Ethics

At some point in my career, I realized that ethical behavior is more than mere compliance with the law. For example, reflecting back on my career, I now wince that as a twenty-something I was the manager of a local consumer finance company office. We typically made loans to individuals who were unable to secure loans through more conventional means, e.g., their bank or a mortgage company. Often these individuals were considered high risk and their capacity to repay a loan was uncertain. (Sound like the housing bubble and credit crash in 2007/2008?) Nevertheless, for interest rates between 18 percent and 36 percent, these individuals might secure a loan through us. What I/we did was legally compliant. Regardless, looking back now, I realize there was something significant missing in my thinking and behavior.

Mine may not be an example that you find ethically challenging. Perhaps, it might be the “hard sell” of certain sweepstakes marketers to senior citizens, or buying goods made by people in sweatshops beyond our borders, or the sale of dangerous or ineffective drugs, medical devices, foods, pesticides or other products to overseas consumers. Perhaps, it is the current socio-political discourse and alternative facts. No matter what your personal ethical “pinch points,” the fact is that compliance-based ethical codes generally are not sufficient for most individuals—or organizations.

Compliance-driven strategies focus on externally imposed standards, with an expectation that the fear of punishment will prevent misconduct. Integrity-based strategies encourage responsible self-governance guided by principles and ideals. For me, principles embody the concept of virtues, not values. For, although we often talk of values in organizations, the reality is that one can value anything, including “getting ahead at all costs.” Virtues, on the other hand, are about integrity, about the goodness of our behavior. They include truthfulness, respect, tolerance, fairness, social responsibility, service, and others. Organizations need to develop and foster a code of ethics that includes both compliance and integrity-based considerations.

Working within the law is a crucial but insufficient standard. As someone stated so well, “Avoiding punishment is not the highest calling for business.” Or, as former SEC Chairperson Richard C. Breeden is reported to have said, “It is not an adequate ethical standard to aspire to get through the day without being indicted.”

Recently the Better Business Bureau held its annual Torch Awards for Ethics luncheon. My congratulations to those organizations, past and present, that have been recognized for exemplifying outstanding ethics. For those of you who are unfamiliar with the Torch Awards, please click here to learn about their Six TRUST! Principles of Ethical Enterprising.