Ethics Is Serious Business

Guest post by John Hooker:

Everyone knows that an organization can’t function without physical infrastructure—communications, transportation, computer technology, and the rest.  Yet we rely equally on social infrastructure.  It consists of the social practices that allow us to relate successfully to coworkers, customers, investors, and the community at large. 

Building and maintaining physical infrastructure requires a certain kind of know-how, which we call engineering.  Maintaining our social infrastructure also requires know-how, because we must develop ground rules that make our social practices sustainable.  The field that provides this kind of know-how is called ethics.

This means that ethics is serious business.  Ethical dilemmas are at least as hard to resolve as engineering problems, and at least as urgent, particularly in our complex and fast-moving world.  They require careful analysis, not gut feeling or simplistic platitudes.  When does online data harvesting become invasion of privacy?  When does pharmaceutical pricing become price gouging?  When does cost saving become worker exploitation?  When does product promotion become false advertising?  When does socializing become sexual harassment?

When organizations go astray ethically, it is usually due to a lack of ethical competence, not bad people.  Naturally, there are plenty of scoundrels out there.  The media loves to tell us about the Bernie Madoffs and Martin Shkrelis of the world.  But most of us are basically good people who are unsure how to navigate the treacherous ethical waters of modern work life.  Even when there are bad people around, we often lack the concepts and vocabulary to explain why they are wrong.

To illustrate this, we need look no further than one of the most famous case studies in professional ethics.  In the 1970s, the Ford Motor Company discovered that its budget car, the Pinto, was prone to burst into flames after low-speed rear-end collisions.  The company could have corrected the problem for $11 per car but decided against the fix – until the problem mushroomed into a public relations disaster, and Federal regulators mandated a recall.  One of the managers involved in the affair was an idealistic young man named Dennis Gioia, who went into the auto industry to make a contribution to society.  He wrote an honest article about his experience years later, after he became a business school professor.  Gioia supported Ford’s decision at the time, based on a plausible cost-benefit analysis.  Yet the flaws in Ford’s analysis are immediately evident to someone properly trained in ethical reasoning.  The problem was not bad people, but bad thinking.

It is a relatively straightforward matter to hire staff with engineering competence.  But how does one recognize ethical competence?  How does one motivate staff to acquire this competence and apply it?

The first step is to understand how people grow ethically.  Beginning with Lawrence Kohlberg, developmental psychologists have discovered that ethical competence tends to develop in stages that parallel social and cognitive development.  There are various accounts of what the stages are, but I find it helpful to identify three broad stages that one can recognize in the staff of almost any organization.

The first stage is heteronomy, in which people take their beliefs and values from others.  In youth, norms are typically supplied by family and school, and in adulthood, by the organizations to which one belongs.  The second stage is ideology, in which people begin to do their own thinking but buy into a thought system that claims to have an answer for everything.  One often finds this perspective among teens and young adults, but it can persist into later years.  The third stage is autonomy, in which people acknowledge the validity of different points of view but strive toward a rational consensus.  It arrives in mature adulthood, if at all.

Employees and managers in the autonomy stage are ready for mature leadership.  They will respond to ethical reasoning and can learn to apply it themselves.  Those in the ideological stage may have charisma but are best avoided when top leadership responsibilities are assigned.  Those in the heteronomy stage will absorb the values of the organization, particularly when it advances their careers.  It is for them that the organization’s ethical norms must be made as clear as possible.

Training in ethical analysis can play a key role in developing ethical leadership.  It gives those with autonomy the intellectual tools they need to make responsible decisions and build consensus around them.  It can help nudge others toward ethical maturity.

Ethics training can take at least three forms.  One is an ethics course in business or professional school.  One can look for this on the resume, although many such courses do not teach ethical reasoning skills.  A second form is ethical training on the job, which can be effective if it goes beyond simply sitting around and exchanging opinions.  Participants must be asked to analyze dilemmas, and their analysis critiqued.  Perhaps the most effective form, however, is a practice of ethical discourse within the organization.  Beginning with top management, ethical analysis should be consistently used in meetings and memos.  It should play a central role in explaining and justifying company policy.  People tend to absorb the thought patterns to which they are exposed on a regular basis.

An organization that takes ethics seriously, and develops ethical competence in its emerging leaders, is well on the way to building a sustainable social infrastructure.

John Hooker is a T. Jerome Holleran Professor of Business Ethics and Social Responsibility, and Professor of Operations Research, at Carnegie Mellon University, Pittsburgh, Pennsylvania, and author of the new book TAKING ETHICS SERIOUSLY:  Why Ethics Is An Essential Tool For The Modern Workplace.  He has also held visiting posts at several universities, most recently the London School of Economics and the State University of Campinas, Brazil. He brings his extensive background in philosophy and logic to the rigorous analysis of ethical dilemmas, and his background in management science to making sure the dilemmas are realistic. He has published over 170 research articles, eight books, and five edited volumes on ethics, philosophy, operations research, and cross-cultural issues, including Business Ethics as Rational Choice and Working across Cultures. He is the founding editor-in-chief of the world’s only academic journal dedicated to teaching business ethics, and he developed the ethics program in the Tepper School of Business at Carnegie Mellon University.

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