The ethics of business… and the business of ethics

Can we compromise on Ethics?

Does the end justify the means?

In the wake of the actual US and EU debt crisis and the meltdown of the financial system in 2008, Ethics seems to be a scarce commodity and it is obvious that some people don’t seem to know the meaning of the word. What is Ethics? Can we make shortcuts on Ethics?

This is about the best thing that I have read in a long time. Adapted from the original articles “Moneywise”, the Royal Gazette by Martha Myron and “Good leaders have more than the right skills”, the Financial Time by Jeffrey Gandz.

The Greeks considered ethics a moral philosophy employing right and wrong, good and evil, and responsibility for one’s actions. Roget’s thesaurus defines ethics as goals, morals, principles, standards, and values.

Individually, we develop a personal code of ethical values during our lives. Children tend to not absorb such an abstract concept, preferring to refer to being made to feel guilty, or as our son used to say: “You keep making me have a conscience and now I can’t make it go away!” This code may be derived from family values, culturally driven acceptable behavior within a community, or self-imposed appropriate standards.

Societies also impose behavioral ethics on its citizens, some very explicit and many more quite implicit. The British, who can be very succinct, would say in judgment on some flagrant impropriety, “it is just not done”. How does a child figure all this out? I do not know too many families who have endless debates about what’s on and what’s not appropriate, but we still implicitly pass on our disapproval when societal codes of conduct are breached.

The temptation is to review the curriculum, perhaps putting more emphasis on the ethics of business, or sustainability. But, while curriculum review may produce some improvements, it is not the answer to what ails business education. It is not what business schools teach students that matters; it is what students experience during their programs.

Three things make for good business leaders: competencies – the knowledge, understanding, skills and judgment needed to run a business well and satisfy shareholders; character – the values and virtues almost universally recognised as worthy of approval and praise; commitment – the aspiration, engagement and sacrifice required to do the hard job of business leadership, rather than just holding the leadership position.

All are influenced by the students’ business school experience inside and outside the classroom, from the way their admissions inquiries are handled, to their courses, programs, examinations, graduations and job searches. And it is probably their formal and informal interactions with faculty that have the greatest impact since, rightly or wrongly, students believe that faculty speak for good business practice since this is what they purport to teach.

Can we make shortcuts on Ethics?

The most obvious element of faculty influence is in what faculties say and do. In the use of flippant expressions such as “business is all about creating shareholder value”, or describing topics such as business ethics and corporate social responsibility as “soft” compared with accounting or finance, faculty are conveying attitudes and feelings about what is and is not important and, by inference, what future leaders should be concerned about.

Looking the Other Way

Enter the pursuit of happiness and the making of money, two diametrically opposed goals. Our personal code becomes increasingly difficult to adhere to as we slide on the slippery slope of compromise.

Yes, some would argue emphatically that they would never, ever lower their personal principles, but the rest of us do make compromises with ourselves, far more often than we care to admit. We will ignore unethical behavior by others in order to justify a financial conflict of interest to ourselves, for instance.

Some examples of half-truths, justifying, small thefts and so on:

  1. An overseas health care visit is really a shopping trip courtesy of the health insurer.
  2. A co-worker charge for overtime not worked.
  3. Small things disappear from the office store room and the construction site. The justification is that the owner is making so much money, he doesn’t need this stuff.
  4. A walk through customs with a totally loaded bag declaring nothing.
  5. A politician awards contracts based on inside knowledge, or personal friendship, not through a fair bidding process. This habit erodes the integrity of government.
  6. A civil servant allows a corporation to fund his/her personal cruise excursion, even though it is labeled a ‘business’ trip.
  7. An employer pockets his staff’s pension money because he’s a little short building his house more than an ethical breach, this is outright theft.
  8. A friend buying stolen tech equipment. Exactly where does all that stolen personal property end up?
  9. A boss running personal purchases and trips for his family through his/her expense account.

These may be dismissed mentally as small necessary infractions, harming no one (quote) but habitually they turn into big deceits – harming individuals, and organizations.

Code of Professional Ethics

Regulatory agencies are instituted to mandate higher standards and to protect the public citizen. Unethical inappropriate conduct perpetrated by a qualified professional exposes the person to a minimum of public censure (in the media) and loss of license while in egregious cases, criminal prosecution, felony charges and imprisonment follow.

Qualified professionals must adhere to an ethics code for their specific profession. For instance: Chartered Financial Analyst, Certified Financial Planner, Certified (Chartered) Public Accountant, Jurist Doctor, and Doctor of Medicine all have ethics code requirements.

A brief description from some professional ethics codes will read as such (this is a generalized combination of the professions)

  1. Act with integrity, competence, diligence, respect, and in an ethical manner with the public and clients.
  2. Practice in a professional and ethical manner that uses reasonable care and exercises independent professional judgment in all matters.
  3. Provide full transparency in all aspects of the advisory process while placing the client’s interest first.
  4. Comply with all applicable laws, rules, and regulations of any government, regulatory organization, licensing agency, or professional association.
  5. Dissociate from any violation of such laws, rules, or regulations.
  6. Professionals must not offer, solicit, or accept any gift, benefit, or compensation or engage in any professional conduct involving dishonesty, fraud, or deceit that compromises their own or another’s independence and objectivity.

In the court of public opinion

Good business ethics means higher shareholder value. According to an article written in Businessweek 2002 and even more pertinent today, by Heesun Wee, headlined “Corporate Ethics: Right Makes Might”: Avoiding scandal isn’t the only reason to observe a stringent code of conduct. Doing the right thing also generates more tangible dividends. After the dust from the Enron collapse settled, one positive outcome provides an important lesson in the value the necessity, really of having a corporate conscience and a culture built around knowing the difference between right and wrong.

It’s tempting to brush aside business ethics as a nebulous, well-intentioned subject suitable for Business School 101 but of little practical value in the real world.

Yet if the events of the past few years have taught business schools anything, it is that what is taught is less important than the impact faculty have on students’ characters and their commitment to be good business leaders, not just skilled ones.

Big mistake

A 2000 survey by the Ethics Resource Centre found that 43 percent of respondents believed their supervisors do not set good examples of integrity. The same percentage felt pressured to compromise their organization’s ethics on the job. That’s a startling number – two years before Enron imploded.

Political trust is an oxymoron

Running a country may be on a grander scale, but no different from that of a corporate entity. The citizens as investors in the country are the shareholders wanting to maintain a high market value on their country’s stock. They understand that a reputation for excellence means the opportunity for an enhanced lifestyle, greater business employment opportunities and access to amenities the perceived bonuses in life.

Politicians are implicitly charged to conduct themselves with due professional care, avoiding even the appearance of impropriety, standards that are even higher than professionals because of their responsibility (and their accountability) to their constituents.

When they slip in that every day duty by succumbing to, for instance, lobbyist excesses, such as: a former Speaker of the US Congress had fully paid-for famous private jet trips to golf in Ireland; or, the World War II heavily decorated Air Force pilot in California turned congressman who had his construction friend literally fund his life, the list becomes depressingly endless.

These transgressions leave citizens feeling more disillusioned knowing that another elected official voted into office to protect the public interest has let them down, misused their trust and public funds.

Politicians may take an ethics oath, but the politician’s greatest and probably only regulatory body is the harsh critic of public opinion.

The most important point, though, in politics just as in a corporate hierarchy, the political buck stops with the man/woman at the top. He/she is responsible, period, for the moral integrity of his/her party.

The lack of trust by the public and investors will punish the performance of politically elected officials of the country, with the inevitable consequence to the country’s stock. The market will always exact its price.

Politicians may take an ethics oath, but the politician’s greatest and probably only regulatory body is the harsh critic of public opinion. We all share a collective responsibility in expressing our criticism of unethical and illegal behavior.

Original Atricles :

– Moneywise, the Royal Gazette, July 2007 by Martha Myron

– Good leaders have more than the right skills, the Financial Time by Jeffrey Gandz


About Georges Abi-Aad

CEO, electronic engineer with MBA in marketing. Multicultural; French citizen born in Lebanon working in the Middle East and fluent in French, English and Arabic. I have more than 30 years of proven experience in the Middle East with European know how. I am good in reorganization and in Global strategic management business. I am a dependable leader with an open approach in working with people, forging a strong team of professionals dedicated to the Company and its clientele. Perseverance is my key word. Married to Carole and having 2 children: Joy-Joelle and Antoine (Joyante!).
This entry was posted in Business Ethics, Econimic Slow down, Global Business, Global Management, How it works, strategic management, Turnaround, Tutoring and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s