Some years ago, a senior executive at a Fortune 100 company objected when I asserted that corporations have an ethical, as well as a legal obligation to keep promises and honor their contracts. He said that the decision to live up to or ignore contractual commitments is a business decision, not an ethical one. The other party has legal remedies, he said, and therefore responsible managers have a duty to evaluate whether it’s in the company’s best interest to honor or breach contracts. The decision should be based on a simple cost/benefit analysis. Ethics has nothing to do with it.
Disturbingly common, this claim of moral immunity is based on the erroneous idea that in business the only thing to consider is self-interest. The theory that expediency, not ethics, should control decision-making flourishes because many people compartmentalize their lives into personal and business domains, assuming each is governed by different standards of ethics.
In business, the argument goes, ethical principles are simply factors to be taken into account; they’re not moral obligations. As a result, fundamentally good people who would never lie, cheat, or break a promise in their personal lives delude themselves into thinking that they can properly do so in business.
Nonsense! There’s no such thing as “business ethics” — there’s only ethics. Fundamental standards of right and wrong like trustworthiness, respect, responsibility, fairness, caring, and good citizenship do not become irrelevant when we enter the workplace. And it doesn’t matter how many people think otherwise.
Remember, ethics is not a description of the way people actually behave. It’s a prescription for how they ought to behave.
Editor's note: This article first appeared in the Capital City Free Press on June 6, 2014.
This article was published by the Josephson Institute.
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