My topical research files contain numerous articles on business, news clippings related to my hot-buttons: politics, religion, philosophy, leadership, education, society, politics, and especially economics. But ONE eighteen month-old revelational piece from the WSJ on why the ivy league (and Harvard in particular) had arrived at the conclusion that the way they were addressing business ethics in the classroom wasn’t working…had some particularly pertinent points.
Paraphrasing, the article bemoaned the lack of success in teaching ethics, and that a “fresh look” was underway. The motivation for this change was attributed to the fact while Harvard (and other brand name institutions) moved very many smart, case-study-experienced-people into the workforce, one noted and disappointing outcome was the group’s propensity to use their smarts to…identify and exploit loopholes. On several occasions, the exploitation of the loopholes by those really smart people had resulted in some very “bad” things, hence the requirement to rethink ethics.
Correspondingly, and despite my dedicated resistance to events featuring “perps on the podium,” I recently went to a “mea culpa” session delivered by a big-time fraudster.
(I wish I would follow my own advice!)
After the obligatory “my actions damaged me, my company, all of our investors, reputations, retirement assets,” ad nauseam, he quickly launched into his prison-time-developed-musings about life as a public company executive. You guessed it, “loopholes” and (smart) people who foisted their exploitative tactics upon corporate executives which enabled his misdeeds…escaped his lips. Finally, the audience received the expected soliloquy on “ethics in the marketplace.”
If I hadn’t been so far away from the solitary exit, I would have walked out.
Each of us makes our own decisions; people make choices, not companies. The rationale for a perp’s decisions is attributed to a variety of impersonal influences: compensation, stock-price-impact, hitting targets, pressure, situational circumstances, strong personalities. Philosophers far smarter than me specify that in the final analysis, a person’s “core” (principles, character, makeup, upbringing, faith, conscience) drive their choices, and their actions reflect the relative weakness or overall lack of those things.
If you compare the volume of “principles” vs. “rules,” the scale is overwhelmingly lop-sided. With “principles” on one side and the “rules” on the other, just a few examples show there are:
- 44 thousand pages in (just) the US Tax Code;
- 20 thousand (Federal) statutes “on the books” with Dodd Frank, Sarbanes Oxley, as classical examples;
- Even with FASB, we are up to: 168 standards, multitudes of previous guidance(s) superseded from predecessors, 7 statements of financial accounting concepts, 48 interpretations, 70 published staff positions (papers), and numerous technical bulletins;
- State and local, regulatory bodies—where should you stop?
So how are all those “rules” working out for us?
I suspect it is logical to say that a multiplicity of “rules” result when people (smart people from Ivy League schools too), fail their principles, or have none. We have seen an-exponentially multiplied volume of rules legislated to fill gaps. But at the same time…principled people…operating from a developed “core”…making consistent decisions from their “core”…and taking personal responsibility for those choices…well, that’s just plain hard. We can stipulate that having principles is clearly much better than being inundated by rules, but the real problem was offered a long time ago…
“It’s far easier to fight for principles than to live up to them.” (Adlai Stevenson—circa 1952)
Pointing out the OBVIOUS