Ethics in Business - An Illusory World of Nice Concepts?

 The world’s largest international finance crisis (beginning in 2007) shakes the earth. The grim effects of international interdependence reach from the capital market to the rice bowls of the Nigerian rice farmers. And one economic scandal happens after the next. Not only the names of big managers, but also those of important businesses, ring painfully in people’s cars. Financial misstatements, huge illegal financial transactions, utopian-scale settlements for failed managers, bribery affairs, and pleasure trips at businesses’ expense... the list is long — and fueled the discussion regarding corporate governance. For a long time now, employees only trust the nice-sounding company values, mission statements or tenets — all published on high-gloss paper — with reserve. And if it is true that in German companies, more than 60 % of the employees have already resigned in their own minds, it seems to be high time for action. But the crisis cannot be solved with snap decisions or economic instruments.

 “Human error” is the main cause of economic disorders and spectacular company collapses, such as the collapse of the new economy in the 1990s of the 20th century. It has been clear for a long time that soft skills hold the greatest meaning for enduring success. But how much of that will be directly invested in the areas of education and courses of study?

He who is not satisfied only with insights and critical analysis needs ethical orientation, which reaches the center of economic activity — and he must therefore find a way from conceptual drafts to the heart of his employees. Ethics as a paper tiger degenerates into a bedside carpet. Plausible value orientation that is relevant to real life must be applied internally. Therefore, we will keep the principle ethical questions to a minimum. What promotes the practical advancement of a person’s own social competence will form the core of this section of Operations Insider.

Values Create Value

 This is also true in the reverse case: a lack of value orientation foils successful business management. A comprehensive study by Booz-Allen-Hamilton (2003), brought about by the massive business scandals in the years 2001 and 2002 unearthed clear results. At the end of the shareholder value era, 150 CEOs from leading German companies agreed: in the middle and long terms, value orientation in companies is essential to survival.

 One of the main factors shaping the rapid change in a company’s culture of values is related, last but not least, to a high labor turnover rate, especially in the managerial area. Each new person brings new input with him in the area of value understanding and management style. Integrative work in view of the DNA of value is indispensable.

 What is the most important impact of values in your organization?

The implementation and anchoring of value codices offers a heterogeneous picture, according to the Booz-Allen-Hamilton study: to hold values to be right and important on one side, but to have an indifferent picture in view of their roles and overall value, damages the authenticity of the image. Different studies in the German speaking and Anglo-American areas agree — business success is predominately dependent on the social competence of employees, and much less so on cognitive and professional competences. Even if the results of the studies differ —60—80 % of the operational results lead, directly or in- directly, back to soft skills. Therefore, whoever would like to work and live with increasing value needs 1.) increases in social competence, meaning the ability to enhance relationship(s) to himself and to others in an enduring fashion and 2.) clarity regarding his values. Besides these “internal” factors, the question regarding the value-givers is of critical importance. Debates regarding societal values are not new. However, the quality of the loss of orientation is a certainly leftist and bitter analysis by Herbert Grénemeyer (“Keine Heimat” — no homeland) from 1988 gets to the heart of this societal climate change. However, he does not account for a solution to, or the emergence of, the roots of this development.

The family as the basic value and cultureforming entity for social superstructures has been pruned down to its core size. The coldness of seemingly all-powerful capital seems to have driven a systematic robber economy. Frustration tolerance and experiences of aversion, as well as an altruistic tenor can only be learned in the primary reference unit and in “Educatopes” (what a word!) with close relations. Social behavior research has not agreed in this matter since Konrad Lorenz. With decreasing birth rates, not only is the economic damage enormous, the inter-generation contract literally unsustainable, no, primary socialization is also frail. Ultimately, only the options in the multimedia seem to be offered at all or to remain. But who equips the media with values? The pressure for individualization asks too much of the individual with this carousel ride, which only gets faster and faster. Last but not least, 9/11 turned the clash of cultures from being a threat scenario to a bitter reality which, however, does not take place between competing national entities, but which goes right through the middle of them. In the Twin Towers, blacks and whites, Europeans, Asian and Arabs, Christians and Moslems perished. The lapse in the East-West Conflict also contributed to this situation, in that the polarity so important for the individual’s positioning was lost. The market economy knows neither corrective nor factual borders.

The capitalization of all life, homo oeconomicus, standing around lost in the landscape in view of frenzied technical developments, structures becoming more and more complex and interdependence that becomes more and more unclear. The last meaningful questions in existence are transferred to the individual response — a more than straining challenge. Only he who takes on the challenge is in the position of taking on management tasks in the future. The call for ethics is becoming therefore audibly louder and more urgent. Therefore, management competence both calls for and challenges the individual. Without the willingness to engage in a process, there will be no recognizable change. Ethics — these are existential questions — not quickly learned extensions of the spectrum of knowledge. The consequence of Corporate Social Responsibility (CSR) indisputably having become a center of economic-ethical interest is that a business is primarily dependent on leaders whose own ethical competence has been clarified and is equipped with the highest priority.

Psycho-Social Health

We have a growing need for health. In the new work world, the socially and mentally healthy individual is becoming more and more important in order to maintain full performance ability. In the global economy of knowledge, a person must be seen as “holistic” in order to achieve this performance. The related trend is called “psycho-social health”. The background of this trend of the future is the theory of the long waves of the Kondratieff cycles — best represented by Leo Nefiodow. Each phase of economic prosperity can be traced back to central, basic innovations, which generated and expanded entire branches of industry.

 Currently, we are in transition to a new wave of economic prosperity. The carriers of the next Kondratieff, according to current prognoses, are biotechnology and psychosocial health. Biotechnology gives us a new understanding of health and sickness. For example, in scientific medicine, the soul/ psyche and social environment will be taken into consideration more than before. In psycho-social health, we focus on the inner life of men and we search for happiness, balance, and contentment.

According to the World Health Organization’s (WHO) definition, the following elements are integral to the construct of “health”:

1.  a stable feeling of self-confidence

2. a positive relationship to one’s own body

3. friendship and social relationships

4. an intact environment

5. meaningful work and healthy working conditions

6. a knowledge of health and access to healthcare

7. a present worth living and the founded hope for a future worth living.

The point of origin is the multifaceted relationships between people — above, to the side, and below. 'They are the starting point for long-term psycho-social healthy living and working. Psycho-social, healthy relationships — and not only career-related — set the foundation for healthy performance, ability to perform, and therefore also potentially realizable success on the market. A conflict-based business culture and destructive team and management behavior can only last temporarily.

Psycho-Social Health — The Trend of the Future

We think that it is time to use the trend of psycho-social health to shape our future. Globalization demands entirely new ways of thinking and behaving in many aspects, which are still (!) unfamiliar to us. Our physical, mental, and social health will play an important role in how we master the transition to the global economy of knowledge. We want to create from fullness and make an outdated, semi-obsolete boundary flexible — starting in the head: the burdensome split between private and professional life reduces quality of life and fuels frustration, which then is transferred from one area to the next and creates double the stress. Instead of that, we want to integrate all areas of life and combine them into a biographic work of art. One is not reduced to “only” his profession or his private life. Both influence him and both have effects on his “whole” life and work. Therefore, potential from both areas is important in order to generate new ways of seeing and behaving, which influence behavior on an everyday basis. The status quo is well-known. The market is dynamic, complex, and globalized. Knowledge became a strategic success factor and changed our society from an industrial society to an information society, all the way up to a global economy of knowledge. This transformation means immense challenges for many businesses and organizations in view of their own increased flexibility, individuality, and internationalization. How the change takes place and how the personnel pulls its weight is a challenge and the task of systematic organizational and personnel development.

How Good is Your Management Team?

The three driving forces of the post-modern (increased flexibility, individualization, and internationalization) lead to the reassessment of one’s own organizational operations. The goal is to react flexibly to trends or even to be proactive. That demands headroom for the personnel so that they can move quickly and without long chains of command. Accordingly, management must be rethought and must delegate much more responsibility than is often wished on a top-down basis. But do you know how “good” at it you and your business are? Besides the “hard facts”, the “soft” side of the company must also be screened systematically for gaps in motivation, faulty management culture and bad team climate to be able to seek out and work on improvement potential. Such organization evaluations function like a type of “medical yearly check-up” and show very concretely where potential can be gained.

Increasing Social Capital

The make-up of modern social capital differentiates between three types of capital in an organization, which is founded on people: network capital of an organization is determined by prompt, relevant information from the markets for customers, vendors, network partners, etc. and offers the framework for informal, timely action on the markets. Whoever must go through long official channels is quickly passed by “speedsters”. The value capital of an organization is determined by the internal moral, work ethic and politically correct actions on the markets. Social responsibility is not only an outwardly recognizable attribute, but also the figurehead of a business culture that has been consciously thought through and, ideally, also lived — internally. Management capital is determined by motivation levels, team cohesion, employee loyalty, personnel engagement, and many other factors. How socially sensible a management culture proves to be is a critical factor. 

Focus on Psycho-Social Health

Our health programs focus on psycho-social health. Because our society is experienced as becoming faster and faster and more and more hectic and people must deal daily with the flood of information selectively, most people long for an emotional home, for peace and relaxation far from the full-time performance society. Employees in organizations also long for a better business culture, cooperative management, and considerably more stress reduction. Stress between people not only influences subjective performance, but also demonstrably reduces moral integrity and identity. Employees thus reduce their loyalty and resign internally. Such work climates need enduring solutions which are financeable and have a high return on a long-term basis. Psycho-social connections gain special meaning here: the family, the partnership, the circle of friends, personal hobbies and exercise. In our work, we recommend thinking through the private situations of the personnel and tying it into the personnel strategy. Ultimately, the family and the partnership is the most cost-effective, informal place of learning. Social skills can be practiced there without problems or risks for the profession and transferred from one area to the other.

Individual Lifestyle Analysis

Psycho-social health encompasses the social area of the individual lifestyle of a person, as well as the psychological processes, which, for example, take place in work situations. The goal of psycho-social health programs is the maintenance and improvement of individual performance. Cognitive and emotional processes, which take place daily, are of special interest. The resources of a person, which are effectively and efficiently used for coping with everyday life, represent the health capital for other areas in which stress is experienced. In consulting, one identifies such coping competencies and makes them useful for other areas of life and work. In coaching, we identify seven basic life fields and areas:

1. career/ profession

2. family / partnership

3. character / personality

4. spirituality / world view

5. network / circle of friends

6. wellness / health

7. calling/life goal

More Than Work-Life Balance

In Germany, we often think of the inflationary subject “work-life balance” — the best functioning balance between both areas of life. This often deals with the subjects of time management and work technology. Even family-friendly measures, such as company kindergartens, flexible work time or offers of care for older relatives, belong to the standard (not everywhere). In our work-life enrichment approaches, we go one step further. In the Enrichment approach, we deal with the psychological interdependencies between professional and private life. This approach examines which psychological processes between both areas of life take place individually and which of them can be sensibly used for transfer processes to the other life areas. The approach makes use of coping techniques, emotional control competencies and cognitive rational self-management. The skills identified are transferred individually to the requisite other life area. The goal is to understand these mechanisms and to generate more performance and quality of life.