Overcoming the Culture’s
Influence in Young People: A
Look At How We Might Realign
Post-Modernist’s Progeny with
the Pursuit of Virtue Ethics
Professor Marianne M. Jennings
W.P. Carey School of Business
February 21, 2008
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 true”
“what 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
• BP
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AT&T
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
Government Issues
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Illinois – Gov. Ryan
San Diego -- $1.1 billion pension fund
deficit; skimming to meet city budget
Connecticut – Gov. Rowland
Chicago – Mayor’s 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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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 Specter’s aide’s 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
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Some Sample Fines
• Boeing
• Tenet
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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
9• $402 million +
Colleges and Universities
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Benjamin Ladner, former president
American University
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$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
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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 singleminded 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 backdating 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 president’s
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
A&M 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
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Johns Hopkins
Syracuse
NYU
Columbia
USC
Penn
Oral Roberts Univ.
Average fine: $2 mil
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UT Austin
Vanderbilt
American University
Shoreline Community
College
• Texas Southern
University
• Maricopa Community
Colleges
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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.
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?
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65% DIDN’T REPORT (1999)
37% DIDN’T REPORT (2003)
41%-50% DIDN’T REPORT (2005)
50% DIDN’T REPORT (2006)
50% DIDN’T 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 can’t 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 shouldn’t have asked.”
Hunsaker in response
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KPMG Internal Culture During Tax
Shelter Years
• $1.2 billion of the firm’s $3.2 billion in
annual revenue
• Mandatory weekly conference calls for 500
tax partners
• “You’re 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
B. High Ethical Self-Esteem
Living in Denial and Slipping Into
Complacency
We all think we are ethical.
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None thought their ethical standards were
lower than those of their peers in their
organization (1%)
Society of Human Resource Managers
Why do we fancy ourselves so
ethical?
1. We are not talking about it with others.
2. We have rationalized, labeled, and
defended ourselves into believing we are
ethical.
One additional possibility
3. COMPLACENCY
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The Survey on Lying
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52% said lying was never justified
66% said lying could be justified
65% would lie to save someone’s feelings
40% said they’d 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!”
Holly L. Moore
former President, Shoreline
Community College, WA to
employees
following her $25,000 raise
awarded in violation of open
meeting laws
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 don’t understand the mindset of
a man who would do what he did to that
company.”
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
Guess Who Said it?
“It’s only illegal if you get
caught.”
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Another CEO
Greg Reyes
Former CEO of Brocade, a Silicon
Valley company
Nephew of Google’s 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
“They’re not bad kids. They only
cheat because they are under
pressure.”
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 it’s worth taking.”
• “Just about everyone is cheating in some
way or another. It is a common thing
among society that is seemingly accepted.”
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)
Schools that discovered
cheating scandals
• Duke
• San Diego State
• Naval Academy –
Annapolis
• Air Force Academy –
Colorado Springs
• West Point
• UNLV
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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 Something’s Gotta
Give
“Truth doesn’t have versions.”
Diane Keaton to Jack Nicholson in Something’s Gotta
Give
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.
- Hell’s Angels’ motto (courtesy B. Franklin)
2. Lying is good. It’s the only way we ever get at the
truth.
- Dostoevsky
3. Circumstances beyond your control will cause bad
acts to be discovered.
- Anonymous
Remember . . .
“It’s not the first mistake the gets
you. It’s the second, the coverup, that will.”
M. M. Jennings
“It’s not the first step; it is the
turn of the road.”
M.M. Jennings’ grandmother
Public trust and the long haul
• Once betrayed . . .
“You really don’t 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
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!
Remember . . .
“A management team
distracted by a series of shortterm targets is as pointless as
a dieter stepping on a scale
every half-hour.”
Larry Page and Sergey Brin
Google Owner’s Manual
Letter to investors
The Story of Sandler
O’Neill
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
O’Neill 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
Social/Regulatory/Litigation Cycle
Public
Moves
the
Cycle
Latency
Time
Awareness
Activism Regulation/Litigation
Options over Time
COST
OPTIONS
TIME
4. Don’t 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
Absolute, Unequivocal, and
Egalitarian Enforcement
• “If the janitor had taken the liquor, he
would have been fired.”
Student’s 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
5. Watch the Rationalizing: “It’s a
gray area.”
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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
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; don’t compromise values
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.
Joe’s father works with stats a great deal. Joe’s
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
there’s 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.
Don’t you?”
Harlan Coben, Chapter 32
Organizational Issues
Who is responsible?
Individual
Action
Organizational Regulations
Government and Systems Regulations
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Layers of Ethical
Development
Evolution
Dean Ned Hill
BYU Marriott
School of
Business
Ethical
Leadership
Ethical Courage
Ethical Knowledge
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9. Keep It Simple!
The Pack of Gum
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