"Good Intentions Aside" by Laura L Nash (Harvard Business School Press, 259 pages, £19.95).
Review by Clare Lorenz.
Most people possess - and practise in their private lives - a strong sense of right and wrong. So why do they so easily acquiesce in doubtful practices at work? Laura Nash's readable book focuses on those grey areas of decision making where morality is apt to break down in business.
"Decent instincts", writes Nash, "are not always strong enough to hold up under the adverse and complex conditions managers inevitably encounter ... management concern about ethics has seemed to centre on two great fears: the fear that living up to ethical obligations will impose an immediate cost on the bottom line, and that employees who adopt unethical standards will pose a financial liability down the road. The second fear has certainly been justified. The financial fallout from recent scandals in nearly every industry in America ... has made it abundantly clear that no manager can afford to leave company standards to chance ... At the same time fear of ethics costing too much prevents the formulation of an effective response."
But how can ethical assumptions be made to work effectively? Nash argues that the answers lie in the goals that managers set, the organisational structures that they adopt, how they motivate others, and in their personal assumptions about the intrinsic worth of other people. This is no wishful thinking. Nash recognises the dilemma faced by many: "I go along with everyone else - I'd do something if I knew I wasn't going to be penalised." As a way out she offers a "covenantal ethic".
The covenant encompasses the need to remain profitable and responsible to a wide circle of stakeholders; also the role of legislation as a preventative as well as a supposed cure. To these she adds even more basic basics - like doing things right because it is right so to do.
Undoubtedly many people in business do try hard to hold on to beliefs. But companies will in future have to try harder. Nash points out that "the consumer will pay a premium for a corporate name that can be trusted to deliver on what it promises". So The Body Shop and Virgin Atlantic win out, while Perrier struggles to rebuild its premier position.
(Clare Lorenz is a researcher and writer.)