Corporate Ethics: The Wonderful Path for Living Up to Ethical Values in Business
Corporate ethics or business ethics are a special field overarching individual and social ethics: We talk about individual behavior as well as about the behavior of organizations. There is, however, one very specific point when we talk about ethics in organizations: It is a prominent place for dealing with ethics in a context of power and lack of power.
This point is important because human beings are intelligent also while pondering their words and their actions. As a matter of fact, we do have a social filtering function in our mind. This means that in general we consider the empirical and social effects of what we are saying and doing. And we know well that others do so as well. In practice, this brings about something like a “credibility check” in every action of others. Beyond, we can use words for masking our intentions: we say one thing and mean another one. We can preach against tobacco and continue to smoke.
Sometimes, this happens also in Christian contexts. When I was a student, an old Jesuit father referring himself to Church agents told me: “Look at what they do. Don’t look at what they say.” Initially, I did not understand but in the course of many years it became clear to me that there can be quite a distance between using ethical words and living according to ethical guide-lines in practice.
This point is even more important in business or corporate ethics. It is logical that we fight for our own interests and for the interest of our organizations. In some cases, we even use what I call “ethical battle rhetorics”. This means that we use ethical words such as trust, fairness, justice and others for masking our own selfish interest.
As we all are aware of this, we need time for creating trust. Trust is the result of the convergence of words and actions, over a certain time. Mistrust is the expectation of a generalized lack of credibility in words and actions.
For companies, this means that Corporate Value Charts are by far not enough. Companies do have a certain level of ethical “resonance”, of the ability to reflect the ethical value and social outcome of their actions. Again, monopolies have more power than small and medium enterprises. Very often, a certain practice of corruption is so common in a given sector that sincere behavior simply leads to a lack of business. On the other side, corruption is expensive, unfair, and leads to social stress. The Corruption Perception Index published by Transparency International shows for example that some countries have made effective efforts for overcoming corruption. This is the case in the Baltic States in Northern Europe where they made and implemented a law for the confiscation of assets acquired by acts of corruption. Such a law, however, only works in an environment where people really are fed up with corruption and co-operate with the enforcement of laws.
Ethical values need to be experienced in practice. This is why corporate leadership is so important. Leaders will be perceived as a role model if they like it or not. If a leader talks about women or about sexual minorities without due respect, others in the company will imitate such a behavior- and vice versa. We can call that the “privilege of defining reality”. It means that ethical values are subject to interpretation, and some individuals have more power than others in making prevail their point of view.
In today’s world, we have a trinity of ethical values which prevails in practically all countries. I talk about fairness, transparency and good communication. Whenever we have a scandal, it is easy to find the same type of comments everywhere: people use to criticize a scandal as behavior which is “not transparent, unfair, and poorly communicated if at all”.
Looking at practical experiences, corporate value charts, codes of conduct and governance rules are just a first step. We have to discuss values and ethical minimum standards, not simply compliance rules. People tend to forget that we have to make an effort for living up to our own values. Creating a good company therefore gives a double meaning to the word “good”: The company should be professionally good, showing a good performance, but it should also live up to ethical values, i.e. act in an ethically good manner.
Without a credible effort for living values, governance rule will just create additional bureaucracy. What we really need, is a common shared vision to be realized following certain ethical values. Here, we might talk about “creating the house of values and of objectives”. Once we share values and objectives, we trust each other because we rightly assume that my colleague will act accordingly even if we find ourselves in completely different places, meetings, and situations.
This is also the way how values really can penetrate large corporations. It requires an effort, also regarding the many pitfalls of ethical behavior. We are human beings, and we make mistakes. Sometimes, we face ethical conflicts or dilemmas. Sometimes, greed gains over ethics.
On the other hand, the art of ethical argumentation and action can be learned. For several years, as the director of the Global Ethic Institute in Germany (www.weltethos-institut.org) I made a program for “global ethics ambassadors”. This was directed to business leaders and mainly consisted in discussing common ethical conflicts. The best point regularly was the richness of our group discussions. Taking from them, it was easy to articulate some principles of ethical action in everyday life. We even made a small “manual” looking of methods of ethical practice in business life.
Most of the ambassadors were very proud to be able to discuss ethical issues in business life. They also experienced that it is of high importance to create spaces where ethical issues in companies and organizations really can be discussed. Such “ethical sounding boards” can be created if the management supports them. They deal with controversial issues and give recommendations. And they quite obviously lead to a higher reputation of such companies in society.
Discussing ethical issues is not at all a guarantee for perfect behavior. Often enough, however, the ambition to obtain, maintain and increase ethical action in a company, is part of becoming a high-performing company as well. As a matter of fact, companies must create value, economic value and social value. They are social vehicles, and they will be successful if they create trust among clients, employees, shareholders and the surrounding community.
There is no way to avoid ethical conflicts but there is a wonderful path for increasing our awareness for ethical and social consequences of our actions. This will create an increase in social trust. And it is not by chance that the international “Trust Index” shows that the level of trust in a society goes along with their GDP and welfare. Creating trust and living up to ethical values therefore is a noble task for all entrepreneurs!
Prof. Dr. Dr. Dr. h. c. Ulrich Hemel, Director, Institute of Social Strategy, former CEO PAUL HARTMANN AG, former Director Global Ethic Institute, Member of the Executive Board UNIAPAC
Foto von Sebastian Herrmann auf Unsplash
