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June 10, 2013

Moving the Needle Toward a Higher Ethical Standard in Business

By Erik Sewell '14  |  june, 2013, Issue 1

As the spring quarter comes to a close, many Boothies find themselves taking inventory of the great classroom experiences and business tools they have acquired over the year. But some may wonder if their new-found knowledge of the marketing mix and CAPM will prepare them for tough real world questions. Specifically, what if the skills you acquired - the letter of the law, pressures from your boss and your moral compass - come into conflict with one another? The first annual "Navigating the Grey" conference attempted to address some of these issues and encourage participants to evaluate the role of ethics in business.

The evening began with a panel of three business leaders from diverse faith, cultural and philosophical backgrounds, moderated by Roger L. and Rachel M. Goetz Distinguished Service Professor of Creative Management Professor Harry Davis. The key issue discussed was how business leaders are grounded and what guides their moral compass in making daily decisions. The panel members agreed that having an ethical framework is vital in business, whether it be based on faith, cultural or philosophical foundations. One reason for this view was that businesses and marketplaces rely on trust and a certain expectation of ethical conduct to facilitate even the simplest transactions.

The impact of ethics in business was explored further with a talk and case study led by Mark Whitacre, whose story is chronicled in a number of documentaries and books. He is most famously played by Matt Damon in The Informant!  When Whitacre was the fourth ranking executive (out of 30,000 employees) at Archer Daniels Midland, he became caught up in a billion-dollar price-fixing scheme and then served as an FBI informant to expose the international scandal. Whitacre wore a wire on the job for three years and incredibly planted the same green lamp (with a secret camera inside) in every major meeting around the world to document the scheme.

Whitacre's story took a bizarre turn when it was revealed that he embezzled nine million dollars from ADM while working with the FBI. Mark served eight years in prison and has now recovered to become the COO of Cypress Systems. He attributes his turnaround to the unconditional support of his wife, whose Christian faith gave her a strong moral compass as she advised him to always do the right thing throughout the entire ordeal. It was shown in court that over 100 people had knowledge of the price-fixing scheme, but it took Mark Whitacre's wife (a schoolteacher) to take a stand for what she knew was right. Whitacre believes this speaks to the all-consuming effect that a quest for power and pure profit-maximization can have on people in business without a strong ethical foundation.

The final talk of the night was delivered by Max Anderson, author of The MBA Oath. This is both a movement and a book that gained international attention in 2009 following the financial crisis as the perception developed that business managers and practitioners could not be trusted. The idea is a derivation of the Hippocratic Oath which can be applied to business and exhorts its proponents to "create value responsibly."

Anderson believes there are two ways to institute ethics in business: by law and by intrinsic motivation. It is simple to understand the motivation to follow the law, but to understand what makes people want to behave in an ethical manner, you must observe the individual's ethical foundation. It is incumbent on each person to determine the foundation of their personal ethical code before finding oneself in "the grey area" where conventional business expertise offers no good answer.

Max Anderson's quest with the MBA Oath was to "move the needle" toward an environment where business leaders hold themselves and others to a higher ethical standard. The hosts and participants of "Navigating the Grey" hope that a similar movement can take hold at Chicago Booth. Notwithstanding Booth's legendary flexible curriculum and reputation for courageously asking tough questions, issues of ethics and morals have largely been left up to us as individual students. The takeaway from the conference is to ask yourself and your classmates how you can help "move the needle" in establishing a higher ethical standard at Booth and in the broader business community.

Last Updated 6/9/13
Last Updated 6/9/13