Ethics, work and globalization

On the subject of ethics, the western manufacturing world seems to be divided between two possible behaviours. One linked to the protestant culture, dominant in the English speaking world, and the other related to Catholicism, featured in Latin societies. However, a universal code of ethics must be identified and implemented that can be shared and understood in societies and organizations that are very heterogeneous in cultural, religious or ethnic terms.

Marco Lisi

In recent years in the business and manufacturing world, we have witnessed a progressive loss of traditional ethical values in line with the increase in global competition. Striking examples of unethical behaviour by companies, recently denounced by the world public opinion, are cases of child labour in the third world by large western multinationals; in our country the curse of illegal work, and the clandestine immigration often associated to it, is unfortunately a phenomenon known to all. On these matters and on the need to respond to them in a way that puts the concept of work, and the ethical issues associated with it, into question, the western world seems to be divided between two possible behaviours.

Work ethics and Protestant culture

In English-speaking countries or, more generally, in countries with a protestant religious tradition, there is a strong need to promote ethical behaviour, for individuals and organizations, in a way that meets the new needs arising from competition in the global village. It is no chance that in these countries, teaching ethics is an integral part of university courses in most public and private universities.
The particular ethical value that work and business in general play in Protestantism was clearly expressed by Max Weber in his book “The protestant ethic and the spirit of capitalism” (1904-5). Weber’s hypothesis was that the Calvinist doctrine of predestination drives individuals to search for evidence that they are among the chosen ones even during their life on earth. Performing useful work in worldly tasks was therefore accepted by the puritan settlers of New England as the most certain way of demonstrating that they were among the elect. It was this puritan ethic, based on work, the desire to achieve financial success and the habit of not wasting accumulated money on frivolities that left its mark on the genetics of the new American democracy.
Even today, the ethical values of the Pilgrim Fathers continue to influence the world of work and business in the USA, though partly changed in a laic and rational sense. In an increasingly aggressive context marked by globalization, reorganization of societies and new technologies, the average American worker, at whatever level in the company, feels the need to perform his/her role more and more responsibly, achieving higher and higher levels of quality, efficiency and excellence. He/she feels the need for the companies he/she works for to be founded on fundamental and deeply rooted values such as integrity, morality, respect, trust and intellectual honesty, right down to the tiniest details of their organizational processes.
As a result, organizations have developed a growing tendency to implement an internal code of ethical conduct and in some cases, a specific office for internal training and consultancy on ethical issues. It is clear that in this type of corporate culture, the public perceives the ethical behaviour of the companies through their products and services, their reasonably fair pricing policy, their respect for public institutions and the community at large, for the environment and the public’s wellbeing. Ethics has started to be seen as an important element to achieve total quality in the company to the point that ethical behaviour is the new frontier of total quality.

Work ethics and Catholic culture

In Catholic countries, Italy being (and not by chance) a paradigmatic example, the separation between ethics in one’s private life and public life is generally more distinct. Paradoxically, in these countries ethical values are considered very important by most individuals, who admit to applying ethical behaviour to their private life. When moving on to the world of work and business, however, morals become a concept that is almost completely ignored. Ethical behaviour at work is therefore based on intuitive, subjective and personal notions of what is right or wrong, rather than universal and objective criteria.
In addition, corruption in these countries is often one of the most serious obstacles to ethical behaviour in the business world. The reasons, past and present, of the “de facto” moral relativism characterising the behaviour at work in many different countries (Latin America, Spain, Italy, but also Poland and Ireland) require deeper and more precise analysis.

Work ethics in Italy’s history

Focusing on Italy alone, there is no lack of hypotheses, some of which are quite fanciful. For example, an attempt has been made, clearly with political and electoral aims, to spread and accredit the stereotype of a cisalpine Italy, still founded on the Celtic values of hard work and honesty, as opposed to idle, careless southern or “Roman” Italy. It has been equally discouraging to hear historians and political scientists claim, we hope provocatively, to be the ancient Romans who invented "otium", the forefathers, by title and by name, of the Roman meddlers and bureaucrats of today.
The historical reality is rather different: with their taste for excellence, their almost obsessive passion for organization, the development of law as the science of living together in civil society and their almost innate instinct to leave a mark of their civilization with works that have survived the centuries to be admired today with wonder and admiration, ancient Romans would today be considered to combine the best of the German, Japanese and American virtues.
One might actually wonder how such a laic vision of work and human performance has been lost over the centuries. Some would blame the institution of slavery, blown up out of all proportion especially in the middle and late empire; others would associate the decay of secular morals with the spread of Christianity, which, with its highly eschatological component, tended to take human interest away from day-to-day reality and focus it on the afterlife. Our aim here is not to discuss the orthodox content and message of Christianity; however, it has undoubtedly always oscillated, through the centuries, between rejection of the world (“contemptus mundi”) and its matters on one side and the evangelical vocation to participate in the construction of the world with one’s fellow men on the other. Although the very first verses of the Genesis seem to anticipate man’s destiny to contemplate great works of creation: “tulit ergo Dominus Deus hominem – et posuit eum in paradiso voluptatis – ut operaretur et custodiret illum” (Genesis 2, 15), it is also true that, a few verses later, the original sin having been committed, a terrible curse afflicts man’s destiny: “in sudore vultus tui vesceris pane – donec revertaris in terram de qua sumptus es – quia pulvis es et in pulvere reverteris” (Genesis 3, 19).
In Ernesto Galli della Loggia’s essay "L’identità italiana", published by Il Mulino, the lack of a sense of State seems to be the most salient and negative feature of our collective nature, followed by the lack of the spirit of service and social sense. The loss or attenuation of these morals is linked to a series of historical causes and circumstances, such as long centuries of foreign domination and the very peculiar characteristics of our Risorgimento. Omnipresent in our culture and moral traditions is the unfortunate shadow of “the end justifies the means”, in business and politics. Behind this reasoning, rather than Machiavelli (who attributed an important moral value to work), we can find his false followers and pupils and their casuistry that anticipated the moral relativism of today.

The need for a universally acceptable ethical code

One of the biggest obstacles to introducing ethical values to corporate culture and organization is essentially philosophical. Ethics, philosophers would note, is a personal process, in which any form of institutional coding plays only a small part. Experts agree that codes of ethics and ethical behaviour, introduced some time ago in the US, have helped many companies escape permanent ethical relaxation bordering on the scandalous, and have made the work environment healthier and more respectable.
A second and more fundamental objection to the spread of work ethics concerns the possibility to define a reference code of ethics, rationally and laically founded, which can be accepted by everybody. The difficulty arises yet again from the confessional and clerical heritage that afflicts our culture. I am not speaking about absolute and universal rules, linked to a particular theology or Weltanschauung, but rather about ethical and responsible behaviour models that our conscience may assume as points of reference.
Substantially this means considering the most obvious ethical principles of a personal nature, such as courtesy, respecting one’s neighbour, honesty, justice, sincerity, fair play and integrating and combining them with professional ethical principles: impartiality, objectivity, openness to discussion, confidentiality, care and diligence in performing professional responsibilities, fulfilment of commitments and loyalty to the company, positiveness and optimism, punctuality (i.e. “princely qualities”).
Fromview, the more societies and organizations differ culturally, religiously and even ethnically, the stronger the need to lay the foundations of a universally recognised morality, for a rule of ethical conduct understood and accepted by all. A sound base of common and universally accepted ethical principles will help us face the global challenges that await us, control of technology first and foremost.
If any doubt remains as to the suitability of combining ethics with work, just refer to the citation of the unquestioned apostle of economic liberalism, Adam Smith, in his book Theory of Moral Sentiments (1759), chronologically preceding the more famous Inquiry into the Nature and Causes of the Wealth of Nations (1776), claiming with conviction the need for a moral foundation in both economic and political systems.

The most valuable asset

To be successful in the third millennium, an organisation must be flexible, capable of rapidly responding to external stimuli and managed by managers who know how to effectively make wide-ranging and radical changes. It is more and more evident, especially in an industrially and economically advanced western world, that an organisation’s greatest and most valuable asset is its human resources and their contribution of creativity, innovation and empathetic involvement.

Marco Lisi

“(...) then Anu and Bel called me by name, Hammurabi, exalted prince, who feared God, to bring about the rule of righteousness in the land (...) and enlighten the kingdom, to further the well-being of mankind”.

Hammurabi, King of Babylon

A rapidly evolving reality
The birth of modern industry and mass production at the beginning of the twentieth century brought with it the first important scientific studies on managing organisations and human resources. These studies focused on the ambitious aim of defining the universal rules for “the best way of organising” the work of large industrial companies (i.e. to make them more efficient and productive). Nevertheless, the industrial world and organisational models designed by the founding fathers of modern management no longer exist. Today change, a distinguishing feature of the entire history of the post-industrial era, operates at a pace that has never been seen before. Globalisation of the markets has led to an increasingly more aggressive, at times even uncontrolled, competition which is continually being transformed. Technological innovation, especially in the field of information technology and communications, combined with market globalisation, has changed the face of industrial organisations. They have gone from being multinational or transnational companies to “virtual” organisations. This means that many of the theories developed in a not so distant past where the world evolved in a more stable and predictable way, no longer apply. To quote Peter Drucker, one of the greatest gurus of modern management: “Every few hundred years in western history there occurs a radical transformation. Within a few short decades, society rearranges itself, its world view, its social and political structure, its arts, its key institutions. Fifty years later, there is a new world. And the people born then cannot even imagine the world in which their grandparents lived and into which their own parents were born. We are living through such a transformation.” (Peter Drucker, Post-Capitalist Society, 1993). To be successful in the third millennium an organisation must be flexible, capable of rapidly responding to external stimuli and managed by managers who know how to effectively make wide-ranging and radical changes. It is more and more evident, especially in an industrially and economically advanced western world, that an organisation’s greatest and most valuable asset is its human resources, with their contribution of creativity and innovation and their emotional and sympathetic involvement.

From the dawn of mankind to the industrial revolution
The first major undertakings based on the work of the masses (sometimes enormous) and managed by groups of individuals responsible for planning, organising, commanding and controlling activities were accomplished thousands of years ago. Just think of the Egyptian pyramids or the Great Wall of China. It is estimated that it took over one hundred thousand workers and around twenty years to build one pyramid. It is outside all logic and good sense to imagine that a project of this size could be carried out without precise organisation and planning of activities: in fact, it had to be carried out under the guidance of dozens of managers ante litteram, who abided by the rules of common behaviour and procedure.
One of the first historical documents testifying to some type of management of human resource dates back to the eighteenth century, in Mesopotamia. It is the famous Code of Hammurabi, which contains a set of laws and administrative regulations written in Old Babylonian cuneiform on a stone stele. Hammurabi was the sixth ruler of the first Amorite Dynasty of Babylon. He supposedly ruled from 1792 to 1750 BC. Some of the 282 articles of the Code define what we today call the minimum daily wage of a worker: “If any one hire a day labourer, he shall pay him from the New Year until the fifth month (April to August, when the days are long and the work hard) six gerahs in money per day; from the sixth month to the end of the year he shall given him five gerahs per day.”
Apart from the undying texts of “military management” represented by the books of Julius Caesar, Latin literature does not have many literary texts on work organisation. One of these, though not a very good example, is the book De Re Rustica (On Farming or On Agriculture) by Marcus Porcius Cato, the Censor (234 – 149 BC). In this book written in a style that was very different to his orating style (flashy, vis polemica, intelligent and witty), Cato gives a series of good suggestions on how to run a farm and manage the workers, which in his case were slaves. The text is completely permeated with a provincial (it was written during the Punic Wars), utilitarian and traditionalist spirit which was typical of the Romans, “(...) absorbed in the practical interests of the farm, he sees the land only as a means of profit and slaves merely as a means to be exploited in every way.” (Ettore Paratore, Storia della Letteratura Latina, 1950).
Through the more or less dark centuries of the Middle Ages, evolution of forms of payment forms does not emerge until the rules of the Arsenal of Venice in 1436. They introduced the per diem wage (or prevailing wage) and forfait payments (a flat rate), depending on the type of work carried out. Three centuries later, a large epoch-making transformation upset the paradigms of a still rather physiocratic society: the industrial revolution which started in Great Britain during the 18th century and extended to the United States at the end of the civil war. The protagonist of the industrial revolution was not man or the organisation, but the machine. The enormous increase in productive capacity offered by machine tools operated by non-human engines reduced workers to the role of mere appendages to the actual machines and reduced the importance of proper organisation of production (as brilliantly demonstrated by Adam Smith in his truly visionary book, The Wealth of Nations, published in 1776). The need for an effective division of labour and rational organisation of the production process was not felt until towards the end of the nineteenth century. In fact, a series of related events took shape in this period, especially in the United States: the development of large corporations (as for instance in the steel and oil sectors), the birth of mass production (the car industry) and a reduction of transport costs connected mainly with development of the railway system.

The birth of classic management theory (1910-1940)
Modern management theory was born in 1911 when Frederick Taylor published his revolutionary work The Scientific Principles of Management. Taylor spent most of his professional life working in the Midvale and Bethlehem steel companies in Pennsylvania. He was a mechanical engineer who grew up in a Quaker and Puritan family (with strong principles of hard work and efficiency) and was appalled by the inefficiency of workers in the steel industry. In his work, Taylor summarised twenty years of observations and scientific experiments aimed at finding the best way to carry out a specific task. At the base of Taylor’s theory, also called the “scientific theory”, is the hypothesis that since a company is a big machine regulated by universal laws, there is only one ideal way of organising work. In this view of the company, men continued to be considered mere appendages to machines: their movements, fatigue, recovery times and social behaviours are viewed as considerations for analysis and scientific conditioning.
Taylor’s ideas became popular not only in America but in France, Germany, Russia and Japan. Their adoption, especially in the flourishing railway industry of the time, made the United States a world leader in terms of industrial efficiency for the next fifty years. Followers of Taylor’s “scientific theory” included the married couple Frank and Lillian Gilbreth and Henry Gantt. Frank Gilbreth was an engineer and Lillian Gilbreth was an engineer and psychologist. Together they scientifically studied the sequence of actions and the best method for performing certain manual tasks (using chronometers and film cameras). Frank in particular became famous for his experiments aimed at improving the brick-laying process. He effectively succeeded in doubling the laying speed, passing from 120 to 250 bricks an hour. Lillian and Frank Gilbreth are remembered for their impressive scientific work and also for the humoristic and moving description of their family adventures recounted by one of their twelve children in the hugely successful book Cheaper by the Dozen which was later made into a film in the nineteen fifties. The engineer Henry L. Gantt was joined by Taylor in his research. He is famous for inventing a type of graph which represents the planning and process of the activities. The “Gantt chart” is still widely used today. It shows the relationship between the work planned and completed on one axis and the time lapsed on the other.
In 1916, therefore almost parallel to Taylor, Frenchman Henry Fayol laid down the foundations for what came to be called “administrative theory” with the publication of his book Administration Industrielle et Genérale (Industrial and General Administration). One of his followers was the German sociologist Max Weber. Unlike Taylor, who was essentially a management theorist, Fayol was managing director of a large French company which owned numerous coal mines. Therefore, he had practical and direct experience in the theories he personally developed. Similar to Taylor’s theory, Fayol’s administrative theory is based on a mechanistic or Newtonian view of the company. The emphasis is not placed on improving the worker’s performance as he carries out his basic activities, but rather on developing the management capabilities of the managers and on the more administrative and organisational aspects.
With their emphasis on improving efficiency and productivity, both Fayol’s administrative view and Taylor’s scientific view of the classic theory of management give little or almost no consideration to the human factor. The mechanistic view of the company, more or less clearly influenced by coeval and positivist philosophical theories, focuses on a de facto materialism and an overly pessimistic view of man, according to which:
men prefer to be managed rather than being free to decide and act;
their motivation is based only on satisfying their economic needs and consequently, the payment system must be exclusively of a monetary nature;
men inherently dislike working, and so managers must manage them with firmness and impartiality.

Human relations theory (1940-1960)
The management approach based on human resources dates back to the work began by Elton Mayo in 1927. In that year, engineers of the Western Electric Company asked Mayo, a Harvard professor, and his work group to act as consultants in a series of studies conducted at the Hawthorne plant (Cicero, Illinois). Mayo conducted numerous experiments on how different physical factors (lighting, room temperature, layout of the locations, etc.) effected the workers’ productivity. The results showed that physical conditions had little importance and that, on the contrary, the human factor, more specifically motivation, had a prevailing effect on productivity. This is how one of the most important assumptions of the classic theory began to disintegrate. In the following years, the human relations approach was developed as part of the theory based on human resources, which focuses on the importance of worker satisfaction in determining productivity. Dale Carnegie was one exponent of this approach who was not acknowledged in official historiography, but this doesn’t mean he was any less insightful and representative. In 1937, Carnegie published his most famous book entitled How to Win Friends and Influence People, which was read by millions of people in the 1930s, 40s and 50s. It has been translated into dozens of languages and is continually being reprinted. It is a classic of its genre. Carnegie’s basic philosophy was based on the concept that to be successful you had to win the cooperation of others, which was naïve, but at the same time fascinating in its simplicity.
In 1954, the humanistic psychologist Abraham Maslow proposed a theoretical scale of a person’s five fundamental needs in increasing order of importance: 1. satisfaction of basic physical needs; 2. personal and family security and job stability; 3. acceptance in one’s social entourage; 4. self-esteem; 5. self-actualisation. With all the limits deriving from oversimplification, Maslow’s theory was and continues to be credited with having identified payment components other than the purely wage aspect. He also proposed that managers, at least enlightened ones, adapted the form of payment to the specific needs and characteristics of each worker.
In 1960, Douglas McGregor introduced the concepts of Theory X and Theory Y. The first represented an autocratic management style, and the second represented a management style more sensitive to the human factor and interpersonal relationships. Theory X was based on an essentially negative and pessimistic view of the human being. It assumed that men had little ambition, disliked working, tended to flee from responsibilities and needed to be managed closely in order to work effectively. On the other hand, Theory Y is positive and optimistic: workers can self-manage themselves, willingly accept responsibilities and consider work to be something just as natural as resting or having fun. We must add that McGregor’s position was not neutral: he believed that Theory Y best depicted the real nature of the workers and that therefore it should guide management work.

Contingency theory and the humanistic-psychological approach (1960-1970)
At this time, Lawrence, Lorsch and others put forward the conviction, called the Contingency Theory or Situational Approach, that there was no best way to do things and not only one style of management that could be used in all situations. How can management actions be adapted to the particular aspects of various situations and, in particular, to the psychological characteristics of each worker? The experimental method for determining character became popular during this period. It was called the Myers-Briggs Type Inventory (MTBI) and was essentially based on Carl Jung’s psychoanalytic theory and in particular, his book Psychological Types. In those same years, the so-called Management by Objective (MBO) by George S. Odiorne was born and met with initial success. The original aim of the MBO was to provide objective and participatory methodology for planning the activities to be performed by a worker in a certain period and his objectives of professional and personal growth (including wage increases) in the same period.

The systems approach and Total Quality Management (1980- )
The 1980s and 1990s were dominated by the theory of Total Quality Management (TQM) created by a small group of quality experts, the most important of which was the recently-deceased American W. Edwards Deming. It is well known that the success of the Japanese production methods, both in terms of productivity and quality, is largely due to the adoption of TQM. However, few people know that it was an American, precisely Deming, who introduced the TQM to Japan in 1950. Deming developed a 14-point program for transforming organisations which can be summarised as follows:

• customer-focused organisation and customer satisfaction;
• philosophy of continual improvement (TQM is a commitment that can never be satisfied. Quality can always be improved);
• quality of anything the organisation makes must be improved;
• statistical techniques must be used to accurately measure each critical variable in the production process;
• employees must be involved at every level of the quality improvement process.

TQM interprets the transformed characteristics of the market by focusing its attention on reducing cycle time and, consequently, reducing the time needed to place a product on the market (time-to-market). The Zero Defects (ZD) approach comes from the assumption that it is much less expensive to prevent errors or defects than to fix them. It also introduced one of the most famous catchphrases of TQM: “do it right the first time.” Total Quality Management is a systems approach because it does not focus on the organisational and administrative aspects, or on personal and interpersonal relationships, but on a “business system” that includes customers, sub-contractors and all the other factors involved in production activity. And this is how William Ouchi proposed his concept of Theory Z in 1981. It was halfway between McGregor’s X and Y Theories and the American and Japanese styles of management that summed up many fundamental points of TQM with a few variations.
 

A management style for the third millennium
As demonstrated, in the course of history, management theory went from rigid and schematic paradigms to more and more varied and complex models. In particular, the systems approach finally affirmed a concept of management that adapts to different situations with flexibility and discernment. Therefore, it is probable that the management approach must also be differentiated based on geopolitical conditions.
With the advent of globalisation, the industrialised west builds its economic supremacy not so much on the production capacity, which has conveniently moved to second or third world countries, but on the capacity to maintain and further develop its technological and scientific leadership. The focus continues to shift from quantity to quality and from hardware to software. New technologies and innovative ideas in the technical field and the field of organisation, creativity and imagination will be the defiant ground on which the battle for economic supremacy will be fought in the upcoming years. Management itself will go from being a production tool to a product in itself, strategic and exportable in the same way as the most sophisticated electronic chip.
Enlightened management will be able to adapt to these imperative changes and to reinvent the organisation so as to stimulate the creative asset that is human resources, which is sometimes just waiting for the right opportunity to come to the foreground. The manager of the near future must therefore be a sort of pedagogue, an expert in the art of teaching by asking questions, founded by Socrates but only poorly followed and developed in later years. Economic leadership increasingly goes hand in hand with cultural and political leadership, just as Pericles’ Athens or Lorenzo the Magnificent’s Renaissance Florence wielded their economic and commercial influence together with their cultural and scientific influence. Europe is faced with a historic opportunity to reassume its role as peace-time leader of the western world based on culture, invention, creativity and the arts. But to achieve this goal it must be capable of reinventing itself, looking bravely towards the future.