Sarah Stuart's 2014 Blog

Sarah Stuart, an MBA student and former editor of the New Zealand Woman's Weekly, reveals the challenges of the programme in a weekly blog.

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Are you an ethical leader?

01 September 2014

Last week we played a fun game of 'Name This Company'.

First clue, its Vision and Values statement: "We treat others as we would like to be treated ourselves....We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don't belong here."

Answer? Enron.

What about the company founded by a man whose motto was "Think straight. Talk straight" and who valued above all else, high standards and honesty.

Answer? Arthur Andersen.

If you'd asked senior executives in either of those now defunct organisations, whether they were ethical before their downfall, chances are they would have sagely agreed. And that's the thing about ethics, as we learned in class last week - they're all your own.

There is no universal ethical law. What's ethical now, may not be in another century. Regulations aren't necessarily ethical. Laws leave lots of ethical holes. You can start with 'Do No Harm', broaden it to 'Do The Least Harm' and even add in a 'Do Good'. But after a long Saturday of discussion on ethics last week, I now know even the philosophers disagree on what is a truly ethical decision.

So what's the point of teaching it in an MBA degree?

There are those that scoff at attempts to do just that. But I've spent more time talking and thinking about ethics in business this term than we did on international finance and how to hedge your way out of a currency crisis (though that was particularly interesting, coming as it did from a former Fonterra CFO).

A group of second year MBA students in the US in 2010 drafted what they hoped would become an MBA Oath, a kind of shareholder-friendly version of the Hippocratic Oath. It aims to safeguard society's interests as much as dividends, talks about environmental as well as economic sustainability and prosperity and guarding against "narrow ambitions" which harm the enterprise and society.

It's of value, says our ethics lecturer, but only if it actually changes the way managers think and act. It is here, perhaps, that the old philosophers actually hold more real value.

John Rawls had the "all are better off" test. If everyone benefits, even unequally, from a decision, then it is an ethical one. John Stuart Mills preferred the positive outcomes exceeding the negative outcomes, while Immanuel Kant believed something was only ethical if you agreed everyone should do the same - a universal law. That's a tough one - but contemporary ethics philosopher Robert Audi offers 10 prima facie obligations (justice, non injury, veracity, gratitude, liberty among others) and says each ethical decision may require weighing up conflicting obligations and deciding on the best ethical decision among a range.

It is often more than one unethical decision which will sink an organisation but one academic ethicist has an excellent list for determining whether your own employer is potentially the next Enron or Blue Chip.

Just before the GFC, business ethicist Marianne Jennings published her guide to the seven signs a company is in real trouble.

They include:

  • pressure to maintain the numbers
  • a climate of fear and silence
  • a weak or complicit board
  • and perhaps most telling, a larger-than-life or colourful CEO surrounded by younger or sycophantic managers.

After hours of ethical deliberation, self-reflection and philosophical discussion, I think I understand the point of business schools teaching what some claim is unteachable. Ethics are more than group norms, more than rules and regulations and they're certainly more than a corporate vision or values.

Kant may be right: ethics are based on universal ideals of justice, human rights and welfare. Thinking about them helps. Acting on them in the business environment might be the toughest thing you do.