ethics class 4 and 5 and 6_nicaragua_individual level
TRANSCRIPT
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Social and Ethical
Responsibility of BusinessLeaders
Class 4-6
Ethics at the Level of the
Individual
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Why do people do bad
things?
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What do people do bad things?
They dont know it is bad when they are
doing it
It benefits them they are getting
something from it
They feel they have no option they are
afraid not to do it
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What do people do bad things?
They dont know it is bad when they are
doing it
It benefits them they are getting
something from it
They feel they have no option they are
afraid not to do it
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What is BAD?How do you know the difference
between right and wrong?
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Please answer the following 3 questions
1. How ethical are you?
1 2 3 4 5Not at all ethical Extremely Ethical
2. How ethical was what Christopher Fort
Knox did to make the sale?
1 2 3 4 5Not at all ethical Extremely ethical
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Take away?
What are these data telling us?
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Take away?
Most of you believe you are ethical YET
there is wide variation in how you define
what ethical is
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World Class BullIs what Chris did to land his big
fish client OK?And, if not, at what point was it
not?
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What is the synopsis of
this discussion?
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We dont all agree on what it means to
behave ethically because
Ethics is relative?
We can agree to disagree?
Some people here are unethical
psychopaths?
Some people here are touchy-feely wimps
with no place in business?
There are not alway clear answers?
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Real World Ethical Situations are
Highly Complex Often There Will
Be NO Clear Answer
You may not even know you facedthem until it is way too late
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Are there some moral
senses we ALL share?
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Which is worse? To stick a pin in your hand
To stick a pin in the hand of a child you dont know?
Accept a wide screen TV from a friend who received it free of charge because ofa computer error
Accept a wide screen TV from a friend who received it from a thief who hadstolen it from someone else
Say something bad about your countr on a talk show in your country Say something bad about your country on a talk show in a foreign country
Slap a friend in the face, with his permission, as part of a comedy skit
Slap your priest in the face, with his permission, as part of a comedy skit
Watch some people drunk acting like idiots weaving and falling down
Watch some people drunk acting like idiots vomiting and peeing on the floor
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Which is worse? To stick a pin in your hand
To stick a pin in the hand of a child you dont know?
Accept a wide screen TV from a friend who received it free of charge because ofa computer error
Accept a wide screen TV from a friend who received it from a their who hadstolen it from someone else
Say something bad about your nation on a talk show in your nation Say something bad about your nation on a talk show in a foreign nation
Slap a friend in the face, with his permission as part of a comedy skit
Slap your priest in the face, with his permission as part of a comedy skit
Watch some people drunk acting like idiots weaving and falling down
Watch some people drunk acting like idiots vomiting and peeing on thefloor
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Cross Cultural Moral Concerns:
The Primary Colors or Periodic
Table of the Moral Sense
The Big Five
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The five spheres of morality
are not only ubiquitous,they appear to have deep
evolutionary rootsImplemented in the brain as a
suite of moral emotions
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Cross Cultural Moral Concerns:
The Periodic Table of the Moral Sense
Harm That it is bad to harm others (And good to help others)
Fairness that one should reciprocate favors, reward benefactors and
punish cheaters Community/Group loyalty
That we value loyalty to the group, sharing solidarity among itsmembers and conformity to group norms
Authority That it is right to defer to and respect legitimate authorities
Purity That we admire/exalt purity, cleanliness and sanctity, while
loathing defilement, contamination and carnality
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So if these 5 moral sensesare universal, why do we all
react so differently?
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Because
Although the five moral senses are
universal and uncomplicated, the moral
situations you will face are unique and
very complicated
These five moral senses will come into
conflict with EACH OTHER (which one
wins)?
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Take away so far?
Sad Truth of Leadership is There will not always be right answers to
the situations you face
So if you think you can rely on gut instincts
or easy platitudes (do whats right), you aregravely mistaken
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Sad truth of leadership?
There will always be consequences to the
decisions you make
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If Chris were to think carefully about
the consequences of his actions
What might they be?
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Thinking about consequences
requires analysis of:
Who is involved?
What could happen? And then weighting the probabilities
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Stakeholder Analysis
The stake holder analysis is a practical,
realistic and powerful tool for thinking
through personal and professional
challenges It forces you to hold multiple perspectives; to
think deeply and carefully about the broader
social, political and economic contexts underwhich the situation you are facing might rest
Requires systematic critical thought (and data!)
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How to apply it?
Stake holder analysis:
Who are all the stakeholders holders
involved in the decision you are about to
make?
What are the consequences of your
proposed actions for each
Short term and long term, positive and
negative
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World Class Bull (B)What happened to
Christopher Fort Knox?
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In organizations, legal,
financial, competitiveanalyses are common,
clear and routineEthical decision get left up to
individualsYou must be prepared
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You are the leaders of the future
Your societies will depend onyou to make decisions that
benefit all stakeholders involvedTake this responsibility seriously
To whom much is given, much
is expected
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John F. Kennedy, 1963
A great society is one in which men and
women of business think greatly about
their functions, their responsibilities and
the consequences of their actions.
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Everyday you are going to bedoing things that impact the
lives of millionsIt is your responsibility as leaders
to think through them the best youcan
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For TomorrowClass 5 and 6
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What do people do bad things?
They dont know it is bad when they are
doing it
It benefits them they are getting
something from it
They feel they have no option they are
afraid not to do it
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For Tomorrow:
Scandal in the First Year MBA
Why did the twins do what they did?
What should the MBA class do?
What could INCAE do to prevent such situations
for happening in the future?
A Brush with AIDS
What is the situation facing the protagonist? What should she do?
What could firms do to prevent such situations
happening in future?
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EthicsClass 5
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To sum up so far:
You all agree that you are ethical, yet
you disagree about what being
ethical is
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World Class Bull
As one short case illuminated, often:
There is no clear answer to what is right
We all differ in our opinions as to when and why a
decision/behavior is wrong You might not even be aware you faced a
moral challenge until it is far too late
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Lesson Learned?
Going forward in your leadership careers, you
can not blindly rely on your ethical
feelings/instincts/principles and/or vague
platitudes real life is too complicated You need to develop your ethical sensibility
You desire/ ability to sense the ethical dimensions to the
situations you face and the decisions/actions you take
You need tools and strategies to help you thinkcritically about the ethical situations you face
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Stakeholder Analysis
To the best of your ability, list all parties
who will be impacted by your decision
What are the consequences (negative and
postive, short and long term) of your
actions/decision on these
parties/stakeholders
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Maintaining Objectivitytests
Rule of Thumb Tests to avoid
decisions you may later regret
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Some good ones
Visibility/Transparency/Publicity
Generality
Legacy/Obituary Trusted Friend
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Youre WrongThere ARE right answersIt DOES all come down to principles/values
There are fundamental moral rights/wrongs
You should be teaching them
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Are there some primarymoral beliefs we ALL
can agree upon?
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Which is worse? To stick a pin in your hand
To stick a pin in the hand of a child you dont know?
Accept a wide screen TV from a friend who received it free of charge because ofa computer error
Accept a wide screen TV from a friend who received it from a thief who hadstolen it from someone else
Say something bad about your country on a talk show in your country Say something bad about your country on a talk show in a foreign country
Slap a friend in the face, with his permission, as part of a comedy skit
Slap your priest in the face, with his permission, as part of a comedy skit
Watch some people drunk acting like idiots weaving and falling down
Watch some people drunk acting like idiots vomiting and peeing on the floor
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Which is worse? To stick a pin in your hand
To stick a pin in the hand of a child you dont know?
Accept a wide screen TV from a friend who received it free of charge because ofa computer error
Accept a wide screen TV from a friend who received it from a their who hadstolen it from someone else
Say something bad about your nation on a talk show in your nation Say something bad about your nation on a talk show in a foreign nation
Slap a friend in the face, with his permission as part of a comedy skit
Slap your priest in the face, with his permission as part of a comedy skit
Watch some people drunk acting like idiots weaving and falling down
Watch some people drunk acting like idiots vomiting and peeing on thefloor
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Cross Cultural Moral Concerns:The Primary Colors or Periodic
Table of the Moral Sense
The Big Five
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The five spheres of morality
are not only ubiquitous,they appear to have deep
evolutionary rootsImplemented in the brain as a
suite of moral emotions
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Cross Cultural Moral Concerns:
The Periodic Table of the Moral Sense
Harm That it is bad to harm others (And good to help others)
Fairness that one should reciprocate favors, reward benefactors and
punish cheaters Community/Group loyalty
That we value loyalty to the group, sharing solidarity among itsmembers and conformity to group norms
Authority That it is right to defer to and respect legitimate authorities
Purity That we admire/exalt purity, cleanliness and sanctity, while
loathing defilement, contamination and carnality
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So if we all share these moralconcerns why is behaving
ethically so complicated?
Because many dilemmas you face
are ones in which these primary
moral senses conflict with one
another
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Right Versus Right
Challenges
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Lessons Learned, Revisited?
Going forward in your leadership careers, you
can not blindly rely on your ethical
feelings/instincts/principles and/or vague
platitudes real life is too complicated You need to develop your ethical sensibility
You ability to sense the ethical dimensions to the situations
you face and the decisions/actions you take
You need tools and strategies to help you think
critically about the ethical situations you face
You need support and guidance from the institutions
you work for
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Objective oftodays class?
To complicate things even further
Lets say you learned something. You agree.
The real world of ethics is more complicated
that you thought. You are prepared to try and
develop your moral sensibility, think critically
about the moral challenges you are going toface and make decisions that will balance
profit with values.
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What is going to stand
in your way?
YOU
Please Answer Following 2
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Please Answer Following 2
QuestionsWhat achievement in your life are you
most proud of?
Why did you decide to come to INCAE?
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What are you most proud of?
First girl with college education in my family
Making xxx my hobbyeven though I dont know
anything about it Overcome a difficult past to be a better person
Getting a job without help
Getting a big promotion at job
Being top student at my university
Graduating with honors
Getting into INCAE
Getting divorced from my husband
Graduating from college and working outside my
country
Becoming a father
Getting promoted at work
Getting into INCAE
Becoming financially independent
Being first woman boos
To be able to buy the first xxxx all my myself andalso the xxx of my dreams
Getting over fear of speaking in public
First person in family to get college degree
First person in class
Getting a great job
Why did you come to INCAE?
Change in career path
To grow professionally
To better myself To grow as an individual
Became INCAE is recognized by a lot of people and
it will help me in my future to go there
To get skills to have a better life style
To learn to be an entrepreneur
To get a good education and have LA point of view
I want to get a MA degree before I am 24
To make lives of my family better to repay them forall the effort they have made for me
Ill make more money
To move fast in my career
To build a strong network for myself
To make a lot of money so I can be a factor of
change
To improve my skills and make more money
To keep training myself to be a better leader
Will lend prestige to my career
For status and making money
To be able to move professionally and make more
money
Get more money
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What are you most proud of?
1. First girl with college education in my family
2. Making xxx my hobbyeven though I dont know
anything about it3. Overcome a difficult past to be a better person
4. Getting a job without help
5. Getting a big promotion at job
6. Being top student at my university
7. Graduating with honors
8. Getting into INCAE
9. Getting divorced from my husband
10. Graduating from college and working outside my
country
11. Becoming a father
12. Getting promoted at work
13. Getting into INCAE
14. Becoming financially independent
15. Being first woman boos
16. To be able to buy the first xxxx all my myself andalso the xxx of my dreams
17. Getting over fear of speaking in public
18. First person in family to get college degree
19. First person in class
20. Getting a great job
Why did you come to INCAE?
1. Change in career path
2. To grow professionally
3. To better myself4. To grow as an individual
5. Became INCAE is recognized by a lot of people and
it will help me in my future to go there
6. To get skills to have a better life style
7. To learn to be an entrepreneur
8. To get a good education and have LA point of view
9. I want to get a MA degree before I am 24
10. To make lives of my family better to repay them forall the effort they have made for me
11. Ill make more money
12. To move fast in my career
13. To build a strong network for myself
14. To make a lot of money so I can be a factor of
change
15. To improve my skills and make more money
16. To keep training myself to be a better leader
17. Will lend prestige to my career
18. For status and making money
19. To be able to move professionally and make more
money
20. Get more money
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What lessons to belearned from these
data?Why are these lessons relevant
to this ethics class?
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You are BIASED
A cognitive bias is a pattern of deviation in judgment that occurs inparticular situations, which may sometimes lead to perceptual
distortion, inaccurate judgment, illogical interpretation, or what is
broadly called irrationality.[1][2][3] Implicit in the concept of a "pattern
of deviation" is a standard of comparison with what is normatively
expected; this may be the judgment of people outside thoseparticular situations, or may be a set of independently verifiable
facts. A continually evolving list of cognitive biases has been
identified over the last six decades of research on human judgment
and decision-making in cognitive science, social psychology, and
behavioral economics.
http://en.wikipedia.org/wiki/Biashttp://en.wikipedia.org/wiki/Irrationalityhttp://en.wikipedia.org/wiki/Facthttp://en.wikipedia.org/wiki/List_of_biases_in_judgement_and_decision_makinghttp://en.wikipedia.org/wiki/Cognitive_sciencehttp://en.wikipedia.org/wiki/Social_psychologyhttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Social_psychologyhttp://en.wikipedia.org/wiki/Cognitive_sciencehttp://en.wikipedia.org/wiki/List_of_biases_in_judgement_and_decision_makinghttp://en.wikipedia.org/wiki/Facthttp://en.wikipedia.org/wiki/Irrationalityhttp://en.wikipedia.org/wiki/Bias -
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How (Un)Ethical are you?
Illusion of objectivity
Implicit prejudice bias that emerges fromunconscious beliefs men are better leaders
In-group favoritism biases that favors yourgroup special attention to those that you know
Bias that favors you
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Such biases are:
Widely prevalent
Robust even when you try and control
them
Contrary to conscious intention
Costly/dangerous
Amplified by the external pressures/normsthat you will face in the real world
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You expect to see a
beautiful white vase
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You expect to see two
blue faces staring at
each other
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You expect to see a
beautiful young womanShe is looking over her shoulder
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You expect to see an
ugly old hagWith a big nose
And thin lipsAnd a long pointy chin
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You want to buy arectangular table for
your newrectangular dining room
Which one will you buy?
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You are really good at
paying close attention to
peoples behaviorsIn the video that follows, how
many times did the players in
WHITE pass the basketball
(most count incorrectly)
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http://www.youtube.com/watch?v=IGQmdoK_ZfY
Thembusinessillusion
http://www.youtube.com/watch?v=IGQmdoK_ZfYhttp://www.youtube.com/watch?v=IGQmdoK_ZfYhttp://www.youtube.com/watch?v=IGQmdoK_ZfY -
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Take away?
We all have biases that can blind us from
seeing the real world (and ourselves)
correctly
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All of you smart, competitive, driven
want to succeed
System encourages it, your families
encourage it, INCAE encourages it, thecompanies you will work for do as well
Your own unconscious biases encourage it!
To accomplish your goals, what might you be
capable of?
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Scandal in the MBA
Accused Parties
What did the Jones twins do?
Why did they they do it?
What kind of rationalizations did they
make to themselves while they were
doing it?
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Lessons learned?
S
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Scandal in the MBA
Enablers
Why did witnesses choose to report it
anonymously?
What should the class do?
What could INCAE (and other
organizations) do to prevent such things
from happening in future?
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Lessons learned?
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You want desperately to get ahead
Is there a way to turn being
ethical into a competitive
advantage?
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A Brush With AIDS (A)Courage as a Skill
What is situation facing protagonist?
Whos fault is this situation? Should she take the product off the market
and re-tool?
Pros and Cons
Is there a way for her to balance economic
pressures/realities with ethical concerns and
responsibilities?
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What is a Sharps
container?
What does the market for a
Sharps container look like at the
time of the case?
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Who is she?
Why does she work at Halsey?
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What is Halseys
mission?
How are employees evaluated?
What is emphasized?
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At start of case, how is shedoing with her sales targets
for the year?
A B h ith Aid (A)
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A Brush with Aids (A)
What is a Sharps Container? What does the market for Sharps containers look like at the time of the
case? After 1987 incident CDC and OSHA required that sharps containers be placed in
every hospital room
Market opportunity for 109 million containers, up 810%
Halsey had 35% of market
Customers willing to pay any price profit margin 45% Lots of competition
Who is she?
What is the company mission? About customers (quality and commitment)
How are employees evaluated
Short term performance measures (they are committed to making profit plan) At start of case, how is she doing with her 1989 sales target?
Yearly bonus of 10,000 increases 1% for every 1% she surpasses her salestarget
She is about to surpass target by 8.2 million
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What is the problem she
is confronted with?
What is the problem she is
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p
confronted with?
Customers complaining sporadically aboutproduct failure
Plastic is shattering in cold temps and
needles could penetrate Plastic is not thick enough
How could the problem be solved?
H ld bl b l d?
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How could problem be solved?
Increase thickness of plastic
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If you were her, at that
moment in time when the
case ends, would you recallthe product and have it
retooled?
Reasons to do nothing?
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Reasons to do nothing?
Containers fail in only 1% of cases At what point does a product have to be good enough?
Even if it fails, what are odds of person getting AIDs?
Product meets OSHA and CDC requirements
No other companies (competitors) are doing anything
Huge profit losses for company Four months of inventory that could not be sold
(7,200,000 dollar right off)
Need to expand mold 16mold, each 25K to retool, 128K profit hit
Increase in raw materials
Huge profit losses for her
Profit losses for her boss Bonus is 25K to meet target (will lose 75% if he does not)
Reasons to do something?
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Reasons to do something?
Hearing Keep up good work is freakingher out
She feels she is not showing commitment
to customers or mission
Possible serious health ramifications
What is someone gets pricked and gets AIDs?
Risk of hurting company reputation
Hurting market share
Who are stakeholders involved? What are possible
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p
consequences of her decision for each one?
Her Phil
Corporate executives/senior management
Sales reps
Hospital buyers
Health care workers And their families
Shareholders
Health care products industry
Society at large
Media
Competitors
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What DID she do???
What did she do?
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What did she do?
Decided product needed to be retooled Asked sales reps: 50% of 325 sales reps said
product needed to be retooled
Went to bosses did not appeal to mission or
morality but by emphasizing economic picture Cost Benefit analysis
Negative short term losses
Positive could be first to introduce a high quality product toa cost insensitive market
Reactions from bosses?
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Reactions from bosses?
Phil said wait 6 months She said no, carefully raised companys
mission statement
Vice president agreed with her Senior management recognized that company
mission statement held no meaning for linemanagers who were compensated for
conflicting goals/objectives The following year quality measures (although
loose) became part of performance measures
Take away?
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Take-away?
She managed to balance the conflictingforces (economic versus ethical) to arrive
at a workable solution
One that benefited her, the company, theshareholders and the customers
Case illustrates:
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Case illustrates:
Young managers approach to handling anethical conflict
She managed to balance the conflicting
forces (economic versus ethical) to arrive at aworkable solution
It is through the process of addressing
such conflict and tension that greatleadership emerges and organizational
values are shaped over time
Review
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Review
The point of this ethics class is not to createvalues or change values it is to teach you tothink A great society is one in which men and women of
business think greatly about their functions,
responsibilities and the consequences of theiractions
To help develop and enhance your: Ethical sensibility
Moral reasoning skills Desire and will to act ethically in the face of moral
conflicts