Current Issues in Business Ethics

Transcription

1 Current Issues in Business Ethics Boz Bostrom, CPA, MBT Associate Professor of Accounting and Finance College of Saint Benedict and Saint John s University Author, A Legacy Unrivaled: The Story of John Gagliardi bbostrom@csbsju.edu (612) September 14,

2 Learning Objectives Understand attitudes of others related to ethics Understand examples of ethical and unethical behavior Understand the benefits of ethical leadership Ethical Attitudes 4

3 Gallup Poll rate honesty and ethical standards high or very high Accountants Business executives Car Salespeople College Teachers Engineers Insurance Salespeople Lawyers Medical doctors Members of congress Nurses Psychiatrists December ,000+ adults in the US (accountants % from Dec 2015) 5 Gallup Poll rate honesty and ethical standards high or very high Nurses Medical doctors Engineers College teachers Accountants Psychiatrists Lawyers Business executives Insurance Salespeople Car Salespeople Members of congress 84% 65% 65% 47% 39% 38% 23% 18% 11% 9% 8% December ,000+ adults in the US (accountants % from Dec 2015) 6

4 Ethical Leadership Survey Which demographics are more sensitive to ethical issues: Men vs. women? Women Older vs. younger employees? Younger Leaders vs. staff? Staff Corporate employees vs. service providers? Corporate Comments from my survey on the ethics of corporate taxation Your survey showed a very liberal bias and I don t feel it was worth my time nor would I put much credence in the results. Its clear you have a predetermined desired result. Corporations are not villains as you wish to portray. These questions are very misleading. It was written by someone who is very pro business and anti-union. Corporations are allowed scandals and bankruptcies and tax havens an average working man could never get.

5 Unethical Behavior 9 United Airlines Debacle Flight booked to capacity Additional crew members needed to fly United asked for volunteers / $800 compensation No volunteers Dept of Transportation guidelines allow passengers to be denied entry But passenger was already on plane

6 United Airlines Debacle Were United s actions legal? Still unclear but possibly. Were United s actions ethical? Your thoughts? Public reaction / impact on United s value What alternatives did they have? Pro s/con s Wal-Mart Mexico Bribery Scandal 12

7 Wal-Mart Mexico Bribery Scandal Began with Pulitzer Prize winning New York Times articles Allegations: Wal-Mart Mexico paid $24M in bribes Began with a $52,000 payment to re-zone a farmer s field Corporate lawyers recommended an investigation nothing came of it and Mexico leader became Vice Chairman of Wal-Mart Corp. Internal auditor found it and upon reporting it was fired. Report was discarded. 13 Wal-Mart Mexico Bribery Scandal Currently in a 3 year major federal investigation Justice Department Federal Bureau of Investigation Securities and Exchange Commission Internal Revenue Service s criminal investigations unit, Wal-Mart has spent over $650M investigating the bribes and improving its policies Found that thousands of bribes were paid in India: Move goods through customs Real estate permits 14

8 Case Study A co-worker has begun to live a lavish lifestyle No explanation for change You suspect co-worker or spouse may be doing something illegal Do you speak up? 15 Rita Crundwell 16

9 Rita Crundwell Began working for the city of Dixon in 1970 Became the Comptroller in fraud began created a new bank account with an officialsounding name Reserve Sewer Capital Development Account Transferred funds into the account / withdrew them for personal purposes. 17 Rita Crundwell Fraud started at $100k per year and eventually was over $5M. Total of over $50M over 20 years Bought cars, homes, horses, and always had a motorhome on hand worth nearly $2M Constant budget cuts In 2011, was praised by a commissioner of the city, She looks after every tax dollar as if it were her own. What percent of the city s budget at the end? 28% Sentencing 18

10 Ethical Behavior 19 Norm Skalicky 20

11 Norm Skalicky CEO of Stearns Bank Owner for over 50 years $2B assets Independent Community Bankers Association Best of the Best Banks with over $1B in assets Based on return on average assets 1 st place 20% ESOP Phone call rule 21 Stearns Bank's Top 10 NOs: 1. No busy work 2. No top heavy staff 3. No overdoing rules 4. No time wasting meetings 5. No excuses 6. No unnecessary anything 7. No fear of being different 8. No substituting reams of paper for productivity 9. No throwing away money 10.No end to the possibilities 22

12 Denis McDonough 23 Denis McDonough 24

13 Denis McDonough Graduated from Stillwater, then Saint John s, then Georgetown Specializes in foreign policy and national security issues Chief-of-Staff for President Obama entire 2 nd term 25 James Burke 26

14 JNJ Credo 1 st responsibility All who use our product 2 nd responsibility Our employees 3 rd responsibility Our community Final responsibility Our shareholders 27 Tylenol Crisis of deaths due to tampering / cyanide Immediate recall of 31 million bottles / cost of $100 million Stock down 15% in a week Rebounded and up 35% for the year 28

15 Benefits of Ethical Leadership 29 What do the following 19 companies have in common? Aflac Deere & Company Fluor Corporation International Paper Company Kao Corporation Milliken & Company PepsiCo, Inc. Starbucks Texas Instruments Xerox Corporation Cummins Inc. Ecolab Inc. GE Jones Lang LaSalle Incorporated Marriott International, Inc. Premier, Inc. Symantec Corporation United Parcel Service Waste Management

16 10 or 11 of the past 11 years 31 Investment returns 10 year compounded annual total growth of S&P 500 Index? 6.9% Average 10 year compounded annual growth of ethical companies? 7.7% 32

17 Questions to consider Is your direct supervisor very ethical? Is senior leadership at your organization very ethical? Do you love your job? Do you plan to stay at your company for a long time? Do you work hard for your company? 33 Survey Results - General Senior leadership is very ethical Direct supervisor(s) is very ethical Strongly disagree 2% 1% Disagree 1% 0% Neutral 4% 5% Agree 36% 29% Strongly agree 58% 65%

18 Survey Results - Details Senior leadership is very ethical I love my job I plan to stay at my company for a long time I work very hard for my company Neutral, disagree, or strongly disagree Agree Strongly agree Survey Results - Details My direct supervisor(s) is very ethical I love my job I plan to stay at my company for a long time I work very hard for my company Neutral, disagree, or strongly disagree Agree Strongly agree

19 Thanks for attending! Be aware of the attitudes of others Be an ethical leader it pays in the long run!