The Only Solution to the Decline in Business Ethics: Ethical Managers

Abstract

This paper defines business ethics as a series of behaviors that adhere to values held by the individual manager, the manager's supervisors and subordinates, general society and, most importantly, the manager's customers and clients. The concept of business ethics is explored through several levels of business organizations and operating environments. The paper then examines recent evidence of the decline in business ethics by noting a few examples involving Beech-Nut, Hertz, Michael Milken, E.F. Hutton, Sears, Salomon Brothers, Dalkon Shield, Exxon Valdez, S&L scandal, brokerage analysts. Surveys are cited to indicate that the American public believes that business ethics are declining. To further analyze the topic, the author reports on a series of structured interviews with managers in a variety of organizations. Fourteen senior managers were interviewed: 4 from large county government, 3 from state government, 4 from large corporations, 3 from small businesses. The managers were asked their opinions concerning the decline of business ethics, and for their recommendations to possibly retard the decline. All managers said they believed that ethics are in decline and that the public believes ethics are declining. The recommendations for retarding or reversing the decline yielded several suggestions: teach ethics in schools and business organizations, develop and enforce Codes of Ethical Conduct within all organizations, establish better monitoring and reporting mechanisms, and hire ethical managers. The paper builds on the interview results by coupling the managers' remarks with admonitions from many authors: while teaching ethics and Codes of Ethical Conduct are important, the most important factor is the ethical behavior of managers (leaders). Ethical leadership is fundamental since ethical behavior is an individual - not a corporate - matter. In practice, ethics is not something that a manager “does”; it is something that the manager “is”.

This paper defines business ethics as a series of behaviors that adhere to values held by the individual manager, the manager's supervisors and subordinates, general society and, most importantly, the manager's customers and clients. The concept of business ethics is explored through several levels of business organizations and operating environments. The paper then examines recent evidence of the decline in business ethics by noting a few examples involving Beech-Nut, Hertz, Michael Milken, E.F. Hutton, Sears, Salomon Brothers, Dalkon Shield, Exxon Valdez, S&L scandal, brokerage analysts. Surveys are cited to indicate that the American public believes that business ethics are declining. To further analyze the topic, the author reports on a series of structured interviews with managers in a variety of organizations. Fourteen senior managers were interviewed: 4 from large county government, 3 from state government, 4 from large corporations, 3 from small businesses. The managers were asked their opinions concerning the decline of business ethics, and for their recommendations to possibly retard the decline. All managers said they believed that ethics are in decline and that the public believes ethics are declining. The recommendations for retarding or reversing the decline yielded several suggestions: teach ethics in schools and business organizations, develop and enforce Codes of Ethical Conduct within all organizations, establish better monitoring and reporting mechanisms, and hire ethical managers. The paper builds on the interview results by coupling the managers' remarks with admonitions from many authors: while teaching ethics and Codes of Ethical Conduct are important, the most important factor is the ethical behavior of managers (leaders). Ethical leadership is fundamental since ethical behavior is an individual - not a corporate - matter. In practice, ethics is not something that a manager “does”; it is something that the manager “is”.