How Can Corporate Ethics Fail? Gradually
The past year was a tough one for corporate leaders -- and for business schools, which have not been left blameless. The MBA credentials held by executives undergoing the “perp walk” have been widely noted, and many have charged business schools as complicit. Critics have called on business schools to teach more ethics classes.
But are ethics courses the answer? After all, most of those executives charged with crimes received their business degrees after taking required ethics courses. Centuries of experience have shown that ethical debates do little to stop individuals from lying, cheating or stealing.
We in business schools can help, but we can be more useful if we do what we have been trained to do: Observe and then try to understand what has happened.
My own observation is that bad behavior is more a problem of the slow and careful socialization of some managers and professionals who now believe that exploitive, misleading actions are OK. It can be called the “boiled frog problem.” When you put a frog in a pot of water and turn on the heat, the frog stays in the water and gets cooked. But if you put a frog into water that is already boiling, the frog will try to jump out and save itself.
I am quite sure if you put fresh business-school graduates onto the Enron audit or in the WorldCom executive suite, they would have jumped out. No, it took years of careful socialization to produce those Boiled Frogs.
Why does Boiled Frog socialization happen, and what does it look like? In part, it is a natural consequence of the difficulty of drawing clear lines. Sophisticated adults realize that rigidly following all rules isn’t always sensible. In the real world, rules must be bent when following them would do more harm than good. A rigid, rule-insistent martinet should not progress beyond the first level of management in any organization. And life isn’t fair. The older you get, the more you see that time and chance play a role, and even the swift got that way through lucky genes.
Ethics aren’t always black and white, but that doesn’t mean good lines cannot be drawn. Business schools can help by speaking the truth about those who draw the line too low. There is no golden key, no ethics discussion that will provide lapse-proof protection to everyone for all time. We learn where to draw our lines through experiences, and those are different for everyone.
Which brings us back to our Boiled Frogs. Some new business-school graduates will be thrown into companies where the water feels cold but is slowly getting warmer. What do such pots look like, and how can you recognize the heat before you get boiled? If you can answer yes to these scenarios, the water is getting too hot:
Do co-workers make job decisions for personal gain at the expense of their employers or clients, and then laugh about it over lunch? Pocketing personal profits from IPOs that were only offered to get you to steer business to the investment banker clearly is not right. Yes, we all do each other favors, but there is a line between a lunch and an introduction and thousands of dollars of personal gain at your employers’ or clients’ expense.
Are you asked to do things you couldn’t tell your mom? She is more sophisticated than you thought back when you were a kid, and she (unlike your boss) really is looking out for your interests.
Are those who want to play fair denigrated with terms like “Boy Scout” or “sissy”? People who call you these names are trying to get you do something stupid. It probably isn’t a coincidence that women are overrepresented among the whistle-blowers in the corporate scandals: They have no manhood to be threatened.
Do the people who practice the above get ahead in your organization? The water heats slowly, and in Boiled Frog companies, neophytes are not shown the serious stuff too soon. New employees are tested in small steps.
If you see any of these Boiled Frog indicators, quit your job now. Lengthy legal investigations are very expensive, and the money you will make stamping license plates is much less than what you will earn at your next job. Let the truly unethical people do the jail time.
Finally, my own coldly observing eye and commitment to truth compel me to note that some faculty members in some business schools are the first to turn up the heat on the pot of water. Here’s how to spot it: Your classroom instructor says business is a game of poker and that everyone knows everyone else is lying.
Business isn’t a poker game. If people find out you are lying to them, they will not take it lightly.
In short, business schools should worry about telling our students that they should be good, and that should make them smarter. Look around. Think about the implications of what you are seeing, and never be afraid to leave a bad situation. Isn’t that the reason you got your MBA in the first place?
