Even though the subject of ethics often makes for news stories, this wasn't supposed to be one. No, it began as an executive education piece that would examine whether companies are investing in training and continuing education these days, what with the soft economy and all. Also, whether that same climate is causing executives to add coursework and certificates to their resumes instead of another job or title. Those questions are worth answering for sure, but we'll leave it for another time and space. Because the whole time I was researching that story-talking with CEOs and professors and business school leaders and the like-it kept leading me to this story.
That makes perfect sense to Stephen Young, global executive director of the business ethics organization Caux Round Table, former assistant dean of the Harvard Law School, dean of the Hamline University School of Law and author of a book called Moral Capitalism. "Every business leader these days is obviously looking at maximizing value," says Young, who points to recent failed Wall Street firms as poster children for what happens to the value and future of companies too focused on short term profits. "You have to look at profit as an intermediate point towards capital value. And we're not just talking about financial capital, but also human capital and social capital and reputational capital. If you look at all of those capital accounts and then figure out how you are going to increase the value of your company, then all of a sudden you find yourself thinking about your customers and clients, about your employees, the environment, the community, technology, and all in new ways. The creation of long-term wealth and sustainability now becomes the focus and that is happening more and more these days."
Young also says that it made sense that my research kept leading me right back to the Twin Cities. After all, not only is it the American headquarters of his organization, but it's also home to companies who long ago decided to work on their intangible assets and not just their balance sheets.
"If you go back to the formation of great Minnesota companies such as Cargill, General Mills and Dayton Hudson Corporation to name a few, they were begun by families who were not at all focused on the short term, but instead wanted legacy businesses that would be good corporate citizens and last for generations."
The first-and only-set of business principles (see Caux Round Table Business Principles at left) designed solely by business people haven't been around for generations, but rather since 1992. That's when Robert MacGregor, head of the Minnesota Center for Corporate Responsibility (now known as the Center for Ethical Business Cultures), and Chuck Denny, then-CEO of ADC Corporation, went to Caux, Switzerland with the idea of formalizing the notion of ethical behavior in business.
"They've been translated into many languages and work in all kinds of countries and they can be used as a basis for a profitable but responsible business," says Young. "In fact, this new MBA Oath is very similar to the substance of the Caux principles."
Ah, yes, the MBA OathIt's a phenomenon that is being talked about in the business community and academic circles all over the country these days. It too has a Minnesota connection in the form of former Medtronic CEO, Bill George, who now teaches management at the Harvard Business School.
In response to the financial crisis, several of George's students initiated an oath to "do no harm." Their idea has gained considerable traction and has been promoted through social networking sites such as Twitter and Facebook.
"You know, it's part of a package," says Young, of the oath. "Acting morally, ethically and responsibly, acting with thoughtfulness for the future, avoiding short termism, avoiding excessive selfishness; it's an act. It's a behavior. You have to decide how you are going to act. Where does your motivation come from?"
"I personally don't think signing a piece of paper is going to make someone act ethically," says Julian Schuster, dean of the graduate school of management at Hamline University. "We need to integrate ethics into our everyday existence so that doing the right thing becomes second nature. Ethics needs to be part of the way we raise our kids, as well as our business leaders. We need to create an atmosphere where ethically run businesses are simply deemed superior to those that aren't."
For their part, Schuster says that rather than having a single course or courses on ethics at Hamline, they "have tried to weave ethics into all of our classes so the discussion permeates every conversation at both the undergrad and graduate level."
The same is true on the campus of the University of St. Thomas, according to Christopher Puto, dean of the Opus College of Business. "Our students leave with the concept that profit is the reward for being a good business, not simply the goal of being in business," says Puto. "Ethics is being talked about far more than it ever has been these days. We are capitalizing on that because of our presence in that space."
That presence, according to Puto, is "one of the largest, if not the largest, business ethics faculties in the country, with over eight fulltime faculty members devoted to ethics and a department in ethics and business law."
Puto also says that enrollment in the fulltime MBA program is up 20 percent year over year, and that he attributes it to the school's stance on ethics.
Under the leadership of Dr. Ken Goodpaster, Ph.D., MBA students at St. Thomas take required courses in business ethics and also participate in an "ethics lab."
"We go out to local companies such as Medtronic, Toro and Imation so students can hear from the CEO and the CFO and the general counsel and other senior executives on how they make ethical decisions," says Goodpaster. "The students are sometimes surprised at how conversive the executives are on the subject."
Since a lot of our conversations these days revolve around the economy, I asked Dr. Goodpaster if empirical research could connect the dots between acting ethically and being profitable.
"There is some data out there that shows over an extended period of time-a decade or so-companies that have reputations for social and ethical integrity outperform companies that don't. In my opinion it will never be decisive data," says Goodpaster. "I don't see the day when the primary reason to be ethical will be driven by a profit motive."
"This is still emerging though so it's not like it's making a lot of headlines in The Wall Street Journal yet," adds Puto. "I do believe ethics will be part of the strategic focus of companies and organizations in the future though. Take the financial crisis. Nobody has gone to jail over this. People are getting fired and losing jobs and companies are going under of course, and it was stupid and inappropriate behavior on a lot of fronts, but it wasn't 'illegal.' This is where ethics is supposed to come in."
So where or when or how does "ethics" guide us in our personal or professional lives? John C. Maxwell, is a former pastor, successful business executive, leadership expert and author of the book, There's No Such Thing As 'Business' Ethics. He suggests a simple way that everyone can move from acting "mostly ethical" to "always ethical." It's based on the golden rule, or asking yourself the question, "How would I like to be treated in this situation?"
Not so simple, says Brother Louis DeThomasis, FSC, Ph.D., chancellor and president emeritus of Saint Mary's University in Winona. He wrote a book with business columnist Neal St. Anthony of the Minneapolis Star Tribune called Doing Right in a Shrinking World: How Corporate America Can Balance Ethics & Profit in a Changing Economy.
DeThomasis says, "Alone, the golden rule, religious tenets and other static belief systems are no longer viable options in our ever-changing world. With the diverse cultures, religions and organizations in our global economy, we must continuously adapt to unique situations and make decisions that benefit all people."
So what of the future? Will academics like DeThomasis, schools such as the Opus College of Business and global organizations such as the Caux Round Table have a bigger voice in the ethics conversation?
"Only if we do a good job of selling it," says Caux Round Table's Stephen Young pointedly. "For years we had to be kind of on the defensive about what we do. 'Oh, you work on business ethics, you wrote a book on moral capitalism, who cares? The world is run by the smart and the greedy and the tricky.' But people do care now. I no longer have to defend myself or my work or explain what I do. It's almost like they're saying it's a good thing that someone is thinking about this. At least now we have a window of opportunity." MB