The Business of Ethics

In this episode of the Center Stage podcast, Alan Richter and Joe Cahill discuss ethics in business and its impact on projects and organizations. As business becomes more volatile, uncertain, complex, and ambiguous, organizations must address ethical considerations both internally and externally to stay relevant and reputable. To do so, they need leaders who can navigate the complexities of ethical decision making by understanding the impact of culture on ethics and the need for inclusivity. 

Dr. Richter is the Founder and President of QED Consulting, and the co-author of the Global Ethics & Integrity Benchmarks. He has consulted corporations for many years in multiple capacities, primarily in the areas of leadership, values, culture, and change. Dr. Richter has led teams in the development of leadership programs and processes and has designed pioneering instructional products in the areas of leadership, business ethics, workforce diversity, globalization, marketing, technology, and communications. He is a frequent presenter, has taught philosophy, psychology, and interdisciplinary courses, and is the author of several books and articles. 

Transcript

 JOE CAHILL:  Hi everyone, welcome to the Center Stage podcast. Today we’ll be engaging in a discussion on the business of ethics, global collaboration and the importance of culture. So, in order to do that with the utmost credibility, we are joined here today by Dr. Alan Richter. 

Dr. Richter is the Founder and President of QED Consulting. Primarily he has provided strategic consulting services in human resource development and change management disciplines to corporations and organizations developing innovative curricula, developing executive leadership programs and designing pioneering instructional products in the areas of leadership, business ethics, workforce diversity, globalization, marketing, technology and corporate communications.

He is the creator of The Diversity Game, an award-winning training tool, The Global Diversity Game and The Change Cycle Game. Not surprisingly, Dr. Richter has also been a presenter on many prestigious stages around the world for conferences. Furthermore, if that’s not enough, Dr. Richter has also consulted extensively in online services, has taught philosophy, psychology and interdisciplinary courses, and is well known as an author of several books and articles.

Let’s get started here and talk about the business of ethics. We are living in an age of international projects, AI technology, extreme complexity and uncertainties that really demand speed and agility. Yet over and over again we are faced with the importance of business ethics. It is a constant. And throughout at least my career and going forward I see the importance of it is more essential than ever.

So tell us from your perspective when did business ethics become so vital and how do organizations approach ethics?

ALAN RICHTER:  Ethics is something that goes back thousands and thousands of years. It’s as old as we are, as the human race. If you think about philosophy and you think about religion, ethics is at the foundation of both philosophy and religion so ethics has been with us all of our human history.

But business ethics, of course, began when business began. And business of course goes back thousands of years as well. But in the last century, and certainly in the last half century particularly, the complexity of business has expanded significantly. We talk about a VUCA world, it’s not just complex, it’s much more uncertain and ambiguous and volatile.

And because of all of that, and because business has gone global as well, the need for structure around business ethics has become more and more important and more vital. So what was in religion and philosophy about 60 years ago became a field of study, an academic field, what is business ethics all about as opposed to philosophy and religion. 

And then it sort of settled into the structure of organizations. So in the late eighties and nineties, we saw ethics offices opening up in large corporations and then in medium size and then in government agencies. And today, 40-50 years later, you cannot be a reputable company and you certainly can’t be a reputable government unless you have an ethics office. So it has become fundamental to all business for profit, not for profit.

CAHILL:  So how do you see the organizations... what is typical within an organization and how they approach ethics? You mentioned the ethics office. Is that typical structure?

RICHTER:  That has become standard, yes. If you don’t have an ethics office, why don’t you have an ethics office? Why? Because typically the value of ethics or integrity is universal, we find it in all cultures, in all organizations, and if you’re gonna live the values you’ve got to have policies and practices that support that. 

So typically an organization, again, for profit and not for profit, will have, if they are big enough, an ethics office or an ethics function. Their independence is important. It shouldn’t be just a little part of HR or a little part of Legal, it should have independence. 

There should be an ethics code of conduct, so employees and staff have some sense of what’s right and what’s wrong, and it will deal with the emerging business or professional ethical issues that are so prevalent today - conflicts of interest, confidentiality, unfair treatment, issues around and respect and fighting against discrimination and harassment and sexual harassment, in addition to the more obvious ethical issues, you know, fraud and corruption and all of that terrible stuff.

So there is a wide area of oversight, as it were, that an ethics office would be addressing. And it is both compliance based - you’ve got to follow the rules - but it also should be values based because many ethical issues and dilemmas are... sit above the law. It is really the interpretation of what’s going on that is maybe not clear in the law. So I think ethics is pretty much pervasive now in all businesses around the world. 

CAHILL:  I do recall in recent years, you conducted a research study for PMI on business ethics and its global impact on projects. Please share with the audience some of the key findings of your research. 

RICHTER: Thank you, Joe. So the research was really based on a book that I had written or co-edited five or six years ago now called An Inquiry into the Existence of Global Values. And we were looking at common values that are shared across the world and there’s not been a lot of research in this area. 

But anyway, bottom line is that we discovered that, to no surprise, that there are some values which you will find in all cultures. We call them the three Fs. It’s freedom, family and fairness. And it actually goes back to the French Revolution, liberte, egalite, fraternite. There they are. Every single constitution that we looked had those three values in them.

Now there are other values that you might consider to be global - truth, love, life. There are others, those aren’t the only three. But we were interested in what happens when values clash. That creates ethical dilemmas not only for individuals but also for societies at large. I mean if you take an issue like the death penalty, that’s a clash between life and fairness, or life and justice, and different cultures will resolve those dilemmas differently.

So what we did with PMI was we created I think ten case studies, there were ten of them, and they weren’t all dilemmas as such but they were cases around ethical issues like interpersonal misconduct and conflicts and confidentiality, etcetera. In each of the ten cases we had four options and they were forced. And we had about 3400-plus project managers from around the world take this online survey and we were able to slice the data by gender, by culture, by age and by a couple of other factors.

And what we found was that the good news was that when folks were confronted with options in a particular case, the vast majority of people got it right to the extent that they avoided the wrong answers, the things that are clearly unethical. So there was tremendous commonality about what is acceptable and what’s not acceptable. 

But then, within the acceptability we did find that there were ranges. We found that, yes, cultures that are more direct chose the more direct option, cultures that were less direct chose the less direct option. So we saw the impact of culture on ethical decision making. We also saw how gender impacted it and age and so forth. But the most prevalent impact or factor, I should say, for ethical decision making was, in, fact culture. 

CAHILL:  That’s interesting. But you found a lot of commonality at the gender level and the age level?

RICHTER:  So in the ten cases, in all ten cases we found cultural differences that we could locate some cultural differences. In gender, I think there were only four cases where we found gender differences, out of ten. Age I think was more significant, I think there were six or seven cases where we found statistically significant differences between older and younger workers.

CAHILL: Next let’s talk about ethics and culture, a little bit more about this culture component. You teach an international project management course for NASA and the aerospace community, and it is focused on ethics and culture and how they affect performance. What is the most important for the audience to understand about how ethics and culture impact the performance of projects, international projects?

RICHTER: Well I think that’s where so many projects fail is when the intercultural understanding and competence breaks down. There are many, many areas, or what we could call dimensions of culture, that can lead to failures in communication and in working together. 

There’s a lot of academic background to this. If you look at the work of Hofstadter, the work of Trompenaars, and many others, just to give you a couple of examples... Hofstadter talks about the individualism index. Some cultures are very individualist, other cultures are much more collectivist. Now what does that mean? If you think about it in terms of values, and this is about a clash of values, if you value individual freedom more than you value community, you’re going to make different decisions to somebody who values community more than individual freedom. 

And we saw that in the PMI study, that Asian cultures compared to North American and Western European cultures, which tend to be more individualistic compared to the Asian ones, which tend to be more collectivistic, will come out with different – percentage-wise at least - different selections when it comes to ethical cases. So culture does make a difference. 

That’s big picture, but then if you get into the nuance of it, it could be about relationships, the individual versus group. It could be about hierarchy, some cultures are more hierarchical, others are more egalitarian. It could be around emotions, some cultures express emotions, others do not, and so you will see the world differently in that way. It could be directness of communication versus indirectness, risk aversion versus taking risks. There are 20 plus - at least - dimensions of culture and it is hard to predict in advance which ones will have more play in any situation. 

CAHILL:  What do you see as the most important global ethical issues we have today?

RICHTER:  I’d have to say we’re living in an amazing time, in a time of racial injustice coming to the fore with George Floyd and the whole Black Lives Matter - this is a global phenomenon. So there are major issues around inequities and injustice. We have the tremendous challenge on climate. I mean that is huge in terms of are we going to save this planet, and that’s the whole value of sustainability which underpins that. 

The pandemic also of course, the importance of well-being and being able to work remotely and again, all the inequities that exist around access to technology and so forth. Another big one is actually the fact that we are moving so fast into the world of AI and that algorithms are going to be ruling everything. So, who writes the code becomes absolutely critical. 

And the biggest challenge I think is in having what I would call humane or ethical technology, which is ethical AI so that we are able to take the biases of the programmers out of the system. So, issues like facial recognition. If your system recognizes men more than women or white faces more than Black faces, well you’ve got problems. Those are huge ethical challenges. 

CAHILL: And they impact, just because of the nature of technology, they have wide impacts, right? One person or one systematic approach to something will be multiplied millions of times to millions of users, right?

RICHTER: Absolutely, yeah. I think just to expand on that a little bit, the sustainable development goals that the U.N. put out in 2015, which is really the U.N.’s plan for the planet, this is for all societies, I think it’s quite a masterful piece of work. I mean there are 17 goals in the SDGs, the sustainable development goals, and if you look at the language in the SDGs they talk about inclusion, they talk about equity, they talk about fairness, they talk about justice, leaving nobody behind. So the very language of what our goals should be as a human race is to be ethical, to end poverty, to reduce inequality, to have fair health systems, to have fair educational systems and you can go on and on and on with all 17 of them.

CAHILL: You brought up the SDGs, the sustainable development goals. PMI has been committed to it for a number of years now and we continue looking forward into the future with our volunteer community, very much committed to the sustainable development goals and how they all relate to projects in one way, shape or form. So can you tell us how these goals are connected to project work and project professionals?

RICHTER: Well, just work in general and obviously there are projects that make up work. I think any work that anybody does, no matter whether you are a business or an agency or a government or a whatever, if you can’t find the connection between what you are doing and any of the development… of the SDGs, there is something wrong with what you are doing. Because if you are not ending poverty, ending hunger, ensuring health, ensuring education, achieving gender equality... It just goes on and on - affordable infrastructure, sustainable energy, climate change - you’ve got to be able to find the connection or something is wrong.

And what we are definitely seeing, not just with governments but heavily with larger organizations, companies, is a formal commitment to how they are dealing with these SDGs in their company. You know, to what extent are we reducing gender inequality, to what extent are we addressing climate change? And that’s what we are seeing more and more of.

We are now six years into this project and there’s another nine years to go. Sadly, I think the Covid pandemic has moved us backwards on some of these measures, like gender equality and poverty and food security and health I think have been moved backwards. So there’s even more urgency now as we move forward and hopefully come out of this pandemic this year, or next, to get back to meeting the goals of the SDGs in the next nine years, eight years.

CAHILL: Yes and interestingly these very audacious goals require projects, right, really smart project management in order to get to that solution. So we are very connected to that and how we fit in, at least our community.

So can you tell us a little bit… We talked about ethics and culture, so how can organizations develop more ethical and culturally aware leaders, global leaders?

RICHTER: Well I think that is where leadership development has always been important for organizations and it’s as important today. We actually have a tool that we developed called the Global Leadership Survey, the GLS, and it is based on the research of 30-40 years of a project called Globe, which is an acronym for Global Leadership… whatever, it’s a very academic study. It’s looking at what are the characteristics of leadership both within cultures and across cultures.

And we were interested in those that were across cultures, and when we analyzed all of the factors, and it is a huge academic, ongoing project, we came up with really four dimensions of leadership. And what makes it global is that it doesn’t matter what your culture is, you have to focus on values and you have to focus on action. You have to focus on ideas and you have to focus on people. And values and ideas are sort of internal and people and action are sort of external, and you’ve got to have an internal and external focus.

But what does that mean? If you think about that in terms of leadership, you’ve got to have ethical leadership. That’s what values is all about, right? You’ve also got to have inclusive leadership, that’s what people leadership is all about, right? You also have to have thought leadership that has the ideas and the visions and all the innovation and everything else. And then finally, you’ve got to have courageous leadership, the ability to execute and to execute with inclusion, with ethics and with insight.

So I guess what the model is telling us and what the Globe studies have shown us is that ethical leadership is a significant part of what leadership is all about. You can’t focus on people, ideas and action without focusing on values as well. It’s got to be principled action, it’s got to be values for people, it’s gotta be ideas that are humane, that have an ethical value to them. 

CAHILL: Excellent. You mentioned cultural relativity to me the other day. What is cultural relativity and how does the rapid evolution of technology, data, machines, impact cultural relativity?

RICHTER:  I like to think of cultural relativity in terms of diversity. In other words, cultures are different. You have individualist cultures and collectivist cultures, you have risk averse and more risk-taking cultures. So, you know, 20 dimensions, there are many, many differences across culture. Unless we are inclusive around culture, we get into trouble. 

And what is a healthy democracy? A healthy democracy is that we are ethical, we have ethical rules and values, and we are inclusive across differences. If you lose your ability to be inclusive around different cultures and it’s only my way or the highway, then we are into the tyrannical, the sort of fascist type of thinking, and that is extremely dangerous. We need values and we need inclusion, which means cultural diversity.

CAHILL:  You also mentioned to me the Edelman Trust Barometer. I thought that was quite interesting. Can you tell the audience what that is? 

RICHTER:  Sure. Edelman has been doing some research on trust around the world. It’s a little skewed in that they have only looked at about 25 or 30 countries, so it’s not as though this is global in the way that the U.N. works globally or that other studies are global. 

But even amongst the more western or the more developed countries, where they’ve got data on trust, they are looking at the ups and downs of where the trust is moving in each of these countries, and they look at four areas. They look at government, they look at NGOs, non-governmental organizations, they look at business, and they look at media. And they are interested in what is happening in the world year by year in terms of is trust going up or down in each one of these four areas. 

The most recent study has shown us that the organizations that have the most trust are NGOs globally. Now it may be different one country to another, but NGOs have the most trust. Then followed by business and then government and then media. And media of course with fake news and all of the stuff that’s happened at least in the USA has lost a lot of trust over the years. 

But again, it is very interesting to see where the movements are within countries, not just globally. I mean, here in the U.S., a tremendous loss of trust certainly in government, in the Trump years. NGOs have gone up by comparison, media has gone down, so it’s always interesting to see the movements of the levels of trust in countries across these four different groupings. 

The one thing that they did report, this was I think in last year’s report, was that to be successful as a leader and to build trust you have to be both competent and ethical. So it’s about action and it’s also about values. But what’s so interesting in this study was that the ethics is three times more important than the competence. So that’s the balance that they saw in the relationship between values and action. Yeah.

CAHILL:  That is quite interesting. I imagine that teams, organizations and societies value ethical decision making. I think it is something that’s maybe self-evident, right? Or maybe not. But with all this increased complexity and pressure for speed and getting things done faster and in innovation, what does ethical decision making look like in this current context and maybe even projecting forward into the future? What kind of changes have to be made to continue to account for this because of the level of importance that it has?

RICHTER:  Well, ethical decision making is critical, it always has been, it always will be. But I think the way we make those decisions is so important. There is a wonderful book out by a Nobel Prize Winner and that’s Daniel Kahneman, you’re probably familiar with it, “Thinking Fast, Thinking Slow.” 

The difference between fast thinking and slow thinking is, as he calls it system one and system two, and the fast thinking in system one is the gut reaction, the quick, “I know the answer and off we go.” And we can only survive because we have fast thinking. I mean, you see a snake, you don’t think about it, you get out the way because evolution has taught you that you can get killed by a snake. Well the truth is 99 percent or 90 percent of snakes aren’t poisonous. But anyway, your survival and safety is what drives you. 

And frankly, we are bombarded with so much information in our brains every minute of the day that we have to think fast, in other words, we have to go intuitive. And most of our thinking actually, and this is what the psychologists tell us, most of our thinking is unconscious rather than conscious. 

But if you have the privilege of time and you can do some slow thinking you can overcome the biases that have been built into the fast thinking and we can be more objective, more thoughtful and come to better ethical decisions if we take the time to work it all out, see what the options are. I mean, good ethical decision making means we look at our options in the light of all the analysis we do - who is affected, what are the issues, what are our options - and then can figure out, almost like chess, if I do this, this is going to come back at me. 

In other words, for each option, what is the consequence. And then we can figure out okay, we’ve got five options, given all these consequences the best course of action is A or B or C or D or E. Whatever. That is very different to oh, gut feeling, boom.

When we do ethics workshops, we sometimes give them a cast study and we tell them, don’t jump to the conclusion. Because people read the case and they say oh, I’m going to do B or whatever the option that they think is the best option. Now B may be the best but it’s not always going to be the best. You can’t always be right with your fast thinking because life is much more complex than that. And frankly, we’ve got so much in-built programming in our brains we never see the world objectively, or completely objectively, so we have to work at uncovering what’s going on in the decision making. 

So yeah, I think teaching people in an ethics workshop how to make good ethical decisions, giving them a model for  how to do that and doing it in the slow, system two version rather than the system one, can be very powerful for people to build that muscle. And it is a muscle that has to be practiced over and over again, which is why the best companies today do ethics training every year. Why? Because we talk about vaccines, there is no vaccine to... You can’t get a shot in your arm and then for the rest of your life you’re going to be ethical. You’ve got to continue to have that ethical conversation, the ethical learning, year by year. That is what the research shows us. 

CAHILL: Let me ask you a little bit more of a personal question. Looking forward, what are your personal dreams and ambitions for contributing to the future of work and society, to help architect what it is going to be and how it evolves?  How do you stay engaged and motivated in doing this?

RICHTER: That’s a great question. I’ve been doing this for 30 years and I think what keeps me going is, back in 2006, together with another colleague, we created a document called the Global  Diversity and Inclusion Benchmarks. And the idea behind that was to provide global best practices in the diversity and inclusion field because there wasn’t enough collection and structure around what are these best practices. It was still an emerging field. 

That document has been updated three times, every five years, and it’s going to be updated again this year, coming out in a month’s time. And we actually changed the name to the Global Diversity Equity and Inclusion Benchmarks because the equity piece has become so important. And we’re working with 112 expert panelists from around the world to develop these benchmarks. 

So the joy of working with leading thinkers around the world, the collaboration… This is a free tool. It is made freely available. So that keeps me going. I mean it has been a fantastic project. 

And there is a sort of parallel project. After the success of the very first GDIB, a colleague of mine who was an ethics officer, said well, why don’t we do the same thing for the ethics and integrity field? So we created the Global Ethics and Integrity Benchmarks, which has also been updated now three times, again, made freely available to anybody. It’s a tool that can be used, again, in all kinds of organizations, for profit or not for profit. And we were thrilled to get an email from the Joint Inspection Unit of the United Nations saying they would like to use our ethics benchmarks as a way to benchmark best practices for U.N. agencies around the world. 

So it’s very gratifying when you see the work that you have done being put into practice because I think my goal but I think everybody’s goal, is to live in a better world, a world with more integrity and a world with more inclusion. 

CAHILL:  And it is a daily, weekly, monthly fight, right? Because every step forward or two steps forward, there is always something that pushes you back. You brought up the point about the recent year with the pandemic. You make these strides on the SDGs, for example, and then you get pushed back a little bit, you’ve just got to keep moving.

RICHTER:  Well there is that famous Chinese proverb I think, and for project managers this is the perfect proverb. It says it can take you 100 years to build up your reputation but you can lose it in one day. So every day, every hour, every project, every program, I think you have to focus on, are we doing this right, is this ethical, is this the right way to do it?

CAHILL: Absolutely. I really want to thank you today, Alan Richter, for your time, your insight. I mean, we learned so much about how important values are in ethics, it’s fundamental to ethics, it’s all about... It is value-based in its essential nature, its common values across cultures, we learned, freedom, family and fairness, right? 

We also learned about there’s 20 dimensions of culture in which you analyze ethical issues and problems. And we talked about the U.N. Sustainable Development Goals, cultural relativity, the Edelman Trust Barometer. A lot of new terminology for many of us that we can dive deeper into. We learned within that trust barometer, that ethics is three times more important than competency, but both are yet needed to leaders. 

And we closed up on this conversation around global diversity and inclusion benchmarks, which I’m personally gonna take a look at that because we’re doing a lot of work internally with PMI and with our volunteer community on that topic. So thank you, Alan.