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ORANGE COUNTY COMMENTARY

How to Succeed in Business? Try Ethics

July 14, 2002|RUSHWORTH M. KIDDER | Rushworth M. Kidder is founder and president of the Institute for Global Ethics in Camden, Maine (www.globalethics.org ), and author of "How Good People Make Tough Choices: Resolving the Dilemmas of Ethical Living." He can be contacted at rkidder@globalethics.org.

The day the rivets popped at WorldCom, I was talking about ethics to a group in Newport Beach. These are savvy financial folks. Yet they were astonished by the news: a $3.9-billion restatement of earnings, and potentially the nation's largest corporate bankruptcy.

A few days later, we could have gasped over Xerox, too, where a new audit has discovered some $6 billion of fuzzed numbers over the past five years.

As they used to say in the comics, "Whazzup?!" The answer is just as direct: "No ethics."

But what accounts for such a hellish spate of moral deviation in corporate America? One answer, oblique but pungent, comes from The Wall Street Journal. On June 28, just as Xerox was hitting the front pages, the paper published a chart titled "High Profiles in Hot Water." It listed 13 executives from nine corporations--Enron, Tyco, ImClone, and others--"embroiled in financial controversy." For each, it listed age, position, tenure, charges, compensation, and personal information (marital status, children). It also included, without comment, another column: "Education."

The implication is clear. Want to know where these sophists of the spreadsheet learned their trade--or, to be fair, never learned the importance of not cooking the books? Harvard, NYU, Ohio State, University of Houston, Northwestern, Tufts, Southern Methodist, Barnard, Seton Hall and other fine schools.

The academics, of course, will howl at this inference. How can you hold those schools accountable for the deviance of a few, when so many of their graduates (including readers of this column) care deeply about ethics?

As they used to say in the comics, "Yeahbut!!" In the last nine months, something enormous has changed. Following Sept. 11, huge numbers of ordinary Americans began raising moral questions that went further than usual below the surface of glossy material comfort. Then Enron collapsed. Prepared by Sept. 11, the public saw Enron too through the lens of ethics.

When the dust settles, however, Enron will be a footnote. The real story here will be the collapse of Enron's auditor, the "Big Five" firm of Arthur Andersen. What caused its downfall? Analysts agree that in auditing Enron, Andersen did nothing illegal. But the whole didn't resemble the parts. They made Enron look like No. 7 on the Fortune 500, when it was no such thing. What went wrong (at least until the shredding started) was not lawlessness but a lack of ethics.

Maybe, in a different era, public outrage would have been muted. But this spring, as Andersen's tale unfolded, ethics was on the public's mind as never before. In the end, nobody could trust the firm. For an accountancy, that's the death knell.

What's that got to do with education? Simply this. For decades, business education programs have telegraphed that ethics isn't important. To be sure, colleges set up ethics electives. Some even require business ethics for everyone. But graduates will tell you how rarely the topic gets discussed outside the ethics class with anything but mild derision. "We're teaching you useful things to help you survive," the other courses seem to be saying. "Because ethics has little to do with survival in the real world, it's optional. So study it if you wish, but remember what really matters."

It is now jarringly clear that "what really matters" are things that can change the corporate landscape almost overnight. When "Big Five" becomes "Big Four" for causes that most business students never learned, something's amiss. Business education needs to reckon with a new reality. Ethics in the 21st century is not optional. It's about survival. Get everything else right and the ethics wrong, and you too can have your place in the Wall Street Journal--maybe even in jail.

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