Why is Business Ethics Such a Failure?

It's no surprise that company culture begins in the C-suite, but how can we teach ethical approaches clearly?

Published: Oct 13, 2023  |  

Writer, professor and business consultant

When I began teaching university-level business ethics classes, I did what most new teachers do: I borrowed ideas from more experienced professors. I asked friends for copies of the syllabuses they used to teach similar topics on practical ethics. These shared many common traits: Have students read some philosophy (Plato, Aristotle, Kant, John Stuart Mill) and then use those points of view as a foundation for understanding particular moral quandaries among businesses. 

This was an utter failure in my experience. First, my undergraduate students were no more capable of understanding Aristotle and Kant than they were of understanding quantum mechanics. Second, the leap from philosophical theory to practical application was unclear to them at best. That was a problem, since that is, after all, really the entire point of teaching business ethics: To move from ideas to actions. But it was a hard slog since the students couldn’t be depended on to understand the theoretical part of it. Lectures were the only answer, but that’s a passive way of learning and I never felt the students were internalizing the issues in a way that might influence their moral thinking. 

Making tough decisions

I needed to make it more personal. So I migrated to a decision-based way of teaching, with students role-playing business leaders faced with a difficult situation and then weighing the relative merits of different approaches and answers. I even used a book series called Taking Sides, which discussed critical ethical issues from contrasting points of view. Other books focused on things like, “Making the tough decisions.”

But here’s what I found students were actually learning: That there are two sides (or multiple sides) to everything, so you can come down on either side or any side. If you can justify any kind of “tough decision” with a general wave at philosophy or precedent (and a healthy dose of self-interest), you’re good. And then you can praise yourself for your courage. But it seemed like it was all operating in a moral vacuum. As Freddie Mercury sings in Queen’s Bohemian Rhapsody, “Nothing really matters.”

Was that really what I wanted to leave my students with at the end of the class? That nothing really matters because any choice can be justified? 

A compliance-based approach

When I moved on to a consulting career, the situation I found at large companies was different, but no more valuable. There I found that the ethics courses were focused primarily on compliance. “I’ve given my employees and contractors the information I want them to have about ethics codes and various laws and guidelines about privacy, confidentiality, and information security, so I’ve done my duty. I can tick those boxes and we’re done.” If you google “Chief Ethics Officer,” you’ll find definitions stressing codes, training programs, ethics frameworks to guide decision-making, and monitoring compliance with government regulations.  

There were some training courses I saw, yes, about how to treat others in the workplace, but those seemed to be inspired, you could tell, primarily by the desire to keep employee attrition as low as possible. 

Aside from those courses, I rarely saw evidence of an approach to ethics that was about changing people’s mindsets, beliefs, or behaviors. Nor did I see self-recognition that maintaining a moral environment across a company begins at the C-suite and cascades down from there. It felt to me, and still feels to me, like a failure—leaders passing the buck for their moral responsibility onto compliance, HR, and marketing people.

Being a good person

What lessons from my teaching could I therefore bring to companies? At the university, I eventually moved to an approach more grounded in virtue-based leadership—that is, what does it mean to be a “good person” and therefore a good leader? For my university courses, I totally jettisoned background readings in moral philosophy. I found that I could convey the basics in a short lecture. 

Then I assigned Stephen Covey’s Seven Habits of Highly Effective People. It was a revelation to my students (partly because they actually read it). The book showed instance after instance of effective leadership based on being a “good person” with the moral insight to act in a way that advanced the well-being of people, and therefore the well-being of the company. 

Imitating others

I maintained—then and now—some important moral philosophy as the basis for my work. One very effective concept to get my points across is Aristotle’s idea of imitation (“mimesis” in Greek … as in, “mimic”). We learn virtue and moral insight by imitating the behaviors, mindsets, and words of others who we are most influenced by. Over time, through practice and repetition, we own those behaviors deep within ourselves. They become moral habits. Unfortunately, those habits can be good and they can be bad.

The following personal story about moral imitation has always resonated with students and clients: Years ago, I reported briefly to a woman who had, to put it as kindly as possible, a potty mouth. She had somehow inherited a misplaced need to imitate the very worst parts of the supervisors she had reported to. She was hard, uncompromising, and profane. 

Just a few months into the job, my wife asked me, “Do you know you’re swearing a lot lately?” I was an adult, supposedly immune from crass influences like this, but I was not. I don’t think anyone is, at any age.

While I was discussing this concept with my class, one student raised his hand: “So you’re saying that an asshole leader can negatively affect a company, so a really strong and moral leader can positively affect the company?”

The student got an “A” on the spot. 

What should they imitate?

If business ethics in a corporate setting is to be more than a failure, I think it needs to thrust responsibility back on business leaders themselves, based on the concept of moral imitation. 

Here’s what I’ve found.

The questions that almost always lead to the deepest reflection by business leaders are: 

Which of your behaviors as a leader would you most like your people across the enterprise to imitate? 

Which of your words and behaviors are inspiring them to do their best on behalf of themselves and the company? 

I’m not going to tell you. You tell me.

I’ve sometimes heard lots of crickets, but it doesn’t have to be that way. Business ethics doesn’t have to be a failure. The C-suite’s moral burden is a heavy one, balancing total shareholder return and other financial imperatives with “doing the right thing.” But properly understood, business ethics can incent the human soul toward bigger things. It can inspire leaders and their people toward greatness for themselves and the companies they represent.

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