The topic of business ethics is one that too often ends up on the back burner, unless you happen to be a social activist. In business circles, the topic arouses as much interest as a turtle race.
The logic of business, chiefly concerned with profit maximization, usually places ethics within the overall logic of self-interest. Ethical issues that do worry businesses deal with those actions that may harm the company, as when employees are drinking on the job, or in some cases actions that may damage the company’s public relations image. When the latter is the main motivator, most companies opt simply to remain within the legal norms. As one senior executive told me recently, “Staying legal is about the only ethical standard we can hope for. It’s difficult enough as it is.”
The problem is that while in most cases ethical behavior implies respect for the law, not all ethical behavior is reflected in the law. Usually, progress in the ethical arena precedes the law, and thus, such progress is hardly advanced if we simply opt for following rules and regulations.
Let’s take the example of discrimination. Discrimination is a practice now widely rejected throughout the world, and in countries like the United States, discrimination in the workplace based on gender, age, national origin, or ethnic/racial belonging is strictly forbidden. In Mexico, discrimination is presumably illegal, but the hiring practices seen all around reveal persistent racism, sexism and ageism. Want ads typically describe age, gender and “good looks” preferences. Presumably, those who are responsible for stating those preferences will usually deny their intentions as discriminatory. If a younger person is desired, it is because customers prefer to interact with young people. If a male instead of a female is hired, it is because men are more willing to travel.
But experience has shown that many widely held beliefs about the impact of social variables on job performance are simply wrong. Women are excellent pilots, blacks can sell just as well as whites, and people over 35 can actually carry out demanding jobs. At least in the United States, the anti-discrimination revolution of the last 20 years has not only not impeded corporate progress, but possibly has had the opposite effect: Because of its new diversity, the U.S. working population is better prepared than ever to enter new, ethnically diverse markets and to innovate new management techniques. The success of U.S. companies in this period is proof enough that there is such a thing as good ethics and good business.
Companies that operate transnationally often are faced with defining their own internal ethics vis-à-vis differing standards in other countries. For example, in Mexico it is a common practice to test women for pregnancy before they are hired, a practice that is justified because of the mandatory paid leave-of-absence regulations in the country. While this is a legal practice, many will agree it is evidently discriminatory. Should a multinational corporation adopt the practice in some countries because it is legal? If it does, it conveys an inconsistent message to its employees and customers: It will discriminate in some cases, but not in others.
Once your organization conveys inconsistent ethical standards, efforts to make your employees more ethical are doomed to fail. Perhaps this was the reason why General Motors, the largest private employer in Mexico, decided about a year ago to put an end to this repugnant form of testing. To my knowledge, the company has not suffered financially because it opted for a more consistent and ethical standard within the organization.
Consistency is the key to attaining good ethical standards. You cannot ask employees, for example, to be honest with respect to the company but to cheat customers. Recently, I met a very bright young executive in the information systems business who told me he had quit his previous job because he was asked to bill his customers for extra hours when the work had not been done. In the short term, the company certainly maximized profits, but at the expense of its own long-term health. For starters, it lost a valuable employee. And eventually, such practices become known and will surely affect sales and profits as well.
Good, pro-active ethics is not inconsistent with good business. Companies should encourage managers to take ethics more seriously, and managers should see such issues as part of their job, rather than simply as something in the way of other “more important” chores.