If You Think You Can’t be Ethically Compromised at Work, You’re Wrong

It’s a bad week for corporate bosses. Volkswagen CEO, Martin Winterkorn, resigned this week in light of revelations that the car maker had, on his watch, falsified emissions tests on what may turn out to be millions of diesel VW’s. Even more dramatically, former Peanut Corporation of America owner, Stewart Parnell, was sentenced to 28 years in prison for his role in a deadly outbreak of salmonella poisoning.

Just how does this sort of thing happen? Are these corporate leaders bad apples? Do they lack a conscience? Are they devoid of normal human scruples? Are these corporate wrongdoings a whole different species from decent, ethical people like you and me? Not necessarily. Members of Mr Parnell’s family, after all, testified that the man “has a heart always to put others before himself”. Frankly, I don’t doubt it.

The notion that nice, regular folks can, in the right circumstances, do very bad things is not exactly new. Back in the early 60’s, the famous Milgram Experiments provided substantial evidence. In that series of experiments, fully two thirds of experimental subjects — volunteers from various walks of life — demonstrated that they were willing to administer a lethal dose of electricity to a stranger, just because an authority figure in a white lab coat told them to.

And modern psychology and criminology tell us there are lots of factors that can push good people to do bad things.

One factor is the ethical equivalent of inattentional blindness — failure to see something that is in plain sight. Sometimes this happens because we are so focused on the narrow definition of our own job. Sexual harassment? Dealing with that is not my job, so why would I think it’s a problem, or even notice it?

Another important factor is the slow, steady erosion of our moral sensibilities that goes with incrementally-worsening ethical behaviour. Tell a harmless little lie…then tell a bigger lie…then tell a huge lie. Eventually serious wrongdoing creeps up on you, maybe without even realizing when it was that you crossed that line.

Finally, there’s rationalization, the self-serving process of redescribing our behaviour so that we can accept that we did it without accepting that the thing we did was bad. “I didn’t steal the money, I just took what I deserved.” Or, “Sure, we fudged the numbers, but no one got hurt!” Or, “Yeah, we bent the rules, but everyone does it.” Rationalizations amount to a crummy exercise of critical thinking skills, but they can be pretty psychologically persuasive.

The net result of these various psychological factors is that you too could screw up the way Martin Winterkorn and Stewart Parnell did. If you think you couldn’t — that you’re simply above such behaviour — you’re deluding yourself.

Admitting that this is the case is a good start.

So, what to do? First, beware. You’re human, and so you’re subject to the usual human failures. Second, don’t tolerate rationalizations in others, and don’t ask them to tolerate them in you. Finally, think twice before bending the rules and thinking that you’ll do it “just this one time.” Because down that path lies ruin.

How companies can stop making their best employees miserable

The New York Times recently carried a provocative thought piece by Arthur C. Brooks called Rising to Your Level of Misery at Work. Brooks describes the phenomenon this way:

Ambitious, hard-working, well-trained professionals are lifted by superiors to levels of increasing prestige and responsibility. This is fun and exciting — until it isn’t.

I’ve certainly witnessed this phenomenon at the university. Smart, ambitious researchers get tapped for administrative jobs — being a department chair or even dean — only to find out that their aptitude for scholarship doesn’t imply an aptitude for administrivia, nor a stomach for administrative politics. It happens at universities, but it happens at organizations of all kinds when employees leave positions where they excelled and got noticed, to move “up” to managerial roles.

The result is bad for morale, perhaps bad for productivity, and, as Brooks points out, probably results in a bunch of extra alcohol consumption.

Brooks presents this as a challenge faced by individuals, a crisis point in the career of the smart, ambitious worker. And he’s right about that. But it’s also an organizational challenge, and a leadership challenge. Here are a few thoughts on what leaders are ethically obligated to do to rise to that challenge.

1. Select based on what matters. Leaders (whether CEOs or senior leaders at universities) understandably tend to choose for promotion bright people people who excel at what they do. But wise leaders need to look beyond performance, to look at the match (or mismatch) between the qualities that allowed the individual to excel and the qualities that would allow them to excel in a new managerial role. They need to ask not just, “would this person be good at the job?” but also “would this person thrive at this job? The person who could “do the job” might be good enough at it for now, but the longer-term organizational and personal costs of burning out need to be counted too.

2. Support your people. Leaders have an obligation to make sure that people promoted to what risks being their “level of misery” are provided appropriate training and support. The fact that you were a star accountant doesn’t mean you have the people skills to be good at managing accountants. The fact that you were a terrific account manager doesn’t mean you’ll have the administrative skills to run a team of account managers. Inevitably you’ll need additional training, you’ll need the support of talented admin staff, and you’ll need mentoring. That last one is tough: mentoring tends to require an investment of a senior leader’s own time — a precious resource — but it’s an essential investment to make.

3. Fine-Tune the Culture. Leaders need to foster the right kind of culture within their organizations. That’s a truism, but worth considering none the less. In particular, leaders need to foster a culture (and a reward system) that gives talented people more than one way to “advance” within in organization. It’s a bad thing if the talented salesperson can only advance (and see herself as advancing, and be seen by others as advancing) by taking on a supervisory position for which she isn’t suited. And it’s a bad thing if going “back” to front-line sales, after a few years’ hard service in a supervisory role, is seen as a sign of failure. If getting promoted to, and keeping, such a position is the only way she can demonstrate her worth, she may well do it — to the detriment of both her own health and that of the organization.

The Ashley Madison Hack: A Sleazy Attack on a Sleazy Business

Several weeks ago, hacker group The Impact Team threatened that they would release the identities and credit card numbers of clients of infidelity promoting social network Ashley Madison. This week, they made good on their threat, releasing details of a reported 36 million user accounts.

For the moment, the data is apparently out there — some news outlets clearly have access already — but it’s hard to find. But informed commentators suggest it may soon be available and searchable online.

Some will call this a victimless crime: a scuzzy company’s lying-and-cheating customers are getting exposed for what they are. But it’s worth noting that there may be some innocent victims in all this: some Ashley Madison accounts may be spoofed by people using stolen credit cards. Others accounts may belong to people who are not in fact married, but who nonetheless don’t need their online dating habits shared with the world. And even the company’s ‘core’ customers, the ones who truly are acting dishonourably, don’t necessarily deserved to be punished in vigilante style. Or perhaps more to the point, it’s not that they don’t deserve it, but rather that The Impact Team doesn’t have the right to decide.

What about Ashley Madison itself? It’s in a sleazy business to say the least. Of course, employees at Ashley Madison aren’t themselves committing adultery (well, unless they happen to be, incidentally). So some people might wonder whether the company itself is doing anything wrong in the course of business? I think pretty clearly, yes. When you actively and knowingly contribute to someone’s wrongdoing, you share the blame. And there are a range of familiar examples in which helping someone to do wrong is considered blameworthy. Think of lawyers suborning perjury. Think of business agents facilitating bribery.

Naturally, many are calling this a “wake-up call,” for web-based companies and for the corporate world more generally. Reports suggest that insiders at the company knew that privacy was a big risk, and worried about “a lack of security awareness across the organisation.” One sign of a lax attitude toward privacy: according to a report in The Guardian, while customer passwords were stored in hashed (scrambled) format, “information such as addresses, credit card details and sexual preferences is all stored in plain-text in the database.” So anyone with access to the database has access to a treasure trove of private info.

Perhaps the moral of the story is that, human nature being what it is, it’s easier to make money by pandering to people’s baser instincts, than it is to protect the private information gathered along the way.

Cecil the Lion shows how reputational risk has gone global

Artwork by Susan MacDonald

Drawing by Susan MacDonald

As of this week, Walter J. Palmer of Minnesota, is pretty much obviously the worlds least-popular dentist. Palmer recently shot — as part of what he says he thought was a legal big-game hunt — a lion whose home was a protected national park in Zimbabwe.

There are some lessons for business in this tale. Even though Palmer wasn’t in Zimbabwe to “do business,” as a tourist he was none the less engaging in a commercial transaction.

The first and most obvious lesson involves the risks of doing business overseas, where it is all too tempting to rely on the guidance of locals to tell you what’s legal and what’s not. Palmer says he “relied on the expertise of my local professional guides to ensure a legal hunt.” The temptation to rely on quick advice from locals is obvious, but it’s a foolish mistake, particularly when those locals have a financial interest in painting a particular picture for you. The risk here is clear. But how far do you need to go in making enquiries? Anyone doing business overseas has to figure out just how far to go in ensuring the legality (broadly speaking) of various aspects of their business. Is this product legal here? Have you got the right permits? Is paying that fee really on the up-and-up?

The second lesson has to do with the difference between what’s legal and what’s ethical. Palmer believed he was conducting a legal hunt. But what’s legal isn’t always ethical, especially in countries with underdeveloped regulatory systems. The fact that a practice is legal doesn’t imply that you’re doing the right thing, that you should be proud of yourself, or that you’re not going to be subject to well-founded criticism.

Next, there’s a lesson here about ethical disagreement. There is deep and genuine disagreement over the morality of certain practices. Hunting lions is one of those practices, but there are others. Birth control is another. So is refusal to bake a cake for a gay couple. So the fact that you are personally absolutely certain that a business practice is ethical doesn’t mean that others are going to agree.

Finally, there’s a lesson about the vulnerability of businesses to critique in an age of social media and online business ratings. The source of criticism lies in the 2 points just above, namely ethical critique and moral disagreement. But the effect of such critique and disagreement is amplified in a world in which your customers as well as the general public can post online messages about you, more or less with impunity. The Yelp page for Palmer’s dental practice has apparently been flooded with angry messages. Twitter has been awash with criticism, and the story has (partly as a result) received widespread media coverage. The doors to his practice are closed, and it’s not clear whether he’ll ever practice dentistry (in the US) again. He will forever be “that dentist who killed the poor lion.”

Maybe Palmer will need to flee to a developing nation. It would indeed be a kind of irony if the only place Walter Palmer can practice dentistry, in the coming years, is a place like Zimbabwe — a place where social media plays a smaller role, where dentists are needed but seldom get wealthy, and where hunting big game is a significant and tempting form of economic activity.

Ethics of Extended Warranties

Shopping this weekend, I was twice offered the “opportunity” to buy an extended warranty on a consumer good. Both times I declined. In one case, I bit my tongue because the warranty was such a bad deal that I was tempted to chastise the salesman. But in neither case do I think it wrong for the sellers to try to sell the warranty to me.

Let me explain.

“Extended” warranty offers are of course common these days. Such warranties may cover a longer period of time, or cover a greater range of problems than does the basic warranty that comes with the product. Whether you’re buying small electronics or a laptop or major appliances, the salesperson will likely offer you the chance to pay extra to get a warranty that goes above and beyond.

But let’s focus here on the small stuff — not major appliances, but smaller items. And let’s start with the two warranties I turned down this weekend.

First, I bought a new pair of prescription reading glasses, for $500. The extra warranty I was offered was priced at $25.

Next, I bought a small, waterproof digital camera to take on a beach vacation. Cost: $189. The young salesman (he could have been one of my students) confidently explained that I “really should” buy the extended warranty, for “just $49.”

Now, whether you should buy a warranty depends on two things. First, it depends on the probability that something bad will happen to the product you’ve bought, multiplied by the cost of repair. That gives you the “expected value” of not having the warranty, which is what you must compare to the expected value — the price— of buying the warranty. In most cases, the expected value of the warranty will be lower than the value of going with out it. Not a good deal.

But one more factor must be counted, namely whether you can afford to cover the cost of loss or damage yourself. If my house burned down, I wouldn’t be able to afford to buy another one, which is why I have house insurance. But in the case of the $189 camera, I know that if it breaks I can afford simply to pull out my credit card and buy another, and so the ridiculously expensive warranty doesn’t make sense for me. But the warranty could conceivably make sense for someone who has the extra $49 to spend on the warranty, but who absolutely would not be able to afford another $189 for a new camera eighteen months from now. People in that category are presumably relatively few, but probably not zero.

What direction did my rough math point in, for the two warranties I was offered this weekend? I figured the warranty on the glasses might, barely, be worth it, but I decided to take a risk and opted not to buy. (Besides, I’m in my 40’s and my prescription might well change in the next 2 years, which would mean buying new glasses anyway.) The warranty on the camera, on the other hand, was laughable; I would have been a fool to buy it. (You can find lots of blog entries out there about why extended warranties on small electronics are generally a bad deal.)

So what about the ethics of offering such crummy warranty deals to customers?

In generally, I think it’s ethically fine to offer such warranties, even though they’re generally a bad deal.

First, the dollar value on these things is relatively low. So, although I think the $49 warranty is (for most buyers) a rip off, it’s a small rip off. No one is going to miss a mortgage payment over it.

Second, the ability to figure out whether a warranty is worth it is well within what we should expect in terms of basic financial literacy for grown-ups. That’s not to say that everyone has that bit of financial literacy. But warranties on small electronics are very simple insurance policies. Compare the question of selling indexed annuities or derivatives or other complex investments. In those cases, investment professionals are selling highly sophisticated financial instruments, and we should expect them only to sell them to sophisticated investors.

So buyer beware. There are bad warranties out there. And they’re generally not unethical products, so even an honest salesperson earnestly advise you to buy a warranty that you don’t really need.

When is a country too corrupt for Canadians to do business there?

Does a brutal dictatorship in the Horn of Africa, featuring systematic slavery and more generally an awful record of human rights abuse sound like a place you want to do business? If so, Eritrea is the destination for you.

The tiny State of Eritrea was the subject of a recent scathing report by the UN’s Office of the High Commissioner for Human Rights. Among the report’s findings: “Eritreans are subject to systems of national service and forced labour that effectively abuse, exploit and enslave them for indefinite periods of time.” Little wonder that Eritreans currently make up a disproportionate number of the African refugees landing on European shores.

Of particular interest is the fact that Canadian mining company Nevsun Resources Ltd is implicated in these human rights abuses. Nevsun is co-owner of the Bisha copper and gold mine. According to news reports, “Nevsun said it regretted if a state-controlled subcontractor it had been required to use had employed conscripts.” (See the petition here, asking Nevsun to “Get slavery out of your mining operations in Eritrea, pay your workers or else close the Bisha mine.”)

Doing business in less-developed country is always going to pose a range of challenges, from corrupt officials to bad infrastructure to non-existent environmental regulations and shoddy labour conditions. If you do business in such places, there are always going to be compromises, and in some cases those compromises — think of long hours and low wages in a Bangladesh garment factory — may be a net benefit to workers, to the local economy, and to shareholders.

And there are things companies can do to act responsibly when doing business in developing countries. They can work with local governments to make sure that existing regulations are adhered to and enforced, throughout the supply chain. They can scrupulously avoid indulging in bribery (which is both illegal everywhere and almost always seriously unethical). They can look for win-win ways to raise labour standards to make workers better off and more productive. Simply by operating with quiet integrity, a company from a developed country may be able to set a good example that helps promote reform.

But in some cases, that won’t be enough. In some cases, doing business in a particular country is just going to mean getting your hands very, very dirty. In some cases, becoming complicit in human rights violations will be either inevitable, or simply overwhelmingly tempting. We have to come to grips with the fact that there are some places where a responsible company simply cannot do business.

And that’s a tragic fact for the people who live in such countries. People in places like Eritrea desperately need trade, to help pull them up out of poverty. But sometimes — as when important human rights are on the line — helping in this way is going to have to stay out of reach.

Chris MacDonald is founding director of the Jim Pattison Ethical Leadership Program at the Ted Rogers School of Management, and founding co-editor of the ethics news aggregator, Business Ethics Highlights. Follow him at @ethicsblogger.

Thinking Critically about Social Responsibility

I recently participated in a conference on Corporate Social Responsibility (CSR), where I gave a short presentation on the role of critical thinking in leading a company toward better social performance. Basically, I argued that in order to motivate employees to embrace some version of CSR — whatever you take that to mean — you need need to think critically about the way your CSR activities dovetail with the goals of your organization, and with the values and commitments that are already motivating your employees.

Interestingly, I received some push-back, in the form of a question from the audience, from someone who suggested that what CSR efforts really need is passion and a sense of purpose. What’s really needed, this person said, is not critical thinking at all. Indeed, for purposes of pushing the CSR agenda forward, critical thinking is actually a bad idea.

As someone who teaches critical thinking for a living, I was naturally somewhat taken aback.

This person had a point, of course: getting something done — whether it’s opening a new division or launching a new product or strengthening your CSR profile — takes passion. It takes commitment. And sometimes critical thinking, which involves asking questions, could seem like a stumbling block. Now isn’t always the right moment for asking annoying questions and expressing doubt.

But I thought I would take the time to lay out, here, the role that critical thinking can play — indeed, must play — in launching CSR activities and bringing them to fruition.

To begin, what is critical thinking anyway? Most of us have a sense of what it is, and most people are generally in favour of it, in most contexts, but what is it? The textbook definition is that critical thinking is the systematic evaluation or formulation of beliefs or statements by rational standards. In other words, it’s about figuring out what to believe, and doing so by determining what beliefs are backed by good reasons. It means asking questions like, “Is that really true?” “How do I know that?” “How certain am I?” and “What assumptions am I making?”

So, how in particular does this apply to CSR?

First of all, a company needs to think critically in order to decide what its CSR objectives are. It doesn’t make sense for a company to dive into CSR by tackling any and every project that anyone has ever associated with that concept.

So, think critically. Will you focus on minimizing (or off-setting) the environmental impact of your operations? Will you incentivize employees to volunteer for charities? Will you build a hospital in a remote village? Will philanthropy be part of your CSR portfolio? Passion is important, but so is directing your passion. Setting objectives requires asking hard questions. It requires, in short, critical thinking. (For a more detailed take on how to think critically about your company’s CSR agenda, see Michael Porter and Mark Kramer’s article, “Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility”).

Second, a successful CSR program requires that a company think critically about methods. The need for businesses to think critically about methods is quite literally why universities have business schools. Managing is not easy. Regardless of the issue at hand, managing requires developing a strategy that makes good use of the materials at hand in order to reach your objectives.

So once you’ve decided that, for example, that you want one chunk of your CSR program to focus on literacy, then what? Do you leverage your highly-educated workforce by sending your employees out to volunteer at an adult literacy clinic? (And how do you motivate them? Simply offer them the chance to do it on company time? Offer bonuses? What else?) Do you partner with other like-minded companies to raise awareness? Do you build pro-literacy messages into your own product-oriented advertising? Or do you merely donate money to the first literacy-oriented charity you find? Is there evidence that that will have an impact? The most impact?

Finally — and this was the part I focused on in my presentation — think about engagement. It should go without saying that a successful CSR program requires the engagement of your employees. After all, a profit-oriented company that suddenly decides that it takes its social responsibilities seriously may well find itself facing a skeptical, or otherwise hesitant, workforce. If you say “we put community first,” but employees secretly believe that the unwritten rule is “profit above all,” they’re going to find all sorts of ways, passive or active, to undermine your CSR activities.

So you need to think critically about what your own argument in favour of CSR is. If you can’t express why you believe in CSR (again, whatever you take that to mean) then you’re not going to be able to convince others that they should believe in it. In other words, can you actually explain, in a credible way, what’s motivating the company (or you, the boss) to take CSR seriously? Is it that you think some version of CSR dovetails so well with the company’s mission? Or is it because you see a win-win outcome that links the good of the community to the company’s own strategic needs (e.g., the need to foster a healthy workforce)? Explain the rationale, in order to convince employees that the move is an authentic one.

A further element of critical-thinking-for-engagement is to help employees see that active support for your CSR program makes sense given what they already value and believe in, and that it’s OK for them to bring those values — their generosity, their sense of community, their passion for the environment — to work with them. In other words, give your employees a pro-CSR argument that is grounded in their own values and beliefs. Doing so requires thinking critically about the various arguments in favour of social responsibility, understanding their structure, and deciding which ones both work logically and are rooted in starting points your employees can accept.

That, in short, is the role that critical thinking must play in any company’s attempt to take corporate social responsibility seriously. This obviously isn’t anything remotely like a full and complete recipe for carrying out a CSR agenda. There are lots of people who can give you better advice about that than I can. But it’s worth giving due credit to the role that critical thinking needs to play. Because while a successful CSR program does need passion, passion that is not guided by critical thinking might well prove fruitless, or worse.

Socrates taught us that the unexamined life is not worth living. One tiny implication of that is that the unexamined CSR initiative is not worth initiating.

Fired for being a jerk in public: does the punishment fit the crime?

I wrote recently about why Hydro One was wrong to fire an employee over the crudely sexist way he and his friends treated a female journalist at a soccer game.

Lots of people disagreed with me, apparently sensing a kind of cosmic justice in a man losing his job over acting like a jackass in public. As I indicated in my previous entry on this case, I have no interest in defending this particular guy’s behaviour, which was sexist and boorish. But I’m disturbed by the glee with which so many people celebrated the fact that he lost his job — his source of income, his means of supporting his family — as a result of his drunken bad behaviour.

And while I think this case is unique in many ways, it is similar enough to other kinds of cases involving bad behaviour off-the-job that it warrants further discussion. Just why were so many people so sure that justice was served when Hydro One fired this guy?

We can think about this in terms of both the substance of the outcome, and the process or mechanism by which it came about.

First, let’s talk substance. Consider, if you will: of all the punishments (or more neutrally, all the bad outcomes) that could befall a sexist buffoon, which one do you think is most fitting? Here’s a short illustrative list:

  • Public ridicule?
  • Forced public apology?
  • Loss of employment?
  • Sensitivity training?
  • Divorce?
  • Expulsion from social clubs?
  • Banishment (along with his family) from the community?
  • Community service (perhaps at a women’s shelter)?
  • Incarceration?
  • A fine?

Which of these outcomes (or which combination of them) do you think fits the crime, here? And why is it that so many people think that loss of employment is the right answer to this very complex multiple-choice question? Yes, arguments in favour of the appropriateness of firing have been offered (e.g., an employer should worry that a man who is a sexist jerk in public will also be a sexist jerk at work). But I’ve yet to see a really robust version of that argument, let alone an explanation of why firing makes more sense, ethically, that punishment alone is the right one, ethically, than all those other outcomes, or — for those who believe this is true — why he deserves everything on the menu.

(Nerdy footnote: if you want to get technical, which of the various extant theories of punishment are you relying on if you think that firing was the right outcome? Deterrence? If so, what evidence do you have that people like that are deterred by punishments of that kind? Retribution? If so, what makes loss of employing the right way to “get back at” this guy? And so on.)

So was firing him the right result, or just the one that was most readily available?

Next, let’s talk process. Let’s talk about the mechanism by which justice was meted out to the employee in question. And let us assume now, just for the sake of argument, that losing his job does seem like an appropriate and proportionate punishment for acting like a jerk (or, perhaps, for being one). The very substantial question that remains is who has the right to decide to enact that penalty? Who do we think, generally, should have the moral right to carry out such punishments?

Not to be too dramatic, compare this to the death penalty. There are a lot of people who are opposed to the death penalty not because they think no one ever deserves to die for their crimes, but because they think the government shouldn’t have the power to hand out such a punishment, even when that punishment is justified. It is not inconsistent — in fact, it is wholly reasonable — to say that some people (people guilty of multiple child murders for example) absolutely ‘deserve to die,’ but at the same time to say that the state shouldn’t be trusted with the discretion to hand out that sentence.

Now, back to the incident at hand. It is entirely reasonable to believe a) that someone who is a sexist buffoon in public deserves to lose his job, and b) that employers should not be encouraged to take it upon themselves to impose such a penalty in such circumstances. We risk handing to corporations a very potent weapon if we arm them with the moral license to pass judgment on our off-the-job behaviour. And nor is the burden of such a license a burden that corporations should be too eager to bear.

Hydro One Was Wrong to Fire Hooligan Employee

A substantial minority of men are capable of boorish, sexist behaviour in public. A world in which all such men were unemployed would not be a better world.

By now many of you will have seen the video that led Hydro One to fire one of its employees. The government-owned electricity distribution company fired engineer Shawn Simoes after he and friends shouted vulgarities at a female news reporter during a live broadcast at a soccer match in Toronto.

This much is clear: what Simoes did was boorish, and offensive. The reporter who was the target of their abuse should not have to put up with that sort of thing — nor should any other woman. What’s less clear is whether his employer is ethically justified in firing him for it. And as much as I hate to say it, I think the answer is no. I’m not going to defend the man’s actions, which are indefensible. Drunkenness is a factor, but not a defence. But just as there is a difference between what is unethical and what is illegal, there is a difference between what is boorish and offensive and what you should be fired for.

Recall the case of Ray Rice, the NFL player who was caught on video knocking his fiancee unconscious. Nothing about this behaviour implied any lack of ability to do his job, indeed to do it very well. But Rice’s behaviour was good grounds for dismissal because, as a football player, he’s a brand ambassador and is supposed to be able to serve as a hero for kids. And his behaviour made him terrible at both. Or compare the case of Jian Ghomeshi, fired by the Canadian Broadcast Corporation after he was accused, by a number of women, of various forms of abuse and assault. This, too, was good grounds for dismissal. After all, in addition to being a brand ambassador, Ghomeshi needed to be able to work closely with female co-workers, something no one would reasonably trust him to do in the wake of such serious and credible allegations.

Simoes’ case is quite different. He wasn’t wearing a Hydro One t-shirt or anything. (The fact that he was a Hydro One employee apparently took considerable online sleuthing.) And it’s not at all clear that his boorish behaviour implies a threat to his female co-workers. Is there a pattern here? Perhaps his supervisor has insight into that.

Hydro One says Simoes violated the company’s code of conduct. But the relevant section of the company’s Code merely says “We treat employees and persons with whom we do business with dignity and respect. Hydro One does not tolerate harassment or discrimination.” It’s a stretch to think that that applies to all employees, all of the time, including when they’re off the job.

There are two key reasons to worry about the firing. One is that the punishment doesn’t fit the crime. The behaviour was very bad, yes, but not physically dangerous and it doesn’t imply an inability, on Simoes’ part, to do his job. Also, there’s reason to worry about the consequences. We don’t know whether Simoes has dependents, but what if he did? It’s bad enough, as a kid, to have a dad seen behaving like that. It’s even worse when Dad loses his job and can’t afford to support you anymore.

The other reason to worry about the firing is that the move implies that employers own you, and your behaviour, 24 hours a day. It implies that there’s no private sphere. After all, there are all kinds of things that you could do, off the job, that might displease your employer. Should they all be firing offences? What if you were filmed taking part in an illegal environmental protest? What if you were spotted smoking marijuana in the park? That’s illegal in many jurisdictions. What if you were spotted taking part in your local Gay Pride parade? That’s legal in most places, but what if your employer is super conservative? It’s simply not healthy for employers to be allowed to make those kinds of calls about off-the-job behaviour.

So I think Hydro One made the wrong call in firing Simoes. We should not tolerate sexual harassment, in public or at work. But unwillingness to tolerate it means we should be ready and willing to speak up against it, even to do so quite aggressively. It doesn’t mean that our employers should get to hand out punishments for behaviour that happens off the clock.

The Downside, and the Upside, of the Underground Economy

Statistics Canada has just released this report on The underground economy in Canada, 2012 — essentially an attempt to gauge the extent of “market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature”.

The report’s key finding:

In 2012, total underground activity was $42.4 billion in Canada or about 2.3% of gross domestic product.

The residential construction industry is the key culprit, accounting for 28.3% of the total. In other words, lots of people are having home renovations done, paying cash, and the contractors aren’t charging — or forking over to government — the required taxes.

The government’s concern, of course, is not merely with measuring the extent of the underground economy. Market activities that “escape measurement” because of their “hidden, illegal or informal nature” are not just unmeasured, but untaxed. So the missing $42.4 billion means a lot of forgone tax revenue.

Ethically this is not good. Contractors (for example) who don’t charge the required taxes are not competing fairly. And consumers who are complicit in such tax avoidance aren’t paying their fair share of the national tax burden; they are, to use the standard mass transit metaphor, “free riders,” letting the rest of us pay to support the tax-funded services that we all enjoy.

Part of the problem, naturally, is that those who engage in ‘underground’ transactions may tell themselves that it’s a victimless crime. But that’s simply false. If you don’t pay your share, you’re not stealing from the government — you’re stealing from the rest of us.

Naturally, some will blame the tax system. Taxes are too high, they’ll say. Or the tax system is too complicated. Fair enough: if that’s your view, work to change the system. Go vote. Write your MP. I realize none of that is guaranteed to get results. But if you break the law in order to protest it, you should at least do it openly. Anything else requires an awful lot of self-serving rationalization. The fact that you feel like you’re already paying too much doesn’t mean that you actually are.

Of course, we needn’t be entirely sanctimonious about this either. Consumers, for their part, can’t plausibly be expected to enquire, for every cash transaction, whether the business involved is paying its taxes. And there’s room for sympathy — always — for those on the bottom rungs of the economic ladder. If you’re living below the poverty line and cutting lawns or babysitting to make ends meet, I have some sympathy for playing fast and loose with the tax rules. But then, that same justification doesn’t apply to the upper-middle-class household paying under the table to have a deck built on the back of their suburban house.

Finally, it’s worth noting the upside, the good news implied by the fact that a bunch of people aren’t actually paying their share. The upside is this: if a bunch of people are getting away with not paying their share, it means we don’t live in an utterly repressive totalitarian state. Consider what it would take to reduce the underground economy to zero: that kind of government intrusion into our lives would be unbearable.

So, the fact that some people get away with it is a good thing. But the impulse to do it — the impulse to avoid paying your share — is not.


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