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Joumal of Business Ethics (2005) 58: 345-357 Springer 2005

DOI 10.1007/S10551-004-5715-Z

Ethics in Business: Answering the Call William I. Sauser,Jr.

ABSTRACT. What might happen if business leaders discussion on this topic. It begins with a brief review
across the globe viewed their work as a sacred calling in a of the concept of ethics in business, followed by a
religious sense? Might not the world be a far better place? listing of various ethical standards which are typically
This paper is an effort to stimulate debate and discussion acknowledged in business settings. Legal standards
on this topic. Concepts addressed include: (a) ethics in are then explored in greater depth, and the concept
business, (b) ethical standards in business settings, (c) the of levels of corporate responsibility is introduced to
role of law, (d) levels of corporate responsibility, (e) the
beg the question, "Are higher standards than the law
role of religion in business ethics, (f) the idea of business as
needed?" Religious behefs are then introduced as a
a calling in a religious sense, (g) the elements of modem
corporate culture, (h) creating an ethical corporate cul- possible higher standard, and teachings of the world's
ture, (i) demonstrating corporate social responsibility, and great rehgions are reviewed as they relate to doing
(i) providing servant leadership. The introduction to the business. This discussion culminates in the concept
paper shows how these concepts interrelate; its conclusion of business as a calling in a religious sense.
offers a challenge to business leaders to answer their call to The higher standards prescribed in rehgious
business in the truest sense. thought are then contrasted to the elements of
modem corporate culture in an effort to highlight
KEY WORDS: business as a calling, business ethics, the magnitude of the challenge faced by those
corporate culture, corporate social responsibility, ethical business leaders seeking to rise to a higher level of
standards, servant leadership, value based management morality in business. The paper then describes sev-
eral ways business leaders might manifest their sense
of calling in the world of business, with particular
Introduction attention focused on (a) creating an ethical organi-
zational culture, (b) demonstrating corporate social
What might happen if business leaders across the responsibihty, and (c) providing servant leadership.
globe viewed their work as a sacred calling in a The paper concludes with a challenge: Who will
religious sense? Might not the world be a far better answer the call?
place? This paper is an effort to stimulate debate and

William I. Sauser, Jr., Ph.D. is Associate Dean for Business Ethics in business
and Engineering Outreach and Professor of Management at
Auburn University. Dr. Sauser eamed his B.S. in Manage- Ethics has to do with behavior specifically, one's
ment and his M.S. and Ph.D. in Psychology at the Georgia moral behavior with respect to society (Sauser, in
Institute of Technology. He is licensed to practice psychology
press a). The extent to which one's behavior mea-
in Alabama and holds a specialty diploma in Industrial/
sures up to societal standards is typically used as a
Organizational Psychology ji'om the American Board of Profes-
gauge of one's ethicality. There are a variety of
sional Psychology. Dr. Sauser's interests include organizational
development, strategic planning, human relations in the workplace,
standards for societal behavior, of course, so ethical
business ethics, and continuing professional education. He is a
behavior is often characterized with respect to cer-
Fellow of the American Council on Education and the Society for tain contexts. The Ethics Resource Center says,
Advancement of Management (SAM). Dr. Sauser was awarded "Business Ethics refers to clear standards and norms
the 2003 Taylor Key by SAM in recognition of his career that help employees to distinguish right from wrong
achievements. bebavior at work" (Joseph, 2003, p. 2). In the
346 William I. Sauser, Jr.

context of doing business, then, ethics has to do with is done (Fieser, 1996). Violation of the law is almost
the extent to which a person's behavior measures up always considered unethical behavior (with the
to such standards as the law, organizational policies, possible exception of civil disobedience as a mech-
professional and trade association codes, popular anism for putting the law itself on trial). One who
expectations regarding fairness and what is right, plus pursues business outside the law is considered to be
one's own internalized moral standards. following an obstructionist approach to business
Business ethics is not an element distinct from ethics (Schermerhom, 2005, p. 75). Such an indi-
ethics in general, but a subfield of the broad area of vidual would almost certainly be labeled "an
study known as ethics (Desjardins, 2003, p. 8). There unethical business person."
is a complex set of issues and expectations for doing A second important source of authority consists of
business (which may differ from culture to culture), organizational policies. These are standards for
and the subfield of business ethics refers to the behavior estabhshed by the employing organization.
examination and application of moral standards Typically they are in alignment with the law (which
within the context of fmance; commerce; produc- takes precedence over them) and spell out in detail
tion, distribution, and sale of goods and services; and "how things are to be done around here." All
other forms of business. employees are expected to abide by organizational
It can be fairly argued that an ethical person be- pohcies. It is very important that managers at the
haves appropriately in all societal contexts. This in- highest level of the organization set the example for
deed may be so, in which case one might prefer the others by working always within the law and the
term "ethics in business" to "business ethics." The policies of the organization.
distinction is subtle, but serves as a reminder that Likewise, another important source of ethical
morality may be generahzed from context to con- guidance is the code of behavior adopted by one's
text. Adam Smith, for example, saw no need for professional and trade associations. These are often
ethical relativism when it comes to business: aspirational in nature, and frequendy establish higher
standards for behavior than the law requires. Mem-
It is impossible to detemiine just how business became bers of a professional or trade association typically
separated firom ethics in history. If we go back to seek to meet these higher standards in order to
Adam Smith, we find no such separation. In addition establish and uphold the reputation of the profession
to his famous book on business and capitalism. Hie or trade.
Wealth of Nations, Adam Smith also wrote The Theory
of Moral Sentiments, a book about our ethical obliga- A fourth type of standard often unwritten and
tions to one another. It is clear that Smith believed that "commonly understood" - is the community's
business and commerce worked well only if people conceptualization of morality. These social mores,
took seriously their obligations and, in particular, their based on commonly held beliefs about "what is right
sense of justice. (Bruner et al., 1998, p. 46.) and what is wrong" and "what is fair and what is
unfair" can be powerful determinants of one's rep-
May (1995) echoes this important point: "The utation in society. Behavior which in the strictest
marketplace breaks down unless it can presuppose sense meets legal requirements, organizational
the virtue of industry, without which goods will not policies, and even professional standards may stiU be
be produced; and the virtues of honesty and integ- viewed by the general pubhc as unfair and wrong
rity, without which their free and fair exchange (Krech et al., 1962).
cannot take place" (p. 693). Yet a fifth set of standards are those of the
individual conscience. Coleman et al. (1980, p.
Glossary IV) define "the conscience" as "the
Standards of ethical behavior functioning of an individual's moral values in the
approval or disapproval of his or her own thoughts
The law (including statutory, administrative, and and actions," and equate it roughly with the
case law) is one important and legitimate source of Freudian concept of the superego. Highly ethical
ethical guidance, of course. Federal, state, and local business leaders typicaUy have moral standards
laws establish the parameters within which business which exceed aU four of the lesser standards hsted
Ethics in Business 347

above. These values, learned early in life and must mean that he is to act in some way that is not
reinforced by life's experiences, are internalized in the interest of his employers" (p. 33). Fieser
standards which are often based on personal reli- (1996) disagrees with Friedman regarding this latter
gious and/or philosophical understandings of claim; Fieser is more sanguine with respect to the
morality (Baelz, 1977, pp. 41-55). corporate officer's voluntary actions to guide the
business to act in a socially responsible manner.
However, Fieser summarizes his careful examination
The role of law of the issue of the sufficiency of the law as a moral
guideline for business with the "cautious conclu-
What is the role of law in determining moral sion" that "the typical business in our society has no
behavior in business? Hosmer (2003) defines "the moral ohligation beyond what the law requires" (p.
465).
law" as:
In contrast, in an elegant treatise on the role of
. . .a consistent set of universal rules that are widely law in business morality, Hosmer (2003) reaches the
published, generally accepted, and usually enforced. opposite conclusion:
These rules describe the ways in which people are
required to act in their relationships with other Legal requirements can serve as a guide to managerial
people within a society. They are requirements to decisions and actions, but.. .they are not enough.
act in a given way, not just expectations or sug- They don't include the fuU range of personal goals,
gestions or petitions to act in that way. There is an norms, beliefs, and values and consequently.. .don't
aura of insistency about the law; it defines what you represent the true nature and actual worth of human
must do. (p. 64.) beings. Legal requirements are useful... [But] we need
something more. (pp. 7576.)
The law plays an important - most would say an
essential - part in estabhshing the moral and practical Stackhouse (1995a) takes a similar stance:
miheu in which husiness takes place. Says Fieser
(1996), "The law.. .is.. .necessary since the laws are Indeed, much of morality is beyond the law.. . Law
what establish the contractual framework within is best when it provides general guidelines for orga-
which businesses operate" (p. 458). Stackhouse nization and action, yet preserves maximum freedom,
(1995a) adds, "Modern business presupposes a stable protects persons and groups from danger or exploi-
fabric of law. Law, of course, means limits; there are tation, and constrains those who subvert the capacity
some things that businesses cannot do and remain to live responsibly. The point is this: economics
and law cannot generate business morality alone.
legitimately in business" (p. 18).
Something in addition to them must guide business,
While few husiness philosophers question the
(p. 18.)
role of the law as a necessary standard of business
morality, there is a raging debate over whether the
So which is it? Does the law provide sufficient moral
law is a sufficient standard of ethicahty in business. In
guidance for business leaders, or is "something else"
other words, is it enough for the ethical business
needed? I weigh in on the side of Hosmer and
person to obey the law, or are there higher standards
Stackhouse; however, one's answer to this question
of morahty which also must be met? Friedman
will differ depending on one's philosophy about
(1970) argues that the law is both a necessary and
corporate responsibility, an issue to which I now
sufficient standard of morality in business, and even
turn.
claims that corporate officers who seek to "go be-
yond the law" in the name of social responsihility
may be breaking trust with corporate shareholders
who expect the officers to serve as their agents in Levels of corporate responsibility
making a profit within the law. "What does it mean
to say that the corporate executive has a 'social Drawing on Carroll's (1979) excellent scholarly
responsibility' in his capacity as a businessman?" asks work, Schermerhorn (2005) makes these observa-
Friedman. "If this statement is not pure rhetoric, it tions about four responsibilities of business firms:
348 William I. Sauser, fr.

An organization is meeting its economic responsibility but not sufficient. Higher standards than the law may
when it earns, a profit through the provision of goods be needed.
and services desired by customers. Legal responsibiHty As a business professor, I seek to prepare my
is fulfilled when an organization operates within the students to take leadership roles in society. Accord-
law and according to the requirements of various
ingly, I encourage them to adopt the proactive
external regulations. An organization meets its ethical
strategy for their businesses, and thus to seek volun-
responsibility when its actions voluntarily conform
not only to legal expectations but also to the broader tarily to identify and avoid any personal or business
values and moral expectations of society. The highest actions which might lead to societal harm. This
level of social performance comes through the satis- places upon them a higher level of moral expectation
faction of an organization's discretionary responsibil- than those business persons who "settle for" strate-
ity. Here, the organization voluntarily moves beyond gies lower on the taxonomy of corporate social
basic economic, legal, and ethical responsibilities responsibiUty. I think that is what leadership is aU
to provide leadership in advancing the \veU-being about: striving to meet the higher standards.
of individuals, communities, and society as a whole,
(pp. 74-75.)

Next Schermerhorn (2005), using Gatewood and The role of religion


CarroU (1981) as his guides, describes a fourfold
taxonomy of social responsibility strategies: Might rehgion play a part in determining ethical
standards beyond "the law?" Zinbarg (2001) makes
An obstructionist strategy ("Fight the social de- an exceUent case for "bringing rehgion into the
mands") reflects mainly economic priorities; social picture" with respect to undentanding business
demands lying outside the organization's perceived ethics more fuUy: "Since moral understandings are
self-interests are resisted... A defensive strategy derived from reUgious traditions as weU as from
("Do the minimum legally required") seeks to protect secular education, the voices that speak to the issue
the organization by doing the minimum legally nec- should be reUgious as weU as secular" (p. 33). Sim-
essary to satisfy expectations. Corporate behavior at
ilarly, Stackhouse (1995b) presents a convincing
this level conforms only to legal requirements, com-
argument that reUgion has much to offer the field of
petitive market pressure, and perhaps activist voices...
business ethics, particularly with respect to issues of
Organizations pursuing an accommodative strategy vocation, moral law, liberation, sin, covenant, and
("Do the minimum ethically required") accept their creation.
social responsibilities. They try to satisfy economic, Baelz (1977) adds this contribution to the argu-
legal, and ethical criteria. Corporate behavior at this ment that rehgion has a role in understanding and
level is congruent with society's prevailing norms, applying ethical concepts in business:
values, and expectations. But, it may be so only be-
cause of outside pressures... The proactive strategy Religion might exercise a coordinating and integrating
("Take leadership in social initiatives") is designed to function by holding before men's eyes the vision of an
meet all the criteria of social performance, including ultimate universal order in which the needs of the
discretionary performance. Corporate behavior at this individual and the needs of humanity were hanno-
level takes preventive action to avoid adverse social nized. It could bind human beings to one another by
impacts from company activities, and it takes the lead binding them all to something even more inclusive,
in identifying and responding to emerging social issues, whether this were conceived in terms of an impersonal
(pp. 75-76.) order or in terms of a personal God. (p. 65.)

Leaders of those business organizations choosing to Zinbarg (2001) presents an exceUent summary of the
pursue a corporate strategy of obstruction or defense ethical principles of the Jewish, Christian, Islamic,
would Ukely hold that the law is a sufficient measure Hindu, Buddhist, and Confiacian traditions, and
of business morality, while those striving to pursue shows how they converge to provide guidance for
an accommodative or proactive strategy would argue behavior in the economic sector. He summarizes his
that the law is certainly necessary for this purpose. review as foUows:
Ethics in Business 349

If the mosaics of the West and the East were joined, What we have tried to do is establish a positive envi-
I doubt that a member of any one of the six faith ronment for individual and company growth which
communities would be uncomfortable looking at it. emphasizes placing responsibility on individuals,
For the marketplace, the mosaic would portray a operating in a decentralized setting dedicated to
coherent religious vision of an ideal economic setting. helping the customer and our company in the long
Economic efficiency would not require a sacrifice of term. Finally, we ask our people to go beyond
human dignity. Economic actors would exhibit mu- themselves and get involved in their own communi-
tual compassion, and individual achievement would ties, (p. 674.)
not be at the expense of communal solidarity. Steady
economic and moral improvement would be pursued In Business as a Calling, a fascinating book written "for
with humiUty and patience, (p. 77.) Jews, Christians, Muslims, and othen who take the
inner life seriously" (p. 1), Novak (1996) describes the
In a similar vein, Stackhouse (1995c) provides a benefits that would accrue to all business leaders if
concise summary of the guidance the Christian faith they viewed their work as a calhng in this sense:
provides for ethical behavior in economic hfe. Many
of these principles are shared across the great reli- It would give them a greater sense of being part of a
gious traditions of the world: noble profession. It would raise their o\vn esteem for
what they do and no doubt stimulate their imagi-
Do not lie, cheat, steal, or covet; deal as equitably with nations about how they might gain greater and deeper
the foreigner and the stranger as with the family satisfactions from doing it. It would help tie them
member and the beloved neighbor; if authority is more profoundly to traditions going far back into the
given to someone, it must not be used to extort or gain past, in seeing their own high place in the scheme of
advantage; all bounty is to be treated as a trusted and things. The human project is a universal project. We
trustworthy steward treats that which is the Lord's. are involved in bringing the Creator's work to its in-
Honor is not to go to the rich and the powerful be- tended fulfillment by being co-creators in a very grand
cause they are rich and powerful but accordingly as project, indeed. In this, we are tied to the whole hu-
they love mercy, do justice, and walk humbly with man race. (p. 37.)
God. Further, the greedy accumulation of wealth
which removes some from accountability to all others
How might those who accept business as a caUing
is contrary to God's justice but damaging to the
translate their passion into action? In their com-
community... Forced poverty is equally contrary to
God's jusdce and destructive of viable economic pendium of thought on moral business, Stackhouse
development. Thus, efforts to call the greedy to ac- et al. (1995) present a number of thoughtful essays
count, to relieve the needs of the distressed, and to and position statements from a variety of religious,
convert both to a disciplined Ufe, are always necessary, historical, economic, and philosophical perspectives
(p. 112.) across the globe. For practical suggestions coming
from the world's great rehgions, these essays and
When one holds fast to such reHgious behefs, then documents provide a rich source of study.
one seeks to exhibit behavior in daily life and Another impressive document written by per-
work which conforms to them. In a theological sons from a variety of faith traditions throughout the
sense, this is considered one's "vocation" or world is the "Universal Declaration of Human
"caUing" (McKim, 1996, p. 36). Says the National Rights," adopted and proclaimed by the United
Conference of Cathohc Bishops (1995), "Business Nations on December 10, 1948. What ultimate
people, managers, investors and financiers foUow a good might accrue if business leaders across the
vital Christian vocation when they act responsibly world took it upon themselves as their caUing to
and seek the common good" (p. 446). This implement the terms of this declaration in every
concept may easily be generahzed to other faith workplace on the globe?
traditions as weU. SuUivan (1995) says, "I think of Below I describe three other types of action
business as a vocation" (p. 676), and summarizes which I beheve leaders who view business as a
his effort to respond to his caUing as a business caUing can undertake to improve the moral chmate
leader as foUows: of the workplace: (a) create an ethical culture within
350 William I. Sauser, Jr.

the organizations they lead, (b) demonstrate corpor- not human beings, and one should be very circum-
ate social responsibility, and (c) provide servant spect in attributing to them anthropomorphic char-
leadership. Before turning to this discussion, how- acteristics. It may be useful at times to speak of
ever, it is necessary to gain a perspective on the corporations as having such traits as loyalty, honesty,
scope of the problem we face as we seek to change character, ethicality, concern for stakeholders, and
the current corporate bureaucratic culture which similar attributes, but it must always be remembered
seems to be stifling moral behavior in business. How that the corporation exists only on paper under the
difficult is the chaUenge? rule of law (Cragg, 2002, p. 126). Says Friedman
(1970), "What does it mean to say that 'business' has
responsibihties? Only people can have responsibih-
Corporate bureaucratic culture ties" (p. 32). While it may be true that individuals
within the corporate structure possess these human
In 1956 WiUiam H. Whyte pubhshed Tlie Organi- character traits, one should never make the assump-
zation Man, a groundbreaking expose of the pressures tion that a corporate entity has a conscience or a soul.
for conformity found in the typical bureaucratic JackaU (1988) speaks ofa pubhc relations ploy known
organization of the 1950s. Whyte's book, a best as the "corporate persona, a kind of fictive reality,
seUer, has become a classic text for study of the known coUoquiaUy in the field as a 'front'" (p. 174).
sociological problems of large bureaucracies - whe- One must always look beyond "the front" to' under-
ther they be for-profit corporations, not-for-profit stand what truly is happening within the organization.
foundations, mihtary units, hospitals, churches, or 2. Business organizations are typically established to
voluntary associations and is stiU in print today. make a profit, and this can affect their moral culture. O n
Says Nocera in his foreword to the 2002 paperback occasion businesses are created for purposes other
edition of Whyte's classic, "Simply for being so far than making a profit (such as tax shelters), but most
ahead of the curve, Whyte deserves enormous proprietorships, partnerships, and corporations are in
credit" (p. xv). It is true, as Nocera asserts, that many business to make a profit. In fact, leaders of for-profit
of the problems inherent in large bureaucracies are corporations have a fiduciary obhgation to increase
now understood and are being addressed. However, the value of the money invested in the corporation
a more recent sociological examination of for-profit by its shareholders (Cragg, 2002, p. 125). Compe-
bureaucracies indicates that there remains a number tition is fierce in today's global marketplace, so
of conditions in these organizations that affect making a profit year after year is no easy matter. The
(adversely, in my opinion) the exhibition of positive need to make a profit puts considerable pressure on
ethical behavior on the part of those individuals business managers, and leads to many temptations to
laboring within them. "cut corners" ethicaUy (Sauser, in press a). In fact,
this profit drive can create within the minds of
In the early 1980s Robert Jackall undertook in-
business leaders a type of situational ethic described
depth case studies of three large American for-profit
by JackaU (1988) as foUows:
corporations. In the course of his research, JackaU
conducted over 180 interviews with corporate
executives in an effort to uncover the social context Notions of morality that one might hold and indeed
of their work. His resulting report, Moral Mazes: Tlte practice outside the workplace say some variant of
World of Corporate Managers (Jackall, 1988), is a Judeo-Christian ethics become irrelevant, as do less
worthy successor to Tlte Organization Man and specifically religious points of principle, unless they
mesh with organizational ideologies. Under certain
provides a rich resource for answering this question.
conditions, such notions may even become danger-
Accordingly I have shaped this portion of the paper ous. .. Managers know that in the organization right
around some of JackaU's primary findings about and wrong get decided by those with enough clout to
organizational life. Here are some of the concerns make their views stick, (p. 105.)
expressed by Jackall in his book:
1. Corporations are persons only in a legal sense. U n d e r In the words of one ofJackaU's interviewees, "What
the law, corporations have rights, privileges, and is right in the corporation is not what is right in a
obhgations as "persons." However, corporations are man's home or his church. WItat is right is what the
Ethics in Business 351

guy above you wants from you. That's what morality is as "vast systems of organized irresponsibihty" (p.
in the corporation" (p. 109). JackaU sums up this 95).
problem concisely: "Strong convictions of any sort 4. Business managers, particularly those at tlte middle
are suspect" (p. 50). levels and below, have little control over their own time.
In for-profit organizations "the bottom hne" is a JackaU (1988) notes that this lack of economy over
quick and handy measure of corporate success, and one's time results from "continual interruption from
short-term unit profitability is often the key to a one's subordinates, telephone caUs from customers
manager's success as weU. A manager who is seeking and cHents, and necessary meetings with coUeagues"
to "get ahead at aU costs" might be tempted to cut (p. 20). (I hasten to add that there are too many
ethical comers in order to gain a reputation as "unnecessary" meetings as weU!) As a consequence
someone who can make money for the organization. of this time pressure, many managers do not have the
This temptation may prove overpowering in an luxury to ponder their decisions and actions in terms
organizational culture where "the guy above you" of ethicality. They often go with their "gut re-
issues such demands as these: sponse," and in a milieu of ethical relativism, they
sometimes make decisions which, upon reflection,
"I don't care how you do it, just get it done!" they recognize as moraUy insufficient.
"Don't ever bring me bad news!" 5. Many corporate managers have a very short-term time
"Don't bother me with the details; you know perspective. This is true because managers are typicaUy
what to do." rewarded for short-term financial gains; the "quar-
"Remember, we always meet our financial terly report" is their major measure of perfomiance.
goals somehow." JackaU (1988) attributes this short-term perspective
"No one gets injured on this worksite...period. in part to the training many managers receive:
Undentand?"
"Ask me no questions, I'U teU you no Hes." The training of professional managers increasingly fo-
(Sauser, in press a.) cuses... on the techniques of financial wizardryfor
example, leveraged buyouts, arbitrage, stock protec-
tion and stock kitingand on quantitative measures of
When a manager asks an employee, "Can't you find
organizational progress... Many of these tools reflect
some way to make this happen?" there is almost an
and illustrate the short-term mentality that character-
impHcit message to "cut ethical comers" if one must izes most managerial training... Similarly, accounting
in order to meet the desired goal or outcome. systems that place a premium on bare-bones inventory
3. Most large business corporations are organized as reflect the same pressure for short-run profit maxi-
bureaucracies; this tends to distribute authority in ways that mization, (p. 82.)
may be counterproductive. In JackaU's (1988) blunt
words, "It is characteristic of this authority system JackaU (1988, p. 83) also credits the stmcture and
that details are pushed down and credit is puUed up. pace of managerial work itself for creating a
Superiors do not Hke to give detailed instructions to short-term perspective. This short-term perspective
subordinates" (p. 20). This can result in considerable coupled with the facts that (a) managerial perfor-
role ambiguity on the part of employees of the firm. mance is "always subject to a myriad of interpreta-
What precisely is to be done, by whom, using what tions" (p. 62) and (b) bureaucracy blurs individual
procedures? In ambiguous circumstances Hke these, authority and responsibility (as noted above) can
moral behavior can become compromised, especiaUy lead to managerial decisions that are not always in
given the organizational culture issues discussed the best interests of the firm, such as "starving a
above. This can lead to what JackaU describes as a plant" or "milking a plant" (JackaU, 1988, p. 91).
related problem, avoidance of responsibiHty: "As a Such a strategy may improve one's chances for up-
result, many managers become extremely adept at ward mobility within the firm while simultaneously
sidestepping decisions altogether and shrugging off eroding the organization's competitiveness in the
responsibiHty.. .leaving those who actuaUy do decide long run. JackaU describes the plight of too many
to carry the baU alone in the open field" (p. 80). For managers as foUows: "Managerial effectiveness and
these reasons, Jackall refers to bureaucratic businesses others' perceptions of one's leadership depend on
352 William I. Sauser, fr.

the willingness to battle for the prestige that comes and their "rank-and-file" employees. "Bureaucracies
from dominance and to make whatever moral create many mechanisms that separate men and
accommodations such struggles demand" (p. 196). women from the consequences of their actions,"
6. Problems of psychological distance and multiple comments Jackall (1988). "Impersonality provides
stakeholders also diffuse responsibility within the bureau- the psychological distance necessary to make what
cratic business firm. Issues of stakeholder satisfaction managers call 'hard choices"' (p. 127). Unfortu-
are explored in depth by such w^riters as Carson nately, this psychological distance, coupled with
(2003), Cragg (2002), and PhiUips (2003a, b) and stockholder detachment, can also result in decisions
will not be elaborated upon in this paper. Suffice it which devastate the hves of many corporate
to say here that multiple stakeholders complicate the employees. Jackall acknowledges the stress which
job of the corporate manager: results from "periods of organizational upheaval, a
regular feature of American business where mergers,
Managers must address a multiplicity of audiences, buyouts, divestitures, and especially 'organizational
some of whom are considered rivals, and some out- restructuring' have become commonplace occur-
right adversaries. These audiences are the internal rences" (p. 24).
corporate hierarchy with its intricate and shifting
power cliques and competing managerial circles, key These six complex organizational features ex-
regulators, local and federal legislators, special publics plored by Jackall (1988) - and others too numerous
that vary according to the issues, and the pubUc at to describe here - have led to a prevaihng organi-
large, whose goodwill and favorable opinions are zational culture in many business organizations
considered essential for a company's free operation. where, according to Jackall, "one must leam to
Oackall, 1988, p. 156.) streamhne oneself shamelessly, leam to wear all the
right masks, leam all the proper vocabularies of
The key stakeholders to please, of course, are the discourse, get to know all the right people, and
owners of the corporation - the stockholders. But cultivate the subtleties of the art of self-promotion"
more and more frequently these persons are dis- (p. 74). Such an organizational culture hardly leads
tanced considerably from the operations of the to the promotion of morality and ethicahty! This is
firm for reasons Jackall (1988) explains as why creating an ethical culture within the workplace
follows: is one of the most important tasks of the modern
manager (Sauser, in press b).
The capital markets are increasingly dominated by big Joseph (2003), in the executive summary of the
institutional investorsamong them, large corpora- National Business Ethics Survey 2003, describes some
tions, the insurance companies, the investment funds, of the results from weak organizational cultures
and the brokerage houses^whose "quick in, quick out" where ethics is not properly emphasized, modeled,
philosophy wreaks havoc with corporate stocks, (p. 83.)
and rewarded. Here are just a few of his findings:

May (1995) concurs with this point:


Nearly a third of respondents say their
coworkers condone questionable ethics prac-
Stockholders are important stakeholders in a company,
tices by showing respect for those who achieve
but by no means the only ones. Workers, customers,
neighbors, and the public at large have in varying way success using them.
a stake in its performance, sometimes indeed a larger The types of misconduct most frequently
stake than stockholders who may dart in and out of observed in 2003 include: abusive or intimi-
their investments more readily than workers and dating behavior (21%), misreporting hours
neighbors can disengage themselves from a company worked (20%), lying (19%), and withholding
and its fortunes, (p. 696.) needed information (18%).
Employees in transitioning organizations
In addition to increasing stockholder detachment (undergoing mergers, acquisitions or restmc-
from the companies they own, there is also the turings) observe misconduct and feel pressure
problem within some organizations of a growing at rates that are nearly double those in more
psychological distance between corporate leaders stable organizations.
Ethics in Business 353

Despite an overaU increase in reporting of ethics, or they may be informal in nature and led by
misconduct, nearly half of aU non-management the manager and/or employees themselves. A highly
employees (44%) stiU do not report the mis- effective way to conduct an ethics training session is
conduct they observe. The top two reasons to provide "what if..." cases for discussion and
given for not reporting misconduct are: (1) a resolution. The leader presents a real world scenario
beHef that no corrective action wiU be taken and in which an ethical dilemma is encountered. Using
(2) fear that the report will not be kept confi- the organization's code of ethics as a guide, partici-
dential. pants then explore options and seek a consensus
Less than three in five employees (58%) who ethical solution. This kind of training sharpens the
report misconduct are satisfied with the re- written ethical code and brings it to Hfe.
sponse of their organizations, (pp. iiiii.) 3. Hire and promote ethical people. This, in concert
with step four below, is probably the best defense
Changing an estabHshed organizational culture is a against putting the business at risk through ethical
very difficult process requiring time, effort, and lapses made by employees with character flaws.
energy on the part of both managers and employees When making human resources decisions it is critical
(HeUriegel and Slocum, 2004). How might to reward ethical behavior and punish unethical
enHghtened managers change a corporate culture to behavior. Investigate the character of the people you
promote rather than inhibit moral behavior in a hire, and do your best to hire people who have
sociaUy responsible manner? Attention is now fo- exhibited high moral standards in the past. Base
cused on the beginnings of an answer to this cmcial promotional decisions on matters of character in
question. addition to matters of technical competence. Dem-
onstrate to your employees that high ethical stan-
dards are a requirement for advancement in the firm.
Creating an ethical organizational culture 4. Correct unethical behavior. This is the comple-
ment of step three. When the organization's ethical
How might a leader in business go about creating an code is breached, the employee(s) responsible must
organizational culture where ethics can flourish? The be punished. Many business organizations use
Ethics Resource Center (Joseph, 2003, p. 5) offers "progressive discipline," with an oral warning (in-
four elements as a beginning point: written standards tended to advise the employee of what is and is not
of ethical conduct; training on standards of conduct; acceptable behavior) used as the first step, foUowed
an ethics office or telephone advice Hne; and a means by a written reprimand, suspension without pay, and
to report misconduct anonymously. Here are some termination as further discipHnary action if unethical
suggestions shared recently at a conference for South behavior persists. Of course, some ethical lapses are
African entrepreneurs (Sauser, in press b): so egregious that they require suspension or even
1. Adopt a code of ethics. The code need not be long termination foUowing the first offense. Through
and elaborate with flowery words and phrases. In consistent and firm appHcation of sanctions to cor-
fact, the best ethical codes are stated simply in lan- rect unethical behavior, the manager will signal to aU
guage anyone can understand. A good way to pro- employees that substandard moral behavior wiU not
duce such a code is to ask aU employees of the firm be tolerated.
(or a representative group of them) to participate in 5. Take a proactive strategy. Businesses that wish to
its creation (Kuchar, 2003). Identify the commonly establish a reputation for ethicality and good corporate
held moral beliefs and values of the members of the citizenship in the community wiU often organize and
firm and codify them into a written document support programs intended to "give something back"
which aU can understand and support. Post the code to the community. Programs that promote continuing
of ethics in prominent places around the worksite. education, wholesome recreation, good health and
Make certain that aU employees subscribe to it. hygiene, nutritious diet, environmental quaHty, ade-
2. Provide ethia training. From time to time the quate housing, and other community benefits may be
ethical business leader should conduct ethics training undertaken in an effort to demonstrate the extent to
sessions. These may be led by experts in business which the business promotes care and concem for
354 William I. Sauser, fr.

human welfare. Seeking out and adopting "best with a culture of integrity, honesty, and ethicality,
practices" from other businesses in the community is the business wiU reap long-temi benefits from all
also a proactive strategy. quarters.
6. Conduct a social audit. Most businesses are
famihar with the process of financial audits. This
concept can be employed in the context of ethics Demonstrating corporate social responsibility
and corporate responsibiHty as weU. From time to
time the business might invite responsible parties to
As noted earlier, there are many different viewpoints
examine the organization's product design, pur-
on the meaning of the term "corporate social
chasing, production, marketing, distribution, cus-
responsibiHty," and thus different strategies for
tomer relations, and human resources functions as
meeting this goal. Friedman's (1970) admonition to
well, with an eye toward identifying and correcting
attend solely to niaking a profit for the shareholders
any areas of poHcy or practice that raise ethical
within the law would Hkely be labeled as a defensive
concems. Similarly, programs of corporate respon-
or accommodative strategy using Schermerhorn's
sibiHty (such as those mentioned in step 5) should be
(2005) typology. Stakeholder theorists typicaUy
reviewed for effectiveness and improved as needed.
recommend an accommodative or even proactive
7. Protect whistle blowers. A "whistle blower" is a strategy. Desjardins (2003), for example, suggests
person w^ithin the firm who points out ethicaUy that ethical businesses "produce a high quality
questionable actions taken by other employees - or product that consumers value, treat employees with
even by managers within the organization. (The decency and faimess, [and] give back to the com-
temi is borrowed from the athletic arena, where munity that supports your business" (p. xiii).
referees "blow the whistle" when a foul is com-
Novak (1996) provides a very comprehensive
mitted.) Too often corporate whistle blowers are
definition of "business ethics" from the proactive
ignored or even punished by those who receive
point of view:
the unfortunate news of wrongdoing within the
business. All this does is discourage revelation of Business ethics means a great deal more than obeying
ethical problems. Instead the whistle blower should the civU law and not violating the moral law. It means
be protected, and even honored. When unethical imagining and creating a new sort of world based on
actions are uncovered within a firm by one of its the principles of individual creativity, community,
own employees, that is the time for managers to step realism, and the other virtues of enterprise. It means
forward and take corrective action (as described in respecting the right of the poor to their own personal
step 4 above). Employees observe one another's economic initiative and their own creativity. It means
actions and leam from one another's consequences. fashioning a culture worthy of free women and free
mento the benefit of the poor and to the greater
Ifthe owners and managers of a business turn a bUnd
glory of God. (p. 133)
eye toward wrongdoing, a signal is sent to everyone
within the firm that ethicality is not characteristic of
To iUustrate his proactive definition of business
that organization's culture. A downward spiral of
ethics, Novak (1996) Hsts what he beHeves to be
moral behavior is hkely to foUow.
seven internal and seven external responsibilities of
8. Empower the guardians of integrity. The business ethical firms. Respectively, they are:
leader's chief task with respect to establishing a
culture of ethicality is to lead by example and to Seven Intemal Responsibilities
empower every member of the organization to
take personal action that demonstrates the firm's 1. To satisfy customers with goods and services of
commitment to ethics in its relationships with real value.
suppliers, customers, employees, and shareholders. 2. To make a reasonable retum on the funds en-
Tum each employee of the firm, no matter what trusted to the business corporation by its
that individual's position in the organizational investors.
hierarchy, into a guardian of the firm's integrity. 3. To create new wealth.
When maliciousness and indifference are replaced 4. To create new jobs.
Ethics in Business 355

5. To defeat envy through generating upward society. There is yet one more step that can be taken
mobihty and putting empirical ground under by one pursuing such a caUing: providing servant
the conviction that hard work and talent are leadership. This ultimate step is the final topic of this
fairly rewarded. paper.
6. To promote invention, ingenuity, and in gen-
eral "progress in the arts and useful sciences"
(Article I, Section 8, U. S. Constitution). Providing servant leadership
7. To diversify the interests of the republic.
Magoni (2002/03) describes a new paradigm for
Seven Responsibilities from Outside Business leadership, a paradigm which is gaining the atten-
tion of theologians, business leaders, and educators
1. To establish within the firm a sense of com-
alike:
munity and respect for the dignity of persons.
2. To protect the political soil of liberty. In leadership literature, two paradigms we often read
3. To exemplify respect for law. about are the pyramid and the inverted pyramid. The
4. To make manifest social justice. pyramid model represents the old school, militaristic,
5. To communicate often and fuUy with their top-down, hierarchical leadership style. The CEO is at
investors, shareholders, pensioners, customers, the top, and all policy and ideas flow fi-om the top
and employees. down.
6. To contribute to making its own habitat, the
In the inverted pyramid, the leader or CEO is seen on
surrounding society, a better place. the bottom, serving the organization. He or she is
7. To protect the moral ecology of freedom, (pp. there to serve the company and remove all of the
134-159.) obstacles that would prevent the team from getting the
job done. This paradigm is often used when describing
Discussing each one of these responsibihties in full servant leadership, (p. 14.)
is beyond the scope of this paper; interested readers
are encouraged to study carefully Novak's excellent The late Robert Greenleaf, founder of the
book and to review Holland's (2002) suggestions for Greenleaf Center for Servant Leadership, is often
taking responsible corporate actions. Here let me credited with coining the term, "servant leader-
simply provide one more quotation from Novak ship." Autry (2002/2003) summarizes six ideas
(1996), a statement which captures the essence of the about servant leadership made popular by Greenleaf
proactive approach to business ethics I am encour- and his disciples:
aging in this paper:
1. Leadership is not about controlling people; it's
The business corporation is in its essence a moral about caring for people and being a useful re-
institution. It imposes some moral obligations that are
source for people.
inherent in its own ends, structure, and modes of
2. Leadership is not about being a boss; it's about
operation. Other moral obligations fall upon it
through the moral and religious commitments of its being present for people and building a com-
members. Thus, those who labor within the business munity at work.
corporation have many moral responsibilities and a 3. Leadership is not about holding on to territory;
richly various moral agenda, of which the fourteen it's about letting go of ego, bringing your spirit to
responsibilities mentioned here are basic but not work, being your best and most authentic self.
exhaustive, (pp. 158-159.) 4. Leadership is less concemed with pep talks and
more concemed with creating a place in which
I submit that any business leader who embraces people can do good work, can find meaning in
Novak's vision of the business corporation as a moral their work, and bring their spirits to work.
institution, and who takes the necessary actions to 5. Leadership, like life, is largely a matter of pay-
create an ethical culture within her or his organi- ing attention.
zation, is making a truly significant contribution to 6. Leadership requires love. (p. 5.)
356 William I. Sauser, Jr.

This final statement about leadership made by Autry nation's economy and quality of life. The corporate
is very similar to the highest ethic identified by Baelz community is struggling to find leaders committed
(1977): love. Says Baelz: to the mission and the margin, people and profit,
organizational growth and family stability. Leaders
Man's essential nature.. .is in accordance with love. In with ethical perspectives that are able to gain the
acting out of love men are being true to what they trust of the employees, the customers and the
really are. Love is not only a force in human nature, it community are no\v in great demand. Structures and
is the source and spring of personal well-being. Those organizations are looking for leaders who care for
who love.. .are acting as 'real' persons; in responding people, rather than...control people, individuals
to the nature with which and for which they have concerned about building community more than
been created they have already discovered what it is to being boss, leaders who empower people rather than
'come alive', (p. 108.) use people, (p. 18.)

Servant leadership, then, can be seen as the apph-


cation of the ethic of love to the management of the Who will answer the call?
work enterprise. Here are ten characteristics of the
servant leader as envisioned by Greenleaf (2002/
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