Institute for Enterprise Ethics
Discussions & Updates
Why does the Institute for Enterprise Ethics exist?
I thought that was a very good question so I prepared the attached couple of pages.
I trust this will give everyone a better understanding of our motivation for pursuing
our somewhat Quixotic mission of “helping executives keep their organizations on the
forefront of enterprise ethics”. Please click here to read the piece.
The travails of the News Corp. board of directors in dealing with their company’s current scandal in the UK can teach us important lessons regarding several principles of corporate governance:
- Running a family business is not the same as governing a publicly traded corporation.
- Legal “independence” and actual independence are not the same thing for directors
- An “independent” special committee of the board cannot report to a corporate executive and still be considered independent
- Even a founder who controls 38% of the corporation’s voting shares should not hold both the CEO and Chairman of the Board positions.
Two very recent articles shed some light on the way an “F” class board works:
Ethics in a Time of Crisis
Few situations are as threatening to the ethical values of an enterprise than when
the organization is facing a crisis. By its very nature, a crisis puts the basic survival
of the enterprise at risk. Decisions must be made and the stakes are very high. The
possibility of sacrificing some elements of the organization’s ethical values and
cultural becomes a real option. How does an enterprise use its ethical foundation
as a source of strength in a crisis rather than as bargaining chip in a critical situation?
The Ethics Resource Center has provided a valuable piece of research to help answer
this question: Accepting Responsibility Responsibly: Corporate Response in a Time
of Crisis. The full report.
The Toughest Anti-corruption Legislation in the World
On July 1, the UK Bribery Act was scheduled to go into effect. Following the 1977
passage of the United States' Foreign Corrupt Practices Act, the new British law will
set new standards for ethical business behavior around the world. According to a recent
article in the Wall Street Journal the original FCPA "?may be proving more effective
than any other U.S. initiative in extending the rule of law into developing markets."
This will only help business everywhere compete more effectively and more consistently
on a global basis. Under the influence of the FCPA, U.S. companies "?are forcing their
anti-bribery standards out through their international supply and marketing chain."
The addition of the UK law will surely accelerate this corporate civility and as the
WSJ editors say, "?make the market place a little less lawless." Read more.
Tone at the Top
In Bill Heck's article on "Ethics and Risk" posted here last week he mentioned the
importance of setting the right "tone at the top" as the foundation for defining the
enterprise's risk appetite. That advice clearly begs the question of how an enterprise
executive team goes about setting the right "tone at the top". This is another topic
that was addressed several years ago by the Center for Corporate Excellence and gives
us another opportunity to reissue that position paper under the Institute's banner.
Read the paper.
It's time.
In 2004 one of the Institute's predecessor organizations, the Center for Corporate
Excellence issued a position paper supporting the separation of the positions of Chairman
and CEO in public companies. Since then many companies have done so. However, on June
10 the Wall Street Journal reported that the management of Research in Motion (RIM),
the manufacturer of the ubiquitous Blackberry device, was advising shareholders to
not support a motion to separate these two jobs at RIM which mysteriously are currently
held jointly and simultaneously by two people. Their defense is "in the best interest
of the company." Clearly some management and boards have not yet gotten the message.
So, we thought it might be worthwhile to reissue the 2004 report under the Institute?s
banner. Read the paper.
Ethics and Risk
The recent economic downturn was substantially caused by financial firms inability
or unwillingness to adequately manage their risk profile. We all knew that somewhere
underlying all the fancy financial footwork were some egregious ethical missteps.
Bill Heck of the Board of Directors Development Group has a simple but important perspective
on this issue. Click here to read his article.
Two and a Half Cheers for Conscious Capitalism
Dr. James O'Toole, the Daniels Distinguished Professor of Business Ethics at the University
of Denver published an articles with David Vogel, the Solomon P. Lee Chair of Business
Ethics at the Haas School of Business at the University of California at Berkley in
the Spring 2011 issue of the California Management Review commenting on the currently
hot topic of Conscious Capitalism. Their article was followed in the same issue by
a number of commentaries by other scholars of business ethics as well as several current
and former business executives including John Mackey, co-founder and Co-CEO of Whole
Foods and Doug Rauch, former president of Trader Joe's Company. This forum on Conscious
Capitalism is well worth the read for anyone interested in how firms can "do well
by doing good." You can access the article and all the replies at the California Management Review. Or, the Institute will make an electronic copy of the lead article available to
anyone who requests it.
Contact Ann Schafer for a copy.
The Markkula Center for Applied Ethics
The Institute has an alliance with the Business and Organizational Ethics Partnership
at the Markkula Center for Applied Ethics at Santa Clara University. Recently Dr.
Dan Sweeney, the interim director of the Institute, traveled to Santa Clara to attend
one of the meetings of the Partnership. Dr. Sweeney spent the day with the corporate
counsels, ethics and compliance officers, other executives from various Silicon Valley
companies and a very impressive group of ethics experts from various universities
in the greater Bay area discussing a number of topics relating to enterprise ethics.
Watch related videos:
Howard Schultz, CEO of Starbucks
On April 6, 2011 The Institute for Enterprise Ethics and the Daniels Voices of Experience program presented Howard Schultz, CEO of Starbucks Corporation. Schultz shared his story of the early days of Starbucks and the challenges of reinventing the company during the economic downturn of 2007 and 2008.
Good Business: Exercising Effective and Ethical Leadership,
A Publication of the Institute for Enterprise Ethics
Good Business is a collection of essays written by members of the Daniels College of Business faculty and published by the Daniels Institute for Enterprise ethics. Good Business presents extensive research on how ethics and responsibility can be made integral to the lives of individuals and organizations and offers many usable examples of how executives can create strategies and cultures that are ethical, sustainable and effective--the essence of good business. This practical resource from the Daniels College of Business demonstrates that ethics and good citizenship are at the heart of all good business strategies, decisions and organizational cultures.
