Part 2: The Ethical Business
Continuing our series on Ethics in the Workplace, associate Senior Consultant and Writer, Luke Andreski follows up the first part: ‘What is the point of ethics and why are ethics important for business?’ with an article exploring what it actually means for an organisation to be considered ethical and whether this can actually lead a modern business towards success.
A set of rules
In the previous article in this series, we looked at the significance of ethics for the modern world. Ethics is a set of rules which guide our behaviour: a normative code which facilitates cohesion, cooperation and trust. Without a shared ethics, businesses, organisations, nations and even civilisations could not operate. If your standards of behaviour and personal objectives are utterly different from mine, we will be unable to predict, plan or agree anything.
In this article, I ask what it means for an organisation to be ethical. I also ask: “Is ethics a success factor in modern business?” and I suggest ways in which we can help the organisations we work for or lead to become more ethical.
It’s worth beginning our discussion with a preliminary question:
“Are organisations ethical by default?”
The basis of trust
Any business relationship assumes a minimal degree of trust – founded upon a shared ethical code
The ethics of organisations
It is my contention that there is no inherent morality in organisations. Organisations, institutions, businesses or enterprises of any kind are not ethical just ‘because they exist’ or because they have been around for a very long time. They are not ethical merely because we made them – no matter how wonderfully creative and industrious we may have been in doing so. Fundamentally, organisations exist solely to serve the purpose for which they were created. This purpose may be hierarchy-enforcing, service-delivering or product-producing. It may be economic, social, educational or military; but it certainly need not be moral.
A second consideration is that the morality of an organisation’s employees, or even of its leaders, need not influence an organisation’s basic morality. In fact, the normative flow is usually in the opposite direction. It is a natural human trait to submit to the authority of the organisation of which we are part. (This would have been, once upon a time, our ‘tribe’.)
So – quite naturally – we subjugate our personal ethics to the objectives and motives of the organisation in which we are employed or which we lead. We are loyal. We are dutiful. We get on with the job.
An example of this might be the tobacco companies of the 1990s. It is well documented that these companies were pushing for increased sales and profit even in the face of growing evidence of a link between tobacco and cancer. The film ‘The Insider’ (about the whistle-blower Jeffrey Wigand) provides a wonderful insight into this. However, this does not allow us to conclude that these companies were operated and run by immoral people. They were, in fact, run by people who felt their personal morality was irrelevant. Those employed by big tobacco companies were simply doing their job – and an important part of any job is loyalty to your employer and getting on with the work you are paid for.
The conclusion to be drawn from the natural amorality of organisations and our perfectly understandable inclination to subjugate our own morality to that of the organisations of which we are a part, is that if we are to ensure an organisation’s morality, that morality must be overtly engineered into the organisation’s structure and function. It will not get there by accident.
Organisations are inherently amoral
Organisations do precisely what they are built to do. If we want them to be moral, morality must be built into them
A deliberate and targeted effort must be made to incorporate morality into the businesses we work for or lead, as, without this effort, their default position will be to serve exclusively the purpose for which they were established, whether this be profit, share value, market position or the delivery of specific services or products: a single-mindedness of purpose which may eventually prove to be amoral or even immoral in its repercussions.
Characteristics of an ethical organisation
So, what are the characteristics we would wish to see – and to implement – in an ethical organisation or business?
On the basis of the above considerations and our discussion of ethics in the preceding article, I would identify these as follows. Ethical organisations will:
- Affirm moral objectives in addition to purely mercantile or functional ones
- Build these objectives into their everyday functioning
- Encourage colleague contribution, self-reliance, participation and well-being
- Ensure fairness in benefits and pay
- Encourage diversity and ensure equal opportunity
- Act to the benefit of the wider community and the environment
- Be self-aware
- Be open about their objectives and intentions
- Encourage moral behaviour in those who work with them and within them
Touching on each of these in a little more detail:
Affirming moral objectives in addition to purely mercantile or functional ones
This will need to be accomplished through a clearly defined mission statement, charter, articles or constitution for an organisation. Given there is no structural imperative for organisations to behave morally, morality must be ‘engineered into them’.
Building these objectives into the everyday functioning of the organisation
A simple axiom of moral logic is that actions possess greater weight than words. No matter how loudly we claim to be moral (virtue signalling, anyone?) it is our actions which truly reveal our morality. Therefore, for a business just to assert its ethical intentions or values is not enough. These values and intentions must be functionally embedded and acted upon within the everyday activities of the organisation through the adoption of clear and decisive policies and procedures.
Encouraging colleague contribution, self-reliance, participation and well-being
In the preceding article (The Point of Ethics) I described three very basic and uncontroversial core moral aims which allow us to tackle the key ethical challenges of the modern world. These are:
Ø The nurturing of individuals
Ø The nurturing of humanity as a whole
Ø The nurturing of all life
The first of these quite clearly justifies our commitment to encouraging colleague contribution, self-reliance and participation, to training and development, and to implementing measures to ensure the well-being of those who work in or with our business or organisation, through ensuring fairness in benefits, pay and opportunity and through encouraging diversity.
Acting to the benefit of the wider community and the environment
It is here that an organisation must act upon the second two core moral aims identified above. This will be achieved through:
Ø Managing the impact of the business or organisation upon its surrounding community and environment, ensuring this impact is ethical and beneficial rather than exploitative or exclusive
Ø Considering the health and well-being of the organisation’s customers or clients, including indirect stakeholders who may be affected by its activities, and acting to ensure its activities and their direct and indirect impacts are positive
Ø Engaging with the surrounding community, clients or customers and indirect stakeholders, keeping them informed, seeking their insights and (where applicable) their consent
Ø Contributing to the wider community through a conscientious approach to taxation
Ø Contributing to the reduction of carbon and other environmental pollutants, rather than just their minimisation (I discuss our relationship as businesses to the environment in greater detail in article six of this series).
It is important, if we are seeking to be ethical as businesses or other types of organisation that we are self-aware: that we acknowledge and recognise our activities and their impact, both in the short and the long term and for both our direct and indirect stakeholders.
Being open about our objectives and intentions
Openness and honesty are key characteristics of ethical behaviour. If we are covert or secretive about our objectives and intentions as businesses or organisations, how can we engender trust in those with whom we interact?
Encouraging moral behaviour in those who work for us or with us
This is an important final characteristic of the ethical business – for a key element of any ethical system isn’t solely that we as individuals or as individual businesses act morally, but that we also encourage the moral development and behaviour of others. Having clear policies on equal opportunities, diversity, professional conduct and leadership will be a central element of this, as will training our colleagues in these policies and how they can be acted upon in our day to day activities.
The ethical business
Ethical businesses affirm moral objectives in addition to purely mercantile or functional ones… and act upon these objectives also
How can we help the organisations we work for or lead become more ethical?
To a large degree this question is answered in the preceding section. We can help our businesses become more ethical by ensuring they adopt the ethical characteristics outlined above. This can be reinforced by ensuring these ethical values and objectives are publicly and transparently engineered into our organisation’s constitution, function and purpose. And since our ethics must comprise action as well as words, they must be sustained by clear and decisive policies and procedures. They must become part of the day to day activities of our working lives.
Ethics is for sharing
Ethics is a shared understanding of how we ought to behave.
If it is not shared, it is not ethics
And, as a further aid, we must assign responsibility within our organisations or businesses for the meeting of our ethical objectives. At board and executive level, through HR and senior management, this responsibility must be included in our job descriptions and definitions of role.
The ethics of success
So, skirting around the issue of whether ethics should be driven by self-interest (after all, is self-interest a reason to be ethical?), let us ask a fairly pragmatic question: “What can ethics give us, as a business?”
The answer to this question is compelling. Ethics offers businesses:
A shared moral vision draws colleagues together at a time when division and polarisation are proliferating both in social media and in society as a whole.
Ø Motivation and inspiration
Ethics has the power to motivate and inspire. After all, who wouldn’t wish to feel they are working in an ethical business, dedicated (alongside other, functional objectives) to ethical aims?
Ø Pride and self-worth
Ethical behaviour and practice allows us to hold our heads up high, both as colleagues, as leaders and managers, and as a business.
Ø A renewal of trust
A 2016 study by Ernst & Young found that less than 50% of global professionals trust their employer. What better way to reacquire this trust than through affirming and implementing the ethical measures outlined above?
(Article 9 in this series will also look at the question of trust.)
Ø A market differentiator
According to the Edelman Trust Barometer, customer trust in businesses in the UK fell to an all-time low of 43% in 2018. In this climate, a commitment to ethics, and therefore to reliability and trustworthiness, must serve as a market differentiator – with potentially significant benefits to profitability.
Ø Added value
If we are an ethical company, providing goods or services to high ethical standards, this means our products or services have an inherent added value. They are more likely to be reliable, safe and community- or customer-focused; therefore, our reputation with customers or clients can only be enhanced, to the potential benefit of our market share.
The benefits resulting from engineering ethics into our businesses seem very much like common sense. They beg the question, “Why wouldn’t you?”
This also brings us back to the issue I skirted around at the beginning of this section. It is likely that as businesses we can gain profitability and resilience through implementing ethical practices, but this isn’t, fundamentally, the point. The point is that we should strive to make the businesses we work within or lead more ethical whether or not we profit from this… simply because, morally, it is the right thing to do.
The ethics of success
The ethical conduct of business offers tangible benefits… yet, regardless of this, it is also what we should do
In my next article, The Ethical Manager, I ask the question “Can you be ethical and still be a successful manager?”
I look at what being a good manager means and consider the issues of ethics vs. efficiency and competitiveness vs. integrity.
Read more articles on our Phase 3 Insights page
About the Author:
Luke Andreski is a writer with over thirty years’ experience in the IT industry, specialising in People Technology implementation projects and change management. More recently he has focused on moral philosophy and psychology, with a particular interest in business leadership and management ethics.
Luke has published two books on ethics: Ethical Intelligence, a guide to effective ethical thinking in a world of polarised belief and political spin; and Intelligent Ethics, exploring the need for ethical change if we are to address the challenges of the 21st Century.
He is currently working in conjunction with Phase 3 on a series of articles investigating Ethics in the Workplace.