Make an Ethical Difference
Tools for Better Action
By Mark Pastin
Berrett-Koehler Publishers, Inc. Copyright © 2013 Mark Pastin
All rights reserved.
Know the Rules before You Play
"The master knows the rules without suffering them, the slave suffers the rules without knowing them."
SITUATION #2 This Land Is Your Land
I once consulted to a company in the "raw land" business. Land is considered "raw" if it is either not currently in use or is used only for farming and has no roads or utilities. Buying such land is highly speculative, because developing the land for residential or commercial use depends on approvals at many levels of government, not to mention someone willing to pay for the roads and other infrastructure. My client had a buyer for a large chunk of raw land, a huge public company whose bonds were rated AAA. When it came down to negotiations, the public company offered a reasonable price, but offered to double the price if my client would accept its AAA rated bonds instead of cash. When the public company's chief financial officer computed the value of the bonds on offer to my client, he made a huge error in my client's favor. The only condition the public company put on its offer was that my client decide then and there. My client asked me, "Should I take the cash now or go for the much higher valued bonds?"
How would you advise the client? In formulating this advice, use the ethical decision-making tool that focuses this chapter.
I have spent 40 years as an ethics advisor to organizations of all kinds, ranging from global multinationals to small start-ups. Needless to say, this was not a clever career plan nurtured in my youth. Ethical situations just seemed to find me. In many of these situations, an ethical change was necessary for the survival of an organization. This was often because the organization had been caught doing something unethical, and often illegal as well. I have not always been able to effect the needed change, but over time I have gotten better at it. I have developed tools for ethical change that increase the chance of a positive outcome.
This book distills the lessons learned in hundreds of situations into a practical guide—a set of tools—to use for ethical action and change. In this chapter, we introduce the first of these tools.
The tools provided here can be used to solve ethical problems as well as problems well beyond the domain of ethics. The ways of thinking that encourage ethical action are essential to the sustained success of groups and organizations, whether or not there is an ethical issue. In fact, I have learned that those who can see the difference between right and wrong—and act on what they see—often have other attributes that contribute to their success.
The world will not be free of ethical defect as a result of what is written here. Nor do I pretend to have surpassed the wisdom of the ages in terms of philosophical ethics. Fortunately, you do not have to be a sage to make a positive difference in ethics. Each and every one of us has the experience of doing something right or making something better. Each of us has an innate ability to contribute to ethics, and my goal is to help you find that ability in yourself, trust it, act on it, and make an ethical difference.
A person can learn how to make a constructive ethical difference in the groups and organizations to which they belong. If you doubt that this is true, it may be because theologians, philosophers, and psychologists have often mystified ethics to make us think that ethical betterment depends on accepting their views. Those who say you cannot change ethics outside of their favored ideology or discipline do a disservice to ethics, and to people. They are using our desire for ethical betterment to promote the viewpoint they favor.
These same ideologues have been trying to convince us for centuries that ethical disputes are too difficult for us to resolve on our own. We are supposed to believe that the best we can do is to demur to the "great minds" and not ask too many hard questions. But these great minds, despite centuries of effort, have not resolved many ethical issues. And where is it proven that, despite confusions and disagreements, we do not have an innate ability to find the right path? Where has it been proven that we need an ideology to guide us?
We see later that the whole idea of an ethics ideology is ill conceived. While you can and will arrive at ethical opinions and generalizations, they will be built upon your ethics sense—and not upon the dictates of an authority.
If we are going to create ethical change, the first question we need to ask is, "What is it that we are trying to change?"
Once we see ethics as ground rules, being an ethical change agent seems to be no more or less than changing the ground rules of a person, group, or organization. You might think a good behavioral psychologist would be in the best position to help us bring about ethical change by manipulating punishments and rewards. And this, I believe, is what some influential thinkers such as B. F. Skinner, the father of behaviorism, have thought. For them it all comes down to the carrot, the stick—and the ass between them.
This misses this point. While we have a working definition of what ethics is, it does not tell us what good ethics is or what bad ethics is. Even if the carrot-and-stick approach worked, it would not give us the faintest idea of which ethical changes to pursue. Another way of putting this is to say that not all ethical change is good. Indeed, one of the things that motivates us to pursue ethical change is the sense that there has already been ethical change—and not entirely for the better. So our question is, How do we know which ethical changes to bring about? What actions will allow us to make an ethical difference in a positive sense?
Easy to See: Hard to Do
While it may seem impossibly hard to figure out just what ethical changes are for the better, this is often not the case. When an organization asks me for ethical advice, I am not there to make things worse. And it is seldom hard to tell what would be better. An example:
SITUATION #3 Outside Looking In
The board of directors of one of the world's largest financial services companies hired several consultants to help with an ethical issue. The issue turned out to be in the executive suite, and to some extent in the bedrooms of those in the executive suite. The CEO of the company had put a lot of trust in a younger employee with whom he was having an affair. Unfortunately, the younger employee abused this trust in a way that might soon become public. Or so the board feared. The board brought in the outsiders, including me, to "gain perspective" and "contain" the problem. While the board knew that it would have to make changes in the executive team, it also knew that the story would be a juicy one in the media. The board asked, "What will our employees think once they see what their leaders have been up to?"
The consultants' task was not to undo the wrongdoing. Too late for that. Our job was to keep the rot from spreading from the top down throughout the organization, thereby creating even more ethical problems. When the employees of an organization learn that the CEO made huge business blunders on the advice of his lover, they often conclude that the whole company is corrupt and lower their own expectations of ethical conduct.
It came down to this. When executives set a bad example, the ground rules of an otherwise decent organization may shift. Employees may feel betrayed in their commitment to doing the right thing when the folks at the top clearly aren't. This organization was a basically honest company. So the task was to keep the ground rules from slipping as a result of the soon-to-be-disclosed scandal. Doing this was a matter of some complexity, since you can't just say, "Your CEO is a bum but we don't want you to be bums." It was important not to compound the internal damage to the company by trying to convince the employees that what they would inevitably hear was not true. You can destroy the integrity of an organization by lying about the wrongdoing of its leadership. It's the old adage about the cover-up being worse than what is being covered up. So the problem was how to communicate with employees in a manner that neither hid the truth nor demoralized the company.
The consultants recommended that the board clean house in the executive suite in as short a time as feasible without leaving the company rudderless. Almost everyone in the executive suite had some inkling of what was going on and either aided and abetted it, or at least tolerated it. In this way, if the issue did become public, the company would already have taken action. Employees would see that the improper conduct was handled decisively and that the board would be viewed as taking strong action to protect the reputation of the company.
The board initially rejected this advice instead trying to salvage more of the company's leadership team. The CEO got wind of the advice given to the board and had the consultants fired. (It is the job of an ethics consultant to be fired in such situations if it helps the company move ahead.) When the board saw that the CEO was not taking decisive action, they accepted the consultants' advice. When the story became public, it was not exciting news since the main actors were long gone.
Even though fixing what was wrong was not easy, it was not hard to know what needed to be fixed. It took no genius to see that communicating to employees that ethical expectations were still high, despite the actions of some executives, was the right thing to do. These employees handled the personal finances of tens of thousands of members of the public, who deserved honest treatment. Philosophical arguments about right and wrong did not come into play. In this case it was easy to see what needed to be done. And this case is not the exception; it is the rule. A premise of Make an Ethical Difference is that there is a sense that allows us to see what is right, even if we sometimes put a stick in its eye.
Understanding ethics as ground rules also provides us with our first tool for making ethical decisions.
TOOL #1 Read the Ground Rules
When a situation presents an ethical issue, look beyond the individuals and their actions and uncover the ground rules that help explain their actions. Remember that ground rules are rules that will only be breached under extreme duress. This means that you should pay particular attention to situations in which the individuals had to make hard choices. For example, while everyone says that they are loyal to their friends, have these individuals demonstrated loyalty when it was not easy to do so? While everyone talks about trust, have there been situations in which these individuals acted on trust instead of holding out for a signed contract? Think about what you know of the individuals in terms of the choices they have made.
If the situation involves groups or organizations as well as individuals, do the same thing for each group or organization. Look beyond the public statements of values and principles and read the actual ground rules. Most companies say that their employees are the key to their success. But when the analysts start biting their nails, many of these companies are quick to start firing people. This would not be their first response if the company's ground rules required that it be as loyal to its employees as it expects it employees to be to it.
Write out the ground rules of the affected parties as specifically as possible. Being specific about the ground rules allows you to communicate with those affected by the situation in terms that will resonate with them. Rather than working with generalizations that don't tell you much in the situation, drill down to the ground rules actually at issue. It is far more useful to know that someone acts on the ground rule "Put shareholder value above all other interests" than it is to know that the individual acts on the ground rule "Act in the interests of shareholders." Someone acting on the former ground rule may act ruthlessly in situations in which shareholder value is threatened. A person with the latter ground rule may allow other priorities to affect their choices. If the ground rules you have written down are not helping you understand a situation, get more specific. Until you write the ground rules down, you are likely to stick with generalities that will not help unravel the situation.
You know you have the ground rules right when you can predict what the parties to a situation will or will not do next. Remember that the organization or organizations involved in the situation have ground rules too. For example, in the situation involving the financial services company, the ground rule at issue was whether executives were held to the same standards of conduct as other employees. Written down it is clearer: "When an employee engages in wrongdoing, the discipline of that employee is consistent regardless of the rank or function of the employee." This ground rule is important to any organization that acts ethically while achieving consistent performance.
Remember the analogy between ground rules and the operating system of a computer. If you were trying to understand something the computer was doing, it would not be that helpful to know the general principle, "Computers run on a series of '0's and '1's." But it might be useful to know the more specific, "The computer is running on Operating System 10.6.8."
Thinking in terms of ground rules may seem like such a simple concept that it can hardly be an important tool for ethical change. But by viewing situations in terms of ground rules, you can not only better understand why certain things happen, you can also understand what you have to change—the ground rules—to be a successful ethical change agent. Instead of just being puzzled by the wrongdoing we observe, we can focus instead on what the wrongdoing means in terms of grounds rules—ground rules that we may need to change.
Reading the ground rules is particularly useful for figuring out why organizations do things. While at least some people are reflective, organizations typically are not. Yes, they have retreats and the like, but these are more about rearranging the furniture than redesigning the space in which the furniture goes. Listening to what organizations say will not help nearly as much as observing the limits of their conduct in terms of ground rules.
When people do think about the ground rules of organizations, they often talk about the "culture" of an organization. When "culture" is used in this way, it is a metaphor suggesting that unseen factors drive organizational behavior. But it is not a great metaphor as the word "culture" also suggests things that can only be changed over a long period of time. And this is not always true with respect to an organization's ground rules. If the executives in the above financial services case had gotten away with their misconduct, the ground rules of the organization would have shifted—for the worse—almost immediately. That is why I prefer the analogy between ground rules and operating systems better than the analogy with culture. If you change one thing in a computer's operating system, there may be widespread ramifications. Ethics is like that, too.
Situation #2 This Land Is Your Land (continued)
In the situation at the beginning of the chapter, I advised my client to take cash. I asked myself, "If the public corporation's AAA bond rating is justified, what ground rule is the corporation following in offering my client so much more in terms of bonds?" If you cannot find a ground rule explaining an action, that is a sign that there is more to a situation than meets the eye. In Chapter Two, we learn that it is also essential to look at the interests in a situation. Absent a plausible ground rule, I assumed the corporation was acting on its own interests. Another ethics warning sign was that the public corporation was putting extreme pressure on my client to decide on the spot. They didn't want the client to think the situation over and take a closer look at the public company's finances. The public company was American Continental, a company whose imminent demise triggered the implosion of the real estate and saving and loans industries in the United States. Cash looked pretty good after all.
Excerpted from Make an Ethical Difference by Mark Pastin. Copyright © 2013 Mark Pastin. Excerpted by permission of Berrett-Koehler Publishers, Inc..
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