Business Ethics - A contradiction in terms? Part 3

In this 3rd reflection on Business Ethics – A Contradiction in Terms?[1], I want to build upon the idea of, not whether we can see and stick up for what is right, but whether what we see is really real? In the World of Commerce & Contracting, we often think that the contract is cut and dried, cast in stone, clear as … then we are surprised when there are disputed terms or interpretations. We often think that our relationship with the counterparty is collaborative and for mutual benefit, then we are surprised when there are disputes about who is responsible or at fault. We often think that we are clear and transparent in our communications, then we are surprised when the other party just does not get it. I could be mounting the case for simplifying contracts or building better collaboration, but these situations also have an ethical implication. If we can’t always believe what we see or hear, then how do we decide who is right or wrong? Maybe we are both right from our unique perspective and the other is just not listening?

By way of example, lets juxtapose the mechanism of contractual Service Level Agreements (i.e. measures of service delivery performance) and the mechanism of effective communications (i.e. what we see and hear). SLAs are great to provide clarity to performance expectations, such as system availability and responsiveness, and typically have service level ‘credits’ associated with them (i.e. penalties for non-performance, up to the level of expected profit) and ‘earnback’ (i.e. ability to waive ‘credits’ through improved performance). Pretty clear so far? No room for ambiguity or to ask, ‘is this right’? So why do most people still spend so much time on reviewing SLAs and some even seek to make money out of SLAs? If the supplier consistently fails to meet their SLAs, then effectively there is 10-15% of that service fee which does not have to be paid by the buyer. Sometimes, the buyer writes it into their budget and the supplier writes it off as non-deliverable and allocates resources elsewhere. If I were making the case for successful negotiations, this would be an example of win:lose or, even worse, lose:lose because in the end it is service delivery and reputation which suffers for both parties. But I am making the case for ethics and for acting with integrity for, as they say, ‘what goes around comes around’. SLAs are about driving good outcomes and good behaviours, not making money, but can lead to bad outcomes. So, is it ethical to insist on the letter of the contract, when the spirit of the contract may be very different i.e. to insist on penalising non-performance when the mutual outcome should be improved performance?    

Perhaps the mechanism of effective communications can give us a lens to look at this situation. Surveys suggest that words carry 5-7% of the communication, tone of voice another 45%, and body language conveys the rest i.e. what we hear is 50% and what we see is the other 50%. Right? So, for the SLA example, we might say that what the contract says is 5-7%, the inflection or tone on top of the words (especially in China) or perhaps the effort or attitude of the supplier is another 45%, but it is the interpretation of the ‘body language’ which is so important. What are the parties saying that they are not saying? What are the, often subliminal, messages we are sending which support or counter the spoken word? What is being left unsaid in our words and tone? Perhaps, what we hear and see is not really real? Again, I could be making the case for effective communications and relationship management which helps us to better understand the other party (often by just spending time together outside of work), but I am making the case for ethics and acting with integrity.

Integrity is about saying what you mean and doing what you say. Ethics is about acting morally, in our case in the World of Commerce & Contracting, in line with the spirit of the contract as well as the letter of the contract. In my example, we have SLAs for good reason but if they are driving poor or unethical behaviours, then we should just step back and ask, ‘is this right?’ Ethics is also about the study of morality and how we can understand it better. We understand ethics better by understanding how we communicate, verbally and non-verbally, as well as how we see the world. If we see the world as ‘dog eat dog’, supplier screw buyer (or vica versa), or win:lose, then this colours our ability to listen to the other party and to act with integrity. As Buddha has said, “Through our senses the world appears. Through our reactions we create delusions. Without reactions the world becomes clear.” 

This year, World Commerce & Contracting is focusing on business ethics in the face of Covid-19 and the uncertainty and disruptions which it brings. Let’s react with true listening and empathy, avoid delusions about the intentions of the other party, and work together with integrity. Let’s not make business ethics a contradiction in terms, but an example to others. Discover more at www.worldcc.com as we unpack and promote ethics and social value in 2021!

Note that the views expressed in this article are my own and do not necessarily reflect those of World Commerce & Contracting.

[1] See LinkedIn link https://www.dhirubhai.net/pulse/business-ethics-contradiction-terms-part-1-bruce-everett/?trackingId=hk%2Bpf0v6E0SE4QAm4Gt9tg%3D%3D