Archive for October, 2013|Monthly archive page
Loblaw Compensating Bangladesh Victims
Filed under: brands, charity, compensation, consumers, corporate citizenship, disaster, employees, international, retail, workplace safety |
Comments (4) Canadian grocery chain Loblaw has announced that it will compensate the families of victims of the factory collapse that happened in Bangladesh’s Rana Plaza this past May. The factory housed a number of garment factories, including some that made garments for the Canadian’ retailer’s “Joe Fresh” line of clothing.
Some will worry that this is a case of too little, too late. And certainly the “too late” part is correct. Compensation is always a distant second best when compared to avoiding deaths in the first place. Whether the compensation is “too little” or not is subject to debate. It’s not clear that Loblaw (or any company) bears direct responsibility for the behaviour of the companies it buys services from, though certainly the case is stronger where the buyer is a highly-capable multi-billion dollar company, and when the companies it buys from are smaller, less-capable companies operating in an under-regulated environment.
Either way, it’s hard not to admire the company for stepping up and assuming responsibility. And the money will surely be a godsend to the families of the victims. But the real benefit of the compensation scheme may well lie in its capacity to reassure Canadians (and other westerners) that the company cares, and that things are going to get better in Bangladesh, so that we can all keep buying goods made there. Because that’s what Bangladesh truly needs.
But on the other hand I continue to worry about Bangladeshi exceptionalism — that is, that all the attention being lavished on the garment industry in Bangladesh will mean little attention gets paid to parallel problems in places like Malaysia, Vietnam, Pakistan, China, and a number of African countries. There are surely factories in many, many developing countries that are ‘Rana Plazas’ just waiting to happen. It’s not clear just what is being done about those.
Finally, many will be asking what still needs to change? Two things come to mind. The first is that companies like Loblaw need to keep getting better at vetting the companies they do business with, in order to weed out the bad ones. This, of course, is much harder than it sounds. The second is that Canadians and other Westerner consumers need to change the way they think about the issue. They need to recognize that Bangladesh is not Canada, and doesn’t have the luxury of North American-style labour standards. They will surely get there, but it will be a long, slow climb.
Most important is that this tragic series of events has focused the world’s attention on an important set of issues. But the challenge lies in harnessing that attention and seeking out reasoned discussion, rather than knee-jerk reactions.
Women, Bank Notes, and Patterns of Inequity
Filed under: banking, discrimination, excuses, government, protest, values |
Leave a comment Canada’s government is under fire with regards to gender equity, and business leaders should take notice.
Attention has recently been drawn to a petition calling for women on bank notes. Currently, Canada’s bank notes feature only dead (white) male politicians. Queen Elizabeth is the only woman featured, and she’s not Canadian. The result is that Canadian women, no matter how accomplished or historically significant, are excluded from being celebrated in this high-profile way. The petition notes that Canada’s $50 bill once featured “The Famous 5” (women instrumental in the fight to acknowledge women’s legal personhood) and Thérèse Casgrain, a Canadian senator who had once been a leader in the women’s suffrage movement in Quebec. But in 2012, those images were replaced with an image of an icebreaker.
Zero representation of Canadian women seems a clear matter of inequity. Of course, it can be pointed out by way of rebuttal that the bills mostly honour dead Prime Ministers, all of whom (the dead ones, that is) happen to be men. But that just means that it’s a case of systemic discrimination, sort of like back when certain police forces required officers to be over 5’10” or something. They didn’t say that women couldn’t be officers; it just happened (*ahem*) to be the case that very few women qualified.
The other thing that might be pointed out is that it’s not as if anyone is asking for anything onerous or expensive, here, in asking for women to be represented. It’s an easy move with plenty of symbolic significance. It’s the respectful thing to do. Other Commonwealth countries have done it. Why couldn’t Canada?
Of course, it’s easy to pick on individual issues like this, and to see them as representing a general attitude of disrespect. And that’s not always fair. So it makes sense to look more generally at what the Government of Canada has done to show its commitment to gender equality.
Let’s start at the top. How has the Government of Canada done at showing commitment to gender equity by, say, appointing women to Cabinet? Well, there are 12 women in Prime Minister Stephen Harper’s cabinet, out of a total of 39 cabinet ministers. That means Cabinet is 31% women. That’s very roughly proportionate to the number of women in Parliament, since there are currently 76 women sitting in the House of Commons (out of 308 seats, for 25%), and 38 more in the Senate (out of 105, for 36%). But of course it’s nowhere near proportionate to the number of women in the Canadian population, or for that matter on the list of eligible voters. That represents a middling grade at best. This is, after all, 2013.
The Harper government has also been criticized for the under-representation of women on the Supreme Court of Canada. I don’t have a real opinion on this, and I realize that in selecting SCC judges the matter of qualification for the job has to be paramount, far more important in fact than in selection of cabinet ministers. But still, well-informed individuals, including SCC justices, say there’s room for improvement.
Add to this the fact that there have been claims that women’s rights have in fact suffered significant setbacks under Harper’s government.
When you put it that way, the lack of Canadian women on Canadian banknotes looks a little more significant, more like part of a pattern than an aberration.
What’s the take-away for business leaders? If you don’t want to have every decision and policy questioned from an equity point of view, make sure your track record on the issue is one that reassures, rather than provoking cynicism or outright antagonism.
Corruption Overseas: An Ethics & Compliance Minefield
Filed under: bribery, capitalism, corporations, corruption, culture |
Comments (1) The problem of corruption is a tough nut to crack. The bulk of bribery and other forms of corruption (though by no means all of it) goes on in developing countries where rule of law is lax and the opportunities for profit are rich. Companies succumb to the temptations at their peril. The ROI on bribes is pretty hard to specify, and the jail time that can result ought to be a pretty good deterrent. But evidently that doesn’t make the problem much easier.
Last week, in conjunction with Canadian Business, the Jim Pattison Ethical Leadership Program hosted an executive seminar on the topic, called “The Ethics and Compliance Minefield: New Rules for Doing Business Overseas.” The day’s schedule included terrific speakers from Siemens, the World Bank, and the RCMP. (If you want to find out more, see here.)
A number of themes came to the fore during the day.
First was the role of rationalizations. As I’ve written before, rationalizations play a key role in all sorts of wrongdoing. Good people generally need to give themselves excuses if they’re going to do bad things and still look at themselves in the mirror in the morning. This is nowhere more true than in the realm of corruption. Claims like, “That’s just how business is done over there,” and “No one really gets hurt,” or “We’ve always done it that way” or “That’s the only way we’ll make our sales targets” are often false, and seldom provide cogent support for the moral conclusions they are intended to support.
The second theme that came up repeatedly was the question of control systems. Companies whose employees and agents engage in bribery seem (anecdotally, at least) to have weak internal controls. And that’s not surprising. In order for a few million dollars to go “missing” here and there, and end up in the pockets of local politicians or shady middle-men, you’ve pretty much got to be mislabelling the money at the very least. This sort of thing should be worrisome, and not just from the point of view of ethics and compliance. Sloppy business is sloppy business.
A third theme that arose was the notion that companies who want to avoid corruption face what is really just a special case of a more general set of management challenges. Instituting appropriate financial controls is a general standard management challenge. Ensuring overall organizational integrity (in the broadest sense) is a standard management challenge. And engaging in serious organizational change (such as in the wake of a bribery scandal, for instance) is a standard management challenge. In other words, this stuff is the stuff that good managers, and good leaders, ought to be good at, and if they’re not they need to get good at it or face peril.
The final theme that arose was cooperation. Stamping out corruption requires cooperation at several levels. It requires cooperation among countries, and in particular among their police forces and other enforcement agencies. It also requires cooperation between companies, who have a lot to learn from each other. (What, for example, might smaller companies learn from a been-there-done-that company like Siemens?) It also requires cooperation between different kinds of organizations — for example, between companies and law enforcement agencies.
None of this is easy. But given the potent ethical arguments against corruption, not to mention the potent legal penalties for being caught engaging in it, it’s a problem that needs to be tackled head-on.
Herbal Remedy Scam
Filed under: compliance, ethics, fraud, health, honesty, information, labelling, law, marketing, natural, product safety, quality, risk, safety, supply chain |
Comments (7) It’s a quality control problem at best, and outright fraud at worst.
A recent study by researchers at the University of Guelph used genetic analysis to study a range of commercial herbal remedies and found a shocking disparity between what was on the label and what’s actually in the bottle.
According to the Vancouver Sun, the researchers looked at 44 herbal products sold by 12 companies, using DNA ‘barcode testing’ to determine what plant species were in the bottle.
The result: some products contained other generally inert species of plants (for example wheat, to which some people are allergic, and rice, to which some people are allergic), without those ingredients being listed on the label. Other products were adulterated with potentially toxic plants like St. John’s wort or senna. Others simply contained none of the active ingredient they were supposed to contain. And yet these products are commercially available at a major pharmacy chain near you.
The study didn’t name names — the study was effectively about quality control within the industry, rather than about naming-and-shaming particular companies. But it’s a damning indictment for the industry quite generally. (Just two companies among the 12 in the study sold products that were just what they said they were.)
Of course, many readers will know that this is not the first reason we’ve had to doubt the integrity of the herbal remedy industry, or the ‘natural’ health product industry more generally. As others have written elsewhere (including pharmacists with the scientific and critical-thinking chops to know the difference), Canada’s regulations regarding natural health products leave much to be desired.
But it’s nothing to laugh about. Unlike homeopathic remedies, which (unless adulterated) generally contain no active ingredients at all, herbal remedies can have actual effects, though those effects may not live up to the claims implied by their labels. Herbal remedies, while under-regulated, can at least have real biological effects. That’s a source of pride for makers of herbals, situated as they are within an alternative-medicine industry that is rife with outright fraud and delusion.
But it also means that the honest bottlers of herbal remedies should be at the front of the line, lobbying government hard for stricter regulations. Perhaps even more crucially they should be doing their best to convince the major chains that there’s a difference between them and the companies whose products failed the Guelph study so miserably. In the end, it’s as much an ethical matter as a matter of self-interest. The public deserves to be better served, and who better than those within the industry itself to make sure that it happens?
If the Price is Right, Do Values Matter?
Should it matter to consumers whether the company’s CEO supports gay marriage, is a libertarian, or a Catholic, or is a supporter of a particular political party?
Yesterday, as part of my Business Ethics Speakers Series at the Ted Rogers School of Management, I had the honour of hosting Professor Alexei Marcoux, from the Quinlan School of Business at Loyola University Chicago. The title of his talk was “Adventures in the Market for Values.”
Alexei’s argument was that it’s almost always a mistake to let the values held by buyer or seller get in the way of a mutually-beneficial exchange. Or, to be more precise, he argued that we shouldn’t get into the habit of making purchases that way, or adopt the disposition to do so.
The argument was basically about what kinds of people we need to be in order to have a flourishing commercial society. The short answer is that we need to be tolerant folks, able to engage each other in commerce when we have shared interest in doing so. This means that we should make our buying decisions based on price, quality, and what we know about the basic ‘commercial integrity’ (i.e., trustworthiness) of the person or company we’re dealing with.
Why not care about the other person’s (or company’s) values? The argument is basically about character, or virtue. Our best ‘vision’ of a flourishing commercial society is one in which people put aside their differences to make themselves and the world better off by engaging in commercial exchange. Alexei quoted Rabbi Jonathan Sacks: “It is through exchange that difference becomes a blessing, not a curse.”
But his argument also has a more directly practical element to it. For any given individual, commerce based on values is going to be irrational, leading to the purchase of goods that satisfy our needs worse than available alternatives. If the deal is a good one, you should take it. (Charles Barkley exemplified this attitude when he was quoted as saying, “I can be bought. If they paid me enough, I’d work for the Klan.”) Socially, the problem with too much focus on the other person’s values is that in the aggregate it results in what economists call “dead weight loss” — a loss in efficiency in the market overall.
Now two caveats apply here.
First, Alexei’s argument isn’t that we shouldn’t care about the values embodied in the products we buy. In fact, quite the opposite: he argued that we absolutely should want to make sure that the products we buy match our own values. That’s part of what is summed up in useful but dreadfully vague word, “quality.” What counts as high-quality paper will differ from person to person, depending on the values they hold. One person demands crisp, bright white paper. Another insists on “good enough” paper that is high in recycled content. His point is that you shouldn’t care about the values of the person you buy from.
Second, his argument isn’t that it could never be right to make a purchasing decision based on the values of the person you’re dealing with. We might be able to imagine extreme cases where doing so would be reasonable. (My own candidates include situations in which the person is the product, or when the values of the person lead you to have doubts about for example the integrity of a brand and the cluster of values the brand is supposed to represent.) Alexei’s point is that we shouldn’t make a habit of making decisions that way; that’s not the sort of people — the sort of community — we should want to be.
Why Do (or Don’t) Companies Go Green?
Filed under: CEOs, corporate citizenship, energy, environment, NGO, sustainability, values |
Comments (5) Why do some companies “go green,” while others are satisfied to go grey? Why do some develop robust sustainability programs while others sit back and watch?
Yesterday, as part of my Business Ethics Speakers Series at the Ted Rogers School of Management, I had the pleasure of hosting Hamish van Der Ven, a Ph.D. candidate from the University of Toronto. The title of Hamish’s talk was “Big-Box Retail and the Environment: Why Some Firms Innovate and Others Stagnate.” His main contention was that the main factor at play is the socialization of high-level executives at multi-stakeholder sustainability networks. In other words, what matters is whether the leaders of the company in question make use of opportunities to sit down with a range of folks to talk about sustainability.
The main competing theory of why companies go green is the theory that it all has to do with profitability. Companies go green, on this theory, because they buy into the “business case” for sustainability. That is, they come to believe that reducing energy usage, minimizing packaging and waste, and so on, will be good for the bottom line. Alternatively, they come to believe that being perceived as environmentally-progressive will win them customers, and increase profits that way.
But as Hamish rightly points out, that explanation suffers from a serious defect. Every company is subject to those pressures — they all want to cut costs and reduce waste and attract environmentally-concerned consumers— but only some of them actually put much effort into sustainability programs that will do those things. If the business case is such an important motivator, why don’t all companies buy into it?
Much more significant, Hamish argues, are the opportunities executives take, or don’t take, to open themselves up to internalizing new social norms. The process of socialization involves precisely the process of internalizing social norms. And that happens through social interaction.
And when leaders change their thinking, they tend to do a lot to change corporate culture. As the head of CSR for one major corporation told me, “We talked a lot about going green, but then one day the CEO called and said ‘Make it happen,’ so it happened.”
Of course, this isn’t just just a story about how policy-makers and activists can influence companies by influencing leaders. It’s also a story about how leaders can implement change in their own organizations. As Hamish put it, “If you sit down with people who think differently, you start to see things in a new light. We cannot expect change to result from [instead] sitting around a table with people who think just like you.”
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Update, Dec. 14, 2013: Hamish has now published a paper based on this research. “Socializing the C-suite: why some big-box retailers are “greener” than others,” Business and Politics Ahead of print (Dec 2013)
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