Focus Question: How important a role should ethics play in running a business?
Objectives
Students will be able to:
Discuss some of the recent ethics scandals involving U.S. companies.
Analyze suggestions for creating a more ethical business environment.
Examine an existing code of ethics adopted by one business.
Propose a model code of ethics for their VE firm.
Standards
NES: 4
ELA: 1,2,3
Time Frame/Notes to Teacher
One day, double period
Teaching Strategies
I. What Would You Do?
· As homework prior to this lesson, distribute Worksheet 17A, “What Would You Do?” As part of the introductory discussion to this lesson, have students explain their answers to the following:
o How did you answer these questions?
o To what extent would actual businesspeople answer these questions the same way?
o How concerned should we be about the ethics of American businesspeople as a whole?
o What issues do these questions raise for discussion?
II. Timeline of the Tyco International Scandal
· Distribute Worksheet 17B, “Timeline of the Tyco International Scandal.” Have students explain their answers to the following:
o What do we learn about business ethics from this newspaper article?
o What is your reaction to this story?
o How can you explain these unethical actions on the part of business people?
o To what extent is the lack of business ethics reported in these stories typical of the way most business people act?
III. Rebuilding Company Ethics:
· Distribute Worksheet 17C, “Rebuilding Company Ethics: A Five-Point Agenda.” Have students explain their answers to the following:
o What are some of the ideas expressed by the author about how to make companies behave more ethically?
o What’s your reaction to his ideas?
o With which do you agree most?
o How would you as the leader of a corporation react to this article?
o What are some of the suggestions you gave as to how to incorporate the ideas in this article into your VE firm?
· Distribute Worksheet 17D, “United Technologies Corporation -- Corporate Principles.” Have students complete the exercise on the worksheet. Then, as part of the whole-class discussion, have them explain their answers to the following:
o What’s your reaction to this code of ethical principles?
o Which of these is most important?
o Which of these principles is most difficult to implement?
o How should those who violate corporate ethics codes be punished?
Summary/Assessment:
Research a current company/person (such as, Martha Stewart, Enron, Adelphia Communications, WorldCom) that has been in the news over the past few years because of an ethical scandal. Prepare a report answering the following questions.
· Who/What company was involved?
· What was the issue/scandal?
· What was the outcome?
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Worksheet 17A
What Would You Do?
Exercise. Tell whether you agree with the three statements below as members of your VE leadership team by placing an “X” in one of the three boxes to the right. Explain your answer below, discussing how you believe most people who run actual businesses would respond.
Worksheet 17B
Timeline of the Tyco International scandal
Key dates and events that led to the convictions of former Tyco CEO L. Dennis Kozlowski and CFO Mark Swartz:
March 13, 2001: Tyco announces $9.2 billion cash and stock deal to purchase the CIT Group, a commercial finance company. Tyco director Frank Walsh helps arrange the deal.
Dec. 5, 2001: Tyco shares close at a high of $59.76 on the New York Stock Exchange.
Jan. 14, 2002: Business Week magazine lists Tyco CEO L. Dennis Kozlowski as one of the top 25 corporate managers of 2001.
Jan. 22, 2002: Kozlowski announces plans to split Tyco into four independent, publicly traded companies. The announcement starts a slide in the price of Tyco shares.
Jan. 29, 2002: Tyco shares drop sharply, one day after the company filed a proxy report with the Securities and Exchange Commission disclosing that Walsh got a $10 million fee on the CIT Group deal, and that another $10 million went to a charity where he was a director.
Jan. 30, 2002:The New York Times reports that Kozlowski and Tyco CFO Mark Swartz sold more than $100 million of their Tyco stock the previous fiscal year despite public statements that they rarely sold their stock. Kozlowski and Swartz say they will buy 1 million shares with their own money.
June 3, 2002: Kozlowski resigns unexpectedly as The New York Times reports he is the subject of a sales tax evasion investigation by Manhattan District Attorney Robert Morgenthau's office.
June 4, 2002: Morgenthau announces a criminal indictment accusing Kozlowski of conspiring to evade more than $1 million in state and city sales tax on fine art purchases.
Sept. 12, 2002: Morgenthau announces a criminal indictment accusing Kozlowski and Swartz of enterprise corruption for allegedly stealing more than $170 million from Tyco and obtaining $430 million by fraud in the sale of company shares. Former Tyco corporate counsel Mark Belnick is charged separately with falsifying records to conceal more than $14 million in company loans.
Dec. 17, 2002: Former Tyco board member Frank Walsh pleads guilty in an alleged scheme to hide the $20 million in fees for the CIT Group deal.
Oct. 7, 2003: The first trial of Kozlowski and Swartz begins with opening statements in which prosecutors characterize them as crime bosses who looted Tyco. Defense lawyers call them honest executives who deserved and disclosed all corporate payments and perks.
Oct. 28, 2003: The jury is shown a video of a birthday party Kozlowski threw for his wife at a resort in Sardinia. Tyco paid roughly half the $2 million cost of the event, which featured entertainers clad in togas and an appearance by singer Jimmy Buffett.
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Worksheet 17B, page 2
Nov. 25, 2003: Prosecutors show the jury a video of the $6,000 shower curtain and other lavish furnishings that decorated Kozlowski's Tyco-owned apartment in Manhattan.
April 2, 2004: A mistrial is declared after a juror says she received a letter pressuring her to convict Kozlowski and Swartz. Some observers said the juror, Ruth Jordan, had previously appeared to make an "O.K." sign to defense lawyers. She subsequently denied making any gesture toward the defense team.
July 15, 2004: In a separate trial, former Tyco corporate counsel Mark Belnick is acquitted of charges that he received millions in loans from the company and failed to disclose the payments.
Jan. 26, 2005: The second trial of Kozlowski and Swartz begins with opening statements in which prosecutors switch tactics to focus on money the two allegedly stole from Tyco. They do not mention Kozlowski's $6,000 shower curtain or the Sardinia birthday party for his wife.
April 27, 2005: Kozlowski, who did not testify at his first trial, takes the stand and testifies that the millions of dollars in Tyco payments and perks he received had been properly authorized and disclosed.
June 17, 2005: A Manhattan jury finds Kozlowski and Swartz guilty of stealing more than $150 million from Tyco. They each could face 25 years in prison.
Source: USA TODAY research
Find this article at:
http://www.usatoday.com/money/industries/manufacturing/2005-06-17-tyco-timeline_x.ht
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Worksheet 17C
Rebuilding Company Ethics: A Five-Point Agenda
Exercise. Read the article below and write a response to the memo that follows.
To build an ethical, excellent business enterprise successfully, serious attention must be given to five interrelated principles:
1. Motivation
To build an ethical enterprise, everyone, from the Board of Directors through executive management to employees at all levels, must understand and embrace the belief that: 1) we must take ethics very seriously 2) there are substantial costs of ethical neglect and 3) there are important benefits of sound ethics.
2. Mission
Each company needs an inspiring and shared mission that can mobilize people toward ethics and excellence. Ethical values and principles must be understood as integral aspects of all strategies and plans to achieve the company mission.
3. Culture
Culture refers to the characteristic traits, habits, and customs that define the organization. In each firm there must be a healthy "value-embedded culture," Without such a culture, ethical decisions and practices are endangered. Just as a physically weak, out-of-shape sports team cannot successfully carry out even the most brilliantly conceived set of plays, so an ethically weak company culture cannot live up to its stated principles and its code of ethics.
4. Practices
When a company has addressed its motivation, mission, and culture, it is time to ask what the company actually "does." What are the basic practices of the company? What are the primary activities, behaviors, and processes undertaken as the company pursues its mission? Here is where companies need action-guiding rules and principles—often stated in the form of a code of ethics. When principles have a nice "fit" with basic business practices and activities, they are not viewed as a set of rules telling us what we cannot do but rather as a “set of plays helping us get into the end zone.”
5. Dilemmas
Even in the best of circumstances, hard cases and crises in business are going to arise. An exclusive emphasis on crisis-resolution, "damage-control" ethics is a mistake because it allows negative challenges and crises to set the ethics agenda and fails to move upstream to deal with the sources of these challenges. Nevertheless, ethical dilemmas and challenges are inescapable and ethically healthy companies must put in place a ready, effective trouble-shooting and crisis-resolution method.
Adapted from http://www.ethix.org/ethics.html. Permission pending.
MEMORANDUM
To: All VE Employees
From: Board of Directors
Subject: Business Ethics
On a separate sheet of paper, please comment on this article about business ethics. How can we incorporate
these ideas into our VE firm?
____________________________________________________________Worksheet 17D
United Technologies Corporation — Corporate Principles
Exercise. Read this statement of corporate principles. Write the letters MI in front of the principle that you believe is most important and a MD in front of the one most difficult to put into place.
nited Technologies is committed to the highest standards of ethics and business conduct. This encompasses our relationship with our customers, our suppliers, our shareowners, our competitors, the communities in which we operate, and with each other as employees at every organizational level. These commitments and the responsibilities they entail are summarized here. 1) Our Customers: Our primary responsibility is to those who use our products and services. We are committed to providing high quality and value, fair prices and honest transactions. We will deal both lawfully and ethically with all our customers. | |
2) Our Employees: We are committed to treating one another fairly and to maintaining employment practices based on equal opportunity for all employees. We will respect each other's privacy and treat each other with dignity and respect irrespective of age, race, color, sex, religion, or nationality. We are committed to providing safe and healthy working conditions and an atmosphere of open communication for all our employees. | |
3) Our Suppliers: We are committed to dealing fairly with our suppliers. We will emphasize fair competition, without discrimination or deception, in a manner consistent with long-lasting business relationships. | |
4) Our Shareowners: We are committed to providing a superior return to our shareowners and to protecting and improving the value of their investment through the prudent utilization of corporate resources and by observing the highest standards of legal and ethical conduct in all our business dealings. | |
5) Our Competitors: We are committed to competing vigorously and fairly for business and to basing our efforts solely on the merits of our competitive offerings. | |
6) Our Communities: We are committed to being a responsible corporate citizen of the worldwide communities in which we reside. We will abide by all national and local laws, and we will strive to improve the well-being of our communities through the encouragement of employee participation in civic affairs and through corporate philanthropy. |
http://www.bsr.org/BSRResources/WhitePaperDetail.cfm?DocumentID=270. Permission pending.
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