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Markkula Center for Applied Ethics

Business Leaders Face Tough Ethical Decisions

CEOs need well-developed consciences

Ann Skeet

Ann Skeet is the director of Leadership Ethics at the Markkula Center for Applied Ethics at Santa Clara University. Views expressed are her own.

This article was originally published in The Mercury News on August 19, 2017.

There really is no such thing as free advice, not for the person receiving it or giving it, as the president and a number of corporate CEOs  on various economic advisory boards have experienced.

Some have commented that this has put business leaders in a tough spot as the President they advise becomes more controversial in his statements about race and bigotry.

“This is one of the toughest times for the consciences of corporate board and corporate CEOs,” said David Temin, head of Temin & Co, a reputation and crisis-management consultancy, just a day before the President disbanded two of his economic advisory councils.

I sincerely hope not.

An attribute of effective, ethical leadership is having courage to act on one’s convictions. Moral judgment is developmental, and my expectation is that people serving as CEOs and directors have well-developed consciences that aid them in making decisions in moments when they must choose between competing interests– either their own or those they represent in a formal leadership role.

Plenty a person has stumbled in such moments, which challenge people to have a clear set of principles guiding them in deciding what is right and the courage to act using those principles. It would be comforting to think that the people in the corner office and the boardroom are among those to whom such decisions come relatively easily.

Those worried that executives are struggling to figure this moment out perhaps buy in completely, as the business legal community appears to have done, to a definition of social responsibility put forth by Milton Friedman—himself a member of an advisory board for President Ronald Reagan.

Friedman stated that the sole corporate social responsibility of business was to increase its profits.  Scholars have argued against this position, and current business practices are supporting their arguments.

I support the belief that a business cannot have a social responsibility, only a person can, as a colleague at the Markkula Center for Applied Ethics has previously reasoned. Businesses can have values and missions, but only human beings can act on them.

Further I recognize that it is difficult for business leaders to know when they make tough decisions exactly how it will affect profits and over what period of time. Leaders appreciate the complexity of their roles and the various stakeholders they serve. Increasingly, markets do as well.

Protecting shareholder value is not to be a crutch, a dodge for making the tough call, though there is evidence that it is used that way in some boardrooms. Business leaders are wise to choose this moment to reclaim their role as civic leaders.

As young people, Gen Xers had plenty of role models who served as both corporate executives and community leaders. Think David Packard or Tony Ridder. It is reasonable that Millennials are demanding the same of Baby Boomers now and ultimately of Gen Xers and Millennials who will advance into corporate leadership roles in greater numbers in the coming years.

We followers must take our leadership where we can find it.  If it is easier to spot in the ranks of CEOs than the White House, then so be it. It doesn’t reduce leadership’s influence and perhaps enhances it as the numbers of people willing to take a moral stand grow.

I am confident that the profitability of American businesses is made healthier by having decisive, courageous corporate leaders.

Sep 1, 2017

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