Managing Values: A Systematic Approach to Business Ethics

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Managing Values: A Systematic Approach to Business Ethics

In business, the right thing to do isn't always clear. But creating a system for managing values is a major step in the right direction.

The very term, "business ethics," tends to arouse some people's cynicism. They shake their heads and woefully recite recent scandals: the baby-food manufacturer that sold flavored sugar water as pure apple juice, the behind-the-scenes deals that nearly toppled the savings and loan industry, or the revelation that a major airline falsified airplane maintenance reports.

And some people express worry or regret that the traditional values-communicating institutions of family, public schools, and religion may be playing "less vigorous" roles in our lives. So says Gary Edwards, executive director of Washington, D.C.'s Ethics Resource Center.

Moreover, many people agree with the well-known business figures who say that business shouldn't be concerned with philanthropy or with employees' ethics beyond their adherence to legal requirements.

For example, economist Milton Friedman has written that return on investment is the appropriate business concern. Following his line of reasoning, managers who perform "good" acts that aren't required and thereby diminish ROI have confused their private and public roles.

Business advisor Peter Drucker has written that ethics is a matter for one's "private soul." And Lester Thurow, dean of MIT's Sloan School of Management, believes that people's ethical values are not subject to alteration, because they are formed at an earlier age than that at which people enter graduate school or employment.

Other perspectives

But altering people's values or souls isn't the aim of organizational ethics programs--managing values and conflicts among them is.

"The question of whether business should concern itself with ethical issues is a straw man," says Burton F. Porter, head of the department of humanities and communications at Philadelphia's Drexel University. "The real question is to what extent business is responsible for social good rather than self-interest."

Like many school and business leaders, Porter sees profit and growth as primary business responsibilities, but not as the only ones. He contends that a person can't "separate business life from life as a citizen."

Many people think that business ethics is a critical issue, but don't think that it affects them personally, according to Curtis R. Berrien, president of The Bay Group, a training consulting firm in San Rafael, California.

Berrien says that when the topic of ethics arises, people often allude to "the things you know by age 19." They're quick to speak of the Golden Rule, honesty as the best policy, and the desirability of courtesy. But if presented with a scenario that requires a decision involving competing claims among values, most people realize that there are wide expanses of "gray area" in the application of widely held principles.

Berrien says ethics may be defined as "a system of beliefs that support a system of morality. Morality involves standards by which people are judged right or wrong--especially in relationships with other people. Ethics is also a function of making decisions that balance competing demands."

In Tough Choices: Managers Talk Ethics, Barbara Ley Toffler identifies four "competing claims":

* conflict between two or more personally held values * conflict between personal values and the values held by another person or the organization * conflicts between basic principles and the need to achieve a desired outcome (a means/end conflict) * conflict between two or more individuals or groups to whom one has an obligation.

In the mid-1980s Toffler interviewed 33 managers, asking them to describe situations they'd faced that had "ethical components." Of the 59 situations described, 39 (slightly more than 66 percent) related to human resource management. …