Some years ago, a senior executive at a large company objected when I asserted that corporations have an ethical, as well as a legal, obligation to keep promises and honor their contracts. He said the decision to live up to or ignore contractual commitments is a business decision, not an ethical one.
His primary responsibility, he said, was to the stockholders. He noted that most of the time it is wise to fulfill your promises because there are legal and relationship risks involved in breaking contracts, but in the end the decision to honor or renounce a business agreement should be based on a cost/benefit analysis. Ethics has nothing to do with it.
This claim that business executives are justified in treating the pursuit of self-interest as a moral imperative is disturbing and dangerous. It’s also common.
The theory that expediency, not ethics, should control decision making in business flourishes because many people compartmentalize their lives into personal and business domains, choosing to believe each domain is governed by different moral standards.
As a result, fundamentally good people who would never lie, cheat or break a promise in their personal lives delude themselves into thinking they can properly do so in business.
Nonsense! There’s no such thing as “business” ethics. There’s only ethics. Fundamental standards of right and wrong, such as trustworthiness, respect, responsibility, fairness, caring and good citizenship do not become irrelevant when we enter the workplace.
And it doesn’t matter how many people think otherwise. Ethics is not a description of the way people actually behave. It’s a prescription for how we ought to behave. In business — and, for that matter, in politics, sports, journalism, and parenting — ethical principles are not simply factors to be taken into account; they’re ground rules.
This is Michael Josephson reminding you that character counts.
Michael Josephson is founder and president of the Westside-based, non-profit Josephson Institute of Ethics. See charactercounts.org.
