Why ‘Corporate Ethics’ is Usually an Oxymoron

David Brooks, as he occasionally does, knocks it out of the park in The End of Philosophy, in yesterday’s NY Times. The subject: moral reasoning.

Wait wait–don’t run away! It’s interesting–I promise!

We often think of morality as principles-driven. Whether religious or philosophical, if we hear “moral,” we’re inclined to think rule-following or deductive reasoning of some kind.

Not so, says Brooks, surveying current literature. Moral reasoning is much more emotional and intuitive than we think. It evolves evolutionarily, as part of our social development. Which, interestingly, puts it on a par with competition.

Evolution isn’t just survival of the fittest. Evolution also favors those groups who have learned to cooperate—competition isn’t just individual, it’s between collaborating groups.

Which means the urge to collaborate is about on par with the urge to compete. Both come from the same parts of the brain, the emotional centers.

This makes common sense on several dimensions. One is that ethics is fundamentally about relationships—not about rules. Even Immanuel Kant—about as principles-based a philosopher as they come—agrees with this (ethics consists in treating others as ends, not means).

Quick cut to business ethics programs. Sometimes phrased as “ethics and compliance” programs. Which leads us to oxymoron number 1: if you’re talking about complying with the law, you’re probably not talking about ethics.

When Harvard Business School started its ethics program in 2004, here’s how the new course (Leadership and Corporate Accountability) was positioned:

"LCA stems from a belief that business leaders play a crucial role in society. They and the companies they build and lead are expected to deliver strong financial results for investors, superior goods and services for customers, attractive work environments for employees, and innovative ideas for the future. At the same time, they are expected to observe the laws of the countries in which they operate, respect society’s ethical standards, and contribute to the communities of which they are part."

It’s hard not to see this as a course about the art of balancing. Balancing competing demands is something at which HBS does a wonderful job. But the course sounds no different at root from other courses that describe balancing competing constituencies in marketing, or production, or business strategy.

Corporate ethics, by this view, is far more corporate than ethical. It is about navigating a company through a minefield of, among other things, people who believe in something called “ethics.”

This view of ethics is to real ethics as a professor of religion is to a churchgoer. Oxymoron Number 2 is “corporate ethics.”

Programs like this almost always still have one assumption at root: the survival of the corporation in a complex, often hostile world. That is the same assumption at the heart of a course in corporate strategy. Proof? How many ethics courses contemplate the disollution of the company? About as many as strategy courses envisioning the same. Zilch.

Just as Machiavelli linked war and negotiation as alternative means to the success of the State, this view links strategy and ethics as alternative means to the success of the Company. In this environment, cooperation is not about ethics–it’s about negotiation to achieve competitive aims. It’s cooperation as means, not ends. It’s not ethical.

No surprise. Machiavelli doesn’t come to mind as a foremost ethicist.

The continued existence and prosperity of a Corporation or a State is very much what competition is about. It is not at all what ethics is about. In an increasingly connected world, a course about ethics would talk about the value of collaboration across and between companies, and how to manage based on it. I don’t see that happening.

Competition and ethics may both derive from evolutionary, emotional sources. But as long as one is subordinated to the other—as long as they’re teaching ethics down the hall from competitive strategy, with a common philosophical goal of corporate competitive success–the winner will be competitive strategy, and the loser will be ethics. No contest.

Too bad, because old-think in a new world is not what we need.

 

7 replies
  1. Doug Cornelius
    Doug Cornelius says:

    Charlie –

    I agree with you. Breaking down compliance, ethics, and strategy into separate parts is the wrong approach. It should not be a complaince requirement; it should be a business requirement. Ethics should not be a burden; it should be a goal.

    For teaching purposes, you do need to break things down into manageable chunks for the classroom. You would hope that the Corporate Accountability would be early class as a prerequisite to others since those ethics issues will be interwoven into all of the advanced classes. (Maybe that is hoping for too much.)

    Reply
  2. David Gebler
    David Gebler says:

    Thanks for the post Charlie.

    I remind companies that the word "ethics" comes from the Greek word "ethos," which is an easier concept to grasp inside a company than the moralistic tone of "ethics." Managers often challenge me by asserting that ethics should not be a values-neutral term in that the "ethos" of a company could be positive or negative.

    However, the reminder that David Brooks lays out and you highlight, is that we as humans are hard-wired to be collaborative and care for each other. However, we are also programmed to be competitive and goal-driven. These are natural tensions that each of us spend our lives trying to balance. But if our organizations only emphasize and reward us for our success in competition, it’s easy to see why the relationship and collaborative aspects of our human nature become suppressed.

    David Gebler

    Reply
  3. Michael Civitelli
    Michael Civitelli says:

    Excellent commentary.  I think you nailed it on the head regarding a  balancing act being taught instead of the ethical thinking we need.  Ehtics is often treated as just one tool in the bag versus the overall approach.  I offer a contrast with the following course description from the fanatastic Executive Leadership Program at the Albers School of Business & Economics at Seattle University  

    EXLR 512 Ethical Leadership – John Dienhart
    3 credit hours
    This course examines leadership and ethical decision making. Participants gain skills and information needed to establish ethical goals, resolve ethical problems in a global marketplace, address ethical responsibilities as a leader and maintain ethical standards within pluralistic organizations and societies.

     

    Reply
  4. dick troll
    dick troll says:

    Charles:

    So called judicial balancing has been part of American jurisprudence for many years. When the interests of the state clash with the interests of the individual, judges supposedly use precedent, reasoned elaboration and extrinsic facts to balance the competing interests.

    Or as it was otherwise explained to me about US Supreme Court deliberations. " "Some day they will let us into the back room where they flip the coins to decide"

    All too often the choices are really political. With real  winners and losers.  For quite some time we have been trying to fgure out how to soften the harshness of capitalism. Privatizing the gains and socializing the risks got us where we are today.

    Can we cross the abyss to a world of deeply ingrained ethical behavior  without social and political upheaval? I have my doubts.

     

     

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  5. Charles H. Green
    Charles H. Green says:

    Dick, I love that line about the Supreme Court’s decision-making.

    I think the difficulty you point out is to a great extent the result of conflating ethics and the law.  Like profit and cash flow, they tend to merge in the very long run–but they can diverge an awful lot on the way there, and for a very long time.

    The law, in short, is simply not the place to look for ethics.

    (A lawyer friend of mine points out that law is the only profession which entirely lacks a concept of "the truth".  There is no truth in law, he says–only evidence.  That makes it literally grammatically difficult to speak of ethics.

    Ethical behavior, I think, is what comes from within; the law comes from without.  While the law usually "makes sense," it takes trained academics to make sense of it for a living.  Ethics generally requires ridding ourselves of education so we can get back in touch with more primal feelings.

    David Gebler (see a few comments above) eloquently points out that most unethical behavior in companies is the simple result of bad interpersonal behavior: people disrespecting others and feeling disrespected; failing to act as role models; the inability to speak of issues that require confrontation.  By this view–which I think makes a whole lot of sense–ethics is an interesting form of evolved social behavior.  Not unlike etiquette, or customs of hospitality, or other signs of connectivity with others.

    I am much more sanguine than you about the prospects of people behaving better to each other, without having to resort to politlcal and social upheaval.

    Though if it were dependent on the law alone…

    Reply
  6. Michael Holt
    Michael Holt says:

    Moral & enthical behaviour, when boiled down, is still behaviour calculated to be in one’s own best interests, ie. is aligned with ones own best chances of survival. A calculated social strategy involves a key concept; reciprocity. If I’m nice to you, then you’ll be nice to me… we’ll form a community and I’m more likely to survive than if I’m on my own.  You’ll calculate the same (and the assumptions around that leads one down all kinds of interesting theoretical paths).

    One of the most interesting books I’ve read explores the bilogical underpinnings of this and investigates reciprocity as a survival mechanism amongst various orders of species. Read Matt Ridley’s "The Origins of Virtue".  Kind of pop science, but good enough for me.  🙂

    Kind regards to all

    Reply
  7. Chris Wadsworth
    Chris Wadsworth says:

    Corporate entities are inherently selfish. They exist to benefit those who have a financial interest in them. Therefore any ethical behavior is a result of selfish intent. I’m not being cynical because this is good – corporate responsibility is becoming more important to many consumers so more and more corporates are seeing that ethical behavior is in their favour, which is a selfish act benefiting the greater good.

    Reply

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