By Jeff Van Duzer, Dean of the School of Business and Economics,
and Kenman Wong, Professor of Business Ethics
It is still too early to draw a complete set of lessons from the recent debacle at Enron, the Houston energy giant, but we can probably make a few preliminary assessments. First, it seems likely that some laws were broken. In and of itself, this is not terribly remarkable. A combination of greed and opportunity will often result in criminal behavior.
What is more noteworthy, however, is how few laws will in the end likely turn out to have been broken. In many instances, it appears that Enron was merely operating in accordance with some of the more conventional notions of good business. In recent decades, popular business philosophy has demanded that corporations be managed with a single end in mind. The sole job of corporate management indeed their fiduciary duty is to maximize the return on the shareholders' investment. While this duty does not require corporate officers to break the law, it does require, where necessary, pushing to the very edge of legal limits.
By these standards, many of the actions taken by Enron's management were laudable. They took full advantage of the accounting and legal loopholes that existed. Where loopholes couldn't be found, political muscle was used to create them. Choices made in gray areas were consistently and aggressively pro-Enron. But for the stunning collapse of the company and the human wreckage it has left behind, Enron might well have been used by many as a case study of good business. In our view, however, Enron marks another crack in the edifice of this "shareholder-value-is-king" approach to defining "good business."
What, then, is a "good" business? This question rests at the very heart of Seattle Pacific University's School of Business and Economics. Likewise, it has significant practical implications for Christians in the business world.
One way to examine the question is by reference to a not-too-far-fetched human metaphor. From a legal perspective, a corporate entity is often characterized as a "person," with an independent existence and a capacity to make contracts, sue and be sued. If a corporation is held to legal standards applicable to a natural person, why then shouldn't it be held to moral standards as well? From this vantage point, we might ask what are the characteristics of a good person? What makes for a good colleague? A good neighbor?
At SPU we have defined this essential goodness as the intersection of two core values. According to our mission statement, we seek to graduate students of competence and character. Both values are important.
A good business must be competent enough to stay afloat. It must understand its markets, must steward and invest its resources wisely, and must know when to take risks, when to cut losses and when to decline opportunities. Basic competence requires familiarity with customer needs, good internal organization, management of human dynamics, and strategic action within appropriate legal and moral boundaries. Competition will see to it that a business that is not good in this sense will soon cease to exist.
However, competence by itself does not ensure goodness. A next-door neighbor may be very successful, drive the finest cars and be regularly written up in the newspaper. Still, we don't know enough to say whether he is a good person. On further examination, he may prove to be selfish, greedy, rude or arrogant. His business practices might make him untrustworthy. In other words, he might be competent but lack good character. The same can be true for a business. Competence (or even greatness) in maximizing return on investment, increasing market share or improving brand recognition may make a business big, efficient, profitable and successful, but it is not, in and of itself, enough to make it good. A good business must possess both competence and character.
What then does good business character look like? Let us suggest three attributes.
Second, a good business is respectful in nature. The competence of a financially successful colleague who regularly belittles her husband, treats her subordinates with disdain and never says "thank you" to waiters in restaurants does not make her good.
Respect involves recognition of one's place in the order of things and an acknowledgment that others have significant places of value as well. A respectful business acknowledges that its employees have dreams and callings of their own and seeks to make the achievement of these goals possible. A respectful business recognizes that it operates within an economic system that is fundamentally built on trust rather than legal compulsion or financial incentives and nurtures the system by keeping its promises even when it is not legally compelled to do so. A respectful business recognizes the natural environment in which it is situated and seeks to walk through the world leaving only light and temporary footprints. A respectful business honors the trust of its customers and shareholders and the labor of its workers.
Finally, a good business must be about something more than itself. It is not enough for a business to go quietly about its business, even if it does so with integrity and respect. To be good, a business must have a purpose beyond itself, beyond simply maximizing return to its shareholders, securing a larger share of the market, or increasing the wages of its employees. Most corporate mission statements are pabulum (and are regularly recognized as such by cynical employees, managers and customers alike) as they focus primarily on internal values or set their sights on nothing higher than corporate politeness. To be good, a business must strive for something more and give its employees more to work for than the mere attainment of financial gain. It must have vision, a reason for being.
Making the Ends Matter
But the ends do matter. A good business understands its raison d'Ítre as seeking to improve the world in which it is privileged to operate. It builds and delivers products and services that improve the lot of the "common society." It builds up the communities in which it operates. It seeks an increase in the well-being of its major stakeholders. And it counts these or other "beyond-self" ends among its primary purposes. Profit, while necessary to achieve these broader objectives, is not the final goal. Profit is a means to these ends.
None of us would likely call an associate good if he or she proved deceitful or treated others with disdain. Similarly, we would likewise question the character of one whose personal ethics were guided only by a goal of maximizing his or her own gain. Business character should be no different. As Christians living after the collapse of Enron, we have a unique opportunity. Many in the business community appear ready to consider "another way." It is difficult to find even a single verse in Scripture that affirms the pursuit of wealth as a legitimate end in and of itself. On the other hand, wealth is routinely characterized as a tool provided by God to be used in the service of higher goods. As Christians, we can take the lead in questioning the "return-on-investment-is-everything" formula for business. We can model a better way, a way of integrity and respect, a way that pursues a higher calling.
Jeff Van Duzer (left) is the dean of Seattle Pacific University's School of Business and Economics (SBE). For 20 years, Van Duzer practiced law with the firm of Davis Wright Tremaine in Seattle, specializing in finance and natural resources. In August 2001, he left law practice for his new role at SPU. A frequent teacher and preacher at Bethany Presbyterian Church in Seattle, Van Duzer has worked as a local board member for The Salvation Army and served on United Way disbursement panels.
Professor of Business Ethics Kenman Wong joined the SBE faculty in 1997. He was selected as SBE's Scholar of the Year in 1998 and Teacher of the Year in 2000. Wong's ethical approach to business and teaching shows in his textbook Beyond Integrity: A Judeo-Christian Approach to Business Ethics (with Scott B. Rae, Harper-Collins/Zondervan: 1996).
Van Duzer, Wong and several other colleagues are in the early stages of developing a Center for Business Ethics to be housed at SBE.
Editor's Note: A version of this article first appeared in Washington CEO magazine. SPU faculty members have become the primary contributors to an ongoing column in Washington CEO titled "Good Business."