Leaders, Check Your Ethics at The Door?

A client recently asked me to explain the difference between Business Ethics and Non-Business Ethics.

“There is no difference,” I replied. “Either we choose to live according to a standard of ethics or we don’t.  We cannot select a different set of values to live by at work than at home.”

Perhaps a better question to ask is this:

Why don’t businesses have a code of ethics that mirrors the values their employees live by as individuals?

There are many who claim that the sole focus of business is to make a profit. They have created a misconception in the minds of some that to facilitate making a profit, business is exempt from the ethics that individuals are expected to uphold. The essential flaw with this ethical exemption theory is that it overlooks the fact that businesses are run by people.  Some people, when given the chance to act in an unethical way where their actions will have no consequences, will give in to greed and corruption.

Examples of what can happen when businesses adopt this relaxed ethical mentality can be seen in the series of scandals beginning with those at the helm of Enron.

Tumbling Dice

The result of the Enron executives’ greed and corruption was the destruction of a company’s reputation and a $63 billion bankruptcy filing. An example that followed Enron was the WorldCom scandal where leaders engaged in corporate securities fraud and accounting violations resulting in a $103 billion bankruptcy filing.

Some other examples of “relaxed ethics” spiraling out of control include Arthur Andersen consultants agreeing to hundreds of transactions for several major companies that “coincidentally” all shared the exact same figures of $1.7 billion and $400 million when reporting incomes, losses, and executive compensation payments.

More recently, we discovered that the officers of government controlled Fannie Mae pocketed millions in salary as they shifted losses and deferred expenses in order to justify the bonuses they paid themselves. The list goes on to include insider trading, executives embezzling from their companies and, of course the Bernie Madoff scheme that ruined the lives of many unsuspecting investors.

Where is the leadership here? Sleeping off a greed-binged ethical hangover somewhere in the gutter on Slush Avenue?

Lessons Learned?…Perhaps Not

What can we learn from these events? Without a set of ethics to guide leaders, power and money can easily lead to corruption. When ethics are “checked at the office door,” the capacity of human greed and selfishness appears to be without limits.

Although the reputations of these companies were destroyed as their unethical business practices were revealed, the reputation of a bankrupt company is a small price to pay for a CEO who has personally amassed  hundreds of millions in cash and other assets.

The irony of it all is while many thousands of lives have been adversely affected by the actions of corrupt executives, the penalties for white collar crimes pale in comparison to those we impose on car thieves or bank robbers where the number of “victims” is comparatively small.

These businesses may have set out with good intentions but they are all prime examples of what happens when we compromise our values over time or dispense with them altogether in the name of the business.

In many companies, we find that conscience has been replaced by greed.  If we intend to or not, we condone this behavior when we invest in companies whose sole objective is to turn greater and greater profits every quarter.

We need to learn from our mistakes pf pure self-interest. or we are destined to repeat them.

We have listened to the reasons why work needs to be strictly business, nothing personal. However, perhaps it is time we all ask ourselves again “Why shouldn’t businesses (their leaders and leadership) have an established code of ethics that mirrors the values we live by as individuals?”

Maybe it’s time for us to rethink the answers we’ve been given.

Markets are Reactive, People are Proactive

We’re often told that market conditions or business cycles caused our current economic crisis.  These statements are flawed and illustrate the common confusion many have between cause and effect.  Market conditions are simply reactions to what people think and do – they don’t create themselves.

The market conditions that resulted from all of the previous examples are a reflection of the unrestrained greed and unethical practices indulged by those involved, including executives, bankers, accountants, wall street traders, and government overseers who are tasked to regulate them.

The market conditions are also a reflection of the “Frankenstein Monster” that can be created by the belief that the sole purpose of a business is to make a profit for its shareholders.

By allowing themselves to adopt  a different set of ethics for business, these “leaders” have led their companies into some of the worst economic and ecological disasters (i.e. BP Oil) the world has ever seen.

How were these business leaders able to do what they did for so long?  As leaders, how can we prevent these types of things from happening in our own companies? Do you ever feel that you are expected to “check your personal ethics at the door” and behave differently at work? Can’t business leaders make a profit and still be honorable, ethical people? How can leaders avoid the temptations of greed and corruption while maintaining the setting on their “moral compass?”  Would your spouse and children be proud of the leader you are in the workplace?

Bookmark Leaders, Check Your Ethics at The Door?

Jacqueline Ayad is Business Consultant at Aeon Alliance Business Consulting
She helps clients with management consulting
Email | LinkedIn

Image Sources:  images-amazon.com, lctmag.com, thehouseofwindows.com, i.ehow.com, wisopinion.com

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