In earlier blog articles we discussed the problem of passage of laws requiring more and more disclosure and accountability. The more complex the issue and the law, the more ways some people and organizations found to circumvent those laws. Normal unintended consequences due to the complexity of issues were exacerbated by passage of more laws, restrictions and often with resulting law suits and other impediments to free movement and actions. Then there are those who are responsible for enforcement of laws and regulations. In our current crisis we observe finger pointing at agencies such as the Federal Reserve, the SEC, the treasury, and other agencies who were given the responsibility of enforcing and overseeing the appropriate regulations. The more laws that are enacted and the more regulations that are promulgated the more chaos seems to occur.
So, what is it that binds us together? We contend that it is covenant. What exactly is covenant and how does it differ from a contract?
“It is important to recognize that a covenant is far more than a contract. In contracts, parties give legal undertakings to effect transactions for reciprocal benefit. In covenants, people bind themselves together, in pledges of faithfulness and loyalty, to promote mutual well-being. The Chief Rabbi of Great Britain spoke about Covenants to the international gathering of Anglican Bishops, the Lambeth Conference, earlier this year. He summed up the differences between covenant and contract in four succinct points. · Contracts concern our interests, while covenants concern our identities. · Contracts deal in transactions, while covenants deal in relationships. · Contracts benefit, while covenants transform. · Contracts are about competition – if I win, you lose; while covenants are about cooperation – if I win, you also win.”
Most Revd Thabo Makgoba
It makes little difference what laws are passed or what restrictions are placed on those who are governed, if persons do not covenant with one another to be governed or to act ethically, then it will not happen. Our constitution is such a covenant. In its inception the framers of the Declaration of Independence and the Constitution covenanted that they would abide by such an agreement, because “we hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness…. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed even when all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.” Over our history there have been many disputes and debates over the meaning of different parts of the constitution. But in the end we have held onto those principles even when we suffered thorough the civil war to maintain the union and what it stands for. Only in debate, examination and litigation have we continued to view the evolution of this wondrous document. Democracy is not easy. It requires participation, conversation and consensus and ultimately acquiescence to the rule of law and the will of the people.
These policies inform our ethical behavior. Can we covenant with one another to abide by certain ethical standards in dealing with one another? Some would say not; that over the years we have lost something in our dealings with one another. To some extent this may be true. But I believe that we may be looking backwards with a dimly lit candle. We fantasize about the way things used to be when we remember that a man’s word was his bond and you could depend on a handshake.
This characterization may be true in some cases but we only have to look at our own history of robber barons, carpet baggers, and snake oil salesmen who bilked the poor and unsuspecting and oppressed the working class.
The Most Revd Thabo Makgoba the Anglican Archbishop of Cape Town and Metropolitan of the Anglican Church of Southern Africa in the Harold Wolpe Memorial lecture discussed the concept of Constitutional Covenant. Some of his points included:
What's good for me is good for America
- Constitutional Identity
- Constitutional Transformation
- Constitutional Relationship
- Constitutional Cooperation
- Democracy, Participation, Accountability
- Constitutional Diversity
- Democracy and Ubuntu
- Constitutional Economic
A full copy of his speech may be seen at the following website. Even though it addresses the South African constitutional situation it has relevance to our own constitutional principles.
http://archbishop.anglicanchurchsa.org/2008/11/harold-wolpe-memorial-lecture.html
Even though we live in a secular world, both our constitution and Archbishop Makgoba’s speech point us towards a higher calling as we struggle to live together morally, ethically, legally and responsibly.
“More than half of recent MBA graduates say their programs should have focused more on ethics, corporate governance, and sustainability, according to a survey from the Association of MBAs’ Research and Consultancy Center. According to a summary of the survey in the Raleigh (North Carolina) Triangle Business Journal, 59 percent of the 544 graduates surveyed agreed that business education programs should focus on all of the stakeholders affected by a business, not simply the shareholders.”
“ Another item from the report: While recent graduates reported that about half of their programs examined ethics “to a large extent,” only 10 percent of MBA graduates from the 1980s made the same estimation. “
http://www.globalethics.org/newsline/2009/12/07/education-ethics-6/
It’s encouraging that more MBA students see the need for ethics training and a broadening of the curriculum. And the fact that about 50% of student programs examined ethics while only 10% of MBA graduates from the 1980’s felt that ethics was covered with adequacy shows that there is a growing recognition for the need for ethics training in business as well as other organizations.
The question that we have is, can we shift the primary emphasis of ethics from a purely behavioral and cognitive mindset to a paradigm that includes the covenantal aspects of ethics? Doing this would make ethics a much more human function that would recognize that organizations are not cold bottom line entities that rely on computer modeling and other hard science justifications for decision making.
The complexities of the twenty first century demand that we reinvigorate and scrutinize the constitution and how it impacts our ethical dealings with one another. It is a living breathing document, subject to multiple interpretations. Can we formulate the same scrutiny to ethics in the same way that we have done with the constitution?
Allison Gower
nilknarf1940
Yes, I think you are correct about corporations having several key constituencies. I always have looked at it like this.
The shareholders are critical because the company ceases to exist without shareholders. This can be overlooked in a publicly traded company since the shareholders appear to be somewhat automatic, but they are not. Over any extended period of time, management will not stay the same unless shareholders are reasonably satisfied.
Management is critical, primarily for leadership. Management which thinks they are also the smartest and should therefore be able to outsmart others, seldom succeed over the longer term. The best management almost always is strong leadership, people who can inspire others and get the best from them. Employees invariably know the skills of their management, they evaluate them full time, and they grade very hard. Weak leadership will invariably lose the confidence of employees. One thing that employees grade is ethics, and they can see quickly if someone is stretching the limits.
Employees are absolutely key. If they are inspired and reasonably capable, they literally can move mountains. Even now, most companies do not realize how important employees are, thinking instead that management is the key. Leadership from management is a key, but even then only to the extent that employees buy in.
I have always viewed the community as the group that gives a company the franchise to operate. If a company consistently operates outside the limits of community approval (environmental, ethics, safety, etc.), problems will develop.
Customers are critical because the company ceases to operate without customers. Customers expect fast, efficient, honest service. In most industries, some company will provide that best, and that company will perform best.
I think that one of the greatest issues that get in the way of these requirements all working well is poor management. I can guarantee that there is more weak or poor management that strong management. And one of the major reasons is because people misjudge how they got into the top position. They often think it is because they are smarter than everyone else and must now act the role. There could not be a worse approach. I sometimes feel blessed that God did not give me the highest intelligence so that I have always needed to work hard and to surround myself with top drawer performers. But that has always worked, and it is the best way to have strong leadership.
All these comments relate best to larger companies, but they also apply to earlier stage companies, just sometimes in different ways. And we should keep in mind that small, developing companies are far more influential for employment growth in the country and for innovation than large companies. With small companies, it is almost impossible to keep one’s eye on all these constituencies because the issue in one section may be far too great. Even so, it never changes their responsibility to be ethical and to treat all constituencies with respect.
Bob Gower