Ethics1st.com Blog

No atheists in foxholes? Think again

2012-04-01T12:28:00.000-08:00

Here's an interesting article about a recent event at a US military base:

"We're sending a message," said Justin Griffith, an Army sergeant stationed at Fort Bragg who spearheaded the event. "Foxhole atheists are out there fighting for your rights. Please return the favor."

Bankers vs. America

2012-03-31T12:11:00.000-08:00

Remember the old films and cartoons of the banker tying the widow to the railroad tracks so he could foreclose on her property? A century later and they're still at it. It's inexcusable that none of the Wall Street executives and brokers that created the financial crisis which has hurt so many people are not in jail. Yet another example of the differences between what is ethical and what is legal.

Santorum Needs a Pornography History Lesson

2012-03-18T11:15:00.002-08:00

In 1969, Richard Nixon appointed the founder of Citizens for Decent Literature (CDL) to his Presidential Commission on Obscenity and Pornography. After two years of interviews and empirical studies,the Commission determined that a majority of imprisoned sex offenders (rapists, child molesters, exhibitionists, etc.) came from homes with "strict, religious beliefs" rather than permissive, open families as Nixon and the CDL had claimed.

Since the CDL's founder was in the minority (3 of 18 members) on the Committee, he could not block public release of the formal report, in spite of attempts to do so. Both he and Nixon were outraged at the findings, certain as they were of a linkage between pornography and crime in general. Five years later, Nixon left the White House in disgrace. What became of the founder of CDL? Charles Keating went to prison for "misappropriating" two billion dollars and bribing U.S. senators in connection with Lincoln Thrift.

During the Inquisition, Santorum's church murdered tens of thousands of "heretics," people who were accused of not adhering to the ("proper") faith. According to most historical accounts, the priests seemed to relish the sexual aspects of the tortures and murders.

More recently, it has come to light that the Vatican systematically covered up for pedophilic priests in many countries. I cannot imagine anything more pornographic or obscene that sexually abusing a child. Perhaps Santorum believes that is not as deviant as showing pictures of naked adults on the Internet. His hypocrisy continues to astound me; but not nearly as much as the people who still consider him credible.

Immigration Mythology {Part 1}

2011-07-10T12:35:00.000-08:00

Like most Americans, I had a variety of summer jobs as a teenager. One situation stands out more than others; it was by far the worst, and hottest.

Between 10th and 11th grade, I worked as a "grape swamper," in vineyards west of Phoenix, AZ. Swampers were the least experienced, hauling crates from the pickers (up and down the rows of grapevines) back to the packing trailer. We worked from 4AM to 1PM, when it became unbearably hot to be outside. I used to tell people that the best part of living in Phoenix is that when you die and go to hell, it will be 10 degrees cooler when you get there.

Even at 15, I was struck by the fact that there were no Gringo adults working; even the foreman was Mexican-American. Having spent my most impressionable years in my home town (Douglas, AZ), I was bi-lingual and therefore felt no discomfort being one of the lightest-skinned workers. I spoke Spanish as well as my co-workers, and willing accepted the good-natured ribbing I got from some of the older workers.

In addition to being mostly white and well-versed in English, I had another significant advantage over my co-workers. At 1PM I could drive one of our family's cars back to my nice suburban home in middle-class Goodyear, and stand in the shower with cold water pouring onto my face and head for over half-an-hour until the heat headache started to fade. My co-workers piled into pickup trucks and went back to sweltering tents or camp trailers. This is how they lived, year-in and year-out, migrating from one harvest to the next. Their greatest, and common, hope was that their children would find a better life in America.

This is one reason I've always been adamantly opposed to special programs in US education that teach children in their native languages. Without a single exception, the Mexican kids I grew up with had parents (many of them here illegally) who insisted their children speak English. At that time, there was no way to get into the "mainstream" society, or into college or corporate management, unless one spoke and understood English well.

To this day, there are extremely limited opportunities for anyone in the workplace who is not able to comfortably communicate in English. I believe the active proponents of such education programs are seeking a personal political advantage over others. Quite simply, their reasoning is, "If you don't understand English (newspapers, television, employers, etc.), then you have to rely on me to tell you what I want you to hear." And what to buy; how to vote; where to live; etc.

In addition to being bi-lingual, living in Douglas afforded an opportunity to be bi-cultural. The town literally sits on the Mexican border. I could stand next to the grave sites of my grandmother and great-grandparents and throw a baseball over the fence into Mexico. Going back and forth to Agua Prieta ("Muddy Water"), Mexico then was easy, even for kids.

One thing I always admired: the way most Mexicans' homes revolve around their children. Mexicans live "family values," while others simply preach it. I find it extremely ironic and hypocritical that those who shout the loudest about family values (political and clerical leaders) also:

Promote "family values" and demonize gay marriage while soliciting other males in airports, Congressional page offices and congregations.
Have affairs or solicit sex while pretending to be happily married.
Are eagerly accepted back into society, often after stating that God has forgiven them and all is well.
Are well compensated (selling books, getting paid for personal appearances at "prayer breakfasts" and giving speeches, TV commentary, etc.)

Most estimates of current illegal immigrants in the US range from 10 million to 12 million. The most common fallacies surrounding these people is that they take jobs away from "real" Americans and that they don't pay taxes.

Throughout my years in Arizona and Southern California, I saw migrant workers picking fruits, vegetables and nuts. These are hot, nasty, dirty jobs that very, very few unemployed "real" Americans are willing to accept. And it would be virtually impossible to get employers to replace the illegals with "real" Americans, because they would have to pay at least the published minimum hourly wage, pay for employment taxes (FICA, Medicare) and carry workers' compensation insurance. The status quo offers significantly more profit with a lot less complications (see Newsweek article).

The same is true for all the contractors who hire "day laborers" at home improvement box stores around the country. Again, very rarely a Gringo to be seen waiting for a job, any job, even one that pays cash at the end of a day.

What are the chances of finding a long-term unemployed, middle-aged white fellow in line to apply for housekeeping or maintenance jobs at hotels and resorts?

The stark reality is that the entire agricultural, construction, hospitality and meat/poultry industries in the US would collapse overnight if we rounded up and shipped out all the "illegal" immigrants in this country. Because they have to "stay under the radar" or get deported, these people eagerly take jobs at substandard wages, with no benefits, that are so menial, and often under such harsh conditions, that "real" Americans won't even consider no matter how broke we are.

Every day in the US, each of us touches something that was produced by an "illegal alien."

Part 2 of this blog addresses the politics and profitability of maintaining the status quo.

Are You Qualified to Teach Me?

2011-06-25T17:02:00.001-08:00

I graduated from the University of Arizona, which at that time, was one of the top 10 schools of accounting. I'm not sure how that was measured, or who did the measuring, but that's what we were told by all the recruiters from the large accounting firms.

I was flown to Anchorage from Tucson by three of the "Big 8." I accepted the offer from Price Waterhouse (now merged with Coopers). The first 6 months I didn't do much more than work on audits of various entities. I reconciled bank accounts and reviewed payroll, and most of my days were spent on a 10-key calculator.

The sad part was that at no time during my education at one of America's "top accounting schools" had I ever touched a 10-key calculator. That's because not one of my professors had ever actually worked in the accounting profession.

I took accounting courses from people who had never seen a "set of books." I took marketing courses from people who had never sold anything. And I took management courses from people who had never been responsible for running any organization.

In order for the US to remain competive in a global economy, we have to make sure our college faculties not only understand subjects well enough to teach the theories to others (often a stretch!), but why they are teaching them and how they can be applied by students after graduating and joining the workforce. Simpy earning a PhD (to become a tenure-track professor) doesn't meet any of these three requirements.

Over a 25-year period, I taught 15 undergraduate and 12 graduate courses at 5 universities. In the second year of teaching, I was full-time faculty at the University of Alaska Anchorage. I was pleased with my student evaluations; among the highest in the business college. But I was told by the Dean, very explicitly in fact, that student evaluations were "meaningless;" the only measure of success in the academic environment was "research and publishing." I told him the State could save a lot of money if they just kicked out the students so the rest of the faculty members could focus on their research and writing. Unfortunately, many of my academic collegues viewed teaching as a necessary but distasteful distraction. And it was evident in their attitudes toward students.

We also desperately need to change the current criteria for tenure at our universities. Doctoral candidates who intend to make a career of serving on college faculties should be required to teach (and be evaluated by students) as part of their core curriculum to receive a PhD.

The primary responsibility of every teacher or professor should be to contribute to the productive education of students. In virtually any other profession or career track, there are specific performance expectations; produce or be replaced. Instructors who cannot effectively teach should be removed, whether K-12 or graduate school.

The U.S. will not be globally competitive without a well-educated work force. We are already far behind much smaller countries in virtually every academic measure at every grade level. Jobs once sent overseas will eventually return to the US. We will be the ones manufacturing cheap goods in sweat shops for the much-better educated, wealthier consumers in China, India and Brazil.

I haven't got a prayer... but I'll run anyway.

2011-05-14T09:35:00.000-08:00

As the Republican candidates elbow their way to the podium, we should keep in mind what they already know about 2012. None of the "announced" (or even the posturing" candidates have a prayer of getting elected President of the United States.

So far, the GOP hasn't produced a credible alternative to the incumbent. Trump is doing what he's always done best: parading and promoting himself. The 20% or so of respondents to recent polls indicating they favored him probably did so as a joke.

Michelle Bachmann rants and raves in misleading, misinformed and often outright silly soundbites. She's the most recent version of Sarah Palin, who is now too busy making big bucks to consider being a comparatively low-paid President. Which is probably a good thing, since very few Americans still take her seriously.

Mike Huckabee seems to be a nice fellow, but too far right and a religious extremist in many eyes. Ron Paul has several ideas worth serious consideration, but is very much "all or nothing" in his approach.

Mitt Romney is a bright guy, but many other Christians view Mormonism as a "cult." Therefore, he would have trouble getting support from the right wing of his own party.

Newt Gingrich seems to have a lot of trouble keeping commitments, or even being respectful of the vows he's already made. He had a recent tirade about Obama raising so much money it would prevent a fair election. Has he read the Supreme Court decision which cleared the way for corporations to throw virtually unlimited funds into elections, presumably to favor candidates who will further minimize corporate tax contributions, and eliminate regulatory systems designed to protect the rest of society, in order to maximize profitability?

It's important for us to recognize the primary reason most of these people run is to satisfy their own egos. They love being the center of attention at rallies; being fawned and pandered and treated as though they were really important. Some make outrageous statements to make sure they're continuously on the 24-hour news cycle.

General Colin Powell is one of the most trusted figures in the U.S. He chose not to run because of the circus he and his family would have to endure. Have we finally reached the point in American politics where nobody worthy of being President will even consider running for the office?

Calculus? You've got to be kidding!

2011-04-30T16:17:00.000-08:00

I took calculus in high school. It was part of the the "college prep" curriculum: algebra (9th); geometry (10th); trigonometry (11th); calculus (12th). I was herded along with classmates, oblivious to the actual uses of this "higher math."

Upon graduation, I entered the U.S. Coast Guard Academy. At that time, not only was the Academy all male, but there were only three majors available, all with emphasis on engineering. Entering 4th classmen (freshmen) were required to take the same classes, including, you guessed it, calculus. Since everyone had to take the same courses, the USCGA just listed calculus as "College Math," even though its catalogue description clearly stated "integral and differential calculus."

When my promised opportunity to apply for flight training after graduating the Academy proved completely false (they "misread" the regulations before I entered), I resigned my commission and eventually attended the University of Arizona (Tucson). The requirements for a business administration bachelor's degree required two semesters of... calculus. The fact that I'd already taken it in high school and again at the USCGA didn't impress the UofA folks sufficiently to allow me to waive the requirement. I had to take two more semesters of it to graduate; their argument was that the USCGA catalogue title was "College Math," regardless of what the catalogue description actually defined as "integral and differential calculus."

Even though I vividly remember spending up to 8 hours at a time on homework (we had slide rules instead of calculators "back in the day"), I really enjoyed calculus. It was challenging and I loved the aspect of problem resolution. I even tutored other high school and college students while working my way to a degree.

But after 40+ years in a wide variety of business environments, working my way up to being both a CFO and a CEO for numerous entities, I have never found had any practical application for calculus. The fact that the University of Arizona required me to have two semesters of it to graduate (with an accounting major and management information systems minor) clearly demonstrates the folks who created the curriculum never spent any time working in the "real world."

In order for the U.S. to remain competitive in a global economy, we have to make sure our college faculties not only understand subjects well enough to teach others (often a stretch, and the topic of another blog!), but why they are teaching them and how they can be applied by students after graduating and joining the workforce. Simply receiving a PhD doesn't meet any of these three requirements.

While diversity in courses is a good idea, students should be given more flexibility in choosing electives. In retrospect, courses in psychology, geography, philosophy or international relations would have been far more beneficial to my career in management than all the hours spent solving equations that I would never see again after graduation.

Getting Ready for 2012 Spectacle

2011-04-14T17:55:00.036-08:00

Who really elected Barack Obama?
“The truth that makes men free is for the most part the truth which men prefer not to hear.” ~ Herbert Agar

This is NOT an endorsement of any political candidate, party or special interest.

Conservatives and liberals, left-wing and right-wing extremists, talk-radio entertainers, TV talking-heads, Democrats, Republicans and Independents continue the debate… “Who Elected President Barack Obama?”

Shortly after his local post-election show ended, I had a rather intense face-to-face discussion with a news-talk radio host who enthusiastically endorsed (on the air!) a comment from a listener: that “Blacks elected Barack Obama.”

McCain 2008 Electoral Results by State Obama

The on-air exchange between his caller and the host asserted that the President would not have been elected without “poor” black voters who were “unemployed and on welfare, looking for more hand-outs.”

One of the Universal rules of ethical behavior that Ethics1st.com strongly advocates is that racism can never be justified, and should never be tolerated.

We also encourage empathy as well as the free and civil exchange of ideas as common elements of mutual benefits to humanity. Unfortunately, facts become irrelevant when:

• Talk-radio and TV performances (left- and right-wing) become more fanatical and polarized,

• They jeopardize ratings and revenue by alienating the audience base,

• They contradict the host’s previously advocated political, social or economic philosophies,

• They induce listeners or viewers to consider issues from different perspectives, especially if those ideas are based on logic instead of emotion.

Political discussions have become more hateful and divisive. As we prepare for the ugly 2012 spectacle, it is important to know what actually happened in 2008:

McCain won FOUR of the FIVE states with the Highest Percentages of “Black” Populations ~ Race (% of Black only):

Mississippi – 37.1%
Louisiana – 31.7%
Georgia – 29.9%
Maryland – 29.5%
South Carolina – 29.0%

Obama won FOUR of the FIVE states with the Highest Percentages of “White” Populations ~ Race (% of White only, non-Hispanic):

Maine – 95.8%
Vermont – 95.7%
West Virginia – 94.1%
New Hampshire – 93.8%
Iowa – 91.0%

McCain won FOUR of the FIVE states with the Highest Percentages of Households below the “Poverty Line” ~ % of Households Below the Poverty Level:

Mississippi – 19.3%
Louisiana – 19.2%
New Mexico – 16.7%
Kentucky – 16.3%
Texas – 16.2%

Obama won ALL FIVE states with the Highest Annual Household Incomes ~ Highest Annual Household Incomes:

New Jersey - $57,338/yr
Maryland - $57,019/yr
Connecticut - $56,617/yr
Massachusetts - $53,657/yr
New Hampshire - $53,337/yr

Obama won ALL FIVE states with the Highest Percentages of College Graduates ~ Highest Percentages of Population with at least a Bachelor’s Degree:

Colorado – 32.7%
Maryland – 31.4%
Connecticut – 31.4%
Massachusetts – 33.2%
New Jersey – 29.8%

Obama won FOUR of the FIVE states with the Highest Percentages of “Over 65” Populations ~ % of Population Age (over 65):

Florida – 16.8%
West Virginia – 15.3%
Pennsylvania – 15.2%
Maine – 14.6%
Iowa – 14.6%

Obama won NINE of the TEN states with the Highest Number of Veterans:

California (2,131,939 Vets)
Florida (1,746,539 Vets)
Texas (1,707,365 Vets)
New York (1,065,749 Vets)
Pennsylvania (1,057,073 Vets)
Ohio (957,889 Vets)
Illinois (841,679 Vets)
Virginia (807,326 Vets)
North Carolina (773,630 Vets)
Michigan (761,308 Vets)

Source: U.S. V.A. 9/30/07

United States Veterans: Thank you for protecting our rights to freedom of expression!

Now if we could only get back to civil discussions (logical rather than emotional), based on facts (not fabrications and attacks) with the intention of an ethical ("win-win") outcome for all Americans.

Take Me Out (of) the Ball Game

2011-04-12T23:00:00.004-08:00

Imagine how excited you might be to find the following employment ad in the classifieds:

Earn $2+ Million/Yr. Work Apr-Sept; poss OT in Oct. Only req'd to work in good weather; no rainy days! Travel to major cities; stay at best hotels. Only expected to be productive 20%-30% of time; excellent performers (productive 30%-35%) earn much more. Random drug-testing conducted; not taken seriously though (should not impact career earning capacity). Add'l income potential fm endorsements, TV and personal appearances, product sales.

Yes, it's time again for the "Boys of Summer." According to the MLB Players Association, the average major league player's salary was $2,996,106 in 2009. That's a pretty good deal for just one fellow, considering for the same amount of money we would have to employ:

More than 60 police patrol officers, or 72 fire fighters, and those people would expect to work round-the-clock to protect the rest of us, rain or shine.
58 elementary school teachers, or 28 college professors, who would force our economy to grow by making our kids better educated and more capable of competing in a global economy.
54 chemists or 57 biologists, who would no doubt contribute to drastic drops in health care costs and make us have to live longer.
46 registered nurses or 33 nurse practitioners, and you know they would also do everything possible to keep us alive longer.
112 US Army sergeants, and those highly-motivated men and women would certainly insist on working 24/7/365 to keep our nation safe from all threats.

Well, you get the idea. America is fortunate that we have these incredibly dedicated individuals who serve because of their conscience and the psychic and emotional benefits they receive from helping others. However, we have got to balance the monetary compensation of our citizens with the relative contribution they make to the welfare of our country.

I'm encouraged by the efforts of people like Rob Peters (Standards of Trust), who is trying innovative ways to measure, qualitatively as well as quantitatively, what we produce and how we contribute, as individuals as well as organizations. Think of advancements of the human endeavor if we could balance the money generated from an activity with the increased well-being (qualitatively) of all those who participated.

For the same amount of money we (American society) glady pay the "average" professional baseball player every year, we could pay the annual tuition at a public 4-year college for more than 400 students! Who knows what those 400 kids could accomplish with a college education?

In a true capitalist society, how many people could even keep their jobs by being productive only 20%-30% of their times "at bat?" I'd hate to end up in an ambulance with an EMT that was only successful 30% of the time, or in an operating room with a 20%-er surgeon.

We need to encourage American Society to shift from a position of:

Ethics of Personal Advantage - "Self-interested, outcome-oriented, individualism." (Mitchell & Scott)

Utilitarianism - "Promoting the greatest good for the greatest number" (John Stuart Mill)

What good will be served if a player makes $3 Million a year, but the rest of us can't afford to take our family to the ball park?

Rationales Used to Justify Unethical Behavior

2011-04-02T20:16:00.002-08:00

IMMENSITY ("Bigness")

There is a common perception that if one commits an unethical act against a large entity, no one will really be harmed. Examples include: padded time sheets and expense accounts; taking office supplies home; cheating on tax returns; and falsifying insurance claims. While very few people would ever consider stealing a neighbor's lawn furniture, a sizable number would think little of taking a set of towels from a hotel room. The first action would cause harm to someone associated with a face and name; the second is a violation of a corporate organization — in the perpetrator's view, a non-entity.

There is also a widely held belief that big means rich, and therefore the large corporation (business, government or church) can easily afford the impact of a "minor" transgression. Unfortunately, people don't realize that such actions become a cost of doing business, which will ultimately be passed back to consumers in the form of increased prices. Eventually, the many must pay for the inconsiderate acts of a few.

"FREE FOR ALL"

No one wants to be left out of a good thing. Regrettably, Americans have been conditioned to view certain goods and services as rights rather than optional benefits. One might reasonably expect to pay for police and fire protection from a local government in the form of taxes; or to receive a fair wage from an employer. But today the governments have nearly an infinite assortment of transfer payments (welfare, AFDC, social security, etc.) and community military bases or other federal installations, and a "pork barrel" mentality beyond comprehension or accountability. Unions have extracted unbelievable, and unaffordable, compensation and benefit packages from major employers. Even non-union workers have no incentives to maintain high productivity levels.

The result of this attitude is best summarized by Howard: "The free lunch mentality has given us public and private debt of a magnitude beyond human imagination." Americans, in a scramble to be included, have become accustomed to receiving things they have neither earned nor paid for, in the mistaken belief there is no cost associated for anyone, e.g., the "free lunch."

COERCION/FEAR

This is perhaps the most reprehensible of all causes of unethical behavior. While it is true that one always has options, the choices may be almost equally distasteful. Some examples include:

A woman who must choose between sex with her supervisor, or losing her job.
A politician who must vote against his conscience or the stated preferences of his constituents, or be exposed as a homosexual.
An employee who must sabotage his company's products, or face striking co-workers with lead pipes in the parking lot.
While unethical behavior should never be condoned, one must consider how he/she might react under the same circumstances. Consider the plight of a health care worker who sees continued endangerment of patients.

Friedman points out: "...most of us... would like to live in a world in which the choices are clear between right and wrong... the good guys always win, and nobody gets hurt.... The real situation is more likely to be that of a nurse who is the sole support of two young children and who has finally landed a job... she fears that if she turns in Doctor Jones, she is more likely to be censured — perhaps even dismissed — than she is to achieve protection of patients against the good [sic] doctor."

FOLLOWING ORDERS

The first thing that comes to mind for most people with an appreciation of history is a Nazi war criminal. A second thought might be of Watergate or the Iran-Contra affair. In the first situation, it is at least conceivable that the executioners were acting egoistically out of fear for their own lives. The Nazi regime was ruthless and unforgiving of disobedience. The second situations posed only career and status threats to those involved. This is simply an attempt to transfer responsibility for one's actions by assuming a position of duality. As Friedman queries: "If you must take a risk in order to achieve an ethical good, how do you judge the relative consequenses of doing it or not doing it?"

PEER PRESSSURE

As discussed above, peer pressure often serves as a motivational factor for ethical behavior. It can just as easily be reversed. Co-workers can harass one into work stoppages, slow downs or strikes. Unions can enforce arbitrary rules which significantly reduce a person's productivity. Members of an all-white church can compel others to shun non-white neighbors. Again, referring to Maslow's hierarchy, the individual's need for affiliation and esteem causes him or her to remain at or below the second level of ethical development, i.e., "it's not my problem."

Organizational behaviorists use the term "group-think" to explain the dynamics involved. Griffin and Moorhead suggest three conditions which encourage this type of group behavior: cohe-siveness; the group leader's tendency to promote his viewpoint; and the group's insulation from outside influence. Lau and Shani furnish eight symptoms of groupthink, as identified in the figure below.

Of the three types of organizations examined here, groupthink is considerably more prevalent in religion than in business or government. It has a higher probability of nurturing the three conditions cited as fostering groupthink, especially with regard to the leader's sway and insulation from outside influences.

RECIPROCITY

There are two prime examples of reciprocity which clearly illustrate the negative effects of this type of behavior. The first involves the purchase of a used car. The seller may not believe he received a fair value when he purchased the vehicle. Something substantially wrong, but not readily apparent (e.g., transmission), was not disclosed. What is the likelihood the seller will voluntarily inform a prospective buyer of the defect?

The second situation involves malpractice litigation. A patient may have legitimately suffered an unintentional wrong. Rather than accept the fact that the doctor was acting in good faith, the patient elects (often with encouragement from an attorney) to seek damages far in excess of the wrong suffered.

Reciprocal action is based on the concept, "I was wronged, so I will inflict an equal or greater wrong." Ironically, one of the most basic of doctrines, consistent with duality, is that "two wrongs don't make a right."

ECONOMIC/FINANCIAL

Reilly and Kyj maintain: "...people find the ecomonic definition [of behavior] unthinkable as a principle of human decency for a functionally progressive and civilized society." Yet, as much as we protest and deny this during interpersonal exchanges, it is an irrefutable fact that "bottom-line" behavior is the rule, and not the exception, in our society. They elaborate on the differences between individual and corporate deportment.

"To practice the morals of economics or business one must strip oneself of characteristics usually associated with 'the good person.' It may be necessary to deny the meaning and significance of community, eliminate loyalty to employees and suppliers, deceive customers, betray one's country, violate the safety of the environment, and destroy the health and quality of life of the people who live in the environment of one's business. Namely, the pursuit of the interests of the corporation makes all of these realities unimportant if they hinder the corporate self-interest. Economic moral theory values the behavior of 'the good person' only to the extent that it contributes to the self-interest of the firm.... The often stated role of the executive is to 'maximize shareholder equity' as the prime function of management is a restatement of the self-interest principle [i.e., egoism]. Those behaviors that lessen, deter, or stand in the way of this goal are considered 'inefficiencies' to be eliminated by responsible corporate management."

Reilly and Kyj further suggest: "The individual may not be the problem; it may be the system that makes 'good' people 'bad.'" At the personal level, one may have to choose between committing an injustice or losing one's job. In effect, this is another form of coercion, whether or not intended as such.

INEQUALITIES

This situation occurs when the punishment for doing wrong is less than the potential reward for committing the act. We should have learned our lesson after the savings and loan industry collapsed in the mid- to late-1980s. Then there was Enron and Worldcom, triggering passage of Sarbanes-Oxley. That didn't prevent the necessity for the US to spend $700 billion to bail out major American banks and corporations in 2008. The reasons these bailouts occurred at all was there were no prohibitions (laws) for the majority of fateful transactions which took place. To date, none of these corporate executives have been held accountable.

APATHY/INDIFFERENCE

In this circumstance, the individual is basically overwhelmed. There is no sense that any action on his part will make an impact. It is a significant factor in declining American voter turn-out. It is also a result of public castigations of "whistle blowers." Now when people witness corruption or inappropriate behaviors, rarely do they come forth. The belief is that their actions won't significantly change the condition, and in their minds, it certainly is not worth jeopardizing their own situation(job, income,community acceptance, etc.).

In addition, Harris and Brown suggest "The second-phase philosophy of 'live and let live' tends to foster an extreme form of individualism. If one person has no right and certainly no responsibility to judge or attempt to change the behavior of another, then each person is by default granted permission to pursue his or her own goals without regard for the common good." In fact, the individual is between libertarianism and egoism.

Mitchell and Scott summarized this problem quite well: "...the coverage given to miscreant managers by the media has heightened America's awareness of wrong doing by those in power, leaving us with an alienated distrusting populace."

"IT'S THE LAW!"

This is perhaps the ultimate demonstration of duality. Laws (statutes, regulations, court rulings, etc.) are initiated and enforced by special interest groups. There is rarely a thought given to ethical considerations, such as that proposed by Rawls' "Veil of Ignorance." In terms of permutations of ethical behavior, laws are typically egoistic, serving the interest of proponents at the expense of others. Laws are libertarian at best, and self-destructive at worst.

Motivations for Ethical Behavior

2011-03-22T22:31:00.011-08:00

PUNISHMENT/REWARD

This is the most basic motivator for ethical behavior, and is closely tied to the first developmental stage, duality. Most of the legal rules fall into this category. People at this level evaluate the relative punishment or reward proceeding with an action. The punishment or reward reward before proceeding with an action. The punishment or reward associated with the act gives the individual an idea of how right or wrong something is. For example, murder must be a more significant wrong than jaywalking. The punishment for the former may be the gas chamber, versus a small monetary fine for the latter.

Mitchell & Scott propose "...needed reforms exist in the legal arena.... The direct linking of consequences to action is a very strong regulator of behavior especially when appropriate and inappropriate behaviors are clearly stated and the former is rewarded while the latter is punished. Individual and organizations that act unselfishly in the long-run interests of others should be recognized and rewarded."

PEER PRESSURE

This factor can be either a motivation for or against ethical conduct. An individual influenced by peer pressure is between the developmental stages of duality and relativism. He is still seeking input from peers to determine the relative weights of punishment or reward. But he is also attempting to balance the different view points of the peer group.

SOCIETAL COOPERATION

The individual at the second level, relativism, now sees different perspectives as having equal validity. This motivation also fluctuates between the libertarian ("live and let live") and reciprocal ("win-win") philosophies. The individual perceives the value of acting in a certain manner, with the anticipation that others will act in a similar fashion.

SELF-REALIZATION/SELF-ACTUALIZATION

The person motivated by self-realization has reached the ultimate level. The goal for ethical behavior is now internally derived. From Aristotle's teachings, the path to happiness is found by developing character through virtues, such as courage, temperance, etc. He proposed the ultimate goal of human behavior is to be happy, and that fulfillment could be attained by overcoming life's traumas. Similarly, Immanuel Kant professed that "freedom is autonomy," and that each person should set his own rules by which to live. Once an individual has reached a certain maturity, his actions are governed by a personal commitment (the final stage) to internally developed values.

It is interesting to note some parallels between the motivations for ethical behavior described above and Maslow's "Hierarchy of Human Needs." The punishment/reward stimulus appears to coincide most closely to those trying to meet physiological and security needs. Peer pressure corresponds to affiliation needs. Societal cooperation is an effective inducement to those seeking status, or the respect of others. And finally, there is a direct correlation at the self-realization and self-actualization levels.

One might question the validity of this proposed correlation. If one is wealthy and of stature, such as an executive, government official, or minister, why are they not at the third, or at least second, stage of ethical development? Quite simply, everyone has different definitions of minimum levels of acceptable norms. One who has acquired wealth may act in a duality fashion to protect physiological and security standards, etc. Each person will attempt to rationalize his or her actions by use of one (or more) of the pretexts listed in the next section.

Pentagon of Integrity

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There are five basic sources of pressures individuals face in daily activities.The ability to resist these temptations creates the core of an individual's ethical character.
The categories of temptations can be summarized as follows:

POWER - There are five principal types of power sought in our society:

Political - The drive to accumulate constituents/votes.

Religious - The motivation to acquire followers to a particular belief.

Causes - The motivation to attract supporters for special interest groups.

Competitive - The need to amass customers, generally at the expense of a rival entity.

Pentagon of Integrity

Individual - The necessity to exert control over others in relationships (subordinates, co-workers, family members, etc.).

WEALTH - The inner drive to amass financial leverage, in three primary forms: income; asset accumulation; and economic influence.

STATUS - The motivation to acquire fame, identity, rank/position and/or affiliation.

EMOTIONS (Irrational emotions) - This temptation category is confined to those feelings generally considered "irrational," such as: revenge; hatred; bigotry; fear; anger; envy; etc.

PERSONAL COMFORT - This classification of pressure on the individual includes such considerations as: ease of lifestyle; personal convenience; conflict avoidance; fear of involvement, retribution, job loss; etc.

Impact of Pressures/Temptations

PENTAGON OF INTEGRITY - The accompanying figures illustrate the relationship of the five categories of temptations relative to the ethics of the individual. Each day, the person may be subjected to any, or perhaps all, of these pressures.

When an individual surrenders to any of these pressures, personal ethics are proportionally diminished. From this perspective then, a person cannot be partially ethical. Using the concept of power for illustration, the following scenarios emerge:

• A politician votes against his/her conscience, fully cognizant of the impact the action will have

on the public, in order to gain the support of a special interest group(s)

• A member of the clergy uses questionable advertising techniques to attract new adherents, thereby increasing his/her influence.

• An environmental group distorts the facts of a situation to sway public opinion to its advantage.

Diminished Ethical Core

As the accumulation of power increases, the individual's ethical core becomes smaller. This is equally true of the other four categories of temptation.

If the person allows himself/herself to be swayed by more than one of these pressures, the ethical core diminishes much more substantially, as indicated. In this situation, the individual has succumbed to both power and wealth pressures. It becomes easy to visualize the impact of additional temptations.

A significant conflict arises, due to the fact that our culture encourages pursuit of power, wealth, status and personal comfort. In addition, irrational emotions are quite often manipulated in the quest for power, wealth, status and personal comfort. For example, bigotry is promoted by some as a means of acquiring the various forms of power described above.

Originally appeared in Ethics in Organizational Behavior (1994) by Michael Smith CPA, MBA

Traditional Sources of Ethical Training

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family

The family unit is the primary foundation of behavioral learning and establishment of values. Unfortunately, American families have changed drastically in the past seventy-five years. The post war (World War II) construction of suburbs and super-highways allowed people to seek jobs in cities, often far from "home," removing their children from frequent interaction with grandparents and other family members (aunts, cousins, etc.). While creating more mobility, it also caused two long-term difficulties.

First, the children of the "baby boom," and subsequently their children as well, were deprived of the opportunity to develop a sense of self, or personal identity, in connection with an extended family group. And second, at least one author (C. William Thomas) suggests there is a maturity factor involved in the formation and application of ethics in business. The younger generations were not frequently exposed to older (50+) adults who could influence more conservative behavior.

Pursuit of the proverbial "American dream" has now thrust a majority of families into the two-income household category. While it may have improved average household income levels, it also created successive generations of "latch-key kids," resulting in two additional adverse factors. More children now receive societal indoctrination from television and/or their peer groups after school than from the traditional family unit. And second, with increased time (and often travel) demands placed on parents by their careers, the availability of meaningful interaction time between the child(ren) and parents has become minimal, and in many cases, non-existent.

Another major source of family disruption in recent years is the divorce rate and resultant single-parent families. It is often necessary for one or both parents to work at more than one job to support separate households. Of course, this further reduces the time available for parenting. The child(ren) of divorce generally receive values-oriented nurturing from only one perspective, that of the custodial parent, if at all. The world as seen from a female frame of reference is often quite different than from a male point of view. Regardless of which parent has custody, the child(ren) does not receive a balanced presentation of ethical norms and societal expectations.

religion

If the family unit is the primary source of social training, organized religion is a veryclose second. Typically the family would base its set of values ("morals") on the teachings of theplace of worship attended. In general, church membership and regular attendance in the U.S. has held steady over the past seventy-five years. There are several factors which have no doubt contributed to this flat trend.

Perhaps the most significant cause may be disenchantment. While America prides itself on being a "melting pot" of nationalities, it also is a place of cultural clashes. One has only to view the historical persecution of Mormons, Catholics, Quakers, Jews, Buddhists, Muslims, etc. to understand the tension created. Even among Protestants, there are hundreds of sub-classifications with widely diverse concepts of acceptable norms.

As long as one was nestled safely in a hometown or neighborhood with minimal exposure to strangers and different beliefs, there were relatively few such problems. However, the past half-century has involved the U.S. in five major military campaigns; and developed super-highways, live television coverage via satellites, and jet aircraft. All of these have exposed the individual to a myriad of unfamiliar cultures and conflicting sets of values, as well as new temptations, pressures, and the visual realities of mass destruction.

Probably the most critical of these new pressures was survival itself, at least economically if not physically. For example, the individual may have been indoctrinated with the "Golden Rule," and "Love Thy Neighbor," and the "Ten Commandments," including "thou shalt not steal" and "thou shalt not bear false witness (lie)." When thrust into the "big/real" world (military combat service, new jobs, college, etc.), the individual discovered not everyone else was playing by the same, or even similar, sets of rules. He or she was forced to adapt or perish. And, maybe for the first time, abandon the comfortable and familiar faith along with its associated values.

A second dominant factor in the doubts of organized religion is the accelerating trend toward commercialization. Churches now own television and radio stations and networks, rental property, amusement parks, farms and ranches, etc. It would appear the emphasis is no longer promoting the church or what is stands for, but rather the personality and power of the central clerical figure, e.g., Jerry Falwell, Robert Schuler, Oral Roberts, etc. Continuing exposures of high-profile ministries and “family-values” political figures, as well as thousands of charges of sexual molestation by Catholic priests, have created a cloud of doubt in the minds of the general public.

This leads to the third issue in determining causes for the splintering of religious influence: hypocrisy. Clerical leaders are expected, or at a minimum perceived, by their followers to be of strong moral character, as defined by the religions. Since the ministers are spokespersons of the church, and more frequently the central driving force, the credibility of the organization is directly related to that of their ministers.

There is one concluding note of irony on the issue of hypocrisy. In 1969, Richard Nixon appointed the founder of Citizens for Decent Literature (CDL) to his Presidential Commission on Obscenity and Pornography. After two years of interviews and empirical studies, the Commission determined that a majority of imprisoned sex offenders (rapists, child molesters, exhibitionists, etc.) came from homes with "strict, religious beliefs" rather than permissive, open families as Nixon and the CDL had claimed. Since the CDL's founder was in the minority (3 of 18 members) on the Committee, he could not block public release of the formal report, in spite of attempts to do so. Both he and Nixon were outraged at the findings, certain as they were of a linkage between pornography and crime in general.

Five years later, Nixon left the White House in disgrace. What became of the founder of CDL? Charles Keating was convicted for "misappropriating" two billion dollars and bribing U.S. senators in connection with Lincoln Thrift. This also provides an excellent example of the dichotomy between personal and career-related ethics.

peer groups

With the decline of influence of the family and religious organizations, the need for affiliation (Maslow) drives the individual to seek acceptance within peer groups. An important consideration is that participation in peer groups is rarely of a conscientious, voluntary nature. Quite often, coercion is involved; at a minimum, the individual may lack preferable alternatives. For example:

A child is given a choice between joining a gang, or being one of its targets or victims

A male teenager joins the football team, while the female becomes a cheerleader; the
alternatives would to be viewed as "outsiders"
A worker who crosses a union picket line is deemed a "scab," and subjected to abuse by
fellow employees
Executives are frequently pressured to choose between doing what is right versus what is most profitable.

In terms of the effects of peer groups on organizational behavior, the norms of acceptable actions and attitudes are set by the leader(s) of the peer group. The majority of these individuals are driven by egoistic motivations (i.e., ethics of personal advantage), and duality on the part of group members is expected, if not demanded.

heroes and role models

Another source of values training has all but disappeared. As with religion, the public has been repeatedly disappointed with celebrities. Those groups once admired, even revered, such as actors, musicians, soldiers, athletes and politicians, have all fallen from grace over the past four decades.

For the most part, they have succumbed to a multitude of the human weaknesses identified above, including: drugs and alcohol; adultery,molestation or other actions deemed to be sexual improprieties; payoffs and bribery; cheating and/or lying. In the interest of increased audiences (viewers, listeners and readers), the media has made all public figures' lives the subject of intense scrutiny. As a result, the world has few, if any, heroes left.

government (including schools and universities)

Governmental units are a fifth traditional source of ethical teachings. Local, state and federal agencies generate innumerable laws, rules and procedures. Similarly, schools and universities provide exposure to proprieties, rules, norms and, to some extent, ethical values. As sources of indoctrination, all governmental bodies have developed near-fatal flaws, which have rendered them ineffective at best, and infinitely damaging at worst. These include:

Lack of Focus - What is wrong with a central government setting the pattern for ethical behavior? John A. Howard states forthrightly, "The American government, itself, has changed drastically, for now its primary activity is to dispense services and subsidies, privileges and protection to categories of citizens in eternal and often hostile competition with each other. ...it is my conviction that the central government was the decisive force in stripping the nation of its capacity to teach each new generation how to live as civilized people.... Gordon Chalmers summarized his 1952 landmark volume of educational philosophy, The Republic and the Person, with this phrase, The proper object of school and college is moral maturity.'"
Corruption and Deterioration of Values - Howardfurther declared, "Integrity has fled the marketplace to such an extent that Harvard University has accepted a $20,000,000 endowment to contrive an ethical cure for the business community. In government, corruption is so vast and intricate that ethics commissions sent out to track down the sources of dishonesty have vanished altogether, or been eaten by savages, according to one report.... The integrity, wisdom, morality and virtue of a candidate have become subordinate qualifications and may even be a hindrance in the politics of delivering favors to the home folks."
inappropriate and/or Ineffective Actions - Mitchell and Scott discuss a concept called quandary ethics, which basically assumes these issues are simply problems to be solved, or "quandaries." From an educational perspective, "Students are asked to address ethical matters through analyzing case studies, engaging in role playing, or solving critical incidents. These techniques are often buttressed with lectures by professors, talks by guest speakers, and selected readings from moral philosophy classics." The major weakness with this method, they note, is that it only alludes to a "quick-fix educational solution," and uses common and comfortable teaching techniques, an obvious advantage for the professor. It is also rules-driven, not based on independently derived concepts. It's easier for us teach children to follow rules than to teach them to understand why a particular decision is ethical or not.

Originally appeared in Ethics in Organizational Behavior (1994) by Michael Smith CPA, MBA

The Absurdity of Audits

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The following companies have at least 5 things in common:

Bank of America • JPMorgan Chase • Capital One Bank (Credit Cards) • Goldman Sachs • Citigroup • Keycorp • Wells Fargo • AIG (Insurance) • American Express • US Bancorp • Merrill Lynch • General Motors (including GMAC Financial Services) • Chrysler (including Chrysler Financial) Answers below*

The general public tends to think of certified public accountants primarily as tax preparers, but anyone can help you file taxes. Basically, the only thing CPAs can do that you can’t (legally) do is issue an “opinion” on financial statements; specifically, performing the “annual audit.”

For many organizations, foregoing the annual audit is not an option; they are often required by law, grant requirements or loan covenants. Most directors and stockholders/members (and lenders!) are under the impression the audit is an indication all is well. By the time an audit report is received (4-6 months after year end) the organization could be in serious trouble. Even then, it never addresses critical questions:

Is the organization well-managed?
Does actual performance match monthly expectations in a current, formal business plan (which should include a detailed budget)?
Is the operation competitive?
Is the organization over-staffed?
How often are ALL policies and procedures reviewed/updated? By whom, at what levels? (Audits address some financial control issues).
What hidden costs are never included in the annual audit?

Some other MAJOR misconceptions:

Auditors works for management. The auditor actually works for the organization through its board of directors, and should be selected by the board, not management.
Audited financial statements imply accuracy in reporting. The auditor’s cover letter (the “opinion”) typically includes such vague phrases as: “… present fairly… reasonable assurance… free of material misstatement…”
CPAs make good candidates for chief financial officers. Other than a common understanding of accounting fundamentals (GAAP, GAAS, etc.), they require two completely different skill sets. An auditor is a narrowly-trained, highly-focused technician. A CFO is (or should be) a first-rate manager, with positive people skills, a solid understanding of how all parts of the organization function together, and the experience to know what the numbers actually mean. Exceptional CFOs comprehend all aspects of today’s game; auditors simply review last year’s score.
The audit is a complete financial representation. It actually indicates only what the “big picture” numbers were at year-end (“…in all material respects…”), but not what those numbers mean to the organization. Except in extreme cases (e.g., "going concern") there is no attempt by auditors to interpret financial statements; that is clearly not their responsibility (as specified in their engagement letter).

*In addition to being some of the most recognizable names in American business, these companies have at least five other things in common:

Each received billions in corporate bailout funds (TARP).
Their executives and managers were not required to repay the millions of dollars they received in individual compensation and bonuses, despite the fact it was their personal actions as corporate decision-makers which created the need for government bailouts.
They are (or were) all “Publicly Traded” companies, regulated by the Securities & Exchange Commission. This required them to submit (to the SEC) quarterly (“10Qs”) as well as annual (“10Ks”) operating and financial reports. Financial institutions were also audited by various federal regulatory agencies.
Each one has (or had) substantial internal audit departments.
Every one of them received annual audits (over the past several decades) by major international CPA firms.

Enron, Tyco, WorldCom/MCI, Lehman Brothers, Bear Stearns, Washington Mutual, Wachovia, and IndyMac Bank as well as Ponzi scheme felons Bernie Madoff and Lou Pearlman used audited financial statements to dupe lenders, investors and US taxpayers out of hundreds of billions of dollars.

Between 1980 and the mid-1990s, 1,600+ banks closed or received federal financial assistance, as did roughly half the insured savings and loans. The Government Accountability Office estimated the financial institution bailouts during that period cost taxpayers nearly $125 billion. Over a dozen Alaskan banks also failed or were “absorbed.” When the “dot-com bubble” burst in 2000, hundreds of millions of dollars evaporated, again taking savings and retirement funds them. All these entities had been audited or “reviewed.”

In 1986, the GAO identified 34% of CPA audits it reviewed as substandard.The situation has not improved, even with the addition of Sarbanes-Oxley in 2002, as evidenced by the “TARP bailout” list. When sued for “audit accountability,” some CPA firms have successfully convinced courts they were simply misled, thereby defeating the sole purpose of the audit (independent, “qualified” affirmation of management’s financial statements).

This year, why not ask your auditor a basic financial question:

"Are we really getting our money's worth?"

It's a fair question, and deserves an honest answer.

Recommended reading list for this topic:

The Vest Pocket CPA

The Vest Pocket Guide to GAAP

The Vest-Pocket MBA, Third Edition

Auditing For Dummies

The Internal Auditing Pocket Guide: Preparing, Performing, Reporting and Follow-up, Second Edition

Sarbanes-Oxley For Dummies

Reading Financial Reports For Dummies

"Must See DVD" for this topic: