Yes, there is such a thing as business ethics

Marketing guru (blogger, author, etc.) Seth Godin posted a provocative blog entry called, “No such thing as business ethics”, in which he worries that the focus on “business ethics and corporate social responsibility” is distracting us from questions of personal responsibility:

It comes down to this: only people can have ethics. Ethics, as in, doing the right thing for the community even though it might not benefit you or your company financially….

Now I could quibble with Godin’s definition of ethics, which is actually a particular controversial view about what ethics requires, rather than a definition. But instead I’m going to take issue with Godin’s claim that all that matters in business is personal ethics, rather than organizational ethics. Godin writes:

I worry that we absolve ourselves of responsibility when we talk about business ethics and corporate social responsibility. Corporations are collections of people, and we ought to insist that those people (that would be us) do the right thing. Business is too powerful for us to leave our humanity at the door of the office. It’s not business, it’s personal.

Godin’s claim that “it’s not business, it’s personal” is problematic in two ways. First, it wrongly implies that business ethics somehow misses out on the whole personal integrity thing. That’s entirely false. Both the academic literature on business ethics and the “ethics and values” programs set up by individual companies put a lot of emphasis on individuals adopting the right values and making good decisions. Secondly, contrary to what Godin implies, individual ethics clearly is not enough. For one thing, people embedded in organizations have obligations that are role-specific. Just as lawyers and doctors have special duties that go along with their roles — they have to follow not just their own consciences, but also highly specific professional codes — so do people in the world of business. And for another thing, organizations can be set up badly such that all kinds of “good” individual decisions can still lead to problematic outcomes. The ethics of the organization, per se, matters a lot.

Interestingly, Godin tells us that he learned about all this from his dad. Unfortunately, while the homely lessons we learned at our parents’ knees tend to give us a good start in life, complex institutional settings tend to bring more complex duties, and hence require more complex principles.

10 comments so far

  1. Carol Sanford on

    Boy, do I agree with you Chris. Especially since the Supreme Court made corporations persons. I suggest that whether an individual or a business, both need explicit statements of beliefs and principles about what is “right” or you miss it when it shows up. For Corporations or Organizations, I call them Social and Planetary Imperatives. They are statements the organization as a whole makes, so they have to discuss and conclude what makes everything they affect healthy and vital. It is not possible to be ethical in the abstract. It is about enabling all living entities, to be whole and evolving.

    The same is true for individuals. We have not system though which people learn how life works, whether human or biota. So we cannot know what is right.

    What Godin is right about it that CSR programs distract us from ethical behavior. It is the programmatic nature in far too many instances, for individuals and the business as a whole, because they are not based on creating health, but doing less harm. They leave out questions of human trafficking and healthy and vital communities.

    We do the same at the individual level, where teacher no longer have time, authority or even skill in many cases, for growing healthy beings (critical thinking skills, personal development) and so they just try to get them through the system (pass the standardized tests). Bard College is proving that if you develop beings, even ones who have been incarcerated for many years, they are more successful than skills training for jobs. They become who beings. But our school and businesses fail people by not developing them as people.

    Most of the programs for CSR just adopt the methods of the class room and compound the problem. The system is broken at both levels, individual and organization. But it is not the trade-off of one for the other, but the lack of capability and systems thinking in both cases. The fragmentation of the approaches and working from the do less, harm are the real distractions.

    • Chris MacDonald on

      Thanks, Carol. I agree about CSR being a distraction — I’ve said something very similar to that on my blog over the years. See for example here:
      https://businessethicsblog.com/2009/02/14/down-with-csr-up-with-business-ethics/

      But it’s not true that the (US) Supreme Court made corporations persons. Corporate personhood is a very old mechanism, dating back nearly a thousand years in Europe. If you’re referring to the Citizens United decision, that decision merely expanded one small aspect of corporate personhood.

      Chris.

  2. Ed Reid on

    The 1886 decision in Santa Clara County v. Southern Pacific Railroad is often pointed to as the basis for the recognition of corporations as persons.

  3. Carol Sanford on

    Thanks. YOU are right. I was too glib on the personhood stuff.

  4. Jonathan Breslin on

    Unfortunately the business world has taken a very impoverished approach to ethics, by essentially equating it with compliance. That sends the message that ethics isn’t actually about doing the right thing, it’s about not breaking the rules. The result is that people in business ask, “What do we have to do?” rather than, “What’s the right thing to do?”

    • Chris MacDonald on

      Jonathan:

      That’s partly true, though I think it’s an overgeneralization. Note that while most major corporations do have a Compliance department (sometimes “Ethics and Compliance”) the “Ethics and Values” function often resides at least partly within HR.

      Chris.

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