WV Executive

In his 2003 book on business ethics entitled “There’s No Such Thing as Business Ethics,” John C. Maxwell wrote, “Most people are disgusted with the state of ethics in America. They are sick of dishonesty and unethical dealings.” While most people can agree with this sentiment, agreement on a solution is an altogether different issue. Twenty-first century organizations are often faced with a workforce lacking a solid ethical foundation.

The teaching and value system assumed to be part of the American experience just one or two generations ago can no longer be taken for granted. This lack of foundational ethics teaching presents new challenges that organizations must face in order to see sustainable prosperity in the following decades. Of the many challenges, three that are important to focus on are disconnection, rationalization and legalism, all of which lead to poor decisions, allowing a culture of unethical behavior to flourish. It is only by addressing these challenges head on that leadership can affect positive change in an organization’s culture.

Disconnection
Even with a move to include all levels of the workforce in decision making, creating a more informed and educated workforce, employees today are as disconnected as ever. The mission statement of companies can be seen as a token expression to make sales and not as a set of core values by which the company measures success. Excessive executive compensation, union hyperbole and the lack of trust between employees and business owners has bred an atmosphere whereby parties believe these are entitled to benefits regardless of whether or not they are sanctioned by owners. Whether it is employees falsifying timesheets, underhanded sales techniques or the mistreatment of low-level employees, the entitlement attitude is alive and well, causing many to live in ethical gray areas—or worse.

Rationalization
By definition from Ask.com, rationalization is “finding ‘good reason’ for things that we really know are wrong.” Take for example the issue of stealing. If you ask someone if they would steal from their neighbor, you would receive a resounding “No!” However, when copyright infringement is at issue, such as copying a CD or DVD, their answer becomes more philosophical, often ending with some reasoning such as “It really doesn’t hurt anyone,” “It’s a big corporation” or that “It is too expensive for people to buy it themselves.” Regardless of the reason, rationalization presents a challenge to 21st century organizations that is difficult but must be addressed at every level as it really is as stated in the Song of Solomon—“the little foxes that spoil the vine.”

Legalism
The danger of legalism has been a topic of great debate for centuries. Both in religious and secular circles, the enactment of rules and regulations has been used to control the masses by numerous leaders in myriad circumstances. The results of legalism, however, are nearly always the same—a loss in one’s ability to reason. In today’s society, many people who consider themselves to be moral, upstanding citizens suffer from this lack of reason. The list of rules they can quote by heart seem outdated and irrelevant in today’s turbulent and chaotic economy. The ability for these people to use core values to wade through today’s issues appears to be sorely lacking and must be addressed.

In 2001, the world first became aware of the debacle at the Enron Corporation. While the incredible unethical activities of Enron executives have been repeatedly addressed by the media, what has not been addressed is the enormous part legalism played in the debacle. From top executives to commodities traders, a breakdown of moral reasoning occurred. Arthur Anderson, who was at the time one of the “Big 5” accounting firms, had given approval to Enron’s scheme that created new rules for revenue recognition. These rules allowed Enron to recognize revenue on the speculation of future earnings, which grossly overstated the profitability of the company. When faced with the outcome of these decisions, CEO Jeff Skilling stated, “We don’t break the law.” This idea that if the auditors or attorneys say it is okay then it must be okay allowed employees at many levels to throw all sense out the window and simply obey the letter of the law as they saw it. Reason had taken a backseat to legalism. According to the Canadian Broadcast Corporation, the results were disastrous with shareholders (including many hardworking Enron employees and retirees) losing an estimated $60 billion.

The Possibilities: Rising to the Challenges
Although the challenges faced by the 21st century organization are daunting, the solutions may be as simple as looking into our past. While the religious connection to our values appears to have lessened, there continues to be some degree of respect for what many consider America’s Judeo-Christian heritage. Many other religions have similar values and have had a significant effect on the American culture. Using very basic but agreed upon values as a starting point, organizations can begin a cultural shift that recognizes important core values at every level, making ethical thought and action a part of everyday life.

In order to create such a cultural shift, employees at all levels must evaluate five key areas:

• Revisit the company’s mission. In order to achieve buy-in to the core values of an organization, a revisit of the company’s mission statement is needed. One method of doing so is to throw out the old mission statement and create a new one based upon core values expressed in open meetings. While this may seem dangerous to some, the results are often surprising when leaders and followers alike realize they are closer than originally thought on what they want for the company.
• Revisit the company’s mission. In order to achieve buy-in to the core values of an organization, a revisit of the company’s mission statement is needed. One method of doing so is to throw out the old mission statement and create a new one based upon core values expressed in open meetings. While this may seem dangerous to some, the results are often surprising when leaders and followers alike realize they are closer than originally thought on what they want for the company.
• Build connectivity. Team building is vital to an organization’s long-term focus. An individual’s ability to connect with a group is important as it allows a sense of belonging in an organization, permitting a cultural shift not only at the macro level (the corporation) but also at the micro level (individual or small group) as well. Teams that include all levels of employees, from top managers to those working as line employees, should be encouraged, as communication at and between each level is important to a healthy culture.
• Demand accountability. Accountability must be the mantra at all levels. A good place to start, which sets an example for the whole organization, is through transparency. By clearly establishing goals both fiscally and ethically and by reporting the results on a regular basis, the organization can firmly establish its value of accountability at every level.
• Encourage thoughtful reflection. Mistakes will be made. When they are, over-reacting can be as damaging as under-reacting. Leaders must walk a fine line in standing firmly for the core values while allowing a learning moment through thoughtful reflection. Regardless of the end result for the particular employee, thoughtful reflection can create an atmosphere where legalism is rejected and where learning occurs. It is this type of environment that facilitates growth in ethical understanding and a deepening of belief in the core values of the organization.

The Results
The challenges facing the 21st century organizations are significant but certainly not insurmountable. While the masses may trend toward unethical behavior and diminishing values, it is important that quality organizations establish a culture that stands above the fray, shining like a lighthouse for vessels that have lost their way. By stepping up and facing the challenges head-on, leaders and followers alike can thrive in an environment that works toward a common mission, demands ethical behavior and values accountability, for it is in this culture that the 21st century organization can flourish.