Free Essay

Business Ethics

In: Business and Management

Submitted By swiss1441
Words 3204
Pages 13
Running header: HEALTHSOUTH: THE SCRUSHY WAY 1

Business Ethics
HealthSouth: The Scrushy way—Activity 8
Melinda S. Whitman
Dr. Jennifer Scott
Northcentral University
May 19, 2013

HEALTHSOUTH: THE SCRUSHY WAY 2
Table of Contents
Introduction…………………………………………………………………………….. 3
Richard Scrushy Represented the American Dream…………………………………… 3
The Sarbanes-Oxley Act was enacted in 2002…………………………………………. 4 What caused the demise of HealthSouth?...……………………………………. 5
Characteristics of Unethical CEOs……………………………………………………… 6
Was Richard Scrushy narcissistic?.……………………………………………………. 7
Impact on Stakeholders………………………………………………………………… 8
Outcome and Fairness of Punishment…………………………………………………. 9
Conclusion……………………………………………………………………………... 10
References……………………………………………………………………………… 12

HEALTHSOUTH: THE SCRUSHY WAY 3 Introduction For at least 20 years, HealthSouth represented a new concept in health care. Its founder, Richard Scrushy was the embodiment of the American dream. His rise was meteoric, yet ultimately the empire he created collapsed due to fraud of his creation. Richard Scrushy Represented the American Dream Richard Scrushy came from humble beginnings. He was born in Selma, Alabama, dropped out of high school, married, and fathered two children. He worked in manual labor jobs, even managing a gas station, until he enrolled in the University of Alabama and completed a degree in respiratory technology (Solomon, Carrns & Terhune, 2003, March 20). After he worked as a respiratory technician for several years he began a company of small hospitals and clinics and created a hospital model which he believed would revolutionize the future of health care (Jennings, 2012) and HealthSouth was born. HealthSouth went public in 1986 with an initial public offering (IPO) of one dollar per share (Jennings, 2012). He courted celebrity endorsements and the trappings of success (Jennings, 2012). In less than two years, HealthSouth’s stock rose to $31 per share and continued to rise thirty-one percent per year over the next decade (Jennings, 2012). Scrushy boasted to industry analysts that HealthSouth had exceeded earnings estimates for 47 quarters in a row and through business acquisitions it became a billion dollar company (Jennings, 2012). HealthSouth became the largest provider of inpatient rehabilitative facilities by creating a network of inpatient and outpatient facilities, outpatient surgery centers, and other healthcare facilities that provided medical services at lower cost than traditional inpatient hospital facilities (Carlson, Coulter & Vogel, 2009). By 2001, HealthSouth operated 1,900 facilities worldwide (Carlson, et al., 2009).

HEALTHSOUTH: THE SCRUSHY WAY 4 As the corporate executive officer and founder, Scrushy personally benefited from the success of HealthSouth. He owned nineteen cars, and art including original works by Renoir and Picasso (Robertson, 2011, March 20). One of the highest paid CEOs at the time, Scrushy earned a salary of $4 million and received a $6.5 million bonus in 2001 alone. The Sarbanes-Oxley Act was enacted in 2002. To address concerns about corporate accountability and accounting practices, Congress passed the Sarbanes-Oxley Act (SOX) in 2002. The country had already experienced a market crisis as many technology companies formulated in the 1990s started to lose value precipitously (Carlson, et al., 2009). In addition, in the previous year a number of significant corporate frauds had been discovered, from Enron to Worldcom and others (Carlson, et al., 2009). To comply with SOX requirements that all financial statements be certified, Richard Scrushy, as HealthSouth’s corporate executive officer (CEO) and its corporate financial officer (CFO) William Owens certified to the accuracy of HealthSouth’s 2001 financial statements which were filed with the Securities and Exchange Commission (SEC) in 2002 (Carlson, et al., 2009). Within a matter of months, questions about the accuracy of the financial stability of HealthSouth surfaced and by February of 2003, the SEC had begun a formal investigation into HealthSouth’s accounting practices (Carlson, et al., 2009). In March 2003, HealthSouth became the first corporation accused of accounting fraud under the SOX law (Carlson, et al., 2009). Several corporate executives freely admitted to authorities that they knew the financial statements were a sham but that they had been directed by Scrushy to make the numbers match Wall Street expectations of HealthSouth’s performance (Solomon, Carrns, & Terhune, 2003, March 20). Additionally, the SEC alleged that on a quarterly basis HealthSouth, with the participation of Scrushy and other senior executives would pick a desired number to represent earnings per share, and then would manipulate the number in such a way so as to arrive at that figure (Solomon, et al., 2003, March 20). The SEC also alleged

HEALTHSOUTH: THE SCRUSHY WAY 5 that HealthSouth reflected inflated earnings by decreased operating expenses, showed some expenses as capital assets, and simply manufactured more than $800 million of non-existent assets, among other things (Solomon, et al., 2003, March 20). Although HealthSouth showed a profit of $230 million in 1999 because of the manipulated financial statements, in reality, the company had a loss of $191 million during that time frame (Solomon, et al., 2003, March 20). The SEC further alleged that HealthSouth’s accountants had perpetrated the fraud by creating false entries that it knew would go undetected by its auditor, Ernst and Young (Solomon, et al., 2003, March 20). HealthSouth insiders who were alleged to have cooperated with the SEC stated that in 1997 they had asked Scrushy to stop the financial manipulation but that Scrushy would not do so before selling his stock (Solomon, et al., 2003, March 20). Ultimately, investigations revealed that HealthSouth’s revenues had been reported 2500 percent higher than actual earning in the five year period from 1997 to 2001, a figure which reached $2.1 billion (Jennings, 2012). Once the SEC revealed its findings, the stock traded on pink sheets at $0.16 per share from a high of $31 in 1998 (Jennings, 2012). What caused the demise of HealthSouth? Certainly, there is no single factor which caused so many at HealthSouth to act unethically. However, in retrospect it is clear that the culture of fraud at HealthSouth was orchestrated by Richard Scrushy. He saw himself in total control of the company and someone who surrounded himself with those he could easily manipulate (Jennings, 2012). He was said to rule with intimidation and fear, veiled threats, and was not willing to accept less than favorable reports of HealthSouth’s financial condition. When the numbers did not reflect his expectations, subordinates were told to get the numbers where they needed to be by going back in time to make subtle changes to each quarterly report so as not to draw suspicion (Jennings, 2012). HEALTHSOUTH: THE SCRUSHY WAY 6 Beginning in the mid-1990s, there was high turnover in older members of the executive team as Scrushy preferred having younger officers, many of them still in their twenties, and none with advanced degrees (Jennings, 2012). During Congressional hearings after HealthSouth practices came to light, employees testified that they voiced concern over what they perceived to be fraud, they were refused a promotion or required to transfer elsewhere in the company (Jennings, 2012). Scrushy was described as flamboyant, and would have celebrities accompany him to HealthSouth events and let politicians and athletes use the corporate jet (Jennings, 2012). He fancied himself as a rock musician who created and performed in his own rock band, used it as entertainment at HealthSouth events and used corporate assets to further the band’s interests (Jennings, 2012). He owned multiple homes, yachts, and created a number of businesses that had contracts with HealthSouth from which he also benefitted (Jennings, 2012). Yet, he was also seen by many as magnanimous because he gave generously to civic causes (Jennings, 2012). Characteristics of Unethical CEOs In their study of corporate fraud and managers’ behaviors as described in the press, Cohen, Ding, Lesage, and Stolowy illustrated that many of those later charged for corporate misdeeds (e.g., managers at Tyco, Enron, HealthSouth, Qwest, Worldcom, among others), managed in the following ways (2011): * They operated in a competitive field; * They felt pressure to be profitable and meet investment expectations; * Their compensation was dependent on reaching financial targets; * They typically dominated management; * The board of directors (BOD) and/or auditing process was ineffectual; * They gave unrealistic financial projections to third parties. HEALTHSOUTH: THE SCRUSHY WAY 7 Additionally, Cohen et al., also found that these managers shared a number of personal characteristics: * It was important that they maintain a high standard of living; * Their personal reputation was tied to the success of the corporation; * They had significant influence on others to carry out the fraud; * They were often tyrannical, narcissistic, demanded compliance, personally ambitious, or a combination of these attributes; * They exhibited a moral obligation by making generous charitable contributions often with corporate assets (2011). Was Richard Scrushy narcissistic? In their article which concerned observations of narcissism in organizations, Blair, Hoffman, and Helland, referenced the collective conclusion of researchers that narcissism was found to be the consistent manager personality trait linked to unethical behavior (2008). According to the American Psychiatric Association (APA), narcissistic people have an exaggerated sense of importance, seek positions of power, lack empathy, need admiration, evidence an attitude of entitlement, and typically exploit others (as cited in Blair, et al., 2008). Additionally, Kernis and Sun found that narcissists discounted negative information (as cited in Blair, et al., 2008), and they based most decisions on their personal needs rather than those of the organization (Blair, et al., 2008). As such, these leaders lacked integrity which McCall and Lombardo demonstrated was shown as a factor in examples of poor leadership (as cited in Blair, et al., 2008). Finally, in his study on narcissistic leadership in organizations, Gérard Ouimet referenced a study by Padilla, Hogan and Kaiser that narcissistic leaders are able to function in organizations which have a lack of structural mechanisms designed to provide oversight of their behavior thus enabling them to essentially be omnipotent, acting with an expanded sphere of influence and acting out fantasies of their exaggerated importance (2010).
HEALTHSOUTH: THE SCRUSHY WAY 8 Hochwarter and Thompson noted that Maccoby found that narcissistic leaders may be perceived as visionaries because of their boldness and risk-taking (as cited in Hochwarter and Thompson, 2012), and further, they tended to respond to ego-threats by aggression and other counterproductive behaviors (Jones & Paulus, 2010, as cited in Hochwarter & Thompson, 2012). Finally, Penney and Spector found that subordinates who provided the narcissistic leader with negative information tended to be punished (as cited in Hochwater & Thompson, 2012). Other researchers identified malevolent leadership behavior (Hochwarter & Thompson, 2012) as a precursor to workplace hostility (Trzesniewski, et al., 2008, as cited in Hochwarter & Thompson, 2012); counterproductive work behavior (Tepper, et al., 2011, as cited in Hochwarter & Thompson, 2012); corporate scandals (Lerner & Tetlock, 1999, as cited in Hochwarter & Thompson, 2012); and lapses in decision-making (Paul, et al., 2002, as cited in Hochwarter & Thompson, 2012). Richard Scrushy came from humble means; he did not possess the Ivy-league business education expected of many in control of a billion dollar enterprise. He saw himself as creating a medical model that would transform the hospital industry. Quite telling is that he intentionally surrounded himself with young, lesser experienced and educated directors to whom he could feel superior. He used intimidation as a means to control subordinates. He also insulated himself with a type of ignorance about the financial picture of HealthSouth, telling financial executives to simply get the numbers where we want them to be (Jennings, 2012, p. 184). He needed to feel important and to surround himself with the trappings of success. Richard Scrushy completed the picture of his narcissistic personality with comments he made concerning his future endeavors, which will be discussed later in this paper. Impact on Stakeholders The fallout from the implosion of HealthSouth is no different from that of those which went before or which have gone since: people lost jobs, investors lost money, workers lost benefits, and leaders lost reputation and sometimes their freedom. When the dust settled and the HEALTHSOUTH: THE SCRUSHY WAY 9 experts performed a postmortem on HealthSouth, obvious lapses surfaced. Those who studied HealthSouth’s governance found its board to be particularly ignorant about how the company functioned, the actions of Scrushy, and the financial stability of the business. In 2003, board member Joel C. Gordon admitted that the board really did not know what happened at the company (Jennings, 2012). Some corporate governance experts have called the board’s lack of action to be gross negligence (Jennings, 2012, p. 189). Dr. Philip Watkins, a board member hand-picked by Scrushy posited that if there were checks and balances in place, they must not have been because if the board was made aware improprieties it would have acted swiftly (Jennings, 2012). Outcome and Fairness of Punishment The government filed criminal charges against sixteen HealthSouth executives. All but Richard Scrushy pled guilty. Scrushy was charged with thirty-six counts of fraud, including one count under SOX for falsely certifying the 2001 financial statement with the SEC (Carlson, Coulter, & Vogel, 2009). In fact, the prosecution of Scrushy for the financial statement fraud was the first prosecution under the SOX Act (Carlson, et al., 2009). Ever the manipulator, Scrushy joined a church prior to the trial and gave to it generously. The church’s pastors attended the trial each day and Scrushy became a televangelist of sorts by appearing on his son’s television show (at a television station owned by the elder Scrushy) (Jennings, 2012). While Scrushy did not testify in his own defense, his attorneys argued that it was the other executives (who had pled guilty) who had committed this fraud without Scrushy’s knowledge (Crawford, 2005, June 28). To the dismay of many, Scrushy was acquitted of all charges in 2005, yet ever the narcissist, Scrushy believed it was the truth which had prevailed (Jennings, 2012). Further, he described the two year prosecution as torture (for him) and he was quick to point out that he considered himself to be the victim of overzealous prosecutors (Crawford, 2005, June 28). HEALTHSOUTH: THE SCRUSHY WAY 10 Scrushy’s entanglement with HealthSouth did not end with his unsuccessful prosecution. HealthSouth shareholders brought suit against Scrushy and alleged that he had actively participated in the fraudulent reporting of HealthSouth’s financial picture. At this civil trial, Scrushy testified and denied receiving millions from the company or playing any part in creating financial fraud. He recycled the defense that had worked so well for him in his criminal prosecution: the Sergeant Schultz defense—I know nothing (Crawford, 2005, June 28). He further disputed that he had inappropriately benefitted from HealthSouth in any way: the fact that HealthShouth purchased land next to his Birmingham, Alabama estate for $1.9 million then gave it to him became a bonus he received one year; his personal profit of $12 million by making an $82 investment in a company which had purchased property from HealthSouth at a steep discount became the way it works in America (ABCnews.com, 2009, June 19). In his testimony, Scrushy disputed the numbers which reflected that he was paid compensation of $226 million at a time the corporation was losing $1.8 billion (ABCnews.com, 2009, June 19). In 2009, the presiding judge found Scrushy’s personal net worth to be $300 million in 2003, that plaintiffs had met their burden of proof and he was ordered to repay $2.7 billion to HealthSouth (Robertson, 2011, March 27). Of interest no doubt to those who were victims of HealthSouth was the fact that Scrushy was actually in custody at the time of his civil trial as he was convicted in 2006 of bribery and honest services fraud for having bought a seat on a hospital regulatory board by making a $500,000 contribution to the gubernatorial campaign of Don Seligman in 1999 (Robertson, 2011, March 27). He served a six year sentence and was paroled in 2012. Now released after having completed his sentence, Scrushy is still pursuing an appeal of that conviction (Faulk, K., 2013, May 10). Despite the fact that he was not convicted of the charges brought by the government, the SEC pursued a civil action against Scrushy to which he entered into a consent judgment in which HEALTHSOUTH: THE SCRUSHY WAY 11 he paid an $81 million judgment and agreed to never serve as an officer or director of a company that markets certain types of securities (Faulk, K., 2013, May 10). The settlement provided that Scrushy could seek removal of the ban after five years which prompted his efforts in 2012 to do so (Faulk, K., 2013, May 10). Toward that end, he has filed an affidavit in federal court in Birmingham to ask that the ban be removed and asserted in support that he has potential investors who want to help him start a company to take advantage of opportunities created by Obamacare legislation (Faulk, K., 2013, May 10). At its most basic, Scrushy is in denial, which is a type of psychological defense mechanism which has enabled him to ignore reality (“Denial,” 2013) and deny the role he played in so many acts of fraud. Conclusion These actions leave no doubt that Richard Scrushy is narcissistic, without remorse, and in denial about his past actions. We can only hope that the Federal Judge in Birmingham comes to the same conclusion and denies Scrushy’s request to lift the ban on him serving as an officer in other corporations.

HEALTHSOUTH: THE SCRUSHY WAY 12
References
Blair, C. A., Hoffman, B. J., & Helland, K. R. (2008). Narcissism in organizations: A multisource appraisal reflects different perspectives. Human Performance (21), 254-276. doi: 10.1080/08959280802137705
Carlson, R. L., Coulter, J. M., & Vogel, T. J. (2009). HealthSouth corp.: The first test of Sarbanes-Oxley. Journal of Forensic and Investigative Accounting (1)2, 1-27. Retrieved from http://www.bus.lsu.edu/accounting/faculty/lcrumbley/jfia/Articles/v1n2.htm

Cohen, J., Ding, Y., Lesage, C. & Stolowy, H. (2010). Corporate fraud and managers’ behavior: Evidence from the press. Journal of Business Ethics (95), 271-315. doi: 10.1007 /s10551-011-0857-2

Crawford, K. (2005, June 28). Ex-HealthSouth ceo Scrushy walks. CNNMoney. Retrieved May 17, 2013 from http://money.cnn.com/2005/06/28/news/newsmakers/scrushy_outcome/

Denial. (2013). In Merriam-Webster’s online dictionary (11th ed.). Retrieved from http://www.m-w.com/dictionary/denial Ex-ceo Scrushy ordered to pay HealthSouth shareholders $3b. (2009, June 19). ABCNews. Retrieved May 18, 2013 from http://abcnews.go.com Faulk, K. (2013, May 10). Former HealthSouth ceo Richard Scrushy seeks to form new healthcare business with opportunities opened by obamacare [Blog post]. Retrieved from http://blog.al.com/spotnews/2013/05/former_healthsouth_ceo_richard_2.html Hochwarter, W. A. & Thompson, K. W. (2012). Mirror, mirror on my boss’s wall: Engaged enactment’s moderating role on the relationship between perceived narcissistic supervision and work outcomes. Human Relations (65)3, 335-366. doi: 10.1177/ 0018711430003 Jennings, M. M. (2012). Business ethics: Case studies and selected readings. Mason, OH: Cengage. Ouimet, G. (2010). Dynamics of narcissistic leadership in organizations. Journal of Managerial Psychology (25)7, 713-726. doi: 10.110802683941011075265 Robertson, C. (2011, March 27). Hunting for bargains after a titan’s fall: Everything must go. The New York Times. Retrieved from http://www.nytimes.com Solomon, D., Carrns, A., & Terhune, C. (2003, March 20). SEC alleges HealthSouth faked $1.4 billion in profits. The Wall Street Journal. Retrieved from http://online.wsj.com

Similar Documents

Premium Essay

Business Ethics

...Christian Hufford Ethical Issues in Business Business Ethics BA 338 Business Ethics Unit 4 Individual Project August 5, 2014 Professor Loschiavo Pyramid schemes and Ponzi schemes share many similar characteristics in which unsuspecting individuals are fooled by unscrupulous investors who promise extraordinary returns. However, in contrast to a regular investment, these types of schemes can offer consistent “profits” only as long as the number of investors continues to increase. Ponzi and pyramid schemes are self-sustaining as long as cash outflows can be matched by monetary inflows. The basic difference a rises in the type of products that schemers offer their clients and the structure of the two ploys. Ponzi schemes are based on fraudulent investment management services- basically investors contribute money to the “portfolio manager” who promises them a high return, and then when those investors want their money back they are paid out with the incoming funds contributed by later investors. The person organizing this type of fraud is in charge of controlling the entire operation; they merely transfer funds from one client to another and forgo any real investment activities. On the other hand, a pyramid scheme is structured so that the initial schemer must recruit other investors who will continue to recruit other investors and those investors will then continue to recruit additional investors and so on. Sometimes there will be an incentive that is presented as......

Words: 746 - Pages: 3

Premium Essay

Business Ethics

...|BUSINESS ETHICS | |Individual assignment | | | | | |Topic 1: The factors influencing corporate culture | |LECTURER: |Trangdtt | |STUDENT: |Nguyen Thuy Anh | |ID NO. |FB00163 | |CLASS: |BA0601.2 | I. NATURE AND BACKGROUND OF FIRM: The Coca-Cola Company is the world's largest beverage company and is the leading producer and marketer of......

Words: 984 - Pages: 4

Premium Essay

Business Ethics

...According to International Business Ethics Institute, understanding business ethics can be problematic in the sense that, this field is vast, often encompassing many concerns such as corporate governance, social responsibility, reputation management, accurate accounting and audits, fair labor practices and environmental stewardship to name a few. Moreover, it generally addresses the entire scope of responsibilities and obligations that a company has to each of its stakeholders like clients, employees, shareholders, suppliers and the community. To simply define business ethics, it is a form of applied ethics where it inculcates a sense within a company’s employees on how to conduct business responsibly. Business ethics seems easy to understand but when you get to the real one, you could find yourself in a confusing situation. Since the term ethics can pose many definitions in a broad context and it can be difficult to find a common understanding of the term, hence, most companies refer the concept of the term ethics as integrity, business practices or responsible business conduct. After you have known the basic definition of business ethics, you would now begin to know the business ethics of a chosen company. This paper aims to give some views on how Hewlett-Packard, an international company which provides mostly computer technologies worldwide, imposes their generally-established business ethics which means to say that it is enforced to their branches all over the......

Words: 297 - Pages: 2

Free Essay

Business Ethic

...Ethics and Integrity in Multinational Companies Silvia Delia OLARU Spiru Haret University, Bucharest, Romania E-mail:olarudelia@yahoo.com Phone: + 40213169793 Elena GURGU Spiru Haret University, Bucharest, Romania E-mail:elenagurgu@yahoo.com Phone: + 40213169785/88 – ext.151 Abstract The good news for multinationals is that globalization is creating more universal standards of business conduct, and these are becoming more rigorous. As more companies adopt these standards, it becomes increasingly important for every multinational to establish companywide core values, standards of behavior, and relevant policies in tune with the rest of the world's ethics and compliance environment. The benefits of an ethical culture outweigh the costs. Globally ethical companies will be those that maintain a strong reputation in all their markets, experience increased employee commitment and loyalty, garner advantages in attracting and retaining customers, and generate superior levels of performance and success. Keywords: globally ethical companies, business conduct, ethical culture, professional standards, corporate code of conduct Introduction Companies operating in foreign countries find that understanding and complying with variant laws, managing employees far from headquarters, serving customers and relating to suppliers and partners in multiple jurisdictions can introduce significant challenges to developing shared corporate values and realizing a truly global culture.......

Words: 2644 - Pages: 11

Premium Essay

Business Ethics

...------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- College of Business, Hospitality and Tourism Studies ------------------------------------------------- Department of Accounting ACC601 – Corporate Accounting Trimester 2, 2012 Research Assignment 2, (10%) Instructions: ( For Education students only) Note * This assignment is to be carried out in groups of three. * Students are required to choose only one topic, and write a research report, based on the format given. * The assignment must comply with normal academic requirements. Refer to the course outline and regulation concerned with plagiarism and copying! * The assignment is out of 10 marks and carries a weighting of 10% towards the overall assessment. * Hard copy & soft assignments must be submitted on or before 24th July 2012. Your written assignment submission format * Cover page – ID# and full name of group members * Acknowledgement declaration (if any interviews conducted) * Abstract / Value of research ½ page * Your research topic / company * why you choose a particular company/ topic – Rationale/ value of research * Methodology of obtaining research information 1page * Quantitative/ and qualitative analysis * Introduction1page * What is your topic and briefly discuss about that......

Words: 407 - Pages: 2

Premium Essay

Business Ethics

...SUBJECT BUSINESS ETHICS PROFESSOR CYRUS GONDA TOPIC UNETHICAL PRACTISE IN FOLLOWING SECTORS: HOSPITAL GROSSERY HOTEL INFORMATION TECHNOLOGY JOURNALISM GYMNASIUM INTERIOR INSURANCE UNETHICAL PRACTISE IN DIFFERENT SECTORS Hospital No profession is more fundamentally rooted in an ethic than medicine. In the 21st century, almost every young American physician graduates from medical school by reciting some version of an oath of ethical behavior first sworn to by doctors in the fifth century B.C. To be sure, the original formulation by the Greek physician Hippocrates is a bit outdated--starting with its invocation of obscure Greek gods and, among many anachronisms, equating treatment with "dietetic measures" and relegating surgery to barbers. Many medical schools have adopted updated versions of the oath, in which not only the language and concepts are modernized but also considerations such as avoiding overtreatment and factoring the patient's economic well-being into the therapeutic relationship are explicitly included in the pledge. Ethical guidelines are central to medical practice because of what one respondent to ACPE's recent poll of physician leaders summarized as the "inherent conflict of interest" between the physician's role as trusted healer and the physician's role as breadwinner--earning a living from the medical knowledge and ministrations applied Case studies: the legal implications for health care's bad business practices Bad, or unethical,...

Words: 4237 - Pages: 17

Premium Essay

Business Ethics

...1) Yes, I believe that Project Share is altruistic in nature and serves the greater good of man and it is also a good business decision for the company. I have postulated some of my thoughts on the writings of Milton Friedman. While I have no objections to giving back to the community and doing social good, I do believe that a majority of the money, time and effort should come from employee contributions rather than corporate dollars used for funds, grants and scholarships. Companies should limit their direct involvement in these activities using just their brand and influence to raise public awareness to the cause, so long as it is consistent with the companies’ values and beliefs. I also believe it is the firm’s primary job is to focus on delivering the highest possible return of shareholder value. If a company cannot produce a profit, or sustain the shareholder’s appetite, then the possibility of promoting a Project Share cannot exist. Everything in the business revolution is predicated on returning value. I should clarify, that my statements above are based upon the fact the companies in discussion are publicly traded and not private entities. Private entities, which include partnerships, limited liability corporations and other non-traded companies with limited employees and owners who are the sole shareholders, can operate as the social responsibility doctrine as they see fit. 2) Milton Friedman’s, belief was that the one and only one social responsibility of a...

Words: 613 - Pages: 3

Free Essay

Business Ethics

...Our group worked very efficiently and effectively together but there is always room for improvement. When we first met, we divided the project into equal parts and set a due date for the written parts. One thing that we could have worked on would be to have more meetings. We feel that if we met maybe one or two more times, we could have gotten all of our issues with the written parts and presentation out rather than communicating though texting and Facebook. Another aspect our group could have improved on would be communication within our group. Although we all finished our parts on time without any conflict, we never got together to bounce ideas off each other and give each other ideas for our parts. We were just assigned the parts and didn’t discuss them until we put it all together. This could have been beneficial to all of us and maybe make the workload less. Overall, we all agreed that our group worked very well together. We started the assignment when it was given to us and finished our parts on time to the best of our ability. We set deadlines and met all together to discuss what our roles were and our meeting were efficient. It was very interesting to meet new people from different parts of the world and work together with them. It was good for all of us to get out of our comfortable groups and come together with people with different interest and ideas with such diverse cultural backgrounds. It was a very realistic representation of what the real world will be......

Words: 312 - Pages: 2

Premium Essay

Business Ethics

...BUSINESS ETHICS Name Institution of Affiliation Introduction The business environment is changing to embrace ethical conduct in the performance of duties and activities of individuals in professional setting. Nowadays, companies are exposed to public scrutiny where their corporate social responsibility and social accountability are assessed. A shift towards rethinking the various functions of a business entity to encompass ethics into their daily management activities has been undertaken as entities seek to be market leaders. Business ethics encompasses the relationship the company has with the employees, customers, shareholders and the community. Business ethics is the analysis of business activities and situations where issues pertaining what constitute a right or wrong act are dealt with through institutional processes (Jennings, 2011). Consequently, ethics involves ascertaining good practices from bad practices based on the context of morals. On the other hand, moral conduct is the behaviour exhibited by human beings that can either be right or wrong depending on the context whereas business ethics. Business ethics can be viewed from two distinct perspectives; descriptive ethics and normative ethics. Normative ethics ascribes to the justification of moral systems whereas descriptive ethics depicts what ethical practices are. Ideally, the paper will delve into more details concerning what business ethics entails and the importance of business......

Words: 1492 - Pages: 6

Premium Essay

Business Ethics

...The success of modern business is apparent, but recently there is much concern in the business-and-society literature and in the general press on whether business fulfils its social role responsibly. Business ethics, corporate social responsibility and corporate governance movements have been developed in recent decades as responses to a growing sense of corporate wrongdoing. This paper attempts to explain why the three movements seem yet to have generated little in the form of widely accepted prescriptions for improvement of business behaviour to the satisfaction of the “constituents” of business, i.e. the major stakeholders. Without denying the usefulness of any of the three movements, the paper suggests that there are weaknesses in all three, especially concerning the way they conceive modern business operation. To this end business pluralism, responsive codes of practice and re-examination of the assumptions (conditions) of business operation could be helpful. In the business literature there is a major strand that celebrates business strength and seeks formulae for success. This strand was manifested in the Scientific Management tradition dating from Frederic Taylor’s work in the early twentieth century (Taylor, 1911) and continued through the Human Relations studies of Elton Mayo that sought to find growth through taking care of the “people dimension” (Roethlisberger and Dickson, 1939). The tradition was further developed following the publication by Peters and......

Words: 1693 - Pages: 7

Premium Essay

Business Ethics

...Running head: Ethical and Moral Issues in Business * Ethical and Moral Issues in Business MGT/216 * Ethical and Moral Issues in Business * In this paper I will address the following topics: the differences between moral and ethical issues, the differences between business ethics and personal ethics and list some examples of ethical issues in today’s business environment. The line between morals and ethics may seem blurred; however, some differences between the two do exist. Morals are defined as one’s personal values or beliefs. These values are typically established by religious beliefs or family influences. Ethics are defined as guidelines for behavioral standards. These guidelines are usually set in place by a specific group or groups of people. For example, businesses usually have a specific code of ethics that may differ from a religious group’s code of ethics. What is acceptable for one group or organization may be unacceptable to others. Business ethics are defined as codes or guidelines used to govern behaviors and practices within any given company. Typically all companies abide by a written code of ethics. These codes are used to ensure that employees understand and practice acceptable behaviors in the workplace. Usually a company’s code of ethics is influenced by the culture surrounding that business. In the business world, personal ethics will sometimes be put aside for the greater gain of......

Words: 669 - Pages: 3

Premium Essay

Business Ethics

...Running head: Code of ethics Code of ethics within businesses Saif Mustafa Ali Monash University Ethics relate to an individual's moral judgements about right and wrong. Decisions taken within a corporation may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to act ethically is a moral one; employees must choose what they think is the right course of action. This may require declining the route that would lead to the largest short-term profit. Ethical behavior and corporate social responsibility can bring considerable advantages to a business. Ethics and ethical behavior are very high priorities for companies today (Davis 2004; Weber 2006). Although codes of ethics are tools that are frequently used as one of the efforts to promote ethical behavior, research suggests that there may be a great deal of room for enhancement of existing codes (Kitson 1996; Blodgett and Carlson 1997; Moyes and Park 1997; Hume, Larkins and Iyer 1999; Schwartz 2001). The aim of this paper is to recognize and discuss ways to improve the code of ethics of an corporation. Blodgett and Carlson reviewed twenty-nine business codes of ethics and concluded that "the codes often contained unclear references to acting ethically, then give widespread compliance lists which operate mainly to forbid breach of current laws"(1997, 1369). Schwartz (2001) in his research based on fifty-seven in detail interviews at four large Canadian......

Words: 1095 - Pages: 5

Premium Essay

Business Ethics

...Business Research Ethics David Taylor III Res/351 8/31/2012 Erica Mitchell Business Research Ethics Ethics in business research is analogous with the structure of variables in a construct. The onus of the burden of proof does not reside in proving the existence of ethics in business research, rather, in identifying the relationship between ethics and research and how ethics impinges on research. Ethics is typically conceptualized as making the right choice, however, because “right” is an abstract value, the definition and consequences of ethical choices is far reaching A customary unethical practice in business research is the falsifying of data. The ethical repercussions of falsifying data are substantial. Unethical Research The University of Minnesota heads one of the top stem cell research facilities. Their rise to prominence in 2002 was the result of falsification of data by one of the Ph students on the research team. The research indicated that new evidence reveals a stem cell that can generate body tissues. Tampered images and plagiarism was also revealed by a panel of scientists. The student used patented images in her presentation to illustrate a seemingly new discover although it had already been patented. The tampered images were the same images presented at different angles to attempt to appear as different results. The behavior of skewed results has on-going consequences. One of the unique aspects of falsifying data is the impact is has on parties other than......

Words: 819 - Pages: 4

Premium Essay

Business Ethics Assignment

...Higher Education Assessment | School: | Hospitality, Tourism and Sport | Awarding Body: | Lancaster University | Module Code: | TH4MD013 | Programme Title: | Foundation Degree Hospitality and Licensed Retail Management | Occurrence: | 13/15 | Module Title: | Business Ethics and Social Responsibility | Weighting: | 100% | Assessment Title: | Corporate Social Responsibility | Assessment No. | 1 | fds | Tutor Details | Name | Ian Mills | Telephone No. | 504481 | | Email | Ian.Mills@blackpool.ac.uk | Room | SB110 | | Internal Verification (IV)For Staff Use Only | Assessment Brief IVMust be internally verified prior to distribution to students | IV Name: | Beverley Heinze | | | Date: | | | Student Submission IVTo be completed if the assessment submission forms part of the IV sample | IV Name: | | | | Date: | | | Assessment Distribution, Submission & ReturnPlease note that late submissions may incur a penalty as defined within the assessment regulations of the awarding body | Distribution Date: | Monday 19th January 2015 | | Submission Time: | Midnight | | Submission Date: | Friday 15th May 2015 | | Submission Point/Location: | Moodle | | Feedback Week Commencing: | Week commencing Monday 1st June 2015 | | Student Number: | | Student Name: | | | Assessment RecordFor Staff Use Only. All assessment grades are subject to ratification by the College board of examiners and the awarding body. | Grade......

Words: 842 - Pages: 4

Premium Essay

Business Ethics

...INTRODUCTION Ethics is a branch of philosophy that inquiries into the nature of ultimate value and the standards by which human actions can be judged right or wrong. Nowadays, with competitive market shares, ethics is becoming more and more important. It could be concerned as one of the elements to business development. To business, ethics is a tool to exam principles and moral or ethical problems that arise in a business environment. Therefore, business ethics can be both a normative and a descriptive discipline. Business ethics is a factor of determining the fundamental purposes of a company. BASIC PRINCIPLES OF BUSINESS ETHICS 1. Be Trustful: Recognize customers want to do business with a company they can trust; when trust is at the core of a company, it's easy to recognize. Trust defined, is assured reliance on the character, ability, strength, and truth of a business. 2. Keep An Open Mind: For continuous improvement of a company, the leader of an organization must be open to new ideas. Ask for opinions and feedback from both customers and team members and your company will continue to grow. 3. Meet Obligations: Regardless of the circumstances, do everything in your power to gain the trust of past customer's and clients, particularly if something has gone awry. Reclaim any lost business by honoring all commitments and obligations. 4. Have Clear Documents: Re-evaluate all print materials including small business advertising, brochures, and other business......

Words: 581 - Pages: 3