Perspectives
June 2005

Dr. Rushworth M. Kidder is president of the Institute for Global Ethics, a nonpartisan, nonsectarian, nonprofit organization that works with corporate clients, educators, government agencies, nonprofits, and foundations worldwide to promote values-based ethical decision making through its Ethical Fitness® training seminars and consultation, lectures, and publishing activities. The institute is based in Camden, Maine and has affiliate offices in New York City, NY; Vancouver, British Columbia; and London, England.

Could Your Code of Ethics Make You the Next Enron?
Dr. Rushworth M. Kidder

One of the most elegantly produced codes of ethics—some 67 pages of full color, fine graphics, nice text—was produced by Enron. I’m told there was one for sale on eBay a while ago, advertised by a single descriptor: “unopened.”

“Of course it was!” we’re tempted to say. Who at Enron bothered with ethics? But suppose it had been opened. Would a code really have helped those executives make better decisions?
That would depend, in part, on what it said. Too often, it seems, codes of ethics in both the for-profit and the nonprofit world are a jumble of mismatched ideas. True, they often include statements that can guide us to the moral high ground. But they frequently include statements that could actually justify the worst of Enronesque excesses.

The high-ground statements found in today’s codes—the genuinely ethical values—typically reflect the five globally shared values of honesty, responsibility, respect, fairness, and compassion. At the Institute for Global Ethics, we find strong evidence that wherever in the world you ask people what “moral” means, you hear some version of these five core attributes.

Given that fact, you might expect ethical codes to be built around those values.
But a new report from the Aspen Institute and Booz Allen Hamilton, titled “Deriving Value from Corporate Values,” suggests that values statements in the for-profit world are a curious potpourri. Examining more than 300 codes from around the world, the researchers found they contained 14 broad categories of statements. Some were clearly ethical, such as “integrity,” “honesty/openness,” and “accountability.” Others were conditions arising from these values, such as “trust” (related to honesty) and “commitment to diversity” (rooted in respect).

But the list also included some terms—including “innovativeness/entrepreneurship,” “drive to succeed,” “initiative,” “adaptability,” and “commitment to shareholders”—that have no moral content of their own. These are excellent business qualities. But unless they’re governed by overarching ethical values, such qualities can lead otherwise skillful managers right over the moral precipice. When Xerox CEO Anne Mulcahy (as quoted in the Aspen/Booze Allen report) says that corporate values “helped save Xerox during the worst crisis in our history,” the natural question is, “Which values?” Yes, honesty and accountability may well avert a crisis—but “drive to succeed” and “innovativeness” may well have created that crisis in the first place.

Nonprofit codes share a similar muddle. Research by my Institute for Global Ethics colleague E. Marcus Fairbrother, in which he tested 20 written values statements from U.S. nonprofits against the Aspen/Booze Allen list of categories, found strong similarities between nonprofit and for-profit codes. True, nonprofits frequently say they want to avoid conflicts of interest, an idea that doesn’t even register among for-profits. And nonprofits appear more strongly interested in the genuinely ethical values: While the top three values in the for-profit world are ethical behavior/integrity, commitment to customers, and commitment to employees, the top three in Mr. Fairbrother’s (admittedly informal) survey of nonprofits are accountability, honesty/openness, and ethical behavior/integrity. For all these distinctions, however, the muddle doesn’t go away. Nonprofit codes, too, are a mélange of organizational and ethical values.

Don’t get me wrong. I’m not arguing that organizational values aren’t grand and wonderful ideas. But when drive to succeed (which shows up in nonprofit codes as commitment to excellence) is prominently displayed on 50 percent of both the nonprofit and the for-profit codes, it’s clear that some sorting out is needed. You can trample down an awful lot of moral virtues on the way to organizational excellence and individual success.

Sorting out this problem is really quite simple. Organizations need to distinguish their codes of ethics from companion documents they might call business or professional practices. Elevating the ethical ideas to a place of their own, managers can let their professional practices be as daring and risk-taking as they want—with the assurance that the activities they promote won’t be confused with ethical values, but will instead be kept on course by reference to that moral compass.

With your professional or business characteristics appearing elsewhere, your code of ethics may be slender. That’s good. The best codes of ethics are brief, portable, even memorizable, covering general principles rather than specific regulations. Phrased positively, they lead rather than chide. Written simply, they’re distinctly user-friendly. Most importantly, they get opened and read—and then used to steer decisionmaking upward into integrity. As Enron’s code reminds us, elegance and confusion are no match for brevity and clarity.

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