PERCEPTION BLACK WRONG WHITE RIGHT WHY GOOD PEOPLE DO BAD THINGS

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1 1 WHY GOOD PEOPLE DO BAD THINGS by: Paul Fiorelli, J.D., M.B.A., Professor of Legal Studies Co-Director, Cintas Institute for Business Ethics Xavier University 2 ILLEGAL BLACK WRONG EVIL LEGAL WHITE RIGHT GOOD 3 PERCEPTION CAN TWO PEOPLE LOOK AT THE SAME THING, COME TO DIFFERENT CONCLUSIONS, AND BOTH BE RIGHT?

2 QUESTIONS WE ASK WHEN SOMETHING GOES WRONG 4 WHO DID THIS? WHAT WERE YOU THINKING? WHERE WILL THIS LEAD US? WHEN WILL IT EVER STOP? WHY DIDN T I FIND OUT SOONER? BETTER QUESTIONS 5 WHO S IN TROUBLE? WHAT CAN I DO TO HELP? WHERE DO YOU NEED ME? WHEN WILL WE HAVE THE TOOLS TO WIN WHILE FOLLOWING THE RULES WHY DIDN T YOU TRUST ME? BREAKING THE RULES 6

3 STRICT CONSTRUCTIONIST 7 STRICT CONSTRUCTIONIST 8 JUST SKIMMING THE SURFACE OF LEGAL COMPLIANCE DOESN T LEAVE ROOM FOR ERROR IF LAWS ARE WHAT WE MUST DO, THEN ETHICS ARE WHAT WE OUGHT TO DO BREAKING THE RULES 9

4 10 ALTRUISTS 11 HOW DO WE TREAT EMPLOYEES THAT ACT IMPROPERLY, BUT IT APPEARS TO BENEFIT THE COMPANY? GOOD SOLDIER STEALS FOR THE ORGANIZATION - NOT FROM IT LOYALTY MISGUIDED ALTRUISTS 12 DO NOT WINK AT VIOLATIONS EXPLAIN THE IMPORTANCE OF ETHICS AND COMPLIANCE EVEN WHEN THE COMPANY APPEARS TO BENEFIT FROM A BREACH THERE ARE CONSEQUENCES

5 BREAKING THE RULES of circumstances PRISONERS OF CIRCUMSTANCES MINDING MY BUSINESS 15 FORCED TO DEAL WITH PROBLEMS CAUSES BY OTHERS IT HAPPENED UNDER MY WATCH

6 PRISONERS OF CIRCUMSTANCES 16 ENCOURAGE OPEN COMMUNICATION & TRANSPARENCY DEAL WITH PROBLEMS - DON'T WISH THEM AWAY BREAKING THE RULES 17 18

7 BREAKING THE RULES PRESSURE 21 WHY DO PRESSURED EMPLOYEES CHEAT?

8 PRESSURE 22 DOES NOT LIVE UP TO BOSSES EXPECTATIONS ARE THE EXPECTATIONS REALISTIC? CAN SET AGGRESSIVE GOALS MUST BE ABLE TO ACCOMPLISH WITH REASONABLE - ETHICAL EFFORTS, CONSISTENT WITH THE MISSION OF THE COMPANY PRESSURE 23 SET REALISTIC GOALS CHALLENGE HOW AGGRESSIVE GOALS ARE OBTAINED CAN THESE ETHICAL TECHNIQUES BE SHARED WITH OTHERS BREAKING THE RULES 24

9 25 GROUPTHINK 26 BE WILLING TO STAND OUT IN A CROWD DON T JUST GO WITH THE GROUP ANSWER YOUR TEAM MAY BE STRONGER BY HAVING DIVERSE PERSPECTIVES AUTHORITY 27 RESPECTFULLY QUESTION AUTHORITY ASK FOR AN EXPLANATION THAT S HOW WE DO IT HERE, OR THAT S HOW WE VE ALWAYS DONE IT ISN T GOOD ENOUGH

10 BREAKING THE RULES RATIONALIZERS 30 WHAT REASONS DO RATIONALIZERS GIVE ABOUT WHY THEY ACTED UNETHICALLY?

11 RATIONALIZERS 31 THEY LL NEVER MISS IT THEY'LL NEVER FIND OUT EVERYONE IS DOING IT! RATIONALIZERS 32 CONVINCE THEM YOU: SHARE VALUES SHARE CONCERNS APPRECIATE THEIR WORTH AS MUCH AS POSSIBLE NOT EVERYONE IS DOING IT BREAKING THE RULES 33

12 Fiorelli, GREED 35 Every company is just one bad decision or one bad employee away from scandal... one scandal away from a salacious headline... and one headline away from a flood of lawsuits. Bill Lytton - former EVP and General Counsel, Tyco International 36 When I look at myself, yeah, I am driven by money, While Gupta he said. departed And McKinsey when I live with in this a society, fortune, you he was know, now you mingling do get fairly with a crowd materialistic, that included so Bill I Gates, look at Henry that. I Kravis am and disappointed. Henry M. Paulson I am Jr., probably then Goldman s more materialistic chief today executive, than with I was whom before, he and traveled I think to money Indonesia is very to see seductive. the Komodo He dragons. continued: For You many have of these to watch men, $100 out for million it, because was not the rich; more it you was have simply it, you the price get used to play. to comforts, If Gupta and wanted you to get compete used to, you on the know, same big level houses as Stephen and vacation A. Schwarzman, homes and going who would and doing go on whatever to give $100 you million want, and to the so it is very New seductive. York Public However Library, much or Sandy you Weill, say that you will whom not he fall knew into from the trap the Weill of it, you Cornell do fall Medical into the College trap board, of it. he had to be a billionaire.

13 GREED DON T THINK PHILANTHROPY WILL KEEP YOU OUT OF TROUBLE BETTER BOARD OVERSIGHT & GOVERNANCE REGARDING SENIOR EXECUTIVES HIRE AND PROMOTE FOR MISSION BETTER BACKGROUND CHECKS BETTER INTERNAL CONTROLS ADDITIONAL REPORTING MECHANISMS PEERS VS. AUDITORS 37 DON T TAKE-AWAYS DO 38 SQUEAK BY LAWS WITH RAZOR THIN COMPLIANCE JUSTIFY CROSSING A LINE BY RATIONALIZING ONCE YOU START DOWN THE SLIPPERY SLOPE, ITS TOUGH TO REVERSE ALWAYS GIVE YOURSELF AN ETHICAL BUFFER CONVINCE EMPLOYEES YOU VALUE THEM NOT EVERYONE IS DOING IT SET UNREALISTIC GOALS, WITHOUT GIVING EMPLOYEES THE RESOURCES TO ACHIEVE THEM ACCEPT RESULTS BECAUSE THE COMPANY SEEMS TO BENEFIT FROM IMPROPER BEHAVIOR EVALUATE YOUR INCENTIVE STRUCTURE AND TRY TO MINIMIZE THE PRESSURE EMPLOYEES FEEL TO CHEAT CONVINCE EMPLOYEES YOU DON T WANT THEM TO STEAL FOR THE COMPANY ACCEPT ORDERS FROM A SUPERIOR OR TEAMMATES, BECAUSE THAT S HOW THEY VE ALWAYS DONE IT RESPECTFULLY ASK FOR A BETTER EXPLANATION