Jaap Winter is a lawyer, professor of international and corporate law at Vrije University Amsterdam, non executive director at a number of Corporate Boards including Chairman of the Van Gogh Museum, and member of the Corporate Governance Center of INSEAD. He was in Cyprus for a series of lectures on Business Ethics and as he highlights in his interview to Kathimerini, rules are not the key for infusing responsibility to the system but the capability of decision making by human beings.
How do you define ethics?
There are many different definitions of ethics. For me the core is the way human being appreciates the consequences of their decisions on others. It is not a set of rules but rather the capacity/capability to think through the consequences of your actions and make a judgement of what is acceptable. This is a human ability that we have as human beings that at times stops us from doing the things the way would like to. We speak of morality only when there are consequences. When choices are on equal terms – choices may not necessarily be ethical, but it becomes ethical if it can have a negative impact on others and a benefit to you. That is when ethics come to consideration.
Are ethics taught or are you born with it?
Both. Aristotle said that you are not born virtuous. You grow in virtue by learning, making mistakes, learn from your mistakes. That is why people become wiser as they age; young people are not wise. They may be smart but not necessarily wise. That comes with age and at the same time, if you don’t discuss (ethics) if you are not reminded of it, then you may not be making decisions that have moral consequences.
How do boards of directors compare to the young – are they defined by wisdom?
I don’t think it is simply the older you are the wiser you become. In life you can live through experiences that earn you wisdom, making decisions that are not easy to make. These decisions would not be easy for you or for others. You can be constantly wiser by learning from mistakes. But if you don’t learn from mistakes you will not gain wisdom.
So when we speak for morality at corporate level are we speaking of utopia?
If ethics are not part of those who participate and make decisions at board level, then they don’t make decisions for the wider good. It is my view that corporations have been detached from what is really valuable for us human beings. They give a lot of emphasis on analysis, looking at financial results and if this becomes embedded practice then we cant learn how to ask the right questions. [NB this is not really an answer to the question of utopia, don’t you think? On that question: is it utopia? I would say: It is not utopia to believe that boards can and should become ethical in their decision making. I am not saying it is easy, but that it is difficult is not a reason to ignore ethics in the boardroom]
You sound somewhat like the EU
The EU has become too technical. I am a supporter of the EU, it has brought us together in Europe in ways that we could not have imagined. What we see is that it has become too technocratic, ( We see this in many countries, in Holland, in France, in Britain with Brexit, that people are not inspired any more by a discussion that centers on technicalities, with measures produced and monitor bureaucratically. If we want to really feel European, we have to be inspired by an idea, that it has real meaning for us. We as member states have failed to make the EU a success.
Who shapes culture in organizations so that they are ethical?
The community of people generate culture, in that sense every one is important. But people follow the example of their leaders. If the boss behaves in certain ways, others will see it as a sign of progress of the company and they will follow. The leadership of a company has the power to influence the culture of the company. It (culture) can’t be left on its own, it needs the whole of community.No one defines it, but if you want change, the leadership must make steps towards that direction and lead by example.
So someone has to write it down?
That is important, because as human beings we need language to communicate. But to write it down is only 10% (of the effort). The biggest challenge is to live by ethical standards, drawing a line, saying that I don’t want to operate in this way and we have to stop. To live it is more important than to write it.
Is it possible to make this a reality in all societies?
I hear discussions that if you want to be competitive you have to behave in a certain way. Or in a society with high levels of corruption, it is impossible to behave ethically. But I don’t accept that argument. I appreciate that it is difficult to see yourself outside an environment such as this, but it can be done. It is the leader’s responsibility especially because it is difficult to do, to start doing it. That is what leadership is about and a leader must face consequences.
Customers for example, will appreciate it that you offer a product which is of quality at the right price. If something you offer is wrong and you are conscious of it and you don’t blame others but take responsibility yourself to solve the problem for your clients, then clients will appreciate it. you will be credible, and effective. There is value in effectiveness and we can’t just say that everything is difficult. Someone said to me that this practice is difficult to apply in Cyprus, it can only be applicable in Holland or in Norway. But we also have difficulty with ethics and human judgement. The situation is different in Cyprus and it may be that there should be tougher rules and enforcement first, but here also, at some point the question will come what responsibility we take ourselves. We cannot just point at the system or the corruption to absolve ourselves from all responsibility.
So why is it important for companies to apply ethics in their daily practice?
For a number of reasons. The way large businesses are organized guide people in ways and processes that do not recognize the human element. They do so through systems, processes, performance indicators.
Someone would say human resourcing
You are right, but just think of this term. ‘human resource”, as if we talk about people in the same way as oil, or equipment. Organizations underestimate the power and potential of people. People make mistakes, yes, but if they are repetitive you will find ways to stop these mistakes. Not by continuous rules and expecting change. If you only produce rules people will not learn. People must have the capacity to make mistakes and learn. Building systems so that people don’t make mistakes, we outsource responsibility to the system suggesting that it will solve our moral problems. That will never happen.