Morals have failed to curb business malfeasance. Maybe it’s time to try real ethics.
Moses with the Ten Commandments
Painting by Rembrandt
There have been many—probably far too many—articles in the media complaining about the corruption, greed and dishonesty apparent at every level of business in recent years. Solutions abound, usually linked to the idea of better moral and ethical teaching. The trouble is, morality has been around since the earliest periods of recorded history, and it has yet to prevent people from behaving in ways that break just about every moral rule.
If something doesn’t work, the only sensible course of action is to try another approach. It is also sensible, before doing that, to wonder why people go on behaving badly and defying society’s norms. Answers based on the supposedly debased nature of mankind, like the claim of original sin, don’t do it for me. They avoid the question by claiming mankind is inherently immoral. Even if that were true, it would explain nothing.
What I want instead is a way of understanding why conventional approaches to moral rules—based, as they all are, on a combination of stick-and-carrot and pleasing the powerful—are never make mankind any less inconsiderate and selfish than we are today.
I think I may have found one, based on understanding the fundamental difference between morals and ethics: morals are external, imposed rules; ethics are principles derived from individual thinking.
Thought is the basis of ethics
What started me on this track was an article on the HBR Editor’s Blog and the link there to a book by a fifth-grade teacher called Rafe Esquith, who for decades has been teaching groups of the children of Latin American and Korean immigrants at Los Angeles’ Hobart Boulevard Elementary School. Esquith has written a book about what he has learned from this, called “Teach Like Your Hair’s on Fire: The Methods and Madness Inside Room 56.Æ
What Esquith uses to teach his students ethical behavior is a structure for thinking; a ‘template’ to help them grasp the basis of ethical behavior and why it depends on them, based on psychologist Lawrence Kohlberg’s Six Levels of Moral Development.
I have adapted my own version, which helps me understand why people approve of ethical behavior when asked, yet consistently fail to put it into practice in their lives. I call it ‘The Six Stages of Ethical Understanding’.
| The Six Stages of Ethical Understanding | ||
| Stage | Reason to behave well | Characteristic approach |
| The Carrot-and-Stick (Basic morality) Stages | ||
| One (obedience and punishment driven) | Avoiding punishment | “I don’t want to get into trouble” |
| Two (self-interest driven) | Getting a tangible reward | “If I act this way, I’ll be given something good” |
| The Law-and-Order (Social morality) Stages | ||
| Three (conformity driven) | Gaining an intangible reward | “It will please someone important to me.” |
| Four (authority driven) | Seeking social status | “People will see me as a respectable person who fits in.” |
| Principled Conscience and Ethical Thinking (Thought-based ethics) | ||
| Five (social contract driven) | Accepting behavioral principles | “Those who live a good life are considerate of others.” |
| Six (ethical thought driven) | Setting personal values | “I follow a personal code of ethical behavior.” |
Many people, even highly educated ones, are stuck in Stages One and Two. Many more never go beyond Stages Three and Four. None of these stages require ethical thought, since they consist in doing what others want to gain reward or approval and avoid punishment. Only in Stages Five and Six, the least common, do you encounter a need for thought, reflection and personal choice.
Forget the stick and the carrot; ignore pleasing others
No stick-and-carrot, reward-based system of ethics ever works for long, since rewards lose their value and people find ways to avoid the punishments, either by concealing what they are doing or weaseling out of the consequences. One of the reasons why greed and dishonesty have been so rampant in business in recent years—and probably always were—is that the basic business attitude encourages nothing more that this ‘don’t be found out’ approach.
Being ethical only to please those in authority, like the boss, has similar drawbacks. Rules, it’s said, are made to be broken—or, at least, evaded with the help of cunning lawyers. Information rarely makes it to the boss if a subordinate is sufficiently determined that it shall not. It also encourages others to inform on wrong-doers as a way of advancing themselves.
True ethics arises when people take the time to think and question what values count for most, what standards are needed for a civilized society and why ethics are needed in the first place. By discovering their own needs and standards, they establish principles they are far less likely to break or evade than those imposed on them by others.
It’s easy to confuse ethics and morals, but they are quite different. Morals are sets of rules, imposed from outside, like the Ten Commandments. Ethics is a process of personal exploration and thought, with the aim of discovering what ways of behaving are necessary to have the type of life you want in the the kind of society you are happy to live within. Morals are authoritarian, derived from society at large and usually restrictive (“Thou shalt not . . . ”); ethics are democratic, individual and derived from living freely (“This is what I understand to be right for me . . .”). Morals come from control by someone of greater power than you; ethics come from within.
Give me ethics every time.
Technorati Tags: corporate ethics, business ethics, morality, honesty, integrity


All conscious, healthy relationships thrive on the basis of trust, integrity and transparency. Transparency itself is about truth-telling. That means being open, honest and sincere in putting yourself ‘out there‘. In many ways, the essence of truth-telling is being comfortable in your own skin.
Saying sorry is one of the most difficult things that human beings can be asked to do. It’s hard enough in a family or a personal context, but in a hierarchical organization, no matter how small or informal, it’s a lot more difficult.
Mistrust is a fact of life in many workplaces, yet it doesn’t originate there. Mistrust is a consequence of experiences individuals have long before entering the world of work. They don’t find it in their working environments; they bring it with them.
All of life is lived in relationship—even life at work. That’s why the most critical building block of any team is trust. Without trust, teams are disparate collections of individuals and groups; and the element that creates or erodes trust—and thus builds or destroys teams—is your individual behavior as a leader. Trust can support teams to go the extra mile, work for the greater good of the team and the organization, foster open and honest communication and engender mutual respect and support. Distrust often stems from a ‘me first’ mind-set that leads to conflict, egoism, and a going-through-the-motions attitude.
Sally P. was overworked, burned-out, stressed and exhausted—the whole nine yards. That’s why her boss asked me to talk to her to see if I could help. It didn’t take long to discover the truth. Sally routinely stayed at her desk until 9.00 or 10.00 p.m., though she started work before 8.00 in the morning.
Most of us have learned to suspect the motives of management because we’ve been fooled before.All the fine words about valuing people and wanting to preserve employment aren’t matched by actions when things get tough. The first action of those same executives is too often to save their own fat salaries and bonuses by laying off thousands of ordinary people. No one likes to feel duped—still less to be duped repeatedly.
Many people are miserable, alienated and overworked primarily because of a lack of trust. Managers take on too much themselves, because they don’t trust their subordinates to do the work properly. They cannot leave people alone to get on with their work, because they don’t believe other people will do a good job without constant supervision. They attend pointless meetings and read futile cc’d e-mails, because they don’t trust their colleagues not to knife them in the back. And they pile up extra tasks, because they don’t trust suppliers not to cheat them, and customers to stay loyal or resist the temptations put before them by competitors. 
I’m sure, like me, you’re drowning in reports, debates, opinions, treatises, articles and sound bites about recent events on Wall Street.


