Business And Leadership Ethics Conference

Business and Leadership Ethics Conference ± three current themes

Tuomo Takala University of JyvaÈskylaÈ, JyvaÈskylaÈ, Finland

Keywords

Ethics, Leadership, Postmodernism, Competitive strategy, Total quality management

Abstract

Collects thoughts that emerged during the recent virtual conference, Business and Leadership Ethics. For the consumer, legislation often seems insufficient to control the activities of business and business suffers as a result. A company's ethical stance is frequently as important as more traditional considerations like product, service and even pricing. Considers three themes as a basis for the ethical orientation of organizations. Postmodernism is important ± after all, this new collective consciousness is largely responsible for the changing view of business that necessitates this study. Despite links with older business styles, competition can be used to shift the ethical base, provided that the ethics of competition (as in sport) are also considered. Total quality management can easily be adapted ± the TQM fundamental of ``excellence'' can become ``ethical excellence''. Concludes that as business and society become partners a true moral leadership will be needed to make the relationship work.

This paper presents themes that were originally part of the Business and Leadership Ethics Virtual Conference, held from 28 June to 28 September 1998 Received: June 1998 Revised: August 1999 Accepted: September 1999 Leadership & Organization Development Journal 20/7 [1999] 360±364 # MCB University Press [ISSN 0143-7739]

[ 360 ]

Increasingly, accidents, malpractices, and other harm caused by business are reported by the media. Laws are not enough to control the transactions between the company and society. We need also moral evaluation in this respect. Business and society, these two systems, will be the most discussed partners during the coming decade. The most crucial is how to manage this relationship. A true moral leadership is needed. This article aims to present three themes: 1 postmodernism; 2 competition; and 3 quality. Are postmodern ethics good or bad things? If a person has a postmodern attitude this question may not be relevant. We can, anyhow, ask in which respect good or bad ethics, ``anything suits'', is a permissive attitude which is not bothered by rigoristic morality. People are not condemned because of different customs, appearance, race or complexion. The complexion is not even in network decisive, but rather other virtues. Postmodern ethics has, however, the weak points typical of the relativistic attitude. If a person has this kind of an attitude he finds no more criteria for the good and the bad. In such a case some charismatic figure (Hitler) starts to order what is good and what bad. Faith replaces critical scepticism and rational moral consideration. For its certain parts, the relativistic standpoint is unbearable, we cannot draw from it a programme which would fulfil the principle of universatility and save people's welfare and guarantee their rights. The good is only the thing which I feel to be good. This justifies strong egoism and, along with it, oppression of other people and even unscrupulous destruction of our environment. Postmodern ethics cannot offer the business ethics, not at least at this stage, The current issue and full text archive of this journal is available at http://www.emerald-library.com

any clear theoretical basis from which to start. Why is this? The author considers postmodern as background for ethical orientations: the terms ``modern'' and ``postmodern'' have become common currency in intellectual debates concerning organizational studies. The postmodern is varyingly interpreted as an ``epoch'', a ``perspective'', or a new paradigm of thought. To begin with, we could distinguish ``modernity'', conceptualized as the modern age, from ``postmodernity'' as an epochal term to describe the period which allegedly follows modernity. According to Cooper and Burrell (1988), modernism is ``that moment when man invented himself; when he no longer saw himself as a reflection of God or Nature''. The origins of the trajectory modernism are traced back to the notion in the age of enlightenment of ``reason'', which is considered to be the highest of human attributes. Despite the opposition to systematic and critical forms of modernism ± the one championing the mechanization and the other seeking for emancipation in the living world ± they share the commitment to an inherently logical social world constituted by reason. In both positions, therefore, it can be found that the assumption is considering an underlying unity that provides legitimacy and authoritative logic (Hassard, 1994). In its most stark sense, postmodernism stands for the ``death of reason''. It has been said that we presently live our life in a postmodern society. One of the most important features of postmodernism is that it rejects the notion that reference is, or can be, an unequivocal relation between forms of representation (words, images etc.), and an objective, external world. At the postmodern level of analysis the focus is on ``the rules grounded in practices which precede subjectivity, which is essentially the structuralist attack upon the philosophy of consciousness. There is no real

Tuomo Takala Business and Leadership Ethics Conference ± three current themes Leadership & Organization Development Journal 20/7 [1999] 360±364

space for the voluntary actor as, instead, the actor's space is found in the notion of action as ``play rather as agency'' (Lyotard, 1984). Postmodern analysis succeeds in distancing itself from the assumption of unity implicit in the enlightenment notion of reason; unlike modernism, where faith is in the recovery of a relationship with nature, postmodernism gives rise simultaneously to increasing liberation from the natural world to the splintering of culture into discrete spheres. In postmodern thought, therefore, the energies are released that demand reunification yet assert its impossibility. The modern and postmodern can be defined through contrasting sets of antinomies (Featherstone, 1988). The postmodern appears to represent a break with the modern, which is defined as being in contrast to it. What are those features that are considered typical of the postmodern mode of life and thinking? Are they: . Multiplicity of meanings? Our social life is seen to be loaded with multiple meanings. There is not only one ``right'' meaning which can be given to an event or a process. . The death of great stories? Modernism is seen to consist of many great stories (e.g. communism in political life, enlightenment in history, abstract expressionism in visual arts, etc. These ``-isms'' are said to be dead and buried, and in postmodernism there only exist short and fragmented narratives, local ``small stories'' versus old superstories. . Fragmented reality? Our life is seen to consist of many fragmented parts which do not have any interaction with each other. In modernism these interactions were clear and evident, but now the whole society is non-transparent and extremely difficult to understand. . Simulation? Lyotard has presented this concept of simulation rather well. ``. . . There are presently more genuine things and objects, everything can be produced by artificial simulation processes, nothing is `the real thing'''. Everything is just copies, the slogan is: ``Buy a copy, not an original''. Life in virtual reality is now possible; who would need ``real'' reality? . Living without objective values? It is not possible to set such moral norms to any person according to which he ought to act. Everything is allowed. Other concepts that have been used are: disappearance of one's own ego, irony and no absolute truth appears, only ``perspectives''.

Postmodern ethics denies the importance and relevance of great stories in the world of the 1990s. It wants to be ethics of metropolis where the values and action codices are determined without objective valuation grounds (a relative basis). Values both are born and die socially. There is no objective measure for value, and there is no need for it. Freedom from the bonds restricting the creativity of ego is of value, but not in the traditional sense. When thinking in a postmodern manner, the ethics of metropolis, i.e. big cities, is microethics. Ethical rules and norms are defined through the social network of threads of the microlevel, by different subcultures. Any of the ``great men'' of thinking, Kant, Hegel, Mill etc. do not dictate with a top-down technique those imperatives which the postmodern group ought to follow. The ``top-down principle'' has been compelled to make way for a horizontally forming set of principles which gets its power on the basis of the set's own functions. Speculatively thinking, we may in the future even talk about virtual reality, virtual morality. In the utmost case the ontology of morality has to be scrutinized from the viewpoint that the moral actor is a solidly constituted collective subject of the virtual reality/network. Virtual reality offers an opportunity to an unpersonified moral subject, which like Nietzsche, can demand ``perfect freedom because God is dead''. It fits in perfectly with the unpersonified ``networkself'', the Cartesian principle ``cogito, ergo sum''. A perfect solipsism comes true; as Bishop Berkeley has stated: ``the outside world is only an idea in my mind''. The relativistic solipsistic ontology represents the epistemological position to which also postmodernism has committed itself. The postmodern attitude is the property of the inhabitants in metropolis, and yet, the biggest part of the world's population lives outside metropolis, in the countryside, in development countries and in other very primitive conditions. In those places the postmodern attitude may not be possible but their ethical norms are regulated by the family, the god, the tradition etc. Postmodern business ethics is only possible in so-called new-technology firms where new working culture and customs prevail. A traditional firm operates according to the same ethics as it always has done. The personality of the entrepreneur, the business idea, the business line, the manner in which things have always been handled, dictate the basis and direction of the ethics of activities. Matti Estola[1] wrote on competition in business and in nature . . . ``The conditions of

[ 361 ]

Tuomo Takala Business and Leadership Ethics Conference ± three current themes Leadership & Organization Development Journal 20/7 [1999] 360±364

[ 362 ]

survival are merely the laws of biology. . . . Ethics deals with the problem of choosing between different kinds of life, and assumes that there is real choice between different kinds, or else there is no such thing as ethics'' (Knight, 1935, p. 71). In nature, those species which win the survival game turn out to be best in finding food and adjusting to varying living conditions. The individuals within one species compete with each other about the leadership and about who can reproduce their genes, which competition supports the best genes' continuation to the next generation. We can agree that this competition keeps the species vital, although morally thinking that the process is in many ways crude and inhuman. Analysing animals' behaviour on a moral basis is not meaningful, however. Predators eat prey, and the populations are connected with this relation. The greater the prey population, the more food for predators which strengthens the predator population and vice versa. In business we can think of customers as ``prey'' and firms as ``predators'', and their populations are connected with this relation. A firm can survive in a ``lack of food (customers) situation'', if it catches its food from other areas (exports), or if it can eat different types of food (expand its activities to other fields). In business, rich and large companies buy small and less successful ones, which phenomena can be legitimated on the basis of development, i.e. superiority in doing business. If this development decreases competition, it can raise product prices. This, however, attracts new firms to such industries, which hinders price rises. The process is analogous to that where an increase in the prey population attracts more predators to the area, which controls the preying population. A small preying population limits the predator population, in the same way as a small number of customers limits the number of existing firms. This example demonstrates the limiting factors customers and other firms set for the success of a specific firm, in the same way as the existence of other animals limits the behaviour of every species and individual in the nature. There thus exist similar ``laws of nature'' in business competition to those which exist in nature. Though we cannot expect moral behaviour from animals, we can still analyse the fairness of competition. Although the competition of survival in nature is crude, every species and individual has some advantages by which they can survive in the game. The advantage of an antelope against a lion is its speed, and the lion dies if it cannot catch its prey for meat. In this way one's wellbeing

means another's misery; similarly, if one firm gets a customer, other firms will lose that customer. Conversely, if an antelope injures its leg, it has no hope against the lion. This makes the survival game in nature unfair, because an injured ``player'' must take part in the game against its will. The business competition is not that unfair, because firms can choose the ``games'' at whatever time they choose to take part. However, a bank may give notice of closing loans to a firm at any time, and customers can change their suppliers at will. These phenomena show that the business competition also has some crude elements. From this section we can learn two things: 1 the laws of nature controlling animal populations are similar to those controlling the number of firms as well as their expansion; and 2 the most effective species, firms and individuals, win both these survival competitions in the long run. The competition in business and sport is similar in many ways. We can think of the firms of one industry as teams playing in the same series. The rules of sporting games are clearly stated, and if one team does not follow them, it can be ruled out of the series or punished in some other way. The rules concerning the firms' competition are presented in the laws of society, and there also exist international laws which the firms must obey. If all teams obey the rules of the game, they can be ranked according to their playing against each other, and we can consider that such a ranking is fair. Error-correcting and motivating coaching as well as learning from other teams are suitable strategies for success in sporting games. If one team does not hire good players and coaches, but other teams do, the original team will not succeed. Similarly, if one firm does not employ skilful workers, or does not raise to the leading positions the most qualified managers, that firm will not succeed. If all firms compete about customers according to the existing laws, then the most effective firms will win the competition and we can consider that the competition is fair. The competition process is analogous in both cases, and it guarantees the development of the players' (workers') skills, playing tools (production technologies) and playing strategies (organising production). In both cases the co-operative skills of players (workers) and coaches (managers) are essential requirements for success. High ethics are a general requirement in sport. The athletes competing in Olympic games swear an oath about fair competition,

Tuomo Takala Business and Leadership Ethics Conference ± three current themes Leadership & Organization Development Journal 20/7 [1999] 360±364

obeying the existing rules. An athlete is considered to behave immorally if he uses forbidden drugs or does not try to win the competition until the last moment. The last requirement allows betting on the winner, because it rules out pre-negotiated results. Giving up in the middle of the game renders the playing meaningless, which decreases the winner's joy of winning the game. Competing in a sporting spirit requires that the winner can enjoy his victory, which occurs if other players have seriously tried to win the game. In this vein we can consider that business competition meets the requirements of high morality, if all firms try to succeed in the business they are involved, and they observe legal methods in competition. The existing laws of societies do not, however, always judge illegal all immoral behaviour of firms; firms' marketing, for instance, does not always meet the requirements of high morality. If the laws of society allow firms to compete by unfair methods, it is the politicians' task to prescribe the laws which prohibit this. This takes place in economies continually, in the form of new laws protecting workers, consumers, environment etc. If the laws of society do not represent high morality, it has serious effects on the fairness of the business competition. The referees in the NHL ice-hockey series, for example, allow more rough play than the European referees. This makes the administration of the games between European and North American teams difficult, and it is common for the North American teams to refuse to play under European referees. Playing with North American referees forces the European teams to play rough, which has perhaps developed the game in the wrong direction. This example shows that if the rules of a game allow unfair competition, every player is forced to use such methods if he wants to succeed in the game. If we consider only the ethics of competition, morally high level teams, firms and individuals should play fair. Conversely, there always exist individuals with low morality, and if the means of competition are not controlled, the competition will favour these. If we want the most effective teams, firms and individuals to win the game, we have to set strict rules for the competition, and we have to ensure that these rules are followed. These rules should represent high morality. An important element in this is that the rules (laws) are the same in every country. If, for instance, the doping rules (environmental laws) vary between countries, those countries with less stringent rules (laws) attract doped athletes (pollutant industries) by better practising conditions

(lower costs). The international competition between athletes (international trade of products) then favours the doped athletes (pollutant firms), which makes the competition unfair. We considered the ethics of business competition by comparing it to the competition in nature and in sport. Competition is an important means of development in all these three cases, although it can be crude and immoral. In sport and business the rules (laws) can be prescribed so that immoral competition becomes punishable. In nature this is not possible, but we can support threatened species by feeding or by other means, if we consider it meaningful. With suitable rules and their effective control, competition is an effective source of economic development, and it meets the requirements of high morality. Competition classifies firms and individuals into successful and non-successful categories, which the latter group may consider unpleasant. People's goodwill is the moral basis for helping the non-successful competitors, which is an important factor in keeping society safe. Social security can be financed by taxing the successful, and it is a political matter to decide the exact tax rate and the organising of the support. Essential in this is that the support does not distort the competition and decrease the competitors' motivation for competing. TQM is an ethical imperative[2]. Doing the right thing the right way the first time and every time demands that several preconditions be met. In instances where these preconditions are not completely fulfilled (in my opinion the majority of cases), TQM must become a goal or strategy as well as a process. TQM preconditions include: 1 The organization must be able to define what is the right thing. This may involve studying customers, markets, competitors, regulators, suppliers, and stakeholders (including employees, creditors, and investors). For companies unsure of what the right thing is, TQM implementation is secondary to planning and goalsetting activities. 2 The organization must be able to do (and afford to do) the right thing. This involves the creation, implementation, maintenance, and improvement of capable systems and processes. 3 The organization must be able to do (and afford to do) the right thing consistently. The organization requires feedback, concurrent, and feedforward control systems. Further, the organization must provide its members with skill, information, and support to take immediate corrective

[ 363 ]

Tuomo Takala Business and Leadership Ethics Conference ± three current themes Leadership & Organization Development Journal 20/7 [1999] 360±364

[ 364 ]

actions when errors or mistakes are discovered. Implementing TQM as a strategy, goal, and process to achieve and maintain these conditions is an ethical imperative from any of the four perspectives: 1 Principle. Doing the right thing the right way implies a standard of excellence external to the organization and its members. Clearly, an organization's attempts and accomplishments in this arena are ethical. Although some views, for example the competing values and stakeholder approaches, imply that it is impossible fully to satisfy diverse or conflicting definitions of the right thing, they nonetheless suggest that those stakeholders with the largest interest and leverage must be satisfied to the maximum possible extent. This is a Thrasymican (``might makes right'') view, but it still implies a right thing or principle independent of the actor. 2 Purpose. Intending to do the right thing the right way is clearly ethical. Goaloriented TQM processes with the purpose of defining, achieving, and maintaining the right thing the right way are ethically imperative. In Kantian terms, the act of pursuing quality is genuinely moral when done out of pure respect for duty, in this case to the customer and other stakeholders. 3 Consequence. The consequences ± by now well-documented in business ± of seeking to do the right thing the right way consistently are lowered cost, increased value, higher customer satisfaction, increased competitiveness, and organizational and economic growth. Examined from this perspective, TQM is once again a clear ethical imperative. 4 Situationalism. This view would imply that TQM could be ethical under certain circumstances. Therefore, if the circumstances under which TQM is ethical were prevalent, then TQM would be an ethical imperative. This is precisely the case. Organizations worldwide are faced with intense competitive pressures, increasing customer demands, higher stakeholder standards, and societal pressures to democratize and transform the workplace. Thus TQM is an ethical imperative from the relativist perspective because it promotes and enables organizational success in precisely these circumstances. Further, TQM becomes a source of sustainable competitive advantage. As such, TQM is becoming a normative, prescriptive

approach to dealing with today's marketplace.

Conclusions and recommendations Whether examined from the perspective of principle, purpose, consequence, or the situation, TQM is an ethical imperative. The study of ethics and the behavior of various business, political, and religious leaders reminds us of course that knowing the right thing to do does not always result in moral choices. Knowledge of the right thing, however, does allow the actor to ask the appropriate questions. Does this action coincide with an established, accepted principle? Are my actions well-intentioned? Is the anticipated consequence appropriate? Does the action fit the demands of the current situation? Having an ethical rationale for TQM and the resulting goals, strategies, and processes can assist organizational leaders as they attempt to train, inform, motivate, and support their employees in the pursuit of these goals and strategies. Comprehension of the ethics of principle, purpose, consequence, and the situation can help organizational members to see the need for and desirability of TQM and can overcome objections to the implementation of the systems and processes necessary to attain and sustain high quality. TQM can appeal to principle, purpose, consequence, and the current situation of the organization. Therefore, adding ethical considerations to training and communication could be beneficial in gaining managerial and employee commitment to TQM.

Notes

1 Matti Estola is Senior Lecturer of Economics at the University of Joensuu, Department of Economics, Joensuu, Finland. 2 Larry Pace is Professor of Management at the Louisiana State University, Shreveport, USA.

References

Cooper, T. and Burrell, G. (1988), ``Modernism, postmodernism and organizational analysis 2: the contribution of Michel Foucault'', Organization Studies, Vol. 9 No. 2, pp. 221-35. Featherstone, M. (1988), ``Postmodern: an introduction'', Theory, Culture and Society, No. 5 pp. 2-3. Hassard, J. (1994), ``Postmodern organizational analysis'', Journal of Management Studies, Vol. 31 No. 3, pp. 304-24. Knight, F.H. (1935), The Ethics of Competition and Other Essays, Unwin Brothers Ltd, Woking. Lyotard, J. (1984), The Postmodern Condition, University of Manchester Press, Manchester.