We pose everyday ethical dilemmas that young people face to “America’s leading business ethicist”

(according to USA Weekend magazine). Here’s some wisdom from the business world to help you
do the right thing.

Dr. David Batstone, the president of Right Reality, Inc., is a professor of social
ethics at the University of San Francisco and a founding editor of Business 2.0
magazine. His new book, Saving the Corporate Soul & (Who Knows?) Maybe Your
Own (Jossey-Bass) establishes eight principles for practicing business with
integrity and profitability without selling out.

Ethical Dilemma 1: How to spend that "extra" cash

Ethical Dilemma 2: Accountability - there's no "I" in company

Ethical Dilemma 3: To tell the truth

Dilemma 1:

Jennifer, 17, is editor of the high school yearbook. She directs a team of 28 students who are active
in the yearbook club. Each year the school sets aside a fund for the club, and Jennifer reports on
club activities to her faculty club advisor. One of Jennifer’s toughest challenges as editor is to plan
for expenses; it’s easy to underestimate photography and printing costs. So she is thrilled at year’s
end once the club has put the finishing touches on the yearbook to find out that it has come in
under budget. Jennifer mulls over how to use the surplus funds. After all, the school set aside the
money for the yearbook club to use. Because she must turn in purchase orders to the faculty
advisor, she simply can’t spend the funds on a club trip, say, to an amusement park. She doubts
that her advisor would approve that purchase order. But she could allot to each club member the
money to make wall posters of their favorite yearbook photos at the print shop. Is it OK for Jennifer
to spend the money this way?

Batstone:

Jennifer has stumbled into a gray zone – where few black-and-white answers live - of financial
accountability. The school has set aside the funds for the yearbook club, and Jennifer does not
distribute the money for any other purpose. A review of the financial reports at year’s end will
confirm that she has done excellent work at managing her club’s funds. Her only clear error is trying
to hide from the faculty advisor how she actually plans to use the surplus money. Why not approach
her advisor directly and offer a good argument for using the money to reward club members?
Maybe the teacher won’t OK a trip to Six Flags – hey, it’s worth a shot – but it would not be
unreasonable to ask for wall posters that show off the club’s best stuff.

If Jennifer one day pursues a career in business, she’s likely to encounter this dilemma again and
again. Most companies of any significant size delegate financial budget responsibilities to their
managers. The amount of money they are given to manage usually is based on a projection of what
it will take to get a project done. No manager wants to overspend on a project. In a company with
limited imagination, managers may not want to leave a surplus at year’s end either. Why? They
may fear that their thrift will lead company executives to lower their projected budget for the
following year. For that reason, managers may seek “creative” ways to drain their budget. A
company with visionary leadership, on the other hand, will find ways to reward managers – and the
people who work in their project – for staying on budget; even more so when they are able to leave
a surplus.
Dilemma 2:
Zachary, 16, went all out for the school prom. His first choice for a prom date accepted his
invitation, and his parents offered to host an after-prom party. To add a bit of glitz, Zachary asked
three of his friends to share the expense of a limousine service for prom night. They agreed, so he
researched the yellow pages for the most affordable limo company, made a reservation, and paid a
deposit up front for half of the rental cost. The balance was due after the event. Zachary informed
his friends of their share of the cost. One friend paid him immediately, while the other two friends
said they would pay him later. The prom night turned out as well as Zachary had hoped it would.
Several classmates raved about his limo entrance.

Back at school the next week, Zachary once again asked his two friends for their share of the rental
cost. They begged poverty. Over the next month, Zachary reminded them on several occasions for
their payment. He got plenty of excuses, but no cash. The manager of the limo company,
meanwhile, was calling his house regularly asking for full payment. Zachary told him it wasn’t his
fault; he had already paid his share. On one call, he tried to give the manager his friends’ phone
numbers, but the manager wasn’t interested. He insisted that Zachary pay the balance. So Zachary
abruptly hung up, shouting that it was no longer his problem. Is he right?

Batstone:

Sorry, Zachary, but you can’t slip out of this obligation. Though he surely regrets it now, Zachary
represented his friends when he engaged the limo company for its service. In that sense, he trusted
that his friends would deliver on his promise. The fact that they did not is indeed Zachary’s problem,
and not the company’s. It’s a real hassle, but he should pay the company promptly, then figure out
how to get his friends to reimburse him.

Risking your own reputation for others is usually a bit tricky, and only should be done after a great
deal of thought. It’s amazing to me how often that even large corporations fail to realize that they
have an ethical responsibility for the company they keep. Here’s an example: A major cable
company that I was using for my home network contracted out to a third party (another
independent company) its billing services. One month I received a charge for cable services that I
did not use. Despite my complaint, the billing service would not correct its error. When I called the
cable company, I was told that the company could not take any responsibility for the errors of the
billing service. That’s wrong. The cable company does have an obligation to its customers. It can
choose to bring in partners (third parties) to help it run its business more effectively, but doing so
does not free it from its obligation to customers.

The excuse “we haven’t done anything wrong” does not hold much weight in a competitive business
environment. A company’s reputation rests on the total experience that a customer has in the
delivery of service. The take home lesson: make promises for your friends (and your business
partners) wisely.
Dilemma 3:

Jesse, 14, plays baseball on a district all-star team. Last year his team reached the district finals
only to lose (as usual) to the traditional powerhouse that hails from one of the larger city suburbs.
But Jesse’s team has high hopes of winning the final this year and move on to the state
tournament. Their optimism rides the strong pitching arm of Larry Porter, a new player who joined
the team at the beginning of the year. Because Larry is just about unhittable, the team rarely loses
when he pitches.

A few days before the playoffs begin, Jesse discovers by chance some unsettling information: Larry
doesn’t actually live in the district. Larry lists his uncle’s address as his home, but he actually lives
with his parents in an adjoining district. Jesse doesn’t know what to do. He doubts that his coach
knows about the sham address. If he reveals Larry’s secret, and his teammates find out that he was
the informer, they will think he’s a rat. Beyond that, the team’s chances in the playoffs will take a
nosedive if Larry is disqualified. Jesse wonders whether it’s best to keep quiet and hope that nobody
else uncovers the truth.

Batstone:

Jesse clearly wishes that he had never learned the truth. Unfortunately, the truth often finds us
whether we are looking for it or not. The test of our character is what we do with the knowledge we
do have.

I have interviewed several senior managers who worked at Enron, the energy company that lied to
its investors and the public about its earnings (to the tune of billions of dollars). They readily admit
to the comfort of burying their heads in the sand and wishing that the dishonesty would go away.
But it didn’t, and the silence let a travesty go on for years that ended up losing the jobs and
retirement income of tens of thousands of innocent people. One former senior executive of Enron
told me that left to grow, deception can take over a company: “Once you stop telling the truth, you
spend as much of your time covering up for your lies as you do creating real value.”

The consequences will not be so dire in Jesse’s situation, of course, but courage is not an easy path
to walk all the same. Who knows? Jesse’s courage may end up saving the team from disaster down
the road. The farther his team goes in the playoffs, the likelihood increases that the truth of Larry’s
living situation will emerge. And that revelation would lead to the team’s disqualification – and
public shame.

So Jesse should go to his coach immediately and tell him what he knows. It would be best to speak
to the coach alone confidentiality. The coach can then validate whether Jesse’s information is
accurate. Just think how awkward it would be if Jesse made a blustery announcement to the whole
team, then found out that he had been misinformed about Larry’s home situation. One would hope
that the coach would do the right thing. If the coach does not, then Jesse will have a much bigger
ethical conundrum!

With recent corporate scandals giving way to a declining confidence in the business world, it is vital
that Junior Achievement rethink what and how children are taught. While Junior Achievement
strives to ensure that every child has a fundamental understanding of business, economics, and free
enterprise, JA students should also know that their goals must be pursued in an ethical and moral
manner. One of the best ways to teach today’s youth that the passionate pursuit of ethics in the
business world is more important than ever is through a defined school curriculum.