Ethics in the Workplace

Tax authorities often face a compliance dilemma:  how to convince the public to report and fairly pay their taxes.  The Internal Revenue Service resolves this dilemma a number of ways.  Twenty years ago, the Service decided to recreate itself from that of an intimidating bureaucracy into a benevolent authority.  This change meant that the IRS would now openly accept an appeals process that any taxpayer decides to initiate, otherwise smiling rather than frowning as they conduct audits.  Otherwise the IRS has kept in place its system of civil and criminal penalties to compel compliance - just in case benevolence doesn’t work out.

In the business world, compliance usually means doing whatever the boss says and contributing to the profits of the organization.  The consequences of noncompliance can mean the failure to receive a promotion, a raise in pay or job continuance.  These measures seem fair and expected.  So in today’s world, obedience to established authority is often enforced through a system of intimidation or the threat of consequences. 

But if tax collection agencies and business entities are perceived as unethical in their practices or in their conduct of business, compliance ends up requiring ever more costly strategies to enforce. The public simply does not respond favorably to feeling mistreated or deceived. 

Last month, the writer chanced to hear about and attend the 18th Annual Conference of the European Bahá’í Business Forum (www.ebbf.org) held at the Depoort Conference Centre in The Netherlands.  EBBF is a non-governmental organization that attracts business people who are concerned about how to implement ethical values and moral leadership in the workplace.  Its members are from 60 countries worldwide.  Its seven core values are ethical business practices, social responsibility in business, values-based leadership, sustainable development, a new paradigm of work, partnership of men and women in all fields of endeavor, and non-adversarial decision making through consultation.  In essence, EBBF believes that ethics must be considered and augmented in the workplace if societies are to advance and prosper.

David Patterson, founder and CEO of Northwater Capital Management, a Toronto based firm that manages $10b in assets, led the program of 20 speakers and facilitators.  He said that business institutions must adjust to a multi-dimensional world.  Presently, he explained, managers consider business as containing cells dependent on one another.  ‘Marks of this paradigm,’ he explained, ‘are high growth, low communication, low motivation, low fun, massive damage to support system (environment, families), and cause/effect/blame.’ He went on to say that managers need to understand that they are all in a single super-system.  ‘For us, in business, it’s not about our shareholders (but) it’s also about our employees, their families, our suppliers, community and environment. The central dynamic of this (new) paradigm is to help grow the people, which then helps grow the firm.’

Next to speak was Julian MacQueen.  With over 40 years in hotel management and founder of Innisfree Hotels, MacQueen said that employees are not required to leave their personal problems behind when entering the workplace.  That would be “schizophrenic”.  His organization provides profit sharing throughout, supports employees resolving personal problems, recognizes anniversaries and birthdays, and rewards ideas that contribute to ethics.  This close attention to employees shows up in an outstanding cooperative culture and long years of service.

World renowned economist, Augusto Lopez-Claros, told attendees that peoples need to see themselves as world citizens rather than as defenders of country or creed.  ‘We are a single race, the human race. Differences in the world between the highest and lowest educated countries can be bridged within a century,’ he said.  As a director of the World Economic Forum for some years, Lopez-Claros pointed out that higher education is what drives economic growth.  Countries need to be builders rather than exploiters of human capital.

Michael Hammer, Executive Director of the One World Trust, stressed the importance of decision-makers in organizations being held accountable to those affected.  Ramin Khabirpour, Managing Director of Danone Poland, told the audience that unbridled growth can no longer be sustained.  Business, he added, must give something back to the people rather than simply exploiting resources.  Dorothy Marcic, faculty member at Vanderbilt University and Fulbright Scholar at the University of Economics in Prague, said that the cost of doing business goes up where trustworthiness is lacking.  Her book, Managing with the Wisdom of Love, has been an international best-seller.

At the end of the four-day conference, attendees dispersed thoughtfully.  The writer, perhaps no less contemplative, wondered when such themes might permeate the thinking of tax authorities and business leaders.  For the foreseeable future, compliance, at least in matters of taxation, is bound to remain involuntary.  After all, is the American expatriate community really prepared to voluntarily pay taxes?