Business Ethics Evolution

TalentManagement.com‘s Performance Management blog boasts a spectrum of useful articles. A recent blog post by Paul Gorrell discusses business ethics 2.0. A good place to start a discussion about business ethics would be the recent Deepwater Horizon oil spill. And a good quote to begin a debate about business ethics comes from BP C.E.O., Tony Hayward. While the catastrophic oil spill was gushing into the gulf, devastating the fishing industry and ruining tourism revenue, Hayward said, “I would like my life back.”

This quote became a symbol of the public perception that BP’s business practices contributed to the oil spill from the beginning and that the company’s priority after the spill was to safeguard its own value and standing with shareholders.

An organization’s business ethics today are often focused on legalities  in an attempt to lower the organization’s potential exposure. Business school case studies like the Johnson& Johnson Tylenol scare in the 1980’s are utilized to evaluate the principles behind an organization’s mission statement, business policies, and leadership decisions. Gorrell writes that it is time for a more purposeful business ethics discussion focused on value-based leadership, a business ethics 2.0 approach that goes beyond compliance.

Gorrell notes that there are ethics lessons to learn from diversity. Today, companies are proud of diversity and inclusion within their organizations, but this has not always been the case. Historically, diversity has taken several steps in the right direction. Initially, the origins of diversity were more about defending organizations from corporate exposure.

Although large companies got used to absorbing sexual harassment lawsuits in the 1970’s because of bad behavior from their executives, they felt more pressure from growing numbers of class action lawsuits, where groups of individuals from a protected class joined together seeking justice for inappropriate corporate actions.

These lawsuits created bad publicity which in turn created a wave of training for executives, to curb their bad behaviors and provide the public with proof that there were systems put into place to relegate  workplace-wide gender bias in hiring and promotion. Gorrell lists three factors that shifted businesses’ approaches toward diversity and inclusion:

1. The shortage associated with the talent war caused businesses to look to nontraditional sources for talent.

2. Companies saw the emerging global market as a growth opportunity, which increased the need to embrace different styles, world-views and cultures.

3. Consumers demonstrated loyalty to companies and brands that included a diverse workforce and a diversity focus.

Gorrell analyzes how ethics is evolving from ‘Ethics 1.0’ to ‘Ethics 2.0’. Initially, in the scandals of the 2000’s, business were focused on how to protect shareholders. The Sarbanes-Oxley Act of 2002 created standards for accounting and reporting. Due to this legislation, organizations honed in on compliance to ensure they were managing risk exposure and the potential penalties involved.

Today there are numerous indicators that ethics is evolving in a way that will provide new opportunities for organizations, leaders, and talent managers.

We are moving toward an age of ethics in the way we do business and encourage behavior from our leaders. This is not because we want to be do-gooders, but because doing good is good business.

A little proof of the move toward a commitment to ethics are the increasing numbers of companies that have corporate social responsibility programs and sustainability programs. Talent managers can also provide significant value by bridging between the company’s commitment to responsibility and practice what it preaches. One idea is to integrate social causes within the learning and development space. Gorrell writes that building ethical organizations involves specific work with the leaders who represent the firm and act as champions of its culture. Due to this, focus on developing  leaders’ ethics is essential. To read other ideas on how talent managers can bridge the gap between mission statement and action, read the full article here.

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