Writing about lapses in company ethics in the Canadian Ethics Centre’s newsletter in 2003, Mark Johnson, a corporate lawyer, observes that there is a psychology of ethical lapses:
Only on rare occasions will hardworking and inherently honest humans knowingly commit an act of wrongdoing. In most cases the person rationalises the act in a number of ways with one or more of the following excuses to lower the bar of ethics and relieve his conscience.
- ‘Everybody does it.’ This provides the individual with herd immunity.
- ‘It’s no big deal.’ This reasoning minimises the wrongdoing to place it within a tolerable range.
- ‘The problem will go away.’ This is more applicable to acts of omission rather than acts of commission.
- ‘Get along by going along.’ This rationalisation is rooted in fear. What ambitious person in their right mind would say no to his or her boss?
One example is the famous shredding of Enron documents by Arthur Andersen. More than any other single act, this contributed to the collapse of Arthur Andersen. The subordinates who carried out the order would probably offer up the defence that they were just following orders.
We are probably all aware of the unwillingness of most people to ‘speak truth to power’ for fear that it will damage their prospects in the organisation. Conflict avoidance is more common than conflict seeking in organisations, yet this leads to huge problems when minor issues are left unattended to. Good ethical policy is likely to create conflicts if it is to be effective. Expectations need to be clearly communicated, understood and owned by everyone in the organisation.
There is usually concern on the part of those trying to resolve ethical dilemmas to preserve the good name of their organisation. Reputation matters and those running any organisation will feel an obligation to ensure that they execute their duties to maintain this precious commodity. Good name is easy to lose and hard to retain, particularly in the voluntary sector where, at times, gossip and informal networking seem to be the prevailing means of communication. This feeling of obligation to perform and to behave ethically is a key component of accountability.
Accountability
We are all familiar with financial accounting and the obligations it imposes to show how money has been used within an organisation, but accountability has wider meanings. It is one of those words we use all the time, often without thinking very hard about what it implies for our resource winning. We tend to use phrases like
- ‘The buck stops here.’
- ‘We’re here to serve our users.’
- ‘We’ve a responsibility to our donors.’
This indicates that along with the feeling of obligation goes a sense of responsibility for actions taken. In essence, accountability is a moral relationship between those who delegate authority and those who receive it.
But of course this is not as straightforward as it sounds, for accountability takes different forms depending on the quality of the relationship and the degree of trust between the parties to that relationship. There are three key components to an accountability relationship:
- Delegation – This occurs when the management of a decision or a task is handed over to another in the expectation that they will ensure its fulfilment on your behalf. It will involve a greater or lesser degree of discretion.
- Responsibility – This is the view from the other side of the relationship – and with this, as we have observed above, goes a sense of obligation to ensure that a task that has been delegated to you is implemented, and to the standards expected.
- Legitimacy – This accountability relationship requires a recognition on the part of those being held to account of the ‘right’ of those demanding such an ‘account’ to make that demand.
One reason for this concern with accountability is the need to demonstrate that resources are used to good effect. It is linked with a decline in trust in our society as relationships that rely on affective ties (such as community and friendship) have been supplanted by more instrumental relationships based on contractual and business relationships.
It is important to realise that no organisation exists separately from the wider community, and organisations that ignore community standards of fairness and morality are subject to a range of adverse consequences. In many cases social standards of fair treatment are enshrined in law. In addition, organisations that are seen to breach widely held standards of ethical behaviour may find themselves subject to pressure from customers, the media or other influential groups. Many funds will only invest in ‘ethical’ companies, and there are several ‘ethical rating’ systems for share analysis. The conclusion must be that ethics are a crucial factor in the attainment of organisational goals.
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