Corporate Ethics

Most companies do not have an ethics framework. Do you?

Most companies have Codes of Conduct which govern how employees treat each other, and Employee Handbooks which govern how the company interacts with employees. However, almost none have an ethics framework that governs how the company does business. Who you choose to do business with, and how you do that business, is as much a part of your company values as anything else. 

There is a default ethics framework for every company in the form of laws. Breaking the law can result in catastrophic repercussions for any company, and so many companies make that their ethics framework. In these cases, your company ethics are simple: if it’s legal then it’s ethical.

However, some of us aspire to do better than simply what the law requires. The law doesn’t require you to treat people with respect, to help others and to be an honest dealer in the market. If you do choose to have an ethics framework, it means you’re holding yourself to a higher standard. Your ethics framework is then an extension of the laws, providing more restrictions on what you can and cannot do. 

If you were to survey CEOs, which I have done, 9 out of 10 will ask you “why in the world would you want an ethics framework?” It can only cost you money in the form of business you decline or relationships you forego. Their perspective is not unreasonable, as they would expect that if society wanted them to act a certain way they would structure that in the laws. 

However, there are some important reasons why you might choose to have an ethics framework:

• If your product can be used in ways that make you uncomfortable or do not represent your intention, an ethics framework can ensure it is never used those ways.

• Employees increasingly want to work at companies that have clear ethics so that they know how the work they are doing is affecting society. Having an ethics framework can be a recruiting advantage. 

• Different employees at your company might have different ideas of what is “ethical”. Having an explicit ethics framework can prevent conflicts that might arise from differing definitions of “ethical”.

At my last company, we had an ethics framework summarized as:

We will not sell Outlier to any customer where we have a reasonable belief it will be used to oppress, injure or attack any person or groups of people. 

Outlier was an analytics company that used artificial intelligence to find hidden insights and patterns in large sets of data. Why would we need an ethics framework for data analytics? We had two specific reasons:

1. One of our customers was US military intelligence, and we felt it necessary to make our position clear as we did not want Outlier used in a way that could have resulted in someone being killed. Data analytics tools are powerful, and the same tool used to optimize a supply chain can be used to identify what points in that supply chain to bomb. Our team felt it was important that our product was not used for those purposes. 

2. We had inbound interest from tobacco and gun companies which represent products that are proven to kill people. We wanted to make it clear we didn’t work with such companies, since expanding their businesses would directly result in more people being killed.

While not all of our employees would have chosen the ethics framework we used at Outlier, all of them appreciated the transparency and clarity of the framework. There were many gray areas that required discussion and deliberation, and the ethics framework gave us a basis for those discussions. Ethics, if done well, is a conversation and not a destination.

It’s important to note that there is no such thing as “correct” in ethics. The best a company can aspire to be is consistent in its application of an ethics framework and everyone else can make their own personal judgment about whether it’s correct. Two different companies might have equal conviction in entirely opposite ethics frameworks, neither of which is illegal. 

There are, of course, some companies whose ethics frameworks involve breaking the law. These companies see existing laws as “unethical” and hence do not feel that they should be bound by them. 

It is true that there are many unethical laws, even today, that discriminate against groups of people in extremely unfair ways. However, it’s also true that companies will ignore laws that are inconvenient to their business model. If you are going to plan to break the law, you are taking on an enormous risk and you are the only one who can decide if that is a good idea. 

Whether you choose to have an ethics framework at your company is a decision that only you as a business leader can make. Regardless of whether you choose to do so, or rely on the laws as your default ethics framework, your decision is the foundation of your company values and hence its culture. 

Choose wisely.