Thursday, January 8, 2009

CORPORATE ETHICS

ETHICS

By

VIKRAM KARVE



Can Ethics and Business co-exist? Or are the two mutually exclusive?

Is Ethics relevant in Business Management in today’s world? Or is "Business Ethics" an oxymoron, not relevant in today's business and corporate environment?

Is there such a thing as Ethical Fitness?

When recruiting new people, or promoting/appointing persons to senior / sensitive positions, a number of attributes ( Hard Skills and Soft Skills) like Professional Competence, Managerial Proficiency, Domain-specific or Technical skills, and pertinent soft skills comprising leadership, communication, behavioural and emotional aspects, and even physical and medical fitness are assessed, evaluated and given due consideration.

But does anyone evaluate a candidate’s Ethical Fitness before recruitment or appointment?

No, I am not talking about the routine verification of antecedents or background integrity checks. I am talking of assessing Ethical Fitness.

Ethical fitness refers to ensuring that people are in proper moral shape to recognize and address ethical dilemmas. Ensuring Ethical fitness in a proactive manner will result in preventive, rather than corrective, Ethical Management.

Before launching any inquiry pertaining to the concept of Ethical Fitness, it is necessary to explore the moral dimension. Moral development is a prerequisite to ethical behaviour; in fact, a sine qua non for ethical fitness. Kohlberg offers a handy framework for delineating the stage each of us has reached with respect to personal moral development.

Stage 1. Physical consequences determine moral behaviour.

At this stage of personal moral development, the individual’s ethical behaviour is driven by the decision to avoid punishment or by deference to power. Punishment is an automatic response of physical retaliation. The immediate physical consequences of an action determine its goodness or badness. Such moral behaviour is seen in boarding schools, military training academies etc. where physical punishment techniques are prevalent with a view to inculcate the attributes of obedience and deference to power. The individual behaves in a manner akin to the Pavlovian dog.

Stage 2. Individual needs dictate moral behaviour.

At this stage, a person’s needs are the person’s primary ethical concern. The right action consists of what instrumentally satisfies your own needs. People are valued in terms of their utility. Example: “I will help him because he may help me in return – you scratch my back, I will scratch yours.”

Stage 3. Approval of others determines moral behaviour.

This stage is characterized by decision where the approval of others determines the person’s behaviour. Good behaviour is that which pleases or helps others within the group. The good person satisfies family, friends and associates. “Everybody is doing it, so it must be okay.” One earns approval by being conventionally “respectable” and “nice.” Sin is a breach of the expectations of the social order – “log kya kahenge?” is the leitmotif, and conformance with prevailing ‘stereotypes’ the order of the day.

Stage 4. Compliance with authority and upholding social order are a person’s primary ethical concerns.

“Doing one’s duty” is the primary ethical concern. Consistency and precedence must be maintained. Example: “I comply with my superior’s instructions because it is wrong to disobey my senior”. Authority is seldom questioned. “Even if I feel that something may be unethical, I will unquestioningly obey all orders and comply with everything my boss says because I believe that the boss is always right.”

Stage 5. Tolerance for rational dissent and acceptance of rule by the majority becomes the primary ethical concern.

Example: “ Although I disagree with her views. I will uphold her right to have them.” The right action tends to be defined in terms of general individual rights, and in terms of standards that have been critically examined and agreed upon by the whole society. (eg) The Constitution. The freedom of the individual should be limited by society only when it infringes upon someone else’s freedom.

Stage 6. What is right is viewed as a matter of individual conscience, free choice and personal responsibility for the consequences.

Example: “There is no external threat that can force me to make a decision that I consider morally wrong.” An individual who reaches this stage acts out of universal ethical principles.

Moral development is in no way correlated with intellectual development or your position in the hierarchy or factors like rank, seniority, status, success or earnings, salary, material wealth. In the words of Alexander Orlov, an ex-KGB Chief, “Honesty and Loyalty may be often more deeply ingrained in the make-up of simple and humble people than in men of high position. A man who was taking bribes when he was a constable does not turn honest when he becomes the Chief of Police. The only thing that changes in the size of the bribe. Weakness of character and inability to withstand temptation remains with the man no matter how high he climbs.” Ethical traits accompany a man to the highest rungs of his career.

In a nutshell the governing factors pertaining to six stages of Moral Development which determine Ethical Fitness may be summarized as:

FEAR – Stage 1
NEEDS – Stage 2
CONFORMANCE – Stage 3
COMPLIANCE – Stage4
CONSENSUS – Stage 5
CONSCIENCE & FREE WILL – Stage 6

Before we try to delve into exploring how to evaluate Ethical Fitness, let us briefly ponder on the concepts of Ethical Susceptibility and Ethical Vulnerability.

Ethical Susceptibility is your inability to avoid ethical dilemmas. Ethical Susceptibility is environment dependent (on external factors) like, for example, your job, your boss, colleagues and subordinates, or the persons around you, or even the ‘prevalent organizational culture’.

Ethical Vulnerability is your inability to withstand succumbing in the given ethical dilemmas /situations. It is dependent on your internal stage of moral development in the given ethical situation.

Whereas being in an ethical dilemma is not in your control, to act in an ethical manner in the prevailing situation is certainly in your control.

Ethical vulnerability is a measure of the ease with which a man be ethically compromised, especially in an ethically poor climate. In situations where the ethical susceptibility is high, morally strong people (ethically non-vulnerable) should be appointed and conversely, only in jobs/situations where ethical susceptibility is low should ethically vulnerable persons be permitted.

If the environment is not ethically conducive, a person can intellectually inwardly reach stage 6 but deliberately outwardly masquerade and remain morally at stage 4 as he may find that he has to sacrifice too much to reach stage 6. This can be particularly seen in most hierarchical organizations where most “smart” employees make an outward preference of being at stage 3 or 4 (Conformance and Compliance) in order to avoid jeopardizing their careers, even if internally they have achieved higher ethical states. This Dr. Jekyll and Mr. Hyde schizophrenic moral approach is at the heart of many ethical dilemmas people encounter in their professional lives and may result in internal stress due to ethical confusion.

Whenever two individuals at different stages of moral development interact with each other, both of them try to force or manoeuvre the other into their own appreciation of the ethical situation, thus leading to conflict.

In a formal hierarchical setup, the players in the chain may not be at similar stages of moral development thereby leading to ethical dissonance in the system. Where the ethical susceptibility is high, morally strong people (less vulnerable) should be appointed and conversely, in only such jobs where ethical susceptibility is low should ethically weak persons be permitted.

What is your stage of personal moral development?

Be honest with yourself and recall the decisions you made in recent ethical situations.

The six stages of moral development are valuable landmarks as they tell you approximately where you are and what changes you will have to make in yourself to move to a higher level of moral development. The ultimate goal is to engage in ethical decision making at stage 6.

However, the level of moral development you do reach will depend on your ethical commitment, your ethical consciousness and your ethical competence.

Food for Thought

What do you do if your boss is at a lower stage of moral development than you?

Do you masquerade and make pretence of being at the “appropriate” stage of what moral development and practice situational ethics to reap maximum benefits?

This Dr Jekyll and Mr. Hyde schizophrenic ‘situational ethics’ approach may cause your outer masquerade to turn into inner reality.

Do you want that to happen? Think about it!

Is there a need to assess Ethical Fitness in business and managerial situations?

Or is "Business Ethics" an oxymoron, not relevant in today's business environment?

Most importantly, can Ethics and Business co-exist? Or are the two mutually exclusive?

Dear Reader, what do you think? Please comment.


VIKRAM KARVE

Copyright © Vikram Karve 2009
Vikram Karve has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this work

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