Arlington, VA October 26, 2015
Before we can approach a real discussion of ethics in business, we first need to agree on its definition. The Oxford English Dictionary (WEB Version) defines ethics thusly:
1. Moral principles that govern a person's or group's behavior: "Judeo-Christian ethics"
Synonyms: moral code • morals •morality values •
Rights and wrongs • principles • ideals • standards (of behavior) • value system • virtues • dictates of conscience
The moral correctness of specified conduct:
"The ethics of euthanasia"
2. The branch of knowledge that deals with moral principles.
For our purposes today (and for the rest of the series) we will be discussing ethics in terms of the first definition. They words here are “Moral”, “Principles”, Govern(ing)”, “Person”, “Group”, Behavior”. These principles define the moral correctness of conduct.
Moral correctness can be defined in many ways; virtually everyone has their own unique view of what they consider ‘correctness’, usually guided by philosophical or religious tenets which they have learned over time. Normally, they learn in three ways: through study of the classical philosophers, and those of more recent times; through study of the Bible, the Qu’ran, Buddha, Confucius, the Vida, and other religious texts; and through emulation and practice based on values inculcated through the family and community.
The results from learning are not necessarily consistent, nor are they necessarily able to provide a ‘positive’ result. People can learn behavior which we would not consider ethical today, but which they practice because they have adopted those modes of behavior. Others learn traditional ethical principles, but their practice of those principles leads them in dramatically differing directions. Dictators who practice genocide, or mass killing and harm have often had the benefit of philosophical and religious education (Hitler, Mussolini, Idi Amin, Pol Pot and others come to mind) , put their practices resulted in abominations. We see the same in the business world, where corporate leaders turn to theft, greed, and illegal practices, not to benefit their company, but most often to benefit themselves at the expense of others. These too have often had good formal educations and most would admit they had upbringings which included understanding of ethical standards.
I believe it is not too far-fetched to argue that ethics begins in the heart and mind of a person. That person makes decisions for a variety of reasons, and may simply decide that traditional moral considerations do not apply in their circumstance. We saw above in the Oxford definition, the cause of euthanasia—assisting in the death of individuals, either voluntarily or involuntarily—which is making headlines in some states where laws have been passed to assist in this type of activity. Here, people are making decisions that the normal rules which define that people do not kill other people, and people do not commit suicide, or be helped to commit suicide, do not apply.
There are two things at play here. First, people have the right of free will—most religions support that principle within bounds. In simple terms, everyone has the right to makes decisions which affect them, assuming that their decision does not violate some law. For those who are not religious, the laws of the states, and the traditional laws of morality normally apply. For those who practice religious beliefs, there is the additional requirement(s) to adhere to the precepts of their particular church.
Relativism: the doctrine that knowledge, truth, and morality exist in relation to culture, society, or historical context, and are not absolute.
Relativism provides the means for people to decide when, where, and how moral principles apply, and when those principles can be changed or disregarded to suit individual desires.
As an example, Kenneth Lay and Jeffrey Skilling, principals in the ENRON Corporation, both received exceptional educations, and were well-qualified to lead a major corporation in the energy field. They did so for a number of years, received awards for performance, and were considered leaders of their industry. Yet, in 2001 their company began to unravel, as it was revealed that they had used’ novel and innovative’ accounting practices to paint a brighter picture of their company. By 2004, the company was bankrupt and both Lay and Skilling were convicted of fraud.
The question here is WHY? Both of these men operated a vast operation, with seemingly bottomless resources, and a rosy future, even in the face of problems in the overall energy business. Lay and killing wanted more, and used their skills to manipulate both the organization of the company and the value of its assets to create a wholly fictitious balance sheet. They were caught as they tried to expand even further.
These individuals knew what they were expected to do. They had the knowledge and expertise to continue their success, but they wanted even more. Knowing that the securities laws were lax in several areas, the two men decided to ‘stretch’ the law even further, and make large profits for themselves. They decided that the relative benefit to themselves outweighed the need to provide profits to their stockholders and employees, so they simply changed the rules.
One of the principal underpinnings of ethics is the sense of accountability. People have the right to make decisions—even bad or illegal decisions—if they choose, but they also need to understand that making these decisions has consequences. These consequences may be minor, or they may be, as in the case of Lay and Skilling, destroy their lives.
The first lesson here is that ethical conduct starts with people—if people do not adhere to a sense of morality and fairness, but instead decide they can do whatever they choose, even if illegal or unethical, then there are consequences for those individuals, and often others as well.
As we move through our discussion, I will provide more examples so that the discussion becomes a practical one, pinned to morals, relative choices, and consequences
Please continue to read and comments as you wish.