The Role of Ethics in Building
Successful Businesses - Part Two
This paper is in two parts - part
one introduces ethics and business, and explores a primary requirement
for any business which aspires to be successful - trust. Part two,
here, covers the contribution which ethical insights can make to
the creation of trust and thereby business success.
What Can Businesses Learn From Ethics?
In part one, our
conclusion was that the creation of trust is a primary business
goal for all businesses and all individuals in business life. Without
trust there can be no business, and the more trust there is the
more business there will be to do.
The question now, then, is how we turn
that two-fold commitment - to keeping commitments and not lying
on the one hand, and dealing fairly and reasonably with others on
the other - into a set of clear nostrums which we can follow, and
that we can inculcate into our staff so that they follow them. This
is where we can learn from the formal discipline of ethics.
In ethics there are a number of approaches
that are generally suggested as being the most viable approaches
to ethics. Three of these are as follows*.
- Consequentialism - the idea that we should be guided by the
expected consequences of our actions, and that the consequences
we should desire are the greatest happiness (or flourishing)
of the greatest number. Therefore, it is not the rightness or
the wrongness of the particular course of action that we choose
per se that is most important, it is the consequences of that
action. The thinkers most associated with setting out this approach
originally are Jeremy Bentham and John Stuart Mill, who in the
nineteenth century put forward an approach to ethics they called
- Deontology - the idea that it is the act that is most important
rather than the consequences of that act, and that the acts
we carry out should be decided on the basis that others have
as much right for regard and consideration as we have; and that
our acts should reflect a commitment to giving others due regard
and consideration. Immanuel Kant is the thinker most associated
with setting out this approach. He came up with what he called
the categorical imperative, in his terms the supreme rule to
guide behaviour. In fact Kant's categorical imperative has three
different formulations, arguably the same imperative from different
viewpoints, two of which I will mention here:
- act only on that maxim [rule] which you can at the same
time will as a universal law". This is a version of the
so-called Golden Rule - we should do to others what we would
want them to do to us in the same circumstances - using
the idea of a universal law (one that applies to all people
at all places and all times) as a reference point for us
to bear in mind when contemplating an action); and
- so act as to treat people as an end and not as a means
only" (my paraphrase). In other words, we should recognise
that others are not just tools for the achievement of our
own goals, but individuals of worth in their own right who
have the right to equal consideration as ourselves.
- Virtue ethics - the idea that it is not the acts, or the
consequences of those acts, that are of primary concern, but
the inculcation and fostering of virtues. The virtues include
such things as truth-telling, generosity, integrity, and so
on. The suggestion is that, by focusing on building up our virtuous
tendencies we will naturally act in a virtuous manner and our
actions will naturally tend to have good consequences. This
theory is not so much about helping us decide what we should
do, but rather, once we know what to do, how do we ensure that
we do it.In other words, we often know we should do such and
such, but self-interest gets in the way and we do something
else. Virtue ethics takes the view that by practicing being
virtuous, over time we become virtuous, so the emphasis is on
getting into the habit of acting in a virtuous manner so that
eventually we act virtuously without thinking about it.
The Deontological Approach to Ethics
for Business Success
All three approaches have their place,
but for present purposes I want to focus on the latter two. This
is because, with consequentialism, there are occasions when you
can say that it is right to break your word or to treat certain
people shabbily if the greater good is thereby promoted. In a situation
where, as a business, you want to build a reputation of trust, you
will not be helped in achieving this if the approach you adopt permits
actions which will reduce trust (which lying or treating people
shabbily clearly will).
There may be times of course, when
lying or treating certain people shabbily is the course you decide
to take in the best interests of the business. That may be so, but
the temptation will be to have recourse to these sorts of actions
more often than is optimal if you adopt a theory of ethics that
permits those sort of actions.
Therefore, it is suggested that businesses,
as a matter of business policy and public commitment, adopt a deontological
approach to ethics (even if there are times when this approach is
a step too far for the business). The two stances set out by Kant
- treat others as you would like to be treated yourself, and treat
others as ends rather than just as means - are the stances most
likely to lead to the greatest fostering of trust and the greatest
reputation for trustworthiness, integrity and fair dealing. These
will, as a consequence, lead to the greatest long-term success.
Building these into your dealings with
colleagues, and employees generally, as well as in relations with
other companies, will do the most to create trust.
It is a strange thing that, when in
a position of power, we so often demand that others meet these standards
but we do not see the need to meet them ourselves. For example,
we expect people reporting to us to treat us as we like to be treated,
but we often do not feel we need to do it in return. And we often
are happy to tell of occasions when we deceived others and got away
with it, without seeing that this undermines our reputation for
trustworthiness and will also tip off others that they should not
feel too particular about treating us with integrity in turn.
In summary, trustworthiness, as fostered
by the above nostrums, has all sorts of advantages for businesses.
It reduces transaction costs inside the company and between companies
by reducing the amount of time and effort all parties feel they
need to put in to doing our best to ensure they are dealt with fairly.
It encourages people and companies to enter into transactions they
would otherwise steer clear of, enabling the business to attract
more business, and enabling the recruitment of staff the business
otherwise would not be able to recruit.
Loss of trustworthiness, conversely,
has all sorts of corrosive effects, as witnessed by the economic
fortunes of those countries where corruption is rife and where the
legal rights of individuals and companies are not always respected
or enforceable in law. Within companies, if employees know that
all staff are treated equally and fairly, they will put their efforts
into meeting company goals; whereas, in companies where it is believed
by staff that they are not treated equally or fairly, and where
success is seen to come from deception or lying (or even where deception
and lying, when found out, is not thought to be a serious problem),
staff will put their efforts into finding ways to advance their
interests which do not align with company goals.
The virtue ethics approach, while not
in itself useful for deciding what to do, is useful in that it puts
forward the view that good habits should be the focus of effort.
By inculcating good habits (i.e. habits derived from practicing
the two versions of Kant's categorical imperative) in a company's
ethos, and ensuring that good habits are seen as contributing to
success, the chances of building a reputation for trustworthiness
and integrity on a long-term basis are much higher.
Metamarketing can help you and your
company create and implement policies designed to increase trust
and thereby contribute to business success, based on Kant's categorical
imperative and on adopting the application of the imperative into
all aspects of business life.
* One other approach, which I have
not discussed in this paper, is the phenomenological approach, and
particularly the approach taken by Emmanuel Levinas which, in a
nutshell, is to take the Other (considered as another subject with
equivalent status to ourselves, and their interests) as primary
even over my own subjectivity and interests).
While I would put Levinas's ethics
high on own my list of ethical approaches and, ultimately, may favour
it over others, it does not lend itself easily to business practice,
both because it does not allow neat encapsulation in short, easily
understandable phrases (a virtue of Kant's ethics) and also because
it sets the bar unrealistically high in terms of ethical practice.
Having said the above, the method by
which I have arrived at proposing Kant's ethical nostrums is phenomenological
more than Kantian. Kant would not have been happy to see his ethics
used to further business success rather than, as he expected, instilling
in us our duty to do right regardless of outcomes.
and Ethics Part 1
to White Papers