Chapter 7: Moral Compass

…does it apply to business?

I once had someone ask me about how I defined morals within business; do business ethics and morals represent the same thing? Do you need both?

Lets start with a definitions:

Ethics deals with codes of conduct set by policies in the workplace and morality is the standards that we individually set for ourselves in regards to right and wrong. Ethics is a set of principles developed purposefully over time. Morality is something one feels intuitively — think I feel, I think, I believe.

The definition of morals will reference ethics in a circular definition; the same goes for ethics. But ethics represents an innate knowledge of right/wrong distinctions. Ethics transcends culture, religion, and time. Morality is defined as having and living per a moral code, or principles of right and wrong and can change with your environment or personal experiences.

I don’t think that business can separate the two in definition or practice however, in terms of individuals, you can be driven by ethics or morals and, at times, there may be a conflicting feeling between the two. I like to think of ethics more along the lines of black and white — everyone should align with the ethics of the business but those ethics may directly go against your own personal morals from time to time, and those morals can ebb and flow and be fundamentally different from the person sitting next to you in the office. Each business will operate from defined ethics but also have culturally ingrained morals that may clash with individuals throughout the org.

No matter the differences, the culture of a business is derived in ethics and the morals/values of the individuals who make up that culture. Depending on the moment, the situation, people may lean more towards ethics but when the phrases “I feel” or “I think” or “I believe” the decisions are being driven by your morals. This is largely found when it comes to matters of the heart (arguing pay without facts, believing that you deserve a promotion, etc.) or when people see actions as being “right” or “wrong”.

Is it ethical to promote based on seniority? Yes. Is it right? That would be up to the individual but has little to do with ethics.

A very recent example of that would be a situation of severance.

Now, ethically speaking, severance is not a requirement by law — there is nothing requiring a business to pay severance to individuals when they are laid off or let go — it is an agreement between an employee and employer. However, I’m certain that anyone who has been laid off and not paid severance felt personally and fundamentally that this action was disrespectful and wrong because they are looking at it from a scope of morally right or wrong. Morally, should you pay out individuals who have been let go because you, as a leader and decision maker, misused money and thus had to let them go?

I would say yes.

But remember ethics. Black and white. It is not required.

Where you see that clash more than anything is when a situation arises where a company picks and choses who gets severance and who doesn’t. Ethically speaking, there is nothing wrong with that but when you pick and choose, it questions what is morally right or wrong and the tug and pull that is created when ethics clash with morals.

An example:

• a company implodes, runs out of money and files bankruptcy
• there is a group laid off and paid our severance
• there is a group not laid off but has to chose between remaining with the new ownership or simply be unemployed with no severance — keep in mind there was little to no negotiation available to those going to the new company in terms of pay, title, or job expectations

From an ethical standpoint, there is nothing wrong with the above. It is the choice of the employee to stay or go and while they may feel entitled to severance due to the work they’ve put into a company that ultimately failed despite their best efforts, there is no obligation despite those feelings. Remember, morals are based more in what you feel is right or wrong but that isn’t law.

To add in more layers here, add in these factors:

• the CEO who is asked to leave by the new owner does receive severance and takes severance despite a large amount of his team being offered less than favorable employment or the reality of being unemployed
• the executive team is asked to stay and allowed to negotiate their terms including term length guaranteeing an amount of pay
• individuals who quit prior to the sale are paid severance due to a “timing error”
• those at a VP level are offered severance almost equal to a full year of salary from more junior level employees and despite them turning it down for various reasons, severance is still not extended to others

If you add in those factors, do you still agree with this being ethically right?

The answer, unfortunately, is yes. Yes, ethically there is nothing wrong with the above, but this calls into question what morals individuals are operating from and when you overrule ethics for morals. I, for one, would not take severance as the founder of a failed company unless my entire team received something for their hard work; a failing company is my fault as the founder and leader and I couldn’t, morally, accept thousands (honestly the amount is very unknown…)while others walked away with nothing.

This isn’t a red flag you can see without it happening but what I can tell you is that the way past entrepreneurs have handled failing business situations should help you see what may happen to any other future endeavors.

Throwing your hands up and saying “not my problem” while you get paid out is not a moral compass I’d want to work for.