Untangling the web of ethics

Do we have ethical obligations to corporations? When I first posed this question (to read earlier columns on this topic, see Ethics Matters archives ,) I never expected the dialogue to go on as long as it has, and I’m grateful to those who’ve not only responded but have stuck with me this long.

I have to admit that several times I had to go back and reread what I had originally written, mostly because people apparently read something into the column that wasn’t there. I never advocated keeping money that belongs to someone else — nor did I suggest it, condone it, or imply that someone should. I merely raised the question of why we would feel compelled to return it and whether that arose from an ethical obligation to an entity that was not itself a moral agent.

Some people told me that it didn’t matter whether they had an obligation to the corporation because they felt they had an obligation to themselves or to their religious beliefs. That argument, unfortunately, misses the point, and also introduces a highly subjective ethical relativism into the argument.

Most of us have our own personal moral codes, and many people draw those from their religious beliefs. But having a personal or religious code does not excuse us from meeting commonly held ethical requirements. One point of ethical reasoning is to see whether our personal or religious codes fulfill at least the basic requirements of ethics.

We’ve seen this most pointedly in cases where parents, out of strongly held religious beliefs, have failed to get life-saving medical care for their minor children. We have decided that in this case the obligation to care for their children overrides their personal and religious beliefs.

Another real-life example involves the young American who was fighting with the Taliban forces. He was apparently following some strong religious feelings and his own personal code of behavior. Regardless, most of us are going to say that he had some fairly strong ethical obligations to the United States that pre-empted his personal and religious beliefs. From all reports, we tend to hold him accountable for not meeting those obligations.

Some people said they would feel obligated to return found money depending on whether the corporation in question was one that had acted ethically itself. That doesn’t seem to hold a lot of water, because most of us believe our ethical obligations exist completely apart from whether or not other people fulfill their obligations.

Quite a few readers suggested that the obligation was not to the corporation, but to the stockholders, because the money in question actually belonged to them. That has some appeal, but then I raised the question of whether or not the net effect on any individual stockholder was ethically significant.

Some people took umbrage at that and railed that it doesn’t make any difference whether you steal a penny or a million dollars; it’s still stealing. The problem with that response is that I wasn’t talking about stealing. I was talking about returning found money — and in that case we do pay attention to the amount involved.

If I find a penny on a deserted street, no one would expect me to expend any time or effort in locating the owner — assuming I even bothered to pick it up. If I were to see a dollar on the floor of the office building elevator, my obligation might consist of asking others in the car if they dropped the dollar. I don’t think there would be any requirement that I go from floor to floor in the building trying to find the owner. If, in either case, I were to find $1,000, the obligation would be much stronger.

Despite the fact that very few people answered my objection satisfactorily, I think this approach has the most going for it — although it’s a little more complicated than it first appears. The crux of the situation is that the process of reaching the ethical judgment is more complex than many people appreciate, and is tied to how we make ethical decisions in real-life situations.

Usually we work from some principle. In this case, let’s assume it’s the principle that we shouldn’t steal. Some people derive this from religious beliefs; others from family, peers, or society. Some people may just come up with it on their own. Although religious beliefs may give some additional motivation to follow the principle, most credible ethical systems hold to the principle that stealing is wrong.

Strict consequentialists, those who believe that the rightness or wrongness of an action depends on the outcome, probably wouldn’t believe in any obligations at all, although they could still come to the conclusion that stealing was wrong. But most people do work from a system that consists of obligations and rights, so I’ll confine myself to that approach.

One problem is that principles are usually pretty broad and don’t speak directly to a wide range of specific situations. We can all agree that if I take some money out of your wallet, that it would be stealing, but most of us want the principle to apply to other situations that aren’t technically stealing — and we need some rationale for that.

So we usually come up with rules that apply to more discrete classes of situations. We introduce some kind of rational thought to determine just what acts count as “stealing.” We may decide that not returning found money is stealing. Or we could say that underreporting your income on your taxes was stealing. Someone could even come to the conclusion that not tipping in a restaurant was stealing, because the tip is part of the server’s salary –although that would be controversial.

Even the rules, however, might not account for all the nuances of individual situations. For example, those who think that not returning found money would count as stealing might not think that finding a penny requires us to expend any effort to locate the owner. They would think, however, that finding $1,000 does. What’s the difference?

We now take the rule that we formed from our principle and apply it to a specific situation. In the case of finding a penny, the good to be achieved is insignificant compared to the time and effort involved in finding the owner and returning the money. As the amount of money increases, the amount of effort we would be expected to expend increases as well.

So we began with a broad and nonspecific principle about stealing. We formed a rule that certain acts — in this case not returning found money — counts as stealing. But we made a determination that the rule might not apply in some situations.

This is where I think we find the solution to the corporate money problem. Although the loss to any individual stockholder is insignificant — probably far less than a penny — the aggregate amount is large — $1,000 — and the effort required to return it is small, because the corporation provides the conduit through which we can identify the owner and return the money. So although I think there is an obligation, it’s to the stockholders, and not to the corporation. The corporation merely makes it easier to discharge the obligation and changes the ethical calculus. In this case, the good to be achieved is greater than the effort involved.

What’s interesting in this approach is that we have used different ethical theories to arrive at one answer. The principle, which we may have drawn from religious sources, is what we call “deontological,” or duty-based. The subsequent reasoning ends up being consequentialist and relies on the outcome. These theories are often thought to be opposed and mutually exclusive, but much of our ethical reasoning takes this multilayered, multitheory approach.

Saying we have an “obligation to the corporation,” which I think is inaccurate per se, may be nothing more than a shorthand way of capturing the complex decision-making process that gets us to the answer. Understanding that, however, can help us arrive not only at this decision, but other decisions in which our initial intuitions might not be as clear.

But all of this talk of returning found money leaves me with a burning question. How much money would you have to find — $1, $5, $50 — before you felt an obligation to seek out the owner and return it? If you think you have an answer, go to the Ethics Matters forum — www.infoworld.com/forums/ethics — and take the Ethics Matters Honesty Challenge.

As always, you can write to me at [email protected].

Source: www.infoworld.com