Ethics in Business - Thin on the High Ground

Over the recent past, observers of events have seen some mind-reeling examples of bosses who lacked will or ability when it came to the vital issue of establishing sound organizational governance within the organisations they were supposed to be leading. This has involved failures of both competence and ethical probity – the debate as to which is worse being irrelevant where both are suspected to have been the case.

Lax practice and sin by omission are nothing new. Some aspects of The Murdoch affair remind me of goings on around Guinness which took place in over twenty years ago. Plus ca change.  Sufficient evidence of mucky goings on was adduced to put Ernest Saunders – the boss of that particular group – into Ford Open for a stretch. Guinness was just the tip of a much bigger iceberg. It raised absorbing theoretical questions at the time, embracing how culture and mores form, group-think, the Abilene Syndrome; but also practical issue about how far it was reasonably possible to expect people at the top of large organisations to be held responsible for the doings of their subordinates. The general argument for the defence was that it was not possible to hold such executives accountable for the innumerable doings of subordinates. This leads to the interesting conclusion that unless organisations are small enough to be micro-managed, they might be effectively uncontrollable - something many executives will have suspected at some point in their careers. That is not to prove that it should be acceptable.

The question arises therefore – what should practically be expected by those at the top to ensure that behavior remains within clear ethical guidelines? Denied the ability to be everywhere at once, leaders must be concerned to set the tone, the rules and guidelines, to minimize the risks of wrongdoing by their staff and agents. The objective is not to get the merger, but to get it acceptably; not to make impressive profits, but to make them without taking financial risks that can bring economies down; not to get the story, but to get it without doing deeply disreputable things in the process; and to set example by not abusing expense claiming just because the system has been set up to let you get away with it.

We face a fearful situation if we cannot rely on integrity and probity at the top. So is it safe to rely on leaders to deliver this as a matter of moral imperative? The events of the last few years collectively ridicule this idea. H.G.Wells’ “The Invisible Man” is the most brilliant parable about all this. Law, regulation, and the high chance of being found out is the only reliable safeguard. Those at the top have to know they will be held to account if they do not govern properly.

We have discovered some deeply unpleasant things about top leaders in the recent past. Whether it’s banks, political institutions, the police or the media – the temptation to be venal, corrupt, reckless or self-serving is ever-present. No-one is exempt. The only way business and society can protect itself is to elevate the importance of setting rigorous ethical standards, and supporting them by instituting the means of detection, and insisting on the removal of those who think they are exempt. Those voices who, despite everything that has happened over the last three years, still make argument for light-touch regulation, or no regulation at all (especially in their particular patch), should be treated with especial scepticism.  Reduction of regulation shifts the balance of power to the regulated, and as Baron Acton famously warned, “Power corrupts……………”

Peter Saxton
August 2011
©Capstick Saxton Associates