Business Ethics & the Individual – Class 1
UG Sections L4, L5 & L6
Fall Semester 2021
Professor Mitya New
Welcome
•
Who am I?
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born in Indonesia
most of my life in Hong Kong
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Corporate career:
o
o
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Reuters in Switzerland, Hungary,
India, Japan, Scandinavia
Dow Jones in India again
Career as Educator:
o
o
o
Professor at various business
schools
Management consultant
Executive Coach
©Leading Organisations International Co Ltd
Course Logistics
Course Schedule
Assessment
Course
Agenda
Course Overview
Introduction to Business Ethics & the Individual
Class 1 - What is Business Ethics
Assessment
Your grading for this course will be a Letter Grade and will be based on a combination
of:
1.
Attendance in class and participation in class discussions/debates and on
discussion board:
15%
Focus on Quality and Quantity
2.
Performance in Three Team Presentations/Debates
25%
All members must participate in part of the team presentation/debate.
3.
Integrated Test – multiple choice (virtual in one week after course)
30%
Open Book
4.
Integrated Test – case study (virtual in one week after course)
Open Book. Max 3 pages, A4, single spaced
30%
Contact
• Professor Mitya New
–
chrisnew@ust.hk
• Teaching Assistant Michael Chan
– chanlc@ust.hk
Course Overview
Class
Class title
Notes
Class 1
What is Business Ethical Leadership
BP & Deep Horizon, Stakeholder vs Shareholder Thinking
Class 2
Making Ethical Choices
Right vs Right Dilemmas and approaches to ethical choices
Class 2a
Presentation/Debate class A
Cases: Apple, Deutsche Bahn, OR Facebook (1 case/student)
Class 3
The Healthy Workplace
#MeToo, Mental Health, Discrimination, Case: France Telecom
Class 3a
Presentation/Debate class B
Case: Camino Therapeutics (multi-part)
Class 4
Making CSR strategic
What is CSR. Michael Porter’s strategic CSR, Case: Singtel
Class 4a
Presentation/Debate class C
Case: IKEA and child labour
Class 5
Investing for ESG impact
Understanding and delivering ESG, Case: Generation Invest.
Class 6
Whistleblowing – the individual choice
Challenge of Whistleblowing, Cases: First America, Olympus (1
case/student)
Class 7
Ethical challenges in a world of AI
Ethics for Robots, Machine Bias, do Robots have emotions, Future of
the workplace. Open class debate
Class 8
Creating responsible & ethical
leadership cultures
Cases: Corruption at Siemens, Gender & Free Speech at Google
Class 9
Review & assessment
Review course themes and open discussion. Assessment questions.
Introduction
• This course requires considerable reading
• This course requires even more individual thinking, it does not provide answers or
solutions, there is no simple right or wrong answer
• We (you) will have debates in a number of classes on case studies where you will
be allocated to teams and will argue for or against a question on what you believe
the right ethical decision should be in the case
• This course can develop your understanding of the role of ethical thinking in the
responsibilities of a leader
• This course has the potential to act as a very powerful compass for your future
careers and potentially personal lives.
Introduction
Team Debate Format
• You can choose or be allocated to a case study team
• Each case will have a proposition for which each team will need
to prepare both the ‘for’ and ‘against’ position ahead of class.
• You will only discover in class whether your team is going to
argue ‘for’ or ‘against’
• Each member of the team must lead one stage of the debate
• The debate will have five rounds followed by questions:
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Opening Statement from ‘for’ and then from ‘against’
Argument 1 from ‘for’ and then from ‘against’
Argument 2 from ‘for’ and then from ‘against’
Argument 3 from ‘for’ and then from ‘against’
Closing Statement from ‘for’ and then from ‘against’
Open questions from all students
Full-class poll to determine which position was more persuasive
Your team must submit a four-page Powerpoint presentation 24
hours before the class outlining the three key arguments “for”
and the three key arguments “against” on the debate topic.
Business Ethics & Individual Leadership
– Course Introduction
Introduction
What is the subject of Business Ethics and how it impacts
the Individual all about?
Open discussion and/or
Zoom Chat 1
Introduction
French philosopher and writer who was a strong
advocate for freedom of speech, freedom of religion,
and separation of church and state.
“With great power comes great responsibility.”
“Voltaire” (François-Marie Arouet)
1694-1778
Introduction
•
Business Ethics is a relatively new field of management thinking
•
•
•
Thinking on what constitutes wise and ethical leadership has existed for a long time
Modern corporate social responsibility ideas have been developing for at least 25 years
The 2008 financial crash following Lehman collapse ($600 billion assets - largest bankruptcy in US
history) has given new impetus
•
Covers leadership responsibility for sustainable development
•
Covers leadership responsibility for behaving ethically
•
Covers leadership responsibility for behaving legally
Responsible and ethical leadership will ultimately be more profitable (in
the long term)
Class 1 – What is Individual
Ethical Leadership
Shareholder vs Stakeholder Theory
British Petroleum and the Deepwater Horizon disaster
Class 1
Agenda
Leadership and Trust
Mindset of Responsible & Ethical Leadership
Responsible & Ethical Leadership – making choices
Core Reading for Class 1
Required Reading
•
•
A Friedman Doctrine – The social responsibility of Business is to increase its profits
Deepwater Horizon – Spilling Oil, Money and Trust
Shareholder Value thinking …
What does Milton Friedman argue in his seminal essay in the New York Times: “The Social
Responsibility of Business is to Increase its Profits”?
What aspect of corporate behaviour particularly
worried Friedman?
… Corporate philanthropy …
©Leading Organisations International Co Ltd
From Shareholder to Stakeholder Mindset
Essence of the difference between the Shareholder and the Stakeholder view of a
company’s Social Responsibility is the question of whether the company is only
responsible to:
 shareholders who own the company
or also to:
 stakeholders who are affected by or deal with the company
Shareholders vs Stakeholders
https://www.youtube.com/watch?v=vD9XJKZmXEs
https://www.youtube.com/w
atch?v=JGZJjqhA9wY
©Leading Organisations International Co Ltd
Shareholder to Stakeholder thinking
Stakeholder Theory is not just a
reaction to the perceived harshness
of pure shareholder capitalism. It
has older roots in reflections on the
role of a company in society …
©Leading Organisations International Co Ltd
Shareholder to Stakeholder thinking
Stakeholder Theory asks two key questions:
 What is the purpose of the firm?
 What responsibility does management have to
stakeholders in and outside the firm?
Some models distinguish between Direct Stakeholder
and Indirect Stakeholders or Internal and External
Stakholders
©Leading Organisations International Co Ltd
Applying Shareholder to Stakeholder thinking to BP and Deepwater
Horizon
Deepwater Horizon accident
British Petroleum and the Deepwater Horizon disaster
• What are the facts of the Deepwater Horizon accident
•
•
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•
•
•
•
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Deepwater Horizon drilling rig owned & operated by Transocean, leased to BP from 2001 – 2013
Halliburton responsible for cement casing & plugging of the well once exploratory drilling complete
Sept 2009 Deepwater Horizon began drilling deepest oil well in history (10,683 m.) in Macondo
Prospect in Gulf of Mexico
Lease of rig costing BP ca $500K/day and BP teams under pressure to get into production
Rig was operating in accordance with regulations stipulated by US MMS, but engineers may have
cut some corners
126 crew on board – 7 from BP, 79 from Transocean, and other companies including Halliburton
April 20, 2010 blowout from drilling riser pipe burst onto the Deepwater Horizon rig and catches fire
Both blowout preventer and blind shear ram activated but fail to stop leaking oil
Fire on Deepwater Horizon was uncontrollable and after 36 hours on April 22 rig sank
11 workers killed and 17 injured in accident
Oil well continued to leak 4.9 million barrels of oil into the Gulf of Mexico for 87 days until July 15
2013 Transocean paid $1.4 billion for violations of Clean Water Act
2014 Halliburton paid $1.1 billion to settle all legal claims
US District Court judge Carl Barbier ruled BP 67% responsible, Transocean 30% and Halliburton
3%. US Supreme Court upheld judgement in 2014
BP’s compensation obligation was uncapped. By Feb 2013 BP faced $42 billion in civil settlements
and payments as well as $18.7 billion in US government fines
British Petroleum and the Deepwater Horizon disaster
Zoom Poll 1
A complicated set of unexpected and unknown mishaps led to this environmental
disaster.
Was the CEO of BP responsible for this disaster?
British Petroleum and the Deepwater Horizon disaster
1.
You will be divided into 6 equally-sized breakout groups
2.
In your groups you will prepare your arguments in favour of or against the position
in one of the questions on the following page. You will have 15 minutes to prepare
3.
Professor will select one member of your group randomly to present your group’s
arguments in a presentation of not more than 3 minutes.
4.
After both groups have presented the arguments for and against the rest of the
class will vote on which argument is more persuasive and be ready to explain the
way they voted.
British Petroleum and the Deepwater Horizon disaster
1.
The US government’s MMS was responsible for the accident.
Group 1 “Agree”
vs
Group 2 “Disagree”
Zoom Poll 2
2.
The new CEO Bob Dudley (replaced Tony Hayward) was right that BP should go
beyond legal requirements to behave in a socially and environmentally responsible
way.
Zoom Poll 3
Group 3 “Agree”
vs
Group 4 “Disagree”
3.
BP should set safety as a ‘bottom line’ and impose its strict safety standards on all its
business partners.
Group 5 “Agree”
vs
Group 6 “Disagree”
Zoom Poll 4
Leadership and Trust
 Deciding what is ethically right or wrong in situations like the one faced by BP is
often not easy for a leader.
 Knowing how to handle the situation in front of the media and public opinion can be
even harder for a leader.
 The impact of these and other controversies have a powerful effect on the trust
people place in the institutions and leaders around them.
 Edelman Trust Barometer 2020: https://www.youtube.com/watch?v=IXp7ciGs08A
Leadership and Trust
What is the Mindset of Ethical Leadership
Is leadership about becoming the
powerful leader hero?
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Winning
Rewarded financially
All-knowing
All-powerful
Mindset of Ethical Leadership
Stakeholder Theory developed in 1980s & 1990s
Concern for Self-Interest
Mindset Shift is from seeing organization and society as stakeholders that need to be
managed towards achieving your individual goals …
My Individual
goals
Organization
goals
Society
goals
Ethical egoism
High
Utilitarianism
Medium
Altruism
Low
Low
Medium
High
Concern for Interests of Others
… to seeing the individual, organization and society as stakeholders whose goals are
all equally important.
My
Organization
goals
My Individual
goals
My Society
goals
Responsible & Ethical Leadership and Covid19
Concern for Self-Interest
Are companies behaving responsibly in the current
corona virus pandemic?
Ethical egoism
High
Utilitarianism
Medium
Altruism
Low
Low
Medium
High
Concern for Interests of Others
What kind of ethical criteria are companies and
governments using to address the corona virus
pandemic?
30
Responsible & Ethical Leadership and Covid19
One of the greatest challenges in leadership is having
the courage to take an individual ethical stand.
An organization’s decision to take an ethical stand is
often driven by a leader’s personal values.
250 million Euro for struggling smaller
business partners (NB: CEO Faber exit)
European Solidarity Plan – supply PPE,
support small retail outlets & suppliers
Support for 4,400 staff – guarantee
salaries for 5 months, no redundancies
before August. CEO Denise Coates made
personal donation of GBP 10 million to
local NHS trust
© Leading Organisations International Co Ltd
Any Questions?
Reading and preparations for Class 2
 Reading
• Right vs Right: When Managers are Faced with Tough Ethical Choices
• Clothing makers in Asia give stark coronavirus warning
• Newcastle takeover: moral values should prevail, Khashoggi’s fiancée says