Joumal of Business Ethics (2005) 58: 345-357
DOI 10.1007/S10551-004-5715-Z
Ethics in Business: Answering the Call
ABSTRACT. What might happen if business leaders
across the globe viewed their work as a sacred calling in a
religious sense? Might not the world be a far better place?
This paper is an effort to stimulate debate and discussion
on this topic. Concepts addressed include: (a) ethics in
business, (b) ethical standards in business settings, (c) the
role of law, (d) levels of corporate responsibility, (e) the
role of religion in business ethics, (f) the idea of business as
a calling in a religious sense, (g) the elements of modem
corporate culture, (h) creating an ethical corporate cul-
ture, (i) demonstrating corporate social responsibility, and
(i) providing servant leadership. The introduction to the
paper shows how these concepts interrelate; its conclusion
offers a challenge to business leaders to answer their call to
business in the truest sense.
KEY WORDS: business as a calling, business ethics,
corporate culture, corporate social responsibility, ethical
standards, servant leadership, value based management
Introduction
What might happen if business leaders across the
globe viewed their work as a sacred calling in a
religious sense? Might not the world be a far better
place? This paper is an effort to stimulate debate and
William I. Sauser, Jr., Ph.D. is Associate Dean for Business
and Engineering Outreach and Professor of Management at
Auburn University. Dr. Sauser eamed his B.S. in Manage-
ment and his M.S. and Ph.D. in Psychology at the Georgia
Institute of Technology. He is licensed to practice psychology
in Alabama and holds a specialty diploma in Industrial/
Organizational Psychology ji'om the American Board of Profes-
sional Psychology. Dr. Sauser's interests include organizational
development, strategic planning, human relations in the workplace,
business ethics, and continuing professional education. He is a
Fellow of the American Council on Education and the Society for
Advancement of Management (SAM). Dr. Sauser was awarded
the 2003 Taylor Key by SAM in recognition of his career
achievements.
Springer 2005
William I. Sauser,Jr.
discussion on this topic. It begins with a brief review
of the concept of ethics in business, followed by a
listing of various ethical standards which are typically
acknowledged in business settings. Legal standards
are then explored in greater depth, and the concept
of levels of corporate responsibility is introduced to
beg the question, "Are higher standards than the law
needed?" Religious behefs are then introduced as a
possible higher standard, and teachings of the world's
great rehgions are reviewed as they relate to doing
business. This discussion culminates in the concept
of business as a calling in a religious sense.
The higher standards prescribed in rehgious
thought are then contrasted to the elements of
modem corporate culture in an effort to highlight
the magnitude of the challenge faced by those
business leaders seeking to rise to a higher level of
morality in business. The paper then describes sev-
eral ways business leaders might manifest their sense
of calling in the world of business, with particular
attention focused on (a) creating an ethical organi-
zational culture, (b) demonstrating corporate social
responsibihty, and (c) providing servant leadership.
The paper concludes with a challenge: Who will
answer the call?
Ethics in business
Ethics has to do with behavior specifically, one's
moral behavior with respect to society (Sauser, in
press a). The extent to which one's behavior mea-
sures up to societal standards is typically used as a
gauge of one's ethicality. There are a variety of
standards for societal behavior, of course, so ethical
behavior is often characterized with respect to cer-
tain contexts. The Ethics Resource Center says,
"Business Ethics refers to clear standards and norms
that help employees to distinguish right from wrong
bebavior at work" (Joseph, 2003, p. 2). In the
346 William I. Sauser, Jr.
context of doing business, then, ethics has to do with
the extent to which a person's behavior measures up
to such standards as the law, organizational policies,
professional and trade association codes, popular
expectations regarding fairness and what is right, plus
one's own internalized moral standards.
Business ethics is not an element distinct from
ethics in general, but a subfield of the broad area of
study known as ethics (Desjardins, 2003, p. 8). There
is a complex set of issues and expectations for doing
business (which may differ from culture to culture),
and the subfield of business ethics refers to the
examination and application of moral standards
within the context of fmance; commerce; produc-
tion, distribution, and sale of goods and services; and
other forms of business.
It can be fairly argued that an ethical person be-
haves appropriately in all societal contexts. This in-
deed may be so, in which case one might prefer the
term "ethics in business" to "business ethics." The
distinction is subtle, but serves as a reminder that
morality may be generahzed from context to con-
text. Adam Smith, for example, saw no need for
ethical relativism when it comes to business:
It is impossible to detemiine just how business became
separated firom ethics in history. If we go back to
Adam Smith, we find no such separation. In addition
to his famous book on business and capitalism. Hie
Wealth of Nations, Adam Smith also wrote The Theory
of Moral Sentiments, a book about our ethical obliga-
tions to one another. It is clear that Smith believed that "commonly understood" - is the community's
business and commerce worked well only if people
took seriously their obligations and, in particular, their based on commonly
sense of justice. (Bruner et al., 1998, p. 46.)
May (1995) echoes this important point: "The
marketplace breaks down unless it can presuppose
the virtue of industry, without which goods will not
be produced; and the virtues of honesty and integ-
rity, without which their free and fair exchange
cannot take place" (p. 693).
Standards of ethical behavior
The law (including statutory, administrative, and
case law) is one important and legitimate source of
ethical guidance, of course. Federal, state, and local
laws establish the parameters within which business
is done (Fieser, 1996). Violation of the law is almost
always considered unethical behavior (with the
possible exception of civil disobedience as a mech-
anism for putting the law itself on trial). One who
pursues business outside the law is considered to be
following an obstructionist approach to business
ethics (Schermerhom, 2005, p. 75). Such an indi-
vidual would almost certainly be labeled "an
unethical business person."
A second important source of authority consists of
organizational policies. These are standards for
behavior estabhshed by the employing organization.
Typically they are in alignment with the law (which
takes precedence over them) and spell out in detail
"how things are to be done around here." All
employees are expected to abide by organizational
pohcies. It is very important that managers at the
highest level of the organization set the example for
others by working always within the law and the
policies of the organization.
Likewise, another important source of ethical
guidance is the code of behavior adopted by one's
professional and trade associations. These are often
aspirational in nature, and frequendy establish higher
standards for behavior than the law requires. Mem-
bers of a professional or trade association typically
seek to meet these higher standards in order to
establish and uphold the reputation of the profession
or trade.
A fourth type of standard often unwritten and
conceptualization of morality. These social mores,
held beliefs about "what is right
and what is wrong" and "what is fair and what is
unfair" can be powerful determinants of one's rep-
utation in society. Behavior which in the strictest
sense meets legal requirements, organizational
policies, and even professional standards may stiU be
viewed by the general pubhc as unfair and wrong
(Krech et al., 1962).
Yet a fifth set of standards are those of the
individual conscience. Coleman et al. (1980, p.
Glossary IV) define "the conscience" as "the
functioning of an individual's moral values in the
approval or disapproval of his or her own thoughts
and actions," and equate it roughly with the
Freudian concept of the superego. Highly ethical
business leaders typicaUy have moral standards
which exceed aU four of the lesser standards hsted
 Ethics in Business
above. These values, learned early in life and
reinforced by life's experiences, are internalized
standards which are often based on personal reli-
gious and/or philosophical understandings of
morality (Baelz, 1977, pp. 41-55).
The role of law
What is the role of law in determining moral
behavior in business? Hosmer (2003) defines "the
law" as:
. . .a consistent set of universal rules that are widely
published, generally accepted, and usually enforced.
These rules describe the ways in which people are
required to act in their relationships with other
people within a society. They are requirements to
act in a given way, not just expectations or sug-
gestions or petitions to act in that way. There is an
aura of insistency about the law; it defines what you
must do. (p. 64.)
The law plays an important - most would say an
essential - part in estabhshing the moral and practical
miheu in which husiness takes place. Says Fieser
(1996), "The law.. .is.. .necessary since the laws are
what establish the contractual framework within
which businesses operate" (p. 458). Stackhouse
(1995a) adds, "Modern business presupposes a stable
fabric of law. Law, of course, means limits; there are
some things that businesses cannot do and remain
legitimately in business" (p. 18).
While few husiness philosophers question the
role of the law as a necessary standard of business
morality, there is a raging debate over whether the
law is a sufficient standard of ethicahty in business. In
other words, is it enough for the ethical business
person to obey the law, or are there higher standards
of morahty which also must be met? Friedman
(1970) argues that the law is both a necessary and
sufficient standard of morality in business, and even
claims that corporate officers who seek to "go be-
yond the law" in the name of social responsihility
may be breaking trust with corporate shareholders
who expect the officers to serve as their agents in
making a profit within the law. "What does it mean
to say that the corporate executive has a 'social
responsibility' in his capacity as a businessman?" asks
Friedman. "If this statement is not pure rhetoric, it
347
must mean that he is to act in some way that is not
in the interest of his employers" (p. 33). Fieser
(1996) disagrees with Friedman regarding this latter
claim; Fieser is more sanguine with respect to the
corporate officer's voluntary actions to guide the
business to act in a socially responsible manner.
However, Fieser summarizes his careful examination
of the issue of the sufficiency of the law as a moral
guideline for business with the "cautious conclu-
sion" that "the typical business in our society has no
moral ohligation beyond what the law requires" (p.
465).
In contrast, in an elegant treatise on the role of
law in business morality, Hosmer (2003) reaches the
opposite conclusion:
Legal requirements can serve as a guide to managerial
decisions and actions, but.. .they are not enough.
They don't include the fuU range of personal goals,
norms, beliefs, and values and consequently.. .don't
represent the true nature and actual worth of human
beings. Legal requirements are useful... [But] we need
something more. (pp. 7576.)
Stackhouse (1995a) takes a similar stance:
Indeed, much of morality is beyond the law.. . Law
is best when it provides general guidelines for orga-
nization and action, yet preserves maximum freedom,
protects persons and groups from danger or exploi-
tation, and constrains those who subvert the capacity
to live responsibly. The point is this: economics
and law cannot generate business morality alone.
Something in addition to them must guide business,
(p. 18.)
So which is it? Does the law provide sufficient moral
guidance for business leaders, or is "something else"
needed? I weigh in on the side of Hosmer and
Stackhouse; however, one's answer to this question
will differ depending on one's philosophy about
corporate responsibility, an issue to which I now
turn.
Levels of corporate responsibility
Drawing on Carroll's (1979) excellent scholarly
work, Schermerhorn (2005) makes these observa-
tions about four responsibilities of business firms:
348 William I. Sauser, fr.
An organization is meeting its economic responsibility
when it earns, a profit through the provision of goods
and services desired by customers. Legal responsibiHty
is fulfilled when an organization operates within the
law and according to the requirements of various
external regulations. An organization meets its ethical
responsibility when its actions voluntarily conform
not only to legal expectations but also to the broader
values and moral expectations of society. The highest
level of social performance comes through the satis-
faction of an organization's discretionary responsibil-
ity. Here, the organization voluntarily moves beyond
basic economic, legal, and ethical responsibilities
to provide leadership in advancing the \veU-being
of individuals, communities, and society as a whole,
(pp. 74-75.)
Next Schermerhorn (2005), using Gatewood and
CarroU (1981) as his guides, describes a fourfold
taxonomy of social responsibility strategies:
An obstructionist strategy ("Fight the social de-
mands") reflects mainly economic priorities; social
demands lying outside the organization's perceived
self-interests are resisted... A defensive strategy
("Do the minimum legally required") seeks to protect
the organization by doing the minimum legally nec-
essary to satisfy expectations. Corporate behavior at
this level conforms only to legal requirements, com-
petitive market pressure, and perhaps activist voices...
Organizations pursuing an accommodative strategy
("Do the minimum ethically required") accept their
social responsibilities. They try to satisfy economic,
legal, and ethical criteria. Corporate behavior at this
level is congruent with society's prevailing norms,
values, and expectations. But, it may be so only be-
cause of outside pressures... The proactive strategy
("Take leadership in social initiatives") is designed to
meet all the criteria of social performance, including
discretionary performance. Corporate behavior at this
level takes preventive action to avoid adverse social
impacts from company activities, and it takes the lead
in identifying and responding to emerging social issues,
(pp. 75-76.)
Leaders of those business organizations choosing to
pursue a corporate strategy of obstruction or defense
would Ukely hold that the law is a sufficient measure
of business morality, while those striving to pursue
an accommodative or proactive strategy would argue
that the law is certainly necessary for this purpose.
but not sufficient. Higher standards than the law may
be needed.
As a business professor, I seek to prepare my
students to take leadership roles in society. Accord-
ingly, I encourage them to adopt the proactive
strategy for their businesses, and thus to seek volun-
tarily to identify and avoid any personal or business
actions which might lead to societal harm. This
places upon them a higher level of moral expectation
than those business persons who "settle for" strate-
gies lower on the taxonomy of corporate social
responsibiUty. I think that is what leadership is aU
about: striving to meet the higher standards.
The role of religion
Might rehgion play a part in determining ethical
standards beyond "the law?" Zinbarg (2001) makes
an exceUent case for "bringing rehgion into the
picture" with respect to undentanding business
ethics more fuUy: "Since moral understandings are
derived from reUgious traditions as weU as from
secular education, the voices that speak to the issue
should be reUgious as weU as secular" (p. 33). Sim-
ilarly, Stackhouse (1995b) presents a convincing
argument that reUgion has much to offer the field of
business ethics, particularly with respect to issues of
vocation, moral law, liberation, sin, covenant, and
creation.
Baelz (1977) adds this contribution to the argu-
ment that rehgion has a role in understanding and
applying ethical concepts in business:
Religion might exercise a coordinating and integrating
function by holding before men's eyes the vision of an
ultimate universal order in which the needs of the
individual and the needs of humanity were hanno-
nized. It could bind human beings to one another by
binding them all to something even more inclusive,
whether this were conceived in terms of an impersonal
order or in terms of a personal God. (p. 65.)
Zinbarg (2001) presents an exceUent summary of the
ethical principles of the Jewish, Christian, Islamic,
Hindu, Buddhist, and Confiacian traditions, and
shows how they converge to provide guidance for
behavior in the economic sector. He summarizes his
review as foUows:
 Ethics in Business
If the mosaics of the West and the East were joined,
I doubt that a member of any one of the six faith
communities would be uncomfortable looking at it.
For the marketplace, the mosaic would portray a
coherent religious vision of an ideal economic setting.
Economic efficiency would not require a sacrifice of
human dignity. Economic actors would exhibit mu-
tual compassion, and individual achievement would
not be at the expense of communal solidarity. Steady
economic and moral improvement would be pursued
with humiUty and patience, (p. 77.)
In a similar vein, Stackhouse (1995c) provides a
concise summary of the guidance the Christian faith
provides for ethical behavior in economic hfe. Many
of these principles are shared across the great reli-
gious traditions of the world:
Do not lie, cheat, steal, or covet; deal as equitably with
the foreigner and the stranger as with the family
member and the beloved neighbor; if authority is
given to someone, it must not be used to extort or gain
advantage; all bounty is to be treated as a trusted and
trustworthy steward treats that which is the Lord's.
Honor is not to go to the rich and the powerful be-
cause they are rich and powerful but accordingly as
they love mercy, do justice, and walk humbly with
God. Further, the greedy accumulation of wealth
which removes some from accountability to all others
is contrary to God's justice but damaging to the
community... Forced poverty is equally contrary to
God's jusdce and destructive of viable economic
development. Thus, efforts to call the greedy to ac-
count, to relieve the needs of the distressed, and to
convert both to a disciplined Ufe, are always necessary,
(p. 112.)
When one holds fast to such reHgious behefs, then
one seeks to exhibit behavior in daily life and
work which conforms to them. In a theological
sense, this is considered one's "vocation" or
"caUing" (McKim, 1996, p. 36). Says the National
Conference of Cathohc Bishops (1995), "Business
people, managers, investors and financiers foUow a
vital Christian vocation when they act responsibly
and seek the common good" (p. 446). This
concept may easily be generahzed to other faith
traditions as weU. SuUivan (1995) says, "I think of
business as a vocation" (p. 676), and summarizes
his effort to respond to his caUing as a business
leader as foUows:
349
What we have tried to do is establish a positive envi-
ronment for individual and company growth which
emphasizes placing responsibility on individuals,
operating in a decentralized setting dedicated to
helping the customer and our company in the long
term. Finally, we ask our people to go beyond
themselves and get involved in their own communi-
ties, (p. 674.)
In Business as a Calling, a fascinating book written "for
Jews, Christians, Muslims, and othen who take the
inner life seriously" (p. 1), Novak (1996) describes the
benefits that would accrue to all business leaders if
they viewed their work as a calhng in this sense:
It would give them a greater sense of being part of a
noble profession. It would raise their o\vn esteem for
what they do and no doubt stimulate their imagi-
nations about how they might gain greater and deeper
satisfactions from doing it. It would help tie them
more profoundly to traditions going far back into the
past, in seeing their own high place in the scheme of
things. The human project is a universal project. We
are involved in bringing the Creator's work to its in-
tended fulfillment by being co-creators in a very grand
project, indeed. In this, we are tied to the whole hu-
man race. (p. 37.)
How might those who accept business as a caUing
translate their passion into action? In their com-
pendium of thought on moral business, Stackhouse
et al. (1995) present a number of thoughtful essays
and position statements from a variety of religious,
historical, economic, and philosophical perspectives
across the globe. For practical suggestions coming
from the world's great rehgions, these essays and
documents provide a rich source of study.
Another impressive document written by per-
sons from a variety of faith traditions throughout the
world is the "Universal Declaration of Human
Rights," adopted and proclaimed by the United
Nations on December 10, 1948. What ultimate
good might accrue if business leaders across the
world took it upon themselves as their caUing to
implement the terms of this declaration in every
workplace on the globe?
Below I describe three other types of action
which I beheve leaders who view business as a
caUing can undertake to improve the moral chmate
of the workplace: (a) create an ethical culture within
350 William I. Sauser, Jr.
the organizations they lead, (b) demonstrate corpor-
ate social responsibility, and (c) provide servant
leadership. Before turning to this discussion, how-
ever, it is necessary to gain a perspective on the
scope of the problem we face as we seek to change
the current corporate bureaucratic culture which
seems to be stifling moral behavior in business. How
difficult is the chaUenge?
Corporate bureaucratic culture
In 1956 WiUiam H. Whyte pubhshed Tlie Organi-
zation Man, a groundbreaking expose of the pressures
for conformity found in the typical bureaucratic
organization of the 1950s. Whyte's book, a best
seUer, has become a classic text for study of the
sociological problems of large bureaucracies - whe-
ther they be for-profit corporations, not-for-profit
foundations, mihtary units, hospitals, churches, or
voluntary associations and is stiU in print today.
Says Nocera in his foreword to the 2002 paperback
edition of Whyte's classic, "Simply for being so far
ahead of the curve, Whyte deserves enormous
credit" (p. xv). It is true, as Nocera asserts, that many
of the problems inherent in large bureaucracies are
now understood and are being addressed. However,
a more recent sociological examination of for-profit
bureaucracies indicates that there remains a number
of conditions in these organizations that affect
(adversely, in my opinion) the exhibition of positive
ethical behavior on the part of those individuals
laboring within them.
In the early 1980s Robert Jackall undertook in-
depth case studies of three large American for-profit
corporations. In the course of his research, JackaU
conducted over 180 interviews with corporate
executives in an effort to uncover the social context
of their work. His resulting report, Moral Mazes: Tlte
World of Corporate Managers (Jackall, 1988), is a
worthy successor to Tlte Organization Man and
provides a rich resource for answering this question.
Accordingly I have shaped this portion of the paper
around some of JackaU's primary findings about
organizational life. Here are some of the concerns
expressed by Jackall in his book:
1. Corporations are persons only in a legal sense. U n d e r
the law, corporations have rights, privileges, and
obhgations as "persons." However, corporations are
not human beings, and one should be very circum-
spect in attributing to them anthropomorphic char-
acteristics. It may be useful at times to speak of
corporations as having such traits as loyalty, honesty,
character, ethicality, concern for stakeholders, and
similar attributes, but it must always be remembered
that the corporation exists only on paper under the
rule of law (Cragg, 2002, p. 126). Says Friedman
(1970), "What does it mean to say that 'business' has
responsibihties? Only people can have responsibih-
ties" (p. 32). While it may be true that individuals
within the corporate structure possess these human
character traits, one should never make the assump-
tion that a corporate entity has a conscience or a soul.
JackaU (1988) speaks ofa pubhc relations ploy known
as the "corporate persona, a kind of fictive reality,
known coUoquiaUy in the field as a 'front'" (p. 174).
One must always look beyond "the front" to' under-
stand what truly is happening within the organization.
2. Business organizations are typically established to
make a profit, and this can affect their moral culture. O n
occasion businesses are created for purposes other
than making a profit (such as tax shelters), but most
proprietorships, partnerships, and corporations are in
business to make a profit. In fact, leaders of for-profit
corporations have a fiduciary obhgation to increase
the value of the money invested in the corporation
by its shareholders (Cragg, 2002, p. 125). Compe-
tition is fierce in today's global marketplace, so
making a profit year after year is no easy matter. The
need to make a profit puts considerable pressure on
business managers, and leads to many temptations to
"cut corners" ethicaUy (Sauser, in press a). In fact,
this profit drive can create within the minds of
business leaders a type of situational ethic described
by JackaU (1988) as foUows:
Notions of morality that one might hold and indeed
practice outside the workplace say some variant of
Judeo-Christian ethics become irrelevant, as do less
specifically religious points of principle, unless they
mesh with organizational ideologies. Under certain
conditions, such notions may even become danger-
ous. .. Managers know that in the organization right
and wrong get decided by those with enough clout to
make their views stick, (p. 105.)
In the words of one ofJackaU's interviewees, "What
is right in the corporation is not what is right in a
man's home or his church. WItat is right is what the
 Ethics in Business
guy above you wants from you. That's what morality is
in the corporation" (p. 109). JackaU sums up this
problem concisely: "Strong convictions of any sort
are suspect" (p. 50).
In for-profit organizations "the bottom hne" is a
quick and handy measure of corporate success, and
short-term unit profitability is often the key to a
manager's success as weU. A manager who is seeking
to "get ahead at aU costs" might be tempted to cut
ethical comers in order to gain a reputation as
someone who can make money for the organization.
This temptation may prove overpowering in an
organizational culture where "the guy above you"
issues such demands as these:
"I don't care how you do it, just get it done!"
"Don't ever bring me bad news!"
"Don't bother me with the details; you know
what to do."
"Remember, we always meet our financial
goals somehow."
"No one gets injured on this worksite...period.
Undentand?"
"Ask me no questions, I'U teU you no Hes."
(Sauser, in press a.)
When a manager asks an employee, "Can't you find
some way to make this happen?" there is almost an
impHcit message to "cut ethical comers" if one must
in order to meet the desired goal or outcome.
3. Most large business corporations are organized as
bureaucracies; this tends to distribute authority in ways that
may be counterproductive. In JackaU's (1988) blunt
words, "It is characteristic of this authority system
that details are pushed down and credit is puUed up.
Superiors do not Hke to give detailed instructions to
subordinates" (p. 20). This can result in considerable
role ambiguity on the part of employees of the firm.
What precisely is to be done, by whom, using what
procedures? In ambiguous circumstances Hke these,
moral behavior can become compromised, especiaUy
given the organizational culture issues discussed
above. This can lead to what JackaU describes as a
related problem, avoidance of responsibiHty: "As a
result, many managers become extremely adept at
sidestepping decisions altogether and shrugging off
responsibiHty.. .leaving those who actuaUy do decide
to carry the baU alone in the open field" (p. 80). For
these reasons, Jackall refers to bureaucratic businesses
351
as "vast systems of organized irresponsibihty" (p.
95).
4. Business managers, particularly those at tlte middle
levels and below, have little control over their own time.
JackaU (1988) notes that this lack of economy over
one's time results from "continual interruption from
one's subordinates, telephone caUs from customers
and cHents, and necessary meetings with coUeagues"
(p. 20). (I hasten to add that there are too many
"unnecessary" meetings as weU!) As a consequence
of this time pressure, many managers do not have the
luxury to ponder their decisions and actions in terms
of ethicality. They often go with their "gut re-
sponse," and in a milieu of ethical relativism, they
sometimes make decisions which, upon reflection,
they recognize as moraUy insufficient.
5. Many corporate managers have a very short-term time
perspective. This is true because managers are typicaUy
rewarded for short-term financial gains; the "quar-
terly report" is their major measure of perfomiance.
JackaU (1988) attributes this short-term perspective
in part to the training many managers receive:
The training of professional managers increasingly fo-
cuses... on the techniques of financial wizardryfor
example, leveraged buyouts, arbitrage, stock protec-
tion and stock kitingand on quantitative measures of
organizational progress... Many of these tools reflect
and illustrate the short-term mentality that character-
izes most managerial training... Similarly, accounting
systems that place a premium on bare-bones inventory
reflect the same pressure for short-run profit maxi-
mization, (p. 82.)
JackaU (1988, p. 83) also credits the stmcture and
pace of managerial work itself for creating a
short-term perspective. This short-term perspective
coupled with the facts that (a) managerial perfor-
mance is "always subject to a myriad of interpreta-
tions" (p. 62) and (b) bureaucracy blurs individual
authority and responsibility (as noted above) can
lead to managerial decisions that are not always in
the best interests of the firm, such as "starving a
plant" or "milking a plant" (JackaU, 1988, p. 91).
Such a strategy may improve one's chances for up-
ward mobility within the firm while simultaneously
eroding the organization's competitiveness in the
long run. JackaU describes the plight of too many
managers as foUows: "Managerial effectiveness and
others' perceptions of one's leadership depend on
352 William I. Sauser, fr.
the willingness to battle for the prestige that comes
from dominance and to make whatever moral
accommodations such struggles demand" (p. 196).
6. Problems of psychological distance and multiple
stakeholders also diffuse responsibility within the bureau-
cratic business firm. Issues of stakeholder satisfaction
are explored in depth by such w^riters as Carson
(2003), Cragg (2002), and PhiUips (2003a, b) and
will not be elaborated upon in this paper. Suffice it
to say here that multiple stakeholders complicate the
job of the corporate manager:
Managers must address a multiplicity of audiences,
some of whom are considered rivals, and some out-
right adversaries. These audiences are the internal
corporate hierarchy with its intricate and shifting
power cliques and competing managerial circles, key
regulators, local and federal legislators, special publics
that vary according to the issues, and the pubUc at
large, whose goodwill and favorable opinions are
considered essential for a company's free operation.
Oackall, 1988, p. 156.)
The key stakeholders to please, of course, are the
owners of the corporation - the stockholders. But
more and more frequently these persons are dis-
tanced considerably from the operations of the
firm for reasons Jackall (1988) explains as
follows:
The capital markets are increasingly dominated by big
institutional investorsamong them, large corpora-
tions, the insurance companies, the investment funds,
and the brokerage houses^whose "quick in, quick out"
philosophy wreaks havoc with corporate stocks, (p. 83.)
May (1995) concurs with this point:
Stockholders are important stakeholders in a company,
but by no means the only ones. Workers, customers,
neighbors, and the public at large have in varying way
a stake in its performance, sometimes indeed a larger
stake than stockholders who may dart in and out of
their investments more readily than workers and
neighbors can disengage themselves from a company
and its fortunes, (p. 696.)
In addition to increasing stockholder detachment
from the companies they own, there is also the
problem within some organizations of a growing
psychological distance between corporate leaders
and their "rank-and-file" employees. "Bureaucracies
create many mechanisms that separate men and
women from the consequences of their actions,"
comments Jackall (1988). "Impersonality provides
the psychological distance necessary to make what
managers call 'hard choices"' (p. 127). Unfortu-
nately, this psychological distance, coupled with
stockholder detachment, can also result in decisions
which devastate the hves of many corporate
employees. Jackall acknowledges the stress which
results from "periods of organizational upheaval, a
regular feature of American business where mergers,
buyouts, divestitures, and especially 'organizational
restructuring' have become commonplace occur-
rences" (p. 24).
These six complex organizational features ex-
plored by Jackall (1988) - and others too numerous
to describe here - have led to a prevaihng organi-
zational culture in many business organizations
where, according to Jackall, "one must leam to
streamhne oneself shamelessly, leam to wear all the
right masks, leam all the proper vocabularies of
discourse, get to know all the right people, and
cultivate the subtleties of the art of self-promotion"
(p. 74). Such an organizational culture hardly leads
to the promotion of morality and ethicahty! This is
why creating an ethical culture within the workplace
is one of the most important tasks of the modern
manager (Sauser, in press b).
Joseph (2003), in the executive summary of the
National Business Ethics Survey 2003, describes some
of the results from weak organizational cultures
where ethics is not properly emphasized, modeled,
and rewarded. Here are just a few of his findings:
Nearly a third of respondents say their
coworkers condone questionable ethics prac-
tices by showing respect for those who achieve
success using them.
The types of misconduct most frequently
observed in 2003 include: abusive or intimi-
dating behavior (21%), misreporting hours
worked (20%), lying (19%), and withholding
needed information (18%).
Employees in transitioning organizations
(undergoing mergers, acquisitions or restmc-
turings) observe misconduct and feel pressure
at rates that are nearly double those in more
stable organizations.
 Ethics in Business
Despite an overaU increase in reporting of
misconduct, nearly half of aU non-management
employees (44%) stiU do not report the mis-
conduct they observe. The top two reasons
given for not reporting misconduct are: (1) a
beHef that no corrective action wiU be taken and
(2) fear that the report will not be kept confi-
dential.
Less than three in five employees (58%) who
report misconduct are satisfied with the re-
sponse of their organizations, (pp. iiiii.)
Changing an estabHshed organizational culture is a
very difficult process requiring time, effort, and
energy on the part of both managers and employees
(HeUriegel and Slocum, 2004). How might
enHghtened managers change a corporate culture to
promote rather than inhibit moral behavior in a
sociaUy responsible manner? Attention is now fo-
cused on the beginnings of an answer to this cmcial
question.
Creating an ethical organizational culture
How might a leader in business go about creating an
organizational culture where ethics can flourish? The
Ethics Resource Center (Joseph, 2003, p. 5) offers
four elements as a beginning point: written standards
of ethical conduct; training on standards of conduct;
an ethics office or telephone advice Hne; and a means
to report misconduct anonymously. Here are some
suggestions shared recently at a conference for South
African entrepreneurs (Sauser, in press b):
1. Adopt a code of ethics. The code need not be long
and elaborate with flowery words and phrases. In
fact, the best ethical codes are stated simply in lan-
guage anyone can understand. A good way to pro-
duce such a code is to ask aU employees of the firm
(or a representative group of them) to participate in
its creation (Kuchar, 2003). Identify the commonly
held moral beliefs and values of the members of the
firm and codify them into a written document
which aU can understand and support. Post the code
of ethics in prominent places around the worksite.
Make certain that aU employees subscribe to it.
2. Provide ethia training. From time to time the
ethical business leader should conduct ethics training
sessions. These may be led by experts in business
353
ethics, or they may be informal in nature and led by
the manager and/or employees themselves. A highly
effective way to conduct an ethics training session is
to provide "what if..." cases for discussion and
resolution. The leader presents a real world scenario
in which an ethical dilemma is encountered. Using
the organization's code of ethics as a guide, partici-
pants then explore options and seek a consensus
ethical solution. This kind of training sharpens the
written ethical code and brings it to Hfe.
3. Hire and promote ethical people. This, in concert
with step four below, is probably the best defense
against putting the business at risk through ethical
lapses made by employees with character flaws.
When making human resources decisions it is critical
to reward ethical behavior and punish unethical
behavior. Investigate the character of the people you
hire, and do your best to hire people who have
exhibited high moral standards in the past. Base
promotional decisions on matters of character in
addition to matters of technical competence. Dem-
onstrate to your employees that high ethical stan-
dards are a requirement for advancement in the firm.
4. Correct unethical behavior. This is the comple-
ment of step three. When the organization's ethical
code is breached, the employee(s) responsible must
be punished. Many business organizations use
"progressive discipline," with an oral warning (in-
tended to advise the employee of what is and is not
acceptable behavior) used as the first step, foUowed
by a written reprimand, suspension without pay, and
termination as further discipHnary action if unethical
behavior persists. Of course, some ethical lapses are
so egregious that they require suspension or even
termination foUowing the first offense. Through
consistent and firm appHcation of sanctions to cor-
rect unethical behavior, the manager will signal to aU
employees that substandard moral behavior wiU not
be tolerated.
5. Take a proactive strategy. Businesses that wish to
establish a reputation for ethicality and good corporate
citizenship in the community wiU often organize and
support programs intended to "give something back"
to the community. Programs that promote continuing
education, wholesome recreation, good health and
hygiene, nutritious diet, environmental quaHty, ade-
quate housing, and other community benefits may be
undertaken in an effort to demonstrate the extent to
which the business promotes care and concem for
354 William I. Sauser, fr.
human welfare. Seeking out and adopting "best
practices" from other businesses in the community is
also a proactive strategy.
6. Conduct a social audit. Most businesses are
famihar with the process of financial audits. This
concept can be employed in the context of ethics
and corporate responsibiHty as weU. From time to
time the business might invite responsible parties to
examine the organization's product design, pur-
chasing, production, marketing, distribution, cus-
tomer relations, and human resources functions as
well, with an eye toward identifying and correcting
any areas of poHcy or practice that raise ethical
concems. Similarly, programs of corporate respon-
sibiHty (such as those mentioned in step 5) should be
reviewed for effectiveness and improved as needed.
7. Protect whistle blowers. A "whistle blower" is a
person w^ithin the firm who points out ethicaUy
questionable actions taken by other employees - or
even by managers within the organization. (The
temi is borrowed from the athletic arena, where
referees "blow the whistle" when a foul is com-
mitted.) Too often corporate whistle blowers are
ignored or even punished by those who receive
the unfortunate news of wrongdoing within the
business. All this does is discourage revelation of
ethical problems. Instead the whistle blower should
be protected, and even honored. When unethical
actions are uncovered within a firm by one of its
own employees, that is the time for managers to step
forward and take corrective action (as described in
step 4 above). Employees observe one another's
actions and leam from one another's consequences.
Ifthe owners and managers of a business turn a bUnd
eye toward wrongdoing, a signal is sent to everyone
within the firm that ethicality is not characteristic of
that organization's culture. A downward spiral of
moral behavior is hkely to foUow.
8. Empower the guardians of integrity. The business
leader's chief task with respect to establishing a
culture of ethicality is to lead by example and to
empower every member of the organization to
take personal action that demonstrates the firm's
commitment to ethics in its relationships with
suppliers, customers, employees, and shareholders.
Tum each employee of the firm, no matter what
that individual's position in the organizational
hierarchy, into a guardian of the firm's integrity.
When maliciousness and indifference are replaced
with a culture of integrity, honesty, and ethicality,
the business wiU reap long-temi benefits from all
quarters.
Demonstrating corporate social responsibility
As noted earlier, there are many different viewpoints
on the meaning of the term "corporate social
responsibiHty," and thus different strategies for
meeting this goal. Friedman's (1970) admonition to
attend solely to niaking a profit for the shareholders
within the law would Hkely be labeled as a defensive
or accommodative strategy using Schermerhorn's
(2005) typology. Stakeholder theorists typicaUy
recommend an accommodative or even proactive
strategy. Desjardins (2003), for example, suggests
that ethical businesses "produce a high quality
product that consumers value, treat employees with
decency and faimess, [and] give back to the com-
munity that supports your business" (p. xiii).
Novak (1996) provides a very comprehensive
definition of "business ethics" from the proactive
point of view:
Business ethics means a great deal more than obeying
the civU law and not violating the moral law. It means
imagining and creating a new sort of world based on
the principles of individual creativity, community,
realism, and the other virtues of enterprise. It means
respecting the right of the poor to their own personal
economic initiative and their own creativity. It means
fashioning a culture worthy of free women and free
mento the benefit of the poor and to the greater
glory of God. (p. 133)
To iUustrate his proactive definition of business
ethics, Novak (1996) Hsts what he beHeves to be
seven internal and seven external responsibilities of
ethical firms. Respectively, they are:
Seven Intemal Responsibilities
1. To satisfy customers with goods and services of
real value.
2. To make a reasonable retum on the funds en-
trusted to the business corporation by its
investors.
3. To create new wealth.
4. To create new jobs.
 Ethics in Business
5. To defeat envy through generating upward
mobihty and putting empirical ground under
the conviction that hard work and talent are
fairly rewarded.
6. To promote invention, ingenuity, and in gen-
eral "progress in the arts and useful sciences"
(Article I, Section 8, U. S. Constitution).
7. To diversify the interests of the republic.
Seven Responsibilities from Outside Business
1. To establish within the firm a sense of com-
munity and respect for the dignity of persons.
2. To protect the political soil of liberty.
3. To exemplify respect for law.
4. To make manifest social justice.
5. To communicate often and fuUy with their
investors, shareholders, pensioners, customers,
and employees.
6. To contribute to making its own habitat, the
surrounding society, a better place.
7. To protect the moral ecology of freedom, (pp.
134-159.)
Discussing each one of these responsibihties in full
is beyond the scope of this paper; interested readers
are encouraged to study carefully Novak's excellent
book and to review Holland's (2002) suggestions for
taking responsible corporate actions. Here let me
simply provide one more quotation from Novak
(1996), a statement which captures the essence of the
proactive approach to business ethics I am encour-
aging in this paper:
The business corporation is in its essence a moral
institution. It imposes some moral obligations that are
inherent in its own ends, structure, and modes of
operation. Other moral obligations fall upon it
through the moral and religious commitments of its
members. Thus, those who labor within the business
corporation have many moral responsibilities and a
richly various moral agenda, of which the fourteen
responsibilities mentioned here are basic but not
exhaustive, (pp. 158-159.)
I submit that any business leader who embraces
Novak's vision of the business corporation as a moral
institution, and who takes the necessary actions to
create an ethical culture within her or his organi-
zation, is making a truly significant contribution to
355
society. There is yet one more step that can be taken
by one pursuing such a caUing: providing servant
leadership. This ultimate step is the final topic of this
paper.
Providing servant leadership
Magoni (2002/03) describes a new paradigm for
leadership, a paradigm which is gaining the atten-
tion of theologians, business leaders, and educators
alike:
In leadership literature, two paradigms we often read
about are the pyramid and the inverted pyramid. The
pyramid model represents the old school, militaristic,
top-down, hierarchical leadership style. The CEO is at
the top, and all policy and ideas flow fi-om the top
down.
In the inverted pyramid, the leader or CEO is seen on
the bottom, serving the organization. He or she is
there to serve the company and remove all of the
obstacles that would prevent the team from getting the
job done. This paradigm is often used when describing
servant leadership, (p. 14.)
The late Robert Greenleaf, founder of the
Greenleaf Center for Servant Leadership, is often
credited with coining the term, "servant leader-
ship." Autry (2002/2003) summarizes six ideas
about servant leadership made popular by Greenleaf
and his disciples:
1. Leadership is not about controlling people; it's
about caring for people and being a useful re-
source for people.
2. Leadership is not about being a boss; it's about
being present for people and building a com-
munity at work.
3. Leadership is not about holding on to territory;
it's about letting go of ego, bringing your spirit to
work, being your best and most authentic self.
4. Leadership is less concemed with pep talks and
more concemed with creating a place in which
people can do good work, can find meaning in
their work, and bring their spirits to work.
5. Leadership, like life, is largely a matter of pay-
ing attention.
6. Leadership requires love. (p. 5.)
356 William I. Sauser, Jr.
This final statement about leadership made by Autry
is very similar to the highest ethic identified by Baelz
(1977): love. Says Baelz:
Man's essential nature.. .is in accordance with love. In
acting out of love men are being true to what they
really are. Love is not only a force in human nature, it
is the source and spring of personal well-being. Those
who love.. .are acting as 'real' persons; in responding
to the nature with which and for which they have
been created they have already discovered what it is to
'come alive', (p. 108.)
Servant leadership, then, can be seen as the apph-
cation of the ethic of love to the management of the
work enterprise. Here are ten characteristics of the
servant leader as envisioned by Greenleaf (2002/
2003): Hstening, empathy, heaHng, awareness, per-
suasion, conceptualization, foresight, stewardship,
commitment to the growth of people, and building
community. What might the world of business be
like if every manager strove to be a servant leader?
The concept of servant leadership is beginning to
move into the mainstream literature for business
education. For example. Ken Blanchard, co-author
of The One Minute Manager (Blanchard and Johnson,
1982), has recently coUaborated with Phil Hodges to
produce Tlie Servant Leader: Transforming Your Heart,
Head, Hands, and Habits (Blanchard and Hodges,
2003). James Autry, fomier president of the maga-
zine group for Meredith Corporation, has also re-
cendy pubHshed a guide for corporate managers who
desire to incorporate the ideals of servant leadership
into their organizational culture (Autry, 2001).
Here is a closing thought. How much better off
would be the world of work if the type of business
culture described by JackaU in Moral Mazes were
replaced by one that emphasizes ethicality, corporate
social responsibiHty, and servant leadership? King
(2002/2003) formulates this question into a chal-
lenge for today's leaders of commerce and industry:
We as a nation have been so enamored by [the]
hero-leader that we have placed immense power and
wealth in the hands of these executives and many
have squandered the trust placed in them. Corpo-
rations have collapsed and filed for bankruptcy as a
result of unethical actions and self-serving leadership
practices. These leaders who have reaped more harm
than good in their actions have directly affected our
nation's economy and quality of life. The corporate
community is struggling to find leaders committed
to the mission and the margin, people and profit,
organizational growth and family stability. Leaders
with ethical perspectives that are able to gain the
trust of the employees, the customers and the
community are no\v in great demand. Structures and
organizations are looking for leaders who care for
people, rather than...control people, individuals
concerned about building community more than
being boss, leaders who empower people rather than
use people, (p. 18.)
Who will answer the call?
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