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Corporate conscience

by Dr Simon Longstaff
05 November 1997
BUSINESS AND PROFESSIONAL ETHICS
Who keeps the conscience of a corporation? Is it the role of the Board, senior management, the whole company (or all of the above)? Can a corporation have a conscience?

After all, its identity as a 'person' is just a legal fiction. Surely, it is only real people that might be said to have the capacity to respond to the still, quiet voice of conscience. And, even if a corporation could have a conscience, would this be a good thing? Perhaps it would be an unwarranted distraction from the prime task of creating wealth for shareholders?

These are but a few of the questions that arise, from time to time, in the field of business ethics. Others are of more immediate concern. For example, many in business ask:
 
  • Can we afford the cost of making this product safe?
  • Can we afford to admit negligence even though we know that we did the wrong thing?
  • Can we afford to let the company's accounts show the real value of our assets?
  • Can we afford to refuse to carry out a client's instructions even when, in all good conscience, we believe to follow them would harm the community?
  • Can we afford to resist paying bribes in order to secure a contract in a difficult overseas market?
  • Can we afford to resist taking advantage of an unintended loop-hole in the law or a contract?

Both types of question are common in the field of business ethics. Some people wish that they would go away. Their reasons vary. It may be that the questions are too difficult to answer. It may be that they trespass on area that people try to reserve as 'private' or 'personal'.

Then again, explicit ethical questions may be troubling because they make the invisible foundations of a corporate culture all too visible. It's sometime surprising to note how many people prefer uncritically to follow patterns laid down in the past. If you ask why something happens the way it does, then the answer comes back, “That's just the way we do things around here”.
A concern for ethics should be regarded as an essential element in the overall 'environmental' awareness of the corporation.
Responses such as this are understandable. After all, people have enough difficulty coping with the daily demands of life without having to engage in apparently unproductive 'navel gazing'. However, I want to suggest that thinking about the underlying character of a company is no longer a luxury, but instead, a matter of necessity. A concern for ethics should be regarded as an essential element in the overall 'environmental' awareness of the corporation – and especially those that are able to cope with the phenomenon of constant change.

Although change has been a constant feature of the human condition, modern societies now experience the phenomenon as a relentless process of such rapidity that even moments of consolidation are washed away by a tide whose volume seems to grow exponentially. At present, there seems to be no reason to believe that these circumstances will alter.

Indeed, management expert, Peter Drucker, has stressed that an ability to manage change is going to be the defining characteristic of the successful organisation of the future. Even where change is designed to simplify structures and processes, its initial impact is to make lives more complicated. While such comments are widely accepted – even to the extent of being regarded as something of a truism, there is still a tendency to overlook some of the less obvious features of the change process. Amongst those features overlooked is the relationship between patterns of change and the ethical climate of organisations.

Whereas there is a natural tendency for people to prefer the certainties of established patterns and rhythms, resistance to change can become an immovable force whenever it is believed that change is being pursued either for its own sake or in support of an unworthy end. The worth of a particular end is directly related to the types of values held to be of importance in an organisation.

The effective management of an organisation's ethos is therefore a precondition for efficient and effective processes of change. As in the case of the 'values gap' referred to above, it is critical that all of the signals point in the same direction. Unfortunately, apart from foregoing the positive effect of facilitating change, failure to close the perceived 'values gap' is also likely to stimulate a loss of faith in the integrity of the organisation.

One result of this is a drop in morale. Another is a concurrent weakening of those internal controls that would otherwise be required to augment the already weakened side-constraints.
 
Dr Simon Longstaff AO is Executive Director of St James Ethics Centre.