The Laws and Ethics…. Who’s Kidding Who?
By Paul Shearstone
Years ago I read an article by a renowned psychologist wherein he wrote his
studies found one percent of all human beings would never lie, cheat or
steal. One percent would always lie, cheat or steal and given the right set
of circumstances, the rest of us would likely lie, cheat and/or steal.
I mention this to highlight the fact that, if we can buyoff on this one
principle – sobering though it may be – we have then, a benchmark from which
to begin to at least try to understand the denigration of ethics that lead
to outcomes like Enron and WorldCom.
Most believe morality walks hand-in-hand with unquestioned ethics. A quick
look-up in a dictionary for Morality reveals words like, ethical, good,
right, honest, decent, proper, honorable, just, principled and so on. All
good words, no doubt. Words too that describe what most of us – including
Enron Exec’s - see in ourselves, Morally Upstanding.
Nevertheless, there is no shortage of those who climb high upon their perch
in an attempt to [dare I say] distance themselves from the great unwashed by
proclaiming their undaunted commitment to honesty and ethics all the while
engaging in activities to the contrary. Foyer walls of most companies
utterly ooze words of benevolence and righteousness – there only for others
to see, but in practice, never to be followed.
To be fair, the great unwashed are not sacrosanct from unethical behaviors
or from a reluctance to take ownership for actions deemed untoward. Even if
it’s something as simple as misusing the Internet or pinching office
supplies from the company stockroom.
The fact is, the Enrons and Worldcoms have not cornered the market on
unethical behavior. Like it or not, moral degradation is systemic in today’s
In an attempt to enlighten us on the realities of true ethical behavior, USA
Supreme Court Justice Potter said, [Ethics] “…is knowing the difference
between what you have a legal right to do, and, what is the right thing to
Omniscient words to say the least! Words that in theory make a whole lot of
sense. In practice, however, one may point out to his Honor, when he is
seated on the Supreme Court bench and asked to adjudicate anything, his
moral and ethical position, is and will always be, compromised by one
factor – in the end, what is LEGAL… what is the LAW?
Climb any pedestal he wants, in practice, his dedication to ethics are only
words, like so many words used to make up so many smarmy Corporate Mission
Statements that run juxtaposed to routine.
The Judge in this case, should not be criticized for knowing the
fundamentals of true morality / ethics or for advocating the benefits
therein. Neither should he be allowed to stand apart from anyone when
clearly, in reality, he too is handcuffed by the very principle that
challenges the rest of us - the thing that governs the outcome of most
every ethical business decision – IS IT LEGAL?
The decision to lay-off 1-100-1,000 or more employees; we can do it – but is
it legal? The decision to withhold commissions, payables or taxes in order
to weather corporate economically challenging times – Q: What are the legal
The ethical dilemma regarding whether to cut back on contracted services to
improve the bottom line and appease the shareholders – Ethics be damned – Q:
What’s our legal position?
It’s not a pretty world and it serves no purpose in kidding ourselves by
attempting to extirpate our own involvement by blaming the Business-Barons
from the likes of WorldCom. Let’s agree, when faced with most ethical
dilemmas, we all hide [if we can] behind the skirt of the lady who holds the
scales of justice.
The question still remains, however, how do the Enrons and WorldComs get so
The answer is not all that mysterious, especially if you buy-off on what was
written earlier - ... given the right set of circumstances, nearly all of
us [from time-to-time] will take the wrong path.
It’s shortsighted to believe high-level executives get out of bed each
morning thinking about how they can swindle the world, take unfair advantage
or act unethically. Just the opposite! That’s not to say, however, just like
in Supreme Court Justice Potter’s case, there are circumstances beyond their
control that may unequivocally govern decisions, which may challenge their
innate moral commitment to ethics.
For example; who among us cannot think of a boss we once had [have] who said
to us something like, “I don’t want to hear how you’re NOT going to achieve
what I asked and the company EXPECTS…. I only want to see RESULTS!”
In many cases like this and in practice, the decision we are left to make
is, is our ethical position more important than keeping our job and putting
food on the table for our family? It’s a tough world out there for those
without a good job. So suck it up soldier! You’re only doing what you’ve
been ordered to do! It’s not your decision! Somebody else will have to take
responsibility for your unethical actions if the doo-doo hits the fan.
…. And we all then fall a little deeper onto the sword of ethics…
Everyone’s for corporate and personal liability to include financial
recompense and/or jail terms especially for those at the top entrusted by us
to always do what is right. We must be careful tough. To level our sights
only on CEOs or CFOs is to miss the real perpetrators by aiming too low.
Like us, CEOs have bosses too. They report the Board of Directors. Granted,
Boards have shareholders to whom they are ultimately accountable, but in
practice, the buck stops at the Board level where ethical decisions – bad or
good – are made.
In the book, Built to Last: Successful Habits of Visionary Companies, Jim
Collins and Jerry Porras speak to this issue by highlighting the [Board’s],
“explicit emphasis on Fair return rather than Maximum return”.
Again, I must point out, fine words we can all embrace because they
altruistically revolve around the Golden Rule of fairness. In general,
however, they are not always practiced. Sadly, we live more today, an
aberration of author *Ayn Rand’s existential position - there is no room for
altruism in business.
Understand a CEO’s ethical dilemma when challenged with a
take-it-or-leave-it Maximum return challenge. In the end, an executive’s
lifespan is predicated on one thing: ‘carrying out’ or being ‘carried out’.
My observation should in no way be construed as an endorsement for the
illegalities engaged in by Enron / WorldCom or others still to be
discovered. The point is, what they are accused of didn’t just happen
overnight. Given the right set of circumstances, the right amount of time,
the right global competitive business climate, the right protection under
the law, these large companies evolved – learned to become what they are
Does that make them any less culpable? No! But it should serve more as a
lighthouse warning that, a) This problem is more far-reaching - insidious -
than we might once imagined, and, b) It Must be corrected – Quickly!
On a positive note, there are and have been many reputable studies done on
the positive impact of ethics in the workplace for example **Harvard
Business School Professors John Kotter and James Heskett who studied the
performance of 207 large firms over an 11-year period. In their findings
Corporate culture can have a significant impact on a firm’s long-term
economic performance. They found the firms with cultures that emphasized all
the key managerial constituencies (customers, stockholders, and employees)
and leadership from managers from all levels outperformed, by a large
margin, firms that did not. Over an 11-year period, the former increased
revenues by an average of 682% versus 166% for the latter, expanded their
work forces by 282% versus 36%, grew their stock prices by 901% versus 74%
and improved their net incomes by 756% versus 1%.
The net-net of this demonstrates companies that paid attention equally to
customers; stockholders and employees outperformed those that didn’t and
over an 11-year period garnered a net growth income factor of 756%. Ethics
On the other hand, all the positive studies in the world will do little to
stop the dismantling of morals and ethics as long as those who engage in
unethical behavior are allowed to continue. It’s time Governments and
law-enforcement agencies bring more pressure to bear on those who sit back
comfortably at a distance [Corporate Boards] creating policies that stretch
the boundaries of law and fan the flames of ethical undoing.
Stronger laws and penalties with teeth – financial and criminal – are needed
to bring needed consequences to already financially comfortable Board
Directors who, I think we’ll find out quite quickly, will be more willing to
re-embrace the “Do Unto Others” principle that keep business strong and
elevates the collective!
· * Ayn Rand: Author Atlas Shrugged
· ** Jeffery L Seglin: Author The Good the Bad and Your Business
Paul Shearstone aka The ‘Pragmatic Persuasionist’ is one of North America’s
foremost experts on Sales and Persuasion. An International Keynote Speaker,
Author, Writer, Motivation, Corporate Ethics, / Time & Stress Management
Specialist, Paul enlightens and challenges audiences as he informs,
motivates and entertains. To comment on this article or to book the
Pragmatic Persuasionist for your next successful event we invite to contact
Paul Shearstone directly @ 416-728-5556 or