Keeping The True Purpose Of Business Top Of Mind
It is a formula destined for failure when the objective of a business becomes the acquisition of wealth instead of growth of the company and its services, remarked an ethics professor here.
The observation came during an “Ethics Awareness Luncheon,” sponsored last month by the New York Chapter of the Chartered Property Casualty Underwriters Society featuring Dr. Ronald F. Duska, professor of ethics from The American College in Bryn Mawr, Pa.
The lecture, entitled “Harry Potter, 9/11& Enron: Ethics Implications for Financial Services Professionals and CPCUs” drew an analogy between the moral equivalents found in the characters from the best selling books by J.K. Rowling, the terror attacks and the corporate scandal.
From an ethics stand-point, Duska compared Enron to a scene in “Harry Potter” where Harrys cousin, Dudley receives 35 gifts for his birthday and becomes upset because it is the same number of gifts he received the year before. He wants one more gift.
“Think of Enron as Dudley,” Duska said. “Dudley is an accumulator. One who wants more and more for the sake of wanting more.”
The analogy, he pointed out, is that Enrons executives lost their focus for their company, leading to its downfall.
“Businesses do not exist to maximize profits,” Duska opined. “They exist to provide goods and service to others.”
The drive behind a business, he added, should be to maximize profits, but profits should not be the goal.
“Counter to conventional wisdom, I want to suggest that while accumulating wealth is a goal, a company begs for trouble when it becomes the primary goal, for then there is no compass to use to check ones direction,” Duska reflected.
Unfortunately, many can be tempted and must be restrained from “losing their soul” not in the spiritual sense, Duska suggested, but in the sense of what the business stands for.
Enron, he noted, wanted to be “the worlds biggest” company, but no one in the corporation could come up with a reason or purpose for doing it, said Duska. Even in reviewing the companys statement of purpose on its Web site, he said, there is no clear definition of what the company wanted to be.
He also blamed Enrons accounting firm Arthur-Anderson for losing its focus, saying it was a clear example of what happens when a company “shunted aside its responsibility for fees.”
In answer to some questions after the lecture, Duska said in his 20 years of teaching he has become both discouraged and encouraged to see businesses practicing ethical standards. He said he had hoped the “Cowboy Capitalist” practices (no relation to Texas or Enron, he insisted) of investment had died away, but Enron gives him cause for concern.
“Im not sure things will get better, but I expect them to get better,” he said, adding, “The optimistic side of me has great confidence in the markets.
“The markets have a way of winnowing things out,” Duska remarked.
He said one practice that would help decrease the temptation toward making profits the primary goal would be to cease focusing on short-term market performance and tying executive compensation to the markets.
The shaken faith in the stock markets and analysts would produce a new information source, he predicted, adding that investment risk insurance could become a primary driver of this information product.
Related to the topic of 9/11, he said Harry Potter serves to delineate the moral relevancy of actions. The terror attacks are unquestionable choices between good and evil, such as the battle between the evil wizard Voldemort and the good apprentice wizard Harry. Duska then made the comparison to Harrys relatives, Aunt Petunia, Uncle Vernon, and Dudley, who, like Enron executives, lost their focus on what is right and wrong.
“Being ethical is hard, if it werent we wouldnt praise it,” Duska noted in closing.
Mark Ruquet is an assistant editor of NU’s Property & Casualty/Risk & Benefits Management Edition.
Reproduced from National Underwriter Life & Health/Financial Services Edition, April 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.