Are People “Sold” on Ethics?

Newsletter

By: Julie Ragatz

When I am asked how I became interested in studying business ethics, I often share one of my favorite quotations from Aristotle, an ancient Greek philosopher:

“…Hence it is no easy task to be good… but to do this (the moral action) to the right person, to the right extent, at the right time, with the right motive, and in the right way, that is not for everyone, nor is it easy; wherefore good­ness is rare and laudable and noble.” Aristotle, Nicomachean Ethics, Book II, Chapter 9

As most of us can attest, it is “no easy task to be good”, even when we want to be. Even though most of us have good intentions, that is, we have a certain amount of moral motivation; we sometimes fail to act as we ought.

What interested me about ethics was the project of thinking about how institutions, particularly businesses, can make the project of ‘being good” a little easier. Many people, not only business leaders, operate from the belief that ethical people will do the right thing, whatever the cost, while unethical people won’t act well unless threatened with meaningful punishment. As regular readers of this Newsletter will attest, I think that this is too simplistic. Research in the field of behavioral ethics confirms that their environment profoundly influences people’s behavior. In other words, culture matters in helping people “be good’’.

But, of course, the often-unasked question is why people should care about being good in the first place. It seems to me that while everyone in the industry understands the value of compliance, people are not sold on the importance of ethics. If you put the ‘fear of God” into people about the consequences of bad behavior, assuring representatives and employees that they will be caught and punished for violating regulations, and then rely on their sense of self-interest (and self-preservation) to stay within the lines, isn’t that enough?

What is the ‘value-add’ of ethics? There are a couple of responses to that question. Jim Mitchell, the Chairperson of the Advisory Board of Center for Ethics, has said, “If leaders spent more time talking about ethics, they would have to spend less time talking and thinking about com­pliance.” If ethical behavior is ‘normal­ized’, leaders can spend more time thinking about the things that leaders should be thinking about, like adding value to clients or expanding their market share. This is one prong of the argument that good ethics is good business.

But some people are skeptical. John May­nard Keynes argued that the market can stay irrational for longer than you can stay solvent. The analogy is that ethical behav­ior may lead to better business outcomes in the long-term, but the long-term may seem like a very long time and it can be hard to wait, especially if you are seeing other people benefit from acting uneth­ically. The challenge is how to quantify those compliance problems that did not happen. To paraphrase Sherlock Holmes, how do you count the dogs that don’t bark? This is something that I have been thinking a lot about. It would require identifying those organizations with ethical cultures and those without ethical cultures and then analyzing performance by a variety of metrics. It may be easier to quantify the successes of an ethi­cal culture by looking at the failures of an unethical one, all things held as equal as possible. Going back to my philosophical roots, Saint Thom­as Aquinas famously argued that what people will not accept by faith, they can be persuad­ed to accept by reason. We cannot simply expect people to take the proposition that ‘good ethics is good business’ on faith, we need to do a bet­ter job of making the case to others that this model really works to achieve good results.

But there is a second argument as to the value of ethics. Any person who directs a Center for Ethics will re­port that some of the most popular events are speeches by “reformed criminals” These are people, usual­ly well known, who have been con­victed of some form of white collar crime. Upon the completion of their sentence, they go around the coun­try telling their story, which is usual­ly one of innocence lost, greed and redemption. I can tell you from per­sonal experience that people really love these talks. Frankly, they have always made me uncomfortable, they seemed voyeuristic and un­seemly, but since I appear to be in the minority on this issue, I resolved to take a closer look.

The stories have a similar theme. These individuals got caught up in a vortex, which left them confused about the real things to be valued in this life. They remorsefully con­fess that they were too interested in power, prestige or wealth and that they lost sight of other goods (like family, community or their faith), which they previously valued. When they lost their position, power and wealth, they rediscovered their original appreciation for those oth­er goods. Many express gratitude for their detection and punishment since, they confess ruefully, they would not have been able to give up those goods on their own - they had to be taken away.

Why do we like these stories? I sus­pect that part of it is a consequence of society’s current titillation with docudramas about crime and pun­ishment, but there is a larger mes­sage. Most of us, like Aristotle, be­lieve that the most choiceworthy life is one that celebrates virtue and contains goods like family, commu­nity and faith. We believe that a life led exclusively in pursuit of wealth and power is not the best life for hu­man persons. We believe that there has to be something more, something else that makes life truly worth living. We like these stories because they reinforce to us what we believe to be true. These are people who had tremendous wealth and power, and they come before us, sheep­ishly, to declare that they got it all wrong. We can feel comforted and perhaps a little sanctimonious that our own little indiscretions have not taken us so far off the path that we have lost sight of what is real and true.

When put in this light, these events do not strike me as so bad. They provide the opportunity to re­flect on why we choose to be good. They provide rein­forcement for the belief that people do not always choose the good because they fear punishment, but rather be­cause they believe that ethics provides us with the skills we need to obtain the goods nec­essary for a choiceworthy life.

So, does ethics need to be ‘sold’? Yes and No. Yes, because we need to a better job of demonstrating that good ethics is truly good business. We also need to do a better job of letting people know that dancing on the edge of right and wrong can have devastating consequences. We can lose our perspective; we can lose our way, just like the criminals on stage in front of us. But the over­all prognosis is good, most people are sold on ethics, they value the goods an ethical life provides, they want to believe that they can do well by doing good, it is the job of ethical leaders to continue to rein­force these beliefs.