Archive for the ‘Ethics’ Category

9780749471354In People Risk Management, Keith Blacker and Patrick McConnell provide insight and practical suggestions about how to manage people-related risks at large commercial firms. Due to their size and complexity, large companies are more prone to disastrous outcomes, such as those experienced by BP, Enron, and Lehman Brothers. The authors offer practical tools, real-world examples, and best-practice guidance about how to implement effective people risk management across an organization and thereby improve decision-making processes.

From bad business decisions to illegal activity, people risk — the risk that people will deviate from an organization’s rules and procedures in a way that damages profits and reputations — presents a growing threat to increasingly complex and global businesses. Leaders should be aware of the following aspects of people risk:

  • Individuals and groups make bad decisions when they fail to consider all of the facts. A bad decision can benefit a firm, and a good decision can be morally dubious.
  • Rather than using rational analyses to make decisions, people are subject to cognitive biases or blind spots, such as overconfidence or groupthink.
  • A company’s culture has a significant effect on people risk management. The culture is influenced from the top down.
  • A company can use a decision checklist as well as pre- and post-mortems to help improve decision-making throughout the organization.
  • Organizations should create personalized codes of conduct to help individuals take personal responsibility and improve decision-making processes.

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The 10 Laws of Trust.jpgIn The 10 Laws of Trust, Joel Peterson examines the importance of trust in the corporate world and beyond. He presents 10 easily followed concepts to building, maintaining, and even repairing trust. Peterson differentiates between high- and low-trust organizations and, through case studies and examples, shows that it is the high-trust environment that is the most successful. He asserts that not only does trust work, but it makes for good business.

The image of the take-no-prisoners, exceed-at-any cost, Machiavellian businessman may not represent the best corporate leader. Trust as a basis for business comes naturally for some, and integrity, while a morally comfortable way to do business, might also be the most effective way. The following are the 10 laws of trust in business:

  1. Start with personal integrity. Integrity should be practiced at work and in all other interactions, both personal and professional. True integrity involves syncing words with actions, avoiding hypocrisy, and doing the right thing habitually.
  2. Invest in respect. Leaders must model and freely give respect, which is another component of trust. It builds reciprocity and should be extended to all employees.
  3. Empower others. Respect can mean allowing others the room to make mistakes, which helps them grow and achieve. If employees know that they are free to explore and will still be trusted even if they fail, they will push themselves.
  4. Measure what should be achieved. If employees or others know what is expected from them, then they have a way to measure their achievements. Uncertainty breeds distrust.
  5. Create a common dream. In addition to individual goals, everyone should be aware of the long-range, shared goals of the organization. Knowing that every individual plays a part toward achieving the communal goals promotes trust between team members.
  6. Keep everyone informed. Leaders need to clearly convey information to those working alongside them. Some of the most successful companies are transparent to a fault.
  7. Embrace respectful conflict. Conflict, if encountered in trust, should be viewed as an opportunity for growth. If the aims of the business are paramount, all interaction moves toward the common goal.
  8. Show humility. Humility encourages the free exchange of ideas. Sometimes the best ideas come from those lower on the company ladder. While this fuels innovation, trust is needed for employees to air their ideas and for management to hear them.
  9. Strive for win-win negotiations. Each party should not come to a discussion with an aim to win, but instead see it as an opportunity for both sides to win. A working relationship should be viewed as ongoing, not something to be ended on the battlefield of the conference table.
  10. Proceed with care. Betrayals will likely happen, and when they do, the leader of a high-trust organization should find that its previously built alliances sustain the organization. Rebuilding trust can occur, and it happens more easily when an atmosphere of trust has been well established.

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Free RideThe Internet has enabled creators—musicians, film producers, artists, journalists, authors, and others—to reach a wider audience than ever before. It has also made it harder than ever for them to be compensated for their work. In contrast, technology companies, which rely on the work of creators and the media business to thrive, have received the greatest financial benefit from their work. In Free Ride, Robert Levine takes an in-depth journey through the systemic struggle of media companies and artists who cannot collect enough of the revenue that their work is generating while those who distribute and aggregate their content, legally and illegally, are experiencing exponential growth.

According to Levine:

  • Music has become so easy to copy and distribute–legally or otherwise–that people forget how much effort is involved in making it. Digital music takes away the cost of making plastic discs and shipping them to stores, but otherwise has not made the cost of producing music any less expensive.
  • Journalism can no longer rely on advertising revenue to support as much of its business as it once did. Major news aggregation websites, like theHuffington Post, generate money with far lower reporting costs. This sets up a disincentive to create original stories and ultimately rewards behavior that hurts the industry as a whole.
  • Roughly 40 percent of the revenue cable companies receive is divided among channels as “carriage fees” that smaller channels rely on to produce high quality, scripted shows. As more people look to the Internet to fulfill their demand for television, legally or illegally, the cable model, and consequently television’s overall quality, is under threat.
  • Movie studios are not in the business of selling tickets to movies as much as they are in the business of selling various rights to show them later. Piracy undertaken via online locker services, or file-hosting services, presents the greatest threat to the industry.
  • Technology companies are primarily interested in cheap and accessible books as a means to another end. Consumers must remember that while the cost of distributing e-books is less, the task and high costs of writing, editing, publishing, and marketing have not changed.

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It seems that corporate and government secrets are being leaked with more frequency in recent history than ever before. Today, it was revealed that Edward Snowden, a former Booz Allen Hamilton employee, was the source of the leak concerning the NSA’s broad and, some would say, overreaching surveillance program. He is currently residing in Hong Kong in an attempt to escape prosecution by the Justice Department. The uptick in leaks such as these may be due in part to easier access to distribution channels via the Internet and a growing public demand for transparency and accountability in government agencies and companies alike.

While the reasons behind such leaks and whistleblowing efforts are often tied to an individual’s personal ethics, it is much harder to understand the conflict involved in the decision to leak information to the public. That decision often has serious and far-flung consequences for the whistleblower and his or her family. For example, Army private Bradley Manning, who leaked hundreds of thousands of pages of classified documents to website WikiLeaks, was arrested and jailed in May of 2010 and is currently in the process of being court-martialed. Edward Snowden could face extradition and be brought back to the U.S. for trial.

On the corporate front, whisteblowers such as Mark Whitacre (Archer Daniels Midland, 1992), and Jeffrey Wigand (Brown & Williamson, 1996) face financial and violent threats, the fear of being blacklisted, and, in some cases, prison time. Karen Silkwood, who uncovered health and safety issues surrounding the Kerr-McGee Cimarron Fuel Fabrication Site in Oklahoma, was killed in a suspicious car accident on her way to meet with a New York Times reporter about what she had uncovered. Because they face such potentially devastating consequences, corporate whistleblowers must carefully consider their decision to release sensitive information, weighing their moral and ethical obligations against their own personal wellbeing.

In their book, The Corporate Whistleblower’s Survival Guide, Tom Devine and Tarek F. Maassarani provide advice for employees considering whistleblowing and how they should handle themselves:

  • Before an employee challenges a company, that employee must understand how large organizations operate and how corporate bureaucracies react to troublemakers.
  • A prospective corporate whistleblower must be certain of what the objective is. Objectives may include being a good citizen, the desire to protect the public from a dangerous hazard, or compensation for damages.
  • When hiring an attorney, the attorney’s motivation for taking the case should be aligned with the whistleblower’s ultimate objective, be it protecting the public from a hazard or winning compensatory damages.
  • It is essential to examine and research the best channels for disclosure of information. Channels may include corporate management, hotlines, advocacy groups, public government agencies, law enforcement, government representatives, or the media.
  • Successful whistleblowing hinges more on relationships than on formal legal rights or resources. Relationships are as significant as the quality of the evidence and the efficacy of the strategy.
  • Advocacy organizations can be vital partners for whistleblowers, since these organizations can provide advice, research, and connections.

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In How to Smell a Rat, Ken Fisher explores how most investment scams can be easily detected and avoided. With his 37 years managing money for individuals and institutions, 25 years writing for the “Portfolio Strategy” column in Forbes, and lifetime of studying markets, Fisher has witnessed countless money managers—both good and bad. He illustrates and examines the five most common signs of financial fraud in detail. Ultimately, readers will learn how to use the five signs as a checklist to identify and avoid con artists, or “rats.” How to Smell a Rat is a critical resource for any investor to spot a potential financial disaster before it is too late.

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Related book summaries in the BBS library: The Devil’s CasinoFundamentals of Enterprise Risk ManagementAnd Then the Roof Caved In

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