• Subscribe Now »
• Current Issue »
• Digital Edition »

Business Ethics: An Oxymoron?

Tweet

Enron, WorldCom, Tyco, ImClone and, locally, Peregrine Systems and Titan Corporation—all named in one scandal or another. Have business leaders lost their moral bearings? Is “business ethics” an oxymoron? With corporate misdeeds dominating the financial news, it often seems so.

These may be exceptions, not the rule, but scandals involving cooked books, insider trading, conflicts of interest and bribery allegations have given rise to a greater emphasis on ethics and ethical leadership. Indeed, for public companies, a code of ethics is now a virtual requirement, and some professional groups, including Realtor associations, are mandating certified ethics training as a requirement for membership.

Symbolic of this trend is the ethics course recently added to the curriculum of the University of San Diego’s master of science in executive leadership program. Initiated in 1998 in cooperation with the Ken Blanchard Companies, the MSEL program is designed to get business executives focused on leadership, rather than just number crunching—and ethics plays a pivotal role. This is what distinguishes MSEL from traditional master of business administration programs.

“I had looked at all these MBA programs, and nobody talked about leadership or about people,” says Blanchard, author of The One-Minute Manager and more than a dozen other books, who teaches some of the MSEL courses. Business schools were training consultants and potential analysts, but Blanchard says he wanted to train leaders. He got a lukewarm reception at Cornell University, but when he proposed the idea at USD, it was adopted in less than a year.

The 22-month program is aimed at executives in for-profit businesses, but many of the students—dubbed cohorts—come from nonprofit, government and military organizations. To be accepted into the program, cohorts must have real-world work experience. Most remain at their jobs, attending classes one weekend a month and one week each summer.

Among the first graduates is Garry Ridge, chief executive officer of the WD-40 Company, who enrolled because “most educational programs only go for people’s heads. This also goes for people’s hearts.” The MSEL program requires cohorts to learn just what kind of people they are, what value positions they come from and how they make decisions. “Once you understand yourself,” Ridge explains, “there’s a lot you can do to understand others.”

Ridge pushed for adding the ethics course to the curriculum. “I felt it was time to turn up the volume,” he says. But when it comes to corporate scandals, it’s not just unscrupulous CEOs who are at fault. “I would put the blame for Enron, WorldCom and everybody else right at the feet of Wall Street,” he says, adding that there is too much emphasis on quarterly results. “WD-40 does not give quarterly guidance and will not do business in 90-day intervals to appease Wall Street.”

Nonetheless, there is no excuse for people taking ethical shortcuts—everyone knows the difference between right and wrong, Ridge says. “It all comes back to leadership. Is it right or not?” WD-40 now offers qualified employees fully subsidized scholarships to the MSEL program.

Although ethics has been a fundamental part of the program since its inception, this year the stand-alone course was added to address business ethics in the wake of the Sarbanes-Oxley Act of 2002. This federal mandate was enacted following the Enron and WorldCom meltdowns, and among its many recommendations is that every public company have a code of ethics that top executives must read and sign. The code must include precepts of honesty and ethical conduct, preventing conflicts of interest, and disclosure in periodic financial reports.

“It seems so basic that we shouldn’t have to tell executives in this age to write this down so they know to be honest and ethical, that they need to comply with laws and regulations,” says attorney and USD law professor Craig Barkacs, who leads the MSEL ethics course.

The precursor to any government regulation is abuse, he says, and smart people are particularly adept at rationalizing unethical behavior. “That’s why you see these really bright people get in trouble in ways that [make] the rest of us ask, ‘How could they be so foolish?’” Barkacs says. “What I try to do with these really smart people is to strip them of their incredible ability to engage in self-deception.”

One of the MSEL program’s guest lecturers has firsthand knowledge of self-deception. Patrick Kuhse spent nearly four years as a fugitive in Costa Rica, hiding from U.S. investigators, before giving himself up and serving four years in prison for conspiracy, money laundering and accepting bribes from a public official in a government bond scam. The East County resident now crisscrosses the country as a motivational speaker, with his engagements ranging from Harvard Business School to corporate boardrooms. He and Barkacs also participate in the Ethics in Business program sponsored by the San Diego East County Chamber of Commerce, which each year holds half-day workshops for high school students—our future business leaders.

Kuhse says ethical lapses stem from a sense of entitlement, which leads to unethical and illegal behavior. “Entitlement issues underpin all white-collar crime,” he says, “from Martha Stewart to [former Tyco CEO] Dennis Kozlowski to myself.”

From that sense of entitlement grows rationalization, the notion that “somebody owes me something. I’ve done an outstanding job, therefore I’m entitled to a perk.” The end result is the feeling of being above the law, he says, and when combined with superoptimism—the idea that “I’m smarter than everybody else”—the scofflaws convince themselves they won’t get caught. But they often are caught, and the years Kuhse spent in prison gave him plenty of time to think about what he had done. “I really had a value shift back to the importance of family and friends and doing the right thing,” he says.

Even with all the publicity that surrounds unethical and fraudulent business dealings, Ridge does not believe most executives in America get up every day trying to rip people off. However, when pressured to deliver stellar financial results quarter after quarter, ethics sometimes are a casualty. That’s why there is an ongoing need for ethical leadership training like that offered through the MSEL program.

“The program delivers value in developing good, ethical leaders,” Ridge says, “and that’s something that today we need more and more of.”

Do you like what you read? Subscribe to San Diego Magazine »

This site is a member of the City & Regional Magazine Association Online Network
Alabama Birmingham Magazine B-Metro British Columbia Okanagan Life Vancouver Magazine California Diablo Magazine Los Angeles Magazine Marin Magazine Orange Coast Magazine Palm Springs Life Sacramento Magazine San Diego Home/Garden Lifestyles San Diego Magazine Colorado 5280 Magazine	Connecticut Greenwich Magazine Delaware Delaware Today Florida Gulfshore Life Orlando Magazine Sarasota Magazine Georgia Atlanta Magazine Hawaii Honolulu Magazine Illinois Chicago Magazine Indiana Evansville Living Fort Wayne Monthly Indianapolis Monthly Louisiana New Orleans Magazine	Massachusetts Boston Magazine Martha's Vineyard Magazine Maryland Baltimore Magazine Michigan Hour Detroit Magazine Minnesota Minnesota Monthly Mpls St. Paul Magazine Missouri Inside Columbia Magazine St. Louis Magazine 417 Magazine North Carolina Chapel Hill Magazine Charlotte Magazine New Hampshire New Hampshire Magazine Yankee Magazine	New Jersey (201) Magazine New Jersey Monthly New York Buffalo Spree Hudson Valley Magazine Westchester Magazine Ohio Cincinnati Magazine Cleveland Magazine Columbus Monthly Ohio Magazine Oregon Portland Monthly Pennsylvania Main Line Today Philadelphia Magazine Pittsburgh Magazine	Rhode Island Rhode Island Monthly Tennessee Memphis Magazine Nashville Lifestyles Texas D Magazine Texas Monthly Virginia Hampton Roads Magazine Washington Seattle Met Washington DC Washingtonian Wisconsin Door County Magazine Madison Magazine Milwaukee Magazine M: Milwaukee's Lifestyle Magazine