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.

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