This article was originally published in MarketWatch on May 29, 2018.
Ann Skeet is the senior director of Leadership Ethics at the Markkula Center for Applied Ethics. Views are her own.
We are in an era where people accept leaders whose core competency is tending to their own self-interest.
Perhaps we are more comfortable with the NFL player celebrating his own accomplishment in the end zone than kneeling to express a political perspective. Business and political leaders routinely garner significant personal largesse not only while holding formal leadership positions, but often because of them. CEOs are dismissed for egregious leadership failures yet collect significant payments as they depart. The current U.S. president overrides all previous norms about separating personal business interests from his elected office, while Cabinet members of his administration cycle through their roles with alarming speed as errors in judgment and abuse of resources are unearthed.
To be sure, business leaders acting in self-interested ways is nothing new. Yet nowadays, the compensation and the daily realities of those in the C-suite compared to the rest of the employees has created a tale of two corporations at many companies. These executives enjoy lower personal financial risk, access to superior health care, high-living financed by corporate coffers (such as former GE head Jeff Immelt’s “back-up” corporate jet), and entertainment perks.
As the breach grows, so does egregious behavior on either side of it. For people above the entitlement line, everything from layoffs to dumping toxic waste is labeled a “business decision.” Among those below the line, waste and petty corrupt practices occur, rationalized by the skew in income and barriers to upside potential most employees experience — that is, if they are employees and not contractors. In each case, “ethical fading” — the unconscious act of forgetting ethics involved in a decision — occurs.
Still, I am hopeful that ethics is starting to have its day. I optimistically refer to this as “ethics creep” into everyday business discussions about human rights and ESG — environment, social and governance — goals and metrics. It is present in the current practice of impact investing by institutional investors as well as philanthropists. Ethics is fundamental to genuine leaders, the ones we want to follow, as opposed to those who are paid the most — both on the job and when leaving with an excessive golden parachute.
Ethics has made its boldest move lately onto the minds of people in influential leadership positions, starting with the pope. Earlier this month, the pope continued to give weight to the importance of ethics by issuing Oeconomicae et pecunairiae quaestiones, translating to “Considerations for an ethical discernment regarding some aspects of the present economic-financial system.”
The Vatican’s official position included both broad-based and specific recommendations for taking a stakeholder stance over shareholder primacy, placing the well-being of people as a higher goal than profits for businesspeople. A meeting convened at the Vatican in December 2016 resulted in a conference sponsored by Fortune magazine and Time, Inc. in September 2017 in New York, bringing together more than 100 CEOs to explore how business can be a force for good.
Perhaps some executives attended this conference to gain positive public relations for themselves and their companies. Yet I witnessed a decent amount of genuine personal passion on the topics at hand while serving as an expert on ethical corporate culture in one working session. Other sessions explored preparing the workforce of the future, equality at work, and taking care of our common home, Earth.
Did a CEO really pose the question at this conference, “Has capitalism run its course?” He did. Did a corporate board member announce that the days of the “brilliant jerk” — the harasser or sexist star performer who nevertheless delivers results — are over? She did. Did CEOs nod approvingly at the suggestion that women and minorities need to be seated on boards rapidly and in large numbers without considering the appearance of quotas? They did.
Many decisions made in the name of dated, corporate law and shareholder primacy will continue to be cast as business decisions instead of ethical ones. But ethics is in vogue. Whether you ascribe the rise to market forces, Adam Smith’s roving, redistributing hand, or a new leadership and personal-branding trend, being ethical is the new power tool for people in both the corner office and the boardroom.