Alexandra Knights Professional, Responsibility, and Leadership John Mahoney Paper 2 Question/Prompt 4 December 20, 2013 There is a common

n misconception regarding what it means to maintain a work/life balance and make distinctions between our business and personal personas. The former is necessary, in order to balance the demands and responsibilities of our personal and professional lives, so as to effectively manage these different stressors and maintain our happiness and composure. The latter, however, can be dangerous. Business is relationship based and inherently personal. Furthermore, conducting business often has implications that transcend the boundaries of our professional and personal lives. Therefore, we should not seek to create a distinction between our professional personal lives, but to understand the differences between the governing principles of each and interplay between differences and similarities, in order to make better decisions.

The Importance of Having Two Sets of Values An important issue, in the context of business ethics, is the conflicts of interest that can arise while doing business. These conflicts of interests generally involve our fiduciary duties to certain stakeholders and occasionally our own aspirations. A firm or individuals ethical responsibility to different stakeholders is codified in the law through fiduciary duties. For example, corporations are fiduciary agents of shareholders and employees are fiduciary agents of their employers. Given this dynamic, there are different situations where what is in the best interest of these parties may differ from each other or our own interest.

In order to remain objective in these situations, it is important to recognize that a different set of governing principles exists for businesses than for individuals. These principles are codified in the different laws pertaining to businesses versus individuals, and a different set of best practices. We must then create, not a separate moral identity for our business interactions, but instead be aware of the similar but differing moral standards and apply our values accordingly.

An example of a situation where there is conflict between the interests of management, shareholders and clients is the Case Study on Quality Department Stores by Professor Lawrence Zicklin (Zicklin). In the case, an investment manager is faced with the decision to vote in favor of Quality Department Stores management at the upcoming proxy meeting and maintain a good relationship with one of his largest accounts, or to vote in favor of a potential acquirer, and potentially lose a large account, but benefit from the 30% increase in equity value that the acquirer says he can generate (Zicklin). Although the Investment managers fiduciary duty is to his fellow shareholders and his investment management company, this odd request from a one of his largest clients has created an ethical dilemma (Zicklin). The complex nature of business requires us to frequently navigate these kinds of ethical dilemmas, while maintaining our objectivity and abiding by the governing ethical principles. In this scenario, the investment manager should cast his vote based off of whether he trusts Qualitys management or the wellknown acquirer. Although he should be mindful of his clients needs, he has no explicit ethical or legal duty to take this client in particular request. The best way to deal with situations like the one presented in this case is to thoroughly understand that a different set of governing principles exists for businesses than for individuals, and be able to remove yourself from the conflict and make an objective decision.

The Case Study on Buynow Stores by Bruce Buchanan (Buchanan) demonstrates a different scenario where the conflict of interest stems from an employees personal interest as opposed to a conflict between shareholders. In the Buynow Stores case, a new employee in the buying office at Buynow stores is struggling with the quantity and quality of gifts and cash she is receiving from suppliers (Buchanan). Although the practice of giving gifts and wining and dining is common in the retail industry, she is bothered but the amount she is receiving and how her fellow colleagues and boss seem to take advantage of the practice (Buchanan). The receiving and giving of gifts is an ethical dilemma that occurs in a variety of industries. Wining and Dining is a common practice used to build and improve both business and personal relationships with clients. But when does this practice go beyond relationship building and at what point will those receiving a gift feel obligated to return the favor. In considering what is acceptable and what is unacceptable, employees have a fiduciary duty to act in their firms best interest, regardless of whether or not they may want or need the gifts they are receiving. In this case, the employee should separate her personal needs or wants aside and focus on the how her firm addresses the giving and receiving of gifts in its code of conduct and other laws and ethical principles that may be applicable to her situation.

In both of the prior case what was legal or ethically acceptable, was also good for business. The Investment manager correctly acted upon his fiduciary duty to his fellow shareholders and company and voted for what he thought would be in their best interests. In the case of the female employee receiving gifts, following up on her companies policies and procedures regarding gifts allowed her to make a decision that allowed her to maintain her objectivity when deciding on

merchandise and not return any favors, which was in the best interest of the company. However, it important to also consider and understand situations in which what seems to be the ethical choice conflicts with what is good for business.

The case of Smith & Wesson described in Jeffery L. Seglins The Right Thing: When Good Ethics, Arent Good Business is an example of when decision[s] about the right thing to do [arent] necessarily going to be good for the company. (Seglin). The case study surrounds Smith & Wesson managements decision to implement smart-gun technology (Seglin). The decision was predicated on an agreement with the government that sought to diffuse the impact of various lawsuits, yet it still had a huge negative impact on the company (Seglin). Despite making guns safer and indirectly protecting consumers, there was still a huge consumer backlash and sales dropped significantly (Seglin). Although the company foresaw the potential backlash they still went forward with the decision and stood by it because management felt a personal obligation to do everything possible to prevent accidents (Seglin). What occurred to Smith & Wesson was a product of managements struggle to maintain objectivity when faced with a conflict of interest. Although they felt they were acting ethically they disregarded the potential for consumer backlash in order to satisfy their own interest, despite the fact that doing so deviated from their fiduciary duty to shareholders and responsibility to consumers.

In addition to recognizing the different set of governing principles that exist for businesses and for individuals, we must also recognize a corporation in its societal context. In his lecture on Corporate Takeovers and Our Schizophrenic Conception of the Business Corporation, William T. Allen describes our conception that the corporation is not strictly private; it is tinged with a

public purpose[that] can be seen as including the advancement of the general welfare.(Corporate Takeovers and Our Schizophrenic Conception of the Business Corporation). If we think of the corporation from this perspective, we realize that a corporation is not merely the private property of its owners[which purpose is] to advance the financial interest of owners but serving the interests of many stakeholders and society (Corporate Takeovers and Our Schizophrenic Conception of the Business Corporation). The societal implications of corporate governance, such as managing negative externalities and consumer interests, is another reason why we must look beyond our own moral values when dealing with the different moral dilemmas that can occur in business.

Maintaining Our Personal Morals in Business Ethics Although is it important to be aware of the differing ethical principles that govern our personal and professional lives in order to maintain our objectivity, this does not mean that adhering to one set of standards is mutually exclusive from the other and that there is no room for personal morals in business ethics. There are situations when good personal ethics arent good for business, and other situations, when they go hand in hand. The important idea to understand is that the extent, to which personal values can be impressed upon or applied to business dilemmas, depends on the type of conflict and the business or ethical principle at play.

In recent years, Congress has been struggling with corporate governance reform. The SarbanesOxley Act is an example of a reform that, although well intentioned, has further blurred the lines between personal and professional responsibility and liability. Historically, under the business judgment rule, the board of directors was protected from any personal liability as long as the

decision making process was free of conflicts of interest and made in a good-faith pursuit of the best interests of the company (III). Removing the threat of personal liability from important business decisions, simultaneously removed a potential source for conflict of interest. However, the Sarbanes-Oxley Act diluted the impact of the business judgment rule by raising the standards for behavior and increasing the personal liability of directors (III). This added liability increases the potential for conflicts of interest, and ultimately hurts corporations by adding personal values and issues to a forum where they should have no bearing. Therefore creating a situation in which personal ethics and values are not good for business.

Another scenario that questions the extent, to which personal values can apply to business principles or best practices, is when it comes to bluffing. In the context of business bluffing can be very strategic. Although bluffing is not specifically lying, it can definitely be considered not telling the truth. This presents a moral dilemma between personal values and business best practices because truth and respect for it are at the cornerstone of personal morality. In the business context, it is important to note that bluffing doesnt mean fraud, and as long as the bluff doesn't extend to the point that it becomes fraudulent it remains within the realm of legality. In his essay, Is Business Bluffing Ethical, Albert Z. Carr quotes Henry Taylor by pointing out that falsehood ceases to be falsehood when it is understood on all sides that the truth is not expected to be spoken. (Carr).

This is significant as bluffing is generally accepted because no one is expecting anyone else to give away his or her potential strategic advantages. He further highlights that ignoring [the] opportunities permitted under the rules [of business, puts one] at a heavy disadvantage in

business dealings (Carr). If we follow this reasoning, we can conclude that the strategic importance of bluffing and a managers responsibility to act on his or her strategic advantages supersedes any personal reservations he or she may have against the act of bluffing. However, this doesn't mean that there is no room for consideration of personal values, which is why Carr cautions against making bluffs that will cause one to lose self-respect or become emotionally disturbed (Carr). Although his conclusion, that decisions, with respect to bluffing, are of strategy,[and] not ethics is indicative of the limited extent to which personal values should impact this type of decision making process; his prior consideration for self respect an emotional disturbance demonstrates how personal values and best practices arent mutually exclusive (Carr).

However, this is not to say that personal morals have no place in business ethics. The Case Study, Toy Maker Faces Dilemma as Water Gun Spurs Violence by Joseph Pereira, chronicles the dilemma Larami Corporation faced when its biggest profit maker, Super Soakers, became extremely controversial after several Super Soaker-wielding youths were wounded in shootings (Pereira). The dilemma Larami faces lies in what course of action it should take in light of the controversy surrounding its top selling product (Pereira). If the company lies low and the controversy doesnt subside, it is unlikely that the firm will survive, however if they willingly halt production, they would be voluntarily foregoing revenue (Pereira).

This is a situation where ones personal remorse for the situation at hand, specifically the families that lost children in Super Soaker related shootings, and generally accepted best business practices, which would not include going out of business just to prove a point or show

remorse, are in conflict. The companys fiduciary duty to its shareholders and its responsibilities to employees and customers, who enjoy using their product, further complicate the situation because they present another set of ethical principles that management must consider. Ultimately the company chose a plan of action that was satisfactory across the moral spectrum. They issued a statement expressing sympathy for those who had lost their lives, while clarifying their lack of control over the misuse of their product. This allowed management to acknowledge their personal beliefs and feelings regarding the shootings, maintain their fiduciary duty to their shareholders to continue to sell the product, and maximize shareholder value.

Conclusion Creating strict distinctions between ones personal and professional lives can be dangerous because of the different ethical issues one can face when making business decisions. By creating a strict distinction, or a separate moral identity for our business interactions we limit our understanding of ethical dilemmas, the governing principles in our personal and profession lives, and how these principles can overlap or conflict in everyday situations. We must then avoid creating a separate moral identity for our business interactions, and instead harness an awareness and understanding of the moral standards and apply our values accordingly. This idea that moral reasoning is a source we can appeal to when our interests conflict is the basis of neutral, omnipartial rule making (Green). By maintaining our objectivity and understanding the different ethical principals at work, we are omnipartially weighing and assessing the different claims and interests and effectively using ethics to render a decision. This is why understanding the differences between the governing principles of our personal and professional lives, and the interplay between differences and similarities, allows us to make better decisions.

Works Cited
1. Buchanan, Bruce. Buynow Stores. New York: (Not Available), 1994. 2. Carr, Albert Z. "Is Business Bluffing Ethical?" Harvard Business Review January/February 1968. 3. Corporate Takeovers and Our Schizophrenic Conception of the Business Corporation, 1992 Rutenberg Lecture, University of Pennsylvania Institute of Law & Economics 4. Green, Ronald M. "Neutral, Omni-partial Rule Making ." The Ethical Manager 1994. 5. III, Porcher L. Taylor. "Sarbanes-Oxley: Danger for Directors." National Law Journal 17 March 2003. 6. Pereira, Joseph. "Toy Maker Faces Dilemma as Water Gun Spurs Violence." Wall Street Journal 11 June 1992. 7. Seglin, Jeffery L. "The Right Thing: When Good Ethics Aren't Good Business." New York Times 18 March 2001. 8. Zicklin, Lawrence. Quality Department Stores. New York: (Not Available), 1994.