By Elfren Sicangco Cruz, in his Oct 27, 2009, column “Framework”, in the Business World
While a company has the responsibility to make a profit, businessmen are people who must apply the same standards of ethics and morality to business decisions and activities that should be applied to all their other activities.
Business ethics is the application of ethical principles and standards to business. But ethical principles in business should not be different from those moral principles that businesspeople should apply to their own personal conduct. For example if dishonesty is considered to be unethical and immoral in one’s personal conduct, then dishonest behavior in business in any form should be considered as equally unethical and immoral. If ethical behavior means not harming others, then it would be unethical to produce unsafe products or fail to recall products in the market that would cause harm to others.
But we can see that there is still an ongoing debate whether ethical principles should be applied if the consequence is a decline in profit. In order to understand this seeming controversy, it is best to begin by accepting that there are three major categories with regard to ethical and moral principles in business affairs, namely, the moral manager, the immoral manager, and the amoral manager.
The Moral Manager is a person who is dedicated to high standards of ethical behavior both in his own personal actions and in his decisions of how to manage the company’s activities. He considers himself more as a steward rather than overseer of the business and, therefore, believes it is important to exercise ethical leadership.
It is important to remember that a moral manager is also very ambitious and has the drive to succeed. They, therefore, pursue business success, but he pursues these goals within the parameters of ethical norms. The law, in the form of corporate governance, is the minimum, and the moral manager follows a higher set of ethical standards even if it is well beyond or above what the law requires.
Unfortunately there is also the Immoral Manager who has no regard for ethical standards in business. This type does not pay any attention to ethical principles in making business decisions and most often also in his own personal conduct.
From the viewpoint of the immoral manager, the extremely competitive nature of business requires a “kill or be killed” mentality and, therefore, nice guys finish second or even last. The immoral manager is, therefore, willing to short-circuit legal and regulatory requirements if he thinks he can escape detection.
Immoral managers are the classic examples of self-serving greed which they term as “simply business.” They have very few scruples and view integrity as a religious term not applicable in the so called “real world.” In effect, they are willing to do almost anything to achieve their personal goals and the interests of their company as long as they believe they can get away with it.
The Amoral Manager believes that it is not necessary to consider ethical principles when making business decisions because it is supposed to be perfectly legitimate for businesses to do anything they wish so long as they stay within legal and regulatory bounds. Amoral managers are either intentionally or unintentionally amoral. Intentionally amoral managers may observe ethical considerations in their personal lives like giving to charity or condemning acts of violence. However, they believe that ethical standards which require doing more than what is required by the law is “unrealistic” in the tough competitive world of business.
One common behavior of intentionally amoral managers is that a lot of their decisions are lawyer driven. Some favorite questions are: “Can we do this even if it is on the legal borderline?” and “Is there a legal loophole we can find like opening an overseas account in a bank that protects the identity of the depositor?”
Then there is the Unintentionally Amoral Manager, who simply does not pay attention to the concept of business ethics. He also does not give any serious thought to the unethical consequences of business decisions which may appear amoral. For example, producing powdered milk for babies may be amoral, but what is the consequence of persuading poor mothers, who have no access to sanitary potable water, to feed their babies with powdered milk boiled with unsafe water?
The biggest problem with amoral managers is that when even when they are confronted by the unethical consequences of their amoral acts, they find it easier to justify the “need” for immorality in pursuit of profit rather than find a way to change their business strategies based on ethical principles.
In the Philippines, there is enough anecdotal evidence showing that while there is a large number of immoral managers, the average manager is amoral. The only problem is that the Filipino amoral manager has the tendency to slip into an immoral mode on occasion given the corrupt environment we now have. But this does not justify immorality in business.
In the final analysis, Manuel G. Velasquez, author of Business Ethics (Pearson Education, 2004) wrote: “All businesses require a stable society in which to carry on their business dealings. Yet the stability of any society requires that its members adhere to some minimal standards of ethics. In a society without ethics, as the philosopher Hobbes once wrote, distrust and unrestrained self-interest would create a ’war of every man against every man,’ and in such a situation life would become ’nasty, brutish and short.’ The ’impossibility of conducting business in such a society, one in which lying, theft, cheating, distrust, and unrestrained self-interested conflict became the norm,’ is shown by the way in which activities break down in societies torn by strife, conflict, distrust and civil war.”
We can only conclude that, in the long run, businesses cannot thrive in a society without ethics. It is therefore in the best interest of business to promote ethical behavior both among its own members and within the larger Philippine society. Allowing immoral and amoral managers to continue operating in the Philippine business environment will only lead to the eventual breakdown of our society and cause tremendous harm to all businesses in this country.
Reprinted from Framework by Elfren S. Cruz in “Business World”, Oct 27, 2009, with permission from author Elfren Cruz. Elfren S. Cruz is a professor of Strategic Management at the Ramon V. del Rosario Sr. Graduate School of Business, College of Business & Economics, De La Salle University.