Daniels Ethics Case CompetitionDESB Undergraduate Case Competition

2013-2014

Coaching Session

Dr. Abe BakhsheshyDaniels Professor of Ethics

Professor and Lecturer of Organizational Behavior

Learning objectives

Levels at which Ethical Issues May Be Addressed

Ethical Decision Making Model (1) Ethical Decision Making Model(2) Case in point Summary

Dr. Abe

Levels at Which Ethical Issues May Be Addressed

PersonalLevel

Situations faced in our personal lives outside the work context

Organizational Level

Workplace situations faced as managers and employees

Dr. Abe

Levels at Which Ethical Issues May Be Addressed

Societal andGlobal Levels

Local-to-global situationsconfronted indirectly as a management team

IndustryLevel

Situations where a manager or organization might influence business ethics at the industry level

5

The Stakeholder View of the Firm

Dr. Abe

Personal and Managerial Ethics

Conventional approachConventional approach

Principles approachPrinciples approach

Ethical tests approachEthical tests approach

ResolvingEthical

Conflicts

ResolvingResolvingEthicalEthical

ConflictsConflicts

7

Conventional Approach to Business Ethics

Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms Pitfall: ethical relativism

Decision or Practice Prevailing Norms

Social, Ethical relativism examples:

If we don’t do it, someone else will. That’s the way it has always been done. We’ll wait until the lawyers tell us it’s wrong. It doesn’t really hurt anyone. The system is unfair. I was just following orders. Everybody else does it.

Personal and Managerial Ethics

Utilitarianism Rights Justice

Caring Virtue ethics Servant leadership Golden Rule

Principles Approach

Anchors decision making on an ethical principle such as:

Personal and Managerial Ethics

Principle of Utilitarianism focuses on an act that produces the greatest ratio of good to evil for everyone Consequentialist theory

Personal and Managerial Ethics

Principle of Rights focuses on examining and possibly protecting individual moral or legal rights

Personal and Managerial Ethics

Personal and Managerial Ethics Principle of justice involves considering

what alternative promotes fair treatment of people

Types of justice Distributive Compensatory Procedural Rawlsim

Personal and Managerial Ethics

Rawls’ Justice Each person has an equal right to the most

basic liberties comparable with similar liberties for others

Social and economic inequalities are arranged so that they are both:

a) reasonably expected to be to everyone’s advantage and

b) attached to positions and offices open to all people

Personal and Managerial Ethics

Principle of caring focuses on a person as a relational, caring and not as an individual

“Only a life lived for others worth living”

-A. Einstein

Virtue ethics focuses on individuals becoming imbued with virtues

Personal and Managerial Ethics

Golden rule focuses on the premise that you should do unto others as you would have them do unto you

Personal and Managerial Ethics

Ethics Test Approach Test of common sense Test of one’s best self Test of making something public Test of ventilation Gag test

Determine economic outcomes, legal requirements, and ethical duties where problem lies and how solution meets all

Ethical Decision-MakingIdentify decision you are about to make

Articulate all dimensions of proposed decision

Conventional ApproachStandards/Norms-Personal-Organizational-Societal-International

Principles ApproachEthical Principles-Justice-Rights-Utilitarianism-Golden Rule-Caring- Virtue- Servant Leadership

Ethical Tests ApproachEthical Tests-Common sense-One’s best self-Public disclosure-Gag test . . .

Course of action passes ethics screen

Engage in course of action

Course of action fails ethics screen

Do not engage in course of action

Identify new course of action

Understand all moral standards

Recognize all moral impacts:

Benefits to some Harms to others Rights exercised Rights denied

Evaluate the ethical duties

Consider the legal requirements

Determine the economic outcomes

Define complete moral problems

Propose convincing moral solution

Analytical Process for the Resolution of Moral Problems

April 20th, 2010Deepwater Horizon‐Gulf of Mexico

Eleven people lost their lives to the explosion of Deepwater Horizon:

BP Oil Spill

What Does 184 Million Gallons of Oil Look Like?

There have been about 4.38 million barrels of oil spilled which would be enough to power 674,563  US homes for 1 year.

BP Oil Spill

BP’s cost of dealing with the spill is up to about $4 billion.

To date, BP has payed claims totaling $207 million to settle for damages (comprised of 67,500 payments).

The total economic impact of the spill remains to be seen the tourism and fishing industries in the Gulf

states generate billions of dollars each year

Several pre-explosion risks and problems allegedly ignored by BP Problems w/ blow out preventer (BOP),

equipment readings, sudden gas release, etc. BP appears to have chosen risky procedures

to save on time and money Using fewer liners/barriers than recommended,

using only 6 centralizers instead of 21, etc.

Who benefits?

• BP and its stockholders as long as nothing catastrophic happens– Can produce more oil with less expense

• Oil consumers– Can have more of what they want, quicker

• Lawyers – Get paid to represent the parties involved,

especially the defense in this case

Who was harmed? • Gulf Coast Fishing Industry• Ecosystem of Gulf Coast• Tourism Industry in Florida, Alabama,

Mississippi, Louisiana• Victims of Deepwater Horizon explosion and

their families• Reputation of Materials Management Service• BP Stockholders• Residents of Gulf Coast States

Is it “Right,” “Just” and “Fair?”• Cutting preventive maintenance to gain more

uptime and more profits when the repercussions of those actions could be catestrophic?

• Does BP have the right to do whatever it wants if it has all of the necessary permits?

• Rights of employees’ to a safe workplace?• Who is responsible or negligent? (Workers,

BP, the US government, and/or its citizens?)

Is it “Right,” “Just” and “Fair?” cont’d Is it moral and ethical for a company to do

business in such a manner that there is a chance that their catestrophic failure could deny the rights and freedoms of others?

Whose rights were exercised? BP and its stockholders BP satisfied regulatory requirements

(MMS) to drill Oil Consumers 1/8 of all domestic oil comes from Gulf

wells Helps alleviate dependence on foreign

oil

Whose rights were denied?

Fishing industry Tourism Industry Gulf Coast Ecosystem Family members of victims Stakeholders of BP US and Global Citizens

The Economics

-Oil is big money...3 out of 5 top global corporations oil co. all 5 oil dependent. top 40 if compared to GDP of countries

-BP has lost over 70 billion in shareholder value and has pledged 20 billion to clean up.

-Was it worth the risk?

The Legal- $75 million cap that must be paid towards those affected by a spill that was set forth by the Oil Pollution Act 1990

-BP has set aside voluntarily 20 billion.

-Should a company be involved in a operation where a negative externalities could cost society more than the value of the company?

“The true essence of humankind is kindness. There are other qualities which come from education or knowledge, but it is essential, if one wishes to be a genuine human being and impart satisfying meaning to one's existence, to have a good heart.”

“Leave this world a better place!”-Tenzin Gyatso, The 14th Dalai Lama (b. 1935)