The Ethical Divide

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In the “Me First” era of the 1980s, there was very little worry for ethics in the business world, and you would have searched long and hard to find a university that dealt seriously with the need for ethics in its business school curriculum.

A case in point concerns John Shad, former chairman of the Securities and Exchange Commission. He had donated $35 million dollars to the Harvard Business School to establish an ethics department. Yet two years later, Harvard had only come up with one rather flimsy-sounding course; moreover, they had been unable to find an ethicist to head up the department.

An example of a pretty fundamental concept that separates the ethical from the unethical is seeing the latter thinking “I’m a mover and a shaker” while the former never forget something as mundane as “We make blenders that people use in their homes.”

John Mahon, University of Maine’s John M. Murphy Chair of International Business Policy and Strategy, says too many people ask the wrong question when it comes to balancing business ethics and profitability. “Can I make money and still do the right thing?” he asks. “That’s a seductive trap.”

Mahon prefers to ask, “What’s an ethical rate of return? What’s a reasonable profit? No one asks that question,” he says. “I believe you can succeed in business and be absolutely ethical. I suggest you don’t have to make a choice between doing the right thing and making a ton of money.”

During the mid-90s a group of Harvard MBA graduates were asked to comment on the barriers to ethical behaviour they encountered in their organizations. The majority felt that as individuals they held strong values, but that they often encountered pressure to behave unethically in their companies.

It appears that the key “E” word for business is the word “Earnings” over another “E” word – “Ethics”.

Most professionals follow a code of standards particular to their own industry and are members of a self-governing body that recruits, regulates, tests and certifies members.

However, a large number of so-called “professionals” are not included: business executives and middle managers.

Society demands high standards from such professionals as accountants, lawyers, engineers and doctors, yet we allow business executives the almost unfettered freedom to make personal fortunes and privileges without holding them to personal account for their behaviour.

It is the right time to demand the forming of a business executives governing organization to perform the same functions. Executives and middle managers must receive certification and undergo regular testing to be allowed to be promoted or receive increased compensation as well as to serve public notice that their behaviour is being monitored for ethical practices.

Ethics courses would, of course, receive government support with the availability of refundable tax credits.

Approved members would be able to receive the designation “CE” to reflect their “Certified Ethically” designation. The CE code must encourage the “seed” of personal ethics – to help executives understand that their business identity is NOT distinct from their personal identity. Creating awareness of one’s own personal values and how those values are enacted at work can help people make some difficult decisions.

Furthermore, public corporations and larger private companies can receive certain tax breaks and incentives to encourage overall corporate ethics; also, tax incentives can serve to encourage proper behaviour. Businesses can themselves be certified much like the ISO certification. And, chief ethics officers would have the legal powers to deny promotions, increased compensation and privileges based on compliance with a written code of ethics, subject to appeal to the industry body.

Schools and colleges can begin the ethics learning process by offering a continuing program of ethics knowledge at the primary level; progressive core ethics credit courses in secondary schools mandatory for graduation and core credit course in universities could be made absolutely necessary for graduation. To emphasize the seriousness of these courses, the passing mark could be elevated.

Each post primary school student would participate in a personal development workshop that will include the idea that ethical leadership requires self-reflection and introspection. Students would practice resolving ethical dilemmas in small groups and have the opportunity to analyze their own decision-making, and get insight into how their thinking compares with others.

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. He can be contacted at: (416) 368-8466 ext. 232

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