May 29, 2007
Braintrust Query: How can we improve the ethics of HOW we get results, over getting results?
By Dan Nelson, Sr VP / Chief Operating Officer, GMDC
At a recent leadership summit conducted by The Solderquist Center for Leadership and Ethics, attendees heard an earful about the decline in leadership ethics across corporate America, with especially troubling insight into tomorrow’s leaders.
The next generation will come with the Generation Y mindset, driven by some very strong cynicism around Big Corporation leadership and their self-serving decision making over the best interests of their employees and their shareholders. There are plenty of examples that have driven the cynicism, including watching friends and parents get downsized/right sized out of work, the meltdowns of Enron, MCI, Worldcom, etc., as well as the continued steady stream of fat CEO compensation and parachute packages.
Five years after Sarbanes-Oxley was supposed to restore the public’s faith in corporate America, some recent statistics bear out that younger Generation Y workers are both disengaged and distrustful of corporate leaders.
According to respondents from KPMG’s 2005/2006 Integrity survey (covering 4,056 U.S. employees across all levels of job responsibilities):
- Fifty-seven percent feel pressure to do “whatever it takes” to meet business
targets; - Fifty-two percent believe that their code of conduct is not taken seriously;
- Forty-nine percent believe they will be rewarded for results, and not the
means used to achieve them; - Forty-seven percent believe policies and procedures are easy to bypass
or override.
Although nearly two thirds of employees believed that their leaders served as positive role models for their organizations, roughly half suggested a lack of confidence that their CEOs knew about behaviors further down in the organization. While 70 percent agreed that their CEOs would respond appropriately to ethical matters brought to their attention, nearly half suggested a lack of confidence that their leaders would be approachable if employees had ethics concerns.
The new generation of workers are showing that they will quickly move on from one career path to another if they feel they can personally advance their growth and compensation agendas, or if they feel the slightest mistrust in the leadership of the organization where they currently work. Turnover and “talent replacement” are at unprecedented levels, creating major barriers in fulfilling the three- to five-year strategic plans for growth of many major corporations in the U.S.
So much for stability.
Discussion Questions: What should universities and corporations do to reinforce the critical importance of business ethics in tomorrow’s leaders? What key steps can be taken to reinforce the importance of how you get results versus simply getting results that drive a company’s stock value and personal gains?
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I have to agree with Ian’s approach vs. Ryan’s. We can lament the sad state of ethics in our society, but browbeating its younger members or ourselves won’t change that. Rewarding ethical behavior will. Ethics lessons should start young, and frankly I think they do. Elementary school is a great place to learn ethics and fair play. Sustaining those lessons when the stakes get higher is the challenge. Our ethics education must focus on the rewards of ethical behavior, not just the fire and brimstone of ethical failure.
Case in point: I was at American Lawyer Media (parent company of CourtTV at the time) during the OJ trial. A camera accidentally caught a glimpse of the side of an alternate juror’s head. The producer immediately informed Judge Ito, knowing it would be a costly mistake, and indeed the judge threw the cameras out of the courtroom for days. The producer could have said nothing, hoping it would go unnoticed. After all, no identity was revealed, no real effect would have resulted.
Our CEO Steve Brill held up that producer’s actions as a shining example of corporate ethics, instituted a $5,000 annual award for ethical conduct, and made that day each year a day when the whole company stopped and discussed corporate and journalism ethics for the whole day.
You want ethics? Make it pay. Show your employees that good guys finish first. It’s not that hard.
I believe that some of the ethics issues corporations and employees face today are the result of changes in higher education over many years. While there were certainly ethics issues in the past, there was less of an emphasis of education for material gain and more on general grounding in certain areas. That general grounding is more conducive to learning and internalizing ethics issues than an education focused on the technical aspects of making money. Law, management and many other educational paths suffer from the technical approach versus a leadership approach. Grafting ethics and leadership onto the modern programs does not seem sufficient. However, to accomplish more radical change would require changing the educational system, certainly at the professional graduate level. There are strong incentives for the schools not to change (not the least of which is that they make more money structured the way they are today than by structuring themselves along different lines that aren’t as “bottom line” focused).
At last; that graduate education in philosophy pays off! In formal philosophy, the ethical imperative is generally expressed as an “ought” statement, i.e., “Dan Nelson ought to be concerned about corporate ethics and those reading his question ought to be inspired to change.” So…given the realities of the market, what “ought” young people be taught?
Let’s see…we live in a country where news analysis (how you feel about the news) is more popular than actual coverage of boring old news. We’re currently involved in a war that has cost us the lives of over 3,500 of our bravest young men and women that we got into because government officials apparently disregarded and/or manufactured evidence. That same war is opposed by politicians who opted to not go on record as being against funding it, so that their ethical position is, “the war ought not to be fought, but it ought to be fully funded.”
Then our impressionable young people look at the magazine racks in any bookstore and see CEOs routinely lionized on the covers of business magazines for increasing shareholder value at any cost and watch as year after year, a cadre of Wall Street analysts get away with encouraging corporate self-destructive behavior in the name of progress.
These same young people are the product of an educational system where parental pressures to succeed have caused many school teachers to make an “A” the new “C” in order to avoid long, drawn out arguments with irate parents demanding that their kids have a 4.0 so they can get into a “good” college.
Finally, these young men and women enter the workforce where they are quickly taught that going along to get along is a greater contribution to the corporate good than being innovative or speaking your mind.
What should we do Dan? I’d say that as a nation we ought to start by looking in the mirror. The reason younger workers are so cynical is that they are bright and quick learners. We’ve taught them well and it may be too late to hope an entire generation can “unlearn.”
The commitment to ethics and genuine business development needs to start at the very top, and inside the board room, and in discussions with outside analysts. All too often it’s the near-the-top that gets in trouble for yielding to the pressures, the body language, the politics, and the short term objectives passed down indirectly by top management with strong inferences; then it’s the top management that gets the financial benefit. If top management is committed to fair play then business will be handled more appropriately all the way down the line.
This is a major issue in our country and not just in the business world. The Gen Y generation and the generation to follow have been raised differently. It’s a “me” society and “do whatever feels good.” Many young people have never attended church and are not taught morals and ethics or basic manners for that manner. Therefore, they are a product of their environment. We must regain focus on the ethics issues.
Colleges will have a challenge teaching something that will be met with resistance. Good leaders that set ethics as an example could present a lecture series and show by example the benefits and the need for business ethics. More importantly–how do we change this trend?
While I commend Phil’s dedication to ethics in education let me suggest a slight shift in emphasis. Rather than including ethics in the discussion, ethics ought to be the foundation of the discussion. Otherwise I’m afraid I agree with my friend Gene Hoffman. The virtues of being unvirtuous seem to be what we celebrate.
How can an industry enjoying aggregate billions in profits sleep in a nation where children routinely go to bed hungry and where adults scramble through dumpsters to stay alive? How can we enjoy those jumbo shrimp at the innumerable industry cocktail parties when at the very moment we bite into the succulent chilled flesh and hope we don’t dripple cocktail sauce on ourselves a child dies somewhere in the world because he or she lacked access to potable water? And how can we continue to carp about being victimized by federal lawmakers over nutrition when every day an increasing number of our young people–those same kids we hope learn our ethics–are diagnosed with diabetes, hypertension and other diet-related ailments?
The problem, once again, isn’t that there are no ethics, it’s that we have the wrong ethics and it shows.
Years ago Dr. Michael Leboeuf wrote a book titled “The Greatest Management Principle in the World” which nets out to: You get what you reward. Making the numbers with no ‘how’ questions asked is rewarded; ethical behavior isn’t.
What bothers me about some of the discussion is the idea that ‘ethics courses’ in university will cool the moral meltdown in America. I’ve got difficult news: that is WAY too late. This needs to be happening in elementary school. It’s mostly in our early years that the subconscious is shaped and unless the individual experiences a major shake-up those subconscious mindsets control about 95% of all behavior. The conscious mind controls only 4% to 6% of our daily choices which is why ‘telling’ people how to behave is largely ineffective.
Holding children, and ultimately adults, accountable for behavior is where it starts. A news item this morning talked about a study claiming that immoral behavior is the result of irregularities in how the brain is wired. Brain wiring is a very complex and fascinating issue and we need to learn all we can. But this is just one more indication of how desperate we are to absolve ourselves from accountability. Maybe some of the CEOs currently in jail should push for a retrial–it wasn’t’ their fault, it’s how their brain is wired! It wasn’t the devil after all. “My poorly wired brain made me do it” is the new explanation. Of course that should lead to compulsory brainscans when hiring senior executives.
Right behavior–“ethics”–is not a political, intellectual or even emotional issue. It’s a spiritual issue.
I’m afraid this ethics issue has not only infiltrated our business and government environments, but supposed “leisure” activities as well. Go to any Little League game nowadays and you will see a gambit of parental stress, yelling at players by coaches and parents, learned bad behavior by players, and the “anything it takes to win” attitude being constantly reinforced. It’s not just the schools and the educational system that will need reforming, it’s society as well. Unfortunately…good luck with that.
There is one fundamental issue with Ethics in general. People will typically act and react in line with what they have been taught, observed and experienced.
If there is a lack of ethics in the home environment, it will be much more difficult for the individual to realize even what ethical behavior is. Though most people would say it is inherent in most human beings to know right from wrong, life is typically all gray, with few choices entirely right or wrong.
When young people observe the lack of ethics, and that those around them seemingly are not chastised for their behavior or ever found out, there is a mentality which begins to take hold of “I want to get mine too.” Or, they did it, they are at a lower position, they are don’t play by the rules, and so on.
If companies, institutions and/or the home life preach ethical behaviors but in practice are ignored, then what are people left to think? The only way to get is to do X vs. the published rules of Y.
Companies, institutions and even those of us at home raising our kids to be true contributing members of society must start now to teach what ethical behavior is. By the way, by definition, ethical behavior is to be practiced throughout an organization. It is not a rule to follow for the little people.
Litigation, bankruptcy and scandal are great educators, but we teach and we learn for life, and one need not look far to find a place where one can be inspired:
“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.”
Theodore Roosevelt
Businesses measure people’s behavior, and rewards are based on those measures. Since the measures and rewards are usually based upon financial results, everyone focuses in that direction. KPMG put together a great study. Making higher ethical standards the norm will take generations, but significant movement in that direction has already begun. The tremendous multi-year rise in ethical investing isn’t just a fad, for example. Let’s see if Sarbanes-Oxley is watered down anytime soon. That would be a clear indicator of backsliding.
At our Food & CPG Marketing Program at Western Michigan University we stress Ethics in each of our course offerings from the syllabus through the class subject content. We are supported with an outstanding Industry Advisory Board composed of a group of executives from all areas of the business. Our Board mandates the inclusion of ethics discussions in everything we do with our students.
I continue to see the vast majority of our students having high ethical standards which hopefully stay with them as they enter the workplace. Hopefully the pressure to deliver results which has been a part of their lives from high school through college will translate to the delivery of business results without compromising their ethics.
The leaders of the companies they work for must continue to stress the importance of Business Ethics for this to be a reality!
RE: Jeff’s comment. Interesting that the answer to a decline in ethics in a society where financial return is seen as the ultimate metric is to — well, create a financial return metric.
We seem to be confusing ethics and morals. The following is a quick overview of these and why we commonly confuse these.
Morals:
For most folks the term “morals” describes a set of beliefs, customs or traditions that are reflected in personal convictions about right and wrong.
Ethics:
Ethics refers to a personal standard of conduct which demonstrates how people should behave based on these morals (which reflect a basic, personal, principle of “right” and “wrong”). Ethics ask the question of how far a person will act in challenging the “cost” of doing the “right” or “wrong” thing…Questions like, “Should I rob this store for food for my starving baby?” “Should I keep this wallet I found,” etc. This is NOT something which is taught in school or on the job.
Operational or descriptive ethics are ethics about how things are (cultural relativism), which are more aligned with anthropology or cultural relativism (there is no reference to how things “should be”). This is really a misnomer, since it is not ethics at all…
Normative (or prescriptive ethics) ethics address how things should be, how people should be based upon a “prescriptive” standard for what “ought” to be. This discerns a right from wrong set of values and principles, and applies it to the standard.
Contrary to this is Ethical relativism (situational ethics), which is the belief that there are no core moral ideas, no absolutes, and no common values which can be shared and understood. According to ER, all ethics are situational, negotiable, dynamic and very personal. This is what most folks feel their morals reflect and is the crux of this confusion in our society today.
It is not the responsibility of the academic world to churn out ethical leaders and role models alone.
Just look at our role models, and/or leaders on Wall Street and in the top seats of corporations and world wide organizations, AND governments. Did they not gain a B.S. or an undergraduate degree and/or MBA? These students were taught the “right way” to manage/build/buy a business entity!
And then, they walked into, saw, and learned the rules of the business world…real quick.
Have we Boomers and Xers not lost the “do it right,” attitude and values that our parents taught us, or tried to teach us?
And you think it’s the Y Generation that will turn all this around. This Y Generation wants to be told what to do, and/or how to do it.
Hence, the X Generation, who have been kicked into an entrepreneurial world of start ups, and building companies, replaced the crumbling corporate world, and honesty in business. This generation has become the leaders and ethical executives who will begin to rebuild the moral fiber of business.
Interestingly, the Wall Street Journal has an article on what Stanford MBAers will be taught in their leadership and development courses.
A start, but it is up to the Boomers, and Xers to redirect our values in business, too.
Our data confirms many of the statements made here. It appears that we don’t have high ethical behavior because we don’t really believe in it. We say we do, but we don’t. In situations suffused with High-Intensity Information, what we really believe in is: save face and win. This isn’t an educational problem, because the educational system is soaked in this very thing as well. Business is soaked in it. Government and our political process it soaked in it. Families and churches are soaked in it. We complain about it, but let’s face it: we believe in it.
Commenters who have zeroed in on the need to teach and reinforce ethics and morals in early childhood are right on the money. At best, a university business ethics course or a corporate code of conduct only serves to remind people of what they have already been indoctrinated into years before.
In those moments of my professional life where an ethical dilemma loomed, (and honestly, who among us has not been faced with one at some time or another) it was not an image of an auditor, or a professor, or a signed code of conduct document that came to me–but the tap on my shoulder was from my long deceased grandfather urging me to think things through and do the right thing.
There may be, and I hope, a very positive aspect to this whole thing….
As “business enabling resources” such as technology and capital investment become commodities available to everyone, more people will be able to start their own businesses. They will not need the large infrastructure of a big corporation or even a franchise to have payroll, accounting, and business operation services (replenishment, forecasting, etc.). This will create smaller businesses that are much more personal than their larger cousins. Conscientious small business operators will be able to offer employees a work environment that is both economically and psychologically rewarding. The reputation of the small business will be based not only on its profits but on the word of mouth (and internet) reputation from its employees.
The challenge in all this is that we are moving from a demand driven economy to a supply driven economy when in comes to most retail items. Efficiency of production is becoming more critical than product variations (lots of pulp, some pulp, no pulp). As the cost of raw materials goes up, manufacturers are struggling to maintain a price point and margins. Only by reducing the product variations will they be able to contain costs. This will be regarded by some as a decline in lifestyle.
And this ultimately is the issue, because the reason many people work is to support a lifestyle. The reason many CEOs want the job is not because they want to produce the greatest widget or service in the world or because they want to be great leaders, but because they want the lifestyle it enables (greed is good). So what schools and society have to do is begin to recognize the companies that have done well in other dimensions besides merely profit. There is benefit to the economy for having good corporate citizens.
While running a chain of stores in Italy, I was taught that “the fish stinks from the head.”
Encourage, demand and reward ethical behavior and you’ll get more of it.
It’s not that difficult.
When I looked at the study, the numbers showed rather marginal improvement — one point here, two points there — not the improvement I expected from reading the article. I’m not a statistician, but are those changes even within the margin of error?
On the whole, I’m with David and Gene. We know from years of performance-improvement data that every facet of an organization’s culture comes from the top — based not on what its leadership says, but on what it does and what it rewards.
That’s true of ethics, too. And it’s not just business that’s been falling down on the job. Over the years, we’ve seen the management of nonprofits and, yes, some churches, treat the assets of their organizations as personal slush funds and stepping-stones to political office.
But I don’t understand why we would blame young people for these ethical lapses. In my view, they’ve been piling up for a couple of decades now, well before many of them were born.
But today’s top management was watching closely and rising through the ranks, and the message was certainly not lost on them. They saw every step, as we chipped away at the legislative checks and balances that had been in place since the Depression and even earlier — back when Republicans in the mold of Teddy Roosevelt busted trusts.
Now that our institutional memory is gone (a side benefit of all those early-retirement packages?) we forget those laws were there for a reason: they kept our markets free in more than name and they added referees to keep the playing field more or less competitive.
With those referees mostly gone now, the result has been fairly predictable: we’ve seen a number of industries consolidate into a few giant players who control their markets much as the trusts did in the Gilded Age. And while we may see what they do as ethical lapses, they see our disapproval as a quaint but fundamental misreading of the real Golden Rule: the ones with the gold make the rules.
Welcome to 1895, folks.
The personal rewards for skirting integrity and having elastic business ethics are huge and well publicized. Few people have the virtue to withstand the highest bidder, and the river of personal greed flows on at an ever-increasing momentum.
Until corporate perks and power are decided and granted via ethical evaluations vs. stock prices, measurable reputations and fair pay and reward relationships between the top and bottom workers, and until directors are not included in stock option slush funds, the Generation Y mindset will take us to a new level of corporate greed.
What should corporations, universities and Congress do? Unfortunately they, by their collective actions, have become associated with the problem. Unless we start a national process of leading with integrity and by example the die is cast. As Pogo would philosophize, “We have seen the enemy and it is us.”
How should universities and corporations reinforce the critical importance of business ethics in tomorrow’s leaders? No question that examples and case studies of ethical and unethical behavior are important. So many universities have study abroad opportunities where ethics can be incorporated there as well.
I agree with the previous comments that ethics discussions need to start early in life-in elementary school, on the soccer or baseball field and at home. My friend’s son will be a senior in high school next year and one of his electives is an ethics class. Ethics needs to be communicated by our schools, universities, parents and corporations. After all, we want our young people to question, “Why?”
And I can’t help but wonder if all the community service hours now required by our schools might instill a greater sense of responsibility and leadership for the future.
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I have to agree with Ian’s approach vs. Ryan’s. We can lament the sad state of ethics in our society, but browbeating its younger members or ourselves won’t change that. Rewarding ethical behavior will. Ethics lessons should start young, and frankly I think they do. Elementary school is a great place to learn ethics and fair play. Sustaining those lessons when the stakes get higher is the challenge. Our ethics education must focus on the rewards of ethical behavior, not just the fire and brimstone of ethical failure.
Case in point: I was at American Lawyer Media (parent company of CourtTV at the time) during the OJ trial. A camera accidentally caught a glimpse of the side of an alternate juror’s head. The producer immediately informed Judge Ito, knowing it would be a costly mistake, and indeed the judge threw the cameras out of the courtroom for days. The producer could have said nothing, hoping it would go unnoticed. After all, no identity was revealed, no real effect would have resulted.
Our CEO Steve Brill held up that producer’s actions as a shining example of corporate ethics, instituted a $5,000 annual award for ethical conduct, and made that day each year a day when the whole company stopped and discussed corporate and journalism ethics for the whole day.
You want ethics? Make it pay. Show your employees that good guys finish first. It’s not that hard.
I believe that some of the ethics issues corporations and employees face today are the result of changes in higher education over many years. While there were certainly ethics issues in the past, there was less of an emphasis of education for material gain and more on general grounding in certain areas. That general grounding is more conducive to learning and internalizing ethics issues than an education focused on the technical aspects of making money. Law, management and many other educational paths suffer from the technical approach versus a leadership approach. Grafting ethics and leadership onto the modern programs does not seem sufficient. However, to accomplish more radical change would require changing the educational system, certainly at the professional graduate level. There are strong incentives for the schools not to change (not the least of which is that they make more money structured the way they are today than by structuring themselves along different lines that aren’t as “bottom line” focused).
At last; that graduate education in philosophy pays off! In formal philosophy, the ethical imperative is generally expressed as an “ought” statement, i.e., “Dan Nelson ought to be concerned about corporate ethics and those reading his question ought to be inspired to change.” So…given the realities of the market, what “ought” young people be taught?
Let’s see…we live in a country where news analysis (how you feel about the news) is more popular than actual coverage of boring old news. We’re currently involved in a war that has cost us the lives of over 3,500 of our bravest young men and women that we got into because government officials apparently disregarded and/or manufactured evidence. That same war is opposed by politicians who opted to not go on record as being against funding it, so that their ethical position is, “the war ought not to be fought, but it ought to be fully funded.”
Then our impressionable young people look at the magazine racks in any bookstore and see CEOs routinely lionized on the covers of business magazines for increasing shareholder value at any cost and watch as year after year, a cadre of Wall Street analysts get away with encouraging corporate self-destructive behavior in the name of progress.
These same young people are the product of an educational system where parental pressures to succeed have caused many school teachers to make an “A” the new “C” in order to avoid long, drawn out arguments with irate parents demanding that their kids have a 4.0 so they can get into a “good” college.
Finally, these young men and women enter the workforce where they are quickly taught that going along to get along is a greater contribution to the corporate good than being innovative or speaking your mind.
What should we do Dan? I’d say that as a nation we ought to start by looking in the mirror. The reason younger workers are so cynical is that they are bright and quick learners. We’ve taught them well and it may be too late to hope an entire generation can “unlearn.”
The commitment to ethics and genuine business development needs to start at the very top, and inside the board room, and in discussions with outside analysts. All too often it’s the near-the-top that gets in trouble for yielding to the pressures, the body language, the politics, and the short term objectives passed down indirectly by top management with strong inferences; then it’s the top management that gets the financial benefit. If top management is committed to fair play then business will be handled more appropriately all the way down the line.
This is a major issue in our country and not just in the business world. The Gen Y generation and the generation to follow have been raised differently. It’s a “me” society and “do whatever feels good.” Many young people have never attended church and are not taught morals and ethics or basic manners for that manner. Therefore, they are a product of their environment. We must regain focus on the ethics issues.
Colleges will have a challenge teaching something that will be met with resistance. Good leaders that set ethics as an example could present a lecture series and show by example the benefits and the need for business ethics. More importantly–how do we change this trend?
While I commend Phil’s dedication to ethics in education let me suggest a slight shift in emphasis. Rather than including ethics in the discussion, ethics ought to be the foundation of the discussion. Otherwise I’m afraid I agree with my friend Gene Hoffman. The virtues of being unvirtuous seem to be what we celebrate.
How can an industry enjoying aggregate billions in profits sleep in a nation where children routinely go to bed hungry and where adults scramble through dumpsters to stay alive? How can we enjoy those jumbo shrimp at the innumerable industry cocktail parties when at the very moment we bite into the succulent chilled flesh and hope we don’t dripple cocktail sauce on ourselves a child dies somewhere in the world because he or she lacked access to potable water? And how can we continue to carp about being victimized by federal lawmakers over nutrition when every day an increasing number of our young people–those same kids we hope learn our ethics–are diagnosed with diabetes, hypertension and other diet-related ailments?
The problem, once again, isn’t that there are no ethics, it’s that we have the wrong ethics and it shows.
Years ago Dr. Michael Leboeuf wrote a book titled “The Greatest Management Principle in the World” which nets out to: You get what you reward. Making the numbers with no ‘how’ questions asked is rewarded; ethical behavior isn’t.
What bothers me about some of the discussion is the idea that ‘ethics courses’ in university will cool the moral meltdown in America. I’ve got difficult news: that is WAY too late. This needs to be happening in elementary school. It’s mostly in our early years that the subconscious is shaped and unless the individual experiences a major shake-up those subconscious mindsets control about 95% of all behavior. The conscious mind controls only 4% to 6% of our daily choices which is why ‘telling’ people how to behave is largely ineffective.
Holding children, and ultimately adults, accountable for behavior is where it starts. A news item this morning talked about a study claiming that immoral behavior is the result of irregularities in how the brain is wired. Brain wiring is a very complex and fascinating issue and we need to learn all we can. But this is just one more indication of how desperate we are to absolve ourselves from accountability. Maybe some of the CEOs currently in jail should push for a retrial–it wasn’t’ their fault, it’s how their brain is wired! It wasn’t the devil after all. “My poorly wired brain made me do it” is the new explanation. Of course that should lead to compulsory brainscans when hiring senior executives.
Right behavior–“ethics”–is not a political, intellectual or even emotional issue. It’s a spiritual issue.
I’m afraid this ethics issue has not only infiltrated our business and government environments, but supposed “leisure” activities as well. Go to any Little League game nowadays and you will see a gambit of parental stress, yelling at players by coaches and parents, learned bad behavior by players, and the “anything it takes to win” attitude being constantly reinforced. It’s not just the schools and the educational system that will need reforming, it’s society as well. Unfortunately…good luck with that.
There is one fundamental issue with Ethics in general. People will typically act and react in line with what they have been taught, observed and experienced.
If there is a lack of ethics in the home environment, it will be much more difficult for the individual to realize even what ethical behavior is. Though most people would say it is inherent in most human beings to know right from wrong, life is typically all gray, with few choices entirely right or wrong.
When young people observe the lack of ethics, and that those around them seemingly are not chastised for their behavior or ever found out, there is a mentality which begins to take hold of “I want to get mine too.” Or, they did it, they are at a lower position, they are don’t play by the rules, and so on.
If companies, institutions and/or the home life preach ethical behaviors but in practice are ignored, then what are people left to think? The only way to get is to do X vs. the published rules of Y.
Companies, institutions and even those of us at home raising our kids to be true contributing members of society must start now to teach what ethical behavior is. By the way, by definition, ethical behavior is to be practiced throughout an organization. It is not a rule to follow for the little people.
Litigation, bankruptcy and scandal are great educators, but we teach and we learn for life, and one need not look far to find a place where one can be inspired:
“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.”
Theodore Roosevelt
Businesses measure people’s behavior, and rewards are based on those measures. Since the measures and rewards are usually based upon financial results, everyone focuses in that direction. KPMG put together a great study. Making higher ethical standards the norm will take generations, but significant movement in that direction has already begun. The tremendous multi-year rise in ethical investing isn’t just a fad, for example. Let’s see if Sarbanes-Oxley is watered down anytime soon. That would be a clear indicator of backsliding.
At our Food & CPG Marketing Program at Western Michigan University we stress Ethics in each of our course offerings from the syllabus through the class subject content. We are supported with an outstanding Industry Advisory Board composed of a group of executives from all areas of the business. Our Board mandates the inclusion of ethics discussions in everything we do with our students.
I continue to see the vast majority of our students having high ethical standards which hopefully stay with them as they enter the workplace. Hopefully the pressure to deliver results which has been a part of their lives from high school through college will translate to the delivery of business results without compromising their ethics.
The leaders of the companies they work for must continue to stress the importance of Business Ethics for this to be a reality!
RE: Jeff’s comment. Interesting that the answer to a decline in ethics in a society where financial return is seen as the ultimate metric is to — well, create a financial return metric.
We seem to be confusing ethics and morals. The following is a quick overview of these and why we commonly confuse these.
Morals:
For most folks the term “morals” describes a set of beliefs, customs or traditions that are reflected in personal convictions about right and wrong.
Ethics:
Ethics refers to a personal standard of conduct which demonstrates how people should behave based on these morals (which reflect a basic, personal, principle of “right” and “wrong”). Ethics ask the question of how far a person will act in challenging the “cost” of doing the “right” or “wrong” thing…Questions like, “Should I rob this store for food for my starving baby?” “Should I keep this wallet I found,” etc. This is NOT something which is taught in school or on the job.
Operational or descriptive ethics are ethics about how things are (cultural relativism), which are more aligned with anthropology or cultural relativism (there is no reference to how things “should be”). This is really a misnomer, since it is not ethics at all…
Normative (or prescriptive ethics) ethics address how things should be, how people should be based upon a “prescriptive” standard for what “ought” to be. This discerns a right from wrong set of values and principles, and applies it to the standard.
Contrary to this is Ethical relativism (situational ethics), which is the belief that there are no core moral ideas, no absolutes, and no common values which can be shared and understood. According to ER, all ethics are situational, negotiable, dynamic and very personal. This is what most folks feel their morals reflect and is the crux of this confusion in our society today.
It is not the responsibility of the academic world to churn out ethical leaders and role models alone.
Just look at our role models, and/or leaders on Wall Street and in the top seats of corporations and world wide organizations, AND governments. Did they not gain a B.S. or an undergraduate degree and/or MBA? These students were taught the “right way” to manage/build/buy a business entity!
And then, they walked into, saw, and learned the rules of the business world…real quick.
Have we Boomers and Xers not lost the “do it right,” attitude and values that our parents taught us, or tried to teach us?
And you think it’s the Y Generation that will turn all this around. This Y Generation wants to be told what to do, and/or how to do it.
Hence, the X Generation, who have been kicked into an entrepreneurial world of start ups, and building companies, replaced the crumbling corporate world, and honesty in business. This generation has become the leaders and ethical executives who will begin to rebuild the moral fiber of business.
Interestingly, the Wall Street Journal has an article on what Stanford MBAers will be taught in their leadership and development courses.
A start, but it is up to the Boomers, and Xers to redirect our values in business, too.
Our data confirms many of the statements made here. It appears that we don’t have high ethical behavior because we don’t really believe in it. We say we do, but we don’t. In situations suffused with High-Intensity Information, what we really believe in is: save face and win. This isn’t an educational problem, because the educational system is soaked in this very thing as well. Business is soaked in it. Government and our political process it soaked in it. Families and churches are soaked in it. We complain about it, but let’s face it: we believe in it.
Commenters who have zeroed in on the need to teach and reinforce ethics and morals in early childhood are right on the money. At best, a university business ethics course or a corporate code of conduct only serves to remind people of what they have already been indoctrinated into years before.
In those moments of my professional life where an ethical dilemma loomed, (and honestly, who among us has not been faced with one at some time or another) it was not an image of an auditor, or a professor, or a signed code of conduct document that came to me–but the tap on my shoulder was from my long deceased grandfather urging me to think things through and do the right thing.
There may be, and I hope, a very positive aspect to this whole thing….
As “business enabling resources” such as technology and capital investment become commodities available to everyone, more people will be able to start their own businesses. They will not need the large infrastructure of a big corporation or even a franchise to have payroll, accounting, and business operation services (replenishment, forecasting, etc.). This will create smaller businesses that are much more personal than their larger cousins. Conscientious small business operators will be able to offer employees a work environment that is both economically and psychologically rewarding. The reputation of the small business will be based not only on its profits but on the word of mouth (and internet) reputation from its employees.
The challenge in all this is that we are moving from a demand driven economy to a supply driven economy when in comes to most retail items. Efficiency of production is becoming more critical than product variations (lots of pulp, some pulp, no pulp). As the cost of raw materials goes up, manufacturers are struggling to maintain a price point and margins. Only by reducing the product variations will they be able to contain costs. This will be regarded by some as a decline in lifestyle.
And this ultimately is the issue, because the reason many people work is to support a lifestyle. The reason many CEOs want the job is not because they want to produce the greatest widget or service in the world or because they want to be great leaders, but because they want the lifestyle it enables (greed is good). So what schools and society have to do is begin to recognize the companies that have done well in other dimensions besides merely profit. There is benefit to the economy for having good corporate citizens.
While running a chain of stores in Italy, I was taught that “the fish stinks from the head.”
Encourage, demand and reward ethical behavior and you’ll get more of it.
It’s not that difficult.
When I looked at the study, the numbers showed rather marginal improvement — one point here, two points there — not the improvement I expected from reading the article. I’m not a statistician, but are those changes even within the margin of error?
On the whole, I’m with David and Gene. We know from years of performance-improvement data that every facet of an organization’s culture comes from the top — based not on what its leadership says, but on what it does and what it rewards.
That’s true of ethics, too. And it’s not just business that’s been falling down on the job. Over the years, we’ve seen the management of nonprofits and, yes, some churches, treat the assets of their organizations as personal slush funds and stepping-stones to political office.
But I don’t understand why we would blame young people for these ethical lapses. In my view, they’ve been piling up for a couple of decades now, well before many of them were born.
But today’s top management was watching closely and rising through the ranks, and the message was certainly not lost on them. They saw every step, as we chipped away at the legislative checks and balances that had been in place since the Depression and even earlier — back when Republicans in the mold of Teddy Roosevelt busted trusts.
Now that our institutional memory is gone (a side benefit of all those early-retirement packages?) we forget those laws were there for a reason: they kept our markets free in more than name and they added referees to keep the playing field more or less competitive.
With those referees mostly gone now, the result has been fairly predictable: we’ve seen a number of industries consolidate into a few giant players who control their markets much as the trusts did in the Gilded Age. And while we may see what they do as ethical lapses, they see our disapproval as a quaint but fundamental misreading of the real Golden Rule: the ones with the gold make the rules.
Welcome to 1895, folks.
The personal rewards for skirting integrity and having elastic business ethics are huge and well publicized. Few people have the virtue to withstand the highest bidder, and the river of personal greed flows on at an ever-increasing momentum.
Until corporate perks and power are decided and granted via ethical evaluations vs. stock prices, measurable reputations and fair pay and reward relationships between the top and bottom workers, and until directors are not included in stock option slush funds, the Generation Y mindset will take us to a new level of corporate greed.
What should corporations, universities and Congress do? Unfortunately they, by their collective actions, have become associated with the problem. Unless we start a national process of leading with integrity and by example the die is cast. As Pogo would philosophize, “We have seen the enemy and it is us.”
How should universities and corporations reinforce the critical importance of business ethics in tomorrow’s leaders? No question that examples and case studies of ethical and unethical behavior are important. So many universities have study abroad opportunities where ethics can be incorporated there as well.
I agree with the previous comments that ethics discussions need to start early in life-in elementary school, on the soccer or baseball field and at home. My friend’s son will be a senior in high school next year and one of his electives is an ethics class. Ethics needs to be communicated by our schools, universities, parents and corporations. After all, we want our young people to question, “Why?”
And I can’t help but wonder if all the community service hours now required by our schools might instill a greater sense of responsibility and leadership for the future.