The Accountable Organization: Reclaiming Integrity, Restoring Trust - page 5


Early in this book, John Marchica asks, "Should we rely on law to stand in for integrity?" As a legislator, this question is of particular interest to me—it's reminiscent of an old political saw, one that says you can't legislate morality. Of course, that doesn't mean we won't try.

In my first session as a member of the Illinois General Assembly, we passed several measures designed to impose integrity and accountability on corporations operating in the state. Not surprisingly, these laws were passed in direct response to Enron, WorldCom, and a host of other—more local—episodes of corporate misbehavior. To be fair, I expect these measures will make companies doing business in Illinois behave better. They will not, however, make corporations any more ethical or accountable or full of integrity. This is not a failure of the laws we enacted; it is merely a consequence of the inherent difference between laws and ethics.

Laws are external rules imposed by society to discourage undesirable behavior. Laws influence behavior by prescribing imminent consequences, be they imprisonment or monetary penalties. But laws are enforceable only when society in some way observes or documents the bad behavior.

Ethics are quite different from laws. Ethics are similarly intended to discourage undesirable behavior, but they are internal rules that extend much further into the gray area between "right" and "wrong"—an area we largely ignore in defining "legal" versus "illegal" activities. Ethics influence behavior too, of course, but not through the threat of imminent punishment. The consequences of unethical behavior are far more ethereal—damage to one's reputation, perhaps, or an unfortunate fate in the afterlife, if that is consistent with one's religious beliefs. Most important, we as individuals enforce our own ethics, following our own internal compass. In other words, while laws are enforced by an observant society, ethics are—to paraphrase another old saw—the principles that guide our behavior when no one else is watching. An ethical person would be troubled by his or her own unethical behavior, even (or especially) if it remains a secret taken to the grave; an unethical person, on the other hand, may be troubled not at all by his unethical behavior, provided that no one ever finds out.

Why is the theoretical difference between laws and ethics relevant to a commercial organization? Businesses, after all, operate in a legally defined marketplace. In most cases, adherence to law is all that many folks expect of business enterprises. Some professionals—for example, lawyers and doctors—impose upon themselves supralegal codes of conduct that define ethical expectations for members. Beyond these laws and professional codes, however, there is no common system of ethics that governs business relationships. But perhaps there should be.

This notion, I think, is John Marchica's great contribution in writing The Accountable Organization. Companies should be ethical, should be accountable, should be full of integrity—not just because it's right, but because it's smart business. As John shows, Accountable Organizations have a competitive advantage over companies without a robust ethical foundation.

We want to live in a world where we can, with some reliability, predict how others will behave in given circumstances; we want to have confidence in our expectations of others. Laws and ethics are imperfect but complementary attempts to create that world. And the efficient operation of a sustainable business enterprise demands no less.

So, how do we infuse organizations with the sort of ethical principles required for the efficient conduct of business? Like John, I am a father of young children, and as a consequence of fatherhood (or perhaps because of cumulative sleep deprivation) too many of my analogies these days revolve around rearing children. Nonetheless, here I think the analogy is instructive: We infuse business organizations with ethical principles in the same way that we infuse children with ethical principles—holistically, by example, by instruction, by practice, by failure, and by success.

In The Accountable Organization, John provides us with a road map for making our organizations accountable, for making them ethical—and it is a good road map. As a legislator, my "business" is really nothing more than being accountable to the people who elected me. I need not turn a profit, I need not produce a product, I need not do anything other than be accountable. And with the turn of almost every page of this book, I find myself responding viscerally to John's ideas, preparing in my head some other way I could be more accountable to my constituents, or fretting about some opportunity I had missed to be accountable. In short, while John's book is especially well tailored to the CEOs of the corporate world, it transcends such narrow application—this book is essential reading for anyone who must organize a human enterprise, who must (willingly or unwillingly) assume the responsibility of "leader."

I'm not surprised that John chose to write this book at this moment in time. I've known John for almost twenty years, and I've watched him grow into ever-larger and more challenging leadership roles. I have always admired his quiet integrity and his evolving ability to lead with grace and humility. In recent years, our conversations have often turned to the public failures of corporate America, and I have sensed in John a growing frustration and disappointment. In typical fashion, John has channeled that frustration not into a scathing indictment of corporate leaders, but rather into a blueprint for change. It is John's intellectual ju-jitsu, his ability to turn negatives into positives, that makes him a success in business and in life.

Years ago, when John was preparing to launch his company, he and I talked regularly about his plans, his prospects, and the personal and professional risks he faced. Truth be told, few of us, faced with the opportunity, would refuse a generous and regular paycheck in favor of the speculative returns of true entrepreneurship. Despite the risks, despite the uncertainties, John did just that, and—in no small part because of his integrity—he did it with remarkable success.

John's success came as no surprise to those of us "who knew him when." In recounting the launch of his company, John notes that he was able to do so without any outside financial help, without any venture capital, without even asking any friends to invest a dollar or two. I was finishing law school at the time—deep in debt and with little money in my pocket, much less for investments. Had John asked, however, I would have borrowed against my car, hocked my guitar, done whatever I had to do to invest in his company. Part of me still wishes that he had asked. But the truth is that I've been afforded a far richer opportunity than investing in John's company—I've had the rare privilege of investing in John, and having him invest in me. The returns—such as reading this book and writing this foreword—are far more rewarding.

Don Harmon

Illinois State Senator

September 2003