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Do Corporations Have an Ethical Obligation to Pay their 'Fair Share' of Taxes?

You say you have a U.S. corporation and want to reduce corporate income taxes? Agree to be acquired by an Irish company and re-incorporate in Ireland. You’ll only pay 12.5% corporate income taxes rather than the 35% rate in the U.S. But wait. There’s more. Ireland recently announced that it reduced the rate to 6.5% on business activity arising from research and development that takes place in Ireland to get the high value jobs in R&D located in the country.

Tax inversions have helped drive mergers-and-acquisitions activity to record highs as companies, particularly those in health care, have looked to foreign deal making for tax savings. Tax inversions are legal so long as they comply with U.S. Treasury rules. But, just because it’s legal does that make it ethical? Do U.S. corporations have an ethical obligation to pay their “fair share?” Do U.S. companies that take advantage of so-called tax inversions by moving their headquarters to a low-tax country violate the norms of corporate social responsibility? Ethically speaking we might ask: Just because a U.S. corporation has a right to engage in a tax inversion is it ethically right to do so?

Under recently revised U.S. Treasury Rules, so long as U.S. shareholders own less than 80 percent of the combined company, tax inversions are permissible. The U.S. company must also merge with the foreign company. Pfizer is the latest U.S. company to disclose it plans to merge with a foreign company. In this case it is Botox maker Allergan Plc in a deal worth $160 billion. The acquisition, which would shift Pfizer's headquarters to Ireland, would be the biggest-ever tax inversion.

Pfizer follows a growing list of U.S. companies taking advantage of tax inversions by incorporating overseas. It’s not the only way to lower taxes. A U.S. company operating overseas can avoid taxes by not repatriating profits back to the U.S. Just keep the profits overseas and they will be tax deferred. The problem is that means more jobs may go to foreigners rather than U.S. workers and economic development in the U.S. may lag as well. Now, even R&D may be stifled.

So what’s the answer to the problem of the U.S. government not getting its fair share of taxes? In this political cycle some suggest lowering the corporate tax rate to be more competitive. Others suggest a tax holiday whereby U.S. companies can repatriate profits tax free for a limited period of time. These are Republican solutions. The Democrats want to prohibit inversions entirely.

The morality of tax inversion policies is linked to the criteria used to make such determinations. Milton Friedman long ago contended that from a shareholder point of view the company should maximize profits to enhance shareholder wealth. This is more likely to occur when tax inversion policies are followed.

I believe the issue of social responsibility is a relevant moral consideration in examining tax inversion policies. Friedman’s point of view notwithstanding, just imagine if all corporations acted to shield corporate income and pay lower or no taxes to the U.S. government.

My suggestion is to institute a lower rate of 15% to be competitive with other industrialized countries, and keep it in place for two years. If this leads to repatriated profits, higher taxes paid to the government, and the in-sourcing of jobs, then the 15% rate should be made permanent. If, however, U.S. businesses continue to shift their profits overseas and continue to outsource jobs, it means one or more of three things: (1) they are motivated by lower wage rates outside the U.S.; (2) they may feel stifled by the excessive regulatory system in the U.S.; and (3) they may truly want to be closer to their expanding overseas markets.

Corporate America reacts to incentives to maximize profits that can lead to higher personal income through bonus and other incentive compensation, and rising stock prices. There is nothing wrong with it. It is a part of our system. However, we must begin to initiate policies to reduce the growing number of people in poverty, bring more into the middle class, and do what is necessary to reverse years of stagnant growth. In my view this is an ethical issue. Corporations have an ethical obligation and social responsibility to do what it takes to improve the economic circumstances of all members of its community. A society cannot prosper without an ever-expanding middle class and lowering of the poverty rate in this country.  

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on December 1, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

 

12/01/2015 in Business ethics, Ethical business practices, Ethical standards in business, Workplace ethics | Permalink | Comments (0)

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11/24/2015

An Exploration of the “Rightness’ of Today’s College Student Protests

The Role of University Administration in Student Dissent

Racial tensions at the University of Missouri that started back in October have sparked a series of demonstrations against discrimination and intolerance on college campuses throughout the United States.

Since the resignation of Mizzou’s president and chancellor November 9, protesters have organized at more than 100 colleges and universities nationwide. Social media sites have lighted up with voices of dissent, and what began as a grievance has evolved into a movement.

Inspired by the marches in Ferguson, Mo., and Black Lives Matter, students are taking to social media to question the institutions they once approached for answers. Calling for racial and social reforms on their campuses, they are borrowing tactics of the past — hunger strikes, sit-ins and lists of demands — and have found a collective voice to address their frustrations, hurt and rage.

About two weeks ago, the dean of students at Claremont McKenna College left the university after students protested her comments to a Latina student with the offer to work for those who "don't fit our CMC mold."

These comments by the dean of students demonstrate insensitivity and go beyond the normal protest triggers, which are unequal treatment of minority students on campus, marginalization of minorities. The comments reflect a basic lack of respect for who the student protesters are, where they have come from, how hard they have worked and how long it has taken them to get to where they are today. The CMC dean’s remarks are incredibly stupid. To say a group of students “don’t fit the CMC mold” is the same as saying they are not like us and/or don’t have the qualifications we have to be admitted to the prestigious CMC.

The sad part for me is I taught at CMC for six years back in the late 1990s and early 2000s. It is a remarkable campus with respect for the depth of academic thought and leadership. Perhaps what has happened at CMC is it has become an insular institution devoid of real life experiences. However, let me add that it may be an overreach to condemn an entire institution for the insensitive comments of one person. Unfortunately, that is exactly what has been going on in all too many colleges campuses recently.

There are other examples of the unrest on college campuses. About 300 students angry over what they regard as racial insensitivity on the Occidental University campus protested racial policies. Jonathan Veitch, the president of Occidental College, said he and other administrators were open to considering a list of 14 reforms, including the creation of a black studies major and more diversity training, that student protesters had drawn up. I am amazed that any college in the U.S., no less in California, which is a beacon for racial tolerance, still doesn’t have a black studies major at Occidental. In 2014-2015, 42% of non-international Occidental students reported that they were minorities or multiracial, according to school statistics.

Nationwide, complaints of racism and micro-aggression are feeding Facebook pages and websites at Harvard, Brown, Columbia and Willamette universities, as well as at Oberlin, Dartmouth and Swarthmore colleges. Peter Salovey, president of Yale University, announced a number of steps, including the appointment of a deputy dean of diversity, to work toward "a better, more diverse, and more inclusive Yale."

For decades, students have helped drive social change in America, if not the world. Campuses, said University of California President Janet Napolitano, have "historically been places where social issues in the U.S. are raised and where many voices are heard."

Over the decades, student protests have shifted attitudes in the country on civil rights and the Vietnam War, nuclear proliferation and apartheid, and some of today's actions are borrowing from tactics of the past. Although some of the strategies may seem familiar, it is the speed and the urgency of today's protests that are different.

"What is unique about these issues is how social media has changed the way protests take place on college campuses," said Tyrone Howard, associate dean of equity, diversity and inclusion at UCLA. "A protest goes viral in no time flat. With Instagram and Twitter, you're in an immediate news cycle. This was not how it was 20 or 30 years ago."

Although the targets of these protests are the blatant and subtle forms of racism and inequity that affect the students' lives, the message of the protests resonates with the recent incidents of intolerance and racial inequity on the streets of America.

So, what is the root cause of the unrest? Is it just immature students acting out? Is it a bunch of spoiled kids protesting things they feel entitled to receive and not getting it? At first glance many will say this is, indeed, the cause. It’s easy to dismiss student protests but it misses the underlying conditions in society that have motivated so many campus protests.

Latino and African American students are often under the belief if they leave their community and go to colleges, that it will be better. They believe it will be an upgrade over the challenges that they saw in underserved and understaffed schools. But if the colleges and universities are the same as those schools, then there is disappointment and frustration.

Dean Howard at UCLA has said, “when these students leave their community to go to a university, they often feel conflicted. So when injustice comes up, they are quick to respond because it is what they saw in their community. On some level, it is their chance to let their parents and peers know that they have not forgotten the struggle in the community."

To think racial insensitivity does not exist on college campuses today is to be blinded to the obvious. Many in our society still judge minorities on the basis of the judger’s values; their goals; what they are trying to achieve in life and why. We have to realize people are different. Students are looking for different things in their college education. Minorities want to be heard and understood.

There is nothing inherently wrong with students protesting perceived unequal treatment or a university leadership that is insensitive to their demands. We have free speech in America after all and what better place to live it out than a college campus? Demanding action be taken by the administration is not what is offensive. What is offensive is when students impinge on the rights of other students to get the kind of education they expect at their universities. So, student protesters have to be sensitive to these students’ needs just as they expect university administrators to be respectful of their needs.

In 1852 John Cardinal Henry Newman wrote his classic text, The Idea of a University. He eloquently stated the purpose in a way that should not be forgotten in the fog of today’s student protests. “If one must assign a practical end to a College education, I say it is to train good members of society. Its art is the art of social life, and its end is fitness for the world.”

In this context, we could say that universities are laboratories to try new things; to think new thoughts; to challenge the status quo; and to seek to change the world for the better. From an ethical perspective, it is to impart the tools to live a principled, significant and meaningful life and thereby to ultimately and collectively improve our society. Today’s students should internalize these ideals as they seek to be heard and understood.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on November 24, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

11/24/2015 in Business ethics, Education, Ethical business practices, Social media, Societal ethics, Workplace conflict | Permalink | Comments (0)

Technorati Tags: academic freedom, black studies, campus intolerance, discrimination in colleges, ethics sage, racial tension, social media, Steven Mintz, student protest

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11/17/2015

The Lost Art of Respect for Authority

The Challenges for Respect, Civility and Morality in Society

It used to be that we respected police, teachers, legislators and our parents. We respected people in authority positions because they had just that – authority to keep our streets safe, show us the way to a better life – a moral life; pass laws that improve our lot in society and give us the chance to better ourselves; and teach us right from wrong.

In today’s society in seems uncivil behavior is the rule rather than the exception. Some people make derisive comments towards police; teachers are shoved and even punched in the classroom; legislators barely register on the respect scale; and parents want to be friends to their kids rather than role models who teach respect and help their sons and daughters to become well-adjusted and contributing members of society.

Looking at other cultures, in Japan, respect is earned. Honor is owed. Respect is based on how a person performs. Honor is based on a person’s position. I go along with that because it emphasizes the moral dimension of honor. After all, if we honor another person we can say that we respect that person as well.

In our society we should honor police, teachers, leaders, and parents because of their positions. Whether or not we respect them is based on their attitudes and actions – but whether or not we respect them, we must honor them.

I don’t typically quote the Bible in my blogs but in this case it is instructive. The Bible tells us to honor our father and mother – not because we think they deserve respect or honor – but because of their position. The Bible tells us to treat others the way we want to be treated, and treating them with respect should be a given.

Turning now to morality, moral value comes from our obligations towards others and the rightness of our acts. Moral values or things that are morally good are reflected in our traits of character, dispositions, emotions, motives, and intentions -- in short, persons, groups of persons, and elements of personality. The distinction between judgments of moral and nonmoral value is a matter of the difference in the grounds on or reasons for which they are made.

Love of fellow man is a morally good disposition or emotion; it is normally also a source of happiness. Consider also the expressions "a good life" and "the good life." We sometimes say of a man that he "had a good life"; we also sometimes say that he "led a good life." In both cases we are saying that his life was good; but in the second case we are saying that it was morally good, or useful, or virtuous, while in the first we are saying, in effect, that it was happy or satisfying, that is, that it was good but in a nonmoral sense (i.e. accumulates wealth, power or prestige in life). In the latter case it is because of respect for the rights of others.

So, what does it all mean? That’s like saying what is the meaning of life. Here are some of my thoughts. We should give respect to others and honor them because it is the right thing to do. We want to be respected and honored so we should treat others this way. Unfortunately, all too often in society respect and honor fall by the waist side.

Today we watch as political candidates make disparaging comments about their competitors. We hear offensive epithets hurled at police. We watch and witness teachers being beaten up in the classroom. And then we read offensive comments sometimes in reaction to such behaviors on Twitter. Some people use that anonymous way of communicating to vent their own frustrations.

The ever-increasing violence in society is a by-product of the breakdown of respect, civility, and moral behavior in society. We can blame social media but we also need to look at the way we, as a society, are serving as that proverbial village to raise our children. We need to look deep inside ourselves and ask whether we are doing all that we can to better our society – make it more civil and promote respect for others.

Respect and position are key ingredients in promoting a more ethical society and in the workplace as I have blogged about many times before. I think one of the greatest leadership challenges for today's leaders is earning respect. In generations past, at least a certain level of respect was shown for positional authority. If you were an elder or a superior in some way, showing respect was a cultural norm. In today's culture, respect has to be earned. It's rarely a given based on your position in the hierarchy. In fact, our culture fights hierarchy at every turn. I understand why it is that way but also believe we should begin with a certain level of respect for those in authority positions and then see where we go from there based on their words and actions.

In conclusion, let me leave you with these thoughts:

Whether or not I respect a person says something about their life, values and character. Whether or not I honor a person says something about my life, values and character.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on November 17, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com

 

 

11/17/2015 in Business ethics, Education, Ethical business practices, Social media, Societal ethics, Workplace ethics | Permalink | Comments (0)

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11/10/2015

Big Pharma: Where is the corporate social responsibility in High Drug Prices?

Are Big Pharma Drug Prices Out of Control?

Imagine you just went to your local pharmacy and were told that the cost of a life-saving drug was $22,500 for 30 tablets to treat AIDS or another infectious disease. Well, if you needed the drug Daraprim that is what you would have to pay. Turing Pharmaceuticals purchased the right to Darprim this past August and CEO Martin Shkreli decided a price increase of 5500% was needed. You heard me right – from $13.50 per dose to $750.00 per pill. But, hope is on the way because San Diego-based Imprimis Pharmaceuticals announced in October that it will be providing an alternative to Darprim that costs a fraction of the pill’s pre-Shkreli price -- $99 for a 100-pill supply or about $1 per pill. In the meantime, how many patients that take Daraprim might get sicker or die because they can’t afford the potential life-saving medication?

Unjustified increases in drug prices include the drug naloxone that reverses overdoses of opioids. In September, Amphaster, the manufacturer of the drug, more than doubled its price. This one is hard to understand because the drug has been on the market since 2010. Why double the price now? Is the manufacturer seeking to cash in on the drug before its 20-year patent protection runs out and generic drugs come out?

A troubling trend comes from a report by Elsevier, a drug product and pricing information provider, that out of a research sample of 4,421 drug groups, 222 increased in price by 100% between November 2013 and November 2014. One such product is tetracycline, which is commonly prescribed for bacterial infections. During the same period it’s per tablet price increased from $0.0345 to $2.3632, a 67-fold increase in one year. Is the possibility of price controls to blame because drug companies seek to profit before drug prices fall under price controls?

We can blame, at least in part, drug price increases on overpaid CEOs of big-Pharma who look to satisfy their own self-interest first and that of their companies, and relegate corporate social responsibility and public health issues to the back of the bus.

To be fair, there is some rationale for the positions of big Pharma CEOs that high drug prices are needed because the cost of research and development of new, more advanced medications is ever-increasing. With an aging population, the need to fight off diseases that can be life-threatening is acute. Do we really want to cut off the supply of essential medications that might cure cancer?

So, what can be done about the extraordinarily high prices of medications? Bernie Sanders wants to make it legal for all Americans to buy drugs from Canada where they are significantly cheaper. This sounds like a good idea to me as it relies on free market competition to reign in out of control drug prices. Hillary Clinton proposes that there should be a $250-a-month cap on out-of-pocket drug costs for patients with chronic diseases such as cancer. This idea sounds good but it introduces price controls in a roundabout way, which goes against our free market system and: Do we really want the government to become involved in another activity given it consistently shows it can’t manage existing ones? Will price controls open the door to more fraud – in Medicare or elsewhere?

Price controls do exist in Europe and Australia because those countries believe – unlike phones or cars – the unique aspect of drug prices is if consumers can’t afford the product, they could have worse odds of living or face certain death. [I don’t think anyone has died from not being able to buy an iPhone -- at least not yet].

The European argument identifies the humane element and seems to me to be an ethical position to take. But is it fair to drug companies to control prices of a product they developed and don’t they have a right to set whatever price the market will bear?  

Economic guru Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, believes creative solutions are needed and suggests a new way to reward originality in drug research and development by offering a generous cash prize for inventing new medicines, and growing the National Institutes of Health to subsidize the expensive stages of early research for pharmaceutical companies. I’m skeptical of Bernstein’s plan because it, too, provides a greater role for government in prescription drug policy.

Recently a group of 118 oncologists came out in an editorial in the Mayo Clinic medical journal to support a grassroots patient effort to push for fairer prices from drug companies. According to the editorial, many cancer patients are bankrupted by the high cost of care even for insured patients for treatment that costs $120,000 a year. The proposal is to get it down to $30,000 in out-of-pocket expenses – more than half the average U.S. household income. According to the editorial, the drugs are so high that as many as 20% of oncology patients don’t take their medication as prescribed. I believe it may be better to mandate catastrophic insurance coverage. Under Obamacare, if you are under 30 or obtained a “hardship exemption” you qualify for a high deductible, low premium, catastrophic plan. What about those over 30 who are more in need?

Greed is good. Greed is right. Greed works. These are the words spoken by Gordon Gekko in Wall Street. We could say this is the mantra of greedy CEOs of pharmaceutical companies. In a 2014 survey by Fierce Pharma, a news outlet for the industry, the average pay of the 10 top CEOs of big Pharma was about $30 million. None of the companies were in the Fortune top 100. Celgene was number 369, the highest in the industry. The CEO of Celgene earned $36.61 million. This seems out of line given the relatively small size of most pharmaceutical manufacturing companies.

There seems to be no easy answer to the growing problem of high drug prices. We can’t expect CEOs to control their own compensation. It rarely occurs that a CEO gains a conscience and looks to the public good rather than his or her own desires. Some intervention is required in the best interests of consumers. As with most things the devil is in the details.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on November 10, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

11/10/2015 in Business ethics, Ethical standards in business, Fraud, Government ethics, Societal ethics, Workplace ethics | Permalink | Comments (0)

Technorati Tags: big ethical business practices, business ethics, corporate social responsibility, Darprim, drug price controls, drug prices, ethics sage, Pharma, Steven Mintz

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11/03/2015

How should we deal with disruptive students in schools?

Parents: Get with it. Teachers: Use it as a teachable moment. Students: Wise up before it is too late

Last Friday about 100 students at Spring Valley High School in South Carolina walked out of class briefly to show support for Ben Fields, a school resource officer, after he was fired because of his actions caught on video showing him throwing an uncooperative black female student across the floor.

The students walked out of classes and gathered in the atrium to express their views on the firing of Fields. Some in the crowd — which included both black and white students — wore T-shirts reading "Free Fields" or "#BringBackFields."

Spring Valley High Principal Jeff Temoney sent a letter to parents afterward saying that the students were back in class within 10 minutes and that class continued in a "safe and productive manner." "I addressed the students to let them know that we understood their need to make their voices heard," Temoney wrote. "Then I reminded them that Spring Valley High is all about the business of teaching and learning, so it's time to go back to class."

It seems like the Principal handled the situation well but the real question is was Ben Fields’ actions justified? The footage of the original incident sparked a national debate on the officer's actions. In the original confrontation two Monday’s ago, Fields can be heard telling the student to get up. A few moments later, he grabbed the student as she was in her seat, which caused the girl and the chair to flip over onto the floor. Fields was then seen dragging the girl for several feet and restraining her on the ground.

The conventional wisdom seems to be that Fields had the right to put his hands on the student, but that when he threw the girl across the room that is when he violated resource officer training because they are taught to deescalate such situations.

The bigger question is what can a school do about a disruptive student? California is moving in the wrong direction. [No surprise there as the trend has been to make excuses for uncivil behavior for the sake of political correctness – thank you Jerry Brown].

California has become the first state in the nation to prohibit schools from suspending or expelling students who engage in “willful defiance” behavior. One reason for the passage of Assembly Bill 420, according to the sponsors, is that it has been disproportionately used statewide to discipline African-American students and, in some districts, Latino students. In 2012-13, African-Americans made up about 6 percent of total enrollment, but 19 percent of suspensions for defiance. Other minorities also may be more susceptible to suspension or expulsion for behavior such as talking back to teachers, fooling around in class, talking to other students at inappropriate times, and other disruptive behaviors that make it difficult to provide a learning environment in K-12.

There is no doubt that students must be treated equal in the application of the law and any deviation from this standard is unacceptable. The issue for me is the new law provides no alternatives to suspension or expulsion for willful defiance. While I agree in some cases the punishment may exceed the crime, school kids still have to learn ethical values such as respect, responsibility for one’s actions, and a work ethic. Disruptive behaviors fly in the face of developing these values. Furthermore, it makes the job of a teacher more difficult at a time when attention span is a big issue, especially for kids at younger ages, and the lack of clear cut standards for willful defiance behavior means the implementation of the law can vary quite a bit from one school district to another. Moreover, students are supposed to be learning lifetime skills and willful defiance is not one of them.

I believe the best way to treat willful defiance is by first calling a meeting with the parents to discuss the improper behaviors. This should be used as a teachable moment both for the student and parents, the latter of whom who might take it for granted that their kid is a model for good behavior. The parents may very well need a wake-up call as much as the kid does. After all, discipline begins in the home and should not be left solely to the school. Disruptive behavior should also be discussed in class in a general way and linked to ethical behavior.

I recommend that the first offense should lead to a warning that goes on the kids’ record. Thereafter, the school should periodically communicate with the parents about the “progress” of their kid. The second offense should lead to suspension. A continued pattern of disruptive behavior, even after appropriate steps have been taken to change those behaviors, should lead to expulsion.

In commenting about the need for the new law, California Assemblyman Roger Dickinson, D-Sacramento, who wrote the legislation, claims one of the reasons for the disproportionate effects of willful defiance on these students is that teachers and administrators lack cultural competence. “We see disproportionate levels of discipline for LGBT-identifying kids, disabled kids, as well as African American kids and Latino kids,” he said. “I think it has to do with expectations that teachers and administrators have about behavioral norms. In many instances, students may have different expectations of behavioral norms.” Does that mean teachers should adopt those expectations rather than what they think, as educators, is right versus wrong?

Obviously, any discriminatory application of the willful defiance provision is wrong. Ethics requires fair treatment for all groups based on the same standard of behavior and equal application of the law. However, I do take exception to the remark that teachers and administrators have different expectations of behavioral norms than students and, therefore, the willful defiance provision is somehow flawed. This is ethical relativism at its worst. We [should] have a set of values based on what is right and what is wrong behavior. If we can’t even agree on those values, then we’ve already lost the battle and we wind up with a society where anyone can do whatever they want as long as it conforms to one’s personal expectations.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on November 5, 2015. Professor Mintz teaches in the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

11/03/2015 in Business ethics, Education, Ethical business practices, Social media, Societal ethics, Workplace conflict, Workplace ethics | Permalink | Comments (0)

Technorati Tags: Ben Fields, disruptive student, ethics sage, parental responsibility, school ethics, Spring Valley High School, Steven Mintz, willful defiance

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10/27/2015

What is the Difference between Morals and Ethics?

Morality v Ethics in Society

Many people bristle at the word “morality” but are quite comfortable using the term “ethical”, and insist there’s some crucial difference between the two. For instance, some people say ethics are about external, socially imposed norms, while morality is about individual conscience. Others say ethics is concrete and practical while morality is more abstract, or is somehow linked to religion. Among philosophers there’s no clear agreed distinction, and most philosophers use the two terms more or less interchangeably.

I like to think about it this way: Morals is about how we deal with people we know while ethics is about how we deal with people we do not know. The Golden Rule is instructive and applies to both: We should treat others the way we want to be treated. For those we know, we expect to be treated with respect and with empathy. For those we don’t know we expect to be treated fairly, a more subjective standard of behavior.

Now, there is no question that morality and ethics cross paths and intersect at integrity. That is, if we are moral and ethical people we will act based on principled behavior following virtues such as honesty, respect, responsibility, and loyalty to the truth as we see it; not so much to a person who might ask us to do something we sense is wrong but to an objective sense of what is right and what is wrong in a particular circumstance.

Moral questions tend to deal with issues such as abortion, capital punishment, and the like that pertain to how we view others’ behavior. Our morals are formed by core values such as how we see the right to life or the right of a woman to choose what she does with her body.

Ethical questions tend to deal with deciding correct conduct. For example, let’s assume your neighbor is growing organic vegetables and has more land than the eye can see. You think about “harvesting” some of these vegetables for your own use. Now, if you decide to stay off your neighbor’s land, you have acted ethically. You considered the interests of your neighbor and acted based on the universal ethical principle known as the Categorical Imperative. It holds that we should act in a way that we would want others to act if faced with similar conditions. In other words, I wouldn’t want my neighbor to use my property and what I grow for her own selfish needs so I should not do that to my neighbor. Thus, ethical action takes on a universal appeal; however we can imagine all kinds of "moral" viewpoints on the right to life versus a woman’s right to choose.

I like to think of ethics as the rules for deciding correct conduct. We can turn to philosophers for guidance as discussed above or the rules may be embodied in codes of ethics such as those of many professions. The following items are characteristics of ethics:

· Ethics involves learning what is right and wrong, and then doing the right thing.

· Most ethical decisions have extended consequences and ethics requires weighing the consequences of alternative course of action.

· Most ethical decisions are not black or white but rely on reasoning through conflict situations using some standard of guidance.

· Most ethical decisions have personal implications.

· Ethical decisions should respect the rights of those who are affected by our actions.

Some people believe that most of us know what the right thing to do is in most of the situations we face in life. That may be true -- for most of us, but not all --. However, the hard part is doing it. How do we ward off the pressure that might be imposed by a boss or friend in trying to make the ethical choice? This is where a strong moral fiber comes into play.

A strong moral fiber is the capacity to do what is right, no matter what the circumstance. It all gets back to integrity – having the courage of our convictions. The problem is ethics is easier said than done.

In today's society it seems that people do not get that there is a difference between what we have the right to do and what the right thing to do is. We have a right to post offensive comments about another person or our employer on social media. But, is it the right thing to do? How will we know? The answer is each of us has a moral compass. Unfortunately, for all too many in society today their moral compass is pointing due south rather than up to the heavens in a northerly direction.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on October 27, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

 

10/27/2015 in Business ethics, Education, Ethical standards in business, Social media, Societal ethics, Workplace conflict, Workplace ethics | Permalink | Comments (0)

Technorati Tags: ethical standards in business, ethics, ethics sage, morals, rights, social media, societal ethics, Steven Mintz

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10/20/2015

Workplace Values and Expectations of the Millennial Generation

Hiring and keeping Millennials Happy in the 21st Century

If you want to attract Millennial interest in hiring and retention on the job, ask how you can accommodate their desire to apply their social networking skills to their jobs. Beyond that, Millennials have specific needs and wants that should be addressed by future employers.

According to a study by the CAA Intelligence Group 86 million millennials will be in the workplace by 2020—representing a full 40% of the total working population. Thus, it is in the best interests of prospective employers to understand what makes Millennials tick. What motivates them to choose to work for one organization over another? What keeps them engaged and a productive worker? What turns them off?

The Intelligence Group studies of millennials have found that:

·         64% of them say it’s a priority for them to make the world a better place.

·         72% would like to be their own boss. But if they do have to work for a boss, 79% of them would want that boss to serve more as a coach or mentor.

·         88% prefer a collaborative work-culture rather than a competitive one.

·         74% want flexible work schedules.

·         And 88% want “work-life integration,” which isn’t the same as work-life balance, since work and life now blend together inextricably.

The survey concludes that millennials are looking strategically at opportunities to invest in a place where they can make a difference, preferably a place that itself makes a difference.

From my experience Millennials look for different things than did older generations of workers. They are not bound by a 9-5 working day preferring instead to have time flexibility. The key to keeping them interested and committed to work is to understand they’ll get the work done but don’t want to compartmentalize their time to do it.

Millennials’ use of technology clearly sets them apart. One of the defining characteristics

of the millennial generation is their affinity with the digital world. They have grown up

with broadband, smartphones, laptops and social media being the norm and expect instant

access to information. This is the first generation to enter the workplace with a better grasp

of a key business tool than more senior workers.

Millennials view the workplace through the same lens of new technology as any other aspect of their lives: instant, open and limitless. The era they have grown up in has shown them that nothing is a guarantee. Instability and rapid change are the norm. To millennials, time no longer equals money. It is a limited resource to be spent wisely and actively managed.

Millennials don’t just want to spend their time earning a paycheck; they want to invest time acquiring the skills and knowledge they need to grow both personally and professionally. They know one particular job may be fleeting and they’ll likely move on a few times during their professional lives. They seek out an employer who can provide the skills necessary to get ahead and climb the ladder of corporate success.  

There have been many criticisms of millennials by older workers including baby-boomers. Some say they are more interested in their own needs than those of an employer. Others claim they lack an adequate work ethic. Still others feel the commitment to the organization is fleeting as they expect to move on after a few years. These attributes may be different than ever before, but that doesn’t mean their bad or wrong. It means employers have to learn to effectively reach out to millennials; provide a stimulating work environment; allow for flexibility in work hours; provide consistent feedback so they know just how well they are doing; and be sensitive to their need to access social media during the day – within prescribed limitations.

Of course millennials have to understand what their employers need and want through the employers’ lens. A committed employee who is trustworthy in today’s world is a bonus to employers. My recommendation is for the Millennial and employer to have a frank discussion about needs, wants, expectation, evaluations, and social responsibility issues.

Finally, employers should bear in mind that this generation makes the environment and sustainability a critical component of their lifestyle choices. Employers need to pay attention to what they do along these lines and expectations for their employers. Developing a sustainability program at work attracts Millennials and keeps them involved. It’s good for society and good for the workplace.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on October 20, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

10/20/2015 in Business ethics, Ethical business practices, Ethical standards in business, Social media, Societal ethics, Workplace ethics | Permalink | Comments (0)

Technorati Tags: business ethics, CSR, ethics sage, ethics sage, Millennials, social media, social networkers, Steven Mintz, workplace ethics, workplace values

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10/06/2015

What is the link between Ethical Leadership and Business Ethics?

Ethical Leaders lead by Example

According to a Gallup Poll taken in 2013, only 21 percent of people characterized business executives as having “high” ethical standards—a little above lawyers (19 percent), but below bankers (28 percent) and journalists (28 percent). Whether that’s deserved or not, it’s nevertheless true that executives set the ethical tone at their companies. But employees have the power to improve it.

Employees engage in unethical behavior from time to time: an employee takes home company supplies; a manager submits personal expenses for reimbursement by the company; a member of top management pressures accountants to manipulate the financial results.  These are just a few of the violations of virtually all company codes of ethics. The question is why does it happen and can anything be done to prevent it?

Ethical behavior must be modeled by the leader of an organization. For me the issue is not so much a lack of business ethics but it is a lack of ethical leadership by management. Underlying all leadership characteristics is the need for a strong sense of ethics – right and wrong – to help those in the organization that look for moral guidance when difficult issues arise or workplace conflicts occur.

Leadership and management go hand in hand. They are not the same thing. But they are necessarily linked, and complementary. Any effort to separate the two is likely to cause more problems than it solves.

Still, much of organizational development writings have been spent delineating the differences. The manager’s job is to plan, organize and coordinate. The leader’s job is to inspire and motivate. In his 1989 book “On Becoming a Leader,” Warren Bennis composed a list of the differences:

– The manager administers; the leader innovates.

– The manager focuses on systems and structure; the leader focuses on people.

– The manager relies on control; the leader inspires trust.

– The manager has a short-range view; the leader has a long-range perspective.

– The manager asks how and when; the leader asks what and why.

– The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.

– The manager is the classic good soldier; the leader is his or her own person.

– The manager does things right; the leader does the right thing.

In the new economy, where value comes increasingly from the knowledge of people, and where workers are no longer undifferentiated parts of an industrial machine, management and leadership are not easily separated. People look to their managers, not just to assign them a task, but to define for them a purpose. And managers must organize workers, not just to maximize efficiency, but to nurture skills, develop talent and inspire results.

The late management guru Peter Drucker was one of the first to recognize this truth, as he was to recognize so many other management truths. He identified the emergence of the “knowledge worker,” and the profound differences that would cause in the way business was organized.

With the rise of the knowledge worker, “one does not ‘manage’ people,” Drucker wrote. “The task is to lead people. And the goal is to make productive the specific strengths and knowledge of every individual.”

For businesses to become more ethical and inspire a new generation of leaders, the manager must share a vision of what it means to be successful in business. In the end it is not the bottom line profit, which is fleeting at best. It is the way that managers interact with people; how they treat their employees; how they deal with customers and suppliers; and whether they respect the accounting process and make decisions based on accurate and complete financial statements, not manipulated statements for short-term gain and to enhance one’s self-interests.

Managers and leaders are committed to ethical relationships and ethical decision making, and such decisions must be ingrained in the DNA of the organization.

It has been said that character is revealed over time and under pressure. Nothing could be more true than to observe how a crisis is handled by the management in an organization and whether underlying core ethical values are stressed (i.e., honesty, integrity, respect and responsibility), and not unethical values (i.e., profits, individual wealth, power and influence).

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on October 6, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.

10/06/2015 in Business ethics, Ethical business practices, Ethical standards in business, Workplace conflict, Workplace ethics | Permalink | Comments (0)

Technorati Tags: business ethics, ethical business practices, ethical leadership, ethical tone at top, ethics sage, Steven Mintz, workplace ethics

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09/30/2015

Ethics Sage one of 30 Best CSR Blogs

30 Exceptional CSR Blogs

Published by Market Inspector

30. September 2015

Ethics Sage is published by Dr. Steven M. Mintz, who holds a PhD and is a professor of accounting specializing in ethics. He likes to share his valuable knowledge by giving presentations to professional and academic groups that would like to create a more ethical organizational environment, as well as providing tips to improve ethics in financial reporting. Dr. Mintz provides readers with interesting thoughts about accounting, business ethics, fraud and workplace ethics issues. If you are interested in CSR don’t hesitate to visit this blog that provides captivating weekly posts. 

http://www.market-inspector.co.uk/blog/2015/09/30-exceptional-csr-blogs

09/30/2015 in Accounting ethical standards, Business ethics, Education, Press, Social media, Societal ethics, Workplace ethics | Permalink | Comments (0)

Technorati Tags: accounting ethics, CSR blogs, ethics education, ethics sage, Steven Mintz

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09/28/2015

VW's Irresponsible Behavior has Consequences

VW joins GM and Toyota in allowing Deficient Cars to be Sold

By now you know that Volkswagen has apologized for selling hundreds of thousands of diesel cars in the U.S. with software specifically designed to evade government pollution tests. The company disclosed that the irregularities on diesel-emission readings extend to some 11 million vehicles globally. The company has admitted that it rigged diesel vehicles using a "defeat device" to pass lab tests, even though they emitted as much as 40 times the legal limit of pollutants on the road.

At this early stage, putting a precise price tag on the ultimate cost of pollution penalties, criminal fines, private settlements, and the like is virtually impossible. I’ve heard an $18 billion liability figure reflects the maximum per-car clean-air penalty the Environmental Protection Agency could, in theory, assess. Some 482,000 four-cylinder VW and Audi cars, sold in the U.S. since 2008, multiplied by $37,500 for each non-compliant vehicle. Volkswagen has set aside €6.5 billion ($7.3 billion) to cover the scandal. That’s a huge amount. However, it’s not enough, in my view, because this is a case where intent to deceive is easy to establish making it a slam dunk for fraud. In fact, early reports indicate that the German government may have known that VW was rigging its emissions tests.

Satisfying the EPA and Justice Department is not the end of the liability story for VW. State attorneys general are going to want in on these settlements using state environmental laws and pollution emission regulations. Then there are private plaintiff attorneys who will file lawsuits seeking compensatory and punitive damages for hundreds of thousands of car owners whose vehicles are worth thousands of dollars less today than they were last week. Yet another category of suits will seek compensation for shareholders who have seen the value of their VW stock shrink by more than a third since the scandal broke last week.

The company is not disputing any of the charges. In fact, Chief Executive Officer Martin Winterkorn said that his company is “deeply sorry” for the emissions-cheating scandal and will do “everything necessary in order to reverse the damage this has caused.” Michael Horn, head of the brand in the U.S., elaborated: “Our company was dishonest with the EPA, and the California Air Resources Board, and with all of you. And in my German words: We have totally screwed up.”

Well, it didn’t take Winterkorn long to bail out after the admission. He resigned as CEO last Wednesday, taking responsibility for an emissions cheating scandal that has gravely damaged the carmaker’s reputation. “As C.E.O., I accept responsibility for the irregularities that have been found in diesel engines,” Mr. Winterkorn, said. He then turned around and undid all the good by apologizing when he qualified it by saying that he had personally committed no misconduct. “I am not aware of any wrongdoing on my part,” he said.

It may be too strong a word to call Winterkorn a “dummkopf.” He needs to realize that even if he knew nothing about the missions scam, he should have known and that puts him into the “bonehead” category. Not knowing about fraud that occurs under one’s nose and during one’s watch is just as bad (all right, not quite as bad), as knowing and doing nothing about. Not knowing the truth when one should know it is not a defense for irresponsibility.

The worst scandal in VW's 78-year history showed no sign of abating as Germany’s transport minister said last Thursday it had manipulated tests in Europe as well as the United States. To her credit, German Chancellor Angela Merkel showed courage when she came out and said that VW should act quickly to restore confidence in a company held up for generations as a paragon of German engineering prowess.

What is it with the automobile industry? How many times are we going to stand idly by while another car company issues another disclosure and, eventually, mea culpa, about ignoring defects or gaming the system as did Volkswagen?  Just a few days before VW’s admission, General Motors agreed to pay $900 million to resolve a federal criminal investigation of ignition-switch flaws linked to at least 124 crash deaths and the recall of 2.59 million cars. So far, no individuals have been criminally charged in the GM case, but prosecutors have said the probe is continuing. In an earlier case concerning cars that allegedly accelerated spontaneously, Toyota reached a $1.2 billion settlement with the Justice Department, the largest-ever U.S. criminal penalty for a car company. I could go back to the 1960s and rehash the Ford Pinto debacle when crashing testing sat low speeds determined that the gas tanks regularly ruptured and the cars could be engulfed in flames causing accidents or deaths.

Trust is the basis for good business. If the driving public cannot trust that their cars will operate safely under all conditions, then the guilty company’s should be punished. Irresponsible behavior is unacceptable, especially in an industry where people’s health and welfare – and very life – is at stake. VW should be ashamed of itself. It has forfeited the right to be considered an elite car company. Let’s hope consumers think twice before being any VWs in the future if for no reason other than to teach the company a lesson that actions have consequences.

Blog posted by Dr. Steven Mintz, aka Ethics Sage, on September 28, 2015. Professor Mintz is on the faculty of the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at: www.workplaceethicsadvice.com.