Ethics & Sustainability Leadership

The Nature of Ethical Judgement

Marc Le Menestrel

marc.lemenestrel@upf.edu

Menu of the session

1. How to think about ethics?

2. How to act in front of ethical issues?

3. How to communicate about ethical issues?

Introductory discussion

Why do we talk about ethics nowadays?

Why in this program?

Why would you like to talk about ethics?

Questions close to you

Are you ethical?

Is business ethical?

Select the white spheres…

Some are still darker than others…

You feel good, full of energy

You may not be credible

And you may be blind to risks

You are honest

It feels bad

But you are more aware and anticipate

Looking at the good side

Looking at the bad side

Thinking Ethics as a Grey Zone

Our ethical judgments are bounded and biased by our emotions, our mental habits and

self-image, our cultural context, our work environment, our self-interest and our power

to act

This phenomenon is not necessarily intentional, but it can have significant

consequences.

We can develop, refine and structure our ethical consciousness. It requires to open our

mind and to be able to think beyond the justification of your ethical opinion.

It necessitates training and effort, outside our zone of comfort

Purely

ethicalPurely

unethical

Marc Le Menestrel, UPF & INSEAD, for

A Classification of Values Instrumental values (egoism):

Pursuing your self-interest. Causing good consequences to oneself: e.g. your salary (individual level); profit (corporate level)

Instrumental values (altruism):Pursuing others’ interest. Causing good consequences to others: e.g. your family, your boss (individual level; your employees, your customers, the society (corporate level)

Deontological values (idealism): Respecting rules and principles: e.g. your education; a code of conduct (individual level); the law, professional standards (corporate level)

Emotional values (virtue):Generating good feelings: e.g. sense of integrity, pride (individual level); positive ethical climate (corporate level)

Dual & Systematic Ethical Analysis

Can it harm? Which stakeholders?How much? When?

Can this be wrong? or unfair? According to laws & regulations? To

some ethical principle? If everyone does the same? All the time?

Does it feel bad? A sense of discomfort? An early warning signal

inside?

Would this be better kept secret? Is this taboo? Could it be publicly known?

Can it benefit? Which stakeholdersHow much? When?

Can this be right? and fair? Is this legal? Is this respecting ethical

principles, code of values? Can this be universalized?

Does it feel good?What virtue do I incarnate? Is this

respecting my integrity?

What would I like to be known? What is transparent?

To which extent is this unethical? To which extent is this ethical?

Marc Le Menestrel, UPF & INSEAD, for

Would you lie for a monetary gain?

Lying

Telling the truth

$ 1 000

$ 1

According to economic rationality, you should lie whenever you have an interest to do so.

According to idealism, you should never lie.

Should you pollute less?

Pollute less

Maintain profits

Increase costs

Continue Polluting

According to economic rationality, you should not care about pollution beyond its expected negative impact on profits

What do you think our children think about this logic?

?

Should a company respect the law?

Violate the law

Respect the law

What is the value of the law beyond the cost of the punishment?

Economic rationality answer is: zero!

What about the value of the spirit of the law?

? $ - 100 000(including the fine)

$ - 150 000

Should our supply-chain respect Human Rights?

Violate Human Rights

Economic Value

Respect Human Rights

Of course, companies do respect human rights even if it is costly. Don’t they?

Should we say everything?

Reveal risks associated with a

product or an activity

Favor regulation Threaten a

market growth

Avoid regulation, Maintain a

market growth

Hide the danger of a product or of an

activity

We often have an interest in hiding potential risksIndeed, sincerity in communication can be very costly…

Where is the limit between confidentiality and transparency?

Will you avoid corruption?

Paying no bribe

Winning a contract

Losing a contract

Paying a bribe

Is corruption a necessary evil……of economic competition?

What about conflicts of interest ? (1)

In the interest of the company

In your own interest

Against your own interest

Against the interest of the company

Why would you act in the interest of the company?

What about conflicts of interest ? (2)

In the interest of the company

In your own interest

Against your own interest

Against the interest

of the company

Reciprocally, could a company be motivated to act in the interest of its employees even when this is

against its self-interest?

Ethical Dilemmas: tough choices

Less ethical

More ethical

An Ethical Dilemma arises when the action that best

favors the interest of the actor conflicts with the action

that is the most ethical

Best interest of the actor

Worse interest of the actor

Priority to Interest: A Reactive Attitude

Economic objectives

Less Sustainable

More Sustainable

???

We act unethically because we think it is in our interest.

We resist admitting the ethical issue (denial)

We insist on our good faith (justification)

We discard the alternative and tend to blame others (externalization)

We face ethical risks. In the worst case, we lose on both ethics and interest

Marc Le Menestrel, UPF & INSEAD, for

Priority to Ethics: A proactive Attitude

Less Sustainable

More Sustainable

We resist acting unethically because we want to respect our values

We acknowledge the ethical dimension (Awareness)

We anticipate the ethical risks (Prudence)

We imagine an opportunity (Vision)

We face economic risks. In the best case, we win on both ethics and interest

???

???

Ethics is an art of surprise!

Economic objectives

How to Communicate (un)ethically?

Ethical questions are value-loaded, emotional and can be biased

towards the unethical side.

Ethical denials and justifications may nurture negative emotions in

others.

Ethical answers which strongly ascertain the ethical side are not

necessarily perceived credible.

Ethical answers which demonstrate awareness and consciousness of

the unethical side, as well as pro-activeness towards the ethical

side may enhance sincerity and trust.

Marc Le Menestrel, UPF & INSEAD, for

Practical Implications• Know who you are and what are the values for which you want to stand up

• Work on your ethical blind spot and learn to face your dark side so that you can transcend yourself

• Do not relegate ethics as a peripheral issue outside your work but integrate it within your thinking model

• Make sure the organization knows its ethical risks by identifying the main dilemmas and their temptations

• Allocate time and effort in the development of alternatives that are non-threatening but can generate future opportunities

• Create communicational spaces where honest discussions about values can be held, and appropriate circles where the line can be drawn between business interest and ethical values.

27Joan Miro, 1968

First Discourse: Economic Rationality

Less ethical More Ethical

Bet

ter

Wor

se

Ethical Values

Sel

f-In

tere

st

Rational

Some insist that self-interest should be the sole and unique criterion of rational choice

Irrational

Second Discourse: Idealism

Less ethical More Ethical

Bet

ter

Wor

se

Ethical Values

Sel

f-In

tere

st

Rational

Some insist that ethical values should be the sole and unique criterion of choice

Irrational

Third Discourse: Corporate Social Responsibility

Less ethical More Ethical

Bet

ter

Wor

se

Ethical Values

Sel

f-In

tere

st

Rational

Some insist that interest and ethics always combine

Irrational

Opening to Ethical Rationality

Less ethical More Ethical

Bet

ter

Wor

se

Ethical Values

Ideal

Rational choices between interest and ethics are often kept hidden.They are the most difficult. Acting in front of these ethical dilemmas is an art of surprise!

Irrational

Prioritytointerest

Prioritytoethics

Marc Le Menestrel, UPF & INSEAD, for

From here, a reactive strategy often consists in:

1.Deny2.Justify

3.Externalize

Such strategy raise ETHICAL RISKS

From here, a proactive strategy often consists in:

1.Acknowledge ethics2.Anticipate risk3.Imagine opportunities

Such strategy is open to IDEAL outcome!

? ?