The Importance of Ethics in the Global Marketplace
At no time in history has the expression, "It's a small world" been more true than it is today. Television, telephone, the Internet, and high-speed air travel have brought the peoples of the world together in a way in which they never have been before. In an instant, a man in New York can communicate with a colleague in Hong Kong, a woman in Des Moines can watch an unfolding revolution in Southeast Asia, and a student in Seattle can access records at the University of Canberra. Not only have these changes brought us closer together culturally and socially, they have also forged every tighter links among the economies of the world. No longer does an American or a French corporation operate solely within the confines of its own nation. Corporate executives from one country must take into account the needs, desires, and expectations of their clients, and potential clients, across the globe. And just as technology enables businesses to have greater access to international markets, it also brings them into intimate contact with their individual clients. Customers are no longer simply numbers on a balance sheet, they are educated consumers who can easily follow all the latest actions of almost any business. Companies can be compared to one another, and held accountable for their actions whether good or bad. A new social conscience has dawned; an informed public demands that all of its concerns - ethical as well as economic - be met. If the businesses of today are to prosper, they must rise to meet this challenge.
Sadly, it is the very desire to achieve prosperity that has brought about much of the recent concern over business ethics. Widely circulated reports of corporate misdeeds and national scandals have created a condition the experts label "Enronitis." (Valenti, p.2) Named for the multi-billion dollar corporation that suffered catastrophic collapse last year, this new "disease" of the workplace underscores the high costs of seeking profits at any price. For Enron's remarkable fall not only emptied corporate coffers and major league shareholders' pockets, it also devastated the "little man." Thousands of former Enron employees saw their life savings eliminated; the company stock that had formed the major part of their pension fund becoming suddenly worthless.
The resulting investigation into Enron's collapse revealed a shocking picture of unbridled corporate greed: false statements to shareholders, crooked accounting, illegal partnerships...and the list goes on. Public confidence in big business was further shaken as the scandal shed light into the dark corners of many other well-known corporations.
The good faith of the public is an often-underrated factor in corporate success. Take the case of Sears Roebuck. Not wishing to go the way of Kmart and other corporate giants who have recently found themselves in Chapter 11, the management of Sears has implemented a program that is dedicated to attaining the highest possible level of corporate ethics. As with any successful ethics plan, the Sears plan starts at home. Happy employees are as essential to a successful business as satisfied customers. A contented workforce projects a positive corporate image. Upbeat employee attitudes are carried over into their dealings with the public. They provide better service, are more considerate and attentive, and more responsive to their clients' needs. A well-served customer is a loyal customer, returning to the same company time and time again.
But what creates a positive corporate culture? The key, according to executives at Sears and numerous other companies is a clear code of company ethics coupled with an atmosphere of trust. Communication between the different ranks of employees is essential. Upper Management must set an example. It must genuinely adhere to whatever code of ethics is promulgated by the company. Lip service is easily detected by lower level employees, who will do as their superiors do, and not as they say. According to Tama Starr, President of Artkraft Strauss:
Managers and supervisors are becoming more conscious of the examples they set, and this resonates throughout. Quality people would always rather be in a workplace where standards - all standards are high. Then they know they aren't just marking time in life."
Employees who believe that their superiors are ethical are far more likely to behave in an ethical manner themselves. Much corporate misconduct derives from the poor example set by management itself. Workers feel pressured by top executives and supervisors to make up deficiencies in the bottom line by any means available. An unscrupulous CEO, such as Albert Dunlap of Sunbeam, can set a tone of aggressive, anything-goes capitalism that can veer dangerously close to mismanagement and malfeasance. (Valenti, p.3) Says Linda Trevino, a Professor of Organizational Behavior at Penn State's Smeal College of Business Administration:
Most people will try to do what they're being asked to do because they want the company to succeed and they want to feel good about achieving their goals. Most people do not have the moral development to resist those pressures."
If the success or failure of a company's code of ethics is based on its employees' moral fiber, how then can a business ensure appropriate conduct on the part of its personnel? According to Organizational Integrity, a survey released in May 2000 by KPMG, three out of four employees have observed illegal or unethical conduct in the workplace. This despite the fact that five out of six employees said that their company had an ethics program in place. (Seglin, p.3) Clearly, an ethics program in and of itself is not enough. To return to the example of Sears, a corporation must make clear its goals and be accessible to its employees. The appointment by Sears Roebuck CEO of William Giffin - a thirty-one-year company veteran who worked his way up the corporate ladder - as head of a department of ethics signaled to employees the importance proper conduct would hold in the corporate culture. (Bresnahan, p.3) Among other innovations, an ethics hotline was established; a direct link to the ethics department that now fields more than 15,000 calls a year. (Bresnahan, p.3) Giffin is readily accessible to all company employees, personally handling the most complex questions of ethical behavior. His "[Ethics] team has become a part of the [day-to-day] process." (William Giffin - Bresnahan, p.3)
But what is ethical behavior? Is it simply the sort of conduct that prevents the commission of illegal acts thus sparing the headache of an expensive lawsuit...or worse? Well, in part, but ethics is much more than that. A proper code of ethics begins with the personal values of individual employees, basic everyday questions of right and wrong. Is it all right to take home office supplies? To pad expense accounts? To lie about the quality of a product or service? Each one of these decisions represents a moral choice. In each case, the person who commits the act weighs the relative consequences and benefits. Perhaps employee theft is a symptom of a larger issue - the mistreatment of personnel. Workers who feel they belong to a corporate family are far less likely to see themselves and management as a case of "us and them." Employees who believe that the company values their opinions and respects their advice are not only much more likely to tender that advice, but also much more likely to engage themselves in matters of concern to the company as a whole. Problems can be threshed out at regular personnel meetings, and employees can offer their suggestions for improvement. Such corporate harmony can reap its rewards both inside and outside of the company. According to KPMG, eighty percent of employees believe that customers will recommend a company whose management they perceive as ethical. (Seglin, p.4)
Yet a harmonious business environment is only the starting point for the implementation of a successful ethics program. Says author Alan Weiss in Making it Work:
If management is art and science, the study of ethical problems lies solidly in the former. So, as the need to address ethical challenges has arisen, the "easy answer" has been unavailable. Management has been forced to consider serious, specific, and thoughtful responses."
According to noted behavioral experts, among them sociologist Max Weber, and human relations consultants Mayo, Fayol, and Maslow, a successful organization is guided by a leadership that values the three qualities of Efficiency, Effectiveness, and Economy. Each of these attributes contributes in its way to the smooth functioning of any and all human institutions, be they public or private corporations, governments, charitable organizations, etc. (Burke, p.4) An efficiently run business possesses a cogent structure with a clear hierarchy, and parts that contribute usefully to the whole. A clear ethical program can help employees to understand their place in the corporate culture. Noticeable guidelines bring reason out of chaos. A worker understands his place in things. He feels a part of the great corporate family. A person who feels included will not only likely be a…