March 06 EDOCService Newsletter

There are a number of traditional approaches to the subject of ethics: philosophical, theological, psychological, and legal. I would like to approach this topic from a simple, pragmatic proposition: business ethics is good for business. This proposition is true regardless of the company's size, location, diversity, product or service provided.

Is it a good deal for a business to incorporate?
Any number of studies has shown that a corporation with a record of long-term success and adaptation to changing circumstances needs a vision of who it is and what its values are. You will notice that I am speaking of a corporation as though it were a living entity. This is not merely a literary device. A company that is incorporated has become a body of its own, with its own identity, property, profits and liabilities. Its liabilities are limited to itself, and the personal assets of its owners and employees cannot be attached to make up its losses.

That is a good deal, but like many good deals, it comes with a major reservation. A series of court rulings and government regulations have reasoned that this separate entity must accept responsibility for the actions of all of the individuals who make the corporation function, and also for the integrity of the products and services it provides. "Let the buyer beware (caveat emptor)" is no longer the rule of the marketplace, and "I did not know what my employees were doing" is no longer an acceptable excuse for CEOs. Violations of acceptable practice standards frequently result in fines and lawsuits averaging $11 million.

Why does a company exist?
Let's go back to visions and values. If I were to ask the average businessman why his company exists, he would look at me as though I were a somewhat dull child and tell me that business exists and people work to make money; the more the better. This sort of bottom-line thinking is probably the single greatest contributor to the ethical problems facing the American economy today. If the primary purpose of business is profit, then the slogan "greed is good" makes perfect sense. If greed is good, then the ultimate goal of business practice is not ethical behavior, but not being detected while being unethical. If the numerical bottom-line is the ultimate reality, then workers are to be hired and laid-off solely on the basis of the impact of labor on the quarterly report, rather than on the basis of long-term planning, quality, experience, and future availability. It is then utterly justified that 70% of American workers report feeling no sense of connection or loyalty to their employers, and little sense of pride or fulfillment in their work. The impact of these feelings on their productivity and reliability should be obvious.

Are workers of today ethical?
With all of this, the good news is even more remarkable. In numerous studies, over 80% of American workers affirm their desire to be ethical in their work practices, to be seen and to see themselves as responsible, trustworthy, honest, and capable. They are concerned about whether their superiors and investors share these values, whether they will be rewarded or punished for being ethical. In an increasingly complex national and international economy, they are not always sure of what constitutes acceptable behavior, and they are afraid that they will be seen as incompetent if they ask questions. We may want people to behave properly, but they will not know this if we do not formulate and teach acceptable standards; consistently rewarding good behavior and punishing immoral activity. We cannot monitor each worker every moment of the day, but we can help them internalize a set of guidelines that will assist them in making good decisions.

With all of the contradictions of modern life, we are living in a society that is increasingly intolerant of business infractions and increasingly willing to force corporations to prove their virtue. Regulators, whistle-blowers, and prosecutors are modern heroes, and executives are increasingly subjected to ridicule, suspicion, and punishment long before, and whether or not, they are ever proven guilty.

Does it pay for a company to perform ethically?
Any company that signs a contract with the federal government, and all of its sub-contractors, must show that they have a comprehensive program of ethical compliance and ethics initiatives. There are now over 1,200 ethics officers working full-time for American corporations, in addition to numerous part-time consultants. The seriousness of this effort is demonstrated by one sentence from the Federal Sentencing Guidelines:

"The potential fine range for a criminal conviction can be significantly reduced - in some cases up to 95 percent - if an organization can demonstrate that it had put in place an effective compliance and ethics program and that the criminal violation represented an aberration within an otherwise law-abiding community."

Clearly, any approach to business ethics that is going to call itself pragmatic must contain a practical and achievable program for attaining ethical goals. That is the subject of my next article.

Eliot Marrus is president of Corporate Ethics Initiatives and has worked with corporations and professional firms in a broad range of business fields to analyze, create, and implement ethics programs to meet their individual needs and goals. He can be reached via email. His phone is 513-891-0243.

EDOCService, Inc.
www.edocservice.com
Focused Marketing for Qualified Leads
"All for the Cost of a Part-Time Employee!"

"What's Up e-Doc?"