Philosophy for Business

P·4·B

Philosophy for Business
electronic journal

ISSN 2043-0736

Home/ Archive

Ethical Dilemmas
Kindle eBook

International Society
for Philosophers

Friends  &  sponsors

Philosophie & Wirtschaft



Launched on 2 November 2003, Philosophy for Business is an e-journal published by the International Society for Philosophers, looking at philosophical and ethical aspects of business practice.

We are aiming for a wide circulation to companies and corporations around the world, as well as academic philosophers.

In order to gain the widest possible readership, articles should be written in simple, non-technical language. The target length is 2500 words.

Some themes that we will be looking at:

   Globalization and monopoly
   Is business ethics possible?
   Philosophy of economics
   Practical ethics
   Idea of a code of conduct
   Freedom of speech
   Industrial democracy
   Whistle blowing
   Ecology and sustainability
   Education and health
   Business and the law
   Tax avoidance and evasion



Please send articles for Philosophy for Business to the List Manager/ Chief Editor Geoffrey Klempner at klempner@fastmail.net.

If you would like to receive Philosophy for Business, or unsubscribe, please go to https://lists.shef.ac.uk/sympa/
info/businesspathways
.

Philosophy for Business is published by the International Society for Philosophers.

The journal is distributed by email via the University of Sheffield list server.

The views expressed in this newsletter do not necessarily reflect those of the Editors or List Manager. If you have any suggestions, comments or criticisms, or if you would like to be an Editor, please write to the List Manager at klempner@fastmail.net.

Philosophy for Business is an open access journal, as defined by the Budapest Open Access Initiative.

In accordance with UK Law (April 2013) all content is archived by the British Library and is available within the reading rooms of all Legal Deposit Libraries.



LIST MANAGER

Geoffrey Klempner

klempner@fastmail.net




EDITORS

Daniel Silvermintz
Silvermintz@uhcl.edu

Tom C. Veblen
SuperBizRT@aol.com

Marco Senatore
marco.senatore@tesoro.it

Peter S Borkowski
p.borkowski@aui.ma

Dena Hurst
dena.hurst@appa.edu

Sean Jasso
sean.jasso@pepperdine.edu





International Society for Philosophers
[back to archive]


P H I L O S O P H Y   F O R   B U S I N E S S           ISSN 2043-0736
http://www.isfp.co.uk/businesspathways/

Issue number 2
30th November 2003

CONTENTS

I. 'Ethics: a Foundation Competency' by Geetu Bharwaney and Carolann Ashton

II. 'Business Ethics in Israel' by Richard Galloway

III. 'Conflict Management as an Ethical Problem' by Mari Kooskora

-=-

EDITOR'S NOTE

In this issue, Geetu Orme and Carolann Ashton highlight the dawn of a new focus
on ethics within the competency set of major organisations.

Richard Galloway, a Londoner who emigrated to Israel over twenty years ago,
looks at business ethics in Israel.

Mari Kooskora, of the Estonian Business School, analyses how conflict
situations in the workplace can arise and defends sensitivity to ethics as a
way of furthering managerial excellence.

We now have a smart new masthead, designed by Jennie Browne of Brain Tank
Studios http://www.braintankstudios.com. The photograph of the Editor is by
John Riley, Latent Image Photography, Sheffield.

Geoffrey Klempner

-=-

I. 'ETHICS: A FOUNDATION COMPETENCY' BY GEETU BHARWANEY AND CAROLANN ASHTON

It seems that "ethics" is the word on many people's lips at the moment. Recent
accounting scandals in corporate America have cast doubt on companies'
trustworthiness and the way in which they do business the world over. Employers
who may in the past have been considered to be "squeaky-clean" are now being
discussed in the business press, as journalists try to predict when and where
the next big corporate scandal will emerge.

Even before these recent scandals, there was evidence of a trend over the past
decade that showed higher demands being made of organisations by employees,
customers and sometimes even the wider community. For example:

-- consumers expecting private and public sector organisations to be more
ethical in their trading policies and business dealings;

-- board directors being asked to consider the impact of awarding themselves
large pay rises when their employees receive less than the rate of inflation;

-- journalists being asked to look at the issue of privacy invasion; and

-- scientists being asked to question their motivation to explore the human
genome.

Literature and research in this area is evolving too. A recent edition of IRS
Employment Review featured a report of 25 organisations' policies and practices
concerning corporate social responsibility (IRS, 2002). Quoted within that
report are three central reasons why businesses cannot ignore ethics:[1]

-- good practice;

-- the risk to their reputation; and

-- increasing external pressures.

The very heart of a number of sectors has been shaken through this questioning
of the values, principles and guiding ethos of well-known organisations.

Various organisations have added "ethical" to their list of corporate values.
In some organisations, polices have been drafted and codes of conduct agreed.
Yet we still seem to be a long way from creating the perfect ethical workplace
that we might want and may aspire to as leaders.

So what is missing? This article seeks to create a dialogue on how we can help
organisations, teams and executives move closer to defining ethics, what it
means in practice and how to work towards ethical practices in business. While
it may be true that ethics is a valuable part of a competency framework, we
would also advocate that it is the very backbone of corporate life. Key
questions that then emerge are how do we then learn it, test it and teach it?

Robinson and Garratt (1996, pp.6--7) suggest 10 further questions that get at
the very essence of what ethics means. We believe that these are very pertinent
in a business context:

1. Are there any differences between moral laws and society's laws? If there
are, why is this?

2. What are human beings really like: selfish and greedy or generous and kind?

3. Are some people better at "morality" than others, or is everyone equally
capable of being good?

4. Are there good ways of teaching children to behave morally?

5. Does anyone have the right to tell anyone else what goodness and wickedness
are?

6. Are there certain kinds of acts that are always wrong? If so, what are they?

7. What do you think is the best answer to the question" 'Why should I be a
good person?'

8. Is ethics a special kind of knowledge? If so, what sort of knowledge is it
and how do we get hold of it?

9. Is morality about obeying a set of rules or is it about thinking carefully
about consequences?

10. When people say, "I know murder is wrong", do they know it is wrong or just
believe it very strongly?

First let's start by defining what we mean by the word 'Ethics' and explore
three different types of ethics.

What is "ethics"?

There are many definitions of "ethics". Chambers English Dictionary defines it
as: "A system of morals" and "rules of behaviour", but the definition preferred
by the authors of the current article is by Connock and Johns (1995):

"Ethics is about fairness, and deciding what is right or wrong, about defining
the practices and rules which underpin responsible conduct between individuals
and groups."

We would add to this our own definition:

"Being ethical involves taking action to ensure that these practices and rules
are applied consistently in all day-to-day business situations."

So, in other words, the word "ethics" is fundamental to the very essence of who
we are, burying itself deeply within our sense of values.

Three types of ethics

The existing literature in this area suggests that there are three possible
approaches to ethics:[2]

1. Social ethics: an approach that came from Greek society and is based on the
Greeks' idea of basic rules for civilised living, but which is different from
one group or society to another. In other words, organisation A may have
different ethics to organisation B by virtue of a different set of values
and/or principles.

Take the financial advice that several different professional services firms
offer their clients. In each case, it is likely to be based on a firm's beliefs
about the integrity and quality of the information provided. But the starting
points for its ethical stances differ, according to a firm's particular values
or principles. These differences in approach are valuable in differentiating a
particular company from its competitors in a difficult marketplace. But the end
result is confusion and lack of confidence among consumers if the ethics
involved differ widely. Recent scandals have served to emphasise the problems
that can occur. It is not only the firms that have been implicated, but also
virtually a whole sector.

2. Transcendental ethics: rely on the absolute concept of right and wrong and a
sense of justice, which is applied equally regardless of any social,
geographical or cultural restriction. It is our view that organisations are
moving towards this particular understanding of ethics, and that it represents
the next phase of evolution for companies across the world. After all, what is
understood as being ethical in the petrochemical sector in Europe should also
be considered ethical in the retail sector in the USA. This is of course far
from where things are now. It involves taking some unpopular decisions that
ultimately will have beneficial results in the long term. It relies on leaders
being able to operate ethically (more about this later).

3. Tactical ethics: are based on obeying rules or laws in order to avoid any
penalties arising from their infringement. These ethics are usually practised
out of a convenience and self-interest rather than a sense of right or wrong.
Many people would consider that "sticking to the law" is an example of being
ethical. The authors believe that tactical ethics will be a step towards
achieving transcendental ethics, but that they are not likely to provide the
compelling case required for change to take place.

So, as you can see, we have to be clear about which type of ethics we are
referring to when we start to have a dialogue about them. Speaking cynically,
some current business practice seems to focus on using tactical ethics with the
intention of being seen as an "ethical" company only if it brings the
organisation more customers. For example, a 1993 survey on business ethics in
Britain carried out by the University of Westminster (Burke, 1993) found an
ethical separation between senior managers and their junior employees. It also
found that although business people displayed a high degree of ethical
awareness, many would discard their principles if profit were affected.
Therefore, "ethics" is not something we suddenly adopt because our company
develops a policy. So, why are ethics important?

The importance of ethics in business

Imagine a world without ethics, where we put ourselves first all the time.
Where no one was interested in the environment or making things better for all.
In the UK, there would be no National Health Service, no state education system,
and our decisions would be based on "what's in it for us?". Sadly, this is how
some people would describe their current workplace.

Research by Axiom Software into graduate recruitment identified that 75% of
graduates would not work for a company with a poor ethical record (Personnel
Today, 2002). It seems that we are all becoming more aware of the need for
ethics. In the USA, companies have now identified the new role of Ethics
Officer. But is this role likely to make any difference to the way in which
companies are run?

Consumers are certainly more driven now that ever before by ethics and social
responsibility. Co-operative Bank has developed a new Ethical Purchasing Index
(EPI) to understand the growth of the ethical marketplace.[3]

So, why is ethical business becoming so important? Many of us are likely to
have formed our ideas of decency and fairness based on our experiences of life.
Often, our views have been influenced by people we have met who have helped to
shape our view of the world -- for example, parents, teachers, mentors,
coaches, suppliers, family, friends and colleagues. They grow and evolve with
us, and changing our ethics involves changes at the very heart of our being.

The workplace is a collection of these many different experiences and therefore
of differing ethics. Many people join a company without investigating the ethics
of their employing organisation closely and often find themselves at variance
and out of balance when those ethics are tested. For instance, someone who
believes in "equality and justice for all" may have a problem working for a
business whose Board earns vast salaries and does not practise the values of
the company.

Ethics need a structure, they need a policy, a code of practice, or a cultural
understanding of the rules, but this alone is not enough. They also need
individuals who can differentiate between right and wrong, people who can make
difficult decisions and are assertive enough to stand by the decisions they
make. This often includes both standing up for themselves and others. These
testing times are often the points at which company values become "flexible"
and separate themselves from what may be a more transcendental approach by the
individual.

Take for example the organisation with a state-of-the-art bullying policy. An
employee invokes the policy in order to challenge the bullying behaviour of
their boss. However, the company knows that the boss has turned that department
round in record time and delivers financial results. The moral dilemma is then
whether to challenge the manager and risk upsetting the status quo or move the
individual elsewhere.

Of course, moving the employee is usually quicker and cheaper. The employee is
then moved to another department and the issue is labelled "clash of
personalities". Now the organisation is escalating the problem by dealing with
it tactically and not transcendentally. Word soon spreads that the bullying
policy is not worth the paper it is written on, and that bullying is rewarded.

So, what role do organisational values play? Can individuals be expected to
follow the "ethical" rules if they do not believe in or understand them, if
they are not part of their own value system, or indeed if they change from
day-to-day? How many organisations would put ethics above profit? How many
companies include issues of ethics in their recruitment process or indeed
include ethics in the training plans of their employees?

It appears to the present authors that having senior managers who value ethical
behaviour as much as profit will achieve the greatest impact on a company's
ethical standards. Businesses need to develop the kind of environment that
promotes ethical development and they can only do that from the top down. So,
accepting that ethics are important, can we measure and test them?

Measuring ethics

The Dalai Lama (1999) states that: "Every one of us has a responsibility to act
as if our thoughts, words and deeds matter." Of course, everything we do has a
consequence; that is a plain and simple matter of physics. Therefore, the
amount to which it has an effect should also be measurable.

Certainly, the question of social responsibility and ethics has become more of
a core issue for businesses. About 80% of FTSE-100 companies now provide
information about their environmental performance, social impact or both.

The CBI's Value Creation Index is providing research in this area. It offers
insights into the "value drivers" that are strongly correlated with market
value. Although the drivers can vary according to a particular industry, there
is a consistency related to management credibility, innovativeness, ability to
attract talented employees and research leadership (Ashton, 2002).

New practitioners in the field of emotional intelligence have often asked the
authors "What role does ethics play in being emotionally intelligent?". It is
our belief that you can test for ethics through emotional intelligence
instruments such as the Bar-On EQ-i (TM) and that this would make an innovative
research topic. It is fair to say that there may be other ways to test for
ethics -- for example, by looking at how our workplace or home are performing
as moral communities.

For the purpose of providing information here that human resource or
organisational development specialists and departments can use immediately, we
are keeping the focus on emotional intelligence components drawn from a single,
but widely used, measure of emotional intelligence. We highlight below the
specific combinations from the Bar-On EQ-i (TM) that we observe in leaders
experiencing day-to-day ethical challenges. Although our hypothesis would need
to be tested over time, we hope that this article will engage other
practitioners in dialogue.

We first start with what we believe to be powerful combinations for an ethical
leader or employee and then we move to considering more problematic
combinations. For ease of reference, the Bar-On EQ-i (TM) descriptions are
reproduced below:

BarOn EQ-i (TM) Descriptions [4]

INTRAPERSONAL To...

Self regard -- accurately perceive, understand and accept oneself.
Emotional self-awareness -- be aware of and understand one's emotions.
Assertiveness -- effectively and constructively express one's emotions and
oneself.
Independence -- be self-reliant and free of emotional dependency on others.
Self-actualisation -- strive to achieve personal goals and realise one's
potential.

INTERPERSONAL

Empathy -- be aware of and understand how others feel.
Social responsibility -- identify with and be a responsible and cooperative
group member.
Interpersonal relationship -- establish meaningful and close relationships.

STRESS MANAGEMENT

Stress tolerance -- effectively and constructively manage stress and strong
emotions.
Impulse control -- effectively and constructively control impulses and strong
emotions.

ADAPTABILITY

Reality testing -- objectively test one's feelings and thinking against
external reality.
Flexibility -- adapt and adjust one's feelings and thinking to new situations.
Problem solving -- effectively solve problems of a personal and interpersonal
nature.

GENERAL MOOD

Optimism -- be positive and look at the brighter side of life
Happiness -- feel content with oneself, others and life in general

The Emotional Quotient Inventory (EQ-i TM)is the most valid and reliable
measure of emotional intelligence in the world today. Published by Multi Health
Systems, its author is Dr Reuven BarOn.

Powerful combinations

-- High Social Responsibility combined with high Emotional Self-Awareness means
that the individual is able to be responsible, dependable and reliable as a
member of their group. In addition, they are likely to be able to know what
they are feeling and why. This combination is likely to provide an important
internal radar to help an individual be aware of their own responses to
situations, particularly when there is a suspicion that something is not right.
It is our belief that leaders who have this combination should do two things:
(i) trust their "gut" when they are experiencing some discomfort; and (ii) ask
themselves whether the situation they are experiencing involves ethics or not?
Then, they have to decide what to do which is where the second combination
comes in.

-- High Problem-solving combined with high Assertiveness and Reality Testing.
In other words, someone who is able to solve problems of a personal and
interpersonal nature and can express himself or herself non-destructively
taking into account the full reality of the situation. When dealing with
ethical situations, this combination would show itself in someone who was able
to own up to their mistakes, and come up with solutions that would meet
everyone's needs (assuming that they have the high social responsibility from
the first powerful combination, shown above).

-- High Stress Tolerance, high Impulse Control and low Flexibility. In other
words, this is someone who can cope with the emotions of stress without falling
apart, combined with patience and low flexibility. This set of attributes may
come as a surprise. There are two important points here. The first involves
timing -- if someone perceives that an ethical stance has been taken without
careful consideration, the decision may be perceived to be irrational, not
well-thought through and impulsive. Second, being ethical also means not being
swayed by others' opinions and unduly influenced by the situation in which one
finds oneself.

A problematic combination

-- Low Reality Testing and Low Independence. In other words, someone who is
carried away by their own thoughts, dreams and perspectives, and who is also
not comfortable being self-directed and working alone without direction from
others. When dealing with situations involving ethics, this combination could
be descriptive of someone who might follow the group and not question the acts
of themselves or others too deeply. Sadly, the authors have seen this
combination more frequently than one would perhaps like within the leadership
populations that they have tested for emotional intelligence. The extent to
which Europe's business community is already being affected by this unhappy
combination is still to be examined in detail.

So, now that we have explored some basic thoughts about these combinations,
what can be said about the possibilities to teach this ethical competency?

Can ethics be taught?

"Ethics is not a methodology or a strategy one can apply without a grounding in
basic theory, principles, concepts" (Foy, 2002).

Bentley College's Center for Ethics believes that you can provide this
grounding; it offers a five-day course on the subject. In fact, many education
experts believe that you can and are now looking at ways of making it part of
the core curriculum of British state schools. These authors believe that you
can -- but that this type of training needs to be rooted in the core values of
each individual. The concept of ethics needs to be explained, and practical and
experiential exercises need to be included in order to help people look at moral
and ethical issues and discuss their reaction to them in a non-threatening way.

If, for example, someone has a low sense of Social Responsibility and an
average Problem-solving ability, it may be appropriate to focus on a set of
ethical problem solving questions in order to raise both sets of scores.

Velasquez, Andre, Shanks, and Meyer (1996) suggest that we should ask ourselves
five questions when trying to resolve a moral issue:

1. What benefits and what harm will each course of action produce, and which
alternative will lead to the best overall consequences?

2. What moral rights do the affected parties have, and which course of action
best respects those rights?

3. Which course of action treats everyone the same, except where there is a
morally justifiable reason not to, and does not show favouritism or
discrimination?

4. Which course of action advances the common good?

5. Which course of action develops moral virtues?

However, organisations need to be careful about the ethical training they
provide because the implication of providing it is that it and the employees it
is training are going to abide by its principles. Actually, following through on
this means a great deal of work, for example looking at:

-- the way in which the organisation deals with customers, suppliers and
employees;
-- everyday routines;
-- the way in which the organisation designs and supports its products;
-- the way in which the organisation deals with mistakes; and
-- the ways in which it spends its money.

However, before any teaching can begin, we need to look at our individual role
as trainers and the actions of our clients. We need to agree ethical contracts
and adhere to them; after all, we will be a role model for ethical behaviour.
We need to be transparent in our actions and be held accountable for them. The
client also needs to be aware of the consequences of their own actions.

In conclusion, we think it is appropriate to bring the focus back to you the
reader and to finish on a key question:

What are your ethics?

Of course, self-development is the key to understanding 'ethics'.

We would like to leave you with a set of questions that we believe get to the
heart of this important question, and we hope that this might start you on the
journey of articulating what ethics means to you in the context of your current
workplace:

1. What are the two or three key principles that are most important to you in
how you do your work?

2. On a scale of 0 to 10, where 10 is fully aligned, to what extent is your
work in full alignment with each of these key principles?

3. What situations are you involved in right now that may be in conflict with
these principles?

4. How many of these situations are of your own creation, either through a lack
of personal clarity and /or a lack of personal confidence in confronting it in
yourself?

5. What are the specific conversations that you are not yet having with people
that you work with and/or with yourself?

6. How would having these conversations help you now?

---

Notes

1. Simon Webley, Institute of Business Ethics (http://www.ibe.com), quoted in
IRS (2002).

2. Adapted from Connock, S and Johns T (1995), Ethical leadership, IPD,
(pp.4--8). The authors further subdivide ethics into "macro-ethics" and
"micro-ethics" in chapters 3 and 4.

3. Ethical purchasing index 2001 (p.3), Co-operative Bank,
http://www.co-operativebank.co.uk.

4. The Bar-On EQ-i (TM) is the most widely used measure of emotional
intelligence today; it was developed by Dr Reuven Bar-On, and is a registered
trademark of Multi-Health Systems Inc, Toronto, Canada, which publishes it. In
the UK, information can be obtained through http://www.eiuk.com.

---

References

Ashton. C (2002), "Importance of diversity in innovation", in The psychological
management of individual diversity, edited by Davidson, M and Fielden, M, John
Wiley.

Bentley College Center for Ethics, Managing ethics in organizations,
http://www.ecampus.bentley.edu/dept/cbe/ethicseducation.

Burke, T (1993), University of Westminster survey for the Co-operative Bank,
http://www.co-operativebank.co.uk.

Connock, S and Johns, T (1995), Ethical leadership, IPD.

Dalai Lama (1999), Ethics for a new millennium, Riverhead Books.

Ethical Purchasing Index 2001, Co-operative Bank,
http://www.co-operativebank.co.uk.

Foy, Sandra (2002), The "who" and the "how" of Moral Education,
http://www.ethics.ascud.edu/values.

IRS (2002), "Corporate accountability", IRS Employment Review, no.756, 22 July,
pp.6--12.

Personnel Today (2002), "Graduates drawn to ethically sound companies",
original research on behalf of Axiom Software, February.

Robinson, D and Garrett, C (1996), Introducing ethics, Icon Books.

Velasquez, M; Andre, C; Shanks, T; S.J.: and Meyer, M.J. (1996), "Thinking
ethically: a framework for moral decision-making", Issues in Ethics, vol. 7
no.1, Winter, http://www.scu.edu/ethics.

---

Geetu Bharwaney (formerly Orme) is Founder and Managing Director, and Carolann
Ashton is an Associate Consultant, of Ei (UK) Limited, a specialist provider of
emotional intelligence assessment, research, coaching and development. The
mission of Ei (UK) is to bring an understanding of emotional intelligence into
home and work communities. Part of achieving this mission is the equipping of
others to provide EQ-i assessment, coaching and development.

(c) Geetu Bharwaney and Carolann Ashton 2002

E-mail : info@eiuk.com
Tel: +44-(0)1525-840090
Web site: http://www.eiuk.com.

A version of this article appeared in 'Competency & Emotional Intelligence'.
Autumn 2002. Vol. 10, No. 1 pp19-25.

-=-

II. 'BUSINESS ETHICS IN ISRAEL' BY RICHARD GALLOWAY

Israel is a crossroads between Europe and Asia, a meeting place of East and
West. It is the home of the three monotheistic religions, the Holy Land for
Judaism, Christianity and Islam. So it comes as no surprise that Israel has
been the centre of constant conflict since the beginning of history.

Today Israel sees itself as a modern, democratic, free-market economy welfare
state. But the conflict continues in all walks of life. It is not only the
conflict which sadly finds itself all too often in headlines of the world's
daily newspapers, nor is it only a physical day to day struggle for survival,
personal as well as national. It is a conflict of differing and often opposing
moral standards: modern and traditional, West and East. The conflict is not
only a political, nationalist struggle between nations but also a social and
economic struggle between factions within our society, religious and
non-religious, rich and poor, Ashkenazim (European Jews) and Sefaradim (North
African and Middle Eastern Jews). The conflict pervades our daily lives on our
roads, in our homes and in our businesses.

But Israel is also an open society which encourages immigration from all over
the world and as such benefits from a wide and colourful mosaic of different
cultures and ideas in all walks of life from science and technology to art,
music, literature and philosophy. The business ethics movement has also begun
to take root and is taught in our universities and business schools.

At the Israeli Open University the course "Ethics and Business" is an advanced
course open to students who have successfully completed courses in
Microeconomics and recommended courses in Organisational Behaviour and Moral
Philosophy. The course comprises a text book which covers diverse subjects
including:

-- the development of Ethics and Business as an academic field

-- the classic economic approach to ethics and economics including Adam Smith's
The Wealth of Nations

-- the myths about the business world, the basic assumptions of classic
economics, and government and self-restraint of business and their limitations

-- basic concepts in Business Ethics such as: relativity of morals, enlightened
egoism, moral responsibility and applied ethics

-- utilitarianism, human rights, Kant, justice and Aristotle

-- suggested models for ethical decision making and managerial responsibility.

The course also includes two books of articles and case studies, mostly in
English, much to the disgust of Israeli students who have difficulty with
academic texts in foreign languages! Finally students are required to write a
paper about ethical dilemmas in business. My paper was on the ethical code of
Real Estate Valuers in Israel.

But beyond the white ivory towers of academia, does the Business Ethics
Movement have any effect on day to day running of businesses in Israel? Reading
the daily newspapers, or watching the news on TV or listening to the news on the
radio, which is an Israeli national obsession, one is likely to get the
impression that Israeli businessmen have never heard of the word "ethics" or if
they have they don't know what it means! Negligent building engineers have
allowed buildings to collapse, one captured on video in full horror as people
were swallowed by a gaping hole in a floor while dancing at a wedding. A
commercial bank went bankrupt due to the embezzlement of a huge amount of money
by a bank clerk whose brother had huge gambling debts. Banks loaned money to
clients to buy the bank's own shares to keep the prices artificially high.
Doctors and dentists frequently recommend and carry out unnecessary but costly
treatments, workers are underpaid and women are sexually harassed at work...
the list is endless.

An example of questionable business ethics is the Israeli Bank-Share case.[1]
In the autumn of 1983 the Minister of Finance took the unprecedented step of
closing the Tel Aviv stock exchange. The public was selling off shares in
anticipation of devaluation in the Israeli currency. The banks, which, as I
mentioned earlier, had been artificially regulating the price of their shares
could no longer support the high price and their shares started snow-balling
downwards. The government was forced to intervene and buy banks' shares but
still thousands of Israelis lost a great part of their savings. It was common
knowledge that the banks were manipulating their shares, but all the bodies
whose function it was to restrain the banks failed dismally: the banks'
directors and their auditors, the Bank of Israel, the Finance Minister and
Treasury officials and the Stock Exchange board. But the offenders escaped
punishment. By the time the case was heard in the Supreme Court, the offences
had expired and the crimes paid. The banks were too big to fall and they relied
on the government's need to protect essential state economic interests. The
regulators are largely dependent on those they are supposed to regulate. They
have to live with the regulated industry and they don't want to have to fight
to enforce strict regulations. Governments may be able to regulate small fry
but they are unable to regulate the sharks who are actually much more in need
of regulation.

But Israel has a strong and buoyant economy. We are world leaders in many
fields such as hi-tech, biotechnology, pharmaceuticals and medicine as well as
security related fields. Every day millions of transactions are made, big and
small. These transactions require trust, for without basic trust contracts
cannot be made and business cannot exist. This trust extends to the system of
law enforcement and Israelis believe the have as fine and independent a
Judiciary as anywhere in the world.

So what will be? "I'll tell you," said Tevye the milkman in "Fiddler on the
roof" the classical musical version of Shalom Alaychem's story about life in
Anatevka, an imaginary village in the all too real Russian Pale of Jewish
Settlement about 100 years ago. "I don't know." Our sages have told us that
since the destruction of the holy Temple in Jerusalem in 70 CE prophecy is
given to fools. The common opinion is that until a political settlement with
the Palestinians can be found the Israeli economy will continue at best to mark
time. But I believe that the solution lies with good old fashioned enlightened
self-interest. The so-called windows of opportunity which open and close with
alarming frequency in this part of the world are in fact no more than a small
pin prick of light at the end of a long, dark tunnel. Mr. Bush may feel that
his "road map" will shorten the tunnel and lead to the creation of a "new"
Middle East but with no real willingness on both sides to come to terms with
one another, any externally imposed plan is doomed to failure. Without
internalising the urgent need for peace, no amount of external pressure can
bring generations of conflict to an end.

Here, I believe, Business Ethics has a part to play in creating the right
atmosphere for peace in the region. As long as there is hunger, fear and
desperation, terror organisations such as Hamas, Jihad and Fatah will find
fodder for their attacks on men, women and children in buses and shopping
centres. As long as these organisations are allowed to continue their
illegitimate business unharassed there can be no trust. The lack of trust leads
to the prevention of work permits and military intervention to protect the
civilian population which is being attacked. This leads to continued and
increased hunger, fear and desperation. And so the downward spiral is
perpetuated.

But the day will come when both sides will come to the conclusion that, like it
or not, we are fated to live together in close proximity on this narrow strip of
land. They will realise that it is in our common interest to create the
conditions which will be conducive to doing so in peace and mutual prosperity.
The benefits of economic co-operation will eventually bring people together and
lessen the mistrust and the hunger, fear and desperation. It will be necessary
to use professional ethical standards to supervise the allocation of the
resources intended for infrastructure so that they will not line the pockets of
corrupt leaders. Then the money raised from philanthropic businesses can be used
to improve both the quality of life and the standard of living, encourage
education and alleviate suffering.

Sounds eutopic? Well maybe. Few would have given the Jewish State more than a
few months to survive once the British mandate came to an end in 1948. Yet from
an agrarian, socialist society of 600,000 souls, Israel trebled its population
in its first few years and today is a country of over 6 million citizens and
amongst the world leaders in many fields. As Theodore Herzl, the founder of the
modern Zionist movement once wrote: "If you will it, it is not a dream."

FOOTNOTE

1. Geva A. (2001) Regulation and Ethics in Business: The Israeli Bank-Share
Case, The Open University, Tel Aviv

(c) Richard Galloway 2003

E-mail: RichardG@justice.gov.il

-=-

III. 'CONFLICT MANAGEMENT AS AN ETHICAL PROBLEM' BY MARI KOOSKORA

Conflict as an organisational reality is inherently neither good nor bad in
itself. Conflicts may be destructive, but can also play a productive role both
within a person and between persons, and for the whole organisation as well.
The ability to productively manage conflicts is critical to managerial success.
Whereas most managers seek to reduce conflict when it occurs because of its
negative connotations, some seek to use it for its positive effects on
creativity, motivation and performance.

Our Business Ethics working group at the Estonian Business School has analysed
over 3000 conflict cases from Estonian organisations taken place in last five
years. The study showed that the majority of conflicts had unpleasant
consequences or were not resolved at all. Estonian managers lacked the ability
to resolve conflicts constructively or make them work in favour of the company
as a whole. It was apparent that managers missed the opportunity to use these
situations positively.

Our studies we found that many conflicts in Estonian organisations were either
poorly managed or left unresolved. 1640 of the 2000 conflicts occurring in 2001
we studied were unsolved. 82 per cent of conflicts were identified as vertical
in nature, those between employers and employees at different hierarchical
levels. Only 18 per cent were horizontal, those between employers or employees
at the same hierarchical level.

This fact and its relation to the top three reasons for conflicts established
from earlier studies (lack of information, lack of teamwork or unclear work
procedures and rules) indicate that Estonian managers, whilst demanding much,
lack realism about how to implement their tasks. They seek immediate results,
without offering opportunities, information or equipment to employees necessary
for achieving them.

Leaving conflicts unresolved or letting people go is a significant ethical
problem. Often it does mean that the employee is being punished because the
manager himself has left something important undone. Estonian organisations aim
at earning profit fast. Too often the employee is claimed guilty, but problems
often lie elsewhere: poor work co-ordination, insufficient information, wrong
or unacknowledged goals, and autocratic management style.

Employees, those most often punished, are most responsible for organisational
profit.

Too often employees are treated solely as means, not as individual human
beings; not enough rights, too many obligations.

Analysing conflicts and their resolution from the standpoint of work ethics,
rights and obligations teaches us:

-- Managers underestimate the importance of ethical criteria: a good,
conflict-free working environment encourages people to work with greater
commitment, which in the end is profitable for the company.

-- The human aspect is significant -- most conflicts end with an employee
getting fired, or leaving a job without the opportunity to defend himself.

-- Managers do not realise that the loss of an employee is a loss not only for
the employee but also for the company.

-- In conflicts where solutions are found, the employees' interests may still
be violated.

The ability to solve conflicts constructively is an important managerial
competency. It is essential for managers to be able to cope with constant
change and diversity in organisations, the very challenges that can lead to
conflicts. And it is up to the manager, in his skill and ability, to resolve
conflict situations constructively.

One result of our studies showed clearly that the decisions people made in
business situations (and also whilst trying to solve conflicts at work) were
much too affected by social environment and organisational climate, company
culture, leadership and communication styles, and managerial behaviour. And not
only by the individual's attitudes and opinions, but also those he thinks are
appropriate in the eyes of society and higher managers of his organisation.

The aim of our current research is to study the competence and behavioural
patterns of Estonian managers in conflict situations in order to find out which
decisions lead to destructive and constructive conflicts in Estonian
organisations. And how the behaviour and competence of managers of such
organisations have influenced both the arousal of such conflicts and their
management. Our research pays attention both to personal traits and the
climate, communication and values of the organisation.

Understanding patterns of behaviour in a particular conflict situation is an
important prerequisite to planning how to manage it. Although the triggering
events of conflicts are not always predictable, they often follow an
identifiable pattern. Patterns can provide important clues to underlying
reasons and how to resolve a conflict. Poor listening, not sharing information
with others, excluding employees from decision-making processes, using power or
an over-controlling style, and poor team-working can trigger conflict. Once
conflict has arisen it is up to the managers' behaviour, skill, knowledge and
experience what will be the outcome.

Several conflicts occur because of bad communication or due to lack of employee
performance feedback. It is common for employees to get feedback only when
something is wrong, but rarely when they have accomplished their task well.

Some managers believe that adopting an autocratic management style makes them
strong and good managers. But research has showed that using only this style
destroys the good microclimate in an organisation and can hinder overall
performance significantly.

Careful attention to when and how a conflict flares up is an important part of
developing a conflict management strategy. When the conflict is open and
active, the conflict behaviours are usually obvious: shouting, heated debate,
unwillingness to listen, hardening of positions, and so on. Intense conflict
can focus attention on basic issues and lead to the resolution of long-standing
difficulties, when problems can no longer be smoothed or easily avoided.
Managers with conflict handling competence, skills and knowledge can now use
the conflict situation as a resource for change, creativity, motivation and
performance. They have acknowledged that being involved in the conflict can
enhance an individual's personal skills of competitive problem-solving.

When conflict is latent, or underground, the signs are not so obvious. Then
conflict behaviour is usually more subtle: writing memos to avoid face-to-face
contact; delaying decisions to block another party; interacting through
subordinates or third parties; avoiding direct exchanges and meetings. Such
conflicts are more difficult to handle. Management requires not only skill and
patience, but also persistence and an effort to help each party listen to the
other while constantly looking for ways to move out of deadlock.

(c) Mari Kooskora 2002

E-mail: Mari.Kooskora@ebs.ee

A version of this article originally appeared in Philosophy Today, Newsletter
of the Society for Applied Philosophy Vol, 16, No 41: September 2002-11-07, p5-7.


[top]