In Search of Ethical Professional Conduct
Corruption, bribery, misappropriation of national wealth, and other
illegal, immoral and unethical conduct continue to hinder the progress
of many countries. A "culture" of unethical behavior now prevails in
some of the poorest nations, which erodes their ability to be deal with
practically every critical issue facing them. This essay by Abraham
M. George was presented before an audience of college students and academicians
in Bangalore, India, in August 1997.
The subject before me is "In search of Ethical Professional Conduct".
It is a deep and crucial subject, and I am humbled by it, but I am equally
excited about the opportunity to speak to you. At the end of this prepared
text, I hope we can exchange our personal views on the subject.
According to a study conducted in 1985 in the U.S., unethical or illegal
conduct in Corporate America results in an estimated $40-$300 billion
a year in lost revenues to government, and in higher prices paid for
products and services by consumers. Similarly, some estimate that 20-40%
of all financial transactions in India go unreported, in the form of
bribes, illegal activity and to avoid taxes.
One way to dig into the thoughts of a vanished civilization is to
examine the words they use. Assuming that this is so, what will future
historians say about our business? More importantly, what will they
say about our society? For long-term survival, any economic system requires
a moral component. This is true of a society and even a civilization.
So, what can we say about the morality in our economic relations?
Today, many are not able to define ethics in clear terms. Calling
right and wrong a "matter of opinion" discourages many from giving serious
consideration to issues of major importance. There is a growing degree
of cynicism and moral sophistication in our society -- a sense that
all things are relative and that nothing is absolutely right or wrong.
This sense of artificial relativism suggests that absolute notions of
good and bad, right or wrong no longer apply. Contributing to this sense
of relativism is what many see as a breakdown of moral and ethical teachings
in the family and religious institutions. Too often, young people are
not being taught the virtue of telling truth and other ethical behavior,
especially through examples of daily life by their parents, and these
children in turn do not see any advantage in being ethical in an unethical
society at large.
In today's highly competitive world, it is hard to be ethical always.
There are times when the temptation is too strong or the fear of failure
is very big. I am reminded about the story of two great friends who
went backpacking into the woods. In the thick of the jungle, a tiger
confronted them. When one of them was just preparing to scare the tiger
away, and turned to his friend for help, he noticed that his friend
was unloading his backpack and getting ready to run. He asked: "Why
are you getting ready to run; the tiger is faster than us." His friend
replied; "I only got to run faster than you".
Too much of business ethics today is focused on questions of law and
policy -- questions about regulations, business practices, and legal
requirements -- such as pollution control, worker safety, truth in advertising,
employee due process, social responsibilities to surrounding communities,
and others. All of these, while they are important, are considered as
either legal or social requirements for businesses. But what gets left
out in this thinking is an adequate sense of or an emphasis on personal
values and integrity. Business does not operate in a vacuum. It is a
subsystem of our social order. Business ethics is a more personally
oriented ethics rather than a public policy or a legal contract. Ethics
is what is legal, and more. Much more. It encompasses honesty, forthrightness,
reciprocity, fair play, keeping commitments, and kindness -- virtues
that may be too much to ask for in today's world.
The cynical view of doing and succeeding in business plays up to unethical
behavior. For example, the following may sound rather familiar: "It
is business, and we just have to do it this way to make a buck" or "Who
is to say what is right or wrong; it is a matter of opinion", or "After
all, that is the way things are done here." There is a perception that
there are many easy paths to quick riches in business through cold-hearted
and unscrupulous schemes. In our age of cynicism we seem to have developed
a disdain for old truths and simple stories of honesty, loyalty, friendship,
and fairness as guidance in how we live. Nevertheless, these visions
of greatness are available to every one regardless of social and economic
I am sure all of us remember Richard Nixon who was elected by a landslide
for a second term as the President of the United States was forced to
resign in disgrace two years thereafter. Ivan Bosky was an immensely
successful stock trader who amassed a wealth of nearly half a billion
dollars through unethical and illegal transactions before he was caught.
After spending time in jail, today he is nearly a popper working with
some charity, and his wife left him with no financial or physical assets
in a divorce suit. Michael Milkin was one of the most successful investment
bankers with Drexel Burnham & Lambert, a well established and reputed
financial powerhouse during the eighties, who accumulated nearly ten
billion dollars for himself and a lot more for his firm, but soon he
too ended up in jail and was forced to return a good portion of what
was illegally obtained. And as for Drexel Burnham & Lambert, Milkin
probably brought it to bankruptcy as a result of public law suits against
Now let me state some business ethical principles:
- Tell the truth in advertising
- Operate within the spirit of the law.
- Fulfill your contractual obligations.
- Treat employees with dignity and respect.
- Treat your customers fairly.
- Avoid social harm.
A few words about ethics and conflict of interest. You have seen the
headlines, "Politician caught in conflict of interest". Conflict of
interest may be defined as a situation in which a person, such as a
public official, an employee, or a professional, has a private or personal
interest sufficient to appear to influence the objective exercise of
his or her official duties. The problem arises when private interest
comes into conflict with official duty. It is important to avoid apparent
and potential as well as actual conflicts of interest.
Obviously, these are just a few. Remember, ethics is not merely having
good intentions. It is not just about feeling sensitive. It is about
action in association with others. Comparing one's virtues with those
of another does not substantiate ethical behavior. You just can't feel
good by assuming that you have done better than the other guy, when
both are at wrong. Similarly, a good deed does not negate a bad one.
A person who reneges on a contractual obligation to repay a debt cannot
feel good about himself by donating some money to a charity or a religious
Ethics in business is no different from ethics in individual life.
Ethical problems in business are "people problems". Let me quote Peter
Drucker, the leading management guru of modern times: "The root of confusion
is the mistaken belief that the motive of a person -- the so called
profit motive of the businessman -- is an explanation of his behavior
or his guide to right action. The concept of profit motive is in large
part responsible for the prevailing belief that there is an inherent
contradiction between profit and a company's ability to conduct itself
ethically and make a social contribution". Implicit in many self-described
pragmatists' conception of the profit motive is the idea that notions
of "virtue" or "integrity" in business are simply idealistic."
Competition consists of trying to do things better than any one else;
that is, making or selling a better product at a lessor cost, or otherwise
giving better service. Competition is not gaining advantage over some
one else through illegal or unethical means, either in reducing costs
or in making sales. In a free enterprise system, competition is the
backbone of business; the engine that makes companies strive for excellence.
Excellence cannot be achieved through improper means, and competition
will ensure that the winners in the long run are those who earn it through
constant innovation, hard work, perseverance, productivity, cost control,
and, don't forget, fair play. Adam Smith who is typically cited as the
"father of capitalism" is often associated with his strong supportive
views on competition and profit motive. His masterpiece "Wealth of Nations'
is cited as the argument for business ruthlessness. However, his less
known writing "The Theory of the Moral Sentiments" makes even Adam Smith
far closer to the Aristotelian viewpoint than what most give him credit
for. Smith's position is that while "self-interest" drives people to
pursue their goals, it does not necessarily mean that every one ought
to be "selfish" in order to succeed.
It was John Steinbeck who said in "East of Eden" that " Money is easy
to make if it is money you want. But with a few exceptions people don't
want just money. They want luxury and they want love and they want admiration".
I may add to that statement: "most people want self respect". Money
gained illegally or unethically brings little happiness. We need to
embrace the Aristotelian approach to business ethics in that every professional
conduct and every business action must be deemed as part of living a
good life, getting along with people, having a sense of self-respect,
and being part of something one can be proud of. But the point is not
that we should stop thinking about money; in fact, we all should work
hard to earn it. But we should also not forget that the pursuit of happiness
is a lot more than the pursuit of money. Happiness is an all-inclusive,
holistic concept. It is ultimately one's character, one's integrity,
and one's accomplishments. This is true of giant corporations as it
is of the individuals who work for them.
Does ethics pay?
One popular assumption that is prevalent today is that success in
business rests on greed, deceit, and unfeeling ruthlessness. Accordingly,
living a virtuous life is seen as incompatible with profitable commercial
activity. Plainly put, many believe that a truly good person cannot
succeed in business. Although this perception of morality in the realm
of business is widespread and goes largely unquestioned, a careful study
of truly "successful" people engaged in commercial activity shows that
it does not tally with reality. Instead, longer-term success in business,
as in all other honorable human endeavors, depends largely on adhering
to the highest moral ideals and ethical standards our civilization honors.
As the chairman of one of the largest and most successful pharmaceutical
company, Bristol-Myers Squibb, puts it, "Men succeed less by their talents
and more by their character. To be successful you don't have to resort
to all sorts of things; you can be successful and yet stand for the
right sorts of things". While the short-term returns of unethical behavior
may appear attractive to both individuals and organizations, a mounting
body of evidence suggests that they are at longer-term risk.
What are the reasons for principled individual behavior? There are
many, but some of the following reasons may sound a little abstract.
Every well-adjusted person wants to contribute something of lasting
value in his or her life. That gives a sense of satisfaction. The need
to feel honorable and ethical. A person who does not feel right about
what he is doing will not be able to do a good job. On an individual
level, one's ability to influence others depends greatly on one's credibility
and good image built through years of ethical conduct. The power of
moral persuasion cannot be understated. Good ethics brings good image.
Good image helps you to accomplish what you want more easily.
On a business level, highly principled behavior is smart business.
When a company conducts its business ethically, it wins the respect
and loyalty of employees and customers. When corporate goals are out
of line with society's goals, the business is in trouble. You cannot
be a successful company and yet be working against the public will --
not for very long.
On a macro-economic level, one of the more compelling reasons for
ethical behavior is the need for a competitive environment that allows
all businesses equal opportunity to survive and grow.
The real problem facing corporations today with respect to ethical
behavior is a management problem. The corporate culture, its planning
process, and the way it implements and controls its actions are all
critical factors that will have a significant impact on whether it is
deemed to conduct its business ethically. Companies need to formulate
core values that dictate their conduct internally as well as with customers,
suppliers, and the society in general. Employees may need to be "indoctrinated"
on codes of conduct and acceptable standards and practices.
To argue, in the manner of Machiavelli, that there is one rule for
business and another for private life, is to open the door for an orgy
of unscrupulousness. On the other hand, to argue that there is no difference
at all is to place morality itself to an almost intolerable strain.
A fundamental difficulty with business ethics is that advice offered
by academic papers often leads to moral absolutism. In reality, people
do not sacrifice their companies on the altar of altruistic extremism.
What managers need are options for dealing with the complex relationship
between altruism, self-interest, and the other factors that make their
business click. Sensitivity, courage, honesty, and persistence are qualities
suggested for managers. Business is a human enterprise. To be good in
business is to be a good human being.
Most business people like pragmatists. We tend to think of them as
more predictable. Idealists, on the other hand, tend to be viewed as
kamikaze pilots -- admired for their courage, but seen as dangerous
because of their willingness to risk self-immolation in an effort to
influence behavior. Saint Peter may care about motivations; a pragmatist
cares about results. Hence, if one is to promote ethics in business,
he should present it in pragmatic terms. In other words, business people
should support business ethics because it is necessary for the preservation
of business. Another pragmatic reasoning is that business ethics is
profitable. One can describe a situation where unethical behavior was
indeed profitable. But that does not mean that ethical behavior is not,
in general -- or in the long term -- profitable. Another argument is
that unethical conduct creates a higher risk of personal, government,
or corporate liability.
Perfection is a laudable aim, but if pursued single-mindedly it can
lead one to become unbearably self-righteous. The spotless life is insignificant
if it fails to contribute to mankind's betterment. One does well when
he sets his sights beyond the mere adherence to ethical codes of conduct
and tries to live a useful life -- one which is productive, significant
and fair. Anyone of wit and experience knows well that ours is an imperfect
world. There are morally objectionable realities in most situations
and choices. While we shall probably not live perfect lives, we can
still lead useful lives -- some useful service in this world, some measure
of good and lasting value. The possibilities for a person in business
to do well while creating, producing and distributing goods and services
History is lavish with instances where the quest for ethical living
rested on the application of intelligence alone -- that is, logic and
reasoning to guide ethics. While rational discussions can resolve borderline
ethical issues, it is doubtful that intellectual discourse on ethical
issues among people has actually altered behavior toward the ethical
and the useful. While intellectual stimulation may be a byproduct of
such debates, it is doubtful that even the participants subsequently
follow the truth. It was Aristotle's position that before moral argument
can be effective the soul of the listener must first have been conditioned
by habits of the right kinds -- a condition developed from childhood.
Hypocrisy is not the end result we seek.
Each man is expected to lead his life answering to the pattern his
vision beholds and his heart honors. But the disturbing fact is that
many have no vision of greatness or goodness, especially in commercial
transactions. Wrongdoing and ill schemes constantly confront us. Intellectual
reasoning alone does not resolve these unhappy situations. We need some
thing more. Probably, emotion and will are to be counted into the equation.
Only abstract theorizing is possible through intelligence by itself.
May be, we need a lot of emotion and will. Emotion is a driving force
for accomplishing the desired outcome; will quickens and concentrates
one's energies to attain that end. The trick lies not solely with knowing
what is right and wrong but in suppressing one's ego that has an unrelenting
hunger for pride. One must concentrate on building a love for the good
and the worthwhile. One has to become an ethical person by force of
habit, stimulated by intellectual reasoning, emotion and will.. The
ideal then is, in Aristotle's terms, to develop "settled habits" of
right living -- virtues -- which shape the kind of person one is. Moral
theories may be useful in helping people arrive at well reasoned decisions,
but it is really moral habits -- a way of daily living -- that gives
them the vision and love of the good that ultimately enable them to
pursue well reasoned decisions consistently.
Self-righteous moral superiority is a presumption that has little
value. Instead of working toward worthwhile accomplishments, some turn
inward to justify their inaction. Many could profit from the words of
Confucius: "When you see a good man, think of emulating him; when you
see a bad man, examine your own heart". It is impossible to live a productive
life when one is preoccupied with evaluating the evil ways of others.
Very few people aspire greatness or pursue excellence. People generally
accept mediocrity. Mediocrity is a great leveler; it raises up the below
average and sinks the above average. When one accepts mediocrity, the
desire for excellence is also lost. The familiar line "Everybody else
is doing this way" is nothing more than accepting a general behavior.
If every one believes that every real-estate broker is dishonest, every
salesman is a crook, every government official is corrupt, and so on,
then the society as a whole turns into one with low values. Then mediocrity
is at best the standard. There is no desire for excellence. When one
is simply interested in winning, ethical standards are automatically
lowered. As Charles Sanford, chairman of Bankers Trust -- a major New
York bank -- put it, "Being excellent has certain connotations. Being
a winner doesn't carry the same kind of ethical standards that one thinks
about as excellent. One can win by a lot of ways, at least temporarily,
but if one is the best as measured by the highest ethical standards
as well as other standards, then one has achieved excellence". One needs
to develop the courage to make hard ethical decisions in the face of
Few people will quarrel with the proposition that success in any field
requires honest, hard work. Nothing of any great consequence has ever
been achieved easily and without considerable sacrifice. We are all
aware of that. But it is difficult to accept the fact that hard work
does not guarantee success. It simply improves the odds. There are other
factors that determine the outcome -- idea, timing, execution, and even
luck. One must be prepared to risk failure in order to succeed. But
when one searches for an easy path that needs little of the above, then
that path is usually paved with dishonest substance. The temptation
to get rich quick by any means leads one to abandon hard, ethical work.
The result of such behavior is usually failure -- one has simply lowered
the odds for success.
No good businessman wants to do business with those who are dishonest.
It is so much easier to attract good deals, business or otherwise, when
one is honest and forthright. Honesty, integrity and transparency are
three globally shared values. The first two are fairly straightforward
and easily understood. The third, transparency, means being open --
nothing to hide, or a willingness to share information --, that brings
people together. Transparency is essential for developing trust. And
without trust, there is little confidence.
Merely avoiding illegal or improper actions may meet the law, but
those who are known for their integrity meet higher standards. These
standards are well above the bottom line -- I mean above profits. People
with integrity often struggle with the question: "What is the right
thing to do?" The problem with such questioning is that the benefit
of doing the right thing cannot be measured easily. Some would say,
if it cannot be measured, it does not exist. Such people will tell us
that one needs to be simply practical and deal with what is real --
what we can see, touch and measure. Intangibles have, in their view,
very little value.
If our conception of reality can be shifted from that which can be
seen and measured to include that which makes a lasting imprint, then
we have embarked on a radically different way of looking at things.
The unseen is just as real as the observed. Today's unseen becomes tomorrow's
real. Experience has shown that fair play, honesty, and keeping commitments
in business and non-business activities make a lasting positive impression
that can be highly "profitable" in the longer run.
How do we improve the professional ethics in a society such as India?
Or put it differently, how can we reduce unethical practices?
- Increase competition in business. Make practically no exception
-- every field, every profession, every industry, and even government
should be made competitive. The free enterprise system, when practiced
properly, assures fair competition. When consumers have alternatives,
producers, sellers, and those who offer services will have to live
up to higher standards. The costs associated with corruption, bribes,
and unethical practices that are borne by the seller will not be passed
on to buyers. In the longer run, ethical businesses will be more cost
efficient and successful.
Business activity is as much social as it is economic. Most business
relationships involve some exchange between individuals, often strangers,
for the benefit of both parties. When one party feels that he has
been ill treated or has received an unfair bargain, he would take
steps to avoid future interaction. The free-market system has ways
of permitting parties to work out their differences, to discover
cheats, to follow alternatives to obtain satisfaction. Just as in
social situations, reputation obviously carries considerable weight
in determining whether one voluntarily chooses to enter into a business
relationship with another. Word travels fast in business, faster
- Eliminate all unwanted controls, subsidies, license requirements,
permits, and so on. These are the sources of power for bureaucrats.
Power corrupts, and absolute power corrupts absolutely. I am not saying
that the government has no role in regulating industries or commercial
transactions. But where market forces can assure effective controls,
we don't need another layer of intermediation.
- Provide clear, fair and practical laws governing business and professional
activity. For example: laws concerning pollution standards, non-competitive
or monopolistic practices, illegal transactions such as bribes, and
so on. The government has a key role in enforcing these laws evenly,
and the judiciary must be equipped to handle them expeditiously. The
penalty for illegal activity must be sufficiently high to deter future
misconduct, and to set examples for others.
- Education. Teach ethics in schools and colleges from an early stage.
Children learn from examples of successful people who have pursued
a high level of ethical standards.
- Family. Honesty, integrity, kindness, unselfish conduct, and other
virtues are best taught in the family. Children learn from their role
models -- mostly parents --who must set examples for their children
from their day-to-day conduct.
- Media, especially television, radio, and printed matter, must elevate
the importance of ethics in professional conduct. There has to be
a deliberate effort on the part of media to communicate the importance
of ethics. Given the privileged or special status of radio and television,
they have a social responsibility to do so.
Last but not the least...
- People who practice high moral and ethical standards must speak
out. There are sufficient number of idealists amongst us who want
a just society. Grass-root movements against corruption, bribes, illegal
activity, and the misuse of power must begin. Boycott businesses that
continue to behave unethically. Demand a higher standard than mediocrity.
Use the power of vote to elect honest politicians. But remember, you
cannot expect an ethical government in an unethical society at large,
and vice versa.
Sure, most of us don't see ourselves as Gandhi, Martin Luther
King or St. Francis. But we need to carve out in our own lives what
Gandhi once called the ``"zone of peace". That I am not going to
engage myself in the manipulation of people.
Having said these, I know what you are probably thinking. That nothing
is going to change, at least in the foreseeable future, in India. I
have often heard words of cynicism, and expressions of hopelessness.
I don't believe in miracles, because it is a very long time since we
had any. Also, we can't wait for God to bring about change. May be,
God wants us to perform our own miracles. We have to start somewhere,
with each one of us making a small difference.
I am reminded about what a seaman friend of mine once told me. Large
oil tankers are steered with huge rudders which are needed to maneuver
them in congested waters. These rudders are awkward and hard to use
to make minor corrections to the tankers in the open sea. Consequently,
these ships are equipped with a trim tab -- a very small rudder -- attached
to the large rudder. The tab, while small, can change the course of
the ship by exerting little pressure over a long stretch of ocean. Each
one of us practicing ethics in India is changing the direction of a
mighty ship in a small way.
No society turns ethical overnight. But if the economic environment
is such that the cost of unethical behavior is high, businesses will
be more careful. If the laws are fair and enforced vigorously, and the
penalty is steep, individuals will be more careful. Over time, may be
in several years, we will see remarkable improvement in the way people
interact with each other. Ethical conduct improves the economic system
and its efficiency, increases productivity, and reduces wasted resources.
Equally important, we all will be a happier people.
The concept of ethics and excellence is to put hard work, good ideas
and integrity together, as Aristotle implied in his writings: a good,
stable, harmonious and successful corporation with good, secure, and
happy employees, all striving to satisfy clients. I agree that it sounds
a little like Mary Poppins, but it is certainly a promising alternative
to the bloodletting that is presently going on.
Traditionally the assumption is that the motive for professional conduct
is the service motive; professional skills that benefit mankind, such
as those offered by doctors, lawyers, and teachers, are meant to be
noble. Harvard Business School has as its motto, "To Make Business a
Profession." Business persons who view themselves as professionals should
be motivated to do good and in doing good the firm will do well. May
be the problem lies in that very few people consider themselves as professionals;
they think of simply doing a job to earn a living.
Let me cite a few statements from business leaders in some of the
largest companies in the world. According to Jean Monty, CEO of Northern
Telecom, the largest telecommunications company in Canada and one of
the largest in the world, "As an operating principle, we will conduct
our business honestly and ethically whenever we operate in the world.
Acting with integrity builds credibility -- that fragile, intangible
asset that's so hard to gain, so easy to lose, and so difficult to regain.
Ethical conduct is the way we protect our credibility as a company,
establish respect for the dignity of every individual, earn trust of
our partners and customers, and define the character of our business".
Nortel's responsibilities are defined to include:
- respecting national and local priorities
- contributing to the well being of local communities
- using corporate power responsibly in relation to the political process
- protecting and enhancing the environment
- competing in an ethical and legitimate manner
- supporting the international scientific community
- ensuring accountability for performance to a broad range of shareholders
Lockheed-Martin, one of the largest aerospace companies in the world,
sets its standards for ethical conduct as follows:
- Honesty: to be truthful and forthright in all our dealings
- Integrity: to say what we mean, to stand for what is right, and
deliver what we promise
- Respect: To treat one another with dignity and fairness
- Trust: to build confidence through teamwork and openness
- Responsibility: to adhere to laws, rules and policy, and to speak
up without fear of
- Citizenship: to do our part to make the communities in which we
These are just two examples among hundreds of other major companies
that are constantly trying to be more ethical. Every company must strive
to add superior value for its customers and shareholders. Pursuing excellence
and acting with integrity can do this.
Let me conclude by pointing out that societies succeed by producing
responsible individuals. Economic excellence is achieved by not capital
alone but character as well. Let us hope that we have learned this lesson
and have the courage to take the right path for our future.