There's Ethical, and Then There's Ethical

I read an interview last week with Robert Iger, CEO of the Walt Disney Company, in which he quoted Warren Buffett on hiring criteria: "When you hire someone, you have to look for brains, energy and integrity, and if they don't have the third, integrity, you better watch out, because the first two will kill you."

I've been thinking about that comment all week, because it's so completely right, and yet not completely right.

If you hire someone who's bright and energetic and unethical, you can be sure that some morning you'll wake up with shoeprints on your back, as he or she has stepped over you to get to the next run of the corporate ladder. But that's not the end of it, or how can you explain -- to go back to what seems like prehistory now -- a company like Enron, headed by a pastor's son and dedicated Bible-study participant, Ken Lay?

Was Mr. Lay simply a hypocrite? I know that's the response many people had, but that's too simple. He's no longer able to answer for himself, but I'm willing to accept that his faith was genuine, and his attempts to discern deeper meaning in Scripture was also genuine. So what happened?

Too many companies, I believe, create cultures that encourage ethics within the company, but encourage "unethics" outside the company. Call it the "us against them" mentality. The usual explanation for this kind of behavior (should anyone raise one of those pesky should-we-really-do-this questions) is, "If we don't, they will."

Need I comment that this is not an acceptable ethic?

I don't have the answer about how to create a 360-degree ethical culture. I don't think required business-school classes in ethics, for example, will solve it (if you don't have a solid moral compass by the time you're 25, I doubt that four course credits will give you one). Sure, a little less focus on short-term stock gains (which means changing the way senior executives are compensated) would help. But for now, I'd rely on regulation more than the natural goodness of people....