Friday, January 27, 2006

Revisiting the Ethics Issue

Way back in December I posted on the idea of an ethics consultant, and that elicited a lot of discussion, some online some off. I spent some time thinking more on the idea and wanted to catalog some of those thoughts. (In the blogging world we expect fast answers and immediate gratification, but in the real world my brain needs to absorb and consider information.)

My brother is a pretty smart guy with a strong business background. He's more of a numbers person and works deep in management theory, so I put this question in front of him and he gave me quite a bit to chew on. First, he asked how to make such a position operational? Do you really want to run all decisions through an ethics person (or department) in addition to all the other people already involved? What would this do to a company's ability to be competitive?

He also pointed out that many companies have ethical codes that act as the basis of their professional conduct. Violate those codes and you'll be out looking for a new job. He posits that the ethical lapses such as those at Enron and Tyco are by "bad seeds." That is, the majority of American business leaders do, in fact, act ethically and we only hear about the bad ones. An extension of that thinking is that Sarbanes-Oxley is overkill, but that's another discussion.

Making this position operational in a large organization is certainly difficult, but if it's a board-level person this would only deal with decisions made that high up in the company. Yes, I know, everyone wants a seat at the table. Plenty of communications professionals out there say that a communications person, at the same seat, would be of far more value and provide a similar kind of service. That is "if you make this move it's going to be a PR nightmare." Which begs the question: are ethics and PR the same thing?

But back to my brother's questions. On his last one I can't entirely agree. Once a person reaches the top of a company, whether that is the CEO or any other board position, they are at the pinnacle of their career. By that I mean they have worked their way up through the ranks, been promoted and rewarded, and developed their personal code of ethics along the way. They built on what worked and discarded what failed, just as we all do. So what does the behavior at the top tell us about the ladder on the way up?

Adam Shostack seemed to be grappling with the same question when he wrote:

Ethics comes from within. How you were raised, and how you view the world. A consultant is unlikely to be asked the right questions about the right problems. So to make good use of an ethics consultant, you almost have to pay them to roam the halls looking for trouble. What ethical consultant could take that sort of assignment in good conscience?

What's more, ethics comes from leadership, and specifically, leaders who make hard decisions in ethical ways. Outsourcing ethics may send the message that ethics is something for someone else to worry about.
I agree with him about outsourcing, this probably should be an internal person, a sort of ombudsman inside the company. Rob Sama wrote an interesting piece that attempts to define ethics as different from morality, but comes to the same conclusion about where a person would have to sit.

That said, Brad Feld has a great idea. He's a VC from the west coast who tries to instill a sense of community in his portfolio companies by encouraging them to donate money to charitable causes from the very beginning.

A former colleague, Rich Polt, started a PR firm on this very idea. He looks for companies that have a degree of community service built into their DNA.

Then there is Google, which still professes to "do no evil," and recent actions seem to suggest it's trying to do just that. But as I noted before, evil for one company is good for another.

Adam is right, ethics comes from within. So who is raising tomorrow's top CEOs?

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