Abelardo “Billy” Cortez l August 2, 2022 l Manila Bulletin
“It really does all boil down to this, doesn’t it? If you live your life with integrity and in accordance with your most closely held values, you are far more likely to be happy than not” … Warren Buffett
Ten years ago, people would have said they were not familiar with ethical issues in business. Today, more companies all over the globe are pushing that ethical management must be one of the major objectives of a decent company, aiming and promoting quality business performance; They argue that if there is a code of ethics in an organization, professionalism becomes more pronounced in promoting a core of shared aspirations.
But what do ethics and integrity mean? Ethics is defined as rules and regulations that have been formed to allow an individual to work in accordance with moral principles. Integrity, on the other hand, is defined as the quality of being honest and fair, a personal choice. The code of ethics can be imposed on every employee and officer, whether he or she agrees with it; but integrity cannot be imposed on any one, it has to come from within.
Persons of integrity, most of the time, show good character, stay away from corruption and hypocrisy, and act prudently regardless of circumstance or consequences. This is typically what moral courage is, and integrity is that vital connection with ethics.
Well-managed companies do initiate codes of ethics, specifying appropriate behavior with a system of incentives, audit, and controls. Other companies, however, focus more in developing attitudes and ways of thinking that stress companies’ values. Yet the drift and substance of the debate indicate some managers view legal compliance as already adequate in addressing the full range of ethical issues within a given company. As they say, if It’s legal, it’s ethical. This is wrong. Legal compliance, on several occasions, is unlikely to unleash strong moral commitment. In a sense, managers in taking up such stance are mistakenly endorsing a code of moral mediocrity. From the perspective of ethics management, the whole objective is to define an organization’s guiding values, create an environment that supports ethically sound behavior, and instill a sense of shared accountability among its officers and employees.
After doing his research on ethics, Stanford Social Psychologist Philip Zimbardo concludes that ethical problems in companies, most of the time, don’t come from a few bad apples but from the barrel makers, the leaders who, wittingly or not, create and maintain the systems in which participants are encouraged to do wrong. Despite what we prefer to believe, situation is a more powerful influence than character for most people. Hence, make it a commitment to do the small things right. Doing small things wrong opens the possibilities of doing big things wrong. In brief, be right and strong even in small things. Admittedly, this won’t be easy. The temptation to look for short-cut solutions is always there.
Let’s recall the 1991 case of internationally top-ranked US investment bank, Salomon Brothers. When its four top-level executives failed to take appropriate action, even after learning that unlawful activities were taking place at the company’s government trading desk, and even if company lawyers also found no law obligating these executives to disclose the improprieties, still, the four top executives were forced to resign. The four (4) executives’ delay in disclosing their prior knowledge of the improprieties unleashed a serious crisis of confidence within the financial industry as well as in the mind of the public. That ethical lapse cost Salomon Brothers huge losses including legal expenses, higher funding costs, and most important, business losses estimated at nearly US$1 billion.
First and foremost. Seemingly intractable corporate problems could be reversed and rectified through cooperation, collaboration and communication strategy with positive impact to the company. By the way, leadership is not practiced only by a select few. It’s also the daily response of every man and woman wishing to make a positive difference within their companies and, consequently, make their companies a better place of work as a result of such individual efforts.
Organizations, whether designed to produce a profit or not, are too complicated and diverse to be simply managed by mere collective knowledge. Leaders must be people smart if they are interested in hiring the right personnel for their corporate goals. It’s clear that unless there is substantial improvement in the hiring and evaluation process by these organizations, it might eventually become a weak link within the companies.
This has been written many times before. When it comes to hiring, technical qualifications conferred by academic degrees, grade point averages, honors, and even the ability to turn a profit are, important considerations in evaluating potential corporate leaders but they do not replace the more enduring attributes such as attitude, emotional intelligence and, more importantly, hiring persons with ethical values and integrity. The best and the brightest only become the best when they possessed ethics and integrity.
Many corporations find themselves rudderless when it comes to their sense of who they are and what they stand for above and beyond creating profit. Without this, corporations can get themselves into real trouble.
A clear example was what happened to Enron; the company as a matter of policy only hired the smartest graduates of top B-schools in the US like Harvard, Wharton, and Stanford banking on the prevailing view that recruiting the brightest would produce business practices necessary for sustained long-term growth. To establish a culture of commitment is not easy to do. Within Enron, it was found out there was no sense of commitment for a better future, or working toward something bigger than an individual’s needs. This led to its eventual collapse.
Meanwhile, let’s look into an area of keen interest for everyone’s concern. We refer to the current global inflationary situation. Food, fuel, and commodities are more becoming expensive these days but income continues to fall. We all know, as this is being written, a slowdown in the growth velocity of global GDP growth is in the cards. This is scary and a daunting stuff. Pay close attention to this. Essentially, corporations owe it to their employees and colleagues, as a matter of strong ethical and moral concerns, to help them handle this looming global crisis and help protect their well-being. Life would be less difficult for them as it is now.
That said, always remember this. We don’t do good because we feel good. We feel good because we do good. That’s what responsive ethical management and culture of commitment is all about.
*** Atty. Abelardo “Billy” Cortez is former FINEX national president and chairman of FINEX Foundation, former co-chairman of the Phils. Capital Markets Development Council and currently member of FINEX Ethics Committee. He’s Finance Committee chairman of San Beda Law Alumni Association. He is presently board director and executive committee member of the International Association of Financial Executives Institutes (IAFEI). A former independent board director at First Metro Investment Banking Corp, he is currently independent board director at other First Metro companies such as First Metro Securities Brokerage, Corp, First Metro Exchange-Traded Fund (ETF), PBC Capital Investment Corporation and First Metro Save and Learn FOCCUS Dynamic Fund (Metrobank Group).