Essay: Lessons Learned on Organizational Ethics

What can we say about “sound ethics” — one of the focal concerns of Ethix magazine this past decade? It doesn’t appear that the human race, including its business leadership, is any closer to “sound ethics” now than it was in 1998. I recently showed The Smartest Guys in the Room documentary on the fall of Enron to a group of MBA students and was struck by how many of the financial institutions implicated in the Enron scandal have reappeared at the heart of the subprime loan scandals. Not very encouraging.

For what it’s worth, here are five lessons on business ethics:

You Can Make Lots of Money Without Being Completely Ethical

Many of us wish that vice and injustice were followed more clearly and reliably by punishment and failure. We wish unethical business people would “reap” what they have “sown.” I wish I could tell my MBA students that they really must operate ethically to be a financial success. But that wouldn’t be true. Crooks and unethical people sometimes get away with bad behavior. All we can say for sure is that they are running a risk of getting caught, and they may need to spend their lives looking over their shoulders fearing that their day of accountability will arrive.

You Can Make Lots of Money While Being Completely Ethical

But I have often encountered the opinion that you simply have to stoop to some brutal, unfair practices in the game of business in order to be financially successful. This is simply not true. No company is ethically (or in any other way) without fault, but some ethically exemplary companies have been extraordinarily successful: Southwest Airlines, SAS Software, In-N-Out Burger, Costco, Lincoln Electric Motors, Whole Foods, Hewlett Packard … the list goes on. Today’s business entrepreneurs, managers, and leaders need to hear about these positive examples. Good ethics alone isn’t going to make a successful business — there are the little matters of a good product, effective marketing, etc. — but sound ethics can be an integral part of sustainable business success. Good ethics isn’t just a cost, it is a benefit to many companies.

Keep the Ethics Focus on the Positive

The previous point leads into a further lesson that business ethics is best served by focusing on the positive rather than the negative. Ethics is primarily about figuring out and carrying out what is good and right — and only secondarily on figuring out and suppressing what is bad and wrong. The ethics office is a coach’s office more than a cop’s office. This perspective makes all the difference in organizational-ethics training and performance.

Sound Ethics Is an Interpersonal Thing

Business ethics as a field of study and expertise has suffered a lot from its university roots in philosophy departments dominated by individualistic, abstract, rationalistic thinking that came from the European Enlightenment. But the kind of logic and thinking that works so well in mathematics and the physical sciences doesn’t work so well in the real life affairs of people. In actual people groups throughout history, ethics and morality are about communities and purposes. Ethics is about protecting people from harm and enabling free and positive relationships — not about dispassionately applying some universal law to solve a problem. So it is critical to figure out and carry out our business ethics as a collaborative, team affair — not isolate individuals in front of computer screens for their only “ethics training” of the year.

Moving Toward Wiki-Ethics

Finally, the best codes of conduct/ethics/values are created, communicated, and maintained by the user-community itself. Corporate ethics that comes out of the boss’s office or from an outside consultant is nothing like the kind that comes from a people challenged to come up with guidelines for themselves and any newcomers to their work areas. Tapping into the wisdom and experience of the people, challenging their best self to invent a great set of guidelines not only builds quality and relevance but also builds ownership of the code and the process.

David W. GillDavid W. Gill is an organizational ethics consultant and trainer, professor on the MBA faculty at St. Mary’s College (Moraga, California), author of It’s About Excellence: Building Ethically Healthy Organizations (2008), and publisher of a monthly e-zine on business ethics (