Wednesday, February 20, 2013

Management is a Science, Don't You Know

Leave it to the Wall Street Journal (Business Education, 2-6-13) to come up with the headline “Does an “A” in Ethics Have Any Value?”

The article itself illustrates the conundrum and the dilemma faced by these science-based educational institutions like business schools, “does making something measurable, quantifiable, metrisizable, or countable, make it ethical?” Business schools and businesses in general are feeling employee heat, community leadership heat, even some shareholder heat to demonstrate some kind of personal responsibility beyond increasing shareholder value. As the chief human resources officer of one of the largest accounting firms in the world said near the end of the article, “I'm not so sure that an “A” in an ethics class is really a valid way of judging” [an individual's moral compass].

Upon reading this statement I couldn't help but reminisce about the remarkably sudden destruction of Arthur Anderson and Co. through arrogance, hubris, plus complete misjudgment of their position in the public's mind, but more importantly, in the eyes of the US Justice Department. It sounds like this industry has yet to learn something about ethical business principles.

The main problem, in my judgment, as I watch so many of these highly trained business school graduates mess things up, behave as though they have no moral compass, don't care, and an increasing number are being indicted, there are too few, if any business schools run by real business people.

I have urged my friends at Fortune magazine, occasionally, to consider publishing one more list, one which companies would never vie to be on: “The Fortune Felons List.” It would probably resemble the other lists that are routinely published but the entries would be in a slightly different order. Every executive involved should be listed along with their business school. That listing alone would be a surprising metric for the public to understand and know.

To make ethical behavior relevant, important, and even required will take a tsunami like change in educational as well as business community thinking. This thought process changing will involve three crucial steps triggered by a catastrophe that captures the nation's attention.

First, there has to be a different ethical effectiveness measurement process. We need a system of ethics metrics that passes the straight face test, and is disclosable.

Second, business education needs to focus a lot more on the practical problems businesses face every day, taught by the people who succeeded or failed to work through those problems and the real ethical questions, rather than moving cheese, counting Penguins, or going Wow. The practical has to dramatically dominate the theoretical.

Third, recognize that the business people who really need more ethical help and coaching, rather than the 22 to 24 year olds, are those in their late 30's and early 40's. These business people have been on the firing line every day, making the decisions, the compromises, and the actions to get their work done, often by degrading and debilitating their moral and ethical frameworks.

Until we can spontaneously name industry leaders who inspire, who motivate, whose ethical and sensible leadership example can be emulated, and there is a relentless pressure educators, colleagues and peers to take business education and practices in more ethical and moral directions, and move away from the present but well-established amoral, theoretically based, totally financially driven business practices, American society will continue indicting, prosecuting, and incarcerating smart people who know better, but act otherwise.

Why do these smart people get into trouble? Three reasons:

1. Peer pressure: “Only sissies stress ethics over performance.”

2. They will get paid handsomely, whatever they do, even if they go to prison.

3. Their peers are the first to rationalize toxic behavior, “If they didn’t do it, someone else would.” “It was just an isolated incident.”

Why be ethical with friends like these?

***

Jim is the author of the upcoming book "Lukaszewski on Crisis Communication: What Your CEO Needs to Know About Reputation Risk and Crisis Management". Order your copy today at amazon.com. By James E. Lukaszewski

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