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Hitting the Ethics Bullseye

Categories: 2018 Spring, theme

Remember Odysseus?

The guy ran into lots of trials, lots of obstacles, but he overcame them all with a cool head, a sharp intelligence, and no shortage of strength and courage – many of the qualities we expect from our modern-day CEOs. At the end of his 10-year journey home, he’s challenged to prove himself by shooting an arrow through 12 small rings. It’s no small feat.

In like fashion, today’s business leaders, to even get a shot at success, must meet sales estimates, make bottom line quotas, ensure compliance with cultural, social and environmental expectations, and pass through the narrow gap hemmed by fairness, integrity, honesty, and ethics. For today’s exec, it’s no small feat to line up these often competing constraints, ring them all, and hit success.

You could make a reasonable argument that a CEO is duty-bound to act in the best interest of the shareholders. And you could also argue that the bottom line is a business’ principal concern. Are you making money? Is your company returning value to its investors? Certainly a business isn’t long for this world if it’s not in the black. All other considerations take a back seat.

Of course we should obey the law. Enforceable legalities are a clear, bright line. Stay on the right side of the line and you’re good. Stray to the wrong side and you’re looking at time in an orange suit. But here’s a question: Should legal definitions frame a business’s ethical code or its social responsibilities? Consider it good as long as it’s legal?

How about those pharmaceutical companies that raised the price of drugs by more than 5,000 percent?

And of course we should be principled. Recently, Larry Fink, founder and CEO of BlackRock (the world’s largest investment company), said in an open letter to CEOs: “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate.”

That “social purpose” may well broaden the ethical imperative. As an investor, Fink may not be off the mark. There’s a body of research that says that companies that have a history of operating ethically, that are socially and environmentally responsible, are more successful in the long run.

And there’s the rub.

The long run is a bit of a luxury. What if you have to make the quota, make the quarter, live up to projections? At the current rate, about half of the S&P 500 will be replaced over the next 10 years. The long run? Nice work if you can get it.

No doubt the issues around responsibility, ethics, and business are difficult. To aim at being an ethical and profit-minded leader who’s conscious of shareholders and stakeholders is to look at a very small target through a lot of narrow constraints. As you may have guessed, maybe even experienced, it’s not an easy shot. In this issue, we’ll do our best to peer into some of the questions. Maybe with a dose of experience, a smattering of wisdom, and a pinch of common sense, we can see our way through.

Filed Under: Article, Issue 2018 Spring, Theme Tagged With: 2018 Spring, theme

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