October 11, 2004
Ethics Have Moral and Practical Value, Says Jennings
by Erica Grieder

	Marianne Jennings Also See Speakers@McCombs See upcoming and past speakers at the school.

Not too long ago, Marianne Jennings, a professor of business ethics at Arizona State University, purchased an unusual collector’s item on eBay: a copy of Enron’s 62-page ethics manual. Speaking at the McCombs School of Business Oct. 1, Jennings said that her excitement at winning the auction was enhanced by the pristine condition of her prize: “It arrived untouched by human hands!”

According to Jennings, considered one of the country’s leading experts on business ethics, Enron’s imposing manual is just one example of how corporate America’s commitment to ethics too often stops at lofty rhetoric—with observers often taking their claims at face value.

For example, Dennis Kozlowski, the former chairman and CEO of Tyco, once told a reporter of life at Tyco: “We have no perks, not even parking spaces.” Eventually, it became known that Tyco executives had other perks to make up for the lack of parking, like $6,000 shower curtains. But in the interim, Jennings noted, Kozlowski was named “CEO of the Year” by BusinessWeek.

In Jennings’ overview of the business ethics landscape, it became clear that one of the challenges facing business ethics educators is the range of motives and tactics that can be considered unethical.

On the one hand, there are cases like the 1998 bribery scandal in Salt Lake City, in which it was found that the Salt Lake Organizing Committee was bribing International Olympic Committee officials in a (successful) effort to bring the 2002 Olympic Games to Utah. The Salt Lake Organizing Committee’s goal was somewhat sympathetic, and their methods were bumbling. In bribing someone, you should “always use cash,” Jennings added ironically.

On the other end of the spectrum, you have highly sophisticated professionals like those at Enron or Arthur Andersen, who took such pride in their technically legal but ethically dubious strategies that they made no effort to hide them. For example, one of Enron’s “unconsolidated affiliates” was the Hawaii 125-O Trust, named with a tip of the hat to FASB 125, an obscure accounting standard that made it all possible.

In addition, these white-collar criminals were not motivated by a misguided sense of civic pride. At the same time, according to Jennings, greed was not exactly the issue. “It was far more complex than that,” she said, “It was very much about hubris.” She argued that people whose careers are markedly successful put themselves at a kind of moral risk, because past success breeds expectations of future success, and “it was really hard to admit they hit a wall.”

Jennings painted a relatively bleak picture of the status of ethics in the academic world as well. Last fall, for instance, the Haas School of Business at The University of California at Berkeley received 4700 applications for admission. 100 were admitted, subject to the truth of their application materials as assessed by a private investigator. But the private investigator found that of those 100, five had falsified information. The interesting thing, Jennings added, is that all five of them would still have earned admission based on their actual experience.

All of this indicates a relatively dismal state of affairs when it comes to ethics and business, and Jennings said so directly. “Since this is a talk on ethics, I won’t lie to you,” she explained. People “hate” ethics, she said, for a number of excuses that do not stand up to scrutiny, mostly related to the theory that in a business environment characterized by cutthroat competition, anyone hewing to absolute values puts themselves at a severe competitive disadvantage.

In reality, according to Jennings, this theory is an urban legend, and ethics make good business sense as well as good moral sense. For one thing, “The only sustainable competitive advantage a company has is its reputation.”

And there are some silver linings to be found. For example, studies indicate that people have ethical knowledge. A 2000 KPMG Organizational Survey, to cite one, found that 76% of employees in business had observed a “high level” of illegal or unethical conduct at work in the previous year. “They were trying to tell us something,” said Jennings.

This awareness does not necessarily translate into direct action: another study, completed in 1999 by the Society of Human Resource Managers, found that about two-thirds of workers who observed unethical behavior did not report it. An overwhelming number (96%) said they did not report it because they were afraid of being accused of “not being a team player.” This indicates, said Jennings, that companies have not committed to ethical leadership. At the same time, it implies that if companies make such a commitment, they will have the benefit of a workforce that is actively concerned about such issues.

On an individual level, Jennings offered some simple, time-tested advice: “Treat people the way you want them to treat you.”