What do “Higher Standards” for Business Look Like?

When we see what seems to be an increase in misbehaviour, we need to ask: is that because behaviour has gotten worse, or because expectations have gotten higher?

See this piece, by Theresa Tedesco, for Financial Post Magazine: Farther. Faster. Higher.

…Business leaders are on trial like never before. Public outrage over recent ethical crises and the dramatic failures of corporate governance, most notably the stunning collapse of Enron Corp. and the financial crisis of 2008, have fuelled assumptions that government and regulators are stepping in and that ethical standards of business must be on the rise as a result. Certainly, public awareness is heightened in the aftermath of spectacular corporate collapses. But are ethical standards actually getting higher as a result? Or are shareholders, employees and other stakeholders simply more aware of the moral considerations in the wake of these scandals and crises, considerations that are soon to be forgotten? Either way, the role of the modern CEO and other senior executives has become much more complex, driven almost reflexively by the velocity of change in social values, technology, regulation and, increasingly, public opinion….

(I’m also quoted, making a point I’ve made before, namely that business is more ethical today than it has ever been in the past.)

But there’s also an interesting philosophical question, here, about what counts as a “higher” standard.

In some cases, “higher standards” might actually mean that we attribute to business obligations in domains in which they previously were seen as having basically no obligations at all. Environmental concern might be one such domain. Once upon a time, pollution just wasn’t an issue. At even once pollution was “on the radar,” so to speak, specific types of pollution (e.g., CFC’s) still weren’t seen as important. In that sense, it’s clearly true that we see “higher standards” imposed, and observed, by business today.

A second kind of “higher standards” might involve stricter requirements for things like honesty and product safety and truth in advertising. Once upon a time, the rule really was “buyer beware.” That’s no longer the case. Social expectations, often backed by law, mean that businesses face (and generally adhere to) standards far higher than we’ve ever seen before in history.

A third kind of “higher standard” might have to do with social expectations with regard to the impact business has beyond its interactions with its own customers and employees. Now, it has long been the case that many businesses make social contributions through things like charitable donations. But today, it is utterly run-of-the-mill for companies to have CSR departments that consider not just things like charitable donations, but how to track and report on the business’s net social impact. This is yet another way in which businesses face, and face up to, higher expectations.

But there is also a fourth kind of higher standard, one which is less-obviously being met. And that is in the area of individual decision-making. When the average person (or the ethicist, for that matter) surveys the world of business, he or she still sees examples of bad behaviour — people lying, cheating, embezzling, and defrauding. Most of us get our data in that regard from the media, which is far from a fair accounting of the issue. But still, the cases are out there. And it’s in that sense that people are very fair to observe that, at very least, things don’t seem to be getting better, dammit. Then again, I know of no credible evidence that things are getting any worse in this regard.

I suspect different people mean different things when they talk about whether “ethical standards” are higher or lower in business today. I suspect that the first 3 kinds of “higher standards” above are the crucial ones, since I suspect that the 4th, which depends on the character of individual human beings, is less susceptible to long-term change on a population basis.

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