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Boardroom Behavior Should Be Guided by Virtue Not Business Ethics

 

The continuing raft of corporate scandals bears witness to the notion that business ethics as currently defined and practiced in the United States have failed to provide  the framework for “doing the right thing” in the boardroom. The companies most in the news for the ethical lapses like Adelphia Communications, Enron and Worldcom each had a carefully crafted and published “code of ethics” that did not prevent wrongdoing.  Most codes of ethics in American corporations can be reduced to the following: 

 

Don’t break the law or violate corporate policies; and

Follow a set of platitudes that encourage “nice play” with other employees
and customers.

 

Take, for example, the “Ethical Business Practices” of Halliburton, published on the company’s Website. The Halliburton code mentions “fair dealing, honesty and integrity” and includes a sentence on prohibiting discrimination against employees. The code then lists a series of topics about which the company has developed a policy, including:

 

·          Sensitive Transactions;

·          Commercial Bribery;

·          Accounting Controls, Procedures and
 Records;

·          Use and Disclosure of Inside Information;

·          Confidential or Proprietary Information;

·          Conflicts of Interest; and

       Fraud and Similar Irregularities.

 

 

 

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Nowhere in this document does Halliburton mention values, moral behavior, character or virtue. Halliburton has reduced business ethics to number one above, “Don’t break the law or violate corporate policies.” Halliburton’s actual policy (Index No.: 3-001) entitled, “Code of Business Conduct: General Policy Regarding Laws and Business Conduct,” (Code) is a nearly 2400-word document that also is silent on values, moral behavior, character or virtue, though it does again mention fair dealing, honesty, integrity and prohibitions against discrimination. Halliburton’s expressed purpose of its Code is to have it be “. . . reasonably designed, implemented and enforced so as to be generally effective in preventing and detecting criminal conduct” and comply “. . . with the requirements of the definition of a ‘Code of Ethics’ as set forth in the regulations of the United States Securities and Exchange Commission (SEC) issued pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.” While the Halliburton efforts appear to meet the legal requirements for a Code, the company should set its sights higher. 

 

In his essay entitled “Complete Guide to Ethics Management: An Ethics Toolkit for Managers,” Carter McNamara noted, “Codes are insufficient if intended only to ensure that policies are legal.” How then can a board of directors ensure that an organization and all of its people behave as they should?

 

First, stop talking about ethics and start focusing on virtues.  For decades, business ethics has been considered by many as “what one can get away with short of breaking the law.” More recently, it appears that the standard has been further relaxed to “break the law and see if one can get away with it.”  While business ethics may have careened into the realm of the situational (read irrelevant), virtues have not. Virtue remains stalwart, resolute, unyielding, and universally accepted as portraying excellence in moral character and behavior.  

 

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