Can we teach businesses to behave ethically?

Gary Overvold & Gerald McCarthy

December 27, 1990|By Gary Overvold& Gerald McCarthy

THIS YEAR, the U.S. business community has had to face up to the legacy of more than a decade of questionable business practices. Like the ghosts that visited Scrooge, the spectacular collapse of the empires of Charles Keating and Michael Milken have given the business community a chance to reflect on a prosperous past and a grim future.

Reckless investment of other people's money, insider trading and other unethical practices have decreased public trust, invited strict government regulation and even bankrupted some businesses.

The rattling chains of Marley and Milken have been heard in the business community. Business schools are debating not whether but how to teach ethics, and many corporations are instituting ethics "training" programs for executives. Our recent survey of Fortune 1000 companies found that about 42 percent of the responding companies were offering ethics programs and that another 10 percent were considering developing them.

But it is not clear whether brief seminars and workshops can create exemplary business people, as did the miraculous intervention that transformed Scrooge. Is ethics something that can be taught? If the answer is no, then a lot of money and energy are being wasted.

At first sight, formal programs in ethics for adults seem to be either unnecessary or useless (or both). After all, adults have either taken to heart the lessons they learned from parents, schools, churches and synagogues -- or they haven't. If they have, formal programs in ethics are unnecessary; if they haven't, classes and workshops probably won't do any good.

True, it's unrealistic to expect that any program in ethics, no matter how well done, will transform an ethically insensitive person into a conscientious manager or a company driven solely by profit into one concerned for ethical standards. However, programs in business ethics in colleges and universities, and especially in corporate management education programs, have an important role to play in raising the standards of business conduct.

First, ethics programs help employees and future employees recognize the ethical dimension of their business decisions. We're not referring to obvious instances of wrongdoing, such as lying and stealing, but to daily decisions about financial planning, marketing, personnel relations (Scrooge's folly) and so on, that have an ethical dimension because they affect the welfare of human beings.

Digital Equipment Corp.'s struggle to reduce its work force to remain competitive in difficult economic times without resorting to layoffs is an outstanding example of a company attending to its human side, the side that is easily passed over. Recognizing the human implications of business decisions is at the heart of an ethical climate, and programs in ethics can focus attention in that direction.

Second, and this is particularly true in corporate education programs, spending time, energy and money on ethics education sends a clear signal to employees that ethical considerations are important and that taking them into account is not a sign of weakness or a lack of business acumen. Although between 85 and 90 percent of the Fortune 1000 companies have adopted codes of ethics, codes alone do not create an ethical environment unless top management's commitment to ethical standards is clear to every employee.

Employees are quick to notice discrepancies between high-sounding statements from corporate headquarters and the more Scroogian realities of what is daily expected of them. There are many ways to make top management's commitment clear, and the investment in ethics education, particularly when senior executives participate, is one of the most effective.

Finally, programs in ethics education can be a great help to employees and future employees. Ethical decisions are never as neat as people would like them to be, and difficult dilemmas in both personal and business lives can create great stress. Recognizing the complex ethical demands faced by business people and equipping them with the tools to handle these demands helps both managers and trainees, by relieving ethical stresses and creating a climate in which dilemmas can be openly discussed.

Ethics education cannot perform moral miracles. It will not make bad people good or guarantee that businesses operate ethically. But no other action by a business school or a corporation is more likely to counteract the widespread notion, perhaps best expressed by Scrooge, that "it's enough for a man to understand his own business." Business schools and corporations must remind students and employees, as Dickens' Christmas tale reminds us, that the common welfare of all people is our business.

Gary Overvold is a professor of philosophy and management at Clark University in Worcester, Mass. Gerald D. McCarthy is a consultant.

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