Overcoming the Cultures Influence in Young People: A Look At How We Might Realign PostModernists Pro

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Overcoming the Cultures Influence in Young
People A Look At How We Might Realign
Post-Modernists Progeny with the Pursuit of
Virtue Ethics

• Professor Marianne M. Jennings
• W.P. Carey School of Business
• February 21, 2008

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What word did the American Dialect Society name
as the word of the year for 2006?
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Truthiness!
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"the quality of preferring concepts or facts one
wishes to be true, rather than concepts or facts
known to be truewhat feels like the right
answer as opposed to what reality will support
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What word never left the top 20 most frequently
looked up words in online dictionaries in 2005
and 2006? And was number one in 2005?
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Integrity!
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Ethical Lapses

• Student loan lenders Sallie Mae and 17
  universities
• Adelphia
• Boeing
• Cendant
• Computer Associates
• Tyco International
• General Electric
• Global Crossing
• Merrill Lynch
• Enron
• Qwest
• WorldCom
• Royal Shell
• Nortel
• Krispy Kreme
• Refco
• UnitedHealth Group
• Merck
• World Bank

• ATT
• Xerox
• Kmart
• Citigroup
• Lucent
• ImClone
• Arthur Andersen
• HealthSouth
• Royal Ahold
• Parmalat
• Apollo Group
• Marsh McLennan
• AIG (Putnam)(Mercer)
• Fannie Mae
• KPMG
• GM
• Options scandals (160 companies)
• HP
• Universities and travel

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Government Issues

• Oil for food UN scandal
• Post-Katrina corruption in contract awards
• Iraq contract awards
• Rob Reiner using his favorite companies for
  California commission contracts and political
  purposes
• Arlen Specters aides spouse gets earmarked
  funds
• Arizona State treasurer investigation for
  conflicts Maricopa County assessor and
  conviction 400 per low-income loan to seniors
• Mike Espy
• Henry Cisneros
• Taser and the law enforcement officials
• Colorado and the 1,500 office chairs
• Contributions for changing the no-touching rule
  at San Diego strip clubs
• Scottsdale School District and the bids
• New York assistant principal who gave his son the
  answers to 35 questions on the Regents exam
• Kerik and employment of illegal immigrant
• DMV employees who gave out licenses in exchange
  for cash
• William Jefferson and the cold cash

• Illinois Gov. Ryan
• San Diego -- 1.1 billion pension fund deficit
  skimming to meet city budget
• Connecticut Gov. Rowland
• Chicago Mayors office and contracts
• Embezzlement BLM
• Former Delay aides and guilty please
• Abramoff
• Duke Cunnigham -- 2.4 million from defense
  contractors
• State crime labs and scandals
• Tom DeLay
• Clark County Commissioner and the MyTai
  concession
• Philadelphia mayor and the pay-to-play
  contracting system
• Darlene Druyun and Boeing
• HR director of JeffCo County and the 32,000 in
  personal expenses on county credit card
• Governors engaged in business relationships with
  those who receive state contracts
• BLM chief in Monterey doctoring invoices to
  embezzle
• USDA employees and the 100K for visas

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Some Sample Fines

• Boeing
• Tenet
• Columbia/HCA
• AIG
• Marsh McLennan
• Fannie Mae
• KPMG
• Tyco
• Cardinal Health
• Pharmas
• UnitedHealth Group
• Siemens

• 615 million
• 725 million interest 900 M
• 1.7 billion
• 1.5 billion
• 850 million
• 400 million
• 465 million
• 750 million
• 600 million
• 2.4 billion
• 600 million
• 402 million

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Colleges and Universities

• Benjamin Ladner, former president American
  University
• 43,982 for dinners (13-course meals)
• 22,345 for first-class ticket to Nigeria
• Personal chef 220,000 for 3 years)
• Personal development trips for chef to Paris,
  Rome and London
• 100,000 for a social secretary
• 44,000 in alcohol
• Furniture expenses
• Engagement dinner for his son
• 54,000 for cars and drivers
• 5,000 lunch hosted by Mrs. Ladner for her garden
  club
• 500,000 of personal expenses in three years

• I do believe I have made mistakes, and I
  understand how the perception of the significance
  of these has been exaggerated in the media. In a
  few instances, I overlooked the fact that certain
  personal expenses were charged to the university.
  Because of my single-minded focus carrying out
  university business, I regret these accounting
  errors and have already reimbursed the
  university. In hindsight, I should have been more
  vigilant and precise. The amounts being leaked to
  the media are overblown and inaccurate, and will
  be shown to be wrong.

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Colleges and Universities

• Apollo and the University of Phoenix
• DOE audit on recruiting and advising
• Stock options back-dating investigation
• The student loan scandals
• Maricopa County CCD loses three presidents

• Maricopa County Community College
• Bond issue
• Funding for campaign materials
• Relationships with builders and others who stood
  to benefit from the approval

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The Presidents

• Texas Southern University and former president
  Priscilla Slade (plus VP for senior
  administration and senior safety engineer) for
  280,000 in expenses for presidents home
• Hung jury
• Wrongful termination suit dismissed
• Vanderbilt and Gordon Gee (700,000 on parties,
  including personal chef)
• Vanderbilt defended him in WSJ article

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The Vice President (Vice Chancellor)

• 2,112.00 reimbursed long-distance charges
• Calls were to counsel for one of the Texas AM
  campuses
• 1,804 calls were after- or before-hour calls or
  during holidays and weekends
• Resigned following anonymous letter to internal
  audit about an affair between the two

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Colleges and Universities Issues

• Cloning fraud
• Research conflicts of interest
• Funding conflicts of interest
• Relationships with students

• Double-dipping by faculty on pay systems
• Text book conflicts
• Grade inflation
• College athletics
• College contracting
• College financial aid

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Colleges and Universities

• UT Austin
• Vanderbilt
• American University
• Shoreline Community College
• Texas Southern University
• Maricopa Community Colleges

• Johns Hopkins
• Syracuse
• NYU
• Columbia
• USC
• Penn
• Oral Roberts Univ.
• Average fine 2 mil

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I. What makes good and smart people at great
colleges, universities, organizations and
companies do really ethically dumb things?
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A. Never an issue of not seeing the issues

• We see the issue.
• We feel the pressure.
• We find ways to comfort ourselves.
• We hope it resolves itself.
• We ignore it.
• We allow others to decide for us.

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UT Austin

• "Larry loves tequila and wine. Since becoming
  director at UT Austin, he has not had to buy any
  tequila or wine. Lenders provide this to him on a
  regular basis."
• Senate Report on Financial Aid Offices and
  Student Lender Relationships

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Leadership Failures on Social Issues

• Duke and the Lacrosse Team
• Virginia Tech and the Cho case
• Disruptive Students A Liability, Policy, and
  Ethical Overview, Journal of Legal Studies
  Education, with Heidi L. Noonan-Day. 24(2)
  291-324 (2007).

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So, if they see it, what happens?

• 65 DIDNT REPORT (1999)
• 37 DIDNT REPORT (2003)
• 41-50 DIDNT REPORT (2005)
• 50 DIDNT REPORT (2006)
• 50 DIDNT REPORT (2007)
• Industry Surveys and SHRM

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In the academic world

• Only 44 of faculty members pursue academic
  integrity cases
• Feeling that there is a lack of administrative
  support

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So, how come they said nothing?

• 96 feared being accused of not being a team
  player (same 1999 and 2003)(80 2006)
• 81 feared corrective action would not be taken
• 75-88 (2006)
• 68 feared retribution from their supervisors
• 49-64 feared retaliatory action (2006)
• (SHRM and industry surveys)

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Merck and Vioxx Revelations

• I just cant wait to be the one to present those
  results to senior management.
• Dr. Alise Reicin
• In a 1997 e-mail on C.V. events (cardiovascular
  effects of Vioxx)
• Merck had not yet begun selling Vioxx

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Hewlett-Packard

• How does Ron Ron DeLia, Boston PI get cell and
  home phone records? Is it all above board?
• H-P senior counsel and ethics officer, Kevin
  Hunsaker
• We are comfortable there are no Federal sic
  laws prohibiting the practice.
• Anthony Gentilucci, H-P global security officer
• I shouldnt have asked.
• Hunsaker in response

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KPMG Internal Culture During Tax Shelter Years

• 1.2 billion of the firms 3.2 billion in annual
  revenue
• Mandatory weekly conference calls for 500 tax
  partners
• Youre either on the team or off the team.
• Jeffrey M. Stein, head of KPMG Tax Department
• to senior manager who raised concerns about
• tax shelters during a call

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B. High Ethical Self-Esteem

• Living in Denial and Slipping Into Complacency

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We all think we are ethical.

• None thought their ethical standards were lower
  than those of their peers in their organization
  (1)
• Society of Human Resource Managers

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Why do we fancy ourselves so ethical?

• We are not talking about it with others.
• We have rationalized, labeled, and defended
  ourselves into believing we are ethical.

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3. Complacency

• One additional possibility

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The Survey on Lying

• 52 said lying was never justified
• 66 said lying could be justified
• 65 would lie to save someones feelings
• 40 said theyd never lied or cheated
• 10 of the 40 said they had told a lie in the
  past week
• 40 said it is okay to exaggerate a story to
  make it more interesting
• 33 said it is okay to lie about your age (only
  to make yourself younger, though, not for
  purposes of drinking age)
• 33 said it is okay to lie about being sick to
  take a day off
• AP Poll, June 23-27, 2006

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We have ethics here.
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Ellen Frishberg

• Former head of student financial aid office at
  Johns Hopkins
• Accepted 160,000 in consulting fees and tuition
  reimbursement from student lenders

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"Appearance of impropriety is as important as
impropriety itself."
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A thought on conflicts

• "I do serve on . . . some advisory boards -- kind
  of like the medical junkets the pharma companies
  offer -- we go to a resort for 3 days, and pay a
  nominal fee. But I still insist on best pricing
  and good service before I bring a loan to my
  students. The new generation of administrators
  just don't have the same moral center."

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Ellen Frishberg, former head of financial aid at
Johns Hopkins, in an address in 2000 to the
National Association of Student Financial Aid
Administrators
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Do more with less!
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Holly L. Mooreformer President, Shoreline
Community College, WA to employeesfollowing her
25,000 raise awarded in violation of open
meeting laws
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Guess who said it!

• I have the highest ethical standards.

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Dr. William McGuire

• Former CEO UnitedHealthGroup, to his board when
  confronted by it with an investigation that
  revealed backdating on one-half billion in his
  stock options
• In Dec. 2007 agreed to repay 600 million

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Guess Who Said It!

• The things he did to that company are horrible.
  I dont understand the mindset of a man who would
  do what he did to that company.

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Richard Scrushy, former CEO of HealthSouth, while
sitting in on the Jeffrey Skilling trial on March
6, 2006. Mr. Scrushy is now serving 7 years for
bribery. HealthSouth took 4 years to decipher its
real earnings once Scrushy was ousted. Revenue
restatement totaled 2.5 billion
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Guess Who Said it?

• Its only illegal if you get caught.

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Another CEO

• Greg Reyes
• Former CEO of Brocade, a Silicon Valley company
• Nephew of Googles CFO
• Convicted in 2007 of backdating options (fraud)
  facing 7 years

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Guess who said it!

• I did not do anything wrong.

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Lawrence Burt, VP of student affairs and director
of the office of student financial services at UT
Austin, who owns 1,500 shares and 500 warrants in
Educational Lending Group, a preferred lender at
UT Austin.
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II. Our Students
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The State of Ethics Is Not So Great

• 60 of high school students cheated on an exam in
  the last year
• 62 of high school students lied to a teacher in
  the past year
• 82 of high school students lied to their parents
  in the past year
• 33 copied something from the Internet
• 28 stole from a store in the past year
• 23 stole from a parent or relative
• Josephson Institute 2006

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Thoughts from a high school principal

• Theyre not bad kids. They only cheat because
  they are under pressure.

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Thoughts on cheating from high school students

• Students who cheat do so on their own terms. Of
  course there has been no penalty, but they know
  there is a risk, and apparently it seems like
  its worth taking.
• Just about everyone is cheating in some way or
  another. It is a common thing among society that
  is seemingly accepted.

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Thoughts on cheating from a high school teacher

• Cheating is done on a daily basis and there is
  little effort to curb it. Kids will ditch class
  by having their parents excuse them during the
  period they are to take a test, and then the kids
  find out from their friends what is on the test.
  Kids can then take the test the next day. . . .
  The new camera cell phones are now being used to
  take pictures of tests and also they are using
  instant messaging to cheat.

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Cheating in College
11 reported cheating in 1963
49 reported cheating in 1993
75 reported cheating in 2003/2005/2006/2007 50
graduate students reported cheating (2006)
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Schools that discovered cheating scandals

• Duke
• San Diego State
• Naval Academy Annapolis
• Air Force Academy Colorado Springs
• West Point
• UNLV

• Berkeley
• Dartmouth
• Columbia
• ASU

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What happens when your 75 figure on cheating
reaches 100?
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Do I have some fixes?
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1. Thoughts on Truth It Exists

• I never lied to you. I always told you some
  version of the truth.
• Jack Nicholson to Diane Keaton in Somethings
  Gotta Give
• Truth doesnt have versions.
• Diane Keaton to Jack Nicholson in Somethings
  Gotta Give

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Truth and Its Percolating Quality

• The laws of probability do not apply when it
  comes to the surfacing of unethical or illegal
  conduct
• 1. Three people can keep a secret if two are
  dead.
• - Hells Angels motto
  (courtesy B. Franklin)
• 2. Lying is good. Its the only way we ever get
  at the truth.
• - Dostoevsky
• 3. Circumstances beyond your control will cause
  bad acts to be discovered.
• - Anonymous

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Remember . . .

• Its not the first mistake the gets you. Its
  the second, the cover-up, that will.
• M. M. Jennings
• Its not the first step it is the turn of the
  road.
• M.M. Jennings grandmother

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Public trust and the long haul

• Once betrayed . . .
• You really dont understand. This story will be
  filed. It will be pulled up every time I am in
  the news. These stories never die.
• Actress Anna Scott (Julia Roberts)
• Notting Hill
• Assumptions about corruption and the resulting
  stereotypes

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The Attitude Survives Stanford

• We took a beating. It was sufficiently bad that
  after the hearings and during the summer of 1991,
  it became clear to me that there was so much
  faculty concern about the ruckus and whether
  Stanford would continue to be a target for this
  kind of thing that I decided that if you're part
  of a problem, you can't be part of a solution and
  so I resigned. I think that steadied things down
  considerably. It wasn't any fun to do that. It
  was not any fun to take a certain amount of
  newspaper abuse in connection with it. Stanford's
  recovered nicely. We're still not paid the
  indirect cost rate I think we are entitled to
  under articulated government policies, but the
  sequelae to the whole furor, I think, made it
  plain to everybody that Stanford hadn't engaged
  in any wrongdoing.
• Donald Kennedy, former President, in interview
  in 2000, on the federal grants issues

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2. Think Marathon, Not Sprint!
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Remember . . .

• A management team distracted by a series of
  short-term targets is as pointless as a dieter
  stepping on a scale every half-hour.
• Larry Page and Sergey Brin
• Google Owners Manual
• Letter to investors

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The Story of Sandler ONeill

• Fifteen years from now, my son will meet the son
  or daughter of one of our people who died that
  day, and I will be judged on what that kid tells
  my son about what Sandler ONeill did for his
  family.
• Jimmy Dunne III
• Sole surviving senior partner from 9/11/01 WTC
  attacks
• One of 17 survivors out of a firm of 83

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3. Ethics and Leadership

• Leadership is the ability to see around corners
• Leadership is the ability to see the problem
  before others
• Leadership is the ability to fix the problem
  before it becomes a headline

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Social/Regulatory/Litigation Cycle

• Public
• Moves
• the
• Cycle

Options
Latency Awareness Activism
Regulation/Litigation
Time
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Options over Time
COST
OPTIONS

TIME
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4. Dont fall victim to Lack of Enforcement

• What you are thunders so loudly that I cannot
  hear what you say to the contrary.
• - Ralph Waldo Emerson

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Absolute, Unequivocal, and Egalitarian
Enforcement

• If the janitor had taken the liquor, he would
  have been fired.
• Students observation on discussion of tolerance
  for a manager who borrowed three bottles of
  vodka on a Friday night for her birthday party
  after work and brought in replacements on Monday
  morning

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5. Watch the Rationalizing Its a gray area.

• Why is it important that it be gray to you?
• Is it legally gray?
• Is it ethically gray?
• Is it a good-faith disagreement?
• Interpretation vs. loophole vs. nondisclosure of
  relevant information
• Descriptors Aggressive opinion
• Aggressive accounting
• Financial engineering

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6. Develop standards

• Personal integrity
• Unit, division, college, university
• Think of and list the lines you will not cross to
  be successful
• The role of a personal credo

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7. Define Dilemmas by Values, Not Circumstances

• Avoid the either/or conundrum and its false
  security Use value-based decision making
• The ease of resolution vs. the long-term
  implications
• Failure to define the issue properly
• Interferes with creative and strategic thinking
• Solve the problem dont compromise values

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A Scenario

• Joe, a student taking a stats course, was injured
  by a hit-and-run driver. The injuries were
  serious. Joe was on a ventilator. While Joe did
  recover, he required therapy for restoring his
  cognitive skills. He asked for more time to
  complete his course work. The prof denied the
  request. Joe would have to reimburse his
  employer for the tuition if he did not complete
  the course with a passing grade. Joes father
  works with stats a great deal. Joes father went
  and took the course final for Joe. Joe earned an
  A in the course. Any problems?

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8. Watch the Slipping . . .

• You slip-slide into evil, he thought. You cross
  the line for just one moment. You cross back.
  You feel safe. You change things, you believe,
  for the better. The line is still intact. Okay,
  maybe theres a smudge there now, but you can
  still see it clearly. And the next time you
  cross, maybe that line smudges a little more.
  But you have your bearings. No matter what
  happens to that line, you remember where it is.
• Dont you?
• Harlan Coben, Chapter 32

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Organizational Issues
Individual Action Organizational
Regulations Government and Systems Regulations

• Who is responsible?

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Layers of Ethical Development
Ethical Leadership Ethical Courage Ethical
Knowledge

• Evolution
• Dean Ned Hill
• BYU Marriott
• School of
• Business

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9. Keep It Simple!

• The Pack of Gum