Business Ethics

Years ago I read an article by a renowned psychologist wherein he wrote his studies found one percent of all human beings would never lie, cheat or steal. One percent would always lie, cheat or steal and given the right set of circumstances, the rest of us would likely lie, cheat and/or steal.

I mention this to highlight the fact that, if we can buyoff on this one principle - sobering though it may be - we have then, a benchmark from which to begin to at least try to understand the denigration of ethics that lead to outcomes like Enron and WorldCom.

Most believe morality walks hand-in-hand with unquestioned ethics. A quick look-up in a dictionary for Morality reveals words like, ethical, good, right, honest, decent, proper, honorable, just, principled and so on. All good words, no doubt. Words too that describe what most of us - including Enron Exec’s - see in ourselves, Morally Upstanding.

Nevertheless, there is no shortage of those who climb high upon their perch in an attempt to [dare I say] distance themselves from the great unwashed by proclaiming their undaunted commitment to honesty and ethics all the while engaging in activities to the contrary. Foyer walls of most companies utterly ooze words of benevolence and righteousness - there only for others to see, but in practice, never to be followed.

To be fair, the great unwashed are not sacrosanct from unethical behaviors or from a reluctance to take ownership for actions deemed untoward. Even if it’s something as simple as misusing the Internet or pinching office supplies from the company stockroom.

The fact is, the Enrons and Worldcoms have not cornered the market on unethical behavior. Like it or not, moral degradation is systemic in today’s society.

In an attempt to enlighten us on the realities of true ethical behavior, USA Supreme Court Justice Potter said, [Ethics] “is knowing the difference between what you have a legal right to do, and, what is the right thing to do”.

Omniscient words to say the least! Words that in theory make a whole lot of sense. In practice, however, one may point out to his Honor, when he is seated on the Supreme Court bench and asked to adjudicate anything, his moral and ethical position, is and will always be, compromised by one factor - in the end, what is LEGAL what is the LAW?

Climb any pedestal he wants, in practice, his dedication to ethics is only words, like so many words used to make up so many smarmy Corporate Mission Statements that run juxtaposed to routine.

The Judge in this case, should not be criticized for knowing the fundamentals of true morality / ethics or for advocating the benefits therein. Neither should he be allowed to stand apart from anyone when clearly, in reality, he too is handcuffed by the very principle that challenges the rest of us - the thing that governs the outcome of most every ethical business decision - IS IT LEGAL? The decision to lay-off 1-100-1,000 or more employees; we can do it - but is it legal? The decision to withhold commissions, payables or taxes in order to weather corporate economically challenging times - Q: What are the legal ramifications?

The ethical dilemma regarding whether to cut back on contracted services to improve the bottom line and appease the shareholders - Ethics be damned - Q: What’s our legal position?

It’s not a pretty world and it serves no purpose in kidding ourselves by attempting to extirpate our own involvement by blaming the Business-Barons from the likes of WorldCom. Let’s agree, when faced with most ethical dilemmas, we all hide [if we can] behind the skirt of the lady who holds the scales of justice.

The question still remains, however, how do the Enrons and WorldComs get so out-of-hand?

The answer is not all that mysterious, especially if you buy-off on what was written earlier - … given the right set of circumstances, nearly all of us [from time-to-time] will take the wrong path.

It’s shortsighted to believe high-level executives get out of bed each morning thinking about how they can swindle the world, take unfair advantage or act unethically. Just the opposite! That’s not to say, however, just like in Supreme Court Justice Potter’s case, there are circumstances beyond their control that may unequivocally govern decisions, which may challenge their innate moral commitment to ethics.

For example; who among us cannot think of a boss we once had [have] who said to us something like, “I don’t want to hear how you’re NOT going to achieve what I asked and the company EXPECTS. I only want to see RESULTS!”

In many cases like this and in practice, the decision we are left to make is, is our ethical position more important than keeping our job and putting food on the table for our family? It’s a tough world out there for those without a good job. So suck it up soldier! You’re only doing what you’ve been ordered to do! It’s not your decision! Somebody else will have to take responsibility for your unethical actions if the doo-doo hits the fan.

. And we all then fall a little deeper onto the sword of ethics

Everyone’s for corporate and personal liability to include financial recompense and/or jail terms especially for those at the top entrusted by us to always do what is right. We must be careful tough. To level our sights only on CEOs or CFOs is to miss the real perpetrators by aiming too low.

Like us, CEOs have bosses too. They report the Board of Directors. Granted, Boards have shareholders to whom they are ultimately accountable, but in practice, the buck stops at the Board level where ethical decisions - bad or good - are made.

In the book, Built to Last: Successful Habits of Visionary Companies, Jim Collins and Jerry Porras speak to this issue by highlighting the [Board’s], “explicit emphasis on Fair return rather than Maximum return”.

Again, I must point out, fine words we can all embrace because they altruistically revolve around the Golden Rule of fairness. In general, however, they are not always practiced. Sadly, we live more today, an aberration of author *Ayn Rand’s existential position - there is no room for altruism in business.

Understand a CEO’s ethical dilemma when challenged with a take-it-or-leave-it Maximum return challenge. In the end, an executive’s lifespan is predicated on one thing: ‘carrying out’ or being ‘carried out’.

My observation should in no way be construed as an endorsement for the illegalities engaged in by Enron / WorldCom or others still to be discovered. The point is, what they are accused of didn’t just happen overnight. Given the right set of circumstances, the right amount of time, the right global competitive business climate, the right protection under the law, these large companies evolved - learned to become what they are today.

Does that make them any less culpable? No! But it should serve more as a lighthouse warning that, a) This problem is more far-reaching - insidious - than we might once imagined, and, b) It Must be corrected - Quickly!

On a positive note, there are and have been many reputable studies done on the positive impact of ethics in the workplace for example **Harvard Business School Professors John Kotter and James Heskett who studied the performance of 207 large firms over an 11-year period. In their findings they wrote:

Corporate culture can have a significant impact on a firm’s long-term economic performance. They found the firms with cultures that emphasized all the key managerial constituencies (customers, stockholders, and employees) and leadership from managers from all levels outperformed, by a large margin, firms that did not. Over an 11-year period, the former increased revenues by an average of 682% versus 166% for the latter, expanded their work forces by 282% versus 36%, grew their stock prices by 901% versus 74% and improved their net incomes by 756% versus 1%.

The net-net of this demonstrates companies that paid attention equally to customers; stockholders and employees outperformed those that didn’t and over an 11-year period garnered a net growth income factor of 756%. Ethics Pays!

On the other hand, all the positive studies in the world will do little to stop the dismantling of morals and ethics as long as those who engage in unethical behavior are allowed to continue. It’s time Governments and law-enforcement agencies bring more pressure to bear on those who sit back comfortably at a distance [Corporate Boards] creating policies that stretch the boundaries of law and fan the flames of ethical undoing.

Stronger laws and penalties with teeth - financial and criminal - are needed to bring needed consequences to already financially comfortable Board Directors who, I think we’ll find out quite quickly, will be more willing to re-embrace the “Do Unto Others” principle that keep business strong and elevates the collective!

* Ayn Rand: Author Atlas Shrugged

** Jeffery L Seglin: Author The Good the Bad and Your Business

About The Author

Paul Shearstone aka The ‘Pragmatic Persuasionist’ is one of North America’s foremost experts on Sales and Persuasion. An International Keynote Speaker, Author, Writer, Motivation, Corporate Ethics, / Time & Stress Management Specialist, Paul enlightens and challenges audiences as he informs, motivates and entertains. To comment on this article or to book the Pragmatic Persuasionist for your next successful event we invite to contact Paul Shearstone directly @ 416-728-5556 or 1-866-855-4590. www.success150.com or paul@success150.com.

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Workplace Ethics is a subject that we have all heard of. In fact, the subject of Ethics in general is something that most people are familiar with. And, what is commonly understood about ethics is there are ethics and then there are workplace ethics. What most people don’t realize, however, is that there is no such thing as workplace ethics; ethics are the same, (or, should be) whether in the workplace or in personal life.

WHAT IT’S ABOUT

Ethics are about making choices that may not always feel good or seem like they benefit you but are the “right” choices to make. They are the choices that are examples of “model citizens” and examples of the golden rules. We’ve all heard the golden rules: Don’t hurt, don’t steal, don’t lie, or one of the most famous: “Do unto others as you would have done to you.” These are not just catchy phrases; these are words of wisdom that any productive member of society should strive to live by.

In our personal lives, most people try to do exactly that. Ethics are thought of by many people as something that is related to the private side of life and not to the business side. In many businesses, having ethics is frowned upon or thought of as a negative subject. This is because business is usually about doing what’s best for number one, not about what’s really the right thing to do. You probably are already feeling uneasy just reading this.

A GOOD EXAMPLE

Take ENRON, for example. Were the actions of ENRON’s CEO’s a good example of ethics? No. But, what they WERE was a CLASSIC example of was two things: One, those actions displayed how ethics were not used in any way. Two, their actions painted a grim and realistic picture of what can happen when ethics are neglected. Had ethics been considered in the first place by the leaders of the company, there would have been no scandal. If ethics were used on a daily basis in every company, there would never be scandals.

Martha Stewart comes to mind when speaking of ethics. Again, there is a feeling of uneasiness when dealing with this topic. But, why is it like that? Ethics are supposed to improve our lives and invoke good feelings. Perhaps the reason ethics is such a sore subject is because they are so often poorly used, if used at all.

A NEW WAY

Ethics are making a comeback. To begin with, more and more corporations and businessmen and woman are now realizing that ethics aren’t checked at the door when entering the workplace. Ethics have every bit as much a place in the public as they do the private. How is it there should be separate sets of ethics, depending upon whether it is your personal life or your work life? The answer is that there shouldn’t be a separate set and in light of recent events that we see on our television sets as of late, more and more companies are realizing this fact.

Some companies are incorporating ethics into their training. It is s subject that can go hand-in-hand with business and when employees and CEO’s alike understand what ethics are about, business can improve. Not only will the community take note of the ethical nature of a business but also so will customers.

Periodic reevaluations are suggested in ethics training as well, since times change many things that some would never consider ethical or non-ethical. For instance, when the first computer hacker to send a work into a university computer system crippled the entire network that the system was a part of, including that of public utilities - simply because he could do it - a question of ethics is hard to pose. Computers were new, at the time. And, no one had ever been able to do such a thing before. With new times comes new technology and new ways of doing things. Ethics will still play a part of it all and refreshing ethics training only re-strengthens what has already been learned, when new ages come about.

In the end, it’s all about what a person understands about ethics. Many university curriculums are now heavily applying the teaching of Ethics and for good reason. Young minds will take this information into the workforce and understand that ethics need to be applied there as well as in the private sector. Corporations will be able to avoid embarrassing scandals that are presented all over national news. Small business will be able to keep and attract more clients and customers. Negotiations between businesses could be accomplished with more consideration for the other company in mind, which would only help both.

Above all, a high level of ethics in your business should be in place at least for the customers. If anything, it is the customer that should be considered the most when it comes to ethical business practices. In the long run, a company will reap great profits from a customer base that feels it is being treated fairly and truthfully.

About The Author

Myron Curry is President and CEO of BusinessTrainingMedia.com a leading provider of workforce and business development training programs designed exclusively for corporate deployment. Myron has over 20 years of successful management experience with leading fortune 500 companies and has written numerous articles about workforce management issues. You can contact Myron at: myron@business-marketing.com or visit his company’s website http://www.businesstrainingmedia.com

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“The ethics of a business are whatever the top-dog says they are.”
- Bryce’s Law

INTRODUCTION

We hear a lot these days about the deterioration of ethics in business, e.g., graft,
corruption, cheating, favoritism, skimming money, etc. This has resulted in a public
relations nightmare for business. If consumers do not trust a company, its a matter
of time before it goes out of business. This is supported by recent studies that give
evidence there is a correlation between business performance and ethical practices
(see the Institute of Business Ethics). Basically, the Institute’s study suggests there
are long-term benefits associated with enacting an ethics programs. Such studies
and recent corporate snafus (e.g., Enron) are impetus for companies coming to
grips with ethics in the workplace.

There are essentially two considerations for devising an ethics program in
business; first, knowing what your ethics are, and, second; implementing them
in a consistent manner.

INTERPRETING ETHICS

There is little point in my telling you what is ethically right or wrong. You already
have an interpretation of this. But let us understand what influences our interpretation
of ethics; our interpersonal relations with others, such as our family, friends, neighbors,
fellow workers, as well as the media. Ethics is learned more than it is taught. It is based
on observations of the conduct of others, people we like and respect as opposed to those
we do not. It is then up to each of us to interpret these perceptions from which we will
base our conduct and behavior. The point is, we act on our perceptions, however accurate
or inaccurate they may be. Another influential factor are our own human frailties of
competitiveness, love, greed and ambition. But then again, this goes back to
interpersonal relations.

Let us recognize that ethical behavior is interpreted differently from person to person. What
one person may consider right or wrong may be different for the next person. The objective
in business is to implement a uniform form of behavior thereby instilling consumer
confidence in a company overall.

IMPLEMENTATION

Writing a corporate code of conduct is in vogue today as a means of articulating the
ethics of a business. Such codes are proudly displayed on web sites and in corporate
brochures more for public relations than anything else. True, they are useful for
disciplining an employee for an infraction of the rules, but I do not see them as an
effective way of implementing an ethics program. Understand this, regardless of what
the code of conduct states, the ethics of a business are whatever the top-dog says they
are. Too often I have seen companies say one thing, then act another, e.g.,
Enron.

Printed codes of conduct are nice, but we have to recognize that it is one thing to
enact legislation, quite another to enforce it. As stated earlier, ethical behavior
is based on observations. Regardless of what a code of conduct says in print, ethical
behavior is based on the relationship of superior and subordinate worker
relationships. If a subordinate observes an indiscretion by his superior, in all
likelihood it will be emulated by the subordinate. This phenomenon occurs
top-down in the whole corporate chain of command. If it breaks down anywhere
in the corporate hierarchy, it will become visible to the subordinate layers and
potentially create a “trickle-down” effect. This means the boss has to be a role
model for ethical behavior; they must “walk-the-walk” as well as “talk-the-talk.” If
they do not, it will not go unobserved by their subordinates. Managers, therefore,
should avoid the “do as I say, not do as I do” phenomenon. They must lead by
example. Anything less is sheer hypocrisy and will inevitably lead to changes
in behavior.

It is simply not sufficient to issue platitudes as to what is and what isn’t ethical
behavior. The manager must follow-up and assure ethical behavior is implemented
accordingly. In other words, we shouldn’t just “desire” truth and honesty, we
must “demand” it. If one person gets away with an indiscretion, others will surely
follow. As such, when writing out a code of conduct, be sure to stipulate the
penalties for its violation.

The success of a business ethics program is ultimately measured by how well it
becomes ingrained in the corporate culture. As we have discussed in the past,
corporate culture pertains to the identity and personality of the enterprise. All
companies have a culture; a way they behave and operate. They may be organized
and disciplined or chaotic and unstructured. Either way, this is the culture which
the enterprise has elected to adopt. What is important is that in order for an employee
to function and succeed, they must be able to recognize, accept and adapt to the
culture. If they do not, they will be rejected (people will not work with them).

The intuitive manager understands the corporate culture and how to manipulate
it. Changing the Corporate Culture involves influencing the three elements of the
culture: its Customs, Philosophy and Society. This is not a simple task. It must be
remembered that culture is learned. As such, it can be taught and enforced. For
example, a code of conduct is useful for teaching, as is a system of rewards and
penalties. Designating people to act as watchdogs of the culture can also be useful,
but be careful not to create a climate of paranoia. Ultimately, as a manager, you
want to create a culture that promotes the ethical behavior you desire.

For more information on “Corporate Culture,” see http://www.phmainstreet.com/mba/pride/eespcc.htm

CONCLUSION

We now live in strange socioeconomic times. 40-50 years ago we
normally had one parent staying home to raise the kids. Now it is commonplace
to find families where both the husband and wife are working and paying
less attention to their children, thereby relegating their parenting duties to
teachers and coaches. In other words, the family unit, which is the basic
building block for learning ethical behavior, is becoming severely hampered.

In business today we have a “fast-track” competitive mentality which does not
encourage a spirit of teamwork but, rather, more rugged individualism. Nor
does it promote employee loyalty. Further, we now live in a society that
encourages people to go into debt, thereby causing financial tensions.

Bottom-line, ethics is about people and trust. Consequently, we should be
sharpening our people skills as opposed to avoiding it. We don’t need more
maxims of how we should conduct our lives; we need to lead by example. As
such, we need more role-models and heroes than we do paperwork.

Let me close with one last thought on how ethics impacts business; there
is probably nothing worse in business than being caught in a lie, particularly
by a customer. Any trust that there may have been before disintegrates
immediately and business is lost. In this day and age, there is something
refreshingly honorable about a person where their word is their bond. Ethics
just makes good business sense.

Tim Bryce is the Managing Director of M. Bryce & Associates (MBA)
of Palm Harbor, Florida and has 30 years of experience in the field. He is available for training and consulting on an international basis. He can be contacted at: timb001@phmainstreet.com

Copyright © 2006 MBA. All rights reserved.

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