Ethics after Socialism: Now or Ever?

University of Economics – Prague Czech Management Center George Starcher Originally Published by European Bahá’í Business Forum 1995

Ethics and business don’t belong in the same sentence. At least in the former socialist countries of Europe. Why would you want to teach ethics to managers, who are compelled to lie, cheat and steal in order to survive in today’s economic situation? After this transition is over, companies will only then be able to even think of morality. These are the comments we heard over and over again during our time working in Bulgaria. And not only in Bulgaria. We have heard these in Albania, Czech, Slovakia, and from colleagues who have worked in Poland and Hungary, as well as from U.S. academics familiar with this part of the world. Yet it was with cautious hopefulness we agreed to return to Bulgaria and spend one week in Sofia helping the faculty of a small, private business school to integrate ethics into their curriculum. Knowing this part of the world and how universities typically work, we spent the first half-day focusing on interactive teaching, based on the firm belief that ethics could not be effectively taught using the normal lecture-only approach. So far so good. Then we moved to ethics. Pandora came, too.

Ethics in Bulgaria

When we asked for examples of unethical behavior in Bulgarian business, we could scarcely keep up with the response from faculty. Here is condensed list of their comments.

Covering a mistake: reports, products, delivery, etc.
Lying about jobs being secure.
Lying about product quality; false labeling.
Attempts to create a permanent myth about product quality.
Not respecting specifications, particularly in building projects.
Lack of purity in medicines (a number of people have been harmed because of this).
Product claims without testing.
Accounting tricks.
Bribery, payoffs.
Corruption, kickbacks.
Stealing goods and services from company (including long-distance phone).
Stealing time from company, either by barely working or by running a private business on company time and using company resources.

While none of these are unfamiliar to Western businesses, the incidence of these activities is reportedly quite high. In fact, it is so widespread, almost no Bulgarians we talked to could imagine business surviving without engaging in the above behaviors. As a basis for beginning the discussion, we shared Kohlberg’s (1981) model of moral development, which has six stages: Level One (stages 1 & 2) are when people only see their needs in a conflict situation. These are the levels children are on when they think they must have whatever they want whenever they want it, and, unfortunately, some adults get stuck there. Level Two (stages 3 & 4) are based on an idea of collectively determined fairness. Level Three (stages 5 & 6) is a principled awareness of fairness based on an personal conception of reciprocity and equality. Here’s how they look, stage by stage (Kohlberg, 1969):

Obedience for fear of physical harm; might makes right.
Obedience for fear of being caught and punished (not physcially).
Conformity to social norms; not wanting to be criticized by the group; looking to others for direction.
Conformity based on a set of societal rules and laws seen as codifed wisdom and which attempt to set the same standards for all citizens.
Behavior based on universal system of justice; moral dilemmas are complex and diverse points of view must be considered; needed here is ability to think abstractly and to weigh competing claims; often supported by written codes, such as a constitution.
A higher development of stage five, though not in written form; important here is that principles are ethical, universal, abstract and consistent.

After going over the six stages, the faculty overwhelmingly agreed Bulgarian business was operating mainly in stages one and two. Businesspeople were ethical only when they feared punishment. Under the old regime, they said, everything was forbidden unless is was expressly allowed. Now it is the opposite. Everything is allowed unless expressly forbidden. Very few things are forbidden. Those that are may be ignored, as along as there is little fear of being caught. How to create a new consciousness in such an environment was a daunting task. But we didn’t let that constrict us. After all, here were we two, “can-do” expatriate Americans, living in working in Europe for years. George has been in various countries in Europe for 30 years now (currently France), 20 of those working for McKinsey & Co as a senior manager and director. While Dorothy has lived in Prague for two years, teaching MBA students and practicing managers and previously spent 16 years doing similar in the States. So we tried, with virtually no success, to “instill” ethics into the curriculum of these faculty. Even though some of them agreed with the importance of integrity, they were adamant in the belief that for now, such ideas could not work in Bulgaria and would be seen as extreme naivete on the part of businessesmen.

Educational components

We decided to take a different approach. First we would identify specific teaching activities, which would address ethical components of educational units. Though this is a highly educated population, ethical principles or moral education were non-existent in schools during the past 40 years. For their part, they quickly learned the fundamentals of changing courses to include ethical principles. We gave them the Teaching Goals Inventory (Angelo and Cross, 1993, 20-21), which includes 52 items, listed as teaching goals. Of these, they chose eight which would foster ethical development of students. They were (original item numbers are at the end of each):

Develop an informed appreciation for other cultures (34).
Cultivate a sense of responsibility for one’s own behavior (44).
Develop respect for others( 47).
Cultivate emotional health and well-being (48).
Improve self-esteem/self confidence( 45).
Develop capacity to make wise decisions (51).
Develop capacity to make informed ethical choices (35).
Develop an informed historical perspective (32).

Their reasons for choosing the above were logical, indicating a keen awareness of what constitutes ethical foundations in education. If one understands other cultures, there can be increased understanding of the ethical traditions of that country, which is helpful with international business. Such awareness can also foster a heightened sense of the moral principles of the student’s own country, for the contrast often leads to further insights. Learning about other cultures can add to gaining respect for others, though that is also a concept of its own within a given culture. If there is more respect for others, people will tend to behave towards each other in a more ethical fashion. And if there is also a sense of responsibility for one’s own behavior, an awareness of consequences to others and to self will lead to a more moral consciousness. However, in order to achieve this at a high level, people must have emotional health, or else they will not be able to make healthy choices. And they must also have self-esteem and self-confidence, for without those, pessimism reigns. People with confidence are more likely to have internal locus of control, to feel their behaviors make a differerence, that if they behave with integrity, it can have positive effects. On the other hand, pessimists may say, “What’s the use? It doesn’t matter what I do, the situation will remain the same.” Numbers six and seven above are self-explanatory, while developing an informed historical perspective can help students to understand the moral context of today’s business climate and what mistakes to avoid in the future to make the situation worse. Yet even with these understandings, the faculty still insisted that ethics was anathema to current Bulgarian business practice. Students needed help in learning how to survive in this Wild West environment, where many were in the Klondike fever mentality of earn as much as you can, as quick as you can, however you can. It was more than that, too. It was often a matter of survival. One faculty courageously told us his story. He earns 10,000 Lev per month (less than $200). If he acts with complete honesty, he would pay taxes of 7500 Lev per month, leaving 2500 for living expenses. And as he put it, he baby’s diapers cost 2000 per month. What choices does one have under such a system? they asked. Further complicating the matter is the fact that the tax laws change almost daily and almost no one, lawyers and lawmakers included, understand how to be totally legal with taxes. We approached the brink of helplessness, where some other American academics had arrived. George had talked to some who bluntly said, “Don’t bother with Eastern Europe now. Wait with ethics for later on.” But still, we thought, there had to be SOME way, some means to break through the unwillingness to consider ethics as a meaningful sphere of thought. Then we realized we were looking at the situation in dualistic terms of either/or, i.e., either there was corruption or there was not. Could we, instead, see the situation in developmental terms, and look to situations where ethical behavior was practiced, or at least accepted as possible in this climate? And from there, we could build.

Redefining ethics

Our next step was to look at ethical and unethical behaviors in a wider context than corruption, lying and cheating. We used Laura Nash’s (1990), as well as Mahoney and Vallance’s (1992), examples of unethical behavior in the workplace as a starting point. Her list of 30 items included:

Humiliating people at work
poor quality products and services
neglect of one’s family
courting the business hierarchy versus doing the job well
favoritism
making an alliance with a questional business partner, etc.

We asked the faculty to list business practices, used now or those which seemed to becoming more important. The exact question we asked was “What things does Bulgarian business do well or are improving on that relate to ethical behavior?” Results were as follows:

Customer service, an idea just now gaining importance. Until very recently, customers were treated rudely or even with contempt (this is true in other former socialist countries, as well). The faculty said this new behavior was ethical because it was a means of giving honest value for what was purchased.
Product quality in some goods, including shoes, textiles, chemicals, cheese and bacteria for cheese, wine food processing, cigarettes, electric cars, software, and plumbing fixtures. Reasons for this being considered ethical are the same as #1 above.
More interest in quality of environment and, in fact, a reduction in the level of pollution. The faculty saw the connection here as one of companies having respect for the quality of life of the community, not just their own profits. However, as one professor mentioned, decreased pollution may not be due so much to ethical behavior as it is to reduced production of factories as the economy has slowed and GNP has slipped to 50% of its previous level.
Attention to quality in building projects is on the increase, which is both an “honest value” issue as well as one of safety.

Other related issues given were:

An educated workforce, which provided for ethical foundations, as workers could be trained to do many kinds of jobs, thus giving honest value to company owners.
A rich cultural life, including many quality theaters, ballet, opera and so on. Such resources increase the quality of life (an ethical issue), and they also bring more value for local businesses to gain foreign partners, since expatriates would be more willing to live in a city with these options. And finally, they bring more value and quality to tourism.

At the end of this discussion, the feeling in the group had changed from pessimism and near hopelessness to one of hopeful possibilities. As we continued on this path, the group became more and more upbeat. They decided to focus on quality service as one to consider emphasizing in their curriculum, partly because it was clearly an emerging value in the society and also because the college was in the process of developing a hotel and tourism program. Attention to customer service was vital to the success of the new program.

Foundations of service

What were the values inherent in giving good service we asked, and what behaviors in the company would foster such service? Values included:

Integrity/honesty. (Is the quality high and do you deliver what you have claimed?)
Trustworthiness/reliability. (Is the quality consistent and can you count on getting it when it’s promised?)
Respect. (Do you treat people with dignity?)
Care. (Do you treat people with consideration and concern for their needs, not yours?)
Responsibility. (Do you make sure you do what it takes to satsify the customer?)
Humility. (Can you be a servant to customers and treat them with deference?)

Behaviors they listed which support these values were:

Productivity. (Working hard and smart to give the customer honest value)
Sensitivity to cultural differences. (Making sure customers from various countries are pleased in ways they prefer)
Continuous improvement. (Developing quality circles or similar design to focus on enhancing level of service)
Pleasant environment. (Both surroundings and appearance of employees should be pleasing to customers)
Make customers feel special. (So they feel really good)

How could these important concepts be made into a course and also be integrated into other courses? Faculty mentioned using relevant articles from journals and magazines, introducing case studies, identifying a good textbook (if possible), using role plays in class which illustrate good and bad service, individual and group projects (students visit various retail/restaurants and compare levels of service), and have students practice with one another giving service. However, the faculty stressed the vital importance of receiving training for themselves. Since they were all products of a command economy, which held no regard for customers and had no concern for service, they felt an urgent need to learn the foundations of a service mentality. Otherwise how could they do justice to the students?

Overcoming obstacles

By this time the faculty were full of energy and enthusiasm for these new ideas, this new approach. Then someone gave the group of dose of reality. How was it possible to take the time to develop this new course and also integrate these concepts into other courses when they were already overworked? And since their salaries were at the subsistence level, most of them used any free time for private tutoring of students. Plus, they were paid by the teaching-hour, not on a salary level. Another issue had to do with the attitude of the school towards academic standards. Faculty felt there was not enough accountability and this was because the school was supported 100% by tuition. Finally, they felt too much like “hired hands,” who were rarely informed about what the school was planning or doing. In fact, this workshop was their first opportunity to meet one another. We therefore promised to act as intermediaries with college administration and list the requirements needed in order for the faculty to have the environment and support needed to introduce these new ideas into the curriculum. In short, how to get the school to be more ethical with faculty and with students. The three major problems we saw here were need for outside funding (grants, donations), the necessity to include faculty in the communication network of the college and even to involve them in some decision-making, and, finally, the need for justice in faculty remuneration, part of which meant paying extra for those involved in developing this new topic.

Conclusions

The final questions we asked ourselves was–who learned more this week: us or them? We started the week with a sense of mission. How we were going to help the faculty bring a sense of ethical enlightenment to their students, who were products of an environment which, currently at least, considered ethical thinking as naive? We had tried to prove wrong all that advice telling us it was premature to teach ethics in the post-socialist countries. At the end, we realized the truth lay somewhere in between all these opinions (as is often the case). Speaking of ethics in grandiose terms of moral principles did not work. They were right. We couldn’t suddenly bring a stage two (re: Kohlberg) society to stage five. However, the most important lesson for us was the realization that we could help develop an ethical awareness, but it had to be with specific concepts and behaviors, and preferably ones which already had some level of familiarity in that environment. Take the foundation and build upon it. In short, don’t introduce new or dissonant concepts, but rather work on speeding up the evolutionary process of ethical development. Finally, it must be mentioned that we passionately believe not only in the moral foundation of an ethical system, but also in the practicality of developing such a system. These concepts come from our beliefs as Baha’is, members of a world religion dedicated to the betterment of world civilization. Some quotations from the Baha’i writings will illustrate some of these points. Man’s supreme honor and real happiness lie in self-respect, in high resolves and noble purposes, in integrity and moral quality, and immaculacy of mind. Material progress and spiritual progress are two different things, and that only if material progress goes hand in hand with spirituality can any real progress be made. Therefore, we do not see ethics in business as some pie-in-the-sky naive and unrealistic goal. Rather, we see it as forming an essential base for the long-term viability of business in any country. So that instead of waiting until later to introduce ethics, as some Americans and others are doing, we feel it is important to lay the foundation now, even though it be a basic one.

Epilogue

We left Bulgaria hoping we had made some lasting difference, but honestly doubting that we had. Therefore it was a pleasant surprise when a large envelope arrived from Sofia six months after the training program. One of the Baha’is who helped organize the program sent a note and a copy of the Bulgarian Chamber of Commerce’s first attempt at creating a code of ethics. The note said the new code was a direct result of our training, for one of the members of the Chamber had been in our group and applied those lessons to a larger audience than we had anticipated. Sometimes you just never know what effects come from a program, or even some behaviors. It just goes to show that morality and ethics are more contagious than we often realize.

References

Angelo, Thomas A. and K. Patricia Cross. (1993) Classroom assessment techniques. San Francisco: Jossey-Bass. Mahoney, Jack and Elizabeth Vallance (eds.) (1992) Business ethics in a new Europe. The Netherlands: Kluwer Academic Publishers. Kohlberg, Lawrence. (1981) The philosophy of moral development. San Francisco: Harper & Row. Kohlberg, Lawrence (1969). Stage and sequence: The cognitive-developmental approach to socialization, in D. Goslin (ed.), Handbook of socialization theory and research. New York: rand McNally. Nash, Laura (1990). Good intentions aside: A manager’s guide to resolving ethical problems. Boston: Harvard Busi