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Prefer a loss to a dishonest gain; the one brings pain at the moment, the other for all time.

It is neither right nor safe to act against conscience.

When we start deceiving ourselves into thinking not that we want or need something ... but that it is a moral imperative that we have it, then is when we join the fashionable madmen Â… and then is when we are in bad trouble.

Our consciences are littered like an old attic with the junk of sheer conviction.

Did you ever expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked?

The recognition of the tension between values and numbers is the first requirement of the strategic manager, and it is the effective reconciliation of that tension that marks a great manager.

What we need is moral leadership. Plato and Aristotle said the four cardinal virtues are justice, wisdom, courage, and self-control. I think they're still right, 2,500 years later.

The business with high ethical standards has three primary advantages over competitors whose standards are lower:
1 . A business of high principle generates greater drive and effectiveness because people know that they can do the right thing decisively and with confidence. When there is any doubt about what action to take, they can rely on the guidance of ethical principles. Inner administrative drive emanates largely from the fact that everyone feels confident that he can safely do the right thing immediately. And they also know that any action that is even slightly unprincipled will be generally condemned.

2. A business of high principle attracts high-caliber people more easily, thereby gaining a basic competitive and profit edge. A high-caliber person favors the business of principle and avoids the employer whose practices are questionable. For this reason, companies that do not adhere to high ethical standards must actually maintain a higher level of compensation to attract and hold people of ability.

3. A business of high principle develops better and more profitable relations with customers, competitors, and the general public because it can be counted on to do the right thing at all times. By the consistently ethical character of its actions, it builds a favorable image. In choosing among suppliers, customers resolve their doubts in favor of such a company. Competitors are less likely to comment unfavorably on it. And the general public is more likely to be open-minded toward its actions.

Note: Darwin Magazine is now dead. Some articles are moving to CIO. I will try to update the links when I have time...

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We hew to laws against stealing because there is already cultural consensus that stealing is wrong, rooted in the fact that the thief deprives the good citizen of the stolen property. To copy an idea does no such thing; wrote Jefferson, "he who lights his taper at mine, receives light without darkening me." It does indeed deprive the original author of the ability to monopolize the idea and perhaps extract money from it. That can serve as a reason to create and enforce such a monopoly, but it's not nearly as grounded in our ethical senses as is robbing a bank or vandalizing a house.

If you look at a lot of the fraud cases, before fraud there was terminal incompetence. When we teach the governance and ethics course [at HBS], the point I make is that you can have great values, but if you don't have the competence [to implement them], forget it. You need both character and competence. If you don't have the competence, you're going to get yourself in real deep trouble.

Note: Older EBF articles are not currently online. I'm not sure if this is temporary or permanent. If you click you will be taken to the Archive.org site to find an archived copy.

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At the heart of Western thinking is the notion that the individual, rather than the group, is the fundamental moral and ethical unit. Companies have rights accorded them by law, systems have functions, but individuals have the responsibility to determine right from wrong.

Since systems are really only groups of people tasked to do certain things in certain ways, they can be subverted. And, while individuals across firms can be networked together and told to be watchful, they will only be as effective as they are good.

For a system to work, it must be made up of the right raw material, which in this case is people who are moral, ethical and have nothing to hide. It must be made up of people with high levels of integrity.

A man who has never gone to school may steal from a freight car, but if he has a university education he may steal the whole railroad.

we used to endorse character and integrity, but today the business ethic that reigns is achievement. And whenever you establish the worth of someone based on what they can do and not on who they are, you have created the environment for fraud.

We talk about moral viruses, which are simply inaccurate or incorrect beliefs about the world or oneself. Almost all viruses stem from fear-based beliefs, which are usually irrational or inaccurate fears, such as the fear of an ethnic group.

Leaders have their own set of moral viruses. One that's lethal relates to trust--the idea that you can't trust people until they've proved they're worthy. That's a vicious circle. If you're looking for ways in which they're untrustworthy, you'll find those and a lack of trust will be perpetuated. Another virus is a belief that there's a hierarchy of value for people. The people who don't have that virus tend to know the name of the night watchman and the janitor, and chat with them about baseball scores.

You cannot fight norms solely with laws. You need to fight norms with other norms.

I think that our culture is biased toward laws and rules. Cultures work best when there's a thick layer of moral norms - shared values and habits of behavior - undergirded by a relatively thin base of law. In the United States, we're over-lawyered, overregulated, and under-normed. We're attempting to deal with our business scandals through law. But the problem is a normative problem, and it needs to be addressed through normative means.

The preoccupation with self led many people from repudiating unnecessary sacrifice to discarding the ethic of sacrifice altogether. The emphasis on relative values, as opposed to absolute values, left people somewhat bereft of common agreement about right and wrong. The current explosion of religious belief represents a search for something absolute to believe in. But in the larger culture, particularly the business culture, there is no overarching sense of shared morality.

This cultural trend then converged with...the perversion of shareholder value into the primacy of short-term earnings. And there was a third trend: deregulation. Deregulation had its main effects on the gatekeepers: law firms and accounting firms. They learned quickly that the firms that got hired most were those which showed clients how to skirt the edge of the law. A report by the American Academy of Arts & Sciences concluded that there wouldn't have been a fraction of the recent scandals were it not for the collusion of the gatekeepers.

It's hard to know what is meant by business ethics. Only people, not businesses, have ethics. Ethics is me, the individual, as a person. I'm ethical or unethical. If I'm employed in a business that I think is unethical, I have a clear choice. I can get out of that business and find something else to do. It doesn't seem to me it's ethical for me to do unethical things because the business can let me do it.

Nobody really believes that it's an ethical precept that you obey every law. If you obey a law that requires you to do something that is unethical or amoral, I think everybody in the room would agree it's a proper human behavior to break that law as long as you're willing to accept the responsibility for that. That was the justification for conscientious objection during the war.

Poker's own brand of ethics is different from the ethical ideals of civilized human relationships. The game calls for distrust of the other fellow. It ignores the claim of friendship. Cunning deception and concealment of one's strength and intentions, not kindness and openheartedness, are vital in poker. No one thinks any the worse of poker on that account. And no one should think any the worse of the game of business because its standards of right and wrong differ from the prevailing traditions of morality in our society.

Running an organization does not license a manager to violate the norms and standards of society, but instead introduces a brand-new set of moral considerations based on stakeholder obligations. In respect of normatively legitimate stakeholders (e.g. financiers, employees, customers), the ethics of business implies more obligations rather than less.

Law is spelled out by consensus in society: It is a minimum standard of conduct. But ethics is not a result of consensus, not something discerned by taking a poll. Ethics is the ideal; law is the minimum.

There are some companies that say, Let's do whatever it takes to meet the requirements of the law. There's nothing wrong with that, but you have to recognize that the law, by definition, typically is made up of rules that have been made to address previous situations. It's tough for it to anticipate future violations that might occur. Companies that invest in building an ethical culture recognize that when new issues arise, people will need an ethical compass that will help them make the right call, or at least get help in a gray area.

Regulation is merely society's way of saying that it does not approve of the way business is operating or, that by operating the way it is, business is ignoring what the society has set as objectives and goals for itself.

Business "ethics," should not be confused with business "morality." Morality is the sum total of a particular society's or organization's current perceived traditions, beliefs, values, attitudes and norms that have been cultivated over time, institutionalized in religious doctrine, laws, regulations and codes of conduct which explicitly or implicitly suggest how an individual should behave in situations as they are encountered daily. Ethics may well include a discussion of moral trends, but morality defines primarily where we are.

Subjective judgments do not become objective simply by translating them into numbers. More importantly, when some of the options under review require ethical considerations, we can cloud the difference between right and wrong when we translate all options into a quantitative order of dollar values. If you tell me that option A contains a moral impediment and option B is pristine, that is substantially different than if you tell me that option A has a probability adjusted present value of $2 compared to $1.50 for option B. And yet we tout the virtue of net present value analysis because it does that very thing.

A fundamental question examined in the management arena is not only the factors that may lead people to make clearly illegal decisions, but more so the dilemma faced by individuals when confronted with legal but irresponsible or illegal but responsible behaviors. Under those conditions, what should one do? What will influence what behavior the manager chooses?

The clash between principles and pragmatism is one of the hardest tests of a leader's character. Of course we want our leaders to be both principled and pragmatic. Principles alone qualify men and women to be preachers or saints. Pure pragmatists can open their tool kits and get down to work, but their amorality makes them dangerous. As many leaders know, sometimes the worst conflict is between two strongly held principles. Navigating that can be harder than trying to keep a balance between principles and pragmatism.

People raised in an environment where praise was carefully meted out typically do not try to challenge the rules; they follow them. When presented with a request that he thinks is unreasonable or unclear, the A player is most likely just to back down and try to comply rather than to question authority. That makes your superstar particularly dependent on powerful figures in situations that subject him to unclear directions or sudden shifts in the rules. Since A players have tried to appease influential people all their lives in order to "know" how to behave, they are not prepared to follow through appropriately on requests that are not straightforward.

When wealth is lost, nothing is lost. When health is lost, something is lost. When character is lost, everything is lost.

In thinking of the mind as a set of cognitive capacities, it helps to distinguish the ethical mind from the other four minds that we particularly need to cultivate if we are to thrive as individuals, as a community, and as the human race. The first of these, the disciplined mind, is what we gain through applying ourselves in a disciplined way in school. Over time, and with sufficient training, we gain expertise in one or more fields: We become experts in project management, accounting, music, dentistry, and so forth. A second kind of mind is the synthesizing mind, which can survey a wide range of sources, decide what is important and worth paying attention to, and weave this information together in a coherent fashion for oneself and others. A third mind, the creating mind, casts about for new ideas and practices, innovates, takes chances, discovers. While each of these minds has long been valuable, all of them are essential in an era when we are deluged by information and when anything that can be automated will be.

Yet another kind of mind, less purely cognitive in flavor than the first three, is the respectful mind: the kind of open mind that tries to understand and form relationships with other human beings. A person with a respectful mind enjoys being exposed to different types of people. While not forgiving of all, she gives others the benefit of the doubt.

An ethical mind broadens respect for others into something more abstract. A person with an ethical mind asks herself, "What kind of a person, worker, and citizen do I want to be?"