on that bonus because their students come from homes that think education matters. Where is the justice in this?”[17]

It’s not clear where the justice is, but there’s no doubt that bonuses aren’t serving their purpose. The problem here isn’t a lack of clarity. No one disputes that the rules for assigning a bonus are clear. The problem is that the rules don’t seem to account for divergent working conditions and challenges.

The important point, finally, is that even though a bonus is extra money outside the basic salary structure, that doesn’t mean it escapes the question, “Where’s the justice in this?,” coming with every decision about who gets how much.

K E Y T A K E A W A Y S

< Wage confidentiality pits the right to privacy against the desire for, and benefits of, transparency.

< Wages and bonuses are used to provide a work incentive, but problems arise when the pay increments don’t obviously align well with promises or with job performance.

R E V I E W Q U E S T I O N S

1. Why might a company want to maintain wage confidentiality?

2. What is an example of a payment bonus becoming disconnected from work performance?

194 THE BUSINESS ETHICS WORKSHOP

3. PROMOTING EMPLOYEES

L E A R N I N G O B J E C T I V E S

1. Distinguish criteria for promoting employees. 2. Locate and define ethical issues relating to promotion.

3.1 The Drinking Strategy If you want a promotion, does going out for drinks with the crew from work help the cause? Here’s a blog post; it’s about two uncles—one who goes drinking with the crew and one who doesn’t—and you’ll see why the answer might be yes:

Look at my uncles, they both work for Ford and one has been in his position for 10-plus years and still doesn’t have a company car, while my other uncle has a company car, increase salary, paid training. Even though he comes home to my auntie blinded drunk in the end it’s all worth it if you want to be noticed.[18]

Get hammered to get promoted! Too good to be true? Probably. But not entirely, the Reason Foundation commissioned a report on the question of whether drink-

ers earn more money than nondrinkers.[19] The title “No Booze? You May Lose” pretty much tells what the study concluded about the link between social drinking with workmates and promotions. A few things should be noted, though. Drinking doesn’t mean coming home blind drunk every night; it just means taking down alcohol in some amount. And the payoff isn’t huge, but it is respectable: about 10 percent pay advantage goes to the wet bunch compared to those workers who stay dry. The really inter- esting result, though, is that guys who drink in bars at least once a month get another 7 percent pay ad- vantage on top of the 10 percent. The bad news for drinking women is that for them, going to the bars doesn’t seem to help.

So there are two findings. First, just drinking is better than not drinking for your wallet. Second, at least for men, drinking socially at bars is even better. One of the study’s authors, Edward Stringham, an economics professor at San José State University, comments on the second result: “Social drinking builds social capital. Social drinkers are networking, building relationships, and adding contacts to their Blackberries that result in bigger paychecks.”[20]

Now, going back to the blog comment about the drunken uncle, isn’t this more or less what the blogger sees too? Here are the next lines from the entry:

No senior management wants to promote a boring old fart. They want outgoing people, in and outside of work. They want social people. If you can display your social abilities to them, it means that you want more than the 9am to 5pm, thank God, time to go home. They want people who enjoy working with the company and the people who they work for.[21]

That sounds reasonable, and it may explain why there’s some serious scientific evidence that party- ing with the workmates does, in fact, lead to promotions in the company.

The link between lifting a glass and moving up may be solid, but is it right? From the worker’s side, there’s not a lot you can do about the situation so you may want to leave some Thursday and Friday evenings available for happy hour regardless of whether you think that’s the way promotions ought to be arranged. From management side, however, there is a stark issue here. When you sit down to look at two candidates in your company for one promotion, do you have a right to consider how well they mix after hours? Do you have a duty or responsibility to consider it?

There are two issues: 1. Should you consider a worker’s party aptitude? 2. If you do, how should you manage it?

The reasons for not considering party ability are many. Two stand out. First, workers are being paid for what they do from nine to five. That’s the job. If you’re going to start considering other things, then

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 195

work performance

A measure of how well an employee is performing the duties of the job.

seniority

The ranking of employees in terms of how long they’ve been working in the organization.

why stop at parties? You could give the promotion to the better player on the company softball team, or the one who’s got curlier hair, or whatever. Second, workers may not have an equal opportunity to party. The guy who lives closer to work and isn’t married obviously holds an advantage over the guy who has diabetes when gin and tonics become job qualifications.

On the other hand, when workmates gather after work to drink, what do they talk about? Well, work. That’s why people say a new advertising campaign or a fresh product idea got scratched onto a napkin. It’s not a metaphor. Further, the ability to labor together with others—teamwork—that’s a real job qualification, and it’s reasonable to suppose that people who get along well drinking will carry the camaraderie over to the next morning’s breakfast meeting (where coffee and tea are served). This ex- plains why companies including Deloitte Consulting encourage and even to some extent pressure em- ployees to socialize outside the office.[22]

Finally, it’s a hard call—there are reasonable arguments to be made on both sides. It’s also difficult to be absolutely certain how the party qualification should be managed if it’s included in the perform- ance evaluation. On one hand, a strong case can be made for transparency and openness, for simply stating that after-hours socializing is, in fact, a part of the job. To not inform workers, the argument goes, that hanging out is a job requirement is really a form of lying: it’s dishonest because the default understanding typical employees are going to have is that what counts in determining the quality of work is the work, period. Whether the assigned task got outlined in a cubicle or on a bar stool is irrel- evant. Therefore, any manager who secretly totes up the social aptitude of the workers is not being honest about the way workers are graded. It’s the equivalent of a college teacher assigning grades par- tially based on class participation without listing that in the syllabus.

On the other hand, all teachers know that listing class participation as part of a student’s grade can lead to brown nosing, and there’s a similar threat in the workplace: if employees are told to party, then at least a few are going to tag along for drinks even when they really don’t want to go and end up sour- ing the evening for everyone. If you as a manager believe in honesty above all, then you may accept that cost. On the other hand, if your vision of corporate responsibility dovetails more closely with profit maximization, you may be able to build an ethical case around the idea that in the name of evaluating employees as perfectly as possible some elements of that evaluation may have to remain close to the vest.

3.2 Three Considerations for Promotion: Work Performance, Seniority, Projected Work Performance When managing a promotion, there are three fundamental considerations; work performance is the most obvious. The person most deserving to step up to a higher level of responsibility is the one who’s best managed current responsibilities. This may be measured by accounts won, contributions to a lar- ger group, or some other work-related factor, but the key is that the measured performance be related with the job.

The problem comes in determining exactly what that word related means. When read narrowly, it means that the employee who looks best on paper—the one who’s written the best reports, achieved the highest sales, won the most cases—will be the most deserving. When read broadly, however, the range of considerations can expand dramatically to include contributions having to do with personality, chemistry, and other characteristics tangential to nine-to-five tasks. This is where questions about go- ing out for drinks after work start to gain traction and importance. Finally, it’s not clear that after- hours socializing should be considered part of work performance, but the fact that it can be included shows how broad this category is.

The second consideration when weighing a promotion is seniority. Seniority is preference for promotion granted to the person who’s been with the company the longest. A strong or pure seniority system simply reduces the choice to comparisons of time with the firm: the promotion goes to the longest-serving employee. There’s a taste of fairness here since no one will be overlooked for a job be- cause of a personal conflict with the boss, or because he doesn’t smile enough at work, or because her skirt is too short or his necktie too absurd or whatever. More, there’s an inherent tranquility in the fact that all employees know exactly where they stand. The connected problem, obviously, is that good work is not directly rewarded. This explains why the seniority system seems especially suited to pro- duction line jobs or any kind of labor where experience is more important than analytic skills, high- level training, or creativity. If it’s true that experience is what matters on a job, then a seniority system should produce promotions that more or less dovetail with expertise and the ability to do a good job.

A weak seniority system considers time with the company as a positive element, but only as one component in evaluating candidates for a promotion. The advantage of this kind of system is the en- couraging of worker loyalty. The retention of good workers is nearly the highest human resources pri- ority of any company, and rewarding seniority plus performance gives good workers a reason to stick

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projected performance

An employee’s work performance judged by predicting how well future, usually distinct, tasks will be accomplished.

around. Equally important, it helps retain good, loyal workers without forcing the company to promote old-timers who’ve never really learned to get the job done well.

The third promotion consideration is projected performance, which evaluates candidates in terms of what they’ll be able to do in the future. A tool used by companies to groom young people for future leadership roles, the escalation normally goes to highly qualified individuals currently working at a level beneath their ability. For example, a health insurance company may hire a college graduate with a strong premed profile and hope to keep that person out of medical school by pulling her up the career ladder at a crisp rate. She simply doesn’t have the experience, however (no one does), to just start near the top. In order for her to play a leadership role in the future, she does need to be familiar with how the company works at every level, including the lowest. That means spending some time on the front lines, say, manning telephones, answering questions from (frequently frustrated or angry) customers. Of course it’s difficult to really stand out in this kind of work, so if she’s going to move up, it’s going to have to be because she’s expected to stand out at something more demanding later on.

Other employees are going to be tempted to resent the rapid ascension since many of them have done just as well at the same job for a longer time. Within the narrow view of performance evaluation (your job performance equals how well you do the work) their resentment is justified. The rule of equal treatment is being severely broken. But if you’re in management, you have a responsibility to the com- pany (and to shareholders if the company is public) to be successful. And you need to face the problem that highly educated and qualified young people have options. Arguably, retaining them is a higher pri- ority—not just financially but also ethically—than keeping more replaceable talent content.

K E Y T A K E A W A Y S

< Work performance is defined in diverse ways, and managers may have a right to consider after-hours activities as part of that definition.

< Three common criteria for awarding promotions are seniority, work performance, and projected performance. Each contains specific ethical tensions.

R E V I E W Q U E S T I O N S

1. Why might someone’s social skills be considered a factor in receiving a promotion?

2. What are some advantages and disadvantages of seniority promotion?

3. Why might a promotion be based on projected performance?

4. FIRING

L E A R N I N G O B J E C T I V E S

1. Define legal guidelines on firing employees. 2. Elaborate justifiable reasons for deciding to fire. 3. Set standards for the actual firing process. 4. Consider ways of limiting the need to terminate employees.

4.1 Optimal Level Firing A study funded by the CATO Institute and titled “The Federal Government Should Increase Firing Rate” concludes this way: “The rate of ‘involuntary separations’ is only about one-fourth as high in the federal government as in the private sector. No doubt private-sector firing is below optimal as well since firms are under threat of expensive wrongful discharge lawsuits.”[23]

There is, in other words, an optimal level for firing, and in both the public and private sectors it’s not being met. People aren’t being fired enough.

The strictly economic question here is, “What is the optimal firing level?” No matter the answer, there’s an ethical implication for the workplace: firing workers is a positive skill. For managers to per- form well—for them to serve the interest of their enterprise by maximizing workplace

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 197

at-will employment

The employer’s right to fire any employee at any time for any reason or for no reason whatsoever.

just cause firing

The doctrine that employers have a responsibility to demonstrate that dismissed workers were failing to fulfill their duties adequately.

performance—the skills of discharging employees must be honed and applied just like those of hiring and promoting.

On the ethical front, these are the basic questions: < When can an employee be fired? < When should an employee be fired? < How should an employee be fired once the decision’s been made? < What steps can management take to support workers in a world where firing is inevitable?

4.2 When Can an Employee Be Fired? In the world of for-profit companies, most work contracts offer at-will employment. Within this scheme, a clause is written into the contract offering employment only as long as the employer desires. Stated more aggressively, managers may discharge an employee whenever they wish and for whatever reason. Here’s a standard version of the contractual language:

This is an “At Will” employment agreement. Nothing in Employer’s policies, actions, or this document shall be construed to alter the “At Will” nature of Employee’s status with Employer, and Employee understands that Employer may terminate his/her employment at any time for any reason or for no reason, provided it is not terminated in violation of state or federal law.

The legal parameters for firing seem clear. Things blur, however, once reality hits. As the Cato study authors note, simply the fear of a pos-

sible lawsuit does impinge to some extent on the freedom to fire, especially when the discharged work- er fits into a protected group. This means older workers, foreigners, or disabled workers may protest that no matter what reasons are given for termination—assuming some are given—the real reason is their age, nationality, or disability. Further, gender protection may be claimed by women fired from largely male companies and vice versa.

Another round of blurring occurs on the state level where legislation sometimes adds specific em- ployee protections, and so curtails employers’ rights. In Minnesota, for example, firing may not be based on a worker’s participation in union activities or the performance of jury duty.

These varied and frequently changing legal protections are the reason managers are typically in- structed to keep detailed records of employee performance. If those can be produced to show a pattern of incompetence or simply inadequate results, they can justify a dismissal before a judge, if it ever comes to that.

Even though legal complexities mean managers are well advised to be careful about firing workers, and it’s prudent to be sure that there are directly work-related reasons for the dismissal, none of that changes the fact that at-will hiring gives wide latitude to the company, and fired workers are typically left with few good avenues of protest. One way to see how tilted the table is toward the employer and away from the employee is to compare the American at-will firing system with the European model, where a reasonable cause for termination must be demonstrated. In the United States, employers may more or less fire anyone for any reason, and the burden of showing the termination was illegal or unfair falls entirely on the worker. In Europe, by contrast, the legal burden falls largely on the employer. In- stead of the worker having to show the firing was wrong, now the company has to show the firing was right. This is a big deal. It’s like the difference between innocent until proven guilty and guilty until proven innocent. Just cause firing means the company holds the burden of proof: it must demon- strate that the worker wasn’t holding up his or her end of the employment contract. That’s a lot harder to do than just producing some work evaluations to buttress the claim that she wasn’t fired because she’s Jewish or he wasn’t let go because he’s Asian. As opposed to the European reality, the conclusion is, employees in the United States hired at will have few recourses against a company that wants them out.

Finally, it’s worth noting that elements of just cause law have been working their way into the American legal system in recent years.

4.3 When Should an Employee Be Fired? Because the legal footing is usually more or less solid for American managers, the real hard questions about terminating employees aren’t legal ones about what can’t be done but ethical ones about what should be done.

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economic slowdowns

Slowdowns in the general economy.

fundamental changes in the market

Basic and far-reaching changes in consumer demands.

rank and yank

The management practice of ranking employee performance and dismissing those near the bottom even when they are fulfilling their duties adequately

employee misbehavior

Employee actions breaking the organization’s rules or norms.

Sometimes firing is unavoidable. Economic slowdowns frequently bring furloughs and termina- tions. When the company’s books turn red, and after all the easy cost cutting has been done, people need to be cut. Who? There are three broad philosophies:

1. Inverted seniority 2. Workload 3. Recovery preparation

Inverted Seniority occurs when the last worker hired is the first released. This works especially well for assembly-line-type labor where one worker can replace another easily. As long as replacement is pos- sible, dismissing the most recently hired allows clear and impersonal rules to make downsizing orderly.

Workload firings focus the pain of job cuts on that part of the company suffering most directly from a falloff in business. An office furniture supply company may find its line of hospital products un- affected by an economic downturn (people keep getting sick even if they don’t have a job) so layoffs are taken from other divisions. This may mean losing workers with higher seniority or better job perform- ance, but it minimizes cash-flow disruption.

Recovery preparation takes the long view on an economic slowdown: firings and layoffs are ex- ecuted not so much to compensate for the present downturn but to sharpen the company for success when the economy bounces back. Staying with the office furniture supply company, the owner may see better long-term opportunities for profits in the nonhospital units, so the downsizing may occur across the board. The idea is to keep those slow-moving units at least minimally prepared to meet new de- mand when it eventually comes.

Sometimes economic slowdowns don’t reflect a problem with the larger economy, they’re the res- ult of fundamental changes in the market, frequently brought on by technological advance. For ex- ample, the popularization of digital photography has shrunk the market for old fashioned film. Seeing this coming, what can a company like Kodak do? They’re probably going to let workers from the old film side go to create room for new hires in the digital division. This is potentially unfair to terminated workers because they may be doing exemplary work. Still, it would be unfair—and financially dis- astrous—to the company as a whole to not change with the times.

Rank and yank is a management philosophy promoted by former General Electric Company CEO Jack Welch. Every year, he counsels, the entire workforce should be ranked and the bottom 10 percent (“There’s no way to sugarcoat this,” he says) should be fired to make room for new employees who may be able to perform at a higher level. Here, the responsibility to the company is being weighed far heavier than the one to the employee because, theoretically at least, those in the bottom 10 percent may be doing fine on the job—fulfilling their responsibilities adequately—it’s just that others out there who could be hired to replace them may do it better. In the hope they will, workers who’ve done noth- ing wrong are sacrificed.[24]

There are two main criticisms of this practice. First, it’s a betrayal of employees who are fulfilling their contractual obligations (they’re just not overperforming as well as others). Second, it’s counter- productive because it lowers morale by drowning workers in the fear that even though they’re doing what’s being asked, they may end up in that dreaded bottom 10 percent.

Employee misbehavior is the least controversial reason to fire a worker. Here, the ethics are rel- atively clear. Employees aren’t being mistreated when they’re dismissed because it’s their own actions that lead to their end. Standard definitions of misbehavior include

< rudeness toward clients or customers, < drinking or drugs on the job, < theft of company property or using company property for personal business, < frequent and unexplained absences from work, < entering false information on records, < gross insubordination, < fighting or other physical aggression, < harassment of others (sexual, sexual orientation, religious, racial, and similar).

4.4 How Should an Employee Be Fired Once the Decision’s Been Made? At the Friday all-staff meeting the office manager stands up to announce, “The good news is the follow- ing people have not been fired!” He reads a list of seventeen names. There are nineteen people at the meeting.

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 199

manager’s duty to the organization

The manager’s ethical responsibility to protect the interests of the organization.

manager’s duty to the employee

The manager’s ethical responsibility to protect the interests of his or her employees.

That’s from a (perhaps unemployed) comic’s stand-up routine. Unfortunately, people have written into the CNNMoney.com with real stories that aren’t so far removed:

< An employee received news of her firing in a curt letter delivered to her home by FedEx. < A man tells of being halted at the building door by security and being humiliatingly sent away. < People report that they arrived at their office to find the lock changed and their stuff thrown in a

box sitting on the floor.[25]

All these are inhumane firings in the sense that no flesh and blood person took the trouble to present the bad news.

It’s easy to understand why inhumane firings occur: not many people enjoy sitting down with someone and telling them they’re out. So it’s tempting to yield to cowardice. Instead of facing the worker you’ve fired, just drop a note, change the lock, talk to security. On the ethical level, however, firing an employee is no different from working with an employee: as a manager, you must balance your duties to the company and the worker.

How can the manager’s duty to the organization be satisfied when terminating a worker? First, to the extent possible, the fired person should leave with a positive impression of the organiza- tion. That means treating the employee with respect. No mailed notices of termination, no embarrass- ing lockouts, just a direct, eye-to-eye explanation is probably the most reliable rule of thumb.

Second, the terminated employee should not be allowed to disrupt the continued work of those who remain. If deemed necessary, security personnel should be present to ensure the ex-worker leaves the premises promptly. Also, if the worker is involved in larger projects, a time for severance should be found when their contribution is minimal so that other members of the team will be able to carry on near normally. (It may be recommendable to arrange the termination to coincide with the finishing of a larger project so that everyone may start fresh with the new, substitute employee.)

Third, the financial costs of the termination should be minimized. This means having clear reasons for the termination and documents (pertaining to worker performance or behavior) supporting the reasons to guard against lawsuits. Also, there should be clear understandings and prompt payment of wages for work done, as well as reimbursements for travel expenses and the full satisfaction of all mon- etary obligations to the employee. This will allow the human resources department to close the file.

With duties to the company covered, how can the manager’s duty to the employee be satisfied? Consultants—both legal and ethical—typically share some bullet-point answers. First, the employee should be addressed honestly and directly with a clear explanation for termination. Speak firmly, the advice is; don’t waver or provide any kind of false hope. Further, the termination should not come as a total surprise. Previous and clear indications should have been given concerning employee perform- ance along with specific directions as to what areas require improvement. Many companies institute a structure of written warnings that clearly explain what the employee’s job is and why their work is not meeting expectations.

Second, getting fired is embarrassing, and steps should be taken to minimize the humiliation. The employee should be the first to know about the discharge. Also, the severance should occur in a private meeting, not in view of other workers. To the extent possible, the employee should have an opportunity to say good-bye to workmates or, if this is the preference, to leave discreetly. For this reason, a meeting late in the day may be chosen as the appropriate time for notice to be given.

Third, to the extent possible and within the boundaries of the truth, an offer should be extended to provide a recommendation for another job.

Fourth, make sure the employee gets all the money coming for work done, without having to jump through hoops.

4.5 What Steps Can Management Take to Support Workers in a World Where Firing Is Inevitable? One response to the inescapable reality that firing happens is preemptive; it’s to reduce the moral un- certainty and hardship before they arise. Two strategies serve this purpose: actions can be implemented to minimize the occasions when firing will be necessary, and steps can be taken to reduce the severity of the firing experience for employees when it happens.

In her book Men and Women of the Corporation, Rosabeth Moss Kanter generates a list of meas- ures that corporations use to diminish firings, and reduce the professional impact for those who are let go. Here’s an abbreviated selection of her recommendations, along with a few additions:

< Recruit for the potential to increase competence, not simply for narrow skills to fill today’s slots. < Rotate assignments: allow workers to expand their competence. < Retrain employees instead of firing them.

200 THE BUSINESS ETHICS WORKSHOP

< Offer learning opportunities and seminars in work-related fields. < Subsidize employee trips to work-related conferences and meetings. < Provide educational sabbaticals for employees who want to return to school. < Encourage independence and entrepreneurship: turn every employee into a self-guided

professional. < Keep employees informed of management decisions concerning the direction of the company:

What units are more and less profitable? Which ones will grow? Which may shrink? < Ensure that pensions and benefits are portable.[26]

K E Y T A K E A W A Y S

< At-will firing grants employers broad legal latitude to discharge employees, but it does not erase ethical concerns.

< Justifiable worker firings include cases where workers bear none, some, or all of the blame for the discharge.

< The act of firing a worker requires managers to weigh responsibilities to the organization and to the ex- employee.

< Steps can be taken to limit the need for, and effects of, employee discharge.

R E V I E W Q U E S T I O N S

1. What’s the difference between at-will and just cause firing?

2. How might fundamental changes in the marketplace require a company to fire workers?

3. What is rank and yank? 4. When managers fire employees, what duties do they hold to the organization, and what are the duties to

the dismissed worker?

5. What are some steps organizations can take to protect their workers from the effects of discharge if firing becomes necessary?

5. CASE STUDIES

5.1 Fashionable

Source: Photo courtesy of Ralph Aichinger, http://www.flickr.com/photos/sooperkuh/3275153928/.

In her blog Love This, MJ (full name not provided) relates that she’s been an aspiring clothes designer since she started sewing tops for her Barbie dolls. Things weren’t going well, though, as she tries to break into the in- dustry. One thing she notices is that there aren’t a lot of female fashion designers out there—Vera Wang, Bet- sey Johnson, and a few more. Not many. So she starts trying to figure it out with questions like these:

< Do women want straight guy designers to dress them because they dress to please the men? It could make sense: what that designer likes, the man in her life is going to love too.

< Do women prefer gay men to dress them because gay men are their new girlfriends? Gay men are usually more receptive to trends and physical appearances too.

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 201

< Do women prefer women designers because she knows a woman’s body better?

< Do men have the same issue? Do some men prefer a lesbian designer? Would they balk at being dressed by a gay designer?[27]

Q U E S T I O N S

1. Assume MJ is right when she hypothesizes that most women like straight male designers because straight guys are the ones they’re trying to impress, so they want clothes straight guys like. Now imagine you’ve been put in charge of a new line of women’s clothes. Your number one task: sales success. You’ve got five applicants for the job of designing the line. Of course you could just ask them all about their sexual orientation(s), but that might leave you open to a discrimination lawsuit. So could you devise a test for new applicants that’s fair—that gives everyone an equal chance—but still meets your requirement of finding someone who produces clothes that straight guys get excited about?

2. Four standard filters for job applicants are

< education level,

< high-risk lifestyle,

< criminal record,

< flamboyant presence in social media.

Which of these might be used to winnow out applications for a job as a clothes designer? Explain in ethical terms.

3. MJ wonders whether women might prefer women designers because she knows a woman’s body better. Is there a bona fide occupational qualification for a women’s fashion company to hire only women designers? Is there a difference between a BFOQ based on sex and one based on sexual orientation?

4. MJ asks, “Do women prefer gay men to dress them because gay men are their new girlfriends?” Assume you think there’s something to this. Could you design a few behavioral interview questions that test the applicants’ ability to become girlfriends (in the sense that MJ means it) with their clients? Would these be ethically acceptable interviews, or do you believe there’s something wrong and unfair about them?

5.2 God at Work

Source: Photo courtesy of Geoff Stearns, http://www.flickr.com/photos/tensafefrogs/1523795/.

The University of Charleston is a private, nonreligious institution with a very particular job opening: the Her- chiel and Elizabeth Sims “In God We Trust” Chair in Ethics. According to the job description, the successful can- didate for this job as a professor “must embrace a belief in God and present moral and ethical values from a God-centered perspective.”[28]

202 THE BUSINESS ETHICS WORKSHOP

Q U E S T I O N S

1. You’re in charge of getting applicants for this post and you’ve got a small advertising budget. What ethical responsibilities should you consider when determining where to place the ad? How broadly should you advertise the position?

2. According to Erwin Chemerinsky, a law professor at Duke University, “The description that ‘candidates must embrace a belief in God and present moral and ethical values from a God-centered perspective,’ violates the Civil Rights Act as religious discrimination in employment.”[29] Imagine you’re in charge of every step of the process of filling this job. How could you respond in terms of

< bona fide occupational qualifications (BFOQs),

< testing,

< interviewing?

3. You’re the university president. The person who currently holds the In God We Trust Professorship has, by all accounts, been doing a mediocre to poor (but not directly unacceptable) job. One day you happen to trip across the person’s blog page and notice that your professor claims to be a sadist and practices a mild form of devil worship (also, the prof’s favorite movie is The Omen). Right now the In God We Trust Professor of ethics is down the hall lecturing to seventy-five undergrads. You sneak to the door and listen from outside. The professor sounds just like always: dull and passionless, but the talk is about the Bible, and nothing’s being said that seems out of line with the job description. Still, you decide to terminate the relationship.

< In a pure at-will working environment, you can just fire the professor. But imagine you want to demonstrate just cause. How does this change the way you approach the situation? What would your just causes be?

< The professor’s classes are passionless because he doesn’t believe in what he’s teaching. Still, his teachings are not directly wrong. Does this case show why a manager may be ethically required in certain situations to implement a strategy of rank and yank? Explain.

5.3 Testing Baseball Players’ DNA

Source: Photo courtesy of katkimchee, http://www.flickr.com/photos/midwestkimchee/206762729/.

The New York Times reports that there’s a “huge difference between sixteen and nineteen years old,” when you’re talking about prospects for professional baseball. A kid whose skills knock your socks off for a sixteen- year-old just looks modestly good when he practices with nineteen-year-olds.[30]

This is a significant problem in the Dominican Republic, which produces excellent baseball players but little in the way of reliable paperwork proving who people really are and when they were born. The Cleveland Indians learned all about that when they gave a $575,000 bonus to a seventeen-year-old Dominican named Jose Ozoria, only to later find out he was actually a twenty-year-old named Wally Bryan.

This and similar cases of misidentification explain why baseball teams are starting to apply genetic tests to the prospects they’re scouting. Typically, the player is invited to provide a DNA sample from himself and his par- ents to confirm that he’s no older than he claims. The player pays for the test and is reimbursed if the results show he was telling the truth.

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 203

Q U E S T I O N S

1. Many experts in genetics consider testing an unethical violation of personal privacy.

< What does it mean to “violate personal privacy”?

< Can a utilitarian argument (the greatest good for the greatest number should be sought) in favor of DNA testing in the Dominican Republic be mounted? What could it look like?

2. In the baseball world, other tests that clearly are allowed as part of the hiring process include testing a player’s strength and speed. Is there anything in the fair application of these tests that may ethically allow—even require—that baseball teams extract DNA to confirm the age?

3. Assume you accept that testing a prospect’s age is a bona fide occupational qualification (after all, the job is to be a prospect: a developing player, not an adult one). Once you accept that, how do you draw the line? Couldn’t teams be tempted to use DNA facts for other purposes? The Times article interviews a coach who puts it this way:

I know [the baseball teams taking the DNA samples] are looking into trying to figure out susceptibility to injuries, things like that. If they come up with a test that shows someone’s connective tissue is at a high risk of not holding up, can that be used? I don’t know.[31]

Can you formulate an ethical argument in favor of teams secretly using DNA tests to do just that, check for as many yellow and red flags as possible in the young prospect’s genetic code?

4. Baseball scouting—the job of hiring excellent future players and screening out mediocre ones—is very competitive. Those who do it well are paid well; those who don’t are cycled out quickly to make room for someone else. You have the job, you have the DNA sample. What do you do? Why?

5. You decide to do the test in question four. The problem is people aren’t trees; you can’t age them just by counting genetic rings—you also need to do some cross-testing with the parents’ DNA. You do that and run into a surprise: it turns out that the young prospect’s father who’s so proud of his athletic son isn’t the biological dad. Now what?

< Is there an argument here against DNA testing, period? What is it?

< Remember, the family paid for the test. Do you have a responsibility to give them these results? Explain.

6. Lou Gehrig was the first athlete ever to appear on a box of Wheaties. From 1925 to 1939 he played for the Yankees in every game: 2,130 straight appearances, a record that lasted more than fifty years. He was voted into the baseball Hall of Fame in 1939. He died in 1941 from a genetic disorder—yes, Lou Gehrig’s disease—that today’s DNA tests would identify. Is there an ethical argument here against DNA testing of prospects or one in favor? Or is the argument about this more theoretical—should the rules be decided regardless of what has actually happened at some time or place? Explain.

7. In a different sport, the sprinter Caster Semenya won the world eight-hundred-meter challenge in 2009 with a time that few men could equal. She looked, in fact, vaguely like a man, which led the International Athletics Federation to run a genetic gender test. She is, it turns out, neither a woman nor a man; she’s a hermaphrodite: a little bit of both. Does the fact that genetic tests don’t always return clean, black-and- white results make their use less advisable from an ethical perspective? Why or why not?

5.4 Windfall at Goldman

Source: Photo courtesy of Manuel Cernuda, http://www.flickr.com/photos/melkorcete/180238980/.

204 THE BUSINESS ETHICS WORKSHOP

Goldman Sachs is an expansive financial services company. Many clients are institutional: private companies and government organizations wanting to raise cash seek Goldman’s help in packaging and then selling stock or bonds. On the other side, private investors—wealthy individuals wanting to multiply their riches—receive a hearty welcome at Goldman because they have the cash to purchase those stocks and bonds. Ultimately, Goldman Sachs is a hub where large companies, governmental powers, and wealthy people come and do business together.

Executives at Goldman Sachs are among the world’s highest paid. According to a New York Times article, “At the center of Goldman’s lucrative compensation program is the partnership. Goldman’s partners are its highest executives and its biggest stars. Yet while Goldman is required to report compensation for its top officers, it releases very little information about this broader group, remaining tightlipped about even basic in- formation like who is currently a partner.”[32]

The rest of the article investigates this shadowy partnership. The conclusions: “Goldman has almost 860 cur- rent and former partners. In the last 12 years, they have cashed out more than $20 billion in Goldman shares and currently hold more than $10 billion in Goldman stock.”

This tally of accumulated wealth in Goldman stock doesn’t even include the standard salary and cash bonuses the partners receive, but leaving that aside, here’s the math: $30 billion divided by 860 divided by 12 should give some sense of the wealth each of these corporate stars is accumulating over the course of a year. To give a provisional idea of how large the number of dollars is here, when you try plugging $30 billion into an iPhone calculator, you find the screen can’t even hold a number that long. Using a different calculator yields this res- ult: $2.9 million per partner every year.

The 2.9 million can be compared with the salary earned by the average American: $50,000 a year. The Gold- man partner gets that in less than a week. This huge money explains the clawing fight that goes on inside Goldman to become a partner. The odds are long. Each time the books are opened to admit a new class, only 1 of 330 Goldman employees makes the cut. It is, in the words of one former partner, “a very Darwinian, survival-of-the-fittest firm.”

In the public comments section of the New York Times story about Goldman, a person identified as GHP picks up on the firm’s characterization as a “Darwinian, survival-of-the-fittest” place. He wrote, “The French revolu- tion was also very Darwinian, let’s give that a try.” During the French Revolution, the wealthy and powerful were rewarded with a trip to the guillotine.

Probably, GHP isn’t just annoyed about how much money executives at Goldman make, he, like a lot of people, is peeved by the fact that the company was bailed out by the federal government during the 2008–9 financial crisis. Had the taxpayers (people making $50,000) not kicked in, Goldman might’ve gone bankrupt, and all that money its partners accumulated in stock would’ve vanished. As it happens, the US government’s bailout was masterminded by US Treasury Secretary Henry Paulson. His previous job was CEO (and partner) at Goldman.

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 205

Q U E S T I O N S

1. Goldman is dominated by a “Darwinian, survival-of-the-fittest” mentality. What does that mean?

< In ethical terms, how can this mentality be justified?

< Would a company dominated by this mentality, whether it’s Goldman or not, be more likely to announce job openings to a limited public, or as a massive public announcement? Why?

2. Describe the advantages of a “behavioral interview.” If you were in charge of hiring for a company seeking employees who flourish in a survival-of-the-fittest environment, what kind of question might you ask in a behavioral interview? Why?

3. One contributor to the New York Times comments section writes, “There are sure to be lots of pointed, angry posts about how unfair it is that these guys make so much money etc. But if we are honest, there is a fair amount of envy and pure remorse that we weren’t bright enough to go down that path! And these guys are very bright.”

How could these comments be construed to explain why high wages and big bonuses are used by Goldman to motivate its workers? What is it that makes big money (or the possibility of big money) function as a powerful motivator to encourage employees to work hard and well? Ethically, how can this use of big money be justified?

4. One difference between offering an employee a wage increase and offering a bonus is that the latter doesn’t come automatically the next year. The employee has to earn it from scratch all over again.

< Why might managers at Goldman award their best workers with a bonus instead of a wage increase?

< By appeal to an ethical theory, could you make the case that, in general, employees should be paid mainly through a bonus system? How would the theory work at two extremes: wealthy Goldman executives and waitresses at a corner diner?

5. Given the kind of work that’s done at Goldman—bringing wealthy people and powerful organizations together to make deals—why might party aptitude (the ability to mix socially after hours) be considered when deciding who does and who doesn’t make partner at Goldman? How could that decision be justified ethically? How could it be criticized ethically?

6. Make the case that in theoretical terms, managers at Goldman have an ethical responsibility to institute the process of rank and yank.

5.5 The Five O’Clock Club

Source: Photo courtesy of C.P. Storm, http://www.flickr.com/photos/cpstorm/140115572/.

A Washington Post story about firing employees relates that some companies use “the surgical method: ter- minations that last about 15 seconds, after which former employees are ushered off company property.”[33]

It doesn’t have to be that way, though. For about $2,000 per fired employee, the outplacement company Five O’Clock Club will help employers manage the actual termination moment more compassionately. Later on, the fired worker receives a year of career coaching to help get back on track.

What does the Five O’Clock Club recommend managers do at the critical moment when giving the bad news? To answer, according to the Post, they offer a booklet titled How to Terminate Employees While Respecting Hu- man Dignity, which “asks managers to approach layoffs with the understanding that, ‘unlike facilities and equipment, humans have an intrinsic worth beyond their contribution to the organization.’”[34]

Then some catchphrases are provided for managers to use:

< George, you’ve been a trooper. I’m sorry that this organization has moved in a different direction.

206 THE BUSINESS ETHICS WORKSHOP

< George, you have made many good friends here. We hope those friendships will continue.

< George, you have made considerable and long-lasting contributions and they are acknowledged and appreciated.[35]

Five O’Clock Club vice president Kim Hall—who downs a lot of Tylenol and coffee on the job—relates several other phrases that may be helpful:

< I know this is hard, but you’ll get back on your feet.

< The timing could actually work in your favor. A lot of people take vacation in the summer. There’s no competition for job hunters.

< Maybe this is a chance to begin your dream career. Follow your heart.[36]

In sum, the Five O’Clock Club helps workers feel better when they’re fired, and helps them get on with their lives. Meanwhile, employers get a hedge against lawsuits. The outplacement service, according to the Five O’Clock Club literature, “can redirect anger or anxiety away from the organization and…encourage the newly- fired to sign their severance agreements so they can get on with their lives.”[37]

Q U E S T I O N S

1. The Five O’Clock Club charges $2,000 per firing. If you were fired, would you prefer to receive the compassionate end the Five O’Clock Club provides, or just get shown the door but also get to keep that $2,000 for yourself?

< If you’re the boss, do you have the right to decide this for the fired employee? Why or why not?

< If you’re the boss, do you have the responsibility to decide this for the fired employee? Why or why not?

2. According to the Five O’Clock Club, “Unlike facilities and equipment, humans have an intrinsic worth beyond their contribution to the organization.”

< Does this sound like utilitarian ethical thinking to you, or is it more in line with the notion of an ethics guided by basic duties and rights? Why?

< Probably, everyone agrees that humans aren’t just machines that can be installed and replaced. But can an ethical argument be made to treat people in the workplace as machines—that is, to abruptly hire them when they’re useful and fire them when they’re not? What ethical theory (or theories) could help you make the case?

3. In general terms, here are three firing situations:

< an economic downturn (good workers are sacked because the company can’t afford to keep them)

< rank and yank (workers are fulfilling their duties but not as well as most of the others)

< misbehavior (a worker is fired directly because of something done or not done)

Looking at these three contexts and the Five O’Clock Club, do you think their services should be hired in all three situations? Do the ethics of firing change depending on why the person is being fired? Explain.

4. Recall some of the Five O’Clock Club’s prepacked firing sentences:

< George, you've been a trooper. I'm sorry that this organization has moved in a different direction.

< George, you have made many good friends here. We hope….

< George, you…are acknowledged and appreciated.

< Maybe this is a chance to begin your dream career. Follow your heart.

The contrasting method of firing employees—the surgical method—is to look the person in the eye, say you’re fired, and have security march the ex-employee out the door, all in less than a minute.

< Is it possible to make the case that the surgical method is actually more compassionate and respectful?

< Is there a place for compassion in business? From a manager’s perspective, how should compassion be defined within a business context?

5. Maybe the Five O’Clock Club gets hired because a company really wants to help and support fired employees. Or maybe the company doesn’t really care about them; all they want is to avoid wrongful termination lawsuits. Ethically, does it matter why the company contracts the Five O’Clock Club? Explain.

CHAPTER 8 MANAGER’S ETHICS: GETTING, PROMOTING, AND FIRING WORKERS 207

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12. 13.

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ENDNOTES

R. Donaldson (director), The Recruit (Burbank, CA: Touchstone Pictures, 2003), film.

“Fortune: P&G Admits Spying on Hair Competitors,” Business Courier, August 30, 2001, accessed May 24, 2011, http://cincinnati.bizjournals.com/cincinnati/stories/2001/08/ 27/daily43.html.

Marti’s Musings, “Nepotism Sucks,” August 30, 2004, accessed May 24, 2011, http://businessethicsworkshop.com/Chapter_8/Nepotism_sucks.html.

Klaus Kneale, “Is Nepotism So Bad?,” Forbes, June 20, 2009, accessed May 24, 2011, http://www.forbes.com/2009/06/19/ ceo-executive-hiring-ceonewtork-leadership-nepotism.html.

“Texas Man Settles Discrimination Lawsuit Against Hooters for Not Hiring Male Waiters,” Fox News, April 21, 2009, accessed May 24, 2011, http://www.foxnews.com/ story/0,2933,517334,00.html.

“2011 Fastest-Growing Franchise,” Entrepreneur, accessed May 24, 2011, http://www.entrepreneur.com/franchises/fastestgrowing/index.html.

Megan Wasmund, “Humana Enforces Mandatory Stop Smoking Program,” wcpo.com, June 16, 2009, accessed June 7, 2011, http://www2.wcpo.com/dpp/ news/local_news/Humana-Enforces-Mandatory-Stop-Smoking-Program.

“Humana: We Won’t Hire Smokers,” Newsvine.com, June 16, 2009, http://sorrelen.newsvine.com/_news/2009/06/16/ 2935298-humana-we-wont-hire-smokers.

Grafter v. New York City Civil Service Commission, 1992.

Wei Du, “Job Candidates Getting Tripped Up By Facebook,” MSNBC.com, August 14, 2007, accessed May 24, 2011, http://www.msnbc.msn.com/id/20202935/page/2.

Martin Carrigan, “Pre-Employment Testing—Prediction of Employee Success and Legal Issues,” Journal of Business & Economics Research 5, no. 8 (August 2007): 35–44.

Karraker v. Rent-A-Center, 2005.

Ariana Eunjung Cha, “Employers Relying on Personality Tests to Screen Applicants,” Washington Post, March 27, 2005, accessed May 24, 2011, http://www.washingtonpost.com/wp-dyn/articles/A4010-2005Mar26.html.

Paul Armentano, “The Kellogg Company Drops Michael Phelps, The Cannabis Com- munity Drops Kellogg’s,” NORML (blog), February 6, 2009, accessed May 24, 2011, http://blog.norml.org/2009/02/06/ the-kellogg-company-drops-michael-phelps-the-cannabis-community-drops-kelloggs.

American Civil Liberties Union, “Testing Chart,” aclu.org, accessed May 24, 2011, http://www.aclu.org/FilesPDFs/testing_chart.pdf.

Michael Kaplan, “Want a Job at Google? Try These Brainteasers First,” CNNMoney.com, August 30, 2007, http://money.cnn.com/2007/08/29/technology/brain_teasers.biz2/ index.htm.

Bill Toth, “Entire State ABC Bonus System Unfair,” News-Record.com, Letters to the Ed- itor, August 19, 2008, accessed May 24, 2011, http://blog.news-record.com/opinion/ letters/archives/2008/08/.

Maya, “Alcohol: Income Booster?,” Monster (blog), September 20, 2006, accessed May 24, 2011, http://monster.typepad.com/monsterblog/2006/09/alcohol_ income_.html.

Bethany L. Peters and Edward Stringham, “No Booze? You May Lose,” Reason Found- ation, September 1, 2006, accessed May 24, 2011, http://reason.org/news/show/ 127594.html.

Bethany L. Peters and Edward Stringham, “No Booze? You May Lose,” Reason Found- ation, September 1, 2006, accessed May 24, 2011, http://reason.org/news/show/ 127594.html.

Maya, “Alcohol: Income Booster?,” Monster (blog), September 20, 2006, accessed May 24, 2011, http://monster.typepad.com/monsterblog/2006/09/alcohol_ income_.html.

Deloitte Consulting: WetFeet Insider Guide (San Francisco: WetFeet), accessed May 24, 2011, http://www.wellesley.edu/Activities/homepage/consultingclub/ wetfeet%20-%20deloitte_consulting.pdf.

Chris Edwards and Tad DeHaven, “Federal Government Should Increase Firing Rate,” Cato Institute, Tax and Budget, no. 10 (November 2002), accessed May 24, 2011, http://www.cato.org/pubs/tbb/tbb-0211-10.pdf.

Allan Murray, “Should I Rank My Employees?,” Wall Street Journal, accessed May 24, 2011, http://guides.wsj.com/management/recruiting-hiring-and-firing/should-i- rank-my-employees.

“Worst Ways to Get Fired,” CNNMoney.com, September 6, 2006, accessed May 24, 2011, http://money.cnn.com/blogs/yourturn/2006/09/worst-ways-to-get-fired.html.

List adapted from Rosabeth Moss Kanter, Men and Women of the Corporation (New York: Basic Books, 1993), 330–31.

“Sexual Orientation in the Fashion Industry,” Love This! (blog), accessed May 24, 2011, http://lovethis.wordpress.com/2007/07/28/ sexual-orientation-in-the-fashion-industry.

Rob Capriccioso, “Divinely Inspired Bias?,” Higher Ed, March 1, 2006, accessed May 24, 2011, http://www.insidehighered.com/news/2006/03/01/charleston.

Rob Capriccioso, “Divinely Inspired Bias?,” Higher Ed, March 1, 2006, accessed May 24, 2011, http://www.insidehighered.com/news/2006/03/01/charleston.

Michael S. Schmidt and Alan Schwarz, “Baseball’s Use of DNA Raises Questions,” New York Times, July 21, 2009, accessed May 24, 2011, http://www.nytimes.com/2009/07/ 22/sports/baseball/22dna.html?hp.

Michael S. Schmidt and Alan Schwarz, “Baseball’s Use of DNA Raises Questions,” New York Times, July 21, 2009, accessed May 24, 2011, http://www.nytimes.com/2009/07/ 22/sports/baseball/22dna.html?hp.

Susanne Craig and Eric Dash, “Study Points to Windfall for Goldman Partners,” New York Times, January 18, 2011, accessed May 24, 2011, http://dealbook.nytimes.com/ 2011/01/18/study-points-to-windfall-for-goldman-partners/?hp.

Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, ac- cessed May 24, 2011, http://www.washingtonpost.com/wp-dyn/content/article/ 2009/08/08/AR2009080802659.html?hpid=topnews.

Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, ac- cessed May 24, 2011, http://www.washingtonpost.com/wp-dyn/content/article/ 2009/08/08/AR2009080802659.html?hpid=topnews.

Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, ac- cessed May 24, 2011, http://www.washingtonpost.com/wp-dyn/content/article/ 2009/08/08/AR2009080802659.html?hpid=topnews.

Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, ac- cessed May 24, 2011, http://www.washingtonpost.com/wp-dyn/content/article/ 2009/08/08/AR2009080802659.html?hpid=topnews.

Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, ac- cessed May 24, 2011, http://www.washingtonpost.com/wp-dyn/content/article/ 2009/08/08/AR2009080802659.html?hpid=topnews.

208 THE BUSINESS ETHICS WORKSHOP

C H A P T E R 9 Manager’s Ethics: Deciding on a Corporate Culture and Making It Work CHAPTER OVERVIEW Chapter 9 examines some ethical decisions facing managers. It considers how leaders guide organizations by se-

lecting and then instilling the specific values and culture that define a workplace.

1. WHAT IS CORPORATE CULTURE?

L E A R N I N G O B J E C T I V E S

1. Define the concept of corporate culture or, more broadly, organizational culture. 2. Learn to recognize and distinguish specific organizational cultures. 3. Consider ways that a culture may be instilled in an organization.

1.1 I’m a Mac, and I’m a PC “I’m a Mac, and I’m a PC” is the first line from a set of advertisements produced for Apple.[1] Two guys stand in front of a white screen, a step or two apart. The one pretending to be an Apple Macintosh computer looks a lot like you’d expect the typical Apple computer user to look: casual, young, and cool; he’s not stressed but certainly alert and thoughtful. He hasn’t had a haircut in a while, but the situation isn’t out of control. He speaks up for himself without being aggressive. His t-shirt is clean, his jeans re- liable, and his tennis shoes stylish. The PC, on the other hand, can’t relax in a polyester suit that’s a half size too small, especially for his inflated waistline. Bulky glasses slide down his greasy nose. Short, par- ted hair glues to his head. He’s clean, shaven, and very earnest. In one of the commercials, the PC man talks about the things he does well: calculation, spreadsheets, pie charts. The Mac responds that he feels more comfortable helping users make their own movies and organize their music collections.

Underneath these ads there are two very different corporate cultures, two very different kinds of companies making two very different products even though both sell their machines in the store’s com- puter section. Now, because this is advertising and it’s paid for by Apple, we should take the claims be- ing made with a grain of salt. And, obviously, Apple didn’t air these spots because they wanted to ex- hibit their corporate culture. They wanted to sell computers (and hammer the competition in the pro- cess). None of that, however, changes the fact that the commercials do a good job of displaying what a difference between corporate cultures looks like. It looks like these two guys. They’re both capable and dedicated, but everything about each of them makes the other one squirm; it’s hard to imagine they could work well together because their habits and comportments—everything from how they dress to the way the talk—is so completely different.

The same can be said about workplaces. It’s easy to imagine a kind of office where PC fits nicely. People there would wear ties and skirts. They’d be punctual. Their days and working styles would be regimented and predictable. Employees would have their own cubicle offices, and anyone proposing an “informal Friday” break from the dress code would be looked on with suspicion. By contrast, Mac would function well in an open, warehouse-like space with a bike rack out front. Flextime would be common—that is, people arriving earlier or later in the morning depending on their preference and on the circumstances of their lives (whether they have children, when they can avoid rush-hour traffic).

corporate culture/ organizational culture

The constellation of beliefs, customs, habits, and values determining how a business or organization acts in the world.

Regardless of when they show up, they take responsibility for making sure they log a full workday. The attire would be casual and diverse. Maybe the boss wears jeans. Some people would probably be annoy- ing others with their loud music, but everyone would force smiles and be tolerant.

One of the reasons the Apple ad works well is that it resists the temptation to simply say Apple is superior. Yes, PC is dorky and Apple is cool, but Apple does admit that PC really is better at analytic- type activities like producing clean spreadsheets. The same mixed findings apply to corporate culture. At the PC office, the clothes aren’t nearly as comfortable as the ones you find at the Mac place, but at least there aren’t any guys wearing jeans that fall a little too low over their back end. And the flextime scheduling at Apple may make for a happier workforce, but only until it happens that a project sud- denly arises and needs to be executed immediately, and one of the key participants has flex-timed and already left for the day. The other team members are left, that means, to do his share of the work. What about the bike racks outside? Everyone agrees that it’s great that the Mac people are peddling to work, but only until a morning thunderstorm pops up and no one can make it to the office. The point is there are advantages and drawbacks to every corporate culture. It’s hard to say that one is better than another (just like Macs work for some people while others prefer PCs), but it’s certainly true that there are different value systems beneath the distinct cultures.

Anyone who has a management role in any organization will be expected to have a grip on what values guide the enterprise and how they reflect in the day-to-day life of people on the job. Further, some managers—and all entrepreneurs—will not only need to apply guiding values; they’ll have to se- lect and create them.

1.2 Definitions of Corporate Culture Corporate culture is easier to get intuitively than put into words. Because you can’t touch it, measure it, or take its picture (even though you can show two people in an advertisement who obviously belong to different corporate cultures), it’s not surprising that there’s no consensus definition attached to the term. Here are three attempts to put the idea in words. A corporate culture is

< “the shared beliefs top managers have in a company about how they should manage themselves and other employees, and how they should conduct their business”;[2]

< “the pattern of shared values and beliefs that gives members of an institution meaning and provides them with rules for behavior in their organization”;[3]

< “a general constellation of beliefs, mores, customs, value systems and behavioral norms, and ways of doing business that are unique to each corporation, that set a pattern for corporate activities and actions, and that describe the implicit and emergent patterns of behavior and emotions characterizing life in the organization.”[4]

There are common threads to these cited definitions and some points that may be added: < Corporate culture is shared; it’s not like a regulation or a code that’s imposed from some specific

place outside the organization. The culture may begin that way, but once installed, it belongs to all those participating in the workplace.

< Corporate culture provides guidance. It’s not a potted plant to be looked at; corporate culture tells an employee that the Daffy Duck necktie is too far out there and should be left in the closet. The pumpkin necktie, however, is OK as long as we’re coming up on Halloween. Analogously, though more significantly, it tells a salesman whether it’s OK to flagrantly lie to a customer, to stretch the truth a little, or only to play it straight.

< Corporate culture provides meaning in the organization; it tells members why they are there. At Goldman Sachs, the bottom line really is the bottom line: people are there to make money. At Greenpeace, by contrast, people arrive in the morning to protect the planet, and while it’s true that many receive a paycheck for their efforts, that’s not the reason they show up for work.

< Corporate culture is top heavy; management carries the heaviest burden. Unlike simple office codes—such as turning in your expense reports within a week of terminating travel—that apply to people more or less uniformly, the burden of understanding and promulgating the organization’s culture falls heavily, though not exclusively, on the leaders.

< A corporate culture is a constellation of values, a set of ways of seeing the business world. < The constellation of cultural values is dynamic; everyone involved every day stretches and pushes

the organization’s culture. < An organization’s culture is organic; it’s born and grows with the organization. It dies there too. < The organization’s culture includes life values, ones that cross beyond purely business concerns to

touch questions including, “Is it OK to date someone from work?” “Can I cry at my desk?” “Will anyone object if I have a shouting match with my wife from the telephone in my cubicle?”

210 THE BUSINESS ETHICS WORKSHOP

workplace time

As an aspect of organizational culture, the way time is understood and valued in the workplace.

employee interaction

As an aspect of organizational culture, the way members relate to each other on the job.

workplace mood

As an aspect of organizational culture, the mood at work on a typical day.

personalized workplace

As an aspect of organizational culture, the extent to which an organization’s members make their physical space at work their own space.

workers or people doing work

As an aspect of organizational culture, the degree to which an organization’s members are valued as integral people with aspirations beyond those of the organization.

This list isn’t exhaustive. It does, however, show how thoroughly corporate culture penetrates the workday.

1.3 What’s My Organization’s Culture? Managers’ job responsibilities include protecting and promoting their organization’s culture. Fulfilling the responsibility requires determining exactly what culture lives in the workplace. There’s no secret decoding mechanism, but there are a number of indicating questions that may be asked. One of the most natural is to brainstorm associated words. For example, imagine visiting two offices, one filled with people who look like the Apple Mac from the commercial, and the other with those who’d fit nat- urally into the office where PCs are bought and used. Just looking at the commercial and jotting words as they flow might lead to lists beginning this way:

< On the Apple side: sloppy, fun, warm, loose, careless, resigned, informal, smart, creative, soft- spoken, controlled, cool, and haughty.

< On the PC side: uptight, formal, reliable, demanding, uncomfortable, determined, perfectionist, detail oriented, disciplined, unconcerned with appearances, and geeky.

These are short, rapidly composed lists, but they’re developed enough to observe two profiles of work- life peeking out. You can see that that the Apple office is going to fit closely with values including com- fort, innovation, and independence, while the PC office will be more compatible with values including reliability and responsibility. You can count on the PC office to get things done, but if you’re looking for something outside the box, you may be better off going the Apple route.

Other questions getting at the heart of an organization’s culture and basic values include these dealing with the workplace time: How many hours are expected at work each week? Is there flextime? Is there telecommuting? Is there a punch clock or some other kind of employee time-in-the-office monitoring? Is it more important that the employee be present or that the work gets done? In some offices it’s the former; in others, the latter.

Then there are questions about employee interaction. Is each worker situated in a private room or a more open, common space? Do people tend to compete with each other or is teamwork a higher value? To the extent there’s individual competition, how far does it go? Is it a good-natured jousting, or closer to hostile blood sport? Of course different kinds of organizations are going to recommend them- selves to one side or the other of the spectrum. For example, a doctor’s office, an archeological dig, a construction company are relatively good places to value teamwork. A stockbroking office, a pro bas- ketball team, and an actors’ studio are spots where you may want to encourage individuals to outdo those around them.

What’s the workplace mood? Fun? Somber? Energetic? Modern? Traditional? Many Volkswagen dealerships are remarkable for their huge windows and sunlight; it’s a kind of work environment for the sales staff meant to encourage an open, airy feel conducive to car buying. Elevated heating and cooling costs go along with all that glass, however, and different workplaces where money is valued more than ambience may choose to cut operating costs with a drabber space. Going beyond the archi- tecture, different offices have different moods. It’s pretty rare that you see practical jokes or trash-bas- ket basketball games going on at the dentist’s office. On the other hand, anyone who’s ever operated a call center telephone knows there’s a solid chunk of each workday dedicated to high jinks.

Is the workplace personalized? Some office cubicles burst with family snapshots and personal memorabilia. Most assembly lines, on the other hand, are practically devoid of individual touches.

Are employees workers or people doing work? If the former—if the value the organization at- tributes to those receiving paychecks is limited to what they do to earn the check—then few resources will be dedicated to supplementals and benefits. On the other side, a corporate culture valuing its em- ployees as people may provide extra vacation time, health insurance, and retirement plans. Branching out further, you can get an idea of a workplace culture by checking to see if a gym or exercise room is provided. Day care for those with young children is another sign of the corporate culture that values workers as integral people.

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 211

dress code

As an aspect of organizational culture, a set of rules—explicit or implicit—distinguishing what garments may and what may not be worn in the workplace.

leisure time

As an aspect of organizational culture, the leisure time habits and preferences of an organization’s members.

community interaction

As an aspect of organizational culture, the degree to which an organization and its members participate in local, nonwork endeavors.

social cause activism

As an aspect of organizational culture, the degree to which an organization and its members participate in social causes not directly related to work endeavors.

political action

As an aspect of organizational culture, the degree to which an organization and its members participate in partisan political activities not directly related to work endeavors.

religious belief

As an aspect of organizational culture, the degree to which an organization and its members embody a faith not directly related to work endeavors.

organizational code

A set of written rules defining an organizational culture and indicating how individuals ought to act within the organization.

Dress codes reflect the organization’s values. Is uniformity or individuality more highly prized? If uniformity is the rule, what kind is it? In some advertising agencies, for example, the people who work in the creative department conceiving the commercials at first appear to be a diverse collection of independent-minded dressers, but get a few together and you’ll immediately perceive a uniform that’s as binding as the most traditional office—it’s just that ratty jeans replace slacks and clever t-shirts re- place neckties.

Another cultural indicator runs through the employees’ leisure time. Where do people hang out? Do they go to football games, the opera, church? Do they spend their weekend mornings on family ex- cursions because they have spouses and children, or are they still in bed, sleeping off the night before? More, is leisure time spent with coworkers? Do employees get together just because they enjoy each other’s company? If they do, the social outings are more likely to occur in connection with organiza- tions seeking a harmonious workforce and expending resources to foster camaraderie on the job. They’re less likely to occur at organizations where everyone is fiercely competing with everyone else, as sometimes happens, for example, at stockbrokerages.

Healthy community interaction is a value emphasized in some corporate cultures. Everyone has seen the “adopt a highway” signs indicating that a local firm or group has taken responsibility for keep- ing a stretch of highway litter-free. The professional sports leagues have traditionally asked players to dedicate some season and off-season time to community outreach. Other kinds of organizations, by contrast, may not even have a local community. Telecommuting and cloud computing mean employ- ees can easily form a functioning organization with members living in different states, even different countries.

Social cause activism is another marker of corporate culture. The shoemaker TOMS Shoes fights rural poverty in developing nations by donating shoes. Other companies focus entirely on doing well in the for-profit marketplace.

Political action may (or may not) infuse a corporate culture. Many companies steer clear of overt or even hints of political partisanship for fear of alienating one or the other half of the electorate. This is especially true for larger enterprises spread across the entire country, drawing consumers from liber- al corners of San Francisco, conservative bastions of north Dallas, and the libertarian towns of New Hampshire. Local businesses, however, especially those catering to relatively homogenous communit- ies, may find no downside to flipping the switch on political activism and breeding partisanship as a guiding value. The company Manhattan Mini Storage provides (obviously) storage for household items in Manhattan. Their big competition comes from warehouses in New Jersey. The Manhattan Mini St- orage billboard ads read, “If You Store Your Things in New Jersey, They May Come Back Republican.” This appeal may work pretty well in central New York City, but it won’t seem very funny most other places.

Like politics, religious belief and doctrine are rarely set at the center of the largest corporations, but smaller outfits operating in a narrow social context may well embody a particular faith.

Conclusion. Taken together, these categories of values begin shaping the particular culture defin- ing an organization.

1.4 How Is Organizational Culture Instilled? A specific culture may be instilled in an organization through a set of published rules for employees to follow or by the example of leaders and employees already working inside the organization.

Instilling a culture through established rules typically means publishing an organizational code governing behavior, expectations, and attitudes. The multinational firm Henkel—the company that in- vented laundry detergent and today produces many cleaning and health products sold under different brand names around the world—has published this kind of code. It’s quite long, but here’s an edited section:

212 THE BUSINESS ETHICS WORKSHOP

cultural dissonance

A conflict between the values the organization publicly promotes as essential to its functioning, and the values guiding an organization’s workers in their day-to-day activities.

social conditioning

A set of social cues and pressures provided by the actions and habits of an organization’s member that guide new members toward how they are to act within the organization.

self-selective process

A process where individuals effectively select themselves into a group as opposed to being selected by others.

Shared values form the foundation of our behavior and our actions throughout Henkel. Every single person plays a key role here. It is the sum of our actions that makes Henkel what it is—a lively corporate culture in which change is embraced as opportunity and everyone is committed to continuous improvement.

Our Values

1. We are customer driven. 2. We develop superior brands and technologies. 3. We aspire to excellence in quality. 4. We strive for innovation. 5. We embrace change. 6. We are successful because of our people. 7. We are committed to shareholder value. 8. We are dedicated to sustainability and corporate social responsibility. 9. We communicate openly and actively.

10. We preserve the tradition of an open family company.[5]

This statement sounds good in general. The stubborn problem, however, with trying to capture a corporate culture with a string of dictates and definitions parallels the ones constantly faced in ethics when trying to make decisions by adhering to preestablished rules and duties: frequently, the specific situation is far more complicated than the written code’s clear application. So, in the case of Henkel, we learn that they embrace change, but does that mean employees can change the dress code by showing up for work in their pajamas? Does it mean managers should rank and yank: should they constantly fire the lowest-performing workers and replace them with fresh, young talent in order to keep turnover going in the office? There’s no way to answer those questions by just looking at the code. And that cre- ates the threat of an at least perceived cultural dissonance within the organization—that is, a sense that what actually happens on the ground doesn’t jibe with the lofty principles supposedly controlling things from above.

1.5 Social Conditioning The second form of instilling a culture doesn’t work through rules but through social conditioning; it’s not about written codes so much as the cues provided by the customs of the workplace, by the way people speak and act in the organization. New employees, in other words, don’t read handbooks but look around, listen, and try to fit in.

In his book Business Ethics, O. C. Ferrell lists some of the social ways a culture infiltrates the organ- ization.[6] Selecting a few of those and adding others yields this list:

1. The founder’s ethical legacy to the organization may contribute to its living culture. Walmart’s founder Sam Walton was a legend in austerity; he industriously minimized costs so in-store prices could be lowered correspondingly. This is a continuing aspect of Walmart’s cultural legacy, though it can be controversial on other fronts. Some complain that Walmart is in essence encouraging third world sweatshop labor by ruthlessly granting contracts to lowest-cost providers.

2. Stories and myths embedded in daily conversations may indicate culturally appropriate conduct. Warren Buffett, leader of the Berkshire Hathaway investment group is a kind of Yogi Berra of the finance world, a highly skilled professional with a knack for encapsulating pieces of wisdom. Here’s a paraphrase of one of Buffett’s thoughts, “I’m rich because I’ve always sold too early and bought too late.” Conservative investing, the lesson is, yields value for shareholders. It’s also a high ethical value within the corporate culture he tries to nurture.

3. Heroes or stars in the organization may consistently communicate a common message about the organization’s guiding values. There’s a difference between lists of values written up in a handbook and a group of leaders who together consistently talk about guiding values and live by them.

4. The dress, speech, and physical work setting may be arranged to cohere with the organization’s values. The United Nations threw a wrench into its own efforts to reduce global carbon emissions by scheduling its thirteenth annual global warming meeting in Bali. The weather was nice there,

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 213

but since most participants came from the United States and Europe, it became difficult not to notice that the values of the organization’s handbook (control of carbon emissions) didn’t jibe with the values of the organization’s members (burn tons of jet fuel to work in a place with sunny beaches). On the other hand, the UN Foundation—which advocates reduced greenhouse gas emissions and similar—recently moved into an environmentally friendly building with cubicles formed from a biodegradable product and many similar, environmentally friendly features.[7]

5. An organizational culture may reinforce itself through self-selective processes. A self-selective process is one where individuals effectively select themselves into a group as opposed to being chosen by others. Hiring presents a good example. Presumably, when an organization hires new employees, certain filters are constructed to reduce the applicant pool to those most likely to succeed. The process becomes self-selective, however, when job interviews are conducted as they are at Google. There, perspective employees are faced with bizarre questions that have nothing to do with the typical “Why do you want to work at Google?” and “Why would you excel at this job?” Instead, they get the following:

< You have five pirates, ranked from five to one in descending order. The top pirate has the right to propose how a hundred gold coins should be divided among them. But the others get to vote on his plan, and if fewer than half agree with him, he gets killed. How should he allocate the gold in order to maximize his share but live to enjoy it? (Hint: One pirate ends up with 98 percent of the gold.)

< A man pushed his car to a hotel and lost his fortune. What happened? < Explain the significance of “dead beef.”

In response, some applicants will dive into the challenges excitedly, while others will find the whole process really weird and prefer not to be caught within a mile of a place where job interviewers ask such bizarre questions. In the end, those who enjoy and want to continue with the job application process are precisely those who will fit in at Google. Perspectives, that means, select themselves.

Conclusion. Two ways a corporate culture may be instilled and nurtured in a workplace are a list of codes to be followed and a set of social techniques that subtly ensure those sharing a workspace also share values corresponding with the organization.

K E Y T A K E A W A Y S

< An organizational culture is the set of values defining how and why members live at work.

< Distinguishing an organizational culture requires observing a range of values from the way people dress to the degree of cooperation and competition in the workplace.

< An organization’s culture may be instilled through codes and rules.

< An organization’s culture may be instilled through social cues and pressures.

R E V I E W Q U E S T I O N S

1. List five aspects of a corporate or organizational culture.

2. Describe two workplace decisions that may be determined by a corporate culture.

3. List some questions you could ask about a workplace that would start to give you a sense of its culture.

4. What are five ways that an organization may attempt to instill a culture through social conditioning?

5. In your own experience in a job or any organization, what’s an example of social conditioning that enforced the place’s culture?

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compliance

In the business world, compliance measures the distance between what an organization says it believes in the abstract and what it and its members actually do.

2. THE RELATION BETWEEN ORGANIZATIONAL CULTURE AND KNOWING THE RIGHT THING TO DO

L E A R N I N G O B J E C T I V E S

1. Delineate an ethically questionable organizational culture. 2. Consider responses to an ethically questionable organizational culture. 3. Define compliance in the business world. 4. Discuss a way of measuring compliance.

2.1 Dishonesty in the Fish Market A frequently recurring business ethics question involves dishonesty: when, if ever, is it OK to lie, to stretch the truth, to not tell the whole truth? A simple scene of deceit goes like this: A fish dealer sells both expensive salmon caught in the wild and relatively cheap farmed salmon. Occasionally, he switches the farmed for the wild—a change that’s very difficult to detect through appearance or taste, even by expert chefs—and pockets the difference. Randy Hartnell is a fish dealer in New York who sus- pected that a lot of that kind of dishonest fish switching was going on among his competitors. He in- vestigated and published an Internet report. As he tells it, he visited the famed Fulton Fish Market in lower Manhattan and found some dealers openly admitting that the fish they were selling as wild had actually come from a farm.[8]

This led the New York Times to do a follow-up story. Using sophisticated chemical tests, the Times confirmed that, yes, at six of eight places sampled, fish being sold as wild for about thirty dollars per pound was actually farmed salmon, which typically sells for about ten dollars a pound.

In the six bad cases, the person who actually made the switch participated in an organization where one or both of two things were true about the culture:

1. Profit was understood as being more important than honesty. 2. Honesty was presumably important, but recalcitrant workers paid little attention and sacrificed

the truth to make a buck. These are two very different situations, and they lead to distinct discussions: One has to do with choices being made about what specific culture to instill in an organization. The other concerns compliance, which, in the business world, measures the distance between what an organization says it believes and what its members actually do.

2.2 An Ethically Questionable Corporate Culture The first situation—one where a fish seller puts profit above honesty because that’s just the way things are done in the company—is one which most outside observers would categorize as fundamentally cor- rupt. Everyone inside the operation knows what’s going on—principal and peripheral members are ly- ing to bring in money—and newcomers are meant to pick up on and continue the practice. The organ- ization itself is dishonest.

What responses are available? First, we need to check whether a serious attempt is being made, or there’s a real interest in making a serious attempt, to justify the deceitful actions. If there isn’t, if man- agement and leaders of a fish-selling business aren’t interested in ethical debates, there’s not much eth- ical arguments can do about it. For those wishing to change a situation like this, the law (criminal and civil) presents good venues for action. Bad publicity in the New York Times might do the trick too.

If, on the other hand, there is an interest on the organization’s part in justifying their actions from an ethical viewpoint, we could ask, “Can institutionalized lying be justified and, if so, how?” Three pos- sible answers run through three distinct ethical theories: duty theory, consequentialist-utilitarian the- ory, egoism:

1. Can basic duty theories justify putting profits above honesty? Probably not. Duty theories affirm that right and wrong is determined by a set of unchanging rules, and they typically include don’t steal, don’t lie, and similar. Because this kind of ethics starts from the proposition that dishonesty is wrong, it’s hard to see a nonfrivolous way of justifying the fish seller’s deceit.

2. Can a consequentialist-utilitarian theory justify putting profits above honesty? Utilitarian theory is oriented by the common welfare. Acts in business—whether it’s lying or doing anything

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 215

corporate culture ethics audit

A corporate (or organizational) culture ethics audit attempts to measure how open channels are between the ethical values stationed at the top of the organization to guide activities and the actual practices down below.

else—are defined as acceptable or reproachable depending on whether they end up doing the most good for the most people. Any act, the theory affirms, that ultimately makes more people happier is good.

In this case, we can imagine an organization promoting lying as a common operating principal and making the case that the ethical stance is, in fact, good. Every Christmas, department stores deploy heavy men in red suits to proclaim that they live at the North Pole and ride a sleigh pulled by reindeer. The stores promote these fictions—addressed to innocent children, no less—to make money. Almost no one finds that ethically objectionable, however. One reason is that they’re implicitly accepting the affirmation that an act making people happier in the end is good, even if it’s dishonest. Similarly, the CIA covert operations branch (undercover spying, insofar as it truly exists) fits a utilitarian mold. In this organization, lying is good because it ultimately serves the American national interest and the basic principles of liberal democracies. Again here, the effects of what’s done matters more than what’s done. Finally, can this reasoning be applied to the lying fish seller? Maybe. As the New York Times story notes, the truth is that even the highest-level chefs and experts have a hard time distinguishing farmed from wild salmon. There is, therefore, a kind of placebo effect for food. If the fake stuff tastes just as good as the real thing, and the only real difference between selling one or the other is that the fish dealer makes out like a bandit, then an argument could be formed that the double-dealing does, in fact, increase happiness (the fish dealer’s) without hurting anyone else. Therefore, the dishonesty is ethically justifiable. In practical terms, however, it’s difficult to see how this strategy could get too far. Sooner or later someone is going to notice the difference, and as people begin to feel scammed (and therefore unhappy), the justification for the double-dealing crumbles.

3. Can an ethical theory of egoism justify putting profits above honesty? Egoism is a coherent ethical approach to the world that does offer some justification for a deceitful fish trader. On this account, the ethical good for organizations and individuals in the economic world is defined as just whatever serves the organization’s or individual’s interest. And switching in the farmed stuff in for the wild is good for the fish sellers. (It’s hard to find any other explanation for the fact that, as the New York Times discovered, fully 75 percent of the places where fish was sold had some switching going on.) By definition, then, the dealing is ethically justifiable under this theory. Of course, most proponents of egoism in the business world don’t stop there. They go on to note that other, honest dealers who are pursuing their interests have a good reason to reveal the fraud. And, as it turns out, that’s just what honest dealer Randy Hartnell did, presumably helping his own business in the process.

Conclusion. Organizational cultures that incorporate lying as an acceptable part of day-to-day business do exist. Whether or not these cultures are ethically justifiable depends on the deep theoretical stances people adopt when going into business.

2.3 The Ethics of Compliance What happens when an organization’s principles are laudable, but they don’t get put into practice by the people actually doing the work? What happens, the question is, when an enterprise (say, a fish- selling operation) internally promotes basic values including honesty, but outside in the world where the transactions happen, the lesson is lost and individual sellers are swapping farmed for wild salmon?

In the business world, this is called a breakdown in compliance. Of course there are different reas- ons for compliance failure, everything from a bad-apple employee to a misunderstanding of directions, but the broadest explanation is simply that key elements of the organization’s guiding philosophy aren’t getting through to the members. One response to this possibility is a corporate culture ethics audit.

A corporate culture ethics audit attempts to loosely measure how open channels are between the ethical values stationed at the top, and the actual practices down below, and one common way of doing the measuring is with a questionnaire addressed to all an organization’s members. Strings of questions can be answered simply yes/no or on a numerical scale from strongly agree (5) down to strongly disagree (0). These questionnaires can be distributed and the responses coming back summed and compared with previous samples in the same workplace or against results drawn from other work- places. The goal is to get a sense of where people are at in terms of putting company ideals into practice.

It goes without saying that a simple questionnaire can, at best, provide only a crude picture of what’s actually going on inside an organization. The process must begin somewhere, however, and two attempts at drawing up auditing questionnaires come from O. C. Ferrell’s Business Ethics[9] and Dr. Ar- thur Gross Schaefer.[10] Combined, and with additions, subtractions, and modifications, the following corporate ethics audit emerges. (As a quick note, this test could be nuanced by changing the responses

216 THE BUSINESS ETHICS WORKSHOP

from yes or no, to agree or disagree on a one-through-five scale. Some audits also add a section for comments.)

A Corporate Culture Ethics Audit

Answer yes or no.

Part 1: Corporate Culture as Defined and Understood throughout the Organization

1. Are codes of ethics and business practices clearly communicated to employees?

2. Are there rules or procedures in company publications that may be consulted?

3. Is there a value system and understanding of what constitutes appropriate behavior within the organization that is shared by members at all levels of the organization?

4. Is there open communication going both ways between superiors and subordinates on questions concerning ethics and organizational practices and goals?

5. Have employees ever received advice on how to bring behavior into closer alignment with the organization’s values and norms?

6. Does the organization have methods for detecting ethical and behavioral concerns?

7. Are there penalties that are publicly discussed for transgressions of the organization’s rules and values?

8. Are there rewards for decisions corresponding with the organization’s culture (even if they don’t result in a profit)?

9. Do people at work act in a way that’s consistent with what they say are the organization’s values?

10. Do employees spend their time working in a cohesive way that is in accord with the organization’s values?

11. Does the organization clearly and directly represent its activities and goals in its public communications?

Part 2: Corporate Culture as Organic and Encompassing

1. Does the company recognize the importance of creating a culture that is concerned about people and their self-development as participants in the organization’s values?

2. Do employees treat each other with a respect, honesty, and fairness that correspond to the organization’s values?

3. Are leadership decisions made with an opportunity for input from all relevant sources?

4. To what extent does leadership, the board of trustees or executive committee, view its responsibility as one to represent the entire organization?

5. Are leadership positions open to all members (insofar as such openness coincides with the organization’s values)?

6. Does the professional staff provide services to all members in accordance with organizational policy and regardless of board or leadership status?

7. Are employees satisfied that day-to-day responsibilities correspond with what the organization’s culture has led them to expect?

8. Is turnover low?

9. Are emotional outbursts springing from ambiguity about responsibilities within the organization rare? (I’m in charge here!)

10. Is there an absence of open hostility and severe conflict that goes beyond the internal competition provided for by the organization’s culture?

11. Does the organization address contract negotiations, work expectations, and compensation levels in a way that corresponds with the organization’s values?

12. Are there shared and commonly held beliefs about how to succeed in the organization?

13. Are there day-to-day rituals, habits, and practices within the organization that create direction and prevent confusion on ethical and business matters?

14. Do the dress, speech, and physical work setting prevent an environment of fragmentation or inconsistency about what is right and appropriate for the organization?

15. Does the organization’s involvement in community activities correspond with the effects of the organization’s day-to-day activities?

In its simplest form—with this audit rendered as a string of yes-or-no questions—the yes answers may be summed with a higher number indicating more compliance within the organization.

This audit can be applied to the question initiating this section. If we assume a fish seller is misrep- resenting farmed salmon as the more expensive wild variety and if we assume that the larger business for which the fish seller works actually does value honesty within its corporate culture, then we should

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 217

dress code

A set of rules—explicit or implicit—distinguishing what garments may and what may not be worn in the workplace.

expect to see an audit like this produce a low score. We should expect to see that employees either aren’t getting the message as to what the corporate culture is, or they’re seeing it as just words, not real values supported on a day-to-day basis by the company’s leaders.

K E Y T A K E A W A Y S

< A corporate culture may be evaluated in ethical terms: it may be justified as ethically respectable or challenged as ethically reproachable.

< Compliance in the business world means the organization’s members are acting in accord with the organization’s stated policies and values.

< Compliance may be loosely measured with a corporate culture ethics audit.

R E V I E W Q U E S T I O N S

1. In what ways can an ethically questionable organizational culture be challenged by outsiders? In what situations might one way be preferable to another?

2. What is an example of compliance, and an example of failure of compliance, in a fish-selling business that openly values honesty?

3. What does a corporate ethics audit do and how does it do it?

3. TWO ETHICALLY KNOTTED SCENES OF CORPORATE CULTURE: CLOTHES AND GROOMING

L E A R N I N G O B J E C T I V E

1. Consider how the organization’s values are reflected in dress codes and grooming codes.

3.1 Scenes of Corporate Culture: Dress Codes Corporate culture is visible on the big issues, including whether a fish-selling business is honest about what consumers are receiving. It also exists, however, in the customs and rules making up quotidian life in the workplace.

One of these quotidian scenes is a dress code, and a glimpse of how one can work comes from AppleInsider, a gossipy online magazine devoted to what’s going on—everything from life at work to product development—inside Apple. The site got its hands on a survey Apple ran of its employees, a version of a corporate culture audit. What Apple was trying to do was get a grip on the corporation’s values as the employees understood them.

According to the study, one notable aspect of Apple culture is the leisurely dress code. “I never dressed nicer than sweat pants. I often came in wearing whatever I slept in the night before and walked around the office barefoot. Nobody cared,” said a customer solutions specialist who works for Apple in Austin, Texas.[11]

The survey presents this as one of the positives of working for Apple. On the other hand, there are people who go to bed at 3 a.m. after a rough party night and still wake up a full hour before leaving for work at 7:45 the next morning because no matter how tired they are, they wouldn’t be caught dead on the street without a shower, some makeup, and the rest. Now, what makes Apple’s culture appealing for many is that both kinds of people can fit in. If you want to dress nicely, great. If grunge is your style, still great. It sounds like this ethical stance in favor of individualism at the core of Apple Incorporated works well.

Listen, though, to the next lines that the same pajama-clad employee wrote in the survey: “There were a lot of communications problems. Micro management to the extreme. I had six different super- visors that did not communicate together and gave me six different answers.”

Well, if part of the corporate culture is to let people be independent to the extreme, dressing however they want, then it’s going to be hard to stop each individual supervisor from supervising in his or her own unique way. This is one of the profound truths about corporate culture: it’s difficult to have

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grooming code

A set of rules—explicit or implicit—concerning hygiene and presentation at work. Codes may concern hair, tattoos, fingernails, and similar.

part way. If you’re going to raise the values of diversity and individuality, then that’s probably what you’re going to get across the board. If it’s in the way people dress, then it’s probably also in the man- agement style and in the customer relations and in the way people treat each other at work.

Of course no one is going to make the claim that a corporation allowing people to show up for work in pajamas is a scene of great ethical debate. It is, however, a scene of very broad debate. It shows how the values an organization decides to raise up permeate the company; they color everything.

3.2 Grooming Codes Personal hygiene is less easily controlled by the organization than dress because it’s more intimate than clothes and, frequently, more difficult to define. It’s easy to require a necktie; it’s harder to figure out exactly what “well-groomed hair” is.

Some grooming codes aren’t questions of ethics so much as safety or hygiene. For safety reasons, you don’t want a guy who hasn’t had a haircut since the 1960s running the table saw in a lumberyard because his hair may get caught up in the blade with some Hollywood movie results. Similarly with re- spect to a woman working as a chef in a restaurant, if she refuses to wash her hands or cut her finger- nails, the health safety of patrons eating the food she prepares is sufficiently concerning to allow and probably require that the cook be ordered to clean up or be fired.

While health and hygiene issues can normally be resolved by appeals to common reason, more difficult ethical dilemmas arise around the organization’s desire to maintain a uniform and presentable workforce as a way of boosting appeal to consumers. It’s safe to say that business would decline at a McDonald’s if employees were allowed to show up for work unbathed, unshaven, and wearing paja- mas. On the other side, however, employees do have lives outside the nine to five, and workplace re- quirements concerning haircuts and beards obviously wash over to those personal hours.

The conflict between a business’s desire for grooming uniformity and the individuals’ personal freedom to appear in public as they wish centers the case of Brown v. Roberts and Company argued be- fore the Massachusetts Supreme Court in 2008.[12] The journey to a lawsuit began when the owner of a Jiffy Lube station hired a consultant to improve the business, and one recommendation was a groom- ing policy requiring neatly combed and trimmed hair, along with the prohibition of beards and mus- taches. Consumers, the consultant reported, found that cleanliness and uniformity provided an implicit assurance of trustworthiness and good work. The problem for Jiffy Lube employee Bobby Brown was that he practiced a version of Rastafarianism. For more than a decade he’d faithfully subscribed to a re- ligion that didn’t permit him to shave or cut his hair.

After refusing to abide by the new Jiffy Lube grooming guidelines, Brown was removed from his normal routine, which included working the register and greeting customers, and banished to the lower bay where, out of customer sightlines, he performed the dirty work of servicing cars and trucks. He sued to get his old duties back. The Jiffy Lube owner refused to back down. In court, the owner provided statistics showing that cleaning up the customer service personnel actually improved busi- ness, and, the owner added, he had the right to control the public image of his company regardless of whether it improved business or not. Brown countered that his grooming was protected by the fact that it was a religious necessity. The grooming requirement, he maintained, didn’t just interfere with his personal life and religion, it completely desecrated both of them. For its part, the high court punted the issue back down to a lower court.

The law in these cases may be hazy, but the ethics will come down to the foundational views shap- ing the organization’s working culture. Here are three different solutions to Brown versus Jiffy Lube as they emerge from three distinct organizational cultures:

1. An authoritarian culture defines right and wrong inside a business as just what the highest- ranking individual orders. In this case, the owner is in charge of his shop, and if he determines that all employees must wear short hair, that’s the way the workplace will be. Since there’s no higher code, authority or appeal, people who want to be part of the company will need to accept obedience to the boss.

2. A consequentialist, utilitarian outlook will produce a workplace culture that most highly values the collective welfare of all those involved. The issue is no longer boss versus employee; it’s what’s best for everyone. If this mentality controls the Jiffy Lube franchise, someone may propose that Brown bundle his hair up underneath a cap or agree to work only limited hours up front at times when visits from walk-ins and new clients are minimal. That way the business can prosper (possibly triggering wage increases for all employees), while Brown’s inconvenience is minimized.

3. An ethics of care produces an organizational culture distinct from the previous two. Instead of seeing the workplace as controlled by an owner, and instead of seeing it as a scene of compromise in the name of the general welfare, a Jiffy Lube structured by care will conceive of the workforce as something near a family. In this case, the ethical justification for action will always trace back

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 219

to the question about whether the act will strengthen and nurture the bonds of all those involved in working together. In the case of Jiffy Lube, this guideline will probably lead to a decision to allow Brown to return to his customary role. It may be that some business will be lost, but if that’s the cost of maintaining the harmony of the work unit as a unit, then the cost will be paid. Of course the owner may still appeal to Brown to cut his hair and shave, but just as members of a family learn to respect (or at least tolerate) the idiosyncrasies and uniqueness of each member, so too a business culture governed by care will ultimately be more interested in preserving Brown’s ties to the group than reforming his character, habits, and presentation.

Conclusion. Some businesses have an interest in controlling the way employees look. The degree to which they’ll control appearances depends on the ethical stance defining their internal values and culture.

K E Y T A K E A W A Y S

< An organization’s fundamental values show through in codes regulating dress and grooming.

< The implications of these particular codes and the values beneath them stretch broadly through the organization.

R E V I E W Q U E S T I O N S

1. What might a dress code tell you about an organization’s larger culture?

2. Why might a business install a grooming code?

3. Why might a utilitarian vision of the workplace and its values lead to an only partially enforced grooming code?

4. WHAT CULTURE SHOULD A LEADER CHOOSE TO INSTILL?

L E A R N I N G O B J E C T I V E S

1. Show that different kinds of businesses and organizations lend themselves to distinct cultures and guiding values.

2. List and describe questions that may help leaders choose an appropriate organizational culture.

3. Show how specific aspects of an organizational culture may be founded on ethical theory.

4.1 Choosing the Right Organizational Culture for Me For those starting a business, the first question about the values and culture of the new workplace is the simplest: What should they be? There’s no right or wrong answer, but there are different ways that any set of values may be justified.

Diverse fields of work will lend themselves more naturally to one or another organizational style and tone. A fish seller delivering to markets, restaurants, and homes, for example, one entrusted with providing food for others to sell and cook, will need to value punctuality and reliability. This kind of firm must honor its contracts by getting orders delivered to clients when promised and by making sure the quality (at least the quality that consumers perceive) is up to standard. Further, the physical work- place—which stretches from the office where orders are received to trucks delivering goods—will prob- ably function best if the values of fairness, respect, and openness are enforced. The various individuals entrusted with any one account must be able to work together well and produce results individually that the entire group stands behind.

On the other hand, if the small company you’re forming happens to be a rock band, then creativity (as they say in the business world, the ability to think outside the box) steps forward as a cardinal value. When trying to get a nightclub or bar to book your group, you may lie about (or “exorbitantly exagger- ate”) the response your songs have gotten from people who’ve listened to you in the garage. You may

220 THE BUSINESS ETHICS WORKSHOP

promise that you’ve got material to present a forty-five-minute show and run out after half an hour. You may not foster mutual respect in the workplace: the lead guitarist may secretly instruct the sound- man to reduce the hapless bass player’s volume to near zero or the drummer may show up for work blind drunk and flinging expletives. All those failures in reliability and respect will wash away, though, if you’ve got a new sound and people like hearing it. Fish sellers and rock bands, finally, are different kinds of businesses and the organizational values surrounding them may be similarly divergent.

Even within the same pursuit, even when two corporations are producing comparable products, there’s no requirement that their cultures be similar. In fact, that’s a central point of the “I’m a Mac, I’m a PC” advertising campaign. The appeal being made in these ads isn’t that Apple is better because their processors run a gigahertz faster than a PC’s or because the screen images are crisper or the bat- tery life is longer. Fundamentally, Apple is making the case that the values—as displayed by the style of clothes the actors wear and their way of standing and speaking—are ones the purchaser may want to participate in. Apple, in essence, turns corporate culture into a selling point.

Refocusing on the problem of determining a set of values for an organization, there’s a two-step process: decide the values, then justify them. One way to proceed is by posing some questions aimed at the core of workplace culture.

What Counts as Success?

In some organizations (especially nonprofits and political groupings), success gets defined socially. Per- haps it’s an effort to eradicate homelessness, or diminish the effects of poverty, or advance a legislative agenda. In this kind of endeavor, one existing to serve the greater good, a utilitarian ethical perspective could be employed to justify the organization’s existence and goals. The reason for the organization’s existence fits well with the theory that acts are ethically good if they bring the greatest good to the greatest number.

By contrast, if success for an organization is economic not social, if it’s about me getting rich and not the general welfare, other theoretical foundations may be more recommendable. A culturalist eth- ics—one that defines moral right and wrong as just what the larger society dictates—might work in this case, at least in the United States where private enterprise and the pursuit of wealth have customarily been regarded as a virtue. Alternatively, a rights-based theory, one that maximizes individuals’ liberty to pursue their own happiness (as long as the rights of others aren’t infringed upon in the process) may work well for those choosing to establish a corporate culture that raises profit as the main goal of the business.

Am I a Collectivist or an Individualist?

If I believe that people work best when they work together, then I may choose to raise collectivism as a central virtue. Individuals are rated professionally in terms of their workgroup’s accomplishments. This kind of organization would recognize a single person’s accomplishment only when it served the efforts of others and individual rewards like bonuses and similar would be severely limited. By contrast, benefits received by one member like health insurance or a year-end bonus would likely be received by all. In the business world, finally, assembly-line work would be a good candidate for collectivism be- cause any finished product is only as good as the weakest part.

On the other hand, someone starting their own business may believe that individuals don’t work best when teaming up with colleagues but when competing against them. In this case, an individualistic corporate culture might be established with workers granted incentives to outperform their colleagues. Pay and benefits in this kind of organization would likely be closely linked to performance and success; those who do well for the company would receive a healthy percentage of the revenue they generate. Further, on the other side, employees shouldn’t make the mistake of thinking that just because the or- ganization is doing well, they’re doing well. They’re not, at least not unless they can show how they contribute personally and significantly to the success. Finally, this orientation of values may be con- structed by someone starting up a wholesale fish-selling operation, and hiring a sales force to go out and lure restaurants away from their current providers and give the new company a chance.

What Do I Value More, the Means or the Ends?

One of the curious aspects of the farmed or wild salmon story is that for many (though definitely not all) consumers, there’s really no difference. Their palettes aren’t sufficiently trained, their cooking ex- pertise insufficiently developed for the distinctions between the two kinds of fish to register inside their mouth. If that’s right, if a consumer really can’t distinguish farmed from wild salmon, then is there any harm in selling the farmed variety as wild (at a 200 percent markup)? Some people will answer yes and others no. If you’re on the yes side, if the kind of organization you want to set up will be ruled by what members do more than the results of what’s been done, then an ethics based on duties suggests itself as the right way to go. Within this kind of enterprise, the basic ideas of honesty and respect for others will prevail; they will guide the way people act inside the workplace and also the way the business interacts

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 221

franchise

A form of business where a company with a successful operation (called the franchisor) offers others (called franchisees) the opportunity to function under the franchisor’s trade name in exchange for a fee or similar compensation.

with customers. You can take people at their word inside this business because telling the truth is a ba- sic element of the organization’s culture.

On the other side, if you look at this and say, “well, consumers are just as happy either way, but selling the farmed fish as wild makes me a lot happier because my profit margin jumps,” then you’ll find a more comfortable spot on the consequentialist side of the ethical spectrum. Here, what people do is less important than the outcome. Decisions about whether an act is acceptable or not are answered by looking at the act’s consequences and nothing else. In this case—and assuming people really can’t tell the difference between the two fish—the way opens to affirming that the general welfare really is improved by the sleight of hand. The fish seller is better off, and no one else has grounds for complaining.

This ethical dilemma—one between valuing the sincerity and the ethical protocol of the actual transaction, and one valuing just the end result and consumer satisfaction—plays out in many and di- verse organizational environments. There’s the fish seller debating selling cheap product that tastes ex- pensive. In 2004 Ashlee Simpson got caught lip-synching on Saturday Night Live when the soundtrack kicked in before she opened her mouth and Tom Petty’s 2008 Super Bowl halftime performance looked fishy. Does it really matter, though? In Simpson’s case, it obviously does because she got caught and it ruined her show, but if everything had fit together right, do you think it’s OK for her to pretend she’s live and then go to the tape without anyone noticing? Are people who paid money to see her sing get- ting cheated?

One organization where this dilemma plays out in quite dramatic terms is police work. It’s an old- time policing phrase that more good has been done with the business end of a nightstick than through every courthouse in the land. It’s unclear whether that’s true, but it gets right to the heart of the ques- tion about means or ends. Should a police department be more focused on going by the book, treating all suspects as the written law dictates, or should they be more focused on the ends—that is, punishing criminals and minimizing crime in a community? Take a situation where an officer knows a man is guilty of a violent assault but the evidence isn’t there. Is it OK to plant something? As is the case of the fish seller and the stage performer, the basic values—the way the members have learned to live and act within organization—will dictate what ultimately happens.

How Do I See My Employees?

Many small businesses have only one employee: the owner who doubles as the employer. Others, however, require a workforce. If people need to be hired, the question about how they’re to be valued can’t be avoided. Are they paid mercenaries? Something closer to extended members of a family? Somewhere in between? One type of business where this question can rise quickly is a franchise. In a franchise operation, a parent company sells the rights to a certain name and kind of product to an indi- vidual to start their own branch. Domino’s Pizza is a good example. Though there are corporate-owned stores, many of the local Domino’s are owned by their managers. These entrepreneurs agree to buy ba- sic material from the mother business—the pizza dough and so on, as well as the signage and participa- tion in advertising campaigns—and in exchange they’re allowed to command their own small outpost of the pizza empire. The extent of corporate control over particular franchises varies from one business to another, but since the actual owner is the person there from day-to-day and in charge of hiring and firing, the culture surrounding the place is going to be largely determined by the values the owner installs.

With respect to employees, what are the possibilities? A libertarian culture comes close to the mer- cenary system. Under this ethical umbrella, freedom and the individual pursuit of his or her own hap- piness become guiding values. Ethical good is defined as that freedom and pursuit, while reprobation is assigned to those acts interfering with others doing the same. In this case, the owner may (though not necessarily) adapt a somewhat disinterested attitude with respect to employees. A certain job is offered at a certain wage and the applicant is free to accept or decline. Acceptance means nothing more than assuming the responsibilities in exchange for a paycheck. Initiating a Domino’s Pizza business, of course, requires hiring many drivers to deliver the product. These aren’t great jobs, driving around and knocking on doors with pizzas, but they may work for students and others who need a little income. Neither the employer nor employee expects any loyalty from each other and the relation continues for- ward just as long as both benefit, nothing more.

Alternatively, a franchise owner may want to welcome employees as integral parts of the business. An ethics of care suits this purpose. Within this theory, good is defined not as freedom or the pursuit of happiness but as the maintenance and fortifying of social networks and relationships. The workplace becomes paternalist (or maternalist) as workers begin seeing themselves participating in an organic unit. In this case, the owner is much less likely to fire workers who foul up (bring pizzas to the wrong address, incorrectly input customer orders into the computer), and probably more likely to share rev- enue and benefits with workers as much as possible. Drivers are likely to be trained at other tasks (making pizzas and taking orders being the main opportunities) so that they can participate more fully in the enterprise.

222 THE BUSINESS ETHICS WORKSHOP

The above questions posed and answered are only a beginning, only the first of many steps on the way to defining and implementing a corporate culture. It’s also true, however, that in the real world people don’t have time to sit down and extensively draw up every detail of their ethical business plan before commencing; every new manager will have to decide for him or herself how far to go on paper before actually beginning to run their operation, whether it’s a Domino’s Pizza franchise or something else. Many will probably just go ahead with the enterprise and pick up ethical things along the way. This isn’t necessarily a bad idea: it’s hard for anyone to know what they believe until they’ve experi- mented a bit. It is worth noting, however, that these kinds of decisions will have to be made at some point. Staying with the Domino’s example, every franchise has a few drivers who mess up more than the rest and every manager has to draw a line somewhere to mark the point where the driver is let go. When that happens, a decision about the values of the organization—the extent to which drivers are more like mercenaries or members of a big business family—will have to be made.

Some further questions that a manager may ask to help sort out the organizational culture of the operation include the following:

< Who are my consumers? Are they purely a way for me to make money, or something closer to a social network with a financial element attached?

< Am I a short or long termer? Do I see my business as a lifelong project, or is this a quick hit and then I’ll move on to something else?

< Who am I responsible to? Am I doing this for me, my family, the community, the world? < What are the vital ingredients of success? Does my organization need to value analysis,

competence, reliability, creativity, or something else to thrive? < What’s my organization’s relation with the law? Do I want to obey the letter and spirit of the

law, just the letter, just the spirit, or do whatever I can get away with? < Am I a delegator or a micromanager? Will I give employees goals and let them find ways to

accomplish them, or will I monitor their performance every step of the way? Conclusion. If you’re starting your own business or joining up with friends to put something together, the first ethical questions you’re likely to face are those concerning the organizational culture of your enterprise. It’s true that you can put decisions off, but for most businesses at some point, there’ll need to be a coherent response.

K E Y T A K E A W A Y S

< People initiating their own business will need to instill an organizational culture.

< The kind of culture instilled will depend on the style of leadership and the contingencies of the type of business.

< Straight-ahead questions about the most basic elements of the endeavor (what I want from my business, how I will see employees and consumers, and similar) may help define an appropriate corporate culture.

R E V I E W Q U E S T I O N S

1. Why might diverse fields of work lend themselves to divergent internal cultures?

2. Picture a business you may want to initiate one day. What are some questions you could ask that might help you get a sense of the kind of culture and values you would erect inside the enterprise?

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 223

persona of leadership

The image and values a leader chooses to project across the workplace.

visionary

As a leadership persona, one that guides an organization’s members toward a shared vision.

coach

As a leadership persona, one that challenges members of an organization to meet specific, relatively accessible goals under close supervision.

affiliative

As a leadership persona, one that fosters social harmony within the organization and focuses on the human and emotional dynamic of the workplace over immediate work requirements.

democratic

As a leadership persona, one that seeks active participation from an organization’s members.

pacesetter

As a leadership persona, one that challenges members of the organization to work and meet goals by setting a strong example.

commander

As a leadership persona, one that gives clear directions and expects compliance.

5. STYLES AND VALUES OF MANAGEMENT

L E A R N I N G O B J E C T I V E S

1. Define the concept of a leadership style. 2. Consider what values underlie specific leadership styles. 3. Investigate what kinds of enterprises may be suited to one or another leadership style.

5.1 Selecting a Leadership Persona A persona of leadership is the image you adopt, the kind of person you decide to be when you stand in front of others as a director. What values will be most important to your particular leadership role, and how will they be transmitted? Psychologist Daniel Goleman has identified the following leadership styles in his book Primal Leadership:[13]

< Visionary. This leader guides an organization’s members toward a shared vision. Establishing and communicating that vision become the primary leadership task and subordinates are granted significant leeway to reach the vision.

< Coach. Members of the organization are challenged to meet specific, relatively accessible goals, and they’re closely supervised—and encouraged—as they work.

< Affiliative. This leader fosters social harmony within the organization and focuses on the human and emotional dynamic of the workplace over immediate work requirements. Nurturing a well- integrated team that works well together is considered the best way to reach the organization’s goals.

< Democratic. These leaders seek active participation from an organization’s members and value consensus in decision making.

< Pacesetter. This leader challenges members of the organization to work and meet goals by setting a strong example, possibly one that most members will be unable to match.

< Commander. This leader gives clear directions and expects compliance. Of course there are other ways of leading, and elements of these six models may be mixed in a single person, but taken together this group of strategies represents common ways of fostering specific values in the workplace. Two examples—John Buford and Carol Smith—illustrate how the strategies and val- ues function together.

John Buford

In a short video from the Washington Post’s continuing “On Leadership” series, the story of John Buford at Gettysburg in 1863 is examined.[14] Buford, a general in the Federal army leads a small force of cavalrymen on a mission to locate and engage Robert E. Lee’s Confederate forces. He finds them near Gettysburg and hatches a plan to arrange the coming battle on terrain that will favor the North. While his small group aligns itself on the high ground and begins battling the vastly superior Confeder- ate force, Buford sends word to the main Federal army of his location and the advantage he’s holding. His group is nearly wiped out, but they resist just long enough for Federal reinforcements to flow in and occupy the adventitious ground. Days later, they’ll win the battle. The South never recovered.

Here are the episode’s key aspects according to the Washington Post’s Ed Ruggero: < As a cavalryman, Buford was accustomed to operating far from headquarters and direct

oversight. He was empowered to and able to make his own decisions. < No preconceived plan can account for all contingencies, so all overarching strategies must leave

room for leaders on the ground to shift strategies as the situation requires and take rapid action. < Buford asked for and got significant (life) sacrifices on the part of his soldiers in the name of the

greater good and larger cause. Along with Buford’s autonomy and decisiveness, the significant ethical trait leaping out of the organiz- ation he led was the uniform willingness of those working with him to sacrifice for the larger goal. There is, at the heart of this organization’s culture as it was fostered by Buford, a sense of the import- ance of the collective over the individual. Buford isn’t the kind of leader who seeks to maximize the in- dividual initiative of the members of his organization and he doesn’t set his team loose into

224 THE BUSINESS ETHICS WORKSHOP

transformational leadership

The ability to transform the members of an organization into devoted and unselfish advocates of its goals.

competition with each other. Instead, he fosters firm camaraderie. Within the six types of leadership personas laid out by Goleman, Buford is, not surprisingly, a commanding leader.

Coming at this value from a different angle, Buford’s can be called transformational leadership. In his book Business Ethics, O. C. Ferrell defines this as the ability to transform the members of an or- ganization into devoted and unselfish advocates of its goals. In a word, it means the ability to in- spire.[15]

As the Washington Post video underlines, business isn’t war. Still, lessons in leadership—and the basic values animating one or another model—may be common to the two. So what kind of business might invite this commanding style? One possibility, one place that might do well under this model of leadership is a Domino’s Pizza franchise. First, because it’s a franchise outfit, because it’s an outpost of the central organization granted wide latitude and independence, the local manager and owner must be able to make decisions independently. There must be an ability to see a way forward and act even without approval from superiors. For example, all Domino’s locations share in the benefits of the cent- ral corporation’s advertising budget, but every individual manager is free to supplement those efforts. A franchisee may decide to send drivers to an apartment complex delivering discount coupons to every door or something similar. What’s important is that every neighborhood is different and offers unique opportunities. Success will require a leader who can get a sense of what might work at a particular place without constantly calling into corporation headquarters for guidance.

Further, with respect to the employees, the commanding style of leadership may be suitable when you take into account that most drivers have relatively little experience in the pizza business and aren’t particularly motivated for the Domino’s team. Almost no one signs up to deliver food because they en- joy it or see a bright future in that line of work. Given that reality, a commanding style—leadership that demands employees follow directions carefully and one that values deference to the delivery policy and rules—may work to keep the operation flowing well. More, the values of transformational leader- ship—devotion to the organization and the unselfish advocacy of its goals—may function to rally the drivers, to inspire a belief in the cause of the business even if, as is obvious, winning the neighborhood pizza delivery war is far less dramatic and important than Gettysburg.

Carol Smith

Here are a few snippets from a newspaper interview of Carol Smith, a senior vice president and chief brand officer for the Elle Group:

Q: What is the most important lesson you’ve learned about leadership?

A: The importance of winning over employees as opposed to bossing employees.…I sit in the middle of the table, always. I don’t want to sit at the head of the table. I want to be part of the process and part of the decision.

Q: Let’s talk about hiring.

A: You’ve got to meet someone three times, and one of them better be over a meal. It’s like a little microcosm of life. Throughout a meal, the personality comes out. Are you going to connect with us? Are you going to be part of the team, or are you going to be one of these independent players who wants to take all the credit? Are you good with assistants? Those are things you can find out in some subtle ways when you eat with someone.[16]

Referring these thoughts back to the list of six leadership personas, Smith reflects skills and practices of at least two distinct leadership styles: democratic and affiliative. Her custom of sitting in the middle of the table instead of stationing herself at the head isn’t an empty gesture, it’s part of the way she broad- casts openness to countersuggestions and input. Further, this kind of culture—one that values give- and-take and some sense of equality in the decision-making process—is bolstered by the distinction Smith draws between being a boss and being bossy. Being a boss means ultimately making, and taking responsibility for, decisions; being bossy means cowing people into grumbling obedience. It’s present- ing herself as the former while resisting the latter that Smith believes makes her style work in her par- ticular organization. Democratic leadership, finally, isn’t the same as political democracy; there’s no in- dication that Smith decides by taking a vote. But where the two do overlap is in the process preceding decisions: a high value is assigned to an open airing of differences, and to the insistence that all sides be heard and respected.

Smith also participates in an affiliative strategy for managing. When she invites potential new hires to dinner, she’s checking to see if they’ll add to the organization’s social harmony. Notice that Smith is probing for information about whether the new hire will mix with superiors, equals, and subordinates in the workplace. Every direction of social interaction is important. Of course the idea here isn’t that no work gets done because so much stress is placed on people getting along, it’s the opposite: because emotional integration is highly valued in the office, members of the organization are likely to work well together in pursuit of the organization’s goals.

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 225

transactional leadership

Leadership dedicated to getting the members of an organization onboard through give and take, and inclusion.

One way of summarizing Smith’s management strategy is that she’s a negotiator, always trying to find ways to get people to come together in agreement. She’s not so interested in locking her employees in a march toward her company’s goals; instead, she activates their participation and then balances in- dividual efforts to keep everyone on the same page. This quality can be called transactional leader- ship, which means leadership dedicated to getting the members of an organization onboard through give-and-take and inclusion.[17]

Moving into a general business environment, what kind of business might invite the style of lead- ership Smith promotes? Starting with what can be excluded, a Domino’s franchise probably wouldn’t work very well. In that business, driver turnover is very high, so she’d spend inordinate amounts of time balancing the social dynamic of a workplace that changed personalities on a weekly basis. Also, in- put from drivers who consider their work to be a McJob and have no experience in the pizza business would be of limited value. It’s very possible, in other words, that the values Smith privileges would quickly lead a Domino’s Pizza restaurant—or any enterprise depending on a large, high-turnover workforce—into red ink.

Apple Incorporated, on the other hand might be a good fit for Smith. We know from the Apple employee survey that the workplace values tolerance and individualism. Within a social dynamic like that, one where people are free to work (and show up for work) as they wish, the great danger is a col- lapse of the group effort into individualistic, self-centered projects and agendas. It takes an alchemy of personalities to make sure these different types of people are functioning well together despite their ex- plosively individualistic outlook. The value of social harmony as promoted by an affiliative leadership style, consequently, might be crucial for this kind of workplace. Apple also sounds like a place where democratic-type leadership could bear fruit. One of the great advantages of diversity in the office is a wealth of viewpoints. For the right kind of leader—one valuing and encouraging contributions from every direction—that diversity can be translated into a maximum number of options for action. Of course if the leader is weak, those divergences will result in chaos; the trick is to maintain openness to the input of others without sacrificing authority and surrendering to rampant individualism.

Conclusion. No one style of leadership will work in every situation, and very few individuals will find that they naturally fall into one category or another. But a sense of the range of possibilities, and an ability to understand the different values holding them up, maximizes a leader’s chances for success.

K E Y T A K E A W A Y S

< A persona of leadership is the role adopted when leading an organization.

< There are a number of basic personas or leadership styles that may be mixed on an individual basis.

< Leadership styles are not good or bad in themselves, but some are more or less suited to certain individual personalities and specific kinds of businesses.

R E V I E W Q U E S T I O N S

1. What are Goleman’s six leadership prototypes?

2. Are there any other leadership prototypes that could be added to Goleman’s list? Explain.

3. What is transformational leadership, and can you think of a kind of organization to which it might be well suited?

4. What is transactional leadership, and can you think of a kind of organization to which it might be well suited?

226 THE BUSINESS ETHICS WORKSHOP

6. CASE STUDIES

6.1 Culture on the Trading Floor

Source: Photo courtesy of Teresa Avellanosa, http://www.flickr.com/photos/49093093@N02/4649978754.

On Wall Street, S&T means sales and trades of stock, and it’s generally carried out by teams working for a bank or investment house. It’s their job to sniff out the best buys (and recommend them to their clients), while also picking up on which shares may be in for a fall so they can be unloaded fast.

On one of WallStreetOasis.com’s forum pages, welcome2nyc starts a thread this way: I was curious to know the culture of S&T. Can anyone give an honest opinion?[18]

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 227

Q U E S T I O N S

1. What is a corporate culture?

2. A contributor named creditderivatives posts this about the culture at Deutsche Bank Equities: “These guys were brilliant and no-nonsense. Very tolerant atmosphere, but very focused. These guys argued over the correct pricing approach for equity swaps as opposed to which March Madness bound team had the best chance of winning it all.”

An “equity swap” is a complex financial bet, but in the end it comes down to this: one side believes a stock will go up (or down) more than another, and they put money on it.

< There’s not a lot of information here, but from what you have, can you brainstorm a short list of words fitting the culture and values Deutsche Bank fosters?

< One important characteristic of corporate culture is employee interaction: the way workers relate to each other on the job. At Deutsche Bank, does it sound like the culture values teamwork among workers, competition, or some mix? Explain.

3. BigFatPanda writes, “I’d rather work on a desk with the trash talk, like where people are on the verge of cutting each other.”

“A desk” is Wall Street talk for a team of analysts working together on investment strategies.

< How would you describe the culture BigFatPanda prefers?

< One of the recurring questions all managers face is “Will more and better work get done if people work together or compete with each other?” It’s pretty obvious where BigFatPanda comes down on this. From what he says and the way he says it, what do you suppose are some of the potential disadvantages of this organizational culture of competition?

4. jjc1122 writes, “When i used to work at the chicago mercantile exchange, there were a lot of crazy stuff. traders routinely doing coke in the bathroom, old irish guys hurling racial insults, fights, and sleeping with their hot female clerks.”

He adds that his experience dates from 2005, but he’d heard that things were actually a lot crazier in the earlier part of the decade.

< Two aspects of corporate culture are workplace mood (the social energy and decorum of an office) and leisure time (what coworkers do and the way they relate to each other when not at work). How has jjc1122’s manager tuned those aspects of the organization’s culture?

< One aspect of working culture involves life values—that is, the extent to which on-the-job experience leaks out to color nonwork concerns and life. What kinds of life values are exhibited by this organization? What kind of theoretical ethical argument could be made to criticize the manager’s promotion of these values?

< The two basic ways that an organizational culture is instilled are codes (established rules guiding an organization’s members) and social conditioning (guidance is provided by following the cues and examples of others in the organization). Do you suspect the values of jjc1122’s Chicago Mercantile Exchange workplace were established more by codes or social conditioning? Why?

< The instillation of a workplace culture through social conditioning functions in a variety of ways. Three are listed here. Can you fill in for each how it may have worked in the Chicago Mercantile Exchange in 2005?

1. Stories and myths embedded in daily conversations may indicate culturally appropriate conduct.

2. Heroes or stars in the organization may consistently communicate a common message about the organization’s guiding values.

3. The dress, speech, and physical work setting may be arranged to cohere with the organization’s values.

< One social way that an organizational culture may reinforce itself is through a self-selective process. What is a self-selective process? How might that process have worked to reinforce the values guiding work life at the Chicago Mercantile Exchange?

5. Bondarb writes, “When i am out with goldman people and somebody tells a joke they all look at the most senior GS person there to see if they are allowed to laugh.” GS is Goldman Sachs, the global investment bank.

< Make the case that employees constantly looking to superiors for guidance—even whether they should laugh at a joke—shows that a strong, clear corporate culture exists at Goldman.

< Make the case that employees constantly looking to superiors for guidance—even whether they should laugh at a joke—shows that a weak, ill-defined corporate culture exists at Goldman.

228 THE BUSINESS ETHICS WORKSHOP

6.2 Corporate Culture at Herschend Family Entertainment

Source: Photo courtesy of Todd Baker, http://www.flickr.com/photos/technowannabe/1139227859.

Joel Manby is CEO of Herschend Family Entertainment, a $300 million corporation employing more than 10,000 people at two dozen theme parks around the country. They put on everything from massive aquariums to Dollywood, the Dolly Parton theme park in Tennessee.

In an interview, Manby discusses the corporate culture infusing the properties. It’s composed of eight attributes:

1. Patience

2. Kindness

3. Honesty

4. Humility

5. Respectfulness

6. Selflessness

7. Forgiveness

8. Commitment

Manby exemplifies the corporate values he’s trying to instill this way, “You can dislike somebody, but you can still respect them, forgive them, and treat them with humility and honesty. We also have a phrase: ‘admonish in private, praise in public.’ So you don’t embarrass people.”

Manby explains that 50 percent of a Herschend executive’s year-end bonus is awarded on the basis of how well the organization’s culture is exhibited and promoted. As he puts it, “You have to put your money where your mouth is.”

He concludes with this: “It’s all about hiring the right people. You know, this culture either resonates with people or it doesn’t. If it doesn’t, they’re not going to enjoy working here.”[19]

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 229

Q U E S T I O N S

1. The characteristics of corporate culture elaborated in this chapter were the following. Corporate culture is

< shared,

< a provider of guidance,

< a provider of meaning in the organization,

< top heavy,

< a constellation of values,

< a dynamic constellation of values,

< organic,

< inclusive of life values.

Choose three of these characteristics and show how the culture Manby promotes at Herschend Family Entertainment relates with each one.

2. What is a corporate culture ethics audit? What does it attempt to measure?

3. If a corporate culture ethics audit were taken of this company, how do you suppose it would fare? Why?

4. Before coming to Herschend, Manby was CEO of Saab, a division of General Motors. His time there was marked by a very different organizational culture. According to him, “I don’t want to bash GM, but intimidation was part of the culture there. You would get ridiculed in meetings. The CEOs had big egos and had no problem making you look silly. I once missed one of my numbers. I didn’t miss it by that much, but the president of all of Saab calls me and orders me to fly over there [to Europe]. I get there Monday morning, he chews me out for four hours, and then I get on a plane and fly back. It was so humiliating, so uncalled for. I figured, if that’s the way I’m going to be treated, I don’t need that. That’s when I began looking at other opportunities.”[20]

Manby lists the attributes of the culture at Herschend—patience, kindness, honesty, and so on. What might a similar list look like for Saab?

5. Corporate culture provides an organization’s meaning; it defines what counts as success.

< For Herschend, what counts as success?

< For Saab, what counts as success?

6. A corporate culture distinguishes workers from people who work. What is the distinction?

< How does Herschend fit into this distinction?

< How does Saab fit into this distinction?

7. Manby says, “Apple’s culture, for example, would be very different from ours, but Steve Jobs is still an incredibly successful CEO. I’m not pretending we’re right and others are wrong; it’s just our culture, and it works for us.”

Explain how Manby can say that a set of ethical values isn’t right or wrong, but one set (at Saab) is wrong for him, and another set (at Herschend) is right for him?

230 THE BUSINESS ETHICS WORKSHOP

6.3 Even Better Than the Real Thing

Source: Photo courtesy of Sandra Cohen-Rose and Colin Rose, http://www.flickr.com/photos/73416633@N00/1363267249/.

The web store FinerBags.com sells fakes—very good copies of purses originally made by Louis Vuitton and similar high-end brands. The price is right: a $1,800 Prada bag can be purchased as a copy for about $180. At Finer Bags, they’re totally open about what they’re doing, and their home page lists the advantages of buying their products. According to the leadership at Finer Bags, “Millions of replica handbags can be found on inter- net these days, they are not a rare thing anymore. Maybe the Louis Vuitton handbag that your friend bought is a perfect replica. Maybe the Louis Vuitton Monogram Speedy 30 that Linda paid $1,200 for is a replica hand- bag. Maybe those replica bags all were bought from finerbags.com.”[21]

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 231

Q U E S T I O N S

1. Would you call honesty part of the corporate culture at Finer Bags? Yes, no, or both? Explain.

2. Corporate cultural dissonance occurs when what actually happens on the ground doesn’t jibe with the principles supposedly controlling things from above. Do you suspect that dissonance is occurring here? Why or why not?

3. This company is selling counterfeit purses, bags designed to trick people into thinking they’re real when they’re not. No one denies that.

< Could you use a utilitarian argument (bring the greatest good and happiness to the greatest number) to justify this corporate culture and business endeavor as ethically respectable?

< Could you use either a basic duties argument (right and wrong is defined by preexisting principles) or Kant’s categorical imperative (to be right an act must be universalizable) to make the ethical case that this company should put itself out of business?

4. This line from the web page is curious: “Maybe the Louis Vuitton Monogram Speedy 30 that Linda paid $1,200 for is a replica handbag.” It’s important to know that the price of the real thing is about $1,200. The point being made is that people can end up paying full price for a copy. If that’s true, it sounds like Finer Bags is inviting people like you and me to realize that we can buy their fakes and then sell them as real, pocketing the difference.

< Imagine you buy a few replicas for $120. Then you spread word around campus that your mom is a major department store buyer and handed off a few Louis Vuitton Monogram Speedy 30s that you’re now selling at the absurdly low price of…$800. Can you sketch an argument to ethically justify your business model? What kind of ethical theory could it be based on? How would you respond to a consumer who discovered the trick?

< Imagine you have so much success that you hire some friends to go around selling bags at nearby colleges. Would you tell them the truth about the source of your bags or keep up the mommy lie? Why? What ethical justification could you sketch to support your decision?

< One reason to lie to the people you hire to sell the bags elsewhere is to help them do their job well. If they believe the bags are the real thing, they may find it much easier to enthusiastically promote their product. Is there any ethical difference between lying to employees to help them improve their work performance as purse salespeople and lying to consumers about what they’re getting when they make a purchase? If not, why not? If so, what’s the difference?

< Can you think of examples in the world where managers don’t tell their employees the whole truth about a situation and believe they’re doing the right thing? What is such a situation? Is it the right thing?

< Assume you’re running the fake purse outfit and hiring sales reps for other schools. You decide to maintain the lie about the purses’ origin. How do you think your small business would fare on a corporate culture ethics audit? Why?

5. Assume you’re running the fake purse outfit and hiring sales reps for other schools. You decide to reveal the truth about the purses’ origin to the reps. What you need to do next is instill a corporate culture that fosters lying. Common ways of instilling a workplace culture include the following:

< The founder’s ethical legacy to the organization may contribute to its living culture.

< Stories and myths embedded in daily conversations may indicate culturally appropriate conduct.

< Heroes or stars in the organization may consistently communicate a common message about the organization’s guiding values.

< The dress, speech, and physical work setting may be arranged to cohere with the organization’s values.

< An organizational culture may reinforce itself through self-selective processes.

How might these or other strategies of social conditioning be used to create a working culture that values lying?

6. If you discuss this case in class, there’ll be people loudly proclaiming that this fake bag business is despicable and completely wrong. Then they’ll go home, hit up finerbags.com on the Internet, and spend the next hour trying to figure out if they can make the scheme work on your campus. It is good money. Now, is there any ethical difference between someone who lies in a social situation like a class and someone who lies as a way of doing business?

232 THE BUSINESS ETHICS WORKSHOP

6.4 “I Created Studio 54!”

Source: Photo courtesy of Carl Johan Crafoord, http://www.flickr.com/photos/carl-johan/53185001.

Not all leadership jobs are exercised from on top of a pyramid, with the president on the highest level, vice presidents below, then directors beneath them, and so on. Take the case of Carmen D’Alessio. “I created Stu- dio 54!” she proclaims, even though she didn’t own any part of the club or have any official role in the way it was run. Still, according to her, if you want to find out about the once-thriving business, “I’m the most import- ant person to talk to.”[22]

In the 1980s, Studio 54 was the New York City club. It began, according to D’Alessio, soon after she dined with two men—Ian Schrager and Steve Rubell—who owned a club in Queens, New York, an area not considered particularly trendy. She thought that Rubell possibly had some raw night-clubbing talent, so she encouraged him to bring his skills to hipper Manhattan.

To generate buzz before Studio 54 actually opened, she dressed Schrager and Rubell in Armani suits and threw a dinner in their honor attended by celebrated artist Andy Warhol, clothing designers Halston and Calv- in Klein, and a host of similarly bright luminaries. Then, on the club’s first night, they went for an outlandish theme bash: 1001 Nights with elephants, camels, tents, men wearing turbans, belly dancers, and everything else packed onto the disco floor. Soon after the remarkable event, a widely distributed magazine at the time, Newsweek, put Studio 54 on their cover.

The parties D’Alessio threw were as outrageous and scandalous as the guests who turned up. One night Bi- anca Jagger (ex of Mick) rode in on a white horse; on another the designer Valentino got to act as the ringlead- er of real circus animals. Armani was feted with a drag-queen ballet. The bartenders were young, male, built, and shirtless. The busboys doubled as entertainers: dressed in tight little white shorts, bowties, and nothing else, they were given illicit drugs and a small paycheck and told to pick up glasses and party with the guests, who included fashion designers, artists, and unique people like Johannes von Thurn und Taxis, a flaming and wealthy European aristocrat whose wife was thirty years younger and so explosive that people called her Prin- cess TNT. Malcolm Forbes, the hard-nosed American businessman, was a regular too. Everyone was welcome, as long as they were interesting.

In talking about it now, Carmen D’Alessio gives credit to the others, but never lets anyone forget what Andy Warhol said about Studio 54’s more visible leaders, Ian Schrager and Steve Rubell: “Carmen brought, hand in hand, Ian and Steve to the Big Apple.”

CHAPTER 9 MANAGER’S ETHICS: DECIDING ON A CORPORATE CULTURE AND MAKING IT WORK 233

Q U E S T I O N S

1. The line outside Studio 54 was infamous. People stretched around the block and waited hours to get in. Some waited all night and never reached the door. One reason things went so slowly for many is that D’Alessio enjoyed swooping out of the club, running down the line, and hand picking people to jump ahead and go straight in.

< Andy Warhol said this about D’Alessio: “She has gone everywhere from Rome to Rio. Anywhere there is a party and until the party lasts, she’ll be there, because she has a list of the rich, the beautiful and the young.”[23] Can you make a good guess about the kind of people that D’Alessio chose for quick entry?

< Essentially, D’Alessio chose some clients for better service than others. Justify this management strategy ethically.

< Another entertainment company with lines is Herschend, the parent corporation of many Disneyland-like theme parks around the country. The lines there—waiting to get on the roller coaster, to buy popcorn, to go to the bathroom—are first come, first served. The values Herschend uses to define its culture (patience, kindness, honesty, humility, respectfulness, selflessness, forgiveness, commitment) fit well with the egalitarian treatment. If you were in charge at Studio 54, what kind of values could you array to help employees and others understand why the line outside the bar moved so unevenly?

2. Studio 54 was a big-time vice den. Upstairs in the shadowy balcony people regularly coupled. Drugs were as common as beer. (A large glittery moon with a face and arms hung from the ceiling. It was snorting cocaine.) Management knew about all this and encouraged it.

< With a focus on the facts that D’Alessio and company generally hired young, attractive, and muscular men, asked them to work with almost no clothes, and fed them drugs to brighten their attitudes, how would you characterize management’s culture with respect to employees? Were they valued as mercenaries, as something closer to members of a family, as something else? (Remember, guys lined up to apply for these coveted posts.)

< How would you describe the Studio 54 attitude toward its consumers? Were they valued as people to be fleeced of their money, as participants in a shared project? Something else? Why do you think that?

3. Though not a lot of clothing was worn by frontline employees, this doesn’t change the fact that there was a very strict dress code at Studio 54.

< In ethical terms, is there any difference between requiring guys to wear almost nothing while they hustle around the bar delivering drinks and, in a different business, requiring guys to wear neat, stiff uniforms while they hustle around a neighborhood delivering Domino’s pizzas? If there is a difference, what is it? If not, why not?

< Unlike Domino’s, Studio 54 had a semiofficial body requirement for employees: the guys needed to be beefy and fit. In thinking about the management decision to impose both dress codes and body requirements, how are these two demands similar and how are they different? Is one less ethically problematic than another? Why or why not?

< What are some ethical justifications an owner could cite for enforcing a dress code in general, regardless of whether it’s a near-nude barboy or a Domino’s driver? How would those arguments apply in the specific case of Studio 54?

4. Carmen D’Alessio was behind the scenes at Studio 54, throwing the parties, arranging people, setting the tone of the place. With respect to Daniel Goleman’s six basic leadership personas listed below, which ones do you suspect correspond with D’Alessio, and which don’t fit her so well? Why?

< Visionary

< Coach

< Affiliative

< Democratic

< Pacesetter

< Commander

5. What is transformational leadership? What is transactional leadership? Does D’Alessio share characteristics with one or both? How?

6. Part of the reason for naming a leadership style a leadership persona is to underline the idea that being a leader can be like donning a mask: you can be whatever you choose when you stand in front of others and direct. Besides being a leader at Studio 54, D’Alessio was also a massive partier. How is adopting a personality for leading an organization like adopting a style to exhibit when you go out with friends on the weekend?

< Is there anything ethically wrong with adopting a mask for your public self? Is so, what? If not, why not?

234 THE BUSINESS ETHICS WORKSHOP

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ENDNOTES

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“Can this Man Save Labor?” BusinessWeek, September 24, 2004, 84.

Robert Kuttner, “Labor and Management—Will They Ever Wise-Up?” BusinessWeek, May 9, 1994, 16.

Simon Head, “Inside the Leviathan,” New York Review of Books, December 16, 2004, 88.

Henkel North America, Vision and Values (Düsseldorf, Germany: Henkel AG & Co., 2008), http://businessethicsworkshop.com/Chapter_9/images/ HenkelNorthAmerica_ Vision_and_Values.pdf.

O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 181.

“UN Foundation Green Building,” YouTube video, 2:23, posted by “unfoundation,” February 14, 2008, accessed May 25, 2011, http://www.youtube.com/ watch?v=15_MdcSUlSY.

Randy Hartnell, “N.Y. Times Calls Wild Salmon a Gamble for Consumers,” VitalChoices 2, no. 25 (April 22, 2005), accessed May 25, 2011, http://www.imakenews.com/ vitalchoiceseafood/e_article000389904.cfm.

O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 181.

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Bobby T. Brown vs. F. L. Roberts & Co., Inc., accessed May 25, 2011, http://www.socialaw.com/slip.htm?cid=18640&sid=120.

See Daniel Goleman, Primal Leadership (Cambridge: Harvard University, 2002).

“On Leadership at Gettysburg: ‘Find Those Confederate Forces,’” Washington Post video, 4:40, http://www.washingtonpost.com/wp-dyn/content/video/2010/04/21/ VI2010042100960.html.

O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 134.

“No Doubts: Women Are Better Managers,” New York Times, July 25, 2009, accessed May 25, 2011, http://www.nytimes.com/2009/07/26/business/ 26corner.html?_r=1&8dpc.

O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics, 7th ed. (Boston: Houghton Mifflin, 2008), 134.

welcome2nyc, March 20, 2010 (9:09 p.m.), “Culture on the Trading Floor…Changed?,” WallStreetOasis.com, accessed May 25, 2011, http://www.wallstreetoasis.com/forums/culture-on-the-trading-floorchanged.

Steve Tobak, Undercover Boss: Escaping GM’s Abusive Corporate Culture,” The Corner Office (blog), BNET, March 30, 2010, accessed May 25, 2011, http://blogs.bnet.com/ ceo/?p=4254.

Steve Tobak, Undercover Boss: Escaping GM’s Abusive Corporate Culture,” The Corner Office (blog), BNET, March 30, 2010, accessed May 25, 2011, http://blogs.bnet.com/ ceo/?p=4254, brackets in the original.

Business Ethics Workshop, accessed May 25, 2011, http://businessethicsworkshop.com/Chapter_9/finer_bags.html.

Jada Yuan, “As the Disco Ball Turns,” New York, April 30, 2007, accessed May 25, 2011, http://nymag.com/news/features/31277.

Steve Lewis, “Good Night Mr. Lewis: Carmen D’Alessio’s Fabulous Life,” blackbook- mag.com, December 11, 2008, accessed May 25, 2011, http://www.blackbookmag.com/article/ good-night-mr-lewis-carmen-dalessios-fabulous-life-part-two/5463.

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236 THE BUSINESS ETHICS WORKSHOP