Archive for the ‘ethics’ Category
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.
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?
Earlier this week I blogged about the intersection between customer service, ethics, and public relations. I pointed out that when the occasional grouchy remark turns into a pattern of disrespect, customer service becomes a question of ethics, and — in an age of social media — a potential PR nightmare.
But this raises a bigger question about the nature of the relationship between a business and its customers. Is the relationship between buyer and seller appropriately thought of as an adversarial one or a cooperative one? Ethically, is it right for a company to think of customers as friends or foes?
There are intuitive reasons on both sides. On one hand, buyer and seller have a shared interest in ‘doing the deal.’ They typically want to do business with each other, and both benefit from the transaction. On the other hand, every dollar a buyer saves is a dollar lost from the seller’s point of view. Every buyer wants a low price and every seller wants a high price, so the conflict is built right in.
We can name at least four different approaches to arriving at an answer to this question.
We might try looking at the question from the point of view of everyday ethics: people are people, and we should treat them honestly and with respect regardless of who they are. If fairness is good, then we should promote fairness in commercial transactions, just as we do in other areas of life. And that requires that buyer and seller at least see each other as equals. They don’t have to adopt a cooperative stance, but neither should they be adversarial.
We could instead take an economic approach. From an economic point of view, the interaction between buyer and seller is best understood as a ‘mixed motive’ game. In other words, it’s a game in which the players’ respective rankings of possible outcomes partly coincide and partly diverge. Both players would rather do a deal than not do a deal, but they disagree over what the best deal would be. If you’re in such a game, you should adopt an attitude that is neither fully cooperative nor fully adversarial. Unless, of course, displaying one of those attitudes moves the deal in your direction.
Third, we might think about this from the point of view of social conventions. It may well be that in certain cultures it is traditional (and perhaps widely accepted) that buyers and sellers treat each other as adversaries. And perhaps in certain other cultures it is traditional (and expected) that buyers and sellers will treat each other in a more convivial way. There are likely even individual industries typified by one or the other of those conventions. Doctors, for instance, are trained (and incentivized) to adopt a collaborative approach to their patients. Some stock brokers have notoriously adopted an adversarial approach to their clients.
Finally, we might think of this question from the point of view of corporate strategy. In other words, whether you think of your customers as friends or enemies — whether you adopt a collaborative or instead competitive attitude to them — might be a question of what kind of company you want to be. Some companies thrive on aggressive sales tactics; others thrive on a softer, more relationship-driven approach. Seen from this point of view, there’s no single, general answer to the question. Each firm needs to answer it for itself.
Regardless of how you frame the question, and regardless of the answer you arrive at, the attitude your company adopts towards customers is bound to become well known, especially in an era in which reputation spreads via Facebook and Twitter. Seller beware!
Ethics should be thought of as the heart of your organization’s HR function. Likewise, HR is likely to be the heart of attempts to manage ethics within your organization. Let me explain why.
It’s hard to imagine a function more essential to most businesses than HR.
HR may not get the glory that Finance does, but it’s just as important. Hiring, training, evaluating, and retaining the right people are all undeniably core management challenges. Every manager knows this. The relevant difference between Finance and HR is that Finance gains prestige by bringing to bear the tools of quantitative analysis; HR issues, on the other hand, are typically harder to quantify, harder to mathematize, leading many to think of them as “mushy.” But “mushy” typically just means “I find this stuff difficult.” Managers who find HR difficult would rather hide in the numbers. Ironically, HR gets called “soft” precisely because it is so hard.
At many large companies, the HR Department is in charge of ethics — or at least that part of ethics that isn’t bundled with Compliance. The HR Department is often tasked with making sure every employee gets a copy of the company Code of Ethics, for example. HR is also typically in charge of ethics training, as well as updating the company’s Conflict of Interest policy and other ethically-salient policies.
But the fact that many companies embed their Ethics function within their HR function may actually obscure the extent to which every aspect of HR is ethically significant. The full extent to which HR is an ethical matter may not be obvious.
Ethics is fundamentally concerned with the choices we make — either as individuals or as companies — when those choices have an impact on people’s well-being or their rights. And so ethics is and must be part of all of the policies and activities for which HR is responsible, not just the ones that have the word “ethics” explicitly attached to them.
Hiring, for instance, (or setting the rules for hiring) involves balancing a range of value-laden criteria, such as skill and experience and reliability, and avoiding ethically-inappropriate criteria such as race, gender, and sexual orientation. The same goes for performance evaluation. Likewise, how overtime is handled — who is eligible, under what conditions, with whose permission — is a fundamental question of justice. This is also true of policies related to discipline, which obviously require attention to fairness, another central sub-topic within ethics.
So even if it weren’t in charge of ethics training and ethics policies, the HR function would remain ethically crucial.
Finally, HR also gains ethical significance by embodying most of the few tools available for managers to shape that elusive thing known as corporate culture. Culture — that communal set of understandings, beliefs and traditions that give a shared sense of “how we do things around here” — is widely acknowledged to be a critical element of organizational success. Indeed, there’s a well-worn saying to the effect that culture trumps strategy every time. That is, regardless of what strategic initiatives senior managers put in place, or what policies they put down on paper, those initiatives and policies are liable to fail if the culture of the workplace isn’t suited to them. Enron famously had a rather lengthy code of ethics, but the culture fostered by the company’s compensation model and its performance review process went a long way toward fostering a culture in which unethical behaviour was readily tolerated. Culture, you might say, makes up an organization’s collective ethical character.
So we see, then, that HR is actually ethically significant in two ways. It is the locus of an enormous number of central, ethically-relevant policies, practices, and decisions. And it is the mechanism through which organizational culture is built, the culture that will hopefully support rather than frustrate ethical decision making.
A shorter version of this blog entry appeared at the Cornerstone Blog
There’s a famous philosophical thought experiment known as “the Trolley Problem.” It goes roughly like this. Imagine one day you see a trolley — the famous San Francisco variety, or something more like a Toronto streetcar — hurtling along its track. The driver is incapacitated, and the trolley is bearing down on 5 people, mysteriously unconscious on the track. You happen to be standing next to a switch, which can divert the trolley onto a different track. But lying on this other track is another unconscious person.
So assuming (as the philosophy professor insists you must) that you don’t have time to haul any of the various unconscious persons off the tracks, your choice is effectively this: should you divert the trolley, thereby killing one person, or do nothing, and allow 5 people to die?
The puzzle is intended to get you to think about what’s more important: promoting good outcomes (fewer deaths instead of more) or sticking to cherished principles (like the principle that you should not cause the death of an innocent person). It makes for a fun and often fruitful classroom discussion.
But as a model of real-life ethical decision-making, the trolley problem is pretty bad. Seldom does life present you with two cut-and-dried options, neatly packaged by your philosophy professor. As Caroline Whitbeck points out, real life isn’t a multiple-choice test. In real life — in business, for example — ethical problem solving is more like a design problem: you need to design the options, before you get to choose among them.
But the trolley problem can still serve as a useful starting point for talking about business ethics. The key is to ask the right questions. Here are a handful of questions designed to make the trolley problem relevant to business ethics. Each, of course, requires a bit of mental translation. We are not, after all, primarily interested in actual trolleys.
1) Does your business need a policy for situations like this? Is your business one in which trolley-problem-like dilemmas come up often? Are employees often faced with situations that require them to trade off outcomes against principles? If so, do existing policies tell them how to deal with such dilemmas appropriately?
2) Is there anything you can do to prevent situations like this from happening in the first place? One of the key characteristics of the trolley problem is that it’s a lose-lose situation: either you kill an innocent person, or you allow several people to die. It’s worth asking (especially if such problems are common; see #1 above) whether there’s something you can do to avoid such situations so that you don’t have to deal with them at all.
3) What kind of corporate culture have you fostered, and how will that culture push people one way or the other in such situations? The trolley problem is a true dilemma, and reasonable people can disagree about it. But what about situations in which you can throw a switch and kill 5 people (metaphorically, at least) in order to save one? And what if that one isn’t a person, but is your company’s bottom line? Will your company’s culture encourage employees to put short-term profit ahead of all other considerations
4) Will people in your organization recognize situations akin to the trolley problem as being ethical problems in the first place? Or will they make the decision on purely technical grounds? Will they see past the fact that flipping switches is, you know, their job? Or past the fact that hey, the trolley has to run on time, and we always flip this switch that way at this time of day?
5) Finally, if the decision were being made by a team, or members of a hierarchy, rather than by an individual, would members feel empowered to speak their mind if they felt the team, or their boss, was making a bad decision?
Philosophical puzzles like the trolley problem become famous for a reason. They get at something deep. And they can provide fruitful fodder for discussion as part of corporate ethics training. The core of a great discussion is there: you’ve just got to know the right questions to ask.
A month ago, we launched the Business Ethics Journal Review (ISSN: 2326-7526), a venture in 21st century academic publishing, which I co-edit along with Alexei Marcoux (Loyola University Chicago).
The goal of BEJR is to publish short, peer-reviewed commentaries on recent business ethics articles published in the standard scholarly journals.
Since our launch, we’ve published the following six peer-reviewed Commentaries:
“Moving Beyond Market Failure: When the Failure is Government’s” by Peter Jaworski Bus Ethics J Rev 1(1) (2013): 1–6
“Corporate Human Rights Obligations: Moral or Political?” by Jeffery Smith Bus Ethics J Rev 1(2) (2013): 7–13
“Toward a Political Theory of the Business Firm? A Comment on ‘Political CSR’” by Pierre-Yves Néron Bus Ethics J Rev 1(3) (2013): 14–21
“Are Usurious? Another New Argument For the Prohibition of High Interest Loans?” by Matt Zwolinski Bus Ethics J Rev 1(4) (2013): 22–27
“The Unification Challenge” by Dominic Martin Bus Ethics J Rev 1(5) (2013): 28–35
“Proposition: Shared Value as an Incomplete Mental Model” by Laura P Hartman and Patricia H Werhane Bus Ethics J Rev 1(6) (2013): 36–43
We’ve also published the following three Responses, from the authors of the works at which some of the above Commentaries were aimed:
“The Cost of Usury” by Robert Mayer (a response to Zwolinski) Bus Ethics J Rev 1(7) (2013): 44–49
“Market Failure or Government Failure? A Response to Jaworski” by Joseph Heath Bus Ethics J Rev 1(8) (2013): 50–56
“Morality Meet Politics, Politics Meet Morality: Exploring the Political in Political Responsibility” by Florian Wettstein (a response to Smith) Bus Ethics J Rev 1(9) (2013): 57–62
You can see abstracts, and get free access to the full PDFs for each piece, by clicking on the links above.
For more information about BEJR, please see our instructions for authors.
Update: You can also follow the BEJR’s Facebook page, here: http://www.facebook.com/BusinessEthicsJournalReview
As of a couple of weeks ago, I’m now co-editor and co-publisher of an innovative new publication that aims to shake up the somewhat stodgy world of academic business-ethics publishing. The Business Ethics Journal Review (BEJR) is a cutting-edge online publication: it’s a free, open-access journal that publishes peer-reviewed commentaries on scholarly articles published in mainstream academic journals.
That may not sound all that exciting to those not firmly ensconced in the ivory tower, so let me explain why it’s worthy of note.
The business model of standard academic journals hasn’t changed in decades, perhaps centuries. The process goes like this. Scholars submit their research; editors vet it for basic adequacy, and then anonymize it and send it to other scholars for “blind review.” If the work passes muster (often after a round or two of revisions) it eventually gets published. If another scholar spots errors or confusions, he or she repeats the process, submitting a rebuttal that goes to an editor, then through the process of peer review, revision, and so on. It’s hardly a process that fosters discussion. A single back-and-forth can literally take years.
BEJR aims to change that formula radically, by leveraging the power of the internet and social media. We’re publishing online, and we’ve streamlined the review process so that we promise authors submission to publication in under 30 days. We also provide a “Comments” function on our website, so that literally anyone with an internet connection can participate in the discussion.
(An interesting aside: my co-Editor Alexei Marcoux and I have started BEJR using two laptops, some off-the-shelf software, and a consumer-grade web-hosting service. It’s taken plenty of work, but we’ve hardly broken the bank. A couple of decades ago, starting your own scholarly journal would have required taking out a second mortgage on your house.)
Broadening discussion in the realm of business ethics is no small feat. A lot of different people have an interest in business ethics, including business executives and other corporate employees, as well as consultants, activists, and academics. The problem is that although there is plenty of conversation about the topic, the conversation tends to be fragmented. Executives talk to executives and to their own employees. Activists chat amongst themselves and try to get the public interested. And academics most typically carry on isolated debates about esoteric considerations in scholarly journals that the uninitiated never dare to read. Bringing business ethics scholarship into a much more public forum holds the potential to foster real dialogue.
Of course, like anything really innovative, there’s a chance that the Business Ethics Journal Review will fall flat on its face. We’ve published half a dozen peer-reviewed commentaries so far, and our website has already seen some lively discussion, but it’s entirely possible that our initial momentum will wither, that the novelty will wear off, and that those who have expressed enthusiasm for this new format will go back to old, familiar ways.
And you know what? That’s OK. That’s what entrepreneurship is about: trying something cool, and living with the chance of failure. But for now, it’s great to be part of something that has other people saying, “Wow, what a great idea!” That’s something everyone should get the chance to experience, at least once in their lives.
As you may have heard, Opus Dei, a branch of the Catholic church, is suing a Danish game publisher, Dema Games, for alleged infringement of its trademark. The game is called “Opus Dei: Existence After Religion.”
The case is pretty much entirely without moral merit. Never mind the David-vs-Goliath image raised by the thought of the powerful Catholic prelature focusing its lawyers’ energies on a tiny Danish publisher. Beyond that, there’s no indication that Opus Dei, the organization itself, is portrayed in any way in the game. So this is unlike the dispute that went on back in 2006, when Opus Dei tried to get Sony to remove references to the organization from the movie version of The DaVinci Code. The issue in the present case is simply whether the organization has the right to control how its name is used.
Trademark protection is effectively a limit on free speech. You can say whatever you want, generally, but you can’t help yourself to words or phrases that are specifically used by other people for commercial purposes. Opus Dei isn’t what we would normally think of as a “commercial” organization, but close enough: its name is the “mark” under which it carries out its “trade.” So it has some claim to a trademark. On the other hand, the words “opus Dei” are just a phrase with multiple uses. As those of you who remember your high school Latin will recall, “opus dei” is translated “work of God.”
This case might best be thought of a question of free speech versus respect for religion. The organization can’t rightly expect to exert worldwide control the use of the two words “opus” and “dei,” words that have many uses in conjunction beyond describing the Catholic group. But on the other hand, should the game publishers relent and remove those words from the title of their game? Opus Dei does have an interest at stake, here, even if it’s not clearly an overriding one embodied in a right. A sufficient degree of respect for the organization and its interests might lead a company to adopt a hands-off policy, regardless of whether the trademark claim is legally enforceable.
All indications are that Dema has no intention of manifesting that level of respect, and I suspect many people — including those who are dismissive or even critical of the Catholic church — will applaud the company in this regard. But what is the unbiased observer to think, from an ethical point of view, about cases of this sort? Here, it is important to recognize the crucial ethical difference between a value, on one hand, and a principle, on the other.
Respect — including respect for other people’s religions — is a value. As such, it is something we generally want to promote. It is good, other things being equal, to demonstrate a degree of respect for other people, and arguably for their religions and the organizations that promote them. Even when we do not support or encourage other people’s beliefs, it is generally a good thing, socially, if we respect them.
Free speech, on the other hand, is a right, and respect for it is a moral duty. And rights and duties tend to be moral absolutes, rather than merely things we want to promote. As a right, free speech is something that is to be breached only under very limited and carefully prescribed circumstances. A right is a line drawn in the sand, and across which we step only when absolutely necessary. When a right (like free speech) and a value (like respect) come into conflict, generally the right has got to win.
Hopefully the Danish court will agree.
I spoke recently to a corporate audience on the topic of Ethics for Leaders. One of the sub-topics I touched on was the fact that leaders need not only to make good ethical decisions, but also to help others make good ethical decisions. As a practical example, we looked at techniques a leader might use to help someone else understand what is ethically problematic about bribery. Sure, someone in a leadership position might have the authority simply to give orders; but in many cases it will be much more effective to explain the values and principles that underlie a particular prohibition.
One of the attendees at this session pushed back in a useful way. “I get the ethical argument against bribery, and I agree. But I’ve talked to Sales Managers overseas who say it’s just not realistic to avoid everything that could be construed as a bribe. How do I deal with that, beyond simply pointing to the FCPA?”
This is a tough challenge, one that needs to be taken seriously. Whether it’s bribery or nepotistic hiring practices, local practices that violate the rules of business “back home” can seem hard to avoid. Business is a competitive game, and it sometimes really is the case that scrupulously following the written rules puts a company at a significant — maybe even definitive — disadvantage.
It’s far too easy to play Monday Morning Quarterback and to speak in idealistic terms about integrity in business. But ethics isn’t about being a saint; it’s about finding a way to do your best to find suitable limits on profit-seeking behaviours when those behaviours put other people’s legitimate interests and rights at risk. So, if we are to avoid sounding preachy, what can we say about the Sales Manager above?
First, make sure the “when in Rome” argument isn’t just being used as a fig leaf to cover up what is really an appeal to convenience. Sometimes it may be easier to follow local custom, but that’s not quite the same as necessity.
Second, if — if! — it really is necessary, when doing business overseas, to engage in practices that wouldn’t be allowed back home, are you at least doing what you can to a) minimize the frequency of such violations and b) working, in at least some small way, to improve standards in the local business community? Bribery and other forms of corruption are truly corrosive, and economies in which they are common would be much better off without them. Are you part of the problem or part of the solution?
Third, ask whether unscrupulous (or merely ‘grey zone’) behaviour is being used to cover up poor performance. It may be that the Sales Manager who feels the need to offer bribes simply isn’t very good at his job and is looking for ways to succeed without having sufficient talent or making sufficient effort. Sometimes lack of ethics suggests lack of competency.
And finally, ask what your company can do to change incentives such that a Sales Manager isn’t so single-mindedly driven by numbers that he feels compelled to bend or break the rules. No one within an organization should ever think of themselves as having just a single objective. Yes, a Sales Manager is in charge of Sales. But he also has responsibilities that include risk management (including avoiding bringing the company into shame or into court) and managing morale within the sales team. People will behave according to how you reward them, and so reward mechanisms ought to be as balanced as you would like their performance to be.
The challenges posed by doing business in the global marketplace are never easy. Only by avoiding both naïveté and cynicism can you hope to do good while still doing well.
It’s that time of year again. Fresh young faces are flooding onto campus, and lineups are long at the university bookstores. Once again, there is a rush of new faces past the door of my office at the Ted Rogers School of Management. And once again, editorials are being written about whether business schools can do anything effective in the realm of ethics. Far better than most, in this regard, is a recent piece by Professors Ray Fisman and Adam Galinsky, of the Columbia Business School and Kellogg School of Management, respectively. Is it possible, they ask, for business schools to train students to be ethical?
Fisman and Galinsky’s piece has a lot going for it. The view they put forward is realistic, but not cynical. Nor does it make the all-too-common mistake of assuming that the goal of an ethics course is to “make students ethical.” And it rightly, to my mind, focuses on the psychology of wrongdoing — on looking for ways to counter the psychological forces that result in decent folks doing bad things.
Beyond recommending their article, I’ll only add the following comments:
Echoing a suggestion I made nearly two years ago, Fisman and Galinsky suggest that business students need to be taught to become “Moral Architects” (their term, not mine). That is, business students need to be taught skills relevant to shaping the environment in which they, and others, work in order to push behaviour in the right direction.
This is exactly right, but if anything Fisman and Galinsky underplay the question of design. A great many business school graduates will go on not just to work in business, but to be managers, and managers are tasked with designing and managing work environments. So even if ethics classes aren’t capable of changing students’ behaviour, it is important to ask whether they can give students the skills to help shape other people’s behaviour in the future.
My final point is about the focus on business students. Why focus on them? Fisman, Galinsky and I all teach at business schools, so for us the answer is obvious. But from a broader point of view, it may be a mistake. If we are concerned with ethical conduct in business, we need to look at all of the training grounds for business, and that goes far beyond the business school.
I often ask my own students, do you know what the difference is between a Business major and an Arts major? The answer is that a Business major already knows she’s going to work in the world of business. The Arts major is almost certainly going to end up doing something in the world of business; she just hasn’t realized it yet.
But of course, it’s highly unlikely that anyone is going to make a business ethics course mandatory for arts majors, based on the simple fact that many arts majors will end up in business. So the burden, for all intents and purposes, is likely to stay with those of us who teach at business schools. As I watch the fresh young faces flow past my office door, I can only hope that we are up to the task.