In Search of Ethical Professional Conduct

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 status.
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 the firm.
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 cause.
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 are endless.
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 uncertainty.
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 than money.

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 live better.

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.