Chapter 1
The Social Contract
“All of this could have been avoided had the company not put
profit ahead of safety.”
Reporter commentary on recall of defective
tires for SUVs, 2007
“Safety is everybody’s responsibility. It’s not just the federal
government’s job to catch safety defects.”
Olivia Alair, spokeswoman for the National
Highway Traffic Safety Administration,
commenting on 2010 Toyota recalls
As Real As It Gets
The consequences for lack of ethical standards integrated into
decision making processes are staggering, and they have hit
every single one of us already. Whether you have lost a loved
one to defective products, lost your health due to poor envi-
ronmental practices, lost your retirement after stock in a com-
pany or a financial institution went belly up and the CEO went
to jail, lost your house as a result of unsafe banking practices,
or even lost potential earnings because of discriminatory prac-
tices, you have experienced the very real consequences of
systemic unethical behavior.
We can measure the impact of lack of ethics—in perhaps
the most real terms possible. We can measure it in terms of
lives lost, permanent physical injury, deleterious health infrac-
tions, gender or age or race disparity across organizations
resulting in differential survival and quality of life, disabling ill-
nesses, poverty, crime rates, self-sufficiency, terminal environ-
mental damage, and even war, terrorism, and riot (in Chapter 2,
we will look at a framework for these measurements). In essence,
we can measure and know whether our actions and products
have been socially responsible.
Estimates on costs of unethical behavior put the price tag at
$3 trillion dollars a year—just in the United States, and just in
the for-profit sector.
Thus, that figure does not include costs in
2 Ethics by Design
government, non-profit, military and education sectors, or any
estimates from international entities. These figures also reflect
only acts like embezzlement and theft, but do not include any
estimated costs for settlements over deaths, injuries, discrimination,
environmental impact or other measures of social irresponsibil-
ity. The costs and consequences of the absence of ethics in
organizations and organizational planning are indeed stagger-
ing—both to the organization and to society.
By contrast, the benefits of ethics integrated into organiza-
tional performance—at all levels—amount to some “holy grails”
of success that many organizations strive for but few achieve.
Businesses that deliver desirable results to society, and prod-
ucts that have a desirable impact, enjoy long-term success and
profit over many years, not just short-term successes. These
same businesses attract top talent and employees who want to
work in an ethical setting that makes meaningful contributions,
thereby allowing the organization to maintain a workforce that
is inherently driven by ethics as part of their practice and
remains loyal to the organization over many years. Turnover
decreases, productivity increases, and profits increase—and
society wants that organization to keep delivering the same or
more. Organizations which possess, apply, and communicate
strong ethical core values—such as stakeholder service, social
responsibility, ethics, and sustainability
—are just as, if not more,
financially successful than their corporate counterparts.
When these benefits are understood, there really is no
better business plan
than one that integrates ethics from the
A strengthening trend across professions over the past 50
years has led to more fields like law, business, medicine and
engineering integrating ethics into their professional training
and higher education curricula, recognizing that ethics are an
important part of professional practices and a desired charac-
teristic of the new workforce.
Some of these professions have
been forced—by society—to do so after patterns of practice led
society to conclude the profession was not willing or able to
regulate itself. After the Watergate scandal, for example, law
schools were required to provide a course on legal ethics that
every student now has to take.

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