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July/August 2006 — Vol. 84, No. 6


Making ethical business decisions

By Debra Susca

Freelance writer in Portland, Conn.


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What would you do? ...

Sheila is a bright 45-year-old who heads up the human resources department of a large corporation. She began her career at the company right out of high school, and over the years earned two college degrees while working her way up the organizational ladder.

One day, Sheila is stunned to learn that the firm is considering hiring back a former employee who years earlier, as a senior person in the company, had unsuccessfully propositioned her and made her life miserable. She had never mentioned the incident to anyone and had put it behind her when he left the company. As she looks at his resume to assess whether to recommend his hire, it’s clear to her that he has the skills to turn around a floundering, yet key, division of the company. What should she do?

“Sheila” has just come up against one of the myriad ethical dilemmas companies of all sizes and their employees face on an ongoing basis. Deciding the best course of action might be easy in some cases, when there are clear-cut choices between “right” and “wrong.” But there are many gray areas, like Sheila’s, when it’s harder to know what the right choice is for you and your company.

Yet, in today’s business culture, where it’s becoming more and more a part of effective management to delegate decision making down into the organization, it’s ever more critical that employees at all levels understand what your company stands for and how to think through decisions.

“It [ethical behavior] is absolutely critical,” says Dean Krehmeyer, executive director of the Business Roundtable’s Institute for Corporate Ethics. The institute brings together leaders from business and academia to fulfill its mission to renew and enhance the link between ethical behavior and business practice. “Evidence strongly suggests being ethical — doing the right thing — pays,” he says.

Krehmeyer points to the institute’s “Bridge Papers” publications, which convey leading-edge research on business ethics. The most recent publication, Building the Business Case for Ethics, states that “companies do well by doing good.” It also asks the question of how managers can be equipped to meet rising financial and ethical expectations.

“Ethics is a very broad, gray area, with that gray area becoming larger as things happen faster, businesses get bigger, and companies face global issues,” says John Walsh, a former Aetna executive who now is the director of faith and work at AGORA, The Forum for Workplace Ethics and Economic Justice in Hartford. “Right and wrong don’t change. But it’s not always a case of just one path being the right path, and the other, wrong. Lots of times there’s an intermediate path.”

Thinking through various viewpoints

Guiding people through the process of making sound ethical business decisions is what Walsh and AGORA do for the professionals who attend the organization’s monthly meetings. There, they hear speakers, panel discussions or case studies about business ethics. They can also meet privately with AGORA staff to work through any ethical decisions they’re grappling with.

At one meeting, a hypothetical dilemma similar to “Sheila’s” was presented to participants, who broke into groups to approach the issue from different angles, getting other people’s points of view and arguing them back and forth.

“The point wasn’t to necessarily solve the problem,” says Walsh, who brings 30 years of corporate experience in finance to his work at AGORA. “The point was to think about the problem and to make people aware that they need to consider the ethical component and consider the impact their decision will have downstream.”

Different viewpoints are critical in helping people who are facing ethical situations, says Philip Gosselin, accounting manager at Directory Assistants Inc. in Glastonbury. “You make a ‘shared wisdom stew,’ if you will, by bringing in different folks and viewpoints and then weighing [them] all.”

Gosselin adamantly believes that behaving in an ethical manner should be unequivocal conduct in companies — and not just because developing a reputation for trustworthiness and honesty is ultimately good for business, but because of the overall effect it can have on society. “Businesses are a huge element of our American society,” he says. “They’re very powerful and drive decisions. If our businesses make ethical decisions, the effect will trickle down and out.”

Getting people to understand that and to think more broadly about how their decisions will affect other stakeholders — employees, customers, stockholders and the community — is the life work of Michael Rion, Ph.D., an ethics consultant in West Hartford who has led hundreds of workshops and ethics training programs for managers at all levels. He has also consulted on ethics and management with major corporations, government entities and community groups.

“Organizations do have such a big impact on people’s lives,” says Rion, who founded his firm, Resources for Ethics and Management, 16 years ago after having served as president of Hartford Seminary. Rion believes that, given the complexity of today’s global marketplace and the fact that more and more employees at all levels are being empowered to make decisions, it’s critical that companies offer ethics training to reinforce company expectations. “I don’t teach adults integrity,” says Rion, who has pioneered practical methods for making ethical decisions (see box, above). “I reinforce the integrity they already have, and serve as a reminder and refresher that ethics and integrity do matter.”

Just ask Edward Guay, founder and principal of Wintonberry Risk Manage-ment, an economic and investment consulting firm in Bloomfield. “Unethical behaviors have an impact on employees, shareholders, your firm’s reputation, even the viability of your business,” says Guay.

He points out that the unethical behavior of a few brought down corporate giants Arthur Andersen and Enron. And in 1995 Barings Bank, a 200-year-old international British investment banking firm, was sunk by one employee and a few of his friends.

“If you have a reputation for being unethical or very aggressive and not caring about your customers or who you hurt, it will definitely affect the sustainability of your firm,” Guay says.

What can you do?

So what can your business do to ensure it’s operating ethically across the organization?

Krehmeyer, from the Institute for Corporate Ethics, says you should first incorporate ethics into the business culture and make it a part of what your company is all about.

“It starts with a company’s mission and vision statement, where the mandate for ethical business behavior is set,” says Krehmeyer. That mandate, he explains, comes from how a company answers the following questions: What do we do for our customers? Our employees? Our communities? How do we make products and provide services that improve the lives of our customers? How do we create a work environment where employees feel engaged and productive and valued as contributors? What should we do to be a good customer to our suppliers? How do we make sure we’re a good corporate citizen wherever we do business?

“There has to be a culture where ethics and business go together; [where] they are not viewed as separate concepts, but as intertwined,” Krehmeyer says. He says studies have shown that such value-based companies outperform others.

Further, Krehmeyer suggests, leaders must be role models of what they and the company stand for. They also need to create an environment that allows people in the organization to feel valued and safe enough to speak up. “Business leaders need to ask themselves if they’ve created the type of culture whereby employees are compelled to speak up if there are issues or behaviors they see that aren’t consistent with the corporate values,” says Krehmeyer. In the Enron debacle, he notes, many mid- and lower-level employees knew what was going on but wouldn’t speak up because they knew they wouldn’t be listened to.

When faced with ethics issues, it’s also important that business owners and chief executives have mentors, colleagues and confidantes with whom they can confer; the right people who will ask them the right questions to help them arrive at a clear decision.

And last, says Krehmeyer, it’s important to celebrate when an employee and the company do the right thing.

“Right now the story of business has been taken over by scandal,” he says. “But the great majority of businesses are doing the right thing. We need to celebrate that.”

Notes Guay: “The best rule to follow when making ethical business decisions is the Golden Rule: ‘Do unto others as you would have them do unto you.’ It’s one of the best philosophies for sustainable business.”


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