Much has been written about how people develop a code of personal ethics. Several years ago, together with Ned C. Hill and one of my sons, we published the following ethics development model (EDM)1, which has been helpful in teaching ethics in the Marriott School at BYU:
The foundation of ethics, Personal Ethical Understanding, represents the most basic ethical issues and boundaries of personal actions. It involves learning the difference between right and wrong, developing a sense of fair play, learning to care for and empathize with others, developing respect for others, and learning basic principles of integrity and reality, and having actions that are consistent with the values a person knows to be right.
As an example of personal ethical understanding, Karl G. Maeser, first president of Brigham Young University was asked what was meant by ethics or honor. He stated: “I will tell you. Place me behind prison walls—walls of stone ever so high, ever so thick, reaching ever so far into the ground—there is the possibility that in some way or another I may escape; but stand me on the floor and draw a chalk line around me and have me give my word of honor never to cross it. Can I get out of the circle? No. Never! I'd die first!" (Burton 1953)
Personal ethical understanding is mostly acquired early in life. Many ethical researchers have argued that after the ages of 6 or 7, a person’s personal code of ethics is quite well defined and difficult to change. Others have argued that people are constantly defining their personal ethical understanding throughout their lives. After many years of research, study and interviewing fraud perpetrators, I do believe that basic, core values are best taught in the home at an early age. I also believe the less time parents spend with their children labeling and modeling ethical behavior, the less likely it is that children will develop strong levels of ethical understanding. In prior generations where fathers and mothers worked with their children each day (whether in agricultural settings or in the kitchen), ethical values were transferred through repeated interactions. Today, the amount of intergenerational time spent together is significantly less and therefore, children are not getting as well defined ethical understanding in the family setting.
A personal ethical understanding or basic code of ethics is applied to all aspects of life.
Regardless of when learned, a personal ethical understanding or basic code of ethics is applied to all aspects of life. It is applied to how we treat others, how we conduct transactions, how we learn, how we earn money, and in everything we do.
Level 2 is the application of ethics to business [and work] situations. People’s business and work activities and decisions are based upon their personal ethical understanding. Individuals must learn what ethical marketing and ethical accounting mean, what constitutes ethical business strategy, and so forth. Thus, the second level of the EDM is being able to translate one’s ethical understanding to the business world, or to other settings in which people earn a living (e.g. the medical profession, engineering profession, etc.) Such translation is not always easy. For example, individuals may be firmly committed to treating family and friends in a strongly ethical way, but not understand how closing a plant or how failure to submit tax withholdings to the government affects peoples’ lives or constitutes unethical or fraudulent behavior.
Most of the people involved in the financial shenanigans of the early 21st Century considered themselves to be honest, ethical people. Yet, when faced with decisions about whether to go along with requests to “cook the books” or to reveal observed inappropriate behavior, they made the wrong choices. They did not know how to translate their personal ethical values to business settings.
While a person’s ethical understanding is developed early in life, the second level of the EDM is usually learned later, both through their educational endeavors and in the workplace. It is the responsibility of teachers and professors, as well as business managers to help students and those we mentor learn to translate their personal ethical values to the business world. Whether a student or new employee is studying business, attending medical school, engineering school or some other professional area, or whether they are a new employee where judgments and ethics are a part of every decision, they must learn how to translate their basic ethical understanding to their profession.
The third level of the EDM is ethical courage. Ethical courage is the strength and conviction to act appropriately in questionable situations. A person can have a personal ethical understanding and be able to translate that understanding to business or other work-related settings but may not have the courage to take a stand when necessary. For example, in one of the major financial statement frauds where I was retained as an expert witness, more than twenty people helped falsify financial statements. All testified they were aware their actions were unethical, but none had the courage to stand for his or her beliefs. Ethical courage is difficult to teach because its roots are formed through years of learning to be courageous in small things. Having ethical courage is sometimes very difficult because there are often perceived “costs” of taking an ethical (and sometimes lonely) stand.
Level 4 or ethical leadership, is instilling in others a desire to develop ethical awareness and courage. This higher form of ethical behavior requires a person to inspire others through labeling, modeling, persuasion, and good management. Anyone who accepts a partner or executive status in a firm should possess ethical leadership. Years ago, an executive of a large retail company told me that his employees can be characterized by the following illustration:
He said that in his organization there is a small group of employees who have well defined personal codes of conduct and who have learned how to translate those ethical values to business settings. They also have the courage to do what is right. These employees will almost always do the right thing. There is another small group that lacks almost any kind of personal code of conduct. This group will be dishonest anytime it benefits them. The largest group, however, is the “swing group” comprised of individuals with situational ethics. This group knows what is right and wrong, knows how to translate their ethical values to the business world, and at times even has the courage to do what is right. Yet, because of inconsistent management modeling and labeling, their ethical choices depend upon the situations they are placed in. Generally, this group will follow their leaders and can be influenced by organizational structure and culture. When there is a strong, positive tone at the top, a strong code of conduct, and strong ethical leadership in the company, this large group will usually make the right decisions. The labeling and modeling of the leaders send powerful messages that keep employees honest and making the right decisions.
An ethical leader can make a huge difference in an organization, a family, a group or a community. Oh, how the world needs ethical leaders! Hopefully, you are already an ethical leader influencing others to be good.
1 See “The Ethics Development Model Applied to Declining Ethics in Accounting,” with Conan C. Albrecht and Ned. C. Hill, Australian Accounting Review, Issue 38, Vol.16, No. 1, March, 2006, pp. 30-40.