Ethical Humpty Dumpties
Enron, WorldCom, Arthur Andersen, Tyco, Phar-Mor, FINOVA, MiniScribe, Bausch & Lomb…and the list can go on of companies embroiled in fraud, scandal, and corruption over the years. Martha Stewart has become an infamous household name because of her insider trading activities. Kenneth Lay, Andrew Fastow, Jeffrey Skilling are all now appealing very long sentences for fraudulent accounting practices for personal gain. What has caused these scandals, which have taken down highly reputable companies touting codes of ethics that stand out among the best in commerce?
Humpty Dumpty has fallen once again and has exposed the weakness of ethical lapses before the entire world with leaders now living in the GreyBar Hotel (prison),[1] attempting to salvage whatever is left of their reputations as leaders of industry. What have we learned from these events? Enough to prevent our leaders from falling further? Now it is Governor Spitzer and a number of other public figures who make recent headlines and show how far we have fallen in personal and organizational ethics. How do we handle ethical lapses? What steps can we take to prevent more of them? Where do we start?
Ethical Theories
Ethical philosophers have derived a number of ways of approaching ethics. The word ethics comes from the Greek (θικ?ς) meaning “the theory of living” [2]Some have divided it into several branches: or “a system of value and custom instantiated in the lives of particular groups” [3] that articulates the morality of the organization. In many ways, it goes beyond individuals groups or organizations to which individuals belong. It does not dismiss individual ethics, but incorporates individuals within an ethical framework of a group setting.
- Normative Ethics – Moral standards that make a distinction between right and wrong. It encompasses the branches of ethics consisting of virtue, duty, and consequences. [4] Normative ethics considers the norm for society or what ought to be, that is “Stealing is wrong and should be punished.” Normative ethics encompasses several theories among which are Consequentialism, Virtue,and Deontology. [5] Consequentialism is the theory of ethics that defines moral right or wrong as dependent solely on consequences. [6]
- Virtue theory is defined by its name and attempts to answer the question, “How should one live?” [7] Based on Aristotle’s model of virtue, it opposes the approaches of consequentialism and deontology and focuses on the good and humanity. We live virtuous because we want to attain goodness and happiness (Aristotle’s eudaimonism). It also looks to outcomes: the kind of character resulting from living out virtues.
- Deontology approaches ethics from inherent right and wrong. It suggests moral obligation, right, or duty to do the right thing. Emmanuel Kant promoted this approach with his emphasis on duty and obligation as categorical imperatives. He held to a universal law for ethics in treatment of individuals so that a person acts out of maxims as a “lawmaking member of a kingdom of ends.” [8]
- Meta-ethics – The analysis of ethical statements, such as truth claims, their emotional expression, whether they are absolute or relative to a society, individual, or culture. [9]
- Applied ethics – The application of ethics to real life situations. Aristotle championed such approach, dividing ethics into two parts: intellectual and moral virtue. To Aristotle, they must co-exist.
- Ethics of Expediency – Although expediency is not among the approaches ethicists often discuss, it is in reality an approach to ethics. When Jesus stood before Pilate, Pilate sought a way out because of his assessment of Jesus’ innocence. He exercised the ethics of expediency by offering an optional release of Barabbas instead of Jesus. Herbert Spencer wrote of it in his work The Principles of Ethics in which he associates expediency with Bentham and Mill in their rejection of divine commands for ethical conduct. [10]
Premises For Individual and Organizational Ethics
One of the early great works by the theologian Aurelius Augustine gives a lengthy space to the Great Babylon, the city of great confusion. Augustine writes, “In Assyria, therefore, the dominion of the impious city had the preeminence. Its head was Babylon – an earth born city, most fitly named, for it means confusion.” [11] Augustine described the bitter battle between the City of Men and the City of God. It is a battle between confusion and truth, ethical confusion with a myriad of ethical theories versus the code of ethics with its source in God. The City of Men built their towers then and builds their skyscrapers now. The City of Men perpetrated confusion with their tongues then, and it continues the same tradition now with double-talk and a post-modern Babel.
There are two premises arising from this Augustinian principle.
Premise #1 – Individuals comprise organizations. Although the several laws of democracies worldwide treat organizations (particularly corporations) as separate entities apart from the individuals who own them, these organizations are not living beings in themselves. They could not exist apart from their living owners.
Premise #2 - There is no distinction in its application between individuals and organizations. When individuals organize, they in effect make a treaty or contract with one another to subscribe to a code for the good of the organization. They, inform the organization’s ethics. The ethics of the organization are the ethics of the individuals forming it. This must be the case for the survival of the organization. Otherwise, conflicts and disengagement arise, and the organization would dissolve. The organization cannot form its own ethical framework. Rather it depends on the individuals managing it and giving it an ethical position.
Back to the Individual
Over 1,600 years after Augustine, another figure arose from the world of business, Peter F. Drucker, and said essentially the same thing as Augustine concerning the reach of ethics.
Drucker’s approach to ethics aligned with Augustine in the specific instance of application. He emphasized a single code of ethics and their equal application to individual and organization alike. He places emphasis on the individual as the primary mover of ethics rather than on the entity of the organization. He writes:
“ There is only one ethics, one set of rules of morality, one code, that of individual behavior in which the same rules apply to everyone alike. And this fundamental axiom business ethics denies.”
He criticized executives for their assignment of ethics to “casuistry” by asserting, “ethics for them is instead a cost benefit calculation involving the demands of individual conscience and the demands of position – and that means that the rulers are exempt from the demands of ethics, if only their behavior can be argued to confer benefits on other people.” [12]
In saying this, he becomes almost prophetic of the Enron scandal, whose executives appeared to reason in such a manner for relaxing their code of ethics so that cronies could benefit. His prophetic indictment of such behavior exposes the convoluted and corrupt reasoning behind the waiver of Enron’s code of ethics. In their attempts to cast benefit toward their colleagues and to boost the company’s stock price, they ruined the lives of hundreds, if not thousands, of ordinary people. His contribution to modern ethical theory was to bring back to organizations the essential that ethics begins and ends with the individual.
Ethics in organizations begins with the individual and individual leadership by example. An internal ethical core provides the basis for action and influence within groups and organizations. Organizations do not have an ethical framework of themselves. Society and organizations within them start becoming ethical through the individual. The individual must be grounded in ethics and moral practice for organizations to succeed. Without individual accountability to an ethical core, there can be no ethical leadership, ethical organizations, or ethical societies.
[1] As heard on the Lee Rodgers Show on KSFO radio, San Francisco.
[2] ______________, Ethicsin Wikipedia: The Free Encyclopedia, http://en.wikipedia.org/wiki/Ethics.
[3]Crisp, Roger (1998). Ethics. In E. Craig (Ed.), Routledge Encyclopedia of Philosophy. London: Routledge. Retrieved July 07, 2006, from http://www.rep.routledge.com/article/L132.
[4] _______________, Ethics in The Internet Encyclopedia of Philosophy, Fieser, James and Bradley [Ed], http://www.utm.edu/research/iep/e/ethics.htm#H2 Dowden,
[5] _____________, Normative Ethics, Wikipedia: The Free Encyclopedia, http://en.wikipedia.org/wiki/Normative_ethics
[6] Sinnott-Armstrong, Walter, "Consequentialism", The Stanford Encyclopedia of Philosophy (Spring 2006 Edition), Edward N. Zalta (ed.), URL = .
[7] Athanassoulis, Nafsika, Virtue Ethics, The Internet Encyclopedia of Philosophy, http://www.iep.utm.edu/.
[8] _____________________, Deontological Ethics in Wikipedia: The Free Encyclopedia, http://en.wikipedia.org/wiki/Deontology.
[9] ______________, Ethicsin Wikipedia: The Free Encyclopedia, http://en.wikipedia.org/wiki/Ethics.
[10] Spencer, Herbert, The Principles of Ethics (Indianapolis: Liberty Fund, 1978), online edition.
[11] Augustine, Aurelius, The City of God (Rio, Wisconsin: The Master Christian Library, Version 8.0, 2000), 686
[12] Drucker, Peter F., The Daily Drucker: 366 Days of Insight and Motivation (New York: HarperBusinesss, 2004), 130.
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