With the recent financial crisis hitting the world, there have been a several attempts to understand what went wrong with the system. A financial and economic system that delivered staggeringly good results and provided economic benefits to billions of people has become tarnished. The question is not simply whether capitalism is broken. Instead, it is a question of how we live and educate our children to make ethical choices. The underlying problem within society is revealed by the flawed decisions, the unethical behaviour, of so many people within the financial services. The past 20 years have shown that all the major firms have failed because of illegal or unethical behaviour. Enron, WorldCom, Tyco, Lehman Brothers all failed because there was unethical and illegal behaviour within the organisations.
In each of these cases, the people who committed the fraud pursued decisions they knew to be flawed for the common good. They were flawed for the society but appeared acceptable for their own organisation. In other words, they were good corporate citizens but not good people.
Can you say No in your organisation?
The question is a potent one that reveals your corporate culture. At the same time, it begins to help us understand how good people can be corrupted by becoming good corporate citizens.
In the civil service, or organisation, there is often a rule of three noes. What this means is that you can tell a minister, or a senior politician, “No” they cannot do X. The first time, they will likely accept it as good advice. You are there to advise and support them and they will always need people to give good advice. You can even do it a second time. You can tell them “No” they cannot do X a second time as a matter of principle. You are standing for a principle, perhaps within your service or within the wider organisation, and they will accept it. After all, they need to have advisers with principles so that they can be sure to act with probity. You can even tell them a third time “No”, they cannot do X. At that point, you are moved away from a position of responsibility.
Is your organisation the same?
What ministers, senior politicians and senior managers want are people around them that enable them to get things done. To put it differently, but directly the approach is “Do not tell me why it cannot be done; tell me how it can be done”. At a certain level, this approach is one that is dynamic, goal orientated, and delivers results. After all, an organisation is not a debating society. It is there to serve a purpose. That purpose is to deliver results either as public policy or as products and services to market. Yet, the question, that remains implicit, is what about the moral element to this approach? At what point does this shift from an acceptable approach to one that begins to disfigure your integrity and corrupt your organisation? The issue is not simply one of whistleblowing for illegal behaviour. That is a different question. Instead, the focus here is about the daily decision making that shapes and potentially deforms our integrity to fit the corporate regime.
You may see this at times when people within the organisation are praised for being flexible. In other words, they are praised for supporting the company line and not challenging it. The approach is particularly powerful and difficult to resist because managers will often link their requests to what is good for the organisation. Instead of being praised for holding firm to your principles or fighting for a higher interest, beyond the organisation, you are encouraged to find a way that works for the organisation. You are praised for being a good corporate citizen not a good person. One can see this in how organisations that claim to uphold corporate social responsibility redefined that social responsibility, that common good, to one in which it fits their interests. They find a way to avoid or reduce their compliance with the law and not seek out ways to fulfil it.
What makes this problematic is that MBA programmes, our education system, seem to reinforce the message that ethical behaviour is that which helps the company. Here is an example of that dilemma.
The task of “influencing ethical behavior” is made more difficult today—at least in the view of some faculty members—because students arrive at graduate school less well prepared—ethically speaking—than students in the past. “The training on ethical and moral issues is considerably less than was seen previously—in the church, the home and the school system,” says Horniman. “And since each has less influence, they don’t support each other. The schools are terrified to talk about moral issues such as promise-keeping, truth-telling, etc.”
There seems to be a popular view that one has to be amoral to succeed in business. Each year NYU’s Lamb presents his class with a case study of a pharmaceutical company that discovers that one of its drugs has been killing 20 people a year. He tells the class to imagine they’re on the company’s board of directors. Do they pull the drug from the market? Or try to “contain” the crisis?
What this reveals is that the students approach is to defend the company over the public interest. The goal is to resist the regulator and not welcome their approach. The employee is expected to be a good corporate citizen and not a good person. The company has determined the common good. In that scenario, the public interest, protecting people from death, becomes subordinated to the company’s interest. Even though the example is from 1986 it seems pertinent today given that recent research suggests that honesty appears to be punished according to MBA graduates. In other words, higher ethical standards seem to lead to lower earnings.
Can we rediscover the virtue needed to make us good people and good citizens?
We face a dilemma that is similar to the one that Aristotle pointed out about the good citizen and the good man. The good man is one pursuing his telos and living a virtuous life. The challenge is that only in the ideal regime is the good man the same as the good citizen. However, the good citizen will reflect the regime that is in power. The good citizen is one that supports the principles and practices of the regime. Where this becomes problematic is that a good person in tyranny, for example, would not be a good citizen of that regime. Moreover, a good citizen of a flawed regime, such as a tyranny would not be a good person. In a corporate setting, we can see this happening when an employee has to leave to save their integrity as a good person. They can no longer be a good corporate citizen in a flawed corporate regime. For example, Greg Smith appears to resign from Goldman Sachs for this reason.
What is to be done?
One way to approach this is to train our young to identify with the good of the regime, obeying the law, respecting the common good, and being faithful to the regimes’ founding principles. In doing this, we would see that family life, school life, religious life, and public life would reinforce each other and that in turn would shape the corporate life. By doing this, we can have a better chance that corporate principles, what makes someone a good corporate citizen will not diverge from what makes them a good person.
A second way is to check corporations to see if they are working in ways that align their interests with the wider common good. In other words, are corporations acting as good citizens in the regime? Where they are not, then that needs to be addressed by regulatory action. The good company is one where it understands how its behaviour affects the wider society within which it lives and acts appropriately to mitigate any negative consequences of its actions. In other words, it will act like a good citizen and in turn it will expect its employees to act as good citizens first and then good corporate citizens second.