STATISTICS & MANAGERIAL ETHICS : OVERVIEW OF PROBLEMS AND TOTAL

SOLUTIONSby

Prof. Shaya’a OthmanGroup Chief Executive Officer

CAPRICE GROUP, TURKIYE

The 1st ISM International Statistical Conference (ISM-1)”, Johor Baharu, Malaysia,

4-6 September 2012

Persada International Convention Centre, Johor Baharu, Malaysia

Note: I have revised my presentation to include Redefinition of Statistics & Managerial Ethics to include Ethical Values

according to Maqasid Al Shariah Shaya’a Othman (1435/ 2014)

STATISTICS & MANAGERIAL ETHICS : OVERVIEW OF PROBLEMS AND TOTAL SOLUTIONS

Shaya’a Othman

Propose Definition of Statistics

“Statistics is a scientific method of collecting, organizing, presenting, analysing and interpreting numerical information, developed from mathematical theory of probability.”

Definition by Shaya'a Othman, KUIS [2008]

OK

“The main reason why ethics in economy and finance are increasingly brought to the agenda not only in scientific researches but also in public discussions is the increasing explicit unethical behaviours of organisations especially in developed countries and increasing negative impact of suchbehaviours. Examples such as the cases of Enron, World-com and Bernard Madoff in the USA, the scandals of Parmalat in Italy, Siemens in Germany should be regarded as incidents arising mainly from unethical practices of the companies and their management”

Mehmet Akif ÇKE [2011],Global Financial Crisis from an Ethical Perspective

Research Journal of Internatıonal Studıes - Issue 19 (June., 2011), University of Istanbul..

Increasing Explicit Unethical Behaviours of Organisations

CRITICAL POINTS OF ABUSE

COMMON ERRORS UNINTENTIONALLY AND INTENTIONALLY

[UNETHICALS] CRITICAL POINTS 1 and 2

CRITICAL POINT 1

CRITICAL POINT 2

Data Collection Design[CRITICAL POINT 1]

Errors in Sampling Design[ CRITICAL PONT 2]

Analysis of Data[Critical Point 3]

Example : Using Simple Regression Line to forecast the future

No!! I

am not

asking

WHAT

formula

, but

HOW

you do

it?

At its core, ethics is about making conscious choices in line with an explicit framework of values and principles. It is this reflective engagement with the world that stops individuals, organisations and institutions from stumbling, blindly, into ethical ‘death traps “

There is no longer a need to offer even a marginally sophisticated answer.

All that one has to do is point to the billions of dollars of wealth destroyed, at the millions of lives adversely affected by loss of homes, opportunities; savings … the list goes on.

Dr Simon Longstaff is Executive Director of St James Ethics Centre. This article was first published in Living Ethics, issue 74, summer 2008http://www.ethics.org.au/living-ethics-overviews/living-ethics-issue-87-autumn-2012

Do ethics really matter? Do they have any practical use?”

Unitized System vs. Stick System

In Curtain Wall Systems

Comparison between Stick and Unitized in Curtain Wall

Systems“There are two types of curtain wall systems; "stick" and "unitized". Although the stick system is cheaper, the unitized system has the advantage of more flexibility relative to allowable deflection of the supporting structure”

Curtain wall Primer for Design Professionals, Matthew Stuart, P.E., S.E., F.ASCEhttp://www.pdhonline.org/courses/s119/s119.htm

CURRENT SITUATION

Source: http://roguemedia.org/tag/finance/

“…….what our role has been in fostering a culture that allows executives to walk off with millions of dollars while their firms lay in tatters and society is left with the bill”

Executives Walk off with millions, while the society struggling to keep alive

FAILURE TO PROMOTE A HIGHER CAUSEby Jay Lorsch and Rakesh Khurana, Harvard Business School

Financial Crisis: Blame Business-SchoolsBusiness schools are largely responsible for the U.S. financial crisis

?Subjec

t on Ethics

MBA

BA

Statistical Diploma/Degrees

Research Methodology Module

“The current crisis highlights the growing complexity of the financial system and underscores the sea change in business education from the generic to the specific, from the old boys’ network to the global financial network, and from boardroom tactics to risk analytics. By training tomorrow’s leaders to manage the risks of the financial system effectively and ethically, we’ll have a fighting chance of surviving even the largest crises. This is what business schools do, and we need to do more of it, not less.

CON: BUSINESS EDUCATION—WE NEED MORE, NOT LESSby Andrew W. Lo, MIT Sloan School of Management

Financial Crisis: Blame B-schoolsBusiness schools are largely responsible for the U.S. financial crisis.http://www.businessweek.com/debateroom/archives/2008/11/us_financial_cr.html

Financial Crisis: Blame Business-SchoolsBusiness schools are largely responsible for the U.S. financial crisis

“In the run up to the crisis, many business executives were so self-interested they failed to consider themselves as custodians of their own institutions. All of us involved in business education need to ask what our role has been in fostering a culture that allows executives to walk off with millions of dollars while their firms lay in tatters and society is left with the bill”

FAILURE TO PROMOTE A HIGHER CAUSEby Jay Lorsch and Rakesh Khurana, Harvard Business School

FINANCIAL CRISIS : BLAME BUSINESS SCHOOLS

WHAT?

HOW?This is normally we teach our students

“What is Weighted Average?”

We should teach our students

HOW

How Weighted Average works?

THE NEED TO SHIFT THE MIND SET OF OUR STUDENTS & MANAGERS

OK

OK

Social Responsibility and Managerial Ethics

Organizational Business Mangement by SHAYAA OTHMAN 24

What is Social Responsibility

25

Classical View : Organizations should concern only on financial returns –advocated by economists Milton Friedman. Organizational resources for any “social good” are adding to the costs and should be passed to consumers through higher price.

Socioeconomic View : Goes beyond making profits to include protecting and improving society’s welfare. Corporation not only responsible exclusively to stakeholders but also to the large society who supported them through buying their products PETRONAS in Sudan, Turkmenistan, etc. JOHORCORP – Wakaf Medical Clinics, etc. Syed Mokhtar – Islamic Art Center KL, Education Foundations, etc

26

Social Responsibility and Economic Performance

27

Positive Relationship between Social Responsibility and Economic Performance. Corporate Social Performance positively associated to financial performance [prior & future] – concluded by many researches .

Social Screening : Applying social criteria [screen] to investment decisions. Mutual stocks Fund will not invest in liquor, gambling, tobacco, nuclear power, weapons, price fixing, or fraud. Good Examples Islamic Funds, Islamic Banks.

“ THERE IS LITTLE EVIDENCE THAT A COMPANY SOCIALLY RESPONSIBLE ACTIONS SIGNIFICALLY HURTS ITS LONG-TERMS ECONOMIC PERFORMANCE”

Valued-Based Management

Organizational Business Mangement by SHAYAA OTHMAN 28

Valued-Based Management : An approach to managing in which managers establish , promote, and practice an organization’s shared values. An Organization’s values reflect what it stands for and what it believes in. Examples Patagonia US [Maker of Outdoor sports strong environmental commitment. - from products design to shipping – gives 10% profit to environmental causes & actively educate customers on environmental issues. KUIS as Islamic Organizations – Islamic Principles all the way from up to down.

Shared Values: share the corporate values From Managers’ Decision & Actions to Employee Behaviors , and products and services. KUIS, etc??

SHARED ORGANIZATION

AL VALUES

Organizational Business Mangement by SHAYAA OTHMAN 29

Greening of Management

Organizational Business Mangement by SHAYAA OTHMAN 30

Global Environmental Problems ;

Serious Situations : Natural Resources Depletions [Oils, Menials, etc] ; global warming; pollution [air, water, and soil]; industrial accidents, and toxic wastes.

How to Green

Protect & Preserver Natural Environment : Example 3M Corporation Program 3 Ps Program = Pollution Prevention Pays

Managerial Ethics

31

WESTERN VIEWS – 4 VIEWS1.Unitarian Views of Ethics; Ethical decisions are made solely on the basis of their outcomes or consequences. Using Quantitative Method of Making Decision. 2.Rights Views of Ethics: Respecting & protecting individual liberties and privileges –right to privacy, freedom of conscience, free speech, life and safety.3.Justice View Ethics: Managers impose and enforce rules fairly and impartially and do by following all legal rules and regulation4.Integrative social contracts : ethical decisions should be based on empirical [what is] and normative [what should be] factors. Integration of two “contract” general social contract of business to operate with acceptable rules and among members of communities – wage levels – norms of industry -

Managerial Ethics

32

Universal Islamic Ethics

Muslims Scholars include al-Gazali [505HA/1111AC], hold the opinion that the Ultimate Objectives [Maqasid al-Sharia] necessary [al-daruiriyyah] for mankind’s peaceful co-existence according to al-Quran and al-Sunaah, include 5 main areas :

1.Protection of al-Din Islam2.Protection of Life3.Protection of Intellect or Faculty of

Reason4.Protection of Progeny or Offspring5.Protection of Material Wealth

Eidin Atta (2010}

Ultimate Objectives [Maqasid al-Sharia]

. Source : Othman, Shaya’a, (2011) Islamic Management, Maqasid Al-Shariah in Islamic Finance, Alor Setar, Kolej Universiti Insaniah.

. Source : Othman, Shaya’a, (2011) Islamic Management, Maqasid Al-Shariah in Islamic Finance, Alor Setar, Kolej Universiti Insaniah.

OK

OK

Catching fraudulent online reviews is no miracle – it's math. (Photo Credit: CC BY/mad LOLscientist/Flickr)

Fighting fraudulent online reviews with mathOnline reviews can make or break a business. Unfortunately, unscrupulous individuals frequently cheat by submitting fraudulent online reviews that either increase or lessen a business’ reputation, regardless of whether the individuals have actually used the product or service or have an opinion. These reviews are sometimes quite hard to catch and weed out, but researchers at State University of New York, Stony Brook, have found that there’s a way to catch these reviews by using mathematics

http://personalmoneynetwork.com/moneyblog/2012/06/19/fighting-fraudulent-online-reviews/

ETHICS

TOTAL APPROACH OF ADDRESSING PROBLEMS OF ETHICS

1. Corporate Responsibility Index (CRI)The Australian government has funded the St James Ethics Centre to provide a website,www.thehub.ethics.org.au, to build communities of responsible business practice in Australia. This CRI is 0ne of its best known benchmarks , which addresses business practices as environmental, social/community, workplace practices, marketplace and business conduct and ethical governance

2. Global Reporting Initiative (GRI), About 80% of the global Fortune 250 companies now disclose their sustainability performance with about 60% of these using the sustainability reporting framework of GRI, an independent internationally networked organisation. The framework measures economic, environmental and social performance

3. Global Compact [GC] of UNUnited Nations launched its Global Compact, in 2000, a voluntary corporate citizenship initiative, which asks a commitment from business and others to advance 10 universal principles in the areas of human rights, labour standards, environment and anti-corruption

Development of Organizational Ethical Index

“a set of moral principles, especially ones relating to or affirming a specified group, field, or form of conduct”

Definition of Ethics

"Business Ethics" can be defined as the critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions of individuals or firms affects othershttp://www.businessethics.ca/definitions/business-ethics.html

ETHICS

Source: Shaya’a Othman (2012). 1st ISM International Statistical Conference, Johor Baharu , Malaysia

MANAGEMENT

•PERSONAL•FAMILY•COMMUNITY•ORGANIZATION•NATION

MANAGERIAL ETHICS

The principles and work ethics upheld by the Prime Minister’s Office include the following:

Trust to perform duties with full responsibility

Integrity to practise values of honesty, sincerity and integrity in all matters

Responsibility to possess high accountability and responsibility in performing duties, without abusing power

and position for self-gain or the benefit of other interested parties

Excellence to constantly endeavour to improve knowledge, creativity and innovation as well as team spirit

Loyalty to have undivided loyalty to the department and nation at all times so as to safeguard image

and sovereignty

Commitment to carry out work with full responsibility at all times and not disregard public responsibilities

because of personal interest

Dedication to be prepared to take on responsibilities at any time with no expectations of reward but for the

good of the department and the government

Discipline to be constantly on good behaviour, observe the laws and regulations and punctuality

Diligence to carry out duties efficiently, effectively and productively at all times in order to produce

excellent service

Professionalism to constantly improve knowledge and skills to provide efficient, prompt and meticulous

services as well as to possess characteristics of creativity, innovation, motivation,

competitiveness and accountability

Maqasid al Shariah as a Administrative Foundation of managing the Nation should be mentioned here

Success of Applying

Managerial Ethic in Accordance to

Islamic Principles

“Statistics is a scientific method of collecting, organizing, presenting, analysing and interpreting numerical information, developed from mathematical theory of probability.”

Definition by Shaya'a Othman, KUIS [2008]

“Statistics is a scientific method with ethical values, of collecting, organizing, presenting, analysing and interpreting numerical information, developed from mathematical theory of probability.”

Definition by Shaya'a Othman, INSANIAH[2011]

“Statistics is a scientific method of collecting, organizing, presenting, analysing and interpreting numerical information, developed from mathematical theory of probability, within the ethical values of Maqasid al-Sharia”

Definition by Shaya'a Othman, INSANIAH, [2012]

REDIFINATION OF STATISTICS TO INCLUDE ETIHICAL VALUES ACCORDING TO SHARIAH

OK

OK

OK

SUMMARY OF TOTAL SOLUTION

Effective, Efficient, EthicalAdherence to Islamic Values

THANK YOU FROMProf. SHAYA’A OTHMAN