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Michael Josephson on Ethics Codes

Believe it or not, I am one of about four or five people who are “experts” in the character education business — I and three consultants did the first and only industry-wide international study of the character education business as a business. As a result, I came out of the study with highly developed notions of both individual and institutional character — in fact, I am halfway through a book called “Character as Competitive Advantage.” I receive a dozen newsletters every week including Michael Josephson’s from the Character Counts! institute. And here’s one worth a look-see: Ethics Codes Don’t Make People Ethical.

It is my view that the most strategically important aspect of a business to get right is that business’s “character.” Not “culture.” Not “ethics.” But character. If you are a single-person business, that character is synonymous with your personal character. But if you’re a growth-oriented business with multiple employees, the company’s character is more than the sum of the individual characters. So, without giving my upcoming book away (sorry, you gotta buy it!), here are some general ideas about what a company’s character is and why it matters.

  • Character is about more than just doing what is right and wrong. One aspect of character is performative, that is, it is about reaching our highest potential through qualities such as effort, diligence, endurance, perseverance, setting high goals, and the other aspect of character is moral, that is, living with and helping other people rather than hurting them through qualities such as fairness, honesty, justice. Character as a true business asset involves both branches. Performance character — which most businesses focus exclusively on as their “character” — without moral character focuses exclusively on success achieved at the expense of others. It is often successful in the short-term, but devestating in the long-term (think of Bear Stearns, Citigroup, Bank of America, Merrill Lynch, and that entire crowd of over-achievers that had blindingly narrow notions of their institutional character). Moral character — which is what folks like Michael Josephson focus on — without performance character gives us good intentions without action. In all my consulting and business experience, one thing and one thing only typifies businesses who enjoy long-term, year-over-year success: the highest levels of performance character wedded to lived values.
  • Michael Josephson is a big believer in “values” as the foundation of character, but I’m a dyed-in-the-wool, totally convinced follower of the “assets” model of character. I not only think that the assets model most thoroughly and convincingly explains why some people are great and some are rotten (for example, kids who have parents who are involved in the kids’ activities turn out better than kids who are ignored by their parents, so “involved parents” is a “character asset”; kids who engage in creative activities turn out better than kids who watch TV all day, so “active use of time in creative activites” is a character asset and “watching TV” is a character liability), thinking in terms of “character assets” can easily and quickly be deployed to produce both a “performing” as well as a “moral” company. Since my entire book concerns the “assets” that give companies great character and, as a result, a long-term competitive advantage, I’m not going to go into great detail (buy the book, me bucko!). Suffice it to say that “assets” include such internal assets such as “purpose,” “reflection,” and “discipline,” and external “assets” such as the breadth and quality of community relations.
  • Most importantly, you can never have “character” without “meaning.” While making a ton of money is a worthwhile goal, it is a depressingly small and jejune goal for humans with infinite potential to waste their time on. Karl Marx once said that what makes humans human is their ability to creatively change the material world — humans are “object makers.” The philosopher and moustache-of-the-month winner Friedrich Nietzsche took issue with this — he thought that people were special because they could create meaning and value — humans were “meaning makers” in the Nietzsche universe. I used to be a dyed-in-the-wool Marxist and now I’m an equally dyed-in-the-wool entrepreneurial capitalist. Why? Because I’ve come around to the “meaning maker” point of view. And nothing creates a high-functioning, moral company faster than “meaning” that encompasses more than just adding zeroes to your paycheck or serving the customer.

    To my mind, these are the three pillars of a company’s character: combining performance and moral character, developing a company’s “character assets,” and running a purpose-driven company, with purpose defined as broadly as possible to encompass as much of the human potential a company has as possible.

    In the end, yep, “ethical codes” have no more value than the paper they’re written on.

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  • One Response to “Michael Josephson on Ethics Codes”

    1. I just love your blog! In particular this entry and the one on Gilbert Kaplan. I was the mezzo soloist in one of his many “gigs” for Mahler’s #2. One of those bucket list things for me, for sure.


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