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Can Ethics Shape Modern Societies?

Friedrich Wilhelm Graf (Germany) Ludwig-Maximilians-University 1. The Renaissance of Ethics in the 1970s Since the 1970s and originating in the United States, there has been a renewed and growing interest in the question of values. So-called applied ethics, meaning business ethics, bio-ethics, environmental ethics and so on, have become an important and controversial object of both academic discourse and debates in politics and the media. How can we explain this new sensitivity toward values? It is primarily a consequence of rapid social changes and a continuing process of modernisation. In traditional, pre-modern societies, human actors within one society usually shared a single religious faith and maintained strong institutions, such as the traditional family or the churches, in order to sustain moral certitudes and definite commandments. Thou shalt do this, thou shalt refrain from that, etc. These commandments were communicated, enforced and passed on to the next generation. Modern societies lack such a basic moral consensus. They are pluralist, which means that everybody can live his or her own personal lifestyle and is allowed to make a personal decision concerning the importance of certain values, as long as we all remain within the basic framework as defined by our legal system. This gain in personal freedom is, however, not without consequences: the price of liberty is a lack of certitude. In modern pluralist societies, we can see an anarchy of values, and what is important or even sacred to one person might be considered by another person as counter-productive traditional garbage that stands in the way of self-definition and emancipation. In pluralist societies, human beings can simply define their individual values. This means that there are many different sets of value systems, always in competition with one another, often squarely opposed. Socialisation within the family as well as ones upbringing, education and religious faith all play an important role in the creation of such value systems. Values have much to do with cultural traditions; they are defined by ancient moral customs, rituals and emotions. Additionally and especially in Europe, the question of religious denomination plays an important role: in traditionally Catholic countries, different values prevail than in societies structured according to Protestant ethics. 2

Competition and free markets are seen in a very different light on both sides of the English Channel; Germany, for example, still maintains traditions of morally motivated anti-capitalism. This close connection between values and culture means that moral pluralism is diversified even further. The more diversity, the more conflict. In consequence, modern societies need to continually and intensively discuss moral conflicts, attempting to find solutions. In the area of bio-ethics, this relates to questions on the beginning and the end of human life; in the ethics of media, it concerns the protection of the personal private sphere. In general, it can be said that questions of ethics have been gaining weight within the discursive structures of modern societies. Science and technology have strengthened individual human actors and our joint ability to shape the world. The more we can achieve, the more we have to pause and think about what we should do and what we should rather leave be. This holds true for individuals as well as organisations, such as political parties, trade unions, employers federations, churches, businesses, etc. They are under increasing public pressure to present themselves as morally identifiable actors. Not only do they need to accept the general legal framework, but they have to publicly pledge certain moral standards. They have to declare their position in a moral system, say who they want to be and what they stand for. This relates, for example, to the abnegation of corruption and an active counter-strategy. Even if only motivated by a legitimate self-interest, they need to take care of a positive image and a good reputation. This explains why, ever since the 1970s, global players have been busy producing codices of business ethics to ensure that employees, customers and regulators accept such goals as lawlike ethical standards that (supposedly) govern the firms behaviour. A bad reputation leads to bad business, not only in the long run. Aside from public laws, thousands of codices have been developed over the past few decades that are supposed to bind companies or whole industries (such as the German Corporate Governance Index or the German Sustainability Code). 2. The Importance of Values Social organisations of any kind can only function well and efficiently if they maintain clear-cut definition of their goals, tasks and competences. They require something akin to an organisationspecific identity. We need to be able to recognise them. The first important role of values within a business is to lay the foundations for its specific public identity. 3

Human beings can only co-operate effectively if they trust each other. The more complex our surroundings become and the more complex organisations appear, trust gains in importance. Without some form of basic trust, I cannot communicate effectively with other actors; without trust, I cannot conduct business. Here, concerning the topic of trust, values once more enter the game. Values are particularly important because they contribute decisively to the creation of trust and the accumulation of what is called social capital. He who lies to others must expect to be lied to in turn. At the very least, we would never know whether the other person is mendacious and thus find ourselves in a precarious position of uncertainty and distrust. By lying to others, we would contribute to the creation of a culture that endorses fraud and deception. It might seem trivial, but this is an important moral message: Was Du nicht willst, das man Dir tu, das fg auch keinem andern zu. (Do not do unto others as you would not have others do unto you.) Organisations are therefore well-advised to reach an internal understanding on the values that are supposed to guide quotidian social interaction and professional co-operation. This is especially true for those values that strengthen their employees feeling of being accepted and respected, and for those values that foster mutual communication and the will to co-operate. Autism, distrust and ghetto mentalities block the road to productive exchange and co-operation. Values are supposed to foster cooperation by instilling an awareness of a common readiness and ability to solve problems by joint action. Without shared values that are accepted by all members of a group, no team spirit can ever grow. Organisations are usually successful when those that work there can identify with their employer. Organisations are efficient when they recognise and reward the willingness of individuals to take on responsibility. It is imperative to foster commitment and a realistic sense of enthusiasm not nave or even blind euphoria! It is important to strengthen the will to identify oneself with ones organisation. This describes the crucial importance of values within an organisation: they are supposed to fortify an individual actors connection to his employer and to support his willingness to engage actively and efficiently in reaching the organisations objectives. Classical virtues like sincerity, responsible behaviour, willingness to co-operate and, above all, reliability are particularly important. Other 4

traditional core virtues are wisdom, justice and moderation. Justice, in particular, is a very significant value when dealing with co-workers and employees. Most modern societies are poly-ethnic and multi-religious, consisting of people from very different cultural origins. This can also be seen in organisations and large corporations. All employees carry their own individual value systems. These systems are not all alike, meaning that organisations need to identify common values that are familiar to most employees, are shared by a large majority of them and are binding to all of them. It is important to agree on a shared moral language. This makes communication a lot easier. Most people have the elementary desire to link their work to some kind of purpose. They want to enjoy Freude an der Arbeit, which is, by the way, very different from having fun. Values are important in the quotidian work flow because they function as a source of purpose and meaning. They strengthen our awareness of the idea that there exists a satisfying and fulfilling connection between us and our professional activities. We can experience our actions as purposeful, as meaningful. This, in turn, can strengthen our connection to the organisation in general. 3. Impact of values on the business When we talk about the importance of values, we need to distinguish between the inside and the outside. A company that is not perceived as a reliable business partner and that holds a bad public reputation cannot be successful in the long run. One example: corruption may lead to more orders and higher sales in the short run, thus leading to increased profit. It seems to be a good business opportunity but only in the short run! In the long run, it is economically counter-productive: it leads not only to legal proceedings and the associated costs, but also to a decline in business due to a tarnished reputation. In addition, corruption also weakens ones own willingness to design the best products and services to compete with others. It leads to sloth, laziness and a weakened capacity to innovate. I have already touched upon the impact of values on the inside of an organisation. If used successfully, they contribute to an increase in efficiency. How is this to be explained? By shared values, we can create a culture of reliability. If people maintain shared values and can rely on each others willingness to adhere to these values, they live in a world of mutually defined moral norms. 5

They now know what one should do and what not to do. They have common perceptions of adequate and proper behaviour. They know what is important and what is less important and they command a mutually intelligible moral language to deal with conflict. The profit derived from such a joint foundation cannot easily be quantified. But what can be said is that consensus and a common moral language save time and money. Not only do people share a common goal, they also have a shared understanding of how to achieve it. This enables all participants to relate to a shared set of beliefs in any conflict concerning specific objectives and strategies. 4. The Importance of Senior Leaders in the Implementation of Values Human beings have very different values and conceptions of a good life, dependent on their individual origins and life stories. Organisations that unite people from very different backgrounds need to be particularly aware of the importance of a set of common values that need to be communicated clearly and implemented in an exemplary fashion. This is the decisive task of Senior Leaders. They are responsible for the acceptance of an organisations shared values by the employees they supervise. In regard of values, leadership competence refers to the communication and demonstration of binding standards. If Senior Leaders fail to lead by example, they undermine not only their own credibility, but also endanger the corporations success in general. If the companys senior leadership are out of touch with its professed values, why should their employees adhere to these standards? For Senior Leaders, reliability means: do what you say, and say what you do. It is important to publicly declare that one does identify with the company and its values. Whoever is not ready to do this, cannot adequately represent the company externally and cannot lead internally. Senior Leaders are to be examples in the identification with their organisation and in the adherence to its values. As we all know, however, Senior Leaders are not perfect. They make mistakes, they have headaches and bad days, they can react curtly and are often over-worked. Dealing competently with ones weaknesses and limits is an important part of their task as role models. They can only adequately play their role if they act with measure. This is, in my view, an extremely important problem in contemporary business ethics and in the debate on company values. There is a tendency toward a rhetoric of exaggeration, of moral emphasis, 6

of limitlessness. It is common to postulate that ones organisation is the best, that its ones goal to constantly improve, to continually make decisive choices, etc. But such a language of sustained moral emphasis and exaggeration is dangerous. It promotes a tendency to overestimate and overtax ones capabilities. When communicating values, a quiet and reserved tone of voice is often far more effective than loud and boisterous shouting. Nobody can achieve constant perfection and no organisation can always be the best. It is much more wise and sensible for Senior Managers to practice a form or realistic pragmatism when communicating an organisations values. A Senior Leader should not over-dramatise conflicts (these exist in any organisation), but he or she should exert a moderating influence on all participants. He should not confront his employees with unrealistic and fanciful expectations concerning their behaviour and success. Leadership also refers to the ability to sensitively gauge what can realistically be achieved within a certain framework of time and resources. The decisive task of Senior Leaders is to create a culture of reliability. Their aim needs to be the creation of a predictable environment for themselves and their employees. Instead of anomia, chaos and arbitrariness, trust and certainty of expectations should take hold. 5. Possible Sanctions This is a difficult topic and the cause of controversy even within the legal profession. It is clear that every employee is bound by the code of conduct. If you cannot accept this code for reasons of personal principle and moral conviction, there is no place for you in the organisation. However, not every infringement needs to lead to strong sanctions, such as an instant dismissal. It is important to gauge the gravity of the offense. But there is a clear system of rank for companies that unite people from many different backgrounds: such companies need to maintain a willingness and ability to exert tolerance. They need values that promote an elementary form respect toward the other, even if I reject the others way of life out of personal principle. Discrimination of any kind and for any reasons cannot be allowed within a company. In case of a clear violation against antidiscrimination rules, decisive sanctions are unavoidable.