How to Manage Corporate Ethics

Five sense making lessons

Nach vierzig Jahren Erfahrung als Professor für Wirtschaftsethik reflektiert Kirk Hanson sein Engagement kritisch. Seine fünf «sense making lessons» teilt er mit unserer Community, die wir hier in Kirk’s englischem Originaltext wiedergeben. Seine Einsichten hat er in seinem Buch «Rotten. Why Corporate Misconduct continues and What to Do About it» ausgeführt.  

When I retired recently, a younger leadership ethics scholar asked me what I had learned over that time that changed my approach to the teaching and practice of business ethics. Forty years ago we thought the “problem” of business ethics could be solved simply by teaching employees good ethical concepts. We taught business students and even a few business executives philosophical concepts such as utilitarianism, deontology, and justice theory. We have now learned five “sensemaking” lessons about business ethics that lead us to a very different approach– whether we are teaching business school students or practicing ethics in leading organizations.

The first lesson was that ethical reasoning for executives and business students needs to be more informal and presented in “common sense” terms. Gradually we developed an approach which asked five simple questions: 1) which choice produces the most good; 2) which choice best respects the rights of those affected and the duties of the actors; 3) which choice is fairest to all affected; 4) which choice contributes most to the common good; and 5) which choice best represents individuals using core virtues such as honesty and integrity. This approach helps present business ethics as an everyday aid to decision making.

The second lesson was that all of us are influenced by our environment, particularly the organizational culture within which we work and live. This made creating and sustaining an ethical corporate culture a major concern of business ethics. It also made “corporate purpose,” one of the prime dimensions of culture, an increasingly important concept. We came to believe that every business needs to have a purpose beyond making money, lest employees believe cutting ethical corners in search of higher profits will be tolerated - and even rewarded.

The third lesson was that personal character, including one’s moral character, is formed over a period of time - and is unique to the individual. This led to a concern for the pressures placed on individuals in corporations – by their bosses and by the organization’s systems. Not all employees can resist the pressures or temptations to do wrong. This has led to the better design of systems and controls and to quicker action to remove managers who tolerate or encourage unethical behavior.

The fourth lesson was the importance of the specific role one plays in an organization or social setting.  Every role – as a sales agent, a financial analyst, or supervisor – presents a set of unavoidable ethical choices and dilemmas. Alerting individuals who take on roles to be aware of those choices and unavoidable dilemmas helps them prepare to handle them, and leads to better decisions under time pressure.

The fifth lesson is that individuals often know the right thing to do, but don’t do it. A cascade of new insights about what is called behavioral ethics is the most recent lesson we have all learned. We knew about the “bystander effect” but now we know of a dozen other behavioral tendencies and concepts which lead individuals to act unethically in some circumstances. The study of behavioral ethics also provides solutions to many of these tendencies.  

Kirk O. Hanson was until 2018 Professor of Social Ethics at Santa Clara University in California. He was also the executive director of the Markkula Center for Applied Ethics at Santa Clara, working in nine fields of professional ethics including business He is also an emeritus senior lecturer at Stanford University and consults with universities on the design of ethics initiatives. 

Hanson partnered with the Lassalle-Institut to conduct three international conferences on business ethics, held in Manila, Zug, and Silicon Valley between 2016 and 2018.