Time to change: the ethical responsibility of controlling
On the website of the University of Applied Sciences in Münster you are quoted in February 2018: Artificial Intelligence, Virtual and Augmented Reality will change economics and our lives within the next five years significantly. What skills do you teach your students to be prepared for this essential change?
Wasserman: There are four essential skills that I try to encourage my students to develop:
1) Awareness of disruptive change…how to recognize disruption, how to respond to disruption proactively, especially by taking a customer-focused view of an industry (this is typically part of design thinking but works very well to teach about disruption). This gets them aware of the context in which AI, VA, and VR are entering both B2B and B2C markets.
2) How to learn continuously…information gathering, competitive intelligence, asking good questions/having good conversations with experts, and overcoming cognitive biases (confirmation bias especially) that often times block us from making the right decision at the right time. This helps them get up to speed quickly on the current state and the expected future state of technology, applications, and market acceptance/barriers of new technology in industries in which they are interested.
3) Understanding both the benefits of technology and the risks, especially from the ethical perspective…who controls data and safeguards it against abuse, cultural differences about privacy and data security…contrasts between EU (especially Germany), US, and China are really interesting for students. This helps them understand the full picture of the impact of these technologies on companies, their customers, and society.
4) Teaching how AI, VR, and AR have the opportunity to change the world for the better, in a wide variety of applications. It amazes me when students come up with cool applications of new technologies in ways experts haven’t yet thought about. This is the power of fresh perspectives thinking about solutions in a creative way and it leads to them thinking about how these technologies can transform industries (or how they may fail).
2. In Munich you will talk very offensively about sustainability and the need, that controllers are obliged to this value. What if their management partners don’t agree on this focus?
Wasseman: This is the big challenge – to work with management partners to understand the full cost of initiatives, to value non-financial as well as financial benefits, to look at both short-run and long-run financial models, and to value the intangible benefits of leading sustainability efforts versus the intangible costs as being viewed as a laggard by customers, current/potential employees, and investors. This is not a zero-sum game, there is the need to present multiple perspectives to investment or operational procedure questions related to sustainability, there is the need to take an ethical stance, and there is also the right time and place to propose creative alternatives that while not perfect, are an acceptable compromise to move forward with.
3. You demand controllers „to act in ways that are required by the ethical standards that guide this profession“. What are these ethical standards?
Wasserman: The ICV along with other professional organizations in related fields, such as the Institute of Management Accountants and the American Institute of Certified Public Accountants either formally or informally hold members to clear ethical standards about due care, objectivity, and integrity in communication and disclosure. In my view, this is especially relevant when decisions about environmental performance could influence the health and safety of employees, customers, or residents of the communities in which the company operates. This is not news to ICV members (see, for example, https://www.icv-controlling.com/en/association/10-core-elements-of-controlling.html).
Fiduciary principles require acting in the best interest of those we serve, and in the sustainability context, implications covered under fiduciary duties could be short-term, like air pollution or safe working conditions, or long-term such as carbon footprint and the use of non-recyclable raw materials.
I argue that controllers have the ethical responsibility to ask top management to fully disclose environmental risks and to clearly consider direct/indirect, financial/non-financial, and short-term/long-term revenues and costs of major decisions. This should be part of the organization’s mission and vision, should be part of internal and external reporting procedures, and should be included in decision-making about investments and ongoing operations. Ultimately, the CEO and the board is responsible for making these decisions, but my interpretation is that, especially from the strategic management perspective, the controller has an ethical responsibility to ask for an objective evaluation of the data, full disclosure of costs, benefits, and risks, and to have a decision-making process that includes sustainability as part of the conversation. I argue that anything less than this is a violation of the ethical standards that guide this profession, even though this might mean a break with ‘how things are typically done’ in the field or past practice in a given organization. I argue that anything less is a failure to meet the ethical standards of due care, objectivity, and integrity.
I realize this might be controversial, but let’s at least have an open conversation about how to integrate sustainability into how we define our own ethical conduct, the conduct we expect from our peers, and how we want to teach and prepare the next generation of controllers. Let’s discuss putting this type of statement in writing, educating ourselves, and sharing best practices, and that will help this profession lead the way toward a better future rather than being a silent co-conspirator in a way that we will look back on with regret.
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About Prof. Dr. Michael Wasserman (Ph.D.)
FH Münster, University of Applied Sciences
Faculty of economy
Field of teaching and research:
Born in 1967 in Detroit, Michigan, USA
1992-2000 Ph. D. in Business Administration
Michigan State University East Lansing, MI USA
Bachelors in Business Administration, University of Michigan, Ann Arbor, MI United States
1992-1997 Graduate Teaching and Research Assistant, Department of Management, Michigan State University, East Lansing MI USA
City of Boston, MA USA - Department of Health and Hospitals
assistant professor of management
George Mason University
Fairfax, VA USA
Associate Professor of Organizational Studies
Potsdam, NY USA
Co-founder/Co-owner/Board of Directors
Auburn, ME USA
US Consulting and Executive Education clients include: US Department of Labor - Washington DC
Federal Deposit Insurance Corporation - Washington DC
EVOKnowledge, Inc. - Chicago IL
Dadash, LLC - Rockville MD
Corning, Inc. - Corning NY
Human Genome Systems - Gaithersburg MD
ASSA ABLOY (Americas Division) - New Haven CT