The Enron scandal was only one in a series of scandals that erupted in 2001-2002. WorldCom, Tyco, Aldelphia, Globcal Crossing, Qwest, Merrill Lynch, Citigroup Salomon Smith Barney, Marsh and McClennen, Credit Suisse First Boston, and even the New York Stock Exchange all came under investigation for illegal activity.
Multiply these people harmed by the dozens of other companies implicated in similar scandals – you will get an idea of why ethics is no longer irrelevant. The consequences of unethical behavior and unethical business institutions are too serious to be ignored.
A stakeholder is anyone who has a stake in the activities of an organization. This “stake” can be direct, as in the relationship of employees or stockholders to the company. This “stake” can be indirect, as in the relationship of the local community to the company.
Some companies made a commitment to customers as their core value, others focused on employees, their products, innovation, or even risk-taking. The common theme was that core values and a clear corporate purpose, what together are described as the organization’s core ideology, were essential elements of enduring and financially successful companies.
There are financial, religious, historical, nutritional, political, scientific, and aesthetic values. Individuals, as well as companies, have values and value systems.
Collins and Porras discovered that while having a set of core values was essential in long-term success, companies did not have to have any particular value to be successful. For example, executives at Philip Morris, a visionary company according to Collins and Porras, were described as defiant and self-righteous in their pro-smoking ideology.
What is human well-being? This is a topic up for discussion. Happiness is certainly part of human well-being, as is respect, integrity, and meaning. Freedom and autonomy also seem to be part of human well-being, as do companionship and health.
There are few if any rules that can guide ethical decision-making. To evaluate a company, like Philip Morris, begin by exploring the meaning and value of the freedom to choose relative to the value of health. Examine the motives of corporate executives to discover if they truly value the personal freedom of their customers, or if their motivation is less impartial and more self-serving.
What can we learn from Malden Mills? Sometimes ethical values are good for a company and sometimes they aren’t. Collins and Porras seem to attain the ideal, high ethical stands and long-term financial success. Others attain long-term success with values that would not be considered undisputably ethical. Others fail because of their undoubtedly unethical values. The record is mixed.
There is no single set of answer in ethics, no single body of information, no is there even a single framework for thinking about ethics. Business ethics is a multidisciplinary field, incorporating information from philosophy, management, economics, law, marketing, and public policy.
The process of ethical reasoning must also be consistent. As we analyze each issue fully and rigorously, we must be mindful of those decisions we have already made, and the implications of those decisions, as well as the implications of the decision we are about to make.
The actions we take and the lives we live give practical answer to these fundamental ethical questions. Our only real choice is whether we answer these questions deliberately or unconsciously. Thus, the philosophical answer to why you should study ethics was given by Socrates over 2000 years ago: “The unexamined life is not worth liviing.”
Business ethics addresses all of these questions: individual morality, social ethics and what characteristics should I cultivate to be an ethical and successful person?
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