Where’s the Line ?

Writing on the Boston College Center for Corporate Citizenship website, Executive Director, Bradley K. Googins, finds that, what with the meltdown in finance, corporate social responsibility is at a crossroads.

“It is clear the failure of an unregulated financial system that almost brought the house down will no doubt be followed by aggressive legislation and regulation as an antidote to calm the fears,” writes Googins. “Already there have been discussions by congressional leaders and others about using this new window to mandate new measures to address climate change, implement safeguards for food, toys and prescription drugs from China, and expand health care insurance mandates.”

He goes on to say: “So here we are at a crossroad for capitalism and corporate citizenship. The trust in a self-regulating system has been lost and the role of lobbying by the business community has been put in a very different light.”

“However, equally dangerous might be a swing of the pendulum too far toward regulation and mandates. We know already that regulations can serve as a disastrous drag on innovation and markets.”

How can business avoid draconian regulations that could stifle growth? Googins offers the following:

• Engage in “a very active dialogue in the business community, and between the business community and those of government and civil society.”
• “Create a new form of global capitalism that reflects blended values with a new respect for the role of government in providing a stronger oversight that its citizens can trust will ensure their interests are protected.”
• Restore “faith to damaged and disillusioned employees, customers, suppliers and communities… guided by active leadership, and infused with basic virtues such as humility, authenticity and accountability.”

In all, Googin concludes, these should “increase the value of capitalism to realize its potential to create a just and sustainable world.”

What do you think?

On Oct. 19, Nike ran its fifth annual Nike Women’s Marathon, in San Francisco. Runners raised some $18 million for The Leukemia & Lymphoma Society. The official winner of this year’s run was announced as Nora Colligan, of Austin, TX. Her time? 3:06.

But wait a second. Arien O’Connell, a 24-year-old school teacher from New York City ran the 26.2 miles in just 2:55:11, almost five minutes ahead of Colligan.

So why did Nike proclaim Colligan the winner? Evidently, some marathoners are more equal than others. The race was divided into two groups: the “elite” runners — the ones Nike believed actually had a chance to contend for the blue ribbon — and the schlubs just shuffling and puffing along for charity’s sake. The elites start their marathon some 20 minutes before the riff-raff start theirs.

The fact that school-marm O’Connell beat out the elite Colligan for time is certainly an embarrassing PR situation for Nike, but it also presents the company with an ethical dilemma. In a time-based foot race, the one who crosses the tape in the shortest time is the winner, end of story. Yet it seems that the company had promised a select group of runners that the winner would only be selected from their numbers. The company did attempt a lame pedal-and-fill response, saying that it “recognizes Arien O’Connell as a winner” – though not the winner.

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L’Oreal is sponsoring a new master’s degree program in “law and business ethics” at the University of Cergy-Pontoise in France, according to a recent posting in EthicsWorld.

According the the post, the international cosmetics giant has developed the new graduate degree course in association with France’s ESSEC Business School, the U.K. Institute of Business Ethics and the U.S. Ethics & Compliance Officers Association.

“This is the first diploma of its kind in Europe,” said Emmanuel Lulin, L’Oreal’s director of ethics. “Business ethics is a complex subject which needs to be addressed with humility and determination. The global leaders of tomorrow are those companies who have integrated ethics into their strategic planning but also their every-day business practices.”

But one has to wonder about a company whose advertising is designed to make women feel nervous about their looks endowing business ethics program. Some might think it a form of CSR-washing. Is it? You tell us.

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After reading our two posts soliciting readers to share their ethical lapses, BNETer Trish Harris wrote to “Where’s the Line?” noting that a couple scenarios dealt with the lapser not wanting to appear as a “snitch” or a “rat.” She writes: “Sometimes and in some professions, being a snitch is the ethical thing to do.”

Of course she’s right. In fact, it’s probably the ethical thing to do more often than not when we encounter clear wrongdoing on the part of our peers, as long as our own nefarious self-interest is not the true motive for our whistleblowing — and unless of course you’re in the mafia.

A while back, Trisha penned an article on the topic for the Institute of Internal Auditors (who, by the way are not snitches but rather play an important policing role within organizations). Published in the organization’s magazine, Tone at the Top, “A Call for Character and Integrity,” outlines the seven steps companies need to take in order to foster an atmosphere of “responsibility and accountability:”

1. Set an ethical tone at the top.
2. Promote strong and effective internal controls.
3. Establish a whistleblower policy.
4. Prevent reprisals.
5. Provide ethics and fraud training for staff.
6. Implement a confidential tips hotline.
7. Create a culture of doing the right thing.

Read the rest of “A Call for Character and Integrity” (pdf).

Last week we asked BNET readers to share their ethical lapses and what they learned them. To our surprise, several folks were offended by the very nature of the question, as if we thought ethical lapses were something to be glorified. Writes jwood:

What were you thinking? Having your readers gloat over their unethical exploits? And then select the “best?”

Not at all. In fact, we’re going ask you to rate each of the lapses, asking whether it was “understandable and forgivable,” “at the line,” or “unforgivable.” Here goes.

namfus writes:

Six years ago, I basically allowed my boss to manipulate my performance review and the HR department in order to sack me.

This ethical lapse is...

• understandable and forgivable
• at the line
• unforgivable

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martikirchmer writes:

Some years ago, in the interest of protecting my employees, I was aggressive about reporting my boss every time he bullied my co-workers or staff. He was indeed a bully — everyone agreed (including HR and his boss) but in trying to bring the problem to a head, my actions were not particularly admirable. The story ends with me (voluntarily) leaving. He is still there.

This ethical lapse is...

• understandable and forgivable
• at the line
• unforgivable

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kschroth writes

Our department head (and my boss) was a super slacker. We conducted a cue and eventually after gathering much evidence against him, made a call to the CEO of the company who was out of state. As stated above this was not received well. We were thought of as deserters. In the end, he got sacked, I moved up, managed the department for awhile before the whole company fell in.

Not sure what I DID learn, but I know that wasn’t the right way to handle it, even though it seemed so at the time. Bummer, but in corporate America it is essential to CYA whether a manager or a peon. Someone usually has something brewing. I have since moved to a smaller organization and LOVE IT!!

This ethical lapse is...

• understandable and forgivable
• at the line
• unforgivable

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And I’m not squeaky clean, either. Here’s mine:

A long, long time ago I was employed at a fashionable retail shop. I got along well with the manager, but one day found out he had been deceptive with the absentee owners — he had a number of times closed the store a couple hours early so that he could see a movie…

The ethical response would have been to call the owner and tell him. But I didn’t want to seem like “a rat.” A few months later, we had a bit of a falling out over a questionable firing. At that point I saw an opportunity for advancement and called the owner and told him about the manager’s movie-going antics, leaving a message.

It all backfired, of course. For starters, I immediately felt awful about being a rat. Then, as it turned out, the owner had already got wind of the manager’s transgression and given him a proper dressing down but forgave him because he was an otherwise competent manager and a terrific sales person. In fact, the owner saw through my little game and almost fired me for my “disloyalty” to my manager. Hard feelings; damaged relations all around.

Lesson learned: It always comes back to bite you.

This ethical lapse is...

• understandable and forgivable
• at the line
• unforgivable

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Lastly, CanadianBusine offers up a current events scenario:

We needn’t look far to ferret out some lessons. Here are two examples:

$23 billion of American taxpayer money lost, stolen or improperly accounted for in Iraq. Complete and utter disregard for the most basic procurement and supply chain management guidelines and then punishment of those who seek to bring this to light.

Sub-prime mortgage meltdown. Plenty of blame being leveled at the government for telling the banks to offer loans to squishy buyers. However, no one forced any bank to violate basic mortgage lending guidelines and then make millions in bonuses from selling this junk paper to equally short-sighted institutional investors.

This ethical lapse is...

• understandable and forgivable
• at the line
• unforgivable

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Is your ethics training effective?

That’s the question that my confrere, Lauren Bloom, an ethics trainer and the author of the eponymous blog, “Lauren Bloom’s Blog,” asks. She says:

In the wake of the subprime mortgage mess, a lot of companies will probably decide that it’s time to offer ethics training to their employees. Here’s hoping that they do it well, and for the right reasons. It’s extremely important to train employees in business ethics, but the training has to be effective if it’s going to be worth the time and trouble invested in it. Effective ethics training is interactive, specific to the ethical issues that are most relevant to the company, understandable and positive, and yields measurable results.

One wonders, though, just how the effectiveness of a company’s ethics training can be quantifiably measured. (If you have a clue, please share it with your fellow BNETers in the comments.)

In my professional, corporate career, I’ve been through a few “ethics courses” but these were mostly taken online and included rather simplistic, multiple choice questions with common sense answers.

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Have an ethics training horror story? Share it.

With all the big-shot execs of failed finance sector companies getting ripped new ones daily by the press and government officials, it seems that ethics — or maybe the lack of it — is everywhere you turn.

Ah, but let they who have not sinned cast the first stones.

Have you, for example, ever set up your boss to fail or be fired so that you could take his or her place? Lied to a VP in order to get a hated co-worker in trouble? Sweetened a deal with favors of an unsavory kind? Taken a client to a strip club? Sabotaged a project so that someone else would get blamed? Stabbed your cube-mate in the back? Offered, or accepted, a kick-back or bribe? Shared private, hurtful information about a colleague?

Share your crimes and misdemeanors in the comments and then we’ll rate them later. Be sure not to leave out any extenuating circumstances — we want to know why you did what you did, and what lessons you learned from your unethical behavior.

If you have a tale to tell but would like to remain anonymous, email us using the link below.

(Image by texturl via Flickr, CC 2.0)

In a blistering new opinion on the Wall Street meltdown, the Wharton School’s Knowledge@Wharton takes on the popular and long-held corporate shibboleth that tying shareholder interests to individual executive incentives is always good for a company, its partners and its customers. In fact, says the article, it’s at “the root of the leadership debacle that has rocked the financial services sector.”

“We ought to start thinking about whether this idea is really working,” says Wharton prof, Peter Cappelli, in Eyes on the Wrong Prize: Leadership Lapses That Fueled Wall Street’s Fall. “It seems to work for the people in charge, but is it really working for the company? It’s certainly not working in the broader society. The shareholders and the executives who have shares in the company are in trouble, but this is spilling over into the economy in a way that I haven’t seen before.”

What do you think? What should exec comp be tied to if not shareholder value?

Some are saying that the financial crisis signals “the end of Wall Street.” Does it also signal the end of the traditional, liberal concept of ethics that have dominated in the West for the past two centuries?

Even before the meltdown, University of Exeter sociologist, Edward Skidelsky, writing in the U.K. journal, Prospect, was suspicious of modern liberal ethics, based as they are on the “rights and obligations” model of John Stuart Mill and not on pre-modern, native virtues like “courage, temperance, prudence and justice,” and such old fashioned notions as “humility” and “charity.” (By “liberal,” Skidelsky refers to classical liberalism and not the set of current political beliefs and policies espoused by the political left and decried by the right.)

In Mill’s reckoning, notes Skidelsky, “neither one person, nor any number of persons is warranted in saying to another human creature of ripe years, that he shall not do with his life for his own benefit what he chooses to do with it.”

Building on Mill’s thought, writes Skidelsky, modern liberal ethics have left us with an essentially de-moralized society, one in which anything is permissible, provided it is not against a law already predisposed to permissiveness.

In short, we are society without inherent virtue; one in which Wall Street’s Masters of the Universe feel no compunction whatever about drawing down Croesus-like compensation packages, inventing “new financial instruments, creating a financial Frankenstein the likes of which we had never seen” — and which no one but the quants who devised them understand — selling high-interest, “subprime” mortgages to suckers with credit ratings so bad they can’t even finance a car and dissembling to authority when called to account.

After all, they were just doing their own thing and it was all legal, right?

Skidelsky advocates a return to pre-modern, virtue ethics. Maybe he has a point. After all, if Wall Street’s Gordon Gekkos had been able to keep their greed in check, tempering it with, say, thrift, humility, prudence and charity, would we be in this mess? Or would the new Romans merely give lip-service the virtues the way our current crop of Masters of the Universe do to “rights and obligations?”

(Image by keysofvirtue via Flickr, CC 2.0)

“Hardly a day goes by without yet another twist or turn in the credit crisis that has engulfed the U.S. financial system for more than a year,” writes former Wharton dean, Russell Palmer in an insightful op-ed piece in Knowledge@ Wharton.

Bear Stearns, one of the country’s largest underwriters of mortgage bonds, has been swallowed up. Venerable institutions such as AIG, Wachovia, Lehman Brothers, Merrill Lynch and Citigroup have brought new CEOs on board. Media reports suggest that the world’s biggest financial institutions have absorbed more than $300 billion in asset write-downs and credit losses even as home foreclosures are at record high levels and Wall Street has laid off thousands of employees…

What caused the crisis? In my view, greed was the underlying factor. Wall Street hedge funds and others are looking for any financial machination that they can find to hype their financial returns. The whole mortgage fiasco is just the latest example. The dot-com bubble of the late 1990s was another instance. Anyone with any sense knew that during the dot-com mania, you couldn’t sustain high prices for stocks on companies that had no current earnings, only losses. It was a bubble, just like the Tulip Mania that investors lived through during the 17th century. With the present subprime crisis, the people originating the mortgages had to know that the higher the risk on the mortgage terms, the greater exposure there was to the mortgage going to foreclosure. So did the people who bought the mortgages, securitized the mortgages, and so on.

It takes courage to state what, deep down, most everyone knows to be the truth when few are willing to utter it. “Speak the truth and shame the devil,” as Rabelais said. Dean Palmer has dared uttered that truth, and put his finger squarely on the crux of the issue: simple human greed all around was the single most important factor in the sub-prime fiasco.

In short, the sharks selling the mortgages thought that they could get a lot out of the little people, while the little people closed their eyes, hoping that they would pay a little and get a lot.

Who’s to blame?

(Crooked house image by alincolnt via Flickr, CC 2.0)