Master class on business ethics

Andy Crane Dirk Matten

You are in for a treat!

• A new paradigm of business ethics • Think outside the box • Categorical imperatives of truth and reason • Shared vision of core values:

–C

ommon purpose

–R

esponsibility

–A

ccountability

–P

rincipled behaviour

Business ethics…I didn’t think there were any!

“Business ethics? There’s no such thing!” “A book on business ethics? Well that must be a quick read!!” “A course on business ethics? Well that’s easy, there are none!” “A professor of business ethics? Well what on earth do you do all day?!”

Oxymoron

def. 1

. a combination of contradictory terms, also considered a paradox.

2

. a contradiction in terms

Is business ethics an oxymoron?

• Ethics = doing what’s right, building better societies • Business = playing to win, doing what’s good for the firm • So are we really Professors of Oxymoronity??!!

Understandable cynicism

• One in four UK employees says that they have felt pressure to compromise their own or their organization’s ethical standards • One in five has noticed behaviour by their colleagues that violates the law or does not accord with expected ethical standards Institute of Business Ethics, Ethics at Work survey, 2005

Types of misconduct Type of misconduct observed

Lying to employees, customers, vendors, or the public Withholding needed information from employees, customers, vendors or public Abusive or intimidating behaviour towards employees Misreporting actual time or hours worked Discrimination on basis of race, gender, etc Sexual harassment Stealing, theft, or related fraud Breaking environmental and safety laws/regulations

Employees observing it

26% 25% 24% 21% 17% 13% 12% 12%

Scandals and collapses

• Enron, Worldcom, Andersen etc collapsing due to huge financial irregularities • Shell’s mis-booking of oil reserves, price-fixing at Sotheby’s & Christies, corruption at BAE in Saudi Arabia?

• A handful of greedy executives? The tip of the iceberg? Or a rotten corporate system?

Degree of trust in specific

80 30 20 10 0 70 60 50 40 Microsoft Exxon Nike Ford USA (%) Europe (%) Greenpeace Amnesty WWF Source: Wootliff and Deri (2001). NGOs: the new super brands.

Corporate Reputation Review, 4/2:157-65

Degree of trust in different types of organisation in the USA and Europe

25 20 15 10 5 50 45 40 35 30 USA (%) Europe (%) 0

Business in general NGOs in general Government in general

Source: Wootliff and Deri (2001). NGOs: the new super brands.

Corporate Reputation Review, 4/2:157-65

Perceived credibility of corporations and NGOs regarding specific issues

80 70 60 50 40 30 20 10 0 Environmental issues Human rights issues USA Europe NGO Corporation NGO Corporation Source: Wootliff and Deri (2001). NGOs: the new super brands.

Corporate Reputation Review, 4/2:157-65

A constant media spotlight

• Drinks industry and binge drinking • Clothing and footwear companies and labour conditions • Confectionery companies, poverty wages and slave labour • Energy industry and global warming • Fast-food companies and obesity

So what can we do….?

Pitfalls of preaching

• Impossibility of conversion • Being certain ≠ being right • Creating moral robots • Knowing right from wrong isn’t the problem

Ethical decision making as balancing

R R R W W W

A brief personal example Or a word from our sponsors … .?

The case against

• ‘Dirty money’ • Preventing academic criticism • Hypocrisy • Corrupting the corporate social responsibility agenda • Legitimating tobacco industry

Resolving a personal ethical dilemma

• Academic freedom • Using resources for positive change • Appropriate openness, governance, and accountability • Living with irony • A leap of faith

An alternative approach to business ethics?

• Identifying the opportunities for change and the ‘structures of constraint’ • Enhancing moral imagination – Recognising and understanding different moral perspectives – Explaining and rationalising these perspectives • Developing new ways of considering responsibilities of business in society

Structures of constraint

• Businesses already have a powerful set of ethics embedded within their DNA • Organizational life is often characterised by amoralization and moral muteness • Leaders set the ethical tone in organizations • People do what’s rewarded … and what they think they ‘should’ do

Opportunities for change

• Acknowledging and understanding the barriers • Encouraging moral awareness and literacy – going beyond the business case • Providing the tools for ethical decision-making • Fostering creativity and moral imagination • Walking the talk

A short experiment…

On a scale of –5 (very wrong) to +5 (very right), how would you rate: • Pretending to be a customer to get information about a competitor • Outsourcing of call centre jobs from Ireland to India

Normative theories

• Consequentialism and cost-benefit analysis • Duty or rights based approaches

Typical Perspective

Ethical Dilemma ‘Lens’ of ethical theory Single normative consideration for solving the ethical dilemma

The value of ethical theories in facing ethical dilemmas in business

If the Professor of Business Ethics just talks about different perspectives or considerations….

….then can we ever say if something is actually right or wrong?

New ways of considering responsibilities of business in society

• Morality is about meeting expectations … but also about challenging them • Identifying broadly agreed upon norms or ‘moral minimums’ • Seeking consensus rather than just moral absolutes • Process of decision-making rather than just the decisions themselves • Ensuring personal engagement rather than conformity and compliance

Some conclusions…

• There are ethics in business … they’re just not always visible, and don’t necessarily lead to the kinds of behaviour we’d like • Morally motivated behaviour is possible in business, but is subject to considerable, and quite rigid structures of constraint • There are few right and wrong answers, just better or worse decisions, or more widely acceptable behaviours • Being ethical in business is a creative endeavour not just a rational one