Ethics Is Serious Business

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

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

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.

is a T. Jerome Holleran Professor of Business Ethics and
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.