I just read an article in the most recent Financial Analysts Journal, “Confronting Ethical Dilemmas in the Workplace”. Much that I agree with and some aspects that I do not:
“Ethics can be dangerous to your career”: I fully agree with this point, although I am not totally sure why it is the foremost sentence in the piece. It is certainly not the most important issue with regard to ethics.
“..most people use a faulty model of unethical behaviour because they think “bad” people do “bad” things”: I tend to agree, in a way, but not the whole way because it is dependent on the obscurity of the issue at hand and the peer pressure and consequences involved. Therefore, in many instances the probability of bad = bad is quite high, and in others quite low. Bad people do bad things, although it is hard to envision an ethical person doing bad willingly or knowingly.
Those who fail to act ethically “often lack the ability to analyse a problem from an ethical perspective…thus, the goal of ethics training is not to change people’s ethics…but rather to enhance people’s sensitivity to ethical issues and provide them with the tools for resolving ethical dilemmas…”
Here is where I have some element of discomfort: I tend to believe that ethical frameworks either develop within the human mind from the year dot, or do not. Either they develop fully to a high level or slowly to an incomplete one, but all reflect an underlying aversion to outcomes which conflict with an objective outcome.
Therefore, for those who have developed a level of integrity (a processing ability to differentiate between right and wrong within a given process), they will be able to identify either key factors that indicate an ethical conflict or the lack of knowledge about key factors that would help define whether a decision is ethical or not. In which case, the mind would enquire and attempt to place the decision and the process within their own ethical construct as soon as reasonably possible – it is worthwhile noting that most jobs are repetitive in terms of process so there is plenty of time to understand the mechanics and ultimately to differentiate the integrity or otherwise of a particular way of doing things..
Ethics is not therefore at its fundamental core a perspective: it is a process and like all processes it bears a number of key characteristics defining structural integrity. A perspective (an interpretation dependent on a relative position) is an outside looking in, whereas ethics is an inside (an internalisation of absolutes distinct from relative position) looking out.
Not everyone is ethical, and the question one has to ask is, “in organisations where non ethical individuals progress while committing unethical practises, why do they progress when output and action are known and clearly measurable?”. Answer: they progress because the decision framework the organisation follows is an unethical one (mass) and the progression (velocity) complies with the unethical framework and the acts are mutually rewarding. This therefore raises a further question: how do unethical organisations become ethical organisations? Well, they require an imperative, that is a business or personal gain for being ethical. Such an imperative is usually an imposition (statutory requirement) and/or a complete change of personnel and culture.
But is the goal of ethics training really about enhancing sensitivity to ethical issues? How do you make an unethical person sensitive to ethics when the operation of ethics itself requires internalised structure and organic process?
Well, for those with existing ethical constructs, irrespective of sophistication, ethical training can align and speed up the assimilation of specific business and business process relevant ethical constructs. We are all learning, and, where ethics is a natural alignment with a natural form, we all need to add detail and specific function to the ethical principles derived from our prior ethical constructs.
For those who do not possess ethical constructs and are never likely to be able to internalise them, ethics become rules of business conduct and just as important a business process as the way in which goods and services are produced or a company run. Failure to adhere to these rules results in termination of employment for an individual or fines, censure and or closure for a company.
In other words, ethics need to become a much more vital part of the fabric of business in order to be able to fulfill an effective role. Ethics should be synonymous with quality, competition, culture, value for money, brand, image everything. In order to be effective, ethics needs to move from a voluntary code to a structural, functional and organic business imperative. And this is the rub. Ethics is a long term value function and many business decisions are focussed on short term goals and objectives which may compromise the values and function of an ethical code.
Merely enhancing “people’s sensitivity to ethical issues and provide them with the tools for resolving ethical dilemmas…” is not going to cut it.
I believe that ethics is (or need to be) more than “a well articulated code of ethics that explicitly tells employees how they are expected to act…..” etc and it is more than management assuming “responsibility for monitoring and regulating employee conduct…to ensure that the incentive system is guiding the decisions and behvaiour of employees…”. To many, ethics appears to be no more than a smile on the face of an organisation, in the sense that the smile and the function are separate and not one and the same.
The following comments are I believe more reflective of an endemic lack of ethical frameworks and little to do with about better preparing newbies with the tools to deal with ethical conduct, and I believe they miss the point:
“…recent graduates..are often naive and may not see the ethical aspects of situations they confront..”
“…mangers may not explicitly ask their subordinates to do anything illegal or unethical, they often turn a blind eye to how an objective is achieved so long as it is achieved”
Again, this is where I devolve from the point of view, in that turning a blind eye is unethical, and that a lack of attention to the process of production (whatever the output) is a critical and fundamental ethical failing in an organisation. The way in which an organisation is run will subsume the ethical constructs of all but the most brave, and hence it is less to do with naivity and tools and more a question of survival. The culture of an organisation is designed to weed out those who are in conflict with that culture and it is an imperative on its own.
“it is important for participants to understand their role within an organisation and the responsibilities and obligations that come with that role”
I think this is fine if ethical conflicts are not systemic and are confined to random decisions that may pose an ethical dilemma to the individual, and in this case it is the individual that is protecting the ethical fabric of the organisation. What is not clear is how this relates to systemic unethical considerations, because it could be an incitement to ignore all ethical issues and keep your hands clean by dealing only with those decisions that pass through your hands. In a sense this is impossible where the issue is systemic since it is very difficult not to endorse by default.
Another comment I found interesting: “investment professionals often have to choose among the competing interests of their clients and employers and weight them against their own”.
Obviously, in any relationship there are two interests: the interests of the provider and the buyer and in an efficient market place, the market will set the price and deal with that particular conflict. In an efficient and competitive market all factors impacting a decision would be known, so ethics would be the imperative to be open and transparent and competitive and to produce goods and services at a level and quality demanded by the market. The business and the ethical imperative are one! In this sense ethics is a processing integrity and an ability to discern distance from that processing integrity. This issue is obviously more complex than discussed and would require a whole blog to itself, but the point about the alignment of process and outcome in an efficient market place argues that ethics and business process, in terms of harmony in the outcome, are one and the same in a perfect market, but become divorced because of market imperfections, imperfections that are accentuated by individuals and companies acting without valid ethical frameworks. Hence the term integrity which is a structural term as opposed to a point of view.
I have other qualms over the issue of culture and bribery because my view again is that the markets in which culture is bribery are imperfect and imperfection risks unethical conduct in the absence of processing integrity, which is a foundation of ethics. There are many in the countries that suffer from the abuse and conflicts and waste of bribery, so to suggest that they are in any way ethical ignores the universal distance between a fair and an unfair outcome.