Business Ethics
Corporations Today
Corporations, by charter, are immortal.
 Corporations have multiple relationships that
they are unlikely to keep secret very long.
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www.sec.gov/edgar.shtml
For media companies revenue depends on:
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Advertisers
Partners
Subscribers
Advertisers
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Large advertisers/partners such as Verizon,
P&G, and Coca-Cola will be around for
decades.
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As will their agencies
As will their consumers
It’s not smart business to bite the hands that
will feed your company for the next several
decades.
 Don’t lie to them or cheat them.
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Advertisers/partners/subscribers/consumers don’t
buy from companies they don’t trust
Current Headlines
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The press loves stories about corporate
dishonesty.
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Enron
WorldCom
Ogilvy & Mather over-billed the government’s Office
of National Drug Control.
Five bankers fired from Barkley Bank for spending
$62,200 on dinner – for themselves.
Bear Stearns hedge fund managers lied to investors.
Bernie Madoff
Goldman Sachs
What’s Going On?
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People perhaps don’t know or don’t care about
business standards or ethics.
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Put their interests first.
People are perhaps greedy.
 People perhaps go along with unethical behavior
because:
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“If I don’t take their money someone else will.”
“No one will know.”
Rationalization
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Criminals and other sociopaths typically
rationalize their behavior with “if I don’t take
their money, someone else will.”
A salesperson for a major media company
forged a client’s name on a contract, but got
caught when the client got a bill and said, “We
didn’t sign anything!”
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The salesperson thought “no one will know; I won’t
get caught.”
Three Reasons
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There are many reasons for unethical behavior,
but three common ones are:
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Strong tendency to bow to authority and follow
orders: “just following orders.”
Strong tendency to do what peer group does—social
pressure and conformity: “everyone does it.”
An absence of clearly defined and communicated
standards: “nobody told me.”
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Bow to authority.
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People give up their individual free will and autonomy and turn
their conscience over to someone else.
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Cave in to peer pressure in order to conform.
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People negate their free will and autonomy and hand over their
individuality to the crowd.
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Nazis at Nuremburg trials said, “just following orders.”
Individuals have a conscience, the crowd, a mob, doesn’t
There is an absence of standards.
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Organizations must create and communicate ethical standards to
trump the “nobody told me” copout.
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We all know what we’re supposed to do.
Why the Ethical Lapses?
Sociopath, narcissist, excessive greed, or other
personality disprders?
 Perhaps due to extreme pressure from
management?
 Perhaps because of an absence of clearly
defined and communicated standards or a code
of ethics?
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Ethics - Definition
Clearly defined standards of right and wrong set
out by written codes or standards by a company
 Individual standards of right and wrong based
on:
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Deep-seated personal values
Accepted beliefs and modes of conduct by groups in
which people choose to work and play
With heightened press coverage of business
scandals…
 The public has become increasingly concerned
about ethical behavior…
 Now, more than ever is the time to follow Peter
Drucker’s sage advice…
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“It is more important to do the right thing than to do
things right.”
Five Areas of Ethical Responsibility
1.
To consumers
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Definition of consumers
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Customers buy a product or service.
Consumers use a product.
In some businesses (retail, utilities, transportation, e.g.) the
customer and the consumer are the same
In other businesses (CPG, media, e.g.) they are different
Audience/readers/subscribers = consumers
Advertisers = customers
Five Areas of Ethical Responsibility
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To consumers (audience/partners/subscribers)
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Put consumers first.
Don’t lie to them.
Don’t sell them shoddy products.
Don’t sell unsafe products.
Don’t accept advertising for products you wouldn’t
recommend to a relative.
Don’t invade their privacy with out clearly notifiying
them.
Five Areas of Ethical Responsibility
2.
To your conscience
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Doing what’s right according to one’s own moral
standards.
“There is no pillow as soft as a clear conscience.”
Doing the right thing increases self-esteem, selfimage, and self-confidence.
Greed is a cancer that will kill a person’s and a
company’s reputation and eventually will kill the
organization.
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Innovator’s dilemma
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Some people are unethical because they believe they
won’t get caught.
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The ring of Gyges
But they are playing an ethical lottery with the odds
of losing extremely high.
Doing the right thing every business day is the only
sure way of not getting caught and of maintaining a
reputation and the self-esteem that goes along with
an excellent reputation.
Five Areas of Ethical Responsibility
3.
To customers
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Customers (advertisers) don’t buy from people and
companies they don’t trust.
Thus, “under-promise and over-deliver” to gain trust
A media company shouldn’t sell advertisers:
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Something they don’t need
Something they can’t afford
Something that doesn’t work
– E.g. Telling them banners will generate lots of clicks
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A media company shouldn’t accept advertising:
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That is in bad taste
That hurts a customer’s image
That is misleading
A media company shouldn’t:
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Give kickbacks
Use bait-and-switch tactics
Let customers feel like they lost a negotiation
Reveal information before a campaign runs or reveal
competitive information
Give away or sell customer data unless customer gives
permission
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A media company shouldn’t:
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Promise what advertising itself cannot deliver.
– The media can deliver potential exposure to an audience
– Can’t promise results – too many uncontrollable factors
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Promise privacy if it can’t deliver
Promise anything it can’t deliver:
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Promotions
Merchandising
Tickets
Position
Placements
Completion of schedules
Results
Five Areas of Ethical Responsibility
4.
To the community
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The global community
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The world community, society
“Do no harm”
“Suppose everybody in the world did this?”
The business community
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To maintain faith in the free-market system
Investors, regulators, general public
“Suppose everybody in business did this?”
Five Areas of Ethical Responsibility
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The industry community
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The advertising-supported media
– Americans get their news and often their values, beliefs,
and attitudes from the media.
– The traditional media altered people’s view of the world
because they were free of government control.
– The media have a responsibility to keep itself free by
fueling it in part or in whole with advertising and/or
subscriptions.
– Out of government control
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The local community
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Don’t foul your nest or cheat your neighbor.
Broadcasters get licenses to serve the community.
Five Areas of Ethical Responsibility
5.
To the organization/company
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Anyone who represent an organization/company to
customers, especially with intangible products such as
the media, becomes a surrogate for a company’s
product.
That representative is the company in the eyes of
customers.
Thus, a company’s credibility and reputation depend
on the credibility of any person or any communication
that represents that company.
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CEO, salesperson, website, press release.
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Company incentives often unwittingly reinforce
doing the wrong thing:
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Compensation and incentive systems often reward
generating revenue or “shareholder value” regardless
of what is best for customers.
Bonuses for making budgets regardless of what is
reasonable can cause unethical practices.
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CFOs or top management sometimes
recommend accounting practices that
“preserve a company’s assets.”
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Too often they have the wrong assets in mind.
A company’s most precious asset is an
excellent reputation.
 Protect a reputation by always doing the right
thing.
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Especially with online data
The Ethical Hierarchy
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The Five Cs
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Consumers
Conscience
Community
Customers
Company
Ethics Check
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Is it legal?
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Is it fair?
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Laws
Regulations
Company policy
To both sides
To all stakeholders
Is it true to my conscience?
Ethics
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The new golden rule
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Do unto customers as they would have others do
unto them.
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Do what they want, not what you might want.
Kant’s categorical imperative
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Act on the premise that the choices you make will
become universal law – for all people for all time.