While you might argue that the book's very title is an oxymoron, The Ethical Executive, by Robert Hoyk and Paul Hersey, is instead a fabulous and practical text that may as well have been titled, "How Not to be Kenneth Lay," and its faithful application could have prevented our entire current economical crisis. Having dutifully passed my requirement of Ivy League MBA ethics coursework and been duly unimpressed by its ability to stop unethical behavior (as I learn from this book, even in my own generally honest self), I would recommend that business schools, university political science and marketing programs, and even small business owners and parents adopt this as the primary ethics text.The problem, as authors describe in the introductory chapters, is that ethics aren't acquired from our education. Discussing a case study in class -- even if it's at Harvard Business School (especially if it is?) -- does not "teach" ethics. No, our parents teach us ethics. And as Hoyk and Hersey write, "what is most lacking in books on ethics is a major emphasis on the root causes of unethical behavior--psychological dynamics." In order for a typical person, with typical familial upbringing and core values, to behave ethically does not call for a strategy for thinking about an ethical problem (the approach taken by traditional ethics textbooks); no, the authors argue, it takes knowledge of the potential "ethical traps" you might encounter. Awareness equals ethical power. Managers (and parents, teachers, whomever) can "use their understanding to objectify what's happening to them."
Hoyk and Hersey lay out 45 ethical traps and give examples of psychological research and real-life ethical foulups, from Enron to Worldcom to Jim Jones. I recognized nearly every one from my life, both in business and in my relationships with my infamously principle-bereft in-laws. What's more, I recognized the traps in the behavior of the key figures in the financial meltdown.
The outrageous betrayal of public trust that we have undergone in the financial industry over the past several months can be analyzed with the help of The Ethical Executive and the traps that it describes. Let's look at the reasons why financial managers chose to invest in sub-prime securities which were being offered to potential homeowners who everyone knew, deep down, had no ability to pay. That's a raft of ethical traps, such as Trap 4, faceless victims; Trap 12, conformity; Trap 7, tyranny of goals; and Trap 8, money. And then there are Traps 27 and 28, advantageous compensation and zooming out. How about the mess over the $313,000 AIG junket and subsequent management response? Lots of the same ones, along with Trap 6, competition; Trap 16, decision schemas ("we just followed procedure!"); and Trap 29, everybody does it.
Today's post about management who lied on their official biographies about their education could point to Trap 41, low self-esteem, and probably Trap 8, tyranny of goals.
Since having completed the book, I have used its lessons time and time again. My husband uses a racially questionable phrase his step-dad said so many times it became second-nature? That's Trap 24, desensitization (Enron used this to convince managers to resurrect deals that were dead, wearing them down until they put the revenues back on the balance sheet) and Trap 29 "Everybody does it," a subset of minimization (think stealing paperclips from the office or expensing your glass of wine with your travel meal -- everybody does it!). In considering whether to go forward with a new freelance job that, upon further thought, seemed a conflict of interest with another (unpaid) commitment I value more, I realized I was caught in Trap 20, obligation (I signed a contract and my friend who gave me the job needs me!), which is also Trap 10, conflicts of loyalty, and of course Trap 8, money.
I have re-evaluated so many of my past corporate behaviors in the light of this book, and it has opened my eyes to the small decisions I am making every day and the bigger life decisions that are examples for my children -- and everyone around me. I find that, far too often, I have fallen prey to Trap 14: self-enhancement ("I'm really an ethical person! Really!") and Trap 10: conflicts of loyalty.
I have, too, considered a whole new way to evaluate the companies in which I invest: it's not so much what the management has achieved, what schools they have attended, or how charismatic they are. (In fact, charisma could very well be a trap. I'll have to alert the authors.) It's about how they were brought up. Many now-criminal CEOs, like Bernie Ebbers of Worldcom and Ken Lay of Enron, were brought up in poor and neglectful families; psychologists know that children who were neglected or abused in childhood seek to find the care they never got from their parents by taking it as adults (through outright thievery or simply stomping on everyone around them in a quest for power and prestige).
While information about how loving and honest a CEO's parents were is not commonly available in an offering memorandum, it's often possible to find stories and vignettes about childhood; many times, stories from the college days tend to make their way into media. It's a good approach to evaluate these for evidence of ethical lacks and to take great caution in trusting managers whose parents have been proven to be unethical -- or even just emotionally unavailable. Would I invest in a company headed up by Martha Stewart's daughter or Edward Liddy's son? Not so much.
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