The role of ethics and morals in managing organizations

When grappling with the challenge of upholding ethics in the modern business landscape, HEC Paris Professor of Strategy, Gérard de Maupeou emphasizes the importance of purposeful leadership. He goes on to discuss ethics in a company context, the role of corporate social responsibility, and why an organization should never lose sight of its values.

ETHICS AND VALUES WITHIN A COMPANY CONTEXT

“For me, ethics is more about having a moral code – what you do and don’t do,” says Professor de Maupeou. “Values are more individual and more linked to the way people behave.” Law, he points out, is simply a way to formalize ethics, though sometimes what is accepted as law can be unethical. Tax optimization in Europe, for instance, may still be legal – but can paying taxes in a different country be considered ethical? Not necessarily.

It is important to take customers, employees, and other stakeholders into consideration when it comes to ethics and values within a company context. The ethics and values of a company is now a genuine concern for an increasing number of prospective employees. Companies are pushed in turn to consider and satisfy their employees’ ethical needs in order to attract more talent. "It's very simple," says Professor de Maupeou. “Whichever company you are, you cannot disregard ethics.”

ETHICAL LEADERSHIP

“A purposeful leader is somebody who is able to lead the company in such a way that exemplifies the different expectations that all the stakeholders have about the company and its values,” says Professor de Maupeou. So, what are a company’s values? There are the prerequisite values, of course – honesty, respect, transparency, etc. Companies also have sets of values unique to themselves. Facebook, for example has five key values – focus on impact, move fast, be bold, be open and build social value.

HOW ETHICS AND VALUES RELATE TO CSR

Corporate social responsibility (CSR), according to Professor de Maupeou, is an acknowledgment of the fact that companies have social obligations to fulfill. By resolutely embedding CSR into their DNA, companies not only increase customer and employee satisfaction, but also help society and the planet.

Social networks play a fundamental role in CSR. “Thanks to social networks," says Professor de Maupeou, "it’s very easy to create a lot of noise.” Ethical behavior in the social media era is under increasing scrutiny. For instance, exposure of a company's sweatshop labor practices and unacceptable working conditions can lead to a boycott. The "noise" of social networking can ruin a company's reputation. On the other hand, as Professor de Maupeou

points out, everything is relative. Different cultures have different moral values, and what is considered unethical in some parts of the world may be acceptable in others. Social media only amplifies the potential for culture clashes.

The impact of social media is not always so pronounced, however. Consider the Volkswagen scandal three years ago – even after it was discovered that the car manufacturer was cheating on emissions tests in the U.S. and other European markets, customers continued to purchase their cars and sales remained fairly consistent.

THE BUSINESS INTEREST IN MANAGING A FIRM WITH STRONG ETHICS AND VALUES

Managing a firm with a firm with clear ethics, values and a strong commitment to social responsibility makes real business sense. The American professor of business administration Edward Freeman, whom Professor de Maupeou invited to speak at HEC Paris, argues that 21st-century companies have no choice but to be socially responsible – otherwise they will stop existing.

When asked by participants what it would take for company leaders to become more socially responsible, Professor Freeman had a wonderful response – the best motivator, he believes, is being able to come home in the evening proud of what you did that day, transmit to your children why you are proud, and act the same way at home as you did at work.