January 7, 2009

Integrity vs. Ethics

日光 ❁卍❁ 丸Image by gullevek via FlickrThe first thing you should know is that I actually hate the use of the word “ethics”.
Over the next few months I plan to write about things that I believe are shaping our industry and influencing the way in which organizations address ethics and compliance. Despite being the CEO of a company called EthicsPoint, the first thing you should know is that I actually hate the use of the word “ethics” when applied to the business world. The problem is that, in its purest form, a person or organization is considered either ethical or unethical based on their actions. But as you and I know, life doesn’t work like that.

Illustrative Case: What to Do About Child Labor?

Let me give you an example…Since 2003, I have had the pleasure to work with Paul Melendez at the University of Arizona, where they hold a world-class Ethics Bowl in the fall of each year. More than 20 universities from around the world send teams of two extremely bright and engaged students to share their solution to a “hypothetical” ethical dilemma. Every year that I have judged this event there are always one or two groups of students who take the ethical high-road. One year the case presented involved a company’s foreign country sub-contractor using child labor to harvest the raw materials that supplied 75% of the company’s revenue. Unfortunately, child labor is a common practice in this country and one that is difficult to control. One group of students recommended to immediately stop using the contractor and find another geographic source for the raw material. Their solution was clearly the “ethical bright-line”, but enacting their solution would in all likelihood bankrupt the organization in a matter of weeks.

The Better Way: Finding a Creative Business Solution of High Integrity.
Instead of “ethics,” I prefer to use the term “integrity”. In the example above it is easy to see what the righteous solution might be, but we do not live in a perfect world and often are unable to instantly mitigate a terrible situation. In this case the best solution is to invest in education and governance around the supply chain’s labor policies; knowing that while you work to correct the problem your profits will be affected and some child labor will undoubtedly be used. Frankly a business decision of high integrity, like investing to change a paradigm and accepting the fact child labor is still in use, could be considered by an “outsider” to be unethical.

Building a sustainable ethical culture takes time and requires difficult decisions to be made as well as learning from our mistakes.
When business leaders are faced with tough decisions that affect people’s livelihood or the sustainability of a business’ franchise the best possible response is often likely to be “baby steps” of high integrity that begin to reshape the values of the organization. Unfortunately, because we live in a two-quarter-at-most-world, a lot of great companies initially find themselves in the penalty box for making these kinds of long-term decisions.

(If you would like to see how the issue of child labor in developing countries is being addressed, I encourage you to visit the International Cocoa Initiative’s website. )

That’s all for now – what are your thoughts?
Do you agree that we need to make a distinction between “ethics” and “integrity” or do you feel I’m off base? Should I have judged the example above differently – was the ethical high road the right one to take? Let me know by posting or sending me an email directly.

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4 Responses to "Integrity vs. Ethics"

Mw3st said... January 7, 2009 at 10:59 AM

I found this quote fascinating :

"Building a sustainable ethical culture takes time and requires difficult decisions to be made as well as learning from our mistakes."

David, I agree totally, and also find that few companies understand the degree of commitment and the complexity of culture change that is required. I believe it requires a long-term commitment with specific plateau targets to consolidate gains and introduce the next level of advancement. It also requires the unstinting support of the very top of the house to be successful over time. An abandoned or reduced commitment in mid-course not only suboptimizes the benefits of culture change, but may lead to costly internal conflict.

- Mike West, Saugatuck Technology

Doug Cornelius said... January 8, 2009 at 10:41 AM

I am not sure I see a meaningful distinction between "ethics" and "integrity." They are both fuzzy terms that bring some baggage with them.

You can even go a few steps further and try to make a distinction between "business ethics" and "personal integrity." It may be the right business decision to continue with this supplier. But an individual may not want to be associated with an organization that uses child labor, regardless of the improvements it tries to make.

David Childers said... January 8, 2009 at 2:34 PM

Bill, I agree that both terms have baggage. I think that we have to have moral courage to call out what is wrong but be realistic to what can be immediately changed. I struggle with the idealistic view that we just "won't do it" when the downside of stopping production is equally as hurtful to your workforce, customers and distributors. You are right, some people may choose to vote with their feet and leave, but I would hope that others would step up to champion the longterm change that is needed to make the situation better.

Andrew Mitton said... January 8, 2009 at 9:48 PM

OK. I'm still trying to sort things out in my mind. Here's what I have now.

Some matters are matters of right and wrong. In my mind these are moral decisions. Those who consistently choose the right decision have integrity.

Other matters don't involve right or wrong; instead, they involve decisions across a spectrum. Let me explain.

Sears used to sell its products in categories of good, better, best. If a good item was $1, then a better item would be $2, and the best would be $3. So it is with many decisions. Some decisions are good, some are better, and some are the best. I'll throw the term "worst" in there just to help make my point. People who consistently choose the best decisions are wise. Those who consistently choose the worst decisions are foolish.

Where do ethics fit in this picture? I don't know. Maybe that's why you hate that term.

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About Me

David Childers
of EthicsPoint

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Favorite Quotes:

Ronald Reagan
There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right.

John Quincy Adams
If your actions inspire others to dream more, learn more, do more and become more, you are a leader.

We are what we repeatedly do. Excellence, therefore, is not an act but a habit.

Ray Kroc
The quality of a leader is reflected in the standards they set for themselves.

John Maxwell
The first step to leadership is servanthood.