Situational ethics meets PeopleSoft

Situational ethics meets PeopleSoft

Byline: Alain Sherter

The phrase of the week, perhaps the year, is “situational ethics.”

The situation, in this case, was a deposition former PeopleSoft Inc. CEO Craig Conway gave in August to lawyers for Oracle Corp. in connection with the bitter takeover fight between the software rivals. The ethics, as PeopleSoft director Steven Goldby said in a Delaware court Monday, relate to Conway’s admission that he misled securities analysts last year by claiming that Oracle’s hostile bid was no longer hurting his company’s business. That statement contributed to PeopleSoft’s decision to fire him, the board member said.

What Goldby really means is that Conway showed poor judgment by lying in a situation — a legal deposition — where ethics occasionally count for something. After the chief executive lied to analysts in September 2003, PeopleSoft’s board compromised its own ethics by filing a bowdlerized transcript with the Securities and Exchange Commission that omitted his assertion that Oracle’s bid was a nonissue.

In his testimony Goldby even admits that PeopleSoft’s board was aware of the offense. “We knew that Conway had misspoken and what he had said was untrue,” he testified under questioning by Oracle attorney Michael Carroll.

PeopleSoft board members were so tortured by Conway’s lapse that they let him run the company for another year. Conscience finally prevailed, though, after Oracle sent them a copy of the deposition reminding them of what they already knew — that their CEO had lied and, for good measure, that the board had tried to sweep it under the rug.

The thing is, Goldby’s spot on in describing the dilemma facing corporate executives.

The notion of situational ethics was developed by Episcopalian theologian Joseph Fletcher in the 1960s. It was an attempt to steer a middle course between “legalist,” or morally absolute, codes of behavior and “antinomian,” or morally relative, views. In essence, he believed that neither legalism, in which moral laws are fixed and immutable, nor antinomianism, where anything goes, provides a sound basis for personal ethics.

Fletcher’s solution, dumbed down here for purposes of executing a cheap joke (an act, by the way, that exemplifies situational ethics) was to tap into a central ’60s-era ethos: All you need is love. In other words, the best guide for moral decision-making is determining how to act in the most loving way. Or whatever.

All well and good, of course, until this cogent and benevolent philosophy is transposed to a realm of human endeavor where love is in notoriously short supply: business. As those other acute social ethicists of the time taught us, money can’t buy you love.

What it can buy is more money, which returns us to the unfortunate Conway. In the end, PeopleSoft dumped him not for violating an ethic — it’s good to tell the truth — but for violating it in a situation where it might hurt the company’s value. Fair enough.

But the problem with that, as we have observed time and time again in recent years, is that corporate boards across the land are eager to shower cash on CEOs willing to violate ethics when it raises the company’s value. The kind of investment pros who Conway lied to are well aware of this moral paradox; indeed, they sanction it. And guess what — most shareholders are aware of it too.

More fundamentally, though, applying situational ethics in business is wrong because it implicitly sanctions the practice of shaping the truth according to the requirements of the moment. Or to the press release, financial statement or deposition.

And therein lies the problem lurking even deeper (can you see it coming?). In this post-modern, post-industrial, post-Sept. 11, post-Enron age, the very idea of what constitutes “truth,” let alone the ethics that emanate from it, is not becoming increasingly clear, as one might expect, but murkier and ever more contingent.

So love may in fact be all you need, as Fletcher would contend. But it probably depends on your situation.

COMPANY: PeopleSoft Inc.

COMPANY: Oracle Corp.

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