Fluent Essays

1.Review the text material for best practices of self-regulated ethics programs. Summarize the material of corporate self-regulation ethics programs. Explain the major challenges and issues to enforce these programs as well as the business ethics training portion, such as codes of conduct, peer review, and the readiness checklists. 2.Analyze three features and benefits of internal self-regulation business ethics. Do you agree with the challenges of and issues of self-regulation? Why or why not? Use citations and references in APA style to support your post. 348 O P E N I N G CA S E Two Leaders’ Ethical Styles Warren Buffet, Berkshire Hathaway Found er and chief executive offi cer (CEO) of Berkshire Hathaway, War- ren Buffett has taken unpre ce dented steps in recent years to ensure that his messages about investing, ethics, and philanthropy reach an audience that will survive him. He didn’t invent the light bulb, but he’s had lots of bright ideas. He didn’t devise the mass- production assem- bly line, but his companies have sold masses of goods. And Warren Buffett didn’t originate the concept of money, but he has more of it than most— he has been listed as the second most wealthy business person Ethical Insight 6.3 Chapter Summary Questions Exercises Real- Time Ethical Dilemmas Cases 17. Kaiser Permanente: A Crisis of Communication, Values, and Systems Failure 18. Social Networking and Social Responsibility Notes 6.1 Leadership and Stakeholder Management Ethical Insight 6.1 Ethical Insight 6.2 6.2 Or gan i za tion al Culture, Compliance, and Stakeholder Management 6.3 Leading and Managing Strategy and Structure 6.4 Leading Internal Stakeholder Values in the Or ga ni za tion 6.5 Corporate Self- Regulation and Ethics Programs: Challenges and Issues 6 T H E C O R P O R AT I O N A N D I N T E R N A L S TA K E H O L D E R S Values- Based Moral Leadership, Culture, Strategy, and Self- Regulation Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 6 The Corporation and Internal Stakeholders 349 by Forbes for several years. So what will be the Omaha investor’s leg- acy? Or, rather, his legacies? Observers say the 83-year-old’s ideas and philosophy of business and life will last far beyond his own. “Some- body from this group will learn something that will affect their lives,” Buffett told a group of graduate students during a 2005 visit to Omaha. “Buffett’s emphasis on working with ethical people is already infl u- encing business leaders and business schools, a change that could last far into the future,” said Bruce Avolio, director of the University of Nebraska- Lincoln’s Leadership Institute. “He buys the culture when he invests in an or ga ni za tion,” Avolio said, “valuing a business’s human con- dition as much as its fi nancial condition. That’s shifting people’s thinking, and it has a huge impact. It’s a model that’s replicable— treating people fairly. Integrity underlies not only Warren Buffett’s investments but also his philosophy of life.” Keith Darcy, head of the 1,400- member Ethics and Compliance Offi cers Association in Waltham, Massachusetts, said Buf- fett has played a hand in “a fl ight to integrity” by investors, executives, employees, suppliers, and customers, who want to be involved with com- panies that do business correctly. “It’s essential to him to be working with people he trusts,” Darcy said. “Without that level of trust, it’s not worth doing business. Certainly he has been an exemplar for understanding that when you make investments, character and reputation are every- thing.” In meetings with students, Darcy said, Buffett “speaks from his heart. He certainly is a mythological fi gure, except he’s not a myth, he’s real— a man of enormous success who always has believed in investing in companies with inherent value, but in par tic u lar the people in those businesses.” Darcy believes Buffett will be a role model far into the future. Buffett himself has stated: “I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, to be read by their spouses, children, and friends. . . . If they follow this test, they need not fear my other mes- sage to them: Lose money for the fi rm, and I will be understanding; lose a shred of reputation for the fi rm, and I will be ruthless.”1 Ratan Tata, Former Chairman of the Indian Corporation Tata Group Ratan Tata retired on his 75th birthday after leading the Indian corpo- rate conglomerate, the Tata Group. He assumed leadership from his uncle in 1991. The so- called House of Tata owns over 100 companies in 80 countries, including the Taj Group of luxury hotels and the exclu- sive Tata Nano car. The group’s holdings exceed those of Wal- mart or ExxonMobil. The Tata Group was the fi rst Indian company to obtain $100 billion in revenues, half of which is from abroad. Ratan Tata helped acquire signifi cant Eu ro pe an enterprises, including Jaguar Land Rover and Corus, the Anglo- Dutch steelmaker. Under his leadership, this group is now “perceived to represent Indian capitalism at its best, Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 350 Business Ethics enjoying the goodwill of millions of customers, the loyalty of more than 400,000 employees and the investments of 3.8 million shareholders, while also reinvesting a substantial part of its profi ts into philanthropic work overseen by a set of trusts.”2 His ethical beliefs are embodied in the company’s policies, as stated in the company’s Article and Rules for Sustaining CSR, Clause No. 10: A Tata Company shall be committed to be a good corporate citizen not only in compliance with all relevant laws and regulations but also by actively assisting in the improvement of the quality of life of the people in the communities in which it operates with the objective of making them self- reliant. Such social responsibility would comprise, to initiate and support community initiatives in the fi eld of community health and family welfare, water management, vocational training, edu- cation and literacy and encourage application of modern scientifi c and managerial techniques and expertise. This will be reviewed periodi- cally in consonance with national and regional priorities. The com- pany would also not treat these activities as optional ones but would strive to incorporate them as integral part of its business plan. The company would also encourage volunteering amongst its employees and help them to work in the communities. Tata companies are en- couraged to develop social accounting systems and to carry out social audit of their operations.3 6.1 Leadership and Stakeholder Management Leadership is the ability to infl uence followers to achieve common goals through shared purposes.4 Leaders, with the help of followers, are responsible for enacting an or ga ni za tion’s vision, mission, and strategies, and for achiev- ing goals in socially responsible ways.5 Leaders also help defi ne the culture and model the values of organizations that are essential for setting and mod- eling the legal and ethical tone and boundaries. Warren Buff ett, found er and CEO of Berkshire Hathaway and Rajan Tata, former chairman of the Tata Group, are two exemplary leaders among many others, who embody the ethi- cal leadership values, characteristics, and actions this chapter addresses. The CEO or president, who sometimes is also the chair of the board of di- rectors, is the highest- ranking leader in a company. However, in both for- and not- for- profi t organizations, the CEO reports to and is advised by the board of directors, which also serves leadership and governance roles. Leadership is not only limited to a few individuals or teams at the top of organizations. Indi- viduals throughout an or ga ni za tion exert leadership responsibilities and infl u- ence in their roles and relationships to direct and guide their organizations. Leadership also requires active involvement with and alignment of internal and external stakeholder relationships. Business relationships involve transac- tions and decisions that require ethical choices and, many times, moral courage. Building new strategic partnerships, transformational restructuring and lay- Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 6 The Corporation and Internal Stakeholders 351 off s, consumer lawsuits, environmental crises, bold new “green” initiatives, and turning around corporate cultures damaged by the eff ects of harmful products are examples of situations that require leadership business and ethical decisions. Leaders are responsible for the economic success of their enterprises and for the rights of those served inside and outside their boundaries. Re- search on leadership demonstrates that moral values, courage, and credibility are essential leadership capabilities.6 James Collins’ fi ve- year research project on “good to great” companies found that leaders who moved from “good to great” showed what he called “Level 5” leadership. These leaders “channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self- interest. In- deed, they are incredibly ambitious—but their ambition is fi rst and foremost for the institution, not themselves” (emphasis added).7 Collins also concluded that Level 5 leaders build “enduring greatness through a paradoxical blend of personal humility and professional will.”8 This chapter focuses on the challenges that values- based leaders face while managing internal stakeholders, strategy, and culture in organizations. From a stakeholder management approach, an or ga ni za tion’s leaders are re- sponsible for initiating and sustaining an ethical, principled, and collabora- tive orientation toward those served by the fi rm.9 Leaders model and enforce the values they wish their companies to embody with stakeholders.10 One of an or ga ni za tion’s most prized assets is its reputation, as noted earlier in the text. Reputations are built through productive and conscientious relation- ships with stockholders and stakeholders.11 A stakeholder, values- based leadership approach determines whether or not the or ga ni za tion and culture: • Are integrated or fragmented. • Tolerate or build relationships. • Isolate the or ga ni za tion or create mutual benefi ts and opportunities. • Develop and sustain short- term or long- term goals and relationships. • Encourage idiosyncratic dependent implementation based on division, function, business structure, and personal interest and style or encourage coherent approaches, driven by enterprise, visions, missions, values, and strategies.12 Eff ective leaders guide the ethical and strategic integration and alignment of the internal or ga ni za tion with the external environment. As the following sections show, competent leaders demonstrate diff erent competencies in guiding and responding to their stakeholders and stockholders. Defi ning Purpose, Mission, and Values Leading an or ga ni za tion begins by identifying and enacting purpose and ethical values that are central to internal alignment, external market eff ec- tiveness, and responsibility toward stakeholders. As Figure 6.1 shows, key Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 352 Business Ethics questions executives must answer before identifying a strategy and leading their fi rm are centered on defi ning the or ga ni za tion’s vision, mission, and val- ues: What business are we in? What is our product or ser vice? Who are our customers? What are our core competencies? A values- based leadership approach is exemplifi ed by Chester Barnard, who wrote in 1939 that eff ective leaders and managers “inspire cooperative personal decisions by creating faith in common understanding, faith in the probability of success, faith in the ultimate satisfaction of personal motives, and faith in the integrity of common purpose.”13 In the classic book Built to Last,14 authors James Collins and Jerry Porras state, “Purpose is the set of funda- mental reasons for a company’s existence beyond just making money. Visionary companies get at purpose by asking questions similar to those posed by David Packard [cofound er of Hewlett- Packard]: ‘I want to discuss why a company exists in the fi rst place. . . . Why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an im- portant result of a company’s existence, we have to go deeper and fi nd the real reasons for our being.’ ” JetBlue’s found er and former CEO, David Neeleman, said: For our company’s core values, we came up with fi ve words: safety, caring, fun, integrity, and passion. We guide our company by them. But from my experience— and I’ve had a lot of life experiences that were deep religious What business are we in? Who is our customer? What are our core competencies? What is our product or service? Vision Mission Values (Who are we? Who will we become?) (What is our strategic purpose for operating?) (What do we stand for and believe in? What standards can be used to evaluate and judge us?) Figure 6.1 Strategic Alignment Questions Source: Joseph W. Weiss. © 2014. Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 6 The Corporation and Internal Stakeholders 353 experiences— I feel that everyone is equal in the way they should be treated and the way they should be respected. I think that I try to conduct myself in that way. I treat everyone the same: I don’t give anyone more deference be- cause of their position or their status. Then I just try to create trust with our crewmembers. I know if they trust me, if they know I’m trying to do the best things I think are in their long- term interest, then they’ll be happier and they’ll feel like this is a better place to work. The top fi ve tips for landing a job at JetBlue include 1. Do your homework! Study JetBlue’s history and their current happenings and their fi ve core values, 2. Know your story: Be prepared for the interview by reviewing your own challenging situations and how you handled them, 3. Show your passion: People at JetBlue are very passionate about the company and what they do. Showing passion for the company and role you are applying for is important, 4. Be open and honest, and 5. Be yourself! “We are a fun company, and we just want you to be you!”15 Ethical companies may also include a “social mission” in their formal mission and values statements. A social mission is a commitment by the or ga- ni za tion to give back to their community and external stakeholders who make the or ga ni za tion’s existence possible. Ben and Jerry’s (now a division of the Anglo- Dutch Unilever conglomerate), Lands’ End, Southwest Airlines, and many other companies commit to serving their communities through diff er- ent types of stewardship outreach, facility sharing (e.g., day care and tutoring programs), and other service- related activities. A starting point for identifying a leader’s values is a foundational vision and mission statement of the company. Levi Strauss & Co.’s, shown in Fig- ure 6.2, exemplifi es an inspirational vision with ethical values. The classical visionary, “built- to- last” companies “are premier institutions— the crown jewels— in their industries— several are still ‘lasting’ today— widely admired by their peers, and have a long track record of mak- ing a signifi cant impact on the world around them . . . a visionary company is an organization— an institution . . . visionary companies prosper over long pe- riods of time, through multiple product life cycles and multiple generations of active leaders.”16 Such companies include 3M, American Express, Boeing, Citicorp, Ford, General Electric, Hewlett- Packard, IBM, Johnson & Johnson, Marriott, Merck, Motorola, Nordstrom, Philip Morris, Procter and Gamble, Sony, Wal- Mart, and Disney. These visionary companies, Collins and Porras discovered, succeeded over their rivals by developing and following a “core ideology” that consisted of core values plus purpose. Core values are “the or- ga ni za tion’s essential and enduring tenets— a small set of general guiding principles; not to be confused with specifi c cultural or operational practices; not to be compromised for fi nancial gain or short- term expediency.” Pur- pose is “the or ga ni za tion’s fundamental reasons for existence beyond just making money— a perpetual guiding star on the horizon; not to be confused with specifi c goods or business strategies.”17 Excerpts of core ideologies from some of the classic visionary companies are instructive and are summarized here:18 Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 354 Figure 6.2 Levi Strauss & Co. Values and Vision Statement VALUES Our values are fundamental to our success. They are the foundation of our company, defi ne who we are and set us apart from the competition. They underlie our vision of the future, our business strategies and our decisions, actions and behaviors. We live by them. They endure. Four core values are at the heart of Levi Strauss & Co.: Empathy, Originality, Integrity and Courage. These four values are linked. As we look at our history, we see a story of how our core values work together and are the source of our success. Empathy—Walking in Other People’s Shoes Empathy begins with listening . . . paying close attention to the world around us . . . under- standing, appreciating and meeting the needs of those we serve, including consumers, retail customers, shareholders and each other as employees. Levi Strauss and Jacob Davis listened. Jacob was the tailor who, in the 1870s, fi rst fash- ioned heavy cotton cloth, thread and metal rivets into sturdy “waist overalls” for miners seek- ing durable work pants. Levi in turn met Jacob’s needs for patenting and mass production of the product, enthusiastically embracing the idea and bringing it to life. The rest is history: The two created what would become the most pop u lar clothing in the world— blue jeans. Our history is fi lled with relevant examples of paying attention to the world around us. We listened. We innovated. We responded. • As early as 1926 in the United States, the company advertised in Spanish, Portuguese and Chinese, reaching out to specifi c groups of often- neglected consumers. • In the 1930s, consumers complained that the metal rivets on the back pockets of our jeans tended to scratch furniture, saddles and car seats. So we redesigned the way the pockets were sewn, placing the rivets underneath the fabric. • In 1982, a group of company employees asked se nior management for help in increasing awareness of a new and deadly disease affecting their lives. We quickly became a busi- ness leader in promoting AIDS awareness and education. We believe in empathetic marketing, which means that we walk in our consumers’ shoes. In the company’s early years, that meant making durable clothes for workers in the American West. Now, it means responding to the casual clothing needs of a broad range of consumers around the world. Understanding and appreciating needs— consumer insight— is central to our commercial success. Being empathetic also means that we are inclusive. Levi Strauss’ sturdy work pants are sold worldwide in more than 80 countries. Their popularity is based on their egalitarian appeal and originality. They transcend cultural boundaries. Levi’s® jeans— the pants without pretense— are not just for any one part of society. Everyone wears them. Inclusiveness underlies our consumer marketing beliefs and way of doing business. We bring our Levi’s® and Dockers® brands to consumers of all ages and lifestyles around the world. We refl ect the diverse world we serve through the range and relevancy of our prod- ucts and the way we market them. Likewise, our company workforce mirrors the marketplace in its diversity, helping us to understand and address differing consumer needs. We value ethnic, cultural and lifestyle diversity. And we depend and draw upon the varying backgrounds, knowledge, points of view and talents of each other. As colleagues, we also are committed to helping one another succeed. We are sensitive to each other’s goals and interests, and we strive to ensure our mutual success through exceptional leadership, career development and supportive workplace practices. Empathy also means engagement and compassion. Giving back to the people we serve and the communities we operate in is a big part of who we are. Levi Strauss was both a Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 355 merchant and a philanthropist— a civic- minded leader who believed deeply in community ser vice. His way lives on. The company’s long- standing traditions of philanthropy, community involvement and employee volunteerism continue today and contribute to our commercial success. Originality—Being Authentic and Innovative Levi Strauss started it and forever earned a place in history. Today, the Levi’s® brand is an authentic American icon, known the world over. Rooted in the rugged American West, Levi’s® jeans embody freedom and individuality. They are young at heart. Strong and adaptable, they have been worn by generations of in- dividuals who have made them their own. They are a symbol of frontier in de pen dence, demo cratic idealism, social change and fun. Levi’s® jeans are both a work pant and a fash- ion statement— at once ordinary and extraordinary. Collectively, these attributes and values make the Levi’s® brand unlike any other. Innovation is the hallmark of our history. It started with Levi’s® jeans, but that pioneering spirit permeates all aspects of our business- innovation in product and marketing, workplace practices and corporate citizenship. Creating trends. Setting new standards. Continuously improving through change. For example: • We were the fi rst U.S. apparel company to use radio and tele vi sion to market our products. • With the introduction of the Dockers® brand in 1986, we created an entirely new cate- gory of casual clothing in the United States, bridging the gap between suits and jeans. A year later, Dockers® khakis had become the fastest growing apparel brand in history. Throughout the 1990s, we were instrumental in changing what offi ce workers wear on the job. • Our Eu ro pe an Levi’s® brand team reinvented classic fi ve- pocket jeans in 1999. Inspired by the shape and movement of the human body, Levi’s® Engineered Jeans™ were the fi rst ergonomically designed jeans. Now, more than ever, constant and meaningful innovation is critical to our commercial success. The worldwide business environment is fi ercely competitive. Global trade, instan- taneous communications and the ease of market entry are among the forces putting greater pressure on product and brand differentiation. To be successful, it is imperative that we change, competing in new and different ways that are relevant to the shifting times. As the “makers and keepers” of Levi Strauss’ legacy, we must look at the world with fresh eyes and use the power of ideas to improve everything we do across all dimensions of our business, from modest improvements to total reinventions. We must create product news that comes from the core qualities of our brands— comfort, style, value and the freedom of self- expression—attributes that consumers love and prefer. Integrity—Doing the Right Thing Ethical conduct and social responsibility characterize our way of doing business. We are honest and trustworthy. We do what we say we are going to do. Integrity includes a willingness to do the right thing for our employees, brands, the com- pany and society as a whole, even when personal, professional and social risks or economic pressures confront us. This principle of responsible commercial success is embedded in the company’s experience. It continues to anchor our beliefs and behaviors today, and is one of the reasons consumers trust our brands. Our shareholders expect us to manage the company this way. It strengthens brand equity and drives sustained, profi table growth and superior return on investment. In fact, our experience has shown that our “profi ts through principles” approach to business is a point of competitive advantage. Figure 6.2 —continued (continued) Co py ri gh t © 2 01 4. B er re tt -K oe hl er P ub li sh er s. A ll r ig ht s re se rv ed . Ma y no t be r ep ro du ce d in a ny f or m wi th ou t pe rm is si on f ro m th e pu bl is he r, e xc ep t fa ir u se s pe rm it te d un de r U. S. o r ap pl ic ab le c op yr ig ht l aw . EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 7/27/2020 9:37 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 667095 ; Weiss, Joseph W..; Business Ethics : A Stakeholder and Issues Management Approach Account: shapiro 356 This values- based way of working results in innovation: • Our commitment to equal employment opportunity and diversity predates the U.S. Civil Rights movement and federally mandated desegregation by two de cades. We opened integrated factories in California in the 1940s. In the 1950s, we combined our need for more production and our desire to open manufacturing plants in the American South into an opportunity to make change: We led our industry by sending a strong message that we would not locate new plants in Southern towns that imposed segregation. Our approach changed attitudes and helped to open the way for integration in other companies and …