Ethics: Good for Goodness’ Sake

What we mean when we talk about ethics.

Greed Is Not Good

Getting clear is not all that easy. Although the word “ethics” gets tossed around freely, those doing the tossing often aren’t entirely clear what they mean by it.

Basically, ethical standards are built on a set of morals that define good and bad behavior. Almost everyone can agree that some actions — murder, for instance — are wrong. Others behaviors — bluffing during negotiations, explicitly disclosing during a job interview how excruciating a debilitating disease will be — are open to debate. But generally speaking, behaving ethically means avoiding lying, cheating, and stealing, as well as cruelty, deception, and subterfuge.

It’s not enough to fall back on “if everyone is doing it, it’s OK.” And just because an action is legal does not automatically make it ethical. What makes ethical decision-making difficult is that it requires thinking through the impact of a decision on all the constituencies affected, regardless of whether the law permits it and despite the negative or positive personal consequences.

In business, unethical behavior is most often inspired by greed cloaked in the mantle of “increasing value for shareholders.” At Sunbeam Corp., a massive layoff enabled the executives to capitalize on a short-term uptick in stock price while depleting the company of long-term value and disrupting thousands of lives. Clearly, that was ethically wrong.

During the recent boom, things got murkier. Companies laid off thousands in the wake of mergers, but with unemployment so low, most quickly found other jobs. The “New Economy thinking,” which deeply influenced the cultural standards in the business community, placed high value on achieving goals rapidly. Deals were negotiated over a weekend, employees hopped from one job to another, executives looked to cash out as quickly as possible. Consultants, academics, analysts, and journalists espoused reckless behavior and short-term thinking in the belief that the good times would continue to roll.

In the end, many dot-com business plans were revealed as foolhardy. Demand for telecom services turned out not to be infinite. Many mergers and acquisitions turned out not to have added value, but instead enriched insiders disproportionately. Whether or not most executives were knowingly enriching themselves at the expense of the long-term health of their companies, many employees shared the short-term mindset.

Sixty percent of the employees at Enron, for example, held stock options in the company. As they waited for their shares to vest, they were clearly motivated to pump up the stock price fast. In the elevators at Enron, employees could watch the financial news stations and see how their stock was doing. Keeping the stock rising was clearly Enron’s core value, regardless of what its values statement said.

Misplaced Loyalty

Loyalty, a noble value in many cases, can also cloud an employee’s clarity about doing the right thing. Rather than confront a colleague on unethical or even illegal behavior, many employees, out of loyalty to the company, will remain silent out of fear that disclosure could make the joint come tumbling down.

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