March 11, 2010
An Antidote for Ethical Disasters
Part two of a two-part series on ethics education for businesses and organizations
By Fr. Robert Spitzer, S.J.
If you do a search of companies that offer ethics training and education, you’ll find that many focus almost exclusively on the arena of legal compliance. I made the case earlier that compliance education is necessary but insufficient, and described the risks a company runs in reducing ethics to legal compliance alone. In fact, I called this cramped perspective a recipe for ethical disaster, which raises a question: What does the antidote look like? What follows is a brief overview of four ways to ensure that an organization is laying the groundwork for a truly ethical culture.
Activate the Conscience
The foundation of ethics is not the law, it’s the conscience. If your organization’s view of ethics is limited to external legal constraints, you’re not activating the faculty that prompts a person to think about right and wrong.
The benefits of conscience aren’t merely negative (avoiding unethical conduct). Conscience also inspires people to seek nobility in their communities and their own lives. It doesn't matter what product or service your organization offers. Any enterprise can be noble (or ignoble) based solely on how it conducts itself and treats people. A noble organization and noble leaders inspire loyalty and commitment. Ignoble leaders inspire fear, mistrust, and self-serving behavior.
Some organizations may see the realm of conscience as problematic, regarding it as a minefield of subjective and contentious points of view. That’s one impetus for preferring to stick to the hard facts of legal compliance. But you don’t need to grapple with divisive moral issues to form a community conscience and common expectations regarding behavior. Compliance education itself can activate the conscience if you take the time to discuss the moral rationale behind laws and rules. Why is it wrong to disclose information to some investors but not others?
But how do you ensure good answers to such questions? That brings me to my second point.
Return to Principle-based Ethics
Recent decades have seen a move away from principle- or rules-based ethics to ends-based or utilitarian ethics. Principle-based ethics focus on the means before the end. They form the conscience around inviolable principles that seek to do good and avoid evil. Utilitarians focus on the ends, not the means. They seek to optimize benefit and minimize harm, and they judge the morality of an action in terms of these outcomes.
You could write a book on why utilitarianism came into favor while principle-based ethics waned, but one consequence of the trend is clear: Decisions based on the belief that the ends justify the means can look awfully bad in hindsight. Many organizations have learned this lesson the hard way. Maximizing shareholder value is a wonderful end, but if you pursue it through shady means, you can destroy the whole business. By contrast, it’s hard to think of a company that has stumbled ethically by adhering to time-honored principles.
Principle-based ethics can be minimal (“Silver Rule’) or maximal (“Golden Rule”). The Silver Rule basically states, “Do no harm and minimize harm that is unavoidable.” Its specific principles tend to take the form of “Thou shalt nots” – don’t lie, don’t cheat, don’t steal, etc. Many Silver Rule principles are enshrined in the law, but an organization can go further and devise principles aimed at avoiding harms that are legal but unethical.
The Golden Rule goes further by exhorting people to “Do unto others as you would have them do unto you.” While the Silver Rule shuns harm, the Golden Rule seeks to do as much good as possible for all stakeholders. For example, a Silver Rule company might pledge to “never mislead our shareholders about our performance.” A Golden Rule company might go one step further by pledging to “write our financial reports in language the average investor can understand.”
The best compliance education in the world won’t save you if your people have burning desires that trump their desire to act ethically. The antidote is working toward a constructive Level 3 culture, where ethics are reinforced by mutual trust and support and a concern for the needs of all stakeholders. |
There is one more vital precept included in principle-based ethics: You can’t justify unjust means. You can’t do evil in order to reach a good end. You can't protect the company's reputation – a good end – by lying about financial problems or misdeeds. While you can’t commit an inherently evil act to bring about good, you can do so if the intent is to prevent an even greater evil from occurring. You can spill oil into the ocean, for example, if the alternative is to allow the ship to explode and kill the entire crew.
Encourage a Personal Code of Ethics
While clearly stated principles are essential to forming a strong, collective conscience (“This is what we expect from each other”), that doesn’t negate the need for people to be very clear on what they expect from themselves. That’s why, whenever I work with an organization, I encourage everyone to commit themselves to their own personal code of ethics. By code, I mean a written set of principles; the commitment is far too important to your success in life to be left unarticulated. I realize this is a practice that doesn't come naturally to many people, especially people who aren't introspective by nature. But a written personal code provides more clarity of conscience and more protection against inducements and pressures to do the wrong thing. It's an extremely valuable exercise.
Strive to Build a Constructive, Level 3 Culture
Most ethical problems aren’t caused by people consciously setting out to do the wrong thing. They arise from fear and arrogance, which are the hallmarks of a defensive, Level 2 culture. Where fear is dominant, people will cut ethical corners to conceal problems, meet demands, and preserve their positions. Where arrogance reigns, people will “push the envelope” to demonstrate their intelligence or aggressiveness and preserve their hard-won status. The best compliance education in the world won’t save you if your people have burning desires that trump their desire to act ethically. The antidote is working toward a constructive Level 3 culture, where ethics are reinforced by mutual trust and support and a concern for the needs of all stakeholders.
There’s much more one can say on the topic of building ethical cultures, especially with regard to the importance of virtue, the role of leadership in modeling behavior, techniques for defining principles and resolving dilemmas, and how to go about building a Level 3 culture. I’ll leave those topics for another day. The approach I’ve outlined here is more arduous than a compliance-only approach because it is not intended to replace compliance education but to supplement and strengthen it. But the return on this time and resource investment will include a reduction in lawsuits, opportunity costs, and turnover of key employees, and an increase in trust, goodwill, esprit de corps, and the market rewards a thriving culture brings.
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Last changed: Jan 11 2010 at 1:10 PM