It’s a matter of ethics

Picasso: La Petit Corrida

People sometimes confuse the meaning of the term “work ethic” and “ethics.”

“Work ethic” refers to the attitude you have toward work. Someone said to have high “work ethic” believes in hard work and works hard, works diligently. In general, Japanese have high “work ethic.” It is a strength, but of like all strengths can become a vulnerability if excessive. That is where “work-life” balance comes into play, spending enough time in leisure or community activities so that you recharge your batteries to increase your productivity at work.

You can have high “work ethic” yet still behave unethically. Nick Leeson brought down Barings Bank with unauthorized trading. Andrew Fastow and Jeff Skilling brought down Enron with fraudulent financial schemes. They all were hard-working executives (had high “work ethic”) but went to jail for the crimes they committed.

Just following your feelings of what is “right or wrong” does not guarantee that you act ethically. People rationalize their actions, and in so doing, often slide down a “slippery slope” that leads to unethical behavior. Again, I can cite the example of Enron. When Fastow et al first structured their investment partnerships as financing vehicles for Enron, they were legitimate “special purpose” subsidiaries that met the test of law. Eventually, as Enron’s financial needs became greater and as Fastow’s greed became voracious, he and Skilling crossed the line into illegal (and unethical) behavior.

What is illegal is most always unethical, but not always. Sometimes in history people have broken laws considered unethical, as in the case of apartheid in South Africa.

So what is ethics, and how does it different from integrity?

Some define ethics as an external body of rules, regulations or laws that govern behavior in society and any group in it, like a company. They view integrity as an internal set of principles that guides our behavior, whether in personal or professional relationships. Ethics may be imposed by laws in society. Integrity relates to wholeness and inner strength to behave correctly regardless of whether laws or regulations impose on us to do so.

Clearly ethics and integrity are interrelated. They both suggest how people ought to behave, to act rightly. We should not steal, murder, mug, slander, fraud, rape. We should deal fairly and honestly with our clients, colleagues, and friends.

To brainstorm issues in ethics, study your company’s code of ethics. If they do not have a code, you can exercise leadership by creating one for them. If the code is not clear, you can exercise leadership by making it clear. For the CEO of a company, ethical leadership is among the most critical responsibilities of the job. Hundreds of companies are now history because ethics was not adequately embedded in the business culture. Enron is the classic case. Did the company act ethically when it encouraged traders to rig the electricity markets that resulted in grid blackouts? Were the traders acting with integrity when they laughed about little old ladies left cold by their action?

In Essays, Interviews, Jobs, I included an essay or two that addressed challenges to ethics. In one, a former Japanese wrote about his experience in sailing. He got close to the Seoul Olympics for the two-man dinghy. He was training in the Bay of Tokyo when a storm came up. As he was heading for shore, he and his partner came across a distressed boat. The man on the boat screamed for help. The client faced the ethical dilemma of stopping to help the man or ensuring his own safety.

Ethical challenges can be quite difficult. Sometimes there is no easy answer, right or wrong. What schools are most interested in is the reasoning process you went through to sort out an ethical issue. Harvard has used extensively in classes on ethics a case entitled the Parable of the Sadhu that addresses the ethics of the individual (integrity). Western mountaineers in the Himalayas faced the dilemma of helping a dying Indian holy man and aborting their climb or continuing on their way. No law required that they act one way or another.

There are  countless ways a worker can face ethical challenges, among them:

  1. telling a client what it wants to hear rather than what it needs to know
  2. coaxing a client to buy a financial product to make a sale in order to meet a sales target
  3. misleading a client with a viewpoint designed to make a sale, when it is contrary to your company’s official view (for example, to sell a floating rate mortgage rather than a fixed rate mortgage when the forecasts are all pointing towards hyperinflation)
  4. not adequately ensuring that customers understand the full implications of the contracts they are signing (e.g. mortgage contracts)
  5. manipulating price transfer information to avoid being accused of dumping
  6. withholding needed information from a colleague in order to get ahead personally
  7. spreading false rumors about a colleague
  8. “trading” in insider information (now in the news in separate incidents both in Japan and the US)
  9. over-billing clients
  10. engaging in sexual or power harassment
  11. accepting an excessive payment for favor (a bribe)
  12. “cooking” the books

You can see that ethical issues almost always deal with what certainly would be embarrassing, if not a scandal or illegal, were the incident publicly known. You will also notice the interrelationship of ethics and integrity. When a teammate withholds information from a colleague that would benefit the team, such behavior is not illegal, but it certainly shows a lack of integrity, and it would be considered unacceptable if known by superiors in the organization.

All the best,

Warren J. Devalier

©2010 Warren J. Devalier