7 myths about business ethics

Build good habits by applying the basic principles every day

By J. EDWARD KETZ GUEST COLUMNIST

To be ethical one must build good habits by applying ethical principles every day, including telling the truth, not stealing and treating others as you would want them to treat you. Anything less will lead to distorted views about ethics as well as a parade of offenses and peccadilloes. Start by learning the seven fundamental myths about ethics. Myth No. 1: Business ethics. Many talk about business ethics without realizing that there is no such thing as "business ethics." Ethical principles exist for all walks of life, and these principles do not change as one traverses different venues. Applications might differ, but the principles themselves do not. For example, I take as a fundamental principle of life that David Badders / P-I one should not steal. This truth applies to my personal life, so I do not steal my neighbor's power tools. It also applies to my business life, so I do not steal computers from my employer. The ethical principle of not stealing applies to all aspects of my life. Myth No. 2: Professional ethics can be separated from personal ethics. A variation of the first myth is that we can live however we wish in our personal lives as long as we act ethically on the job. Aristotle discards such a juvenile idea when he proclaims that my character is the sum of all my habits. If I lie habitually in my personal life, then I am not building the strength or the character to stand true at other times. If I lie in my personal life, then likely I will lie in business situations. I will be too weak to resist future temptations of prevarication, even if they take place in the business realm. Myth No. 3: Some things are ethical; some are not. The gist of this myth is that some issues or topics are devoid of ethical content, but this assertion can be true only if human interaction is absent. Consider the classic make-or-buy analysis taught in management accounting. At first blush, it may appear that this decision analysis is purely technical and devoid of ethical content. But ethics pervades this technical grid in several ways. The analyst who is working for the firm is receiving compensation to perform a good investigation; doing anything less is stealing from the employer. The investigation and the recommendations presuppose reliable data and disclosure of all important assumptions; anything less is lying. The decision process itself assumes maximization of shareholder profit, constrained by various stakeholder concerns. One must include these

stakeholder issues to ensure fair treatment of all stakeholders. At the same time, we try to maximize shareholder wealth; else we are stealing from the investors. Myth No. 4: Ethics is a matter of education alone. To act in an ethical way, one must understand his or her duties and obligations. Obviously, education has a role to play in instructing folks about their ethical responsibilities. I have learned, however, that education alone does not produce ethical people, for some very highly educated people act thoughtlessly, selfishly and unethically. To steer citizens toward more ethical behavior, we must supplement education with enforcement. Myth No. 5: Responsibility for ethical education rests with colleges and universities. The calls for more ethics training at colleges and universities make me laugh. I wonder where were the parents, the churches, the K-12 teachers, the Little League coaches and the Girl Scout leaders. Myth No. 6: Ethical dilemmas are episodic. This myth takes the tack that ethical problems arise only occasionally during one's life; accordingly, individuals need education about these professional quandaries; armed with the appropriate facts, one becomes capable of solving such predicaments as they occur. Missing the ethical content of daily human interaction increases the chances of not recognizing major ethical episodes when they materialize. Myth No. 7: You either are an ethical person or you are not. This myth has several problems. The first mistake is that this assertion presumes that education, enforcement and habit-building have no role to play. Clearly, they do. The second problem with this thought is that it assumes perfection, but all people have ethical lapses. What differentiates the two groups is that an ethical person will admit the error, try to make amends and learn from the transgression. Unethical people cover up the blunder, do not care about the consequences and learn nothing from the experience.