Warning: This is not a column advocating for ethics. That would be too simplistic and self-evident a position to take. To do otherwise would be to denounce motherhood, the flag and apple pie.
Rather, this column will focus on ethical standards as a business imperative. Of course there is a moral imperative. But it is also, simply, good business. For the fact is that real estate practitioners of all stripes adhering to a code of ethical behavior serves as a form of protection for our clients.
According to Investopedia, business ethics is defined as “the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities.”
IREM takes a much more straightforward view: “Ethics is the discipline dealing with what is right or wrong, good or bad, often related to duty or obligation. The rules of conduct or code of principles recognized in respect to a particular class of human activity.”
All industry associations have their own particular codes of ethics, and IREM is no exception. These codes are backed by testing, training and review. Then, the alphabet soup of initials that follow a practitioner’s name becomes an assurance to the client that there is at least a recourse should things go off the rails. In fact, out of roughly 20,000 members around the globe, we can boast fewer than 20 ethical complaints in any given year—of which only a third or so move through the entire ethics committee hearing process.
It is a time of increased need for ethical awareness, I believe. In this post-Enron, post-Martha Stewart, post-Bernie Madoff climate, it is critical that our clients know and embrace the fact that there are codes of behavior that will protect their interests.
I think it is especially true in the age of the Internet, where decisions are often made in the wink of an eye and expediency can overshadow judgment. It brings into high relief the contrast between an ethical code that hangs on the wall behind you and that belief put into practice. Business is bottom line-motivated and very competitive and it is easy to construe that as an opportunity to cut certain corners. It doesn’t take a lot for years of reputation to be wiped away as the result of one poorly placed decision.
And when it comes to specific business situations, there are frankly no governing rules to guide us, but one. It’s the fairness test, and it is simple. If you wouldn’t want it done to you, then don’t do it to somebody else. It’s also a matter of checks and balances. It’s unfair to discriminate, so we put blinders on when showing a space, and the person showing the space is not the same person running the credit or making the decision to approve.
Ethics at the end of the day is a no-brainer—but only for those of us who want to adhere to a certain standard. As J.P. Morgan is credited with saying, “If you have to ask, you can’t afford it.” For those who have to ask, buyer beware.
Chris Mellen is 2016 president of IREM. He also serves as vice president of property management for the Boston-based Simon Companies, supervising the day-to-day operations of all properties in the firm’s portfolio.