2006 Volume 9 Issue 2

Graziadio Faculty Discuss Ethics

Graziadio Faculty Discuss Ethics

Are there rules to ethical conduct?

The state of ethics in America today is of grave concern to many people. In the past decade it seems corporate scandals, media fabrication, student cheating, and disreputable conduct have become common occurrences rather than abnormal behavior. Several members of the Graziadio faculty recently engaged in a hearty dialogue on ethics in America and about teaching ethics to students. Below is a compilation of some of their thoughts.

Linnea McCord, JD
Business Law

The rules of ethical conduct at work (whether in corporations, nonprofits, government, associations, etc.) are not personal, situational, relative, multicultural, or optional. The United States Supreme Court does not apply the ethical principles embodied in American law differently to different groups of people. It is “one nation, under God, with liberty and justice for all.”

Morality is knowing the difference between right and wrong; ethics is a code of conduct that recognizes the difference between right and wrong; law is the enforcement mechanism that enforces the code of conduct that recognizes the difference between right and wrong.

It is impossible to talk about ethics in the United States without referring to our Judeo-Christian heritage. When making decisions in business, students should keep in mind that Moses sits on top of the U.S. Supreme Court building—for a reason. The source of the ethical principles which are embodied in our law come from our Judeo-Christian heritage, and our country’s ethical principles are embodied in our law. If our students do not know these ethical principles, they will not understand how it is possible for them to end up going to jail or losing millions of dollars even if some of the finest accounting and law firms in the country may have told them that what they are doing is “legal.”

Over the past 40 years, too many people have thought something can be unethical, but legal. What this means is that the law is no longer enforcing what is right, but rather is allowing or enforcing what is wrong. By definition, there is something amiss with our legal system if it is not enforcing what is right. This will lead to cynicism about law and once rule of law is damaged, our culture of trust will also be negatively impacted.

American ethical principles are beginning to be mirrored overseas for the simple reason that market economies and representative governments, which more and more countries are trying to become, require a culture of trust. We have enjoyed a stable society and a successful economy because of our unique brand of Rule of Law based on clear moral and ethical principles.

Our culture of trust has certainly been damaged, however, by our confusion over ethics. That is why we are currently experiencing some of the worst scandals in our history throughout our society—not just in business. It’s too early to tell what the long-term effects of these scandals will be and how much damage we may have done to our culture of trust.

Academics discussing ethics theories is one thing. Giving clear, usable advice to business people on what is right and wrong behavior in American business and American society is something else. Our job is to make sure that our students leave business school with a clear understanding of what is right and wrong in American business if we wish to continue having a successful capitalist economy and a stable and harmonious democracy.

Our graduates need to know what the simple and clear ethical principles are that must guide their decision-making about what is the right thing to do in business in the U.S. and while working for American companies overseas (in whatever type of organization). To do otherwise will only increase the criticism rightly leveled against business schools that they do not effectively teach ethics to their business graduates.

One of the ethical “rules” of American law is care and competence. That is why our students need to be well-versed in all of the subjects we are currently teaching. Today’s business persons must know how to manage people and have top-notch analytical skills as well.

Ethics is our best competitive advantage in the 21st century global economy. I hope we never forget that.

Photo: Marcello Gambetti

Mark Mallinger, PhD
Applied Behavioral Science

I agree that there are “right” and “wrong” behaviors; however, there are also “gray” behaviors that are unrelated to legal standards, and that’s what makes the determination of ethical action significantly more complex. For example, a manager is asked to make a decision regarding yearly salary increases for his/her employees. Theoretically, we would probably agree that rewards should match performance and, therefore, it would make sense to base the percent increase on individual productivity or some other measure of accomplishment.

However, let’s assume one employee’s last quarter of work was exceptional, but the previous three quarters were below average. Do you average the four quarters to assess an overall performance rating or weight the most recent work as more significant?

Another employee is nearing retirement, but still performs well, that is, above expectations. However, the employee is not as creative as you would like (especially when you compare that employee’s work to the innovative work of a third member of your staff who is relatively new in the department). Unfortunately the appraisal system in your organization has no measures to evaluate creativity.

A fourth employee has been written up on occasion for various infractions, such as coming in late to work and taking long lunch or coffee breaks. Your concern is that this behavior not only suggests lack of respect for company policy, but sets a bad example for others. However, employee four is your top performer!

The manager must allocate salary increases from a pool of funds that cannot be increased—the budget is set (at say 4 percent). We are dealing with a zero-sum game: giving more money to one employee reduces the amount that is given to another.

The question: What is the ethical responsibility of the manager?

Of course, the “correct” response is complex. Questions that need to be considered: What is performance? Are there clear measures of performance? Are some performance metrics more important than others and, therefore, should be weighted more? Is the organization’s performance appraisal system appropriate for the expected goals? Does the question reflect ethical issues, or does the scenario deal with management challenges that are outside of the scope of ethical behavior? And so on.

Clearly the scenario represents only one example of the dynamics of organizational life, but demonstrates the complexity of ethical challenges that require considerable exploration and may not be answered outright with a “right” or “wrong.”

Kurt Motamedi, PhD

We might find the roots of our discussion in the views of at least two 17th century British philosophers, John Locke and Thomas Hobbes, who had major influence on Jefferson and other founders of our Constitution, in which are embedded Judeo-Christian values and traditions.

For example, John Locke argued for limited government. He forcefully questioned the “divine right” of kings. Thomas Hobbes’ social contract was argued to be at risk if the government did not fulfill its obligation of securing the people’s natural rights: life, liberty, and property.

The notions of enlightened self interest and rationality have been fully inquired into by other adept philosophers (i.e., Kant, Rousseau, and recently, Rand). Their collective works have helped form many of our assumptions about governance—including the notion of agent managers (representing owners). These notions have contributed to the formation of our complex hierarchies and markets.

Trust is a real asset that underpins all human interactions and cultures. When trust is low, human conditions suffer because there is less opportunity for cooperation and joint effort toward accomplishing mutually beneficial over-arching goals. How can trust be enhanced and preserved? It is not necessarily through more laws, rules, government, and administration.

It is unfortunate that many of our professional schools (business, medicine, law, etc.) neglect teaching the philosophical foundations of our consequential professional disciplines (trades). Morality and ethics buttress all societies through personal responsibility. Personal responsibility requires the understanding of one’s own impact on others and taking responsibility for the consequences.

I wish I could be more convincing in teaching my students that our civilization and morality were not created since Irvine became a city, as some of them de facto believe and act on. Our culture and values are indeed the by-product of human experiences of untold generations and of our collective learning.

Steven M. Sommer, PhD
Applied Behavioral Science

I find it limiting to suggest that all ethical issues are contained in the law. Research across many academic disciplines including the social sciences, philosophy, and several areas in management has examined issues of moral philosophy and ethical behavior (universalism, relativism, utilitarianism, etc.). Indeed, one of the leading names in ethics is Richard DeGeorge (University of Kansas), who helped start the Society of Business Ethics, which publishes Business Ethics Quarterly.

A fundamental question examined in the management arena is not only the factors that may lead people to make clearly illegal decisions, but more so the dilemma faced by individuals when confronted with legal but irresponsible or illegal but responsible behaviors. Under those conditions, what should one do? What will influence what behavior the manager chooses? These issues are cogently discussed by Dan Dalton and Richard Cosier in a seminal article published in Business Horizons (May-June 1982). For example, U.S. companies are allowed to “dump” products in other countries that do not pass product quality laws in the U.S.

Regarding another angle on this point, I showed a recent FEMBA (Fully Employed MBA) class a video of John Stossel’s “The Blame Game,” which shows many incidents of people loopholing through Social Security and Workers Compensation laws in order to obtain funds. Every student in my class was morally outraged at the unethical but legal behavior of the individuals profiled.

Current discussions have moved the arena by suggesting that being ethical may involve living to a standard that exceeds that required by law. If you look at the websites of such companies as Nike and Reebok (former examples of “bad” behavior), you will see that they engage in solving some very significant problems to promote social justice (a highly ethical practice): 1) through paying employees to perform community service; 2) matching with cash the hours that employees spend volunteering. One would have a hard time finding such actions prescribed in the law.

Photo: Georgios M.W.

Finally, if we look at some of the legal decisions on liability, we might question how ethical the law is. For example, an individual was awarded $7 million after getting run into while riding his bike. The court found the bike manufacturer liable because it had failed to put a disclaimer on the bike that riding at night without a light “might be” dangerous. Such a potential event was determined not to be an obvious danger. One might discount this ruling as an exception, but the many similar anecdotes that can be catalogued suggest that the law is not applied the same way to all groups of people. Rather than bring up historical issues, I will refer to more contemporary debates as to whether capital punishment is equally applied across racial groups, or if medical care is equally delivered across social-economic classes. Current practices for each follow the law, but there is significant argument about whether all the behaviors are ethical.

Which brings us to efforts to encourage the adoption of U.S. moral principles in other cultures (remember, America starts at the Arctic Circle and extends south to Tierra del Fuego). I recall almost 30 years ago when the United States was first criticized for our “ethical imperialism” for pushing our morality on other countries through such legislation as the Foreign Corrupt Practices Act of 1977. And yet, we have been known to “shelve” this moral righteousness when it serves our purposes (e.g., women soldiers not allowed to drive in Middle Eastern countries that we are defending).

So, I leave you with this final exam on ethical behavior. What would you do in the following situation: I was born in Morocco, a country in North Africa. I was born to U.S. citizens, but before the law of “jus soli” which automatically grants full citizenship for being born to U.S. citizens on foreign soil. So, when an affirmative action form has a box for African-American, should I check it or the box for white (my skin color during the winter)?

Ray Valadez, EdD

It is up to each and every one of us to teach ethics in our courses. Some of us will have to be more creative than others because of the subjects that we teach. In my international business courses, I begin the course on the first day with a discussion on an article written a few years ago, but one that still holds the essence of some of our dialogue. The article, “Values in Tension,” by a highly respected author in business ethics, Thomas Donaldson, appeared in the September/October issue of the Harvard Business Review in 1996.

In essence, Donaldson reviews the extreme philosophical views of cultural relativism and an absolutist view, or what he calls “ethical imperialism.” When making business decisions in foreign lands, he suggests three guiding principles in balancing the extremes: respect for core human values, respect for local traditions and the belief that context matters when deciding what is right and what is wrong. In examining the core human values, one cannot help but look at our Christian experiences and beliefs.

As for myself, I believe each individual has to have a moral compass. More importantly, our future captains of commerce (as I call my students) must be reminded, if not guided, in establishing their moral compasses, not only in their personal lives, but also in their business decisions. As some of you have more expertise in decision making, I will defer to you to help our students understand the decision process. But in my classroom, I review the need to keep our Judeo-Christian ethical basis as the guidepost in business decisions.

The simple truth lies in perception. And there is nothing wrong with our perception as a Christian university. We have and should continue to promote our way of life. After all, is our Christian belief not part of our university’s mission statement? And since when do we rely on the law to establish our ethics?

Ariane David, PhD
Organization Theory and Management

Ethics training has permeated contemporary organizational, political, and educational life in an attempt to prevent or remedy malfeasance and the appearance of malfeasance. Whether this is a reaction to ongoing corporate and political scandals and high profile lawsuits or just a new trend, current ethical training is legalistic, and compliance is focused and based on the notion that what is within the law or the rules is ethical. Conversely, it implies that what is ethical will naturally be codified as law. In addition, there is the assumption that what needs to be taught to students and employees is conformity to rules (Garofalo, 2003[1]). We judge the ethics of an elected official by whether she/he stays within the bounds of the law, which in some cases involves splitting minute hairs. If the courts decide that no law was broken, then we say that no wrong was done. But is this true, or is it possible that ethics has less to do with compliance than it does with a fundamental distinction that focuses on the effects of actions and the rationale underlying those actions?

Kant’s criteria for judging the ethicality of actions coheres with the latter. In his famous aphorism, he states, “Act according to a maxim that you can wish to be universal law” (Garafalo, 2003, p. 491). This statement implies that we must first be aware that those maxims or principles exist and then discover what they are. Additionally, we must then determine if we would wish those principles to apply universally to all, including ourselves. Such a proposal for ethical behavior cannot be codified, nor is it a compliance issue. On the contrary, in Kant’s view, the essence lies in the ability of individuals to look inward and steadfastly examine the very core of their values and their most revered, deeply held beliefs (Chan & Garrick, 2002[2]).

Likewise, according to Foucault, the foundation of ethical behavior lies in what he called freedom, not freedom brought about by the act of liberation, but freedom that arises out of the ongoing practice of personal growth (Marshall, 2002[3]), i.e., the examination of one’s closely held assumptions (Chan & Garrick, 2002; Kienzler, 2001[4]).

According to Kienzler, identifying and questioning assumptions is only one of the four aspects of critical thinking that undergird ethical thought. Other aspects are to seek diverse points of view and alternatives, to make connections with people and among arguments, and to become actively involved (Kienzler, 2001).

A prime example of the division between the teaching of ethics as lawful behavior and the practice of ethical thought as described by Kant and Foucault can be found in the practice of slavery. Until relatively recently and for millennia (although Bales[5] would argue that slavery is alive and well even today), slavery was a morally and ethically accepted practice. “For much of history slavery was seen as a reasonable, legally sanctioned action reflecting a divinely ordained order…” (Bales, 2004, p. 60). Even religious paragons such as Augustus and Aquinas fully endorsed the practice (Bales, 2004). And while individual voices spoke out against it for hundreds of years, the majority of people adhering to culturally entrenched ethical thinking were not swayed. The view that slavery was an ethical practice remained immutable until the second half of the eighteenth century when, in spite of its legally and ethically sanctioned position, the movement questioning the practice of slavery reached a critical mass (Bales, 2004). This rethinking culminated in what Walt Whitman called, “the greatest moral convulsion of the earth” (Bales, 2004, p. 59). This moral convulsion resulted in the de-legalizing of slavery in the United States. Yet, the laws did not appear out of a spontaneous consensus of the masses, but were the result of the early-on questioning by a few who felt compelled to examine the assumptions, values and beliefs that formed the foundation of existing codified ethical thought regarding slavery.

Thus, teaching people to behave within the laws and rules does not teach them to “see” beyond the individual or group thinking that might ultimately be found to be unethical. It cannot show them what in their society needs to change, nor can it show them how to make the determination whether or not the ethical rules are themselves ethical. While blind compliance follows on the heels of thoughtful law/rule making, only through the practice of critical thinking can a society come to question its own practices and eventually move beyond its ethical perceptions. Critical thinking thus becomes the fundamental tool in the distinction between ethical and non-ethical behavior.

We have passed the time when ethical law making is the responsibility of a few people. The complexity of our world requires that we exercise our prerogatives as critical thinkers and ask the question, “What, like slavery, might we as a society (or I as an individual) be taking for granted at this moment that could, while lawful and widely accepted, be hurtful to others and fundamentally unethical?” As ethical beings and educators, we cannot wait for mass consensus to change the laws. We must adopt the position that the responsibility for creating an ethical world lies with us.

[1] Garofalo, Charles. Toward a global ethic: Perspectives on values, training and moral agency. The International Journal of Public Sector. 2003. Vol. 16, Iss. 7; pg. 490.

[2] Chan, Andrew, Garrick, John. Organization theory in turbulent times: The traces of Foucault ethics. Organization. Nov. 2002. Vol. 9, Iss. 4: pg. 683.

[3] Marshall, James. Micel Foucault: liberation, freedom, education. Educational Philosophy and Theory. Vol. 34. No. 4, 2002.

[4] Kienzler, Donna. Ethics, critical thinking, and professional communication pedagogy. Technical Communication Quarterly. Summer 2001. Vol. 10, Iss. 3: pg. 319.

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Graziadio Business Review is an online journal that delivers relevant business information and analysis for business, government, and non-profit managers. From accounting and finance to ethics and work/life balance, the Graziadio Business Review extends current business debates in new directions that you can use to advance your business and professional career.
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