Building Ethically Healthy Organizations

One hundred sixty of six hundred recent MBA graduates from Harvard Business School created and signed an “MBA Oath” voluntarily pledging to serve the greater good, act responsibly and ethically, and refrain from advancing their own narrow ambitions at the expense of others.

Since it has been widely noted that MBAs, including those from elite schools like Harvard, have often been at the heart of the business scandals of recent years, and since the conventional business mythology today is that some kind of “invisible hand” will optimize a marketplace where each actor pursues their own rational self-interest (i.e., big bucks for me asap) . . . we can only be grateful for the twenty percent who stood up and spoke up for ethical, responsible business. We have certainly had enough of the other kind.

But good intentions and public pledges only go so far. We need more.

In recent decades the agenda of business ethics has been set by behavior that risks or brings about litigation, financial penalties, or brand-tarnishing scandal. Ethics books, courses, and company training programs tend to approach ethics as an individualistic exercise in dilemma-resolution and damage control. But this is entirely too narrow, reactive, and negative. Too little, too late.

Think about your health. For many people, health is of interest only when they get sick or injured and need to get drugged or patched up. But this damage control approach does not help one avoid illness and injury, much less achieve a level of fitness and health that enables the kind of activities that life is really all about.

A vastly superior approach to health care is to get focused on what you would like to do in life over the next few years or decades (hiking, dancing, sleeping well, walking, playing with kids and grandkids, enjoying great food without drooling, etc.) --- and then take a careful, positive, systemic approach to your nutrition, cardio and resistance training, stretching, posture, breathing, stress relief and so on. This is holistic and positive. There are no guarantees that you won’t get hit by a truck or catch some plague but your chances of being healthy, minimizing injury and illness, and achieving your life goals are much higher.

Organizational ethical health works much the same way. Instead of a reactive, defensive problem-focus we begin by asking, What is our mission as an organization? What do we want to achieve? Then, given this mission, what are the core values, characteristics, and habits we must build into our culture (understood broadly as our personnel, physical infrastructure, and organizational structure/policies as well as our rituals and atmosphere) to best enable the achievement of our mission? And what are the guidelines for our specific business practices (marketing, research, whatever they are) to keep us on track toward our mission? Inspiring mission + value-embedded culture + principle-guided practices: all consciously built, aligned, maintained, and rewarded. Now we are talking “ethically healthy organization.”

Final analogy: great sports teams must study their opponents and decide how to neutralize or defend against the problems they will be creating on the field. But if that “damage control” is all they do, they lose. Great coaches first get their teams focused on an inspiring mission (e.g., “Music City Bowl”!). Great coaches also design great plays for their offense and defense so that their teams don’t just react to the opposition but proactively dictate what happens on the field. But brilliant plays don’t (and can’t) get executed successfully unless the team has certain characteristics, e.g., power, speed, quickness, flexibility, teamwork, coachability, resilience, etc.; this is the “culture” of the team.

So too, well-designed codes of ethics don’t get executed and keep companies on the track to excellence and success unless there is an organizational cultural foundation that enables such execution. The mission and value system need to be built into the team, not imposed on them as a penalty or corrective only when the players get out of line.

David W. Gill (Ph.D., USC) is a veteran organizational ethics consultant and author in the San Francisco Bay Area. Check him out further at www.ethixbiz.com.