Have you ever noticed that leaders of companies love to promote their commitment to ethical business practices? Go to the PDF version of an public company’s annual report and do a search for the word ethical, or ethics, and you’ll see a very nice discussion about the firm’s commitment to ethical business practices. Yet, when you look at litigation trends you see that the number of disputes has never been higher. A recent Fulbright & Jaworski Litigation Trends Survey showed that 83% of the corporate counsel surveyed expected litigation to increase, up from 79% the previous year.
Herein lies the problem: Ethical conflicts arise during projects, in part, because the stakeholders don’t define the word “ethical” the same way. This is a systemic problem throughout Corporate America.
Is it possible that company leaders are causing ethical dilemmas by not really understanding philosophical aspects of ethics? The importance of ethical business practices are being stressed, as are the findings that ethical leaders tend to be more successful. However, leaders don’t seem to be spending enough time stressing the simple truth that what is ethical to one stakeholder may not be ethical to the next. That is, they are encouraging people to be ethical without delving into the philosophical foundation of ethics. Prerequisite knowledge is as important in business as it is in school. One can’t skip the theory and go straight to practice. It isn’t a sustainable strategy.
For example, assume you are an American project manager asked to develop a project to build a new factory in China, which will result in 100 lost American jobs. Is this ethical? The answer is: It depends on your ethical philosophy.
If you are an ethical egoist you would say “yes”, as you are doing something legal and in your best interest. If you adhere to Divine Command Theory you would likely say “no”, as China is officially an atheistic state. The holder of a utilitarian view would probably say “yes” because, economically anyway, more people (i.e. customers) would benefit from the action than be harmed by it. One who adheres to Kant’s Categorical Imperative model would likely say “no”, since Chinese workers are not given the same rights and benefits as American workers.
So, to mitigate the risk of disputes within your projects you may want to state your ethical philosophy clearly to all stakeholders. Most American corporate managers seem to adhere to an ethical egoist or utilitarian model, which is OK. In a free society everyone has the choice to adopt a philosophical framework that they like. What they don’t have is the right to assume that everyone else will adopt the same model. Just because you justify an action as ethical doesn’t mean that it is. It just means that it’s ethical to you. Therefore, be sure to take the time to let all those you lead know your ethical philosophy. They may not agree with it, but if a conflict arises they cannot say they were unaware of it.