by Fr. Robert J. Spitzer, S.J.

Fr. Spitzer often observes that Level 3 Leadership has to be chosen every day. It’s impossible to make that choice consistently and effectively without Prudence, Courage, Fairness, and Self-Control.

The four Cardinal Virtues aren’t named for a bird, or a baseball team, or the men who elect the Pope. The word “cardinal” comes from the Latin, cardo, which means hinge. So the Cardinal Virtues literally mean those virtues on which all moral behavior depends.  A lack of these four makes it very hard to do the right thing consistently.

At the same time, though, the Cardinal Virtues are not considered good in and of themselves. Unlike an end virtue, such as Charity or Love, they are means virtues, or means to an end. While they represent indispensable tools for doing what is right, they can also be employed for
evil ends. Machiavelli had prudence, as did Stalin. Terrorists can display a true but horrible form of courage.  Self-discipline can be exercised for the sake of the ego alone. Even justice can be perverted into an equitable approach for crushing dissent.

However, when these virtues are directed at Love and placed in the service of others, they provide the essential means for living an ethical, Level 3 life.

Prudence is the primary Cardinal Virtue – the cardinal of cardinals. The other three are virtues of the will; you can bring them to bear in a situation primarily through your mere willingness to do so. But prudence is a virtue of the mind; it can be defined as “the perfected ability of right decision-making.” It is all about seeing and understanding what is good (or true, or fair, or necessary, etc.), either through your own personal insight or by following a trusted source of wisdom, such as Scripture.

Without prudence, it is hard to judge what is fair, or when courage will lead to a positive or a negative result (which battles to pick). Prudence tells you what types and occasions of self-control will bear good fruit, and which amount to little more than compulsion or a distraction from higher things (“No, I can’t drive you to the hospital. That’s my daily hour for jogging.”)  Since prudence isn’t a virtue we can exercise without study or support, it requires a commitment to lifelong learning and daily reflection.
Courage is often equated with physical bravery or the ability to overcome fear with passionate determination. More often, though, it reflects a peace of mind that arises from an internal conviction in the nobility of our cause or principles. This peace allows us to overcome peer pressure to acquiesce in wrongdoing, and to speak up even when we have reason to fear retaliation or humiliation. It allows us to admit mistakes, defend others who are being unfairly maligned or marginalized, and even to take difficult actions, such as resigning from a job, rather than do or support something wrong.

As mentioned above, you need prudence to know how to apply courage to a specific situation, and to judge when your hesitation to act is
rooted in fear or good sense. For example, it may take courage to criticize an unjust act in front of an audience, but in some situations, a public rebuke may be the worst way to get that action reversed.

You can’t say yes to others and to higher-level pursuits if you can’t say no to your own temptations and desires that conflict with Level 3 goals. The virtue of self-control doesn’t only prevent domination by pleasure or egotism; it also provides the discipline needed to master skills as well as other virtues. It takes discipline to control emotions like anger and arrogance; to pause and question your own motives; and to overcome dejection when plans go awry. It takes self-control to remind yourself to look for the good in others when it’s so much easier to focus on their flaws.

Fairness can be simply defined as giving the other his due. It is the desire to provide people with proper compensation and credit for their work, and to ensure a balanced and equitable relationship between activities done and rewards or penalties received. The figure of Justice is customarily blindfolded to convey impartiality. That’s because we’re powerfully tempted to unfairly favor our friends and allies and shortchange strangers and competitors.

In organizations, fairness is the cornerstone of empathy. You can’t build a constructive Level 3 culture if people perceive that fairness is being violated. (“Times are tough, so we’re cutting pay by 10%. We reached this decision last week at our management retreat in Bermuda.”)

The Cardinal Virtues are mutually reinforcing, and it’s not unusual to find yourself in situations where all four must work in concert. For example, in a meeting aimed at making a big decision, you might need fairness to balance the interests of all stakeholders affected by the decision; courage to point out a serious problem that everyone else is choosing to ignore; self-control to avoid getting angry at someone who is pushing your buttons; and prudence to see the truth of the situation and to know just when and how to apply these other virtues.

Conversely, just as it only takes one flat tire to stop a car, the absence of any one of the virtues can undermine your entire Journey to Excellence. That’s why it pays to keep all four in mind, as well as in practice, because practice is what makes a virtue habitual and reliable.

by Fr. Robert Spitzer, S.J.

If you do a search of companies that offer ethics training and education, you’ll find that many focus almost exclusively on the arena of legal compliance. I made the case earlier that compliance education is necessary but insufficient, and described the risks a company runs in reducing ethics to legal compliance alone. In fact, I called this cramped perspective a recipe for ethical disaster, which raises a question: What does the antidote look like?
What follows is a brief overview of four ways to ensure that an organization is laying the groundwork for a truly ethical culture.   FIND BOOKS BY FR. ROBERT SPITZER, S.J. HERE.

Activate the Conscience

The foundation of ethics is not the law, it’s the conscience.  If your organization’s view of ethics is limited to external legal constraints, you’re not activating the faculty that prompts a person to think about right and wrong.

The benefits of conscience aren’t merely negative (avoiding unethical conduct).  Conscience also inspires people to seek nobility in their communities and their own lives. It doesn’t matter what product or service your organization offers. Any enterprise can be noble (or ignoble) based solely on how it conducts itself and treats people.  A noble organization and noble leaders inspire loyalty and commitment.  Ignoble leaders inspire fear, mistrust, and self-serving behavior.

Some organizations may see the realm of conscience as problematic, regarding it as a minefield of subjective and contentious points of view. That’s one impetus for preferring to stick to the hard facts of legal compliance. But you don’t need to grapple with divisive moral issues to form a community conscience and common expectations regarding behavior. Compliance education itself can activate the conscience if you take the time to discuss the moral rationale behind laws and rules. Why is it wrong to disclose information to some investors but not others?    GET BOOKS BY FR. ROBERT J. SPITZER, S.J. HERE

But how do you ensure good answers to such questions? That brings me to my second point.

Return to Principle-based Ethics

Recent decades have seen a move away from principle- or rules-based ethics to ends-based or utilitarian ethics. Principle-based ethics focus on the means before the end. They form the conscience around inviolable principles that seek to do good and avoid evil. Utilitarians focus on the ends, not the means. They seek to optimize benefit and minimize harm, and they judge the morality of an action in terms of these outcomes.

You could write a book on why utilitarianism came into favor while principle-based ethics waned, but one consequence of the trend is clear: Decisions based on the belief that the ends justify the means can look awfully bad in hindsight.  Many organizations have learned this lesson the hard way. Maximizing shareholder value is a wonderful end, but if you pursue it through shady means, you can destroy the whole business. By contrast, it’s hard to think of a company that has stumbled ethically by adhering to time-honored principles.

Principle-based ethics can be minimal (“Silver Rule’) or maximal (“Golden Rule”). The Silver Rule basically states, “Do no harm and minimize harm that is unavoidable.” Its specific principles tend to take the form of “Thou shalt nots” – don’t lie, don’t cheat, don’t steal, etc. Many Silver Rule principles are enshrined in the law, but an organization can go further and devise principles aimed at avoiding harms that are legal but unethical.

The Golden Rule goes further by exhorting people to “Do unto others as you would have them do unto you.” While the Silver Rule shuns harm, the Golden Rule seeks to do as much good as possible for all stakeholders. For example, a Silver Rule company might pledge to “never mislead our shareholders about our performance.” A Golden Rule company might go one step further by pledging to “write our financial reports in language the average investor can understand.”

There is one more vital precept included in principle-based ethics: You can’t justify unjust means. You can’t do evil in order to reach a good end. You can’t protect the company’s reputation – a good end – by lying about financial problems or misdeeds. While you can’t commit an inherently evil act to bring about good, you can do so if the intent is to prevent an even greater evil from occurring. You can spill oil into the ocean, for example, if the alternative is to allow the ship to explode and kill the entire crew.

Encourage a Personal Code of Ethics

While clearly stated principles are essential to forming a strong, collective conscience (“This is what we expect from each other”), that doesn’t negate the need for people to be very clear on what they expect from themselves.  That’s why, whenever I work with an organization, I encourage everyone to commit themselves to their own personal code of ethics. By code, I mean a written set of principles; the commitment is far too important to your success in life to be left unarticulated. I realize this is a practice that doesn’t come naturally to many people, especially people who aren’t introspective by nature. But a written personal code provides more clarity of conscience and more protection against inducements and pressures to do the wrong thing. It’s an extremely valuable exercise.

Strive to Build a Constructive, Level 3 Culture

Most ethical problems aren’t caused by people consciously setting out to do the wrong thing. They arise from fear and arrogance, which are the hallmarks of a defensive, Level 2 culture. Where fear is dominant, people will cut ethical corners to conceal problems, meet demands, and preserve their positions. Where arrogance reigns, people will “push the envelope” to demonstrate their intelligence or aggressiveness and preserve their hard-won status. The best compliance education in the world won’t save you if your people have burning desires that trump their desire to act ethically. The antidote is working toward a constructive Level 3 culture, where ethics are reinforced by mutual trust and support and a concern for the needs of all stakeholders.

There’s much more one can say on the topic of building ethical cultures, especially with regard to the importance of virtue, the role of leadership in modeling behavior, techniques for defining principles and resolving dilemmas, and how to go about building a Level 3 culture. I’ll leave those topics for another day. The approach I’ve outlined here is more arduous than a compliance-only approach because it is not intended to replace compliance education but to supplement and strengthen it. But the return on this time and resource investment will include a reduction in lawsuits, opportunity costs, and turnover of key employees, and an increase in trust, goodwill, esprit de corps, and the market rewards a thriving culture brings.

BOOKS BY FR. SPITZER HERE!

By Fr. Robert Spitzer, S.J.

Is it possible that a common approach to business ethics training might do as much to cause ethical problems as prevent them? While that may seem counter-intuitive, it’s a risk that companies run in reducing ethics to little more than legal compliance.

Unfortunately, that’s the case today in many organizations, where a legalistic view of ethics holds sway. The problem stems in part from a lack of knowledge, but also, to put it bluntly, a lack of nerve. Many managers know little about the moral and philosophical basis for ethics, but those who do are often reluctant to speak about basic concepts like right versus wrong. They’re afraid that their contemporaries might view such ideas as preachy or moralistic (“Who are you to lecture me about virtues and principles?”). They might even be concerned that traditional views will strike modern ears as vaguely intolerant. “Who gets to decide what’s right and wrong anyway? Isn’t that whole notion rooted in outmoded social constructs?”

“Legal compliance” is poor litmus test of ethical behaviour

Rather than risk these sorts of potential objections, it’s safer to retreat to the clear-cut realm of legal compliance. It’s easier to focus on the question, “Is it legal?” than to grapple with a question like, “What ethical standards should we hold ourselves to?’’

This retreat has led to the bizarre phenomenon of lawyers acting as agents of ethics. Law was never intended to be the foundation of conscience. The law’s function is to protect the rights of citizens. It is minimalistic by nature. When we make this minimalistic perspective the grounds for ethics and conscience, we make ethics equally minimalistic.     FIND BOOKS BY  ROBERT J. SPITZER, S.J.  HERE

Outsourcing conscience and judgment

There are three things inherently wrong with a purely compliance-based view of ethics. First, by placing the focus on the external constraints of the law, it excuses people from thinking about the interior dimensions of ethical conduct. There’s no need to check your own motives, your own principles, or your own conscience – and by “your,” I don’t just mean the individual’s motives and judgment; I also mean the collective conscience and principles of the entire organization. Ethics becomes a collection of external proscriptions created and enforced by external parties (SEC, OSHA, FDA, etc.). As a manager, your only job is to understand these proscriptions and avoid legal trouble by heeding them. In an organization that takes this view, there’s no need to consult your conscience, just your lawyer. Over time, the conscience of leaders and the organization’s collective conscience can atrophy. Sherron Watkins, the Enron whistleblower, saw this happen in the years before Enron imploded. She described the company CFO, Andrew Fastow, as a man who “didn’t have a moral compass.”

Second, in compliance-based systems, tremendous attention is paid to discerning the line that divides the legal from the illegal. You will hear ethics officers say that their job is to paint that line bright red so that people can see it clearly and avoid crossing it. But by focusing on that line, you create a mindset that tends to bring people right to the edge. Leaders aren’t asking themselves, “What’s the right thing to do?” They’re asking, “What are we allowed to do? What can we get away with?  Are there precedents to justify the decisions we want to make? What do our lawyers say?”

If you go this way, you’re not only using your lawyers in lieu of your conscience, you’re delegating your judgment to them as well. If the judgment they give you proves faulty and you wind up breaking the law, you can rest assured the lawyers won’t take the blame.  It may be their advice, but it’s your decision.

Undermined by rationalization

The third problem is that compliance-based ethics is often undermined by the ingenuity of the rationalizing mind. Smart people in particular are adept at rationalizing their decisions. They love to find loopholes and push the envelope; they love to think that their company’s competitive edge resides in their own resourcefulness. People working in a compliance-based system

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can come to regard the rules as external ropes that one can loosen with an application of cleverness. Sharp people will try to prove their brilliance by finding ways to finesse requirements. Most ethical trespasses don’t begin as conspiracies. They begin with managers thinking they’ve found an adroit way to gain an edge or deal with a problem. These same managers are often deemed “the smartest guys in the room” until their wonderful schemes dissolve into indictments.

I’m not saying that compliance education isn’t important. It is very important. Managers need to know what a conflict of interest is. They need to know the rules with regard to transparency and disclosure, insider trading, gifts and hospitality, and other potential landmines.

But an understanding of ethics that stops at legal compliance is hollow. It lacks conscience, which lies at the core of ethical conduct. It lacks principles to help distinguish good decisions from rationalized misconduct. Organizations that fail to distinguish ethics from mere compliance can end up with neither.

STAY TUNED FOR PART 2 – 

Most business professionals are acutely aware of the fact that decision-making within our highly technological and multi-layered organizations has become extraordinarily complex and rapid. Computer access, email, the internet, conference calls, integrated systems, and other technological advances, though incredibly positive in their capacity to promote communication, growth, access to resources, and the opening of new opportunities, has also increased the pressure on executives to act more quickly within evermore complex situations. In order to create sufficient time and psychic space to deal with this new pressure, contemporary leaders have incorporated two habits into their “decision-making” apparatus:

1) narrowing the number of factors impinging upon decisions in order to accommodate the short amount of time available for them, and
2) the distinction between so-called “hard factors” and “soft factors” (of which ethics is considered a soft factor which can be eliminated from the narrowed range of decision variables).

In my view, ethics became a “soft factor” because of the above trends toward personalism and toleration (away from rules-based ethics). Because of this, some leaders caricatured ethics as “warm and fuzzy,” which undermined and insulted the discipline. Perhaps worse, it made ethically oriented leaders feel soft, inferior, lesser negotiators, less loyal to the organization, and therefore (ironically), guilty. Many leaders felt that they were imposing more on their people than other leaders; that they were creating an uneven playing field for their employees; that they were creating a hostile work environment rather than a trusting one. Truly good leaders created an atmosphere of personalism and toleration without a feeling of compliance, negativity, and guilt.

Now add the exigencies of increased competitiveness from international companies (who may not see ethics the same way as US companies), from mega-mergers and huge conglomerates, and from the continual threat of being left behind technologically, and one can understand why an atmosphere of looking for shortcuts, indeed, even cutting corners seemed to be the best way to protect one’s organization and its stakeholders. Not only had rules-based ethics begun to disappear, it almost seemed unethical to apply these principles in a business atmosphere which seemed to be overcomplicated or even undermined by them. The stage was set for top leaders (including boards of directors) to ignore intentionally what almost seemed commonplace in the past, and to do everything, absolutely everything (no holds barred) to give their organization competitive advantage in an increasingly complex, international, fast-paced, mega-merging world.

It is probably apparent to most that moral training within households, churches, and schools has moved from “rules-based” to “ends-based” ethics. The origins of this trend were quite well-intentioned. During the early 1960s, psychologists and psychoanalytically-based philosophers and theologians tried to give emphasis to empathy, respect for the individual person, and care, which gave rise to a kind of teleological personalistic ethics (one that associated good actions with optimizing empathy, respect, and care within particular situations). This was an exceptionally important and good trend in human relations, workplace environment, family environment, and even ethics. However, it had one major drawback. Some of the key proponents of personalistic ethics claimed that depersonalized ethics was attributable in great part to the overemphasis on rules-based ethics. This contention might have been true in a limited number of situations, but it certainly did not warrant or substantiate the false dichotomy between personalistic ethics and rules-based ethics that soon resulted. Some psychologists even proposed that in order to be free to empathize with and care for others deeply, we had to get over our “hang-ups” about rules and the guilt associated with them. As this false dichotomy worked its way into the commonsense environments of the workplace, popular media, family, church discussion groups, high school classrooms, and even university seminars, it became commonly accepted. Many academicians even suspected that too many rules would “stunt” one’s capacity for empathy and love. Rules almost seemed to get in the way of ethics!

The above false dichotomy combined with another phenomenon to produce a virtual eclipse of rules-based ethics within the culture, namely, the absolutizing of the principle of toleration. Again, the demise of rules-based ethics seems to have arisen out of what was initially a good, helpful, and important movement within Western culture. The late 70s, 80s, and 90s brought with them not only a vigorous desire for racial and ethnic diversity, but also a desire to respect all cultures and dispositions out of respect for individuals, and a desire to reverse historical momenta of inequity. These movements were not only well-motivated, but responsible in great part for social progress and the alleviation of past injustices.

Unfortunately, as with the proponents of personalistic ethics, the proponents of toleration created a false dichotomy between their main principle and rules-based ethics. Some proponents declared that ethical rules belonged to Western or Judeo-Christian culture, and that insistence on these rules was tantamount to cultural insensitivity (at the very least), or cultural domination (at worst). Some proponents even suggested that such principles represented religious arrogance, the sanctioning of religion, workplace intolerance, religious intolerance within schools, and so forth. The absolutization of the principle of tolerance seemed to be directly proportionate to the decline of rules-based ethics.

It must be emphasized here that the principles of toleration, cultural diversity, and pluralism are very positive. A problem occurs only when toleration is absolutized, set above all other principles, and therefore set into a false dichotomy with those other principles. Nevertheless, the problem happened, and it significantly undermined rules-based ethics in Western culture. In order to avoid the seeming negative influence of rules-based ethics, educators and church leaders advocated a movement away from it toward “values training.” Values training does not necessarily advocate an elucidation of ethical, unethical, moral, or immoral behaviors, but only an elucidation of what a particular person considers to be valuable. Thus, the objectives of values training could be satisfied by simply saying, “I consider monetary security, feeling right about life, and a modicum of love to be valuable; therefore, I will have lived a good life if I have pursued and have been able to acquire some of these ‘values.’” This represents a significantly weaker ethical position than radical utilitarianism and situationism, for it does not even advocate a minimization of harm or a maximization of social benefit.

The sad part about the above trends is that the dichotomy drawn between personalism/toleration and rules-based ethics is quite unnecessary, misleading, and harmful. One can believe in inviolable principles and the intrinsic dignity of others simultaneously. Indeed, the two are mutually complementary! One can also believe in inviolable principles and toleration for individual and cultural differences simultaneously. One need only remember that toleration cannot be absolute, for tolerance of what is destructive of others can be the worst form of intolerance of their personhood. When tolerance becomes absolute, it generally leads to inherent contradictions. If one tolerates genocide, one is blind to the inalienable rights of the non-tolerated group.

As personalism and the “absolutizing of toleration” became more accepted, the falsely dichotomized rules-based ethics became less accepted, and television shows, movies, family discussions, church sermons, and grade school / high school discussions barely mentioned right or wrong, good or evil, good character or bad character, or “thou shalt not….” We became extremely positive toward the positive, but failed to be negative toward the negative. As will be seen, the latter is just as important as the former in the prevention of public calamity and the restoration of the public trust. A resolution to our current ethical difficulties will require a redressing of the above false dichotomies.

The last 30 years has marked a decided change from principle-based to utilitarian ethical criteria. Principle-based ethics has four essential characteristics:

1) It associates ethical conduct with particular acts (e.g., on the negative side, it associates evil or unethical behavior with harming unnecessarily, lying, cheating, stealing, being unfair; and on the positive side, it associates good or nobility with honesty, fairness, altruism, and even love).

2) It considers the above associations to reflect “inviolable principles.” “Inviolability” generally refers to an unwillingness to engage in a particular “evil action” unless one is compelled to do so in order to avoid a greater evil or an evil of greater magnitude. In short, wherever the principle of “lesser of two evils” does not obtain, “inviolability” means “not crossing the line.”

3) As such, principle-based ethics holds that “the end does not justify the means,” that is, that one cannot use an evil means to achieve a good or beneficial end. Though principle-based ethics allows one to use an evil means to avoid an even greater evil end (e.g., self-defense), it does not permit the use of an evil means to achieve a beneficial end. Therefore, even if an action should produce a benefit for one hundred people, it cannot justify doing an unnecessary or unfair harm to a single person in order to achieve it.

4) Principle-based ethics is generally justified through three criteriological grounds:

a) faith, religion, or divine warrant (e.g., the Ten Commandments),
b) conscience (an immediate intuitive sense of evil in actions – which is marked by a sense of guilt, foreboding, self-alienation, or “being out of kilter with” or “not at home in” the cosmos or the totality), and
c) cultural predominance (e.g., a cultural mandate which, if violated, brings with it ostracization, accusation of heresy, or even punishment).

In brief, principle-based ethics asks the question “should we?”, relies upon a sense of inviolable principles, and does not allow the end to justify the means, though it will allow for “the lesser of two evils” to resolve ethical dilemmas.

In contrast to this, utilitarianism is essentially relativistic and consequentialistic. It generally holds to the following three tenets:

1) One should try to optimize benefit and minimize harm in any given situation. This makes utilitarianism consequentialistic and situationalistic. It is consequentialistic because it associates ethics with benefit and “lack of harm” in the consequences of actions rather than associating ethics with actions themselves (as would be done in principle-based ethics). It is situationalistic because it evaluates actions in every situation relative to the harms and benefits in that situation.

2) As such, utilitarianism has no inviolable principles. Each principle may be subject to a harms-benefits calculus which may allow for a remarkable degree of rationalization when situations suggest a minimum degree of harm or a maximum degree of benefit.

3) Utilitarianism also does not strictly adhere to the principle “the end does not justify the means.” In its attempt to optimize benefit and minimize harm, utilitarianism has a teleological quality (i.e., it is oriented toward optimizing the end without giving focused attention to the means). This has the peculiar quality of making ethical allowances for actions which principle-based ethicists would disallow, so long as these actions give rise to sufficient benefit.

This last quality of utilitarianism tends to take the focus off rules or proscriptions associated with unethical means. I have heard many business ethicists declare, “We have spent far too much time and energy on rules and compliance when ‘true enlightenment’ dictates that all we need to do is optimize the greatest good for the greatest number of people in every situation.

Spending time on rules seems so negative. Why not focus on optimizing the positive?” Though this emphasis on maximizing benefit seems, at first, to be noble indeed, its de-emphasis of means and rules lies at the root of every major corporate ethical failure in recent history. It seems as though our consciences are so “off the hook” in our noble pursuit of optimal benefit that we don’t even have an inkling of “trouble on the horizon” minutes before major ethical implosions.

Utilitarianism has also caused a shift in the way that ethical questions are asked. Since it tends to quantify ethics (in its hope to maximize benefits and minimize harms for the greatest number of people) it does not ask the question “should we?” but rather “how much can we?” Thus, for example, instead of asking “Should we offload debt to offshore subsidiaries in an undisclosed fashion?” an executive might ask “How much debt can we offload to offshore subsidiaries before disclosure becomes a problem?” The question “should we?” opens the way for our consciences to be engaged by our inviolable principles, while the question “how much can we?” seeks a quantitative parameter for our consciences not to be engaged.

Unfortunately, no quantity has an inherently ethical quality (as principles do). Therefore, the specific quantity which demarcates ethical from unethical behavior is merely a matter of subjective disposition which can frequently be arbitrary. Thus, one group of executives may declare “three percent of our debt can be offloaded to offshore subsidiaries before disclosure becomes a problem,” while others might declare “six percent,” and still others, “fifteen percent,” or “twenty percent,” or “thirty percent.”

Once one declares that the line between ethical and unethical behavior is quantitative, the road is wide open to every imaginable form of rationalization to increase that quantity to the maximum possible extent. By the time one reaches, say, thirty percent, the ethical implosion is becoming a reality, and people are asking, “Why didn’t we get a handle on this before?” Evidently, public trust, the economy, and the efficacy of commerce depends on finding a resolution to this fallacious kind of ethical reflection.

We as colleagues within the Jesuit Educational network have access to a longstanding tradition of ethics education which can be shaped into six practical steps to help ameliorate the current problematic situation in business ethics. “Jesuit” here refers to St. Ignatius Loyola’s two-pronged view of the ethical life:

1) a commitment to inviolable principles which he believed to be the foundation for character and action, and

2) a practicality, indeed, even a pragmatism about the implementation of these principles within the social or communal domain.

Hopefully the following series of short articles will live up to his reputation for being unreservedly practical about the theoretical, and well-reasoned and well-grounded about the practical. Before explaining the six steps, it will be necessary to assess how the business world entered into its current ethical situation.

How is it that Enron, WorldCom, Arthur Andersen, and so many other firms of supposed high integrity found themselves in complete ethical and commercial dissolution? Contemporary research does not attribute this to a generation beset by base ethical motivation. Though the children of the 80s were frequently called the “me generation,” it does not seem that this group was more greedy, base, or malicious than any other generation. Well then, how did the 80s lead to our second millennial problems? I would attribute this to four implicit, but steadily increasing, cultural conditions:

1) the move from principle-based to utilitarian criteria,
2) the decline of traditional principle-based instruction,
3) the complexity and rapidity of decision-making and the failure to integrate ethical reflection into it, and
4) the misuse of “case precedents” in resolving ethical dilemmas.

A brief explanation of each of these problematics, which will be posted in a bi-weekly series beginning next week, will help to set the stage for a practical solution whose roots are firmly planted in the Jesuit tradition.

With this column, I begin a new series on principle-based organizational ethics which I have written about in my book, The Spirit of Leadership (Pacific Institute Publishing) and my monograph of “Six Steps to Better Ethics,” and also in several articles. I would like to thank Pacific Institute Publishers in advance for permission to use material from The Spirit of Leadership.

Many of you know the truth about the common cliché, “good ethics is good business.” It not only keeps the organization out of lawsuits while enhancing its reputation, it also infuses increased spirit and synergy, peace of mind and trustworthiness. Poor ethics undermines the sense of trust, gives rise to fear, depletes energy, and creates malaise.
My intent in this and subsequent columns, is to present some successfully implemented ideas abouthow to move an organization toward principle-based ethics.

Why principle-based? Because the alternatives do not work. The organizational world is changing so rapidly that ethical reflection is at best a permanent “gray area.” Even though a company has ethical standards, many leaders have no idea how to implement them. Moreover, the noble goals of tolerance and diversity seem to be at odds with specific ethical standards.

Leaders labor under the belief that to promote the noble causes of diversity and tolerance, they have to move toward the lowest common denominator of prescribed standards or principles. Leaders feel guilty about mentioning ethical standards because it seems as if they are seizing the moral high ground. They don’t want to “lay a trip” on anyone. They are not priests or ministers, so they may as well let the “ethics thing” find its own level.

This unintended ethical fog has opened the door for unmitigated rationalization. The human capacity for rationalization is virtually infinite – give us five minutes, and we can rationalize any action in any situation. If we have no standards, no “uncrossable lines,” we are likely to go anywhere that is not clearly illegal. This propensity has led to the bizarre phenomenon of lawyers acting as agents of ethics. Law was never intended to be the foundation of conscience. The law’s function is to protect the rights of citizens. It is minimalistic by nature. When we make this minimalistic agency the ground of ethics and conscience, we make ethics equally minimalistic.

We now face a peculiar cultural situation: Ethics seems to be in a perpetual state of ambiguity; lawyers cannot add clarity to this ambiguity without moving beyond their minimalistic function; and rationalization has become one of the primary goals of ethical reflection. As a result, we see several severe consequences: a rapid increase in lawsuits and transactional costs (monitoring, protection, insurance, legal remedies); employees attempting to get a “fair deal” from companies by stealing, absenteeism, and misuse of property; a rapid decrease in trust; a rapid increase in the five debilitators (fear, anger, suspicion, passive aggression, and compulsive ego); and a loss of the sense of integrity.

Integrity is an internal disposition that associates our identity with moral rectitude. We do not simply think that our morals are important to live with ourselves or to sleep at night, we believe that our morals are partially constitutive of our very selves. The identification of self with morals is so deep that we don’t have to think about whether we are going to act according to our principles, we simply do. No psychic energy is wasted on internally debating whether a principle applies in this situation; we simply do the “right thing.”

This internal disposition is progressively being replaced by an external constraint system. Instead of saying, “This action is a violation of principle,” we now ask, “Please contact our lawyer to see if we have a legitimate exception to our possible violation of the latest interpretation of this stature.” Using such “moral” logic, we dissociate our identity from our moral convictions. Our employees will see this, take a cue from it, and follow suit. So will our children. The only way of reversing this disturbing trend is to return to principle-based ethics.

Stay tuned next month for some ideas and plans which may help us to move beyond ambiguity and the lowest common denominator to principle-based ethics.