 The only way is ethics
S
candals in business, government
and even religious organisations
over the past decade have
added to the erosion of trust in society.
Data from the 2012 Edelman Trust
Barometer shows a dramatic drop in
trust in the credibility of CEOs in mature
markets such as the US, UK, France,
Germany and South Korea.
This state of unease is attracting vigorous
commentary from the media and public
about the standards of ‘moral’ behaviour
demonstrated by senior executives in
positions of responsibility, which in turn
is forcing some captains of industry to
re-think what is ‘right and wrong’.
There is an urgent need for business to
abandon the short-term thinking and
short-sighted decision making that has
led to the recent economic troubles and
unrest in society and reconsider how they
will implement the new maxim of ‘the
business of business is sustainable and
ethical business’.
The changing times in which we are
living call for progressive leadership
that respects the mutual dependency of
business and society and importantly also
recognises the role of ethics as conducive
to both parties achieving their potential.
With their moral behaviour under the
spotlight, business leaders are being forced
to grapple with problematic questions about
‘justice’ and the link between corporate
action and consequence. It is the potentially
harmful consequences to society that
are causing serious concern for business
leaders. They are having to reflect on how
they ‘judge’ behaviour to be ‘just’ when
addressing business affairs which present
moral issues. There is however a cacophony
of competing philosophical perspectives on
business ethics for leaders to reflect upon
and better understand how to act when
they encounter ethical matters.
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Management Focus | Autumn 2012
The only way is
Dr Palie Smart
Reader in Corporate Responsibility
Ethics
Utilitarianism - producing
happiness for all
The British philosopher Jeremy Bentham
argued that when business leaders are faced
with ethical dilemmas, they should aim to
maximise good for the maximum number
of people. He nobly places the potential
for collective suffering and pleasure over
and above that of the individual. An ethical
leader might question who decides that
the sum of individual suffering is to be less
than that of collective suffering? Should
individual gain be traded in for the benefit
of majority happiness and ultimately for the
sake of utility?
Libertarianism - respecting
individual freedoms
British philosopher John Stuart Mills
proclaimed the pursuit of higher order
pleasures, over immediate gratifications, to
be better for individuals and society in the
long-run. Indeed, the preoccupation with
short-term gains at the expense of longterm mission has been a constant criticism
of the banking sector, particularly those
involved in sub-prime transactions.
In recognising the importance of
individual utilitarian, logic ventures
into libertarianism - a perspective
that appreciates individual freedom, a
choice that is well illustrated by western
democratic capital markets. However,
is freedom and choice based on fairness
for all? It is here that we need to reach
beyond concepts of utility and liberty
to Aristotle and his notion of ‘virtue’ to
understand how to create a more level
playing field for everyone.
Aristotelian - promoting virtues
For the great Greek philosopher
Aristotle, the notion of a good life came
as a result of upholding virtues that have
intrinsic worth. He believed people
generally ‘do the right thing’ and act
according to their virtues. If they fail
to do so and create harm, they usually
lack some prior knowledge that hinders
their action. Former CEO of Barclays,
Bob Diamond denied knowledge of his
traders’ wrongdoings regarding libor fixing
and therefore claimed he was unable to
act appropriately as a leader. Similarly,
in the USA, when hedge fund managers
were questioned about their dealings, that
not only harmed themselves, their firms
and the global economy, they defended
their actions by protesting “it’s not our
fault”, “we are the victims of a financial
tsunami”, “we were not in control”.
This clear abdication of responsibility
intrigues Michael Sandel, a Professor at
Harvard University, who suggests we ask
the same fund managers: “Were you
equally not in control during the good
times?” and “What do you rightly deserve,
if you suggest you were not in control?”
Justice from an Aristotelian perspective
has to do with giving people what they
deserve in accordance with their virtues.
Civil society’s trust in the corporate world
is under threat and the moral behaviour
of business leaders under scrutiny. The
bottom line of business ethics depends
on asking tough questions. For business
leaders, questions of justice must sit at
the heart of their business. They need
to engage creatively with the different
philosophical debates and accept that one
perspective alone will not suffice. MF
For further information please contact the
author at Palie.Smart@cranfield.ac.uk
Management Focus | Autumn 2012
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