The Economics of Business Ethics: Reward the Behavior You Want to Incent

A recent blog post from Seth Godin, No such thing as business ethics, stimulated some discussion among the folks here at WebAD. I think Seth has some very good insight about ethics in the business world and striking a balance between maximizing profit and being ethical while maximizing that profit.

Seth’s core idea that businesses can’t be ethical since they are just collections of people leads to the conclusion that companies need to hire ethical people in order to be ethical in business practices. Our very own Jamison Morrow has some very powerful and insightful feedback about these ethics ideas proposed by Seth. In his opinion, companies should incent employees to engage in ethical business practices through their corporate culture. This practice puts the ethical impetus on the company again instead of the individual and it’s a matter of basic economics to reward the behavior you want to incent, in this case ethical business practices.

Feel free to comment and share your opinion on this important subject.

Jamison’s Feedback on Seth’s Blog Post About Business Ethics

I find it odd that people bother to have debates on ethics (or write articles on it), when they haven’t agreed upon a common standard of basic human morality. Without one standard, everyone is equally correct. It’s like trying to define algebra when you’ve yet to define the common operations upon which algebra is built.

Furthermore, people will always make the choices that best maximize their personal utility. For example… I feel recycling is a good thing. I *always* wash out my empty cans/glass/etc. I have a recycling bin just downstairs, which is picked up bi-weekly. It’s great, and easy, and I feel good doing it. Even when it wasn’t downstairs (at my old residence), and I had to bag it up and drive it somewhere, I still did… because it made me feel good, and I felt it was the right thing to do. However, if you moved that recycling system 1000 miles away from me, I dump everything without thought. Now it cuts into things that I value far more than the environment. Like time with my family, my income, my weekend, etc. I don’t have enough incentive to recycle, even though I’m an ethical person (by the green standard) with a great desire to recycle.

To that end, I contest that if you want to create an ethical company, you don’t hire ethical people…you create an environment where being ethical (by your chosen standard) has greater incentive than the alternative.

3 Comments

  1. it is hard to get people to follow good ethics at work but it can be done with the right motivation

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