Global Ethics & Critical Thinking

Business Communication & Ethics, Week10 Summary, 6/10/12
Jack Welch Management Institute

What a run it has been. The last lap took a ton of effort and there are a lot of takeaways for me to think about during the rest of my life. Here are the quick highlights and then the deep dive into details.

I. AES case gives a fantastic experience to see a global ethics framework from multiple perspectives.

II. I learned that defining core values alone is insufficient to guide a company through ethical dilemmas and that companies must evolve specific business conduct guidelines (BCG) to spell out employee behaviors expected in various thorny situations. The next time I sign the annual IBM's BCG certification I will pay a lot more attention than I have been giving over the last several years.

III. There are three guiding principles to shape ethical behavior across transnational projects
(a) Respect for core human values - absolute moral threshold for all business activities
(b) Respect for local traditions - but taking a bold stand when ethical standards are below US threshold
(c) The belief that context matters when deciding what is right and what is wrong - empowering managers to make balanced decisions

III. Critical Thinking Process for a well considered decision
I will be using the handy checklist below at work to make robust decisions going forward

1. State the problem under inquiry clearly and precisely - beware of framing bias
2. Engage the right people - get diverse perspectives for breadth and depth; do not commit to a solution prematurely
3. Raise the right questions and be open minded - recognize assumptions, implications, consequences and be willing to learn; reformulate the problem where needed
4. Focus on the decision to be taken
5. Gather and assess relevant information - critically examine sources of information; use concepts and ideas to interpret the information accurately and effectively
6. Develop well-reasoned conclusions and solutions
7. Understand Consequences - short & long term; downside and upside
8. Decide - steering clear of decision making traps (Hammond et al, HBR1998)
9. Test the solutions against relevant criteria and standards including playing the devil's advocate
10. Communicate effectively with others and iterate to get to the solutions

More detailed notes below.

I can see my ethical perspective soaring to new heights.
what a great education !

Dr DP

JWI 505, Business Communication & Ethics, Week10 Summary

I. HBR case study - AES Global Values
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The case gave a great look inside a company attempting to balance the economic, social and environmental costs in India and redefining its notion of social responsibility in the process. As someone who has seen the impact of multi national companies from the grass roots perspectives in India, I could appreciate the point of view from the corporate side and see the gaps in thinking. I believe I have come to some very different conclusions compared to my class mates as some of the answers the AES is looking for cannot be found easily in libraries but in the hearts and minds of the people who make up the society in rural India, where complex socio-political forces are at play. Nontheless, I have learned a great deal from the perspectives expressed in the class discussions.


II. Donaldson, Ethics Away from Home (HBR, 1996)
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Standards of ethical conduct defined by: shared attitudes, familiar laws, judicial procedures
What happens when host country's ethical standards are lower than home country's?
Rethink the assumptions and business practice in foreign settings what works in home country may fail in a host country
Are there principles to work through a maze of cultural differences and establish code of conduct for globally ethical business practice?

Cultural Relativism: No international rights and wrongs; when in Rome do as Romans do else forefeit business opportunities
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Limitation - Morally blind. There are fundamental values that cross cultures, companies must uphold them

Asbolutism - Ethical Imperialism: Do everywhere exactly as you do at home;
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-there is a single list of moral truths (problem: different cultural traditions must be respected)
-that moral truths can be expressed with only one set of concepts
-they call for exactly the same behavior

Belief in a global standard of ethical behavior

Context must shape ethical practice. Cultures have different standards of ethical behavior - different ways of handling unethical behavior. Absolutist approach may therefore be a disastrous mistake. Managers need to be aware of culture's attitudes toward ethics

If companies can either adopt a host country's ethics nor extend the home country's standards
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Three Guiding Principles
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Managers must distinguish between practices that are merely different and those that are wrong
For relativists nothing is sacred and nothing is wrong
For absolutists many things that are different are wrong
To shape ethical behavior
(a) Respect for core human values - absolute moral threshold for all business activities
(b) Respect for local traditions
(c) The belief that context matters when deciding what is right and what is wrong

Respect for local traditions should not be confused with respect for cultural relativism
Some practices are clearly wrong eg Union Carbide, Bhopal, India
Company's execs seriously underestimated how much on-site management involvement was needed to compensate for country's poor infrastructure and regulatory capabilities
Disastrous gas leak lesson : companies using sophisticated technology in a developing country must evaluate that country's ability to oversee its safe use

Defining the ethical threshold: Core Values
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Some hard truths must guide managers' actions - core human values; minimum ethical standards for all companies
(1) Right to good health
(2) Right to economic advancement, improved standard of living
(3) Golden Rule - Reciprocity; do not do to others what they do not want done to themselves

Shared attitudes about what it means to be human:
Individuals must not treat others simply as tools - they must recognize the person's value as a human being
Individuals and communities must treat people in ways that respect people's basic rights
Members of community must work together to support and improve the institutions on which the community depends

Common Human Values
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Individual Liberty, Egalitarianism, Political Participation, Human Rights

Respect for human dignity:
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create and sustain a corporte culture where people's intrinsic values are acknowledged; not see employees customers and suppliers as a means to an end
Produce safe products and services in a safe workplace

Respect for basic rights
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Support and protect individual rights of employees, customers, surrounding communities
Avoid relationships that violate human beings' right to health, education, safety, adequate standard of living

Good citzenship
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Support essential social institutions eg. economic system, education system, working with host govts, orgnznss to protect the environment


Core values are a Moral compass for business practice
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Help companies identify practices that are acceptable and those that are intolerable - even if practices are compatible with host country's norms and laws
eg. violations of core values
-Dumping pollutants  near people's homes
-accepting inadequate standards for handling hazmats
-employing children prevents them from receiving a basic educaton
-Lying about product specifications violates trust that is needed to sustain a corporate culture in which customers are respected
-Sometimes it is not a company's actions but those of a supplier or customer that pose problems
Tan family - supplier of Levi Strauss; forced 1200 Chinese and Filipino women to work 74 hrs/wk in guarded compounds in Mariana Islands

Creating an ethical corporate culture
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Core values for business can help companies begin to exercise ethical judgment
how to operate ethically in foreign cultures but are not specific enough to guide managers through actual ethical dilemmas

Whenever intolerable business situations arise, managers should be guided by precise statements
that spell out behavior and operating practices that the company demans

Many companies don't do anything with their codes of conduct
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they simply paste them on the wall

More of them now have Codes of conduct, vision, values
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Codes of conduct must provide clear direction about ethical behavior when temptation to behave unethically is strongest
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Bribery is unacceptable: Guidelines for gift giving, payments to get goods through customs, requests from intermediaries

Code of Conduct is explicit about business practice
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Bribery: Funds and assets of Moto shall not be used, directly or indirectly, for illegal payments of any kind
Unambiguous about which kind of payments are illegal - payment of bribe to a public official, kickback of funds to an employee of a customer
Specific procedures for handling commissions to intermediaries, issuing sales invoices, disclosing confidential info in a sales transaction...covering all situations in which
an employee can accept or offer bribes

Codes of conduct must be explicit to be useful
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but must also leave room for manager to use his or her judgment in situations requiring cultural sensitivity
Host country employees should not be forced to adopt all the home country values and renounce their own
Moto's code is exemplary: Gives clear direction

Absolutes
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Employees of Moto will respect laws, customs, traditions of each country in which they operate
but will at the same time not engage in course of conduct - even if legal, customary, accepted in such country - deemed to be in violation of accepted business ethics in Moto
or the laws of the US relating to business ethics

Individual judgment
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Strike apporpriate balance between providing clear direction and leaving room for individual judgment
crafting values statements and ethics codes one of the hardest tasks that execs confront

Words are just a start
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Refer to the Organization's Credo, code - be credible, committed, consistent
If senior managers act as though ethics dont matter then rest of employees wont think ethics matter

Conflicts of Development and Conflicts of Tradition
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Managers should prepare to grapple with Moral ambiguity and tension
The view that all business practices can be classified as ethical or unethical is too simple
Things should be as simple as possible - but not simpler
There is black, white and then the moral free space
In the grey area - no tight prescriptions for a company's behavior
Managers must chart their own courses - as long as they do not violate core human values

How can managers discover the limits of moral free space ?
Distinguish a value in tension with their own from one that is intolerable ?
For Managers to develop good ethical judgment, core values and code of conduct are key
But even explicit guidelines cannot always provide answers

thorniest ethical dilemmas
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Host country's ethical Standards are different and also lower than the home country's

Managers must recognize that when countries have different ethical standards
there are two types of conflict that arises

Conflict of Relative Development
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Ethical standards conflict because of Countries' different levels of economic development.
Host country may accept wage rates that seem inhumane; as economic conditions improve this will improve.

Conflict of cultural tradition
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Saudi Arabia - women cant be corporate managers
increase in economic development will not change the rules
To resolve ask the question: Would the practice be acceptable at home if my country were in a similar stage of economic development ?

Problem with Bribery
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Bribery undermines market efficiency and predictability, denying people thier right to a minimal std of living
Bribery disrupts distribution channels when goods languish on docks until local handlers are paid off
destroys incentives to compete on quality and cost due to under the table payments lead to purchasing decisions
Refusing to acquiesce is tantamount to giving business to unscrupulous companies
Destroys predictability, undermines essential social and economic systems - without an ability to predict outcomes, no one will invest
Practice is woven into social fabric
Govt policies are blamed n part in India
Business practices perpetuate corrupt behavior
Wealth disparity breeds corruption - Even a dramatic redistribution of wealth in would still leave most of India's inhabitants in dire poverty
Individual managers or a single company cannot wipe out entrenched corruption in a host country no matter how many bribes they turn down
When the host country's tax system, import and export procedures, procurement practices favor unethical players, companies must take action
Many consider bribes as a form of remuneration
US FCPA defines limits of petty bribery - even routine bribery is intolerable

Some degree of ethical commitment- play by the rules - is necessary for a sound economy
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Differences in Regulatory environments
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1980s India: Ciba-Geigy Dystentery med Entero Vioform import fought by Govt of India as it was banned in US as some users had side effects
India had high epidemic levels of dysentry problem
Unethical to make the drug available in India ?
Rational to consider this is not unethical despite the small risk of side effects

But sometimes Host country's standards are inadequate at any level of economic development then foreign companies must refuse to do business there:
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-If host country's pollution standards are very low and working in oil rig leads to increased risk of cancer
-dangerous side effects of a drug treatment outweighs the benefits then managers should not accept health standards that ignore that risk

When Relative economic conditions don't drive tensions
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there is a more objective test for resolving ethical problems
Is it possible to conduct business successfully in the host country without undertaking the practice ?
Is the practice a violation of core human value ?

Guidelines for Ethical Leadership
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Learning to spot intolerable practices and to exercise good judgment when ethical conflicts arise requires practice.
Need to create a culture that rewards ethical behavior

Guideline for developing Global ethical perspective in managers
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(1) Treat corporate values and formal standards of conduct as absolutes
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Whatever ethical standards a company chooses, it cannot waver on its principles wither at home or abroad. Leaders should set example and influence company lore

(2) Design and implement conditions of engagement for suppliers and customers
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Will your company do business with any customer or supplier ? What if the customer or supplier uses child labor ? What if it has strong links with organized crime ? What if it pressures your company to break a host country's laws ? Such issues are best not left for spur of the moment decisions.

(3) Allow foreign business units to help formulate ethical standards and interpret ethical issues
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Poulenc Rorer: TI: Allow foreign subsidiaries to augment lists of corporate ethical principles with their own suggestions.
TI: International Global Business Practices Council, with managers from  countries in which the company operates.
Overarching intent - create global ethics strategy, locally deployed.
Council's mandate - provide ethics education and create local processes that will help managers in the company's foreign business units resolve ethical conflicts

(4) In host countries support efforts to decrease institutional corruption
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Participate in reforming host-country institutions.
GE strong stand in India, using media to make repeated condemnations of bribery in business and government.
A single company cannot drive out entrenched corruption.
Transparency International, Germany based org, effective in helping coalitions or companies, govt officials, others work to reform corruption ridden bureaucracies in Russia,
Bangladesh.

(5) Exercise Moral imagination
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Using moral imagination means resolving tensions responsibly and creatively.
eg. Coca Cola, consistently turned down requests for bribes from Egyptian officials
gained political support and public trust by sponsoring projects to plant fruit trees


Company's commitment, statement of values, codes of ethics - key to provide managers with a foundation for behaving ethically
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Stakes can be very high as in Bhopal Union Carbide disaster.
Values must be the starting point for all companies as they formulate and evaluate standards of ethical conduct at home and abroad.
Add specific guidelines and Translate core human values into core values for business.

Ineffective policing of transnational corporations, enforcement, inadequate regulations.
Behaviors by unscrupulous companies are clearly wrong.

Restoration of SS United States, once luxury ocean liner Asbestos lining had to be stripped. With US standards for asbestos cost is $100M.
Ukraine $2M - places workers at known health risks.
Contract met Ukraine standards but ethical business people must object

III. Week10 Lecture1
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Conducting Business Research - Why, When and How?
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In Business, Data and Analysis needed to make good decisions
Some business issues require research, culminating in a set of recommendations
- framed in a logical, well written "white paper" or persuasive, well-supported presentation

3 most common reasons for conducting business research are
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(i) Controversy: There is significant controversy surrounding the facts or trends in your industry, product market, labor pool, or another aspect of your business
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(ii) Risk: There is need to make a risky decision - large, difficult to reverse financial investment,
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statement on behalf of the firm that if inaccurate would damage the firm's reputation

(iii) Unknowns
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An area or idea is new to the firm and "getting smart fast" is necessary
before determining whether further analysis is warranted; what the next steps should be

Controversy can arise due to Unknowns
Risks perceived may be associated with uncertainty about key facts

Decision to build a new plant is dependent on a demand forecast
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If demand fluctuates wildly or if the product is new and demand is difficult to forecast
the decision to invest in the plant will seem more risky than
if demand is well known due to large contracts secured with reliable customers

When not to do research (save on cost and time)
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- when Areas are familiar
- when there is little controversy
- low risk of loss (tangible/intangible) due to error

Information Asymmetry - A competitive Advantage
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Information in public domain => everyone has same info => parity with competitors
A firm should have info that others don't
interpretation and application of that information can give new insights in ways customers and competitors will behave
find ways to win

Decision to invest time and energy in business research is not an academic exercise
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Resources - time - are always constrained

Critical Management Skill: Learn to Develop strong sense for and Decide
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-when public information is sufficient
-when you can go with your gut
-when you need a well developed research process to deliver an informed recommendation

Be clear; Do not embark until then
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What will you do with the results of your research?
Imagine you have the answer to the question. What action will you take ?
Imagine you have results of your survey. What decision will you be able to take with confidence ?


Areas of controversy => sources of risk (significant unknowns) => get idea of WHAT business research is needed
Be clear about Value of Research outcome => Decide WHEN to trigger research (doing in adcance of need may waste energy or need update or redo)
Get clear, well supported documentation
Leadership & Organization must Act on it

What you dont know you dont know
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How to Conduct Business Research
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Decide value or research outcome will justify the effort
Decide the timing is right
Then engage in business research - find facts; "intel" making a business case; prep; briefing document
- effectively & efficiently identify,find, interpret data and info you need with the key steps

(i) State "intent of research" question clearly: What is the point of the work you propose ?
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Resist urge to jump to conclusions or seek out info before you have clearly defined your question

eg. Need to decide whether or not to invest in a new plant

Should we invest in a new plant ?
Are we confident we have demand to support an investment in a new plant ?
Is the technology we are considering in the new plant going to be obsolte before it pays off ?
Is this a good time to purchase a plan, or is a joint venture or lease agreement a better option ?
Is our product mix in line with our production capacity?
How will an investment in a new plant give us an advantage over our competitors?
How will an investment in a new plant help us retain and gain customers?

So, more than one question is at the heart of the research needed
but Cannot boil the ocean and learn everything about everything

Wrong question can spin the team's wheels without getting to the crux of the matter
Discuss what the real question is can generate insights and get your org to focus on what the highest priority objectives are

(ii) Plan your research
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what aspect of the issue do you need more info about ?
Consider what will you do with the info once you get it - focus your search on specific issues and priorities; don't start with a random internet search
Define clear workplan - what info is needed? who will obtain it?
Beware "Scope creep" - team members don't have a clear research plan; don't know when the work is complete enough to move ahead;
which issues are important - should be given most time and energy

(iii) Determine likely sources of info or data you seek (evaluate what bias or blind spot that source may have)
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Imperative to validate credibility of info source
Internet - validity & quality varies; credibility questionable; wiki not scholarly
Library - databases EBSCO host=> peer reviewed articles (experts in the field support the info in the article)
Analyst reports
industry publication - more trust worthy
How are the materials selected, vetted, curated matters

(iv) Assess & Organize info as it applies to the issue in question
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Organize, analyze, critically evaluate info - essential skill for effective management

(v) Iterate
Focus on certain issues may cause you to rethink and restate your core question

Time needed for any of the four steps can vary depending on situation
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Resolve a controversy: state question (1 day), planning & sourcing (1 day), assess findings (1 week)
Significant risk associated with decision: what is the fundamental question ? (longter time); plan, source, assess (nominal time0

Use this methodology to drive business decisions
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Create a Strong business case for a large investment in a new product line
Make recommendation for changes in internal processes based on comparison with industry best practices

Why, What, When, How to conduct business research
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IV. Lecture2  - Critical Thinking for Business Decisions
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When faced with a Specific question or set of questions => you may need business research
Info, Proposals, recommendations, assertions => you are expected to make a decision and take action

Assess and organize information as it applies to the issue in question
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Organizing, analyzing, critically evaluating info is an essential skill for effective management
Type and quality of info varies broadly
There is limited time for search and analysis
Common error - gather too much of wrong info, truncate analysis too soon, involve wrong people in info assessment

Being selective in info you choose is important
Being too selective can create problems as well.
Ideally gather various points of view
- Go beyond usual suspects, get every brain in the game
- proactively seek different points of view from competitors
customers who have defected to other suppliers,
players in different parts of your industry value chain

Follow best practice in business research
well defined question and research plan will guide info gathering

If looking for a specific answer, risk of confirmation bias (you'll pay attention to info that confirms your hypo)
keeping an open mind is important to avoid self-fulfilling prophecy (you find data to support the answer you want to get)

Once you have a Variety of high quality info, then in some cases recommendations are obvious
All signs point to go or no go. But does this mean go or stop ?

Strategy does not flow from analysis..no matter how great the analysis
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Experience and context - along with a critical mind - are needed to craft a direction or make a tough decision

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Take all the info you've gathered + add original thought + your analysis & insights => assessment => drive decisions
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Purpose of critical thinking is to justify a decision or motivate an action
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In some cases it may also be important to justify reversing a decision or changing the firm's course of action

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Critical thinking is a vital skill in evaluating info, incredibly important to professional success
Critical eye towards all information is the hallmark of great managers
Rather than just consuming information, Ask:
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Under what conditions would this be true (or not true) ?
Did the creators of this info have an over or unsconscious bias ?
Are there other interpretations of this data that would impact my conclusions or actions?

Get past Missing opportunities vs Misguided actions
Develop sharply honed critical thinking skills to make better decisions

concentrate on building skills in
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- Data driven decision making -> stay alert to cues and clues
- Get every brain in the game -> Consider multiple perspectives; map the playing field and players
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Be a savvy consumer of information
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how, why, find, interpret, vet info on
competitors, industry, personnel, regulations
Glean insights that your competitors don't have and
see opportunities before others do => WIN

Connect the dots, Understand why a strategy may or may not work & assertively articulate it