An emphasis on ethics
Last Friday’s New York Times ran a headline on a familiar theme: skullduggery in corporate management.
The article began, “Documents for a transaction that is at the center of a wide-ranging insurance investigation were doctored two months after the deal was struck, executives with direct knowledge of the transaction said.”
The alterations were made “to spruce up A.I.G.’s financial reports, ultimately boosting its stock price,” according to the article’s writers Timothy L. O’Brien and Jenny Anderson. The alterations were done by mid-level employees and are being investigated, they wrote. One of the cooperating executives in the investigation is corporate titan, Warren E. Buffett.
The alleged alterations, the Times reported, “led to the downfall of Maurice R. Greenberg, who had been A.I.G.’s chief executive for nearly four decades.”
Portland State’s School of Business Administration aims to counteract this trend by inculcating students with a sense of the business’s responsibility to the whole society, and has been doing that for many years.
The Dean of the School of Business Administration Scott Dawson said, “I wouldn’t be surprised if Greenberg goes to jail.”
PSU’s school of business is accredited by the American Association of Collegiate Schools of Business. “For years the AACSB has required that ethics be taught, at both the undergraduate and graduate levels,” Dawson said.
For the first time this year, according to Dawson, the MBA program is offering two separate classes pertaining to ethics, one for law and one specifically for ethics.
The problem with ethics, he said, is that unlike with law and accounting, there are no concrete legal requirements that must be followed. Sometimes it becomes a question of what is being tolerated in the culture of a company.
Transgressions are frequently motivated by greed. “People get into a position of power and they think they can get away with things,” Dawson said. “There’s a lack of a set of ethical guidelines.”
David Layzell, an Intel executive who is teaching the five-week course in business ethics at PSU beginning in May, observed, “Look at the paper any day and you can find something happening in this field.” The government is mounting investigations, corporate executives are going to prison and other executives are escaping jail but being fired for alleged unethical practices, he explained.
“The events of Enron, etc., and the resultant tightening of the law has had an impact on what is taught,” Layzell said. “In terms of putting the class together, I am drawing on a lot of recent developments both in the law and in the practice.”
Layzell is director of Intel Business Practice Excellence.
Jesse Dillard, professor in the School of Business Administration, is considered something of an authority on business ethics. He has written papers on the subject.
“Business is in business to provide goods and services to people in society,” he said. “As such, it should support and sustain a democratic governance society.”
If the system does not sustain that society, “then you consider alternatives,” he said. He pointed to the fact that every eight to 12 years the nation experiences an economic disaster. At such times, the government tends to impose new restrictions and regulations.
“People take advantage of the system,” Dillard said. To some degree this temptation is built into the system, which dictates, “If you don’t grow, you die.”
Legitimate growth, he implied, comes through innovation, creativity and risk-taking. Less legitimate growth can tempt businesses and individuals to attempt growth through speculation, evasion, dysfunction and cutthroat competition.
“I’m not sure you can teach people to be ethical,” Dillard said. “Character comes from our experiences. But we can make people aware of their responsibilities.”
One ethical issue affecting the economy today, he said, is the movement of jobs offshore. Although some may argue this can mean lower prices to consumers, Dillard sees it as more likely another way to increase corporate profits. Offshore movement of jobs introduces complex ethical issues, in his view.
“You have to consider something beyond economics,” he said. “You have to consider the effect on [people].”
