Good Business

Exercising Effective and Ethical Leadership

James O'Toole, Don Mayer

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781136963650
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This illuminating and practical collection of essays addresses the increasingly important topics of corporate ethics, social responsibility, and sustainability in the context of effective global business strategies. Instead of condemning business, or exhorting corporate leaders to "do good, " the authors deal with the "hot button" issues of our time in a cool and rational manner, seeing them as opportunities rather than as problems. As the authors illustrate, there is no necessary trade-off between business leaders doing the right thing, on one hand, and the profitable thing, on the other. They demonstrate that ethics is not peripheral, or in addition to, the central concerns of business. To the contrary, ethics and good citizenship are at the heart of all good business strategies, decisions, and organizational cultures. These essays offer useful examples of how executives can create strategies and cultures that are, both and at the same time, ethical and effective--the essence of GOOD BUSINESS.

A PUBLICATION OF THE INSTITUTE FOR ENTERPRISE ETHICS

Daniels College of Business, University of Denver

PART I

Ethics: the Personal and the Professional

CHAPTER

The Content and Practice of Business Ethics

by Buie Seawell

Framing the structure and content of business ethics is a presumptuous undertaking; yet, it is one I believe to have real merit. Over more than twenty years of teaching ethics to undergraduate business majors and graduate business students at the Daniels College, a significant consensus has developed among the school’s faculty as to “what it’s all about.’’ This chapter is an attempt to put into summary form the consensus on the content and practice of business ethics that a faculty from diverse fields of business education—marketing, management, finance, legal studies—have developed over years of teaching and working together.

What is Ethics?

Ethics is the branch of philosophy concerned with the meaning of all aspects of human behavior. Theoretical Ethics, sometimes called Normative Ethics, is about discovering and delineating right from wrong; it is the consideration of how we develop the rules and principles (norms) by which to judge and guide meaningful decision-making. Theoretical Ethics is supremely intellectual in character and, being a branch of philosophy, is also rational in nature. It is rational reflection on what is right, wrong, just, unjust, good, and bad in terms of human behavior.

Although business ethics is in part reflective and rational, its theoretical character is only a prelude to its essential task. Business ethics is best understood as a branch of Applied Ethics, which is the discipline of applying value to human behavior, relationships, and constructs. Business ethics is simply the practice of applying value within the context of the enterprise of creating wealth (the fundamental role of business).

There are three parts to the discipline of business ethics: personal ethics, professional ethics, and corporate ethics. All three are intricately related, and it is helpful to distinguish between them because each rests on slightly different assumptions and requires a unique focus in order to be understood. In a sense, we need to look at business ethics through a trifocal lens: close up and personal, intermediate and professional, and on the grand scale (utilizing both farsighted and peripheral vision) of the corporation.

Personal Ethics: Four Ethical Approaches

In spite of some recent bad press, business executives are first and foremost human beings. Like all persons, they seek meaning for their lives through relationships and enterprise, and they want their lives to amount to something. Since ethics is chiefly the discipline of meaning, the business executive, like all other human beings, is engaged in this discipline all the time, whether cognizant of it or not. We should therefore begin by looking at how humans have historically approached the process of making meaningful decisions.

From the earliest moments of recorded human consciousness, the ethical discipline has entailed four fundamental approaches, often called ethical decision-making frameworks: Utilitarian Ethics (outcome based), Deontological Ethics (duty based), Virtue Ethics (virtue based) and Communitarian Ethics (community based). Each has a distinctive point of departure as well as distinctive ways of doing the fundamental ethical task of raising and answering questions of value. It is important to understand that all four approaches overlap and have common elements:

• Impartiality: weighting interests equally

• Rationality: offering reasons a rational person would accept

• Consistency: applying standards similarly to similar cases

• Reversibility: using standards that apply no matter who makes the rules

These are, in a sense, the rules of the ethics game, no matter which of the following four schools or approaches to ethics one uses.

Utilitarian Ethics

The Utilitarian approach is perhaps the most familiar and easiest to understand of all approaches to ethics. Whether we think about it or not, most of us are doing Utilitarian Ethics much of the time, especially those of us in business. Utilitarians ask a very important question: “How will my actions affect others?” They then attempt to quantify the impact of their actions based on a least common denominator, such as happiness, pleasure, or wealth. Therefore, Utilitarians are called consequentialists because they look to the consequences of their actions to determine whether they are justified or not.

“The greatest good for the greatest number” is the Utilitarian motto. Of course, defining good is no easy task because what some people think of as good, others think of as worthless. When business people do cost-benefit analyses, they are practicing Utilitarian ethics. In these cases, the least common denominator is typically money. Everything in a cost-benefit analysis from the cost of steel to the worth of a human life is assigned a dollar value, and then some business people just do the math.

The Ford Pinto automobile was a product of just such reasoning. Thirty years ago, executives at the Ford Motor Company reasoned that the cost of fixing a gas-tank problem with their Pinto cars was larger than the benefit of saving a few human lives. Several tanks subsequently exploded, people died, and ultimately the company lost lawsuits when judges and juries refused to accept the Ford executives’ moral reasoning.

One of the most common uses of such outcome-based reasoning occurs in legislative committees in representative democracies: how many constituents will benefit from a tax credit, and how many will be marginalized? Indeed, representative democracies make most decisions based on the Utilitarian principle of the greatest good for the greatest number. While democratic governments are naturally majoritarian, there are some things in constitutional democracies that cannot be decided by just doing the math (adding up the votes). Some questions should never be voted on. The founders of our nation expressed this fundamental concept with three words in the Declaration of Independence: certain unalienable rights. Even if the majority wishes to do so, it cannot vote to take away the freedom of speech of an unpopular minority. There are issues where the Utilitarian approach clearly is not applicable.

Deontological Ethics

Enter the Deontological Ethicists. Immanuel Kant is the quintessential deontological (duty based) ethical theorist. Kant, who lived in 18^th century Prussia, was one of the most amazing intellects of all time, writing books on astronomy, philosophy, politics, and ethics. He once said, “Two things fill the mind with ever new and increasing admiration and awe...the starry heavens above and the moral law within.” For Kant there were some ethical verities as eternal as the stars.

Deontological means the study (or science) of duty. Kant rejected Utilitarianism because he did not believe humans could predict future consequences of their actions with any substantial degree of certainty. Any ethical theory based on a guess about future consequences appalled him. He believed if we use our facility for reason, we can determine with certainty our ethical duty. As to whether or not doing our duty would make things better or worse (and for whom), Kant was agnostic!

Duty-based ethics is enormously important for (and consistently ignored by) at least two kinds of folks: politicians and business people. It is also the key to a better understanding of the responsibilities of team members. Teams (like work groups or political campaign committees) are narrowly focused on achieving clearly defined goals: winning an election, successfully introducing a new product, or winning a sailboat race. Sometimes the coach (or boss) of a team will say, “Look, just do whatever it takes.” Ethically, “whatever it takes’’ means the ends justify the means, the very Utilitarian rationale Kant rejected.

For Kant, there were some values (duties) that could never be sacrificed to the greater good. He wrote, “So act as to treat humanity, whether in thine own person or in that of any other, in every case as an end withal, never as a means only.” To some extent, one’s team members, employees, customers, and partners are our means to various goals (ends), but they are also persons. Persons, Kant believed, cannot be merely used. They must be respected in their own right, whether or not our goals are achieved. He called this absolute respect for persons the Categorical Imperative.

In any team the goal is critical, but treating team members with respect is imperative. Teams fall apart when a member feels used or abused (treated as less important than the goal). Leaders thus carry the ethical burden of achieving a worthwhile end without treating those who sacrifice to achieve it as expendable means. Persons are never merely a means to an end, they are ends in themselves!

Virtue Ethics

It is one thing to understand there are duties that are not conditional (that is, we must perform them regardless of consequences); it is quite another to develop the character to act on those duties. Aristotle (384-322 B.C.) wrote the first systematic treatment of ethics in Western civilization: Nicomachean Ethics. Today we call his approach Virtue Ethics. For Aristotle and other Greek thinkers, virtue meant the “excellence” of a thing: the virtue of a knife is to cut, the virtue of a physician is to heal, the virtue of a lawyer is to seek justice. In this sense, ethics becomes the discipline of discovering and practicing virtue. Aristotle begins his thinking about ethics by asking, “What do people desire?” He discovers the usual things—wealth, honor, physical and psychological security—but realizes these things are not ends in themselves; they are means to ends.

Within virtue ethics, the ultimate end for a person must be an end that is self-sufficient, that which is always desirable in itself and never for the sake of something else. This end of ends Aristotle designates with the Greek word eudemonia, usually translated by the English word happiness. While eudemonia does mean happiness, its signification is of a higher-order than the modern signification of happiness. The problem is not with the Greek word eudemonia; the problem is in our English word happiness. Happiness comes from the ancient word hap, meaning chance, as in happenstance. “Why are you smiling,” we ask, “did you win the lottery?” But to Aristotle, happiness was not something one acquired by chance. Happiness was the grand work of living, the very practice of being all that you can be. Self-fulfillment and flourishing are far better words to translate the concept contained in the Greek word eudemonia. For Aristotle, this state of virtue is achieved through intent, reason, and practice. To us, happiness is a feeling; to Aristotle, happiness is something you do.

Aristotle thought that one becomes virtuous by exercising the unique gift of human reasoning—that is, through study and rational contemplation. “The unexamined life is not worth living,” Socrates said almost 100 years before Aristotle. Like Aristotle and Plato (Aristotle’s teacher), Socrates knew humans must first engage our brains before we open our mouths or spring into some decisive action. For Aristotle, the focus of the brainwork was to find a proper balance between extremes to which the human condition tempts us. Between our fears (deficits) and exuberances (excesses) lies a sweet spot, or golden mean he called virtue.

At times of physical peril, say in a big storm on a small sailboat, a crew member may be immobilized by fear and unable to function, placing the lives of everyone on the sailboat in danger. Or, the opposite could happen. A sailor with a devil-may-care attitude in the face of real danger can as easily lead a boat to disaster. Aristotle says courage is the virtue located at the mean between cowardliness and rashness. Yet, identifying that virtue, and making that virtue part of one’s character, are two quiet different things. Aristotle thus distinguishes between intellectual virtue and practical virtue. Practical virtues are those developed by practice and become part of a person’s character, while intellectual virtue is simply the identification and understanding of a virtue.

Practice is how one learns to deal with fear, how one learns to tell the truth, and how one learns to face both personal and professional conflicts. Practice is the genius of Aristotle’s contribution to the development of ethics. He showed that virtues do not become a part of our moral muscle fiber simply because we believe in them, or advocate for them. Instead, virtues become part of our character by our exercising them. How does one learn to be brave in a storm at sea? Aristotle says, “Just do it.”

The ultimate goal of developing virtue is eudemonia, the full flourishing of our best selves, which Aristotle calls true happiness. While practitioners of the Judaic-Christian tradition tend to think of ethics (or morality) as the business of figuring out how to be good rather than bad, it is not the true end of ethics so far as Aristotle was concerned. To Aristotle, the highest good is a state of fulfillment: becoming who you truly are, realizing the potential you were born with, and being at your best in every sense.

Just as the virtue of the knife is to cut well, and the virtue of the boat is to sail well, the virtue of the self is to become the best human he or she can be. That is, to most fully utilize our capacity to reason, to apply reason to difficult moral and ethical questions, and then to put our ethical decisions into practice. Thus in joining reflection with action, the virtuous person fashions an excellent life. After years of such practice, excellence becomes habitual. Just as a perfectly trimmed sailboat cuts through the water effortlessly in synch with the waves and the wind, the man or woman in a state of eudemonia has achieved excellence and fulfillment.

Professional and Communitarian Ethics

All three approaches to ethics described above are principally focused on the individual: the singular conscience, rationally reflecting on the mea...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Contents
• I Ethics: the Personal and the Professional
• II Organizations and Ethics
• III Corporation, Public policy, and Global Citizenship
• IV A View from the Top
• Epilogue: At Daniels, Ethics is a Contact Sport
• List of Contributors
• Acknowledgments
• Index