An ethical business culture - the need of the hour

Lionel Wijesiri

It seems that no matter where we look today, the erosion of ethics and basic moral principles of right and wrong have taken us to an abyss. One victim of this cancerous disease is our business sector.

The ultimate result is that the public trust in our corporate bodies is in imminent danger of extinction. Perhaps at no time during the past three decades has business ethics or the lack thereof, been of such paramount importance to the well-being of our business entities and country.

Reviewing the events of the last year, it would appear that the words “business” and “ethics” are conflicting terms. A number of high profile companies are being investigated for questionable business practices and it appears that the 1980’s mantra “greed is good” has gone awry.

In the rapids ahead, no inner guidance system will be strong enough to guide the empowered employees save an unshakable desire to discover what is truly ethical and do it. This is a sad fact but does not mean that we do not have controls or systems for encouraging the good and limiting the bad.

It does mean we need to recover the old-fashioned wisdom which taught that one of the primary jobs of leadership is to develop the ethical awareness of one’s followers while bringing out their creativity and competency. It does require each of business leaders to begin cultivating their ethical competence with the same enthusiasm they devote to cultivating their technical, marketing and finance skills.

Interconnected and interdependent, our business enterprises have wider interests and wider spans of influence than any government bureaucracy. They are driven by their competitive position to be responsive and adaptive on a national and global scale. But, have they done enough to seize the ethical initiative which will eventually define the future of the country (and the world) and be around to enjoy it. Most independent experts do not think so.

Gray Area

Ethics is a very broad, gray area, with that gray area becoming larger as things happen faster, businesses get bigger, and companies face national and global issues. Right and wrong don’t change. But it’s not always a case of just one path being the right path, and the other, wrong. Lots of times there’s an intermediate path.

Take, for example, the case of Anusha. She is a bright 45-year-old who heads up the human resources department of a large company. She began her career at the company right out of University, and over the years earned two additional degrees while working her way up the organizational ladder.

One day, Anusha was stunned to learn that the firm was considering hiring back a former employee who years earlier, as a senior person in the company, had proposed to her and when rejected, made her life miserable for many years. She had never mentioned the incident to anyone and had put it behind her when he left the company. As she looked at his resume to assess whether to recommend the hire, it was clear to her that he had the skills to turn around a floundering, yet key, division of the company. What should she do?

This is one of the myriad ethical dilemmas companies of all sizes and their employees face on an ongoing basis. Deciding the best course of action might be easy in some cases, when there are clear-cut choices between “right” and “wrong.” But there are many gray areas, like Anusha’s, when it’s harder to know what the right choice is for her and her company.

Trickle down

Most Management gurus believe that behaving in an ethical manner should be unequivocal conduct in business sector - and not just because developing a reputation for trustworthiness and honesty is ultimately good for business, but because of the overall effect it can have on society. Businesses are a huge element of our society. They’re very powerful and drive decisions. If our businesses make ethical decisions, the effect will trickle down and out.

Let me quote two personal experiences. One of the CEOs, whom I knew personally, the founder of a family-owned private business, had to face a formidable client who would not sign a contract until he was “paid a commission.” Unwilling to give in, this CEO ended up losing more than 50% of his year’s business and running up losses in the millions over two years.

He didn’t fire a single employee, though. Nor did he try to evaluate the price his organization would have to pay for not being corrupt. And in time, he not only turned his company around but used its down period to train all his top managers to enter a new, and now highly profitable, line of business.

Second experience is quite opposite to the first one. Once I asked the marketing manager who resigned (on ethical grounds) from a large business why no one before him had raised a red flag about the questionable practices carried out by his ex-company. He said it was because no one thought to call what they observed “unethical” or “wrong”; they just called it “aggressive selling.” In other words, corruption in our country remained unquestioned not because people were malicious or greedy or poor but because corrupt behavior came wrapped in smooth, palatable jargon.

Options

So where do we end up? What can a business do to ensure its operating ethically across the organization? Modern management experts talk of four vital elements.

First, business heads should first incorporate ethics into the business culture and make it a part of what their companies are all about.

To be continued