What Theory of Business Ethics do you follow? University Business Ethics Speaker Chuck Gallagher comments!

January 23, 2010

While standing in line for a dinner/reception at a well know Canadian University (I was there as their keynote speaker for a business ethics symposium), the Dean of the Business School asked me – “What theory of business ethics do you follow?”  Most of the time I’m fully prepared to answer questions posed about ‘ethics’, but in this case – that question caught me off guard.

I wanted to be respectful with my answer while thinking to myself – “the more academic we make ‘business ethics’ the less effective it will be for students to learn and apply.”  My response – “I follow the theory of business ethics that keeps one out of federal prison.”

The look I received in response was – priceless.  “I see,” he responded and from there the discussion seemed to change direction.

The next day it all made sense – not only to the Business School Dean, but the students in attendance – as I walked in dressed in an orange jump suit and handcuffs.  (you can see some of my presentation here).  As I explained I took 23 steps from the curb into federal prison, it became clear that every choice does have a consequence.  And, as I explain, the choices you make today create the consequences you experience tomorrow and into the future.

But…I was still plagued with the answer to the question…”What theory of Business Ethics do you follow?”

BUSINESS ETHICS THEORIES:

The other day, I ran across an excellent article that outlined different theories of business ethics in “the star online” – the full article written by John Zinkin is here.  The following is a reprint of excerpts from the various theories of business ethics he espouses.  Thanks and credit to Mr. Zinkin for his work.

Machiavellian ethics

These are pragmatic, weighing probable consequences and the likelihood of achieving given outcomes, often regardless of how the ends have been achieved. People practising this type of ethics will argue that the ends justify the means.

The merit of this system is that at least any decision being taken can be assessed in terms of whether it will achieve the desired ends; and if it fails this basic test, then it should not be taken.

However, there are two problems with this approach. First, it does not recognise that organisations need codes of conduct and rules to help people to make predictable and consistent decisions.

Second, it can lead to a failure of “Tone at the Top” with people encouraged to “do whatever it takes” – the kind of thinking that contributed to the recent failures of governance in Wall Street that have hurt us all so badly.

Utilitarian Ethics

These are a more moral extension of Machiavellian ethics, where the outcomes are weighed up by calculating how to “achieve the greatest good for the greatest number” for both the company and its customers. Principles are important only as rules of thumb.

The problem with this type of approach is that it encourages the tyranny of the majority and can lead to ignoring the needs of minorities and so be used to justify persecuting minority shareholders, which is poor governance.

Kantian rules-based ethics

Rules-based ethics (associated with the German philosopher Immanuel Kant) go one step further in that they also consider the effect actions have on the rules of the organisation and whether they adhere to given principles.

This approach tends to be bureaucratic and perhaps overly legalistic, sometimes with a rigid adherence to the rules without due regard for particular circumstances that may justify exceptions.

Of course, the problem is that if there are too many exceptions or waivers, the rules themselves and the system they represent are discredited; outcomes become unpredictable; and corruption and free riding are encouraged.

Rousseau’s social contract ethics

Social contract ethics recognise the need for mutuality and reciprocity if companies are to flourish: both within the organisation itself, where “Do unto others as you would be done by” is as good a rule as any for behaviour, and between the company and the community it serves.

They also recognise that no company is an island and it must therefore behave responsibly towards the community, minimising the external costs the company creates, lest it create a “tragedy of the commons” with its associated risk of systemic failure.

The problem with this type of approach is when it leads to the kind of loyalist, tribal thinking within a profession so that bad practices are covered up and justified in the name of loyalty to the group (a favourite topic of films with rogue cops who are protected from Internal Affairs for example).

Personalistic ethics

Personalistic ethics reflect what an individual feels about the decisions being taken. As such they often share the following three characteristics:

First, they are driven by the individual’s personal sense of virtue and how the decision will reflect on the person’s character and sense of self-worth;

Second, they may be based on empathy where the decision maker puts himself/herself in the shoes of the other person when deciding what to do;

Third, they may be based on intuition driven by conscience – asking the question “will I be able to sleep at nights” when making a decision.

Obviously it is important that board members must be personally comfortable with the decisions they are involved with.

The problem is that often people who decide on Personalistic ethical grounds become impatient with other people calculating what to do using either a rules-based or utilitarian approach, and may be uncomfortable with Machiavellian thinking.

SO – WHAT THEORY OF BUSINESS ETHICS DO YOU FOLLOW?  Having spent time in federal prison for unethical choices…I stand by my response to that question.  I follow the theory of ethics and choices that keep you out of prison.

COMMENTS WELCOME!


Social Networking, Social Media, Social Web and Ethics – Are They Compatable? Ethics Speaker Chuck Gallagher Comments!

January 29, 2009

For a 51 year old former Sr. VP of Sales and Marketing, current business ethics speaker and fraud prevention consultant, I am finding web 2.0 and/or social media (or whatever title you give it) to be a vast open space for opportunity and/or disaster. And for those of us who are growing into this new frontier the pitfalls can be dramatic and costly.

One year ago I had no clue what web 2.0 was or meant. Frankly neither did most of my counterparts. Those of us in the Baby Boom generation just didn’t get it. As far as we were concerned sites like MySpace and Facebook were for kids. And, frankly, we didn’t have a clue what the fascination was all about. Just really seemed like a colossal waste of time. Either the “young” folks were texting – seemed like speed dial and a call was quicker – or they were writing in some unknown code that was designed to keep those of us with budding grey hair confused. And confused we were.

Then, for reasons I still don’t fathom, I began – like many others of my generation – to find some attraction to just what the fuss was all about. Viola…Baby Boomers connect and the world for us changes.

AMAZING FACTS:

According to site analytics reported on in compete.com for December 2008 the following amazing statistics are available:istock_000007298729small

Number of Unique Visitors:

Facebook 59,675,502

MySpace 59,544,152

LinkedIn 9,349,996

In all three cased the number of people visiting these sites increased for the month of December 2008 and increased for the year for both Facebook and LinkedIn.

IMPACT FOR ADULT SOCIAL MEDIA CONNECTIONS:

While the number of uses for MySpace (mostly high school and college aged users) has remained flat, the more adult related sites has skyrocketed. The number of unique visitors to LinkedIn over 2008 has increased 153.9% and unique visitors to Facebook has increased 85.7%. While there may be those who disagree, I submit that the great majority of the increased visitorship to these sites is coming from adult users that are beginning to learn how to tap into the value of social media connections.

The growth is incredible as I am seeing daily (yes daily) the number of people in the Baby Boom group who are beginning to figure out that they will be left behind if they don’t join the social media revolution. The message that one might share is instantaneous and the access to data is vast. The power for branding, marketing and media messaging is limited only by the narrowness of ones mind.

INTERCONNECTED – FOR BETTER OR WORSE:

First, let me say, you do have control over when and how you use these tools. That said, the reality is you are interconnected. For example I am working with a social media site called twitter. Now for those who twitter it makes perfect sense (I guess). For me, well…I’m trying to figure it out. But one thing I do know is that since my twitter postings are linked to my facebook account, every time I make a post to twitter my facebook is updated.

That interconnection can be a great benefit. But, it has to be one that is managed. As a baby boomer and professional speaker and consultant I quickly got the value of these social media site from a marketing and branding perspective. And, I promise for those who really get it, I’m no where close to truly maximizing the value that can be gained there.

Here’s an example of the power of social media at work. As I began writing this blog I posted a comment on twitter (which like Facebook and LinkedIn is growing exponentially). I stated that I was writing this article and would be open to suggestions. The request was posted on twitter – which linked to my facebook page. Just a moment ago I looked on my facebook page and has two responses, both of which were very helpful.

Here are their comments with some minor edits:

A professor from Texas writes: “Who owns my data?” Guess what – Facebook owns what you put on your profile. Not you. Take your page down? Doesn’t matter, they still have, and own, that information.

A professional speaker from Florida writes: I am amzaed how social media has taken off the way it has…. I do not like it when people think it is the perfect place to push their MLM or any other products or services.

Don’t get me wrong I think that MLMs are a great business to get into. But please first read the secret behind “Permission Marketing” as taught by Seth Godin. If you use this (read More Strategy )it does work. I know I have people who write me and call me and I don’t really know them but they feel like I am there best friend. This is all done by “Permission Marketing” not by pushing yourself upon your friends list.

Also becareful what you post on someone’s “Wall” where everyone can read it. I will sometimes post something on their Wall and then follow-up with a direct private message to further explain the details or the private information. There are somethings you don’t want everyone to know without the permission of the other parties involved.

ETHICS, CHOICES AND CONSEQUENCES:

Every choice has a consequence. Every time you call someone or write a note, you make a choice that has a consequence. Perhaps your call or note is received with joy and the consequence is deemed positive. Likewise, many in turbulent economic times are receiving calls or notes that result in the loss of jobs and – the consequence is much different.

The same applies to every entry or contact in a social media environment. I, for example, write about ethics and fraud – white collar crime mostly. I am aware that with the touch of the keyboard, I publish data that some find helpful and refreshing and others find offensive. Believe me I have heard from those who do find my work distasteful. In any event, I understand that the way we interact on the web is much different and substantially more powerful than what we have previously been accustomed.

So here are some questions (feel free to comment below – who knows where the dialogue will take us):

  • If you use social media sites such as Facebook, LinkedIn or Twitter for business promotion, are you concerned more about your privacy or the promotion of your business?
  • If you had to choose between LinkedIn or Facebook – which site would you select and what motivates that selection?
  • If you use Facebook, do you feel that it is ethical to look at the friends of your friends and request a connection to them?
  • Would you rather expand your network of “friend” or “connections” or maintain your privacy?
  • How do you feel social media networking is different than networking – say through a chamber of commerce event?

As times passes, like with anything, we will all learn and grow. Meanwhile, the issues of what, how and where to use social media and what is fondly called web 2.0 are unfolding.

One last comment before this entry is closed out… As I speak often to university students I find that they too have an amazement at this whole social media issue. This comment just came through on my facebook page. It is accurate and demonstrates just how we need to think about the balance between social, marketing and privacy. Here’s the comment:

Fascinating. I find the balance of being public and yet wanting privacy control a tight balance. Companies are using FB as an HR research/background tool.

Your comments are welcome…