Archive for the ‘Uncategorized’ Category
The Ethics of Businesses Honouring Remembrance Day
Yesterday was Remembrance Day here in Canada (and Veterans Day in the U.S.) Not only did millions of people take a moment to thank veterans and to honour those who served and those who died in combat, so did quite a few companies. This has always been the case. Storefronts have long featured signs, around this time of year, that said “Thank you to our veterans” or “lest we forget.”
But now we have Twitter and other social media. Now the expression of such sentiments can be even cheaper (in both senses of the word). And the nature of social media is such when a company’s gesture is taken as crossing the line into crass exploitation, it can readily go viral. Some have even suggested that it is disrespectful for companies to Tweet about Remembrance Day at all. After all, companies generally communicate for just one reason, and that’s to build sales.
(I wrote two years ago about the similar problem with businesses memorializing 9/11.)
It’s a fine line, ethically. Because there is little that is nobler than wanting to say ‘thank you’ to those who served and sometimes died so that we can enjoy the freedoms we enjoy. But there is little that is more ugly than using a solemn occasion to one’s own narrow economic advantage.
Ethics is partly about outcomes — we want people to do things that will do more good than harm, and that will be respectful of other people’s rights. But ethics is also about intentions. If the intention behind a Remembrance Day tweet is noble — if the social media staffer who posted the tweet really does just want to express heart-felt thanks — then the tweet is arguably a good thing. But if the tweet emanates from the Marketing department, in a cynical attempt to boost sales by pulling heart-strings, that’s a different matter altogether.
And guess what? Intentions are terribly hard to judge from the outside. That’s at least as true for corporations as it is for individual humans. What did the Hudson’s Bay Company intend in tweeting its thanks to Canada’s armed forces? Is there even an answer to that question, let alone one we could divine from the outside?
So the safe advice, from a PR point of view, might be to avoid the Remembrance Day or Veterans Day tweets altogether. Even if your intentions are pure, avoiding the tweets means you avoid the possibility of being misunderstood. But from an ethical point of view, there may be times when a company with the right intentions should craft its message carefully (to minimize the risk of the sentiment being misunderstanding) and send it anyway.
What’s Your Duty When Your Boss is Out of Control?
Filed under: CEOs, character, employees, management, trust, Uncategorized, virtue, whistleblowing, workplace ethics, workplace safety |
Comments (5) What are an employee’s responsibilities when the boss is out of control — when he or she is self-destructive, doing damage to the organization, or both? It’s one of the hardest problems of workplace ethics.
A case in point is the staff at Toronto’s City Hall, who have and continue to labour under Mayor Rob Ford, a mayor whose strange and erratic behaviour must make continuing the city’s work all but impossible. And bad news continues to pile up for Ford. This past week Toronto Police revealed that they were in possession of a certain video, one that apparently shows the mayor smoking crack, a video the existence of which the mayor had previously denied. And then details surfaced regarding Ford’s behaviour on St Patrick’s day of last year, when he showed up ‘very intoxicated,’ both at City Hall and in public.
Ford has been, in effect, a train wreck. But not exactly merely a private train wreck. He’s been a train wreck in public, and at the office. This raises an interesting question for the people who have worked with him. What are your responsibilities when the boss is a mess? Should you cover up and enable? Should you confront? Should you keep your head down? Staff at City Hall may be facing a particularly public form of this question, but it’s a problem faced in many workplaces.
Junior employees typically have the most to lose, so let’s deal with them first. The first thing that needs to be said is that junior employees aren’t always obligated to speak up, especially when speaking up puts them in personal or professional peril. For all our talk about ‘speaking truth to power,’ there’s a limit to how much we can ask people to sacrifice. It can be OK to keep your head down. This is a question of ethics, but ethics isn’t about always doing the maximum; it’s about deciding the right course of action, based on a range of relevant considerations. And keeping your job is one of those.
The corollary to the permission to keep your head down, though, is an obligation to learn from the situation, to figure out how you might help to avoid such situations in the future, and to resolve never to put junior employees in such a bind when you yourself are at the top of the ladder.
Of course, if your boss’s antics are putting lives at risk, that’s an ethical consideration that should probably outweigh your own concern with staying employed. Valuing your own job above the public safety implies a level of egocentrism that is incompatible with our general social responsibilities.
But an employee’s level of responsibility for the boss varies with power and proximity. A senior advisor with a lot of influence has a responsibility to use it. When you’ve got the boss’s ear, you owe it to him or her to give good guidance, even what it’s advice he or she does not want to hear. But if the boss won’t listen, and if your position gives you the relevant authority, you should take action. Just what action to take will depend on what options are available to you, given your organization’s governance structure.
Most crucial of all is to remember that you owe your primary allegiance not to the boss, but to the organization. With very few exceptions, an employee’s duty is to the mission of the organization as a whole. In normal circumstances, it’s up to the boss to coordinate and motivate employees in pursuit of that mission. But when the boss strays far off mission, or wanders into utter ineffectualness, then there’s justification for deviating from the usual chain of command. Good leaders — ones who are aware of their own foibles and who are focused on the good of the organization — will make it clear to their employees in advance that that’s what they would want them to do, should the need ever arise.
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.
Regulating Book Prices? Bad Idea.
The Quebec government’s proposal to regulate the price of books is wrong-headed in all sorts of ways. The proposal — or rather the range of proposals, currently being considered by a parliamentary commission — would likely involve fixed prices and/or a limit on big bookstores’ ability to offer steep discounts on best-sellers.
The move would amount to taking sides in the marketplace: not surprisingly, the owners of small bookstores (ones that can’t buy and sell in bulk) are in favour of the proposed regulations, as are their allies in the union of Quebec writers (UNEQ). And while it is sometimes reasonable for governments to take sides in this way, the reasons need to be carefully examined on a case-by-case basis, and clear analysis requires transparency about the fact that sides are in fact being taken, and that there will be winners and losers as a result.
Of course, it matters that this story is about Quebec, a jurisdiction that for years has seen its politics dominated by the perceived need to protect the French language. According to the UNEQ, small bookstores are “guardians of diversity,” which basically means they’re a source of French-language books. But then, I would wager that Amazon sells, or soon will sell, more French-language books than all the wee bookshops in La Belle Province put together.
In fact, it’s a bit weird that reports about this bit of news don’t mention Amazon. I’m no expert on book-selling industry, but it seems to me that the real battle is between Amazon and the big-to-medium-sized bricks-and-mortar stores. There will always be a niche market for cute, idiosyncratic little bookstores. What’s less clear to me is that there’s a future for bigger stores that merely try but fail to replicate in bricks-and-mortar what Amazon does online.
The most general reason why this proposed policy is a bad idea is basic economics: when governments choose sides in the marketplace, they are opting against the type of efficiency at which markets excel, namely the kind that brings consumers things they want at low prices, and that rewards producers for finding effective methods of production and management in pursuit of such consumer satisfaction.
It’s worth considering what the public reaction would be if the product in question were something other than books. What if the government of Quebec proposed keeping the price of children’s clothing high, in order to limit the impact of Walmart and to defend the little boutiques selling hand-made clothing. Would anyone seriously want to promote a policy making kids’ clothes more expensive this way?
But beyond basic arguments about economic efficiency, it has to matter here that the products in question are books. Isn’t literacy and reading more generally a good thing, socially? So isn’t it a good thing when books are cheap? The complaint of the small bookstores is that big stores making books too cheap. But any attempt to keep prices high is necessarily an attempt to keep some people from buying books. There will always be ‘marginal’ readers who will buy a given book at a reduced, big-box price, but not at list price. Of course, we can’t (alas) ensure that everyone has access to everything they want, but do we really want to exclude such people from buying those books, as a matter of government policy?
Business, the Sochi Olympics, and gay rights
In light of Russia’s appalling stance on gay rights, the Sochi Olympics represent a true ethical dilemma for the organizations involved.
On one hand, Russia’s recent anti-gay law is truly ethically abhorrent, and should be denounced in the strongest possible terms. If Vladimir Putin’s government is willing to jail people, or worse, simply for expressing a desire to be treated equally, it certainly doesn’t deserve the warm fuzzy spotlight of the quadrennial Olympic love-in.
On the other hand, liberal democratic ideals don’t spread through a policy of isolation. Boycotting (or moving) the Olympics might teach the Russians a quick lesson about what is and is not acceptable to the international community, but it will be a rather terse and ineloquent lesson. The kind of interaction that the Olympics make possible, indeed inevitable, opens up a lot more space for dialogue.
It’s worth noting that the dilemma faced by the International Olympic Committee (IOC) and Olympic sponsors is in some ways similar to the dilemma faced by many Western multinational corporations when doing business in places that do not live up to the kinds of standards Westerners are used to. Doing business in a developing nation can mean being subject, for example, to very different workplace health and safety standards and significantly lower—or even absent—environmental regulations. And even if companies were to decide to adhere voluntarily to higher standards, they have to realize that their local suppliers and indeed local governments are liable to act in ways that would be considered unacceptable “back home.” Such companies have to decide: should we do business here or not?
Some will argue that, with regard to such dilemmas of international commerce, human rights violations represent a line in the sand. It’s one thing to have workers work slightly longer hours than would be permissible in Canada or the U.S., but it’s another thing entirely to make use of forced labour, or to engage in discrimination based on race or sex. But then, even with regard to human rights, a distinction can be made between engaging in human rights violations, on one hand, and merely doing business in a place where others do so on the other. It’s not necessarily wrong to do business in a place where human rights violations occur, especially if a company does what it can, whenever it can, to make things better.
So the IOC and Olympic sponsors might similarly argue that, yes, Russia’s treatment of homosexuals is a human rights violation and ethically unacceptable, but as long as such violations don’t happen at the Olympics, they themselves are doing no wrong.
But one issue that none of the organizations involved can easily shrug off is the safety of the athletes. There is at least some risk that Russian authorities will detain or deport any Olympic athlete who violates the legal prohibition on “homosexual propaganda.” Deportation would merely be an embarrassing hassle. But detention could be truly dangerous. If some brave athlete should speak out, be taken into custody, and—it’s not unimaginable—something bad happen to that athlete, then the organizations that made such a chain of events possible would bear at least some of the blame.
But things are complicated somewhat by the fact that at least some Russian gay-advocacy groups have asked the international community not to boycott Sochi. A boycott, they point out, would leave them to struggle in the dark. They prefer the light, however muted, that the Sochi Olympics promises to shed on their plight. And while such groups don’t hold a moral trump card, their voices certainly deserve considerable attention.
So maybe the IOC and other organizations involved truly are in a no-win situation. Or, at least, a situation in which all of the options on the table are fraught with ethical peril. In such situations, the meaningful ethical discussions must happen around the edges. Has the IOC gone far enough to denounce Russia’s anti-gay stance? Can and should it go farther? Will broadcasters and sponsors do anything (perhaps something not directly tied to the Olympics) to advance the cause of equality? What can governments in Canada, the U.S. and Western Europe do to lobby Moscow for meaningful change, and what in turn should Western companies do to encourage their governments to put such pressure on Moscow? In the end, the IOC and the other organizations involved should perhaps be judged not by what they choose to do, but by how they choose to do it.
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Related reading:
Transparency and Corruption, 2013
Transparency International has just released its latest, the “2013 Global Corruption Barometer.” It’s a fascinating read (and the website is brought to life by a bunch of great infographics). And it’s an important topic for anyone with a serious interest in what makes business work, or fail. Corruption after all is corrosive to markets. It’s not just a political problem, but a business problem. Corruption of all kinds drains money from more productive uses, and makes the ‘playing field’ of business uneven and muddy. The GCB is a measure of just how muddy and uneven the playing field is perceived to be in each of 107 countries.
The GCB includes lots of interesting findings, such as the following:
- In Sierra Leone, 84% of people said they had paid a bribe to someone in a position of authority in the last twelve months, compared to just 3% in Canada and 7% in the U.S. (Not coincidentally, Sierra Leone is one of the poorest countries on the planet.)
- In Afghanistan, about the same number of respondents felt that NGOs are extremely corrupt (34%) as thought that business is corrupt (34%).
- In the U.S., 60% of respondents thought that corruption had increased there over the previous year (compared to only 10% who thought corruption had decreased.)
- In Canada, the most mistrusted institution is political parties (62% of Canadians think those are either corrupt or very corrupt), followed by business (48%), parliament (47%), and the media (39%).
It is worth emphasizing that the GCB is a measure of opinion. To generate this report, TI surveyed 1,000 people in each country (or 500 people in small countries) to ask them about whether they feel, for example, that corruption has gotten better or worse in their country in the last 12 months. So the report doesn’t (and of course couldn’t) measure actual corruption. Still, the report is meaningful. It is of course possible that the people in a given country are systematically mistaken about levels of corruption. But even if that were the case, it would say something interesting about that country. And in the end, when it comes to corruption, perception matters: even perceived corruption is enough to corrode trust, and without trust meaningful commerce simply cannot happen.
Witnessing (but not reporting) Unethical Workplace Behaviour
A new study of ethics in Canadian workplaces suggests that 42% of workers have witnessed ethical breaches in the workplace, and nearly half of them failed to report such misconduct.
The survey was conducted by Ipsos Reid for ClearView Strategic Partners Inc., a Toronto-based ethics whistleblowing advisory firm.
The survey also drilled down to ask respondents what kinds of questionable behaviour they had witnessed. According to Clearview,
…28% of respondents witnessed the misuse of company property at their current employer, 25% saw harm to employees, 17% observed privacy violations, 17% were aware of fraud, 13% witnessed conflicts of interest, 9% knew about bribery or corruption, 12% observed environmental violations, and 11% had knowledge of the misrepresentation of financial results.
It’s a provocative study, but one that raises more questions than it answers. For starters, as is often the case in such surveys, the proportion of respondents saying they had witnessed unethical behaviour is implausibly low. Only 42%? Presumably that means people were thinking only of a narrow range of fairly serious infractions, and ignoring commonplace wrongs such as petty lies, employees shirking their responsibilities, and minor thefts from the company’s supply closet. My guess is that there is some serious under-reporting going on here. The interesting question: just which kinds of ‘minor’ wrongdoings are likely to be most under-reported in a survey like this?
Another question: do the people surveyed understand well the definitions of the forms of wrongdoing they say they witnessed? For example, when they say they witnessed conflicts of interest, just what do they mean? A study I co-authored a decade ago found that many people in the organization we studied could not provide a clear definition of the term “conflict of interest,” even though they had a clear understanding that such conflicts posed ethical problems. If respondents to Clearview’s survey are equally confused about the definition of (for example) conflict of interest, are they more liable to be over- or under-reporting having witnessed it?
Finally, there are interesting questions to ask about what the study says is the widespread failure to report misconduct (i.e., presumably to report them to someone in a position of authority). According to Clearview, 69% of respondents indicated a “lack of faith that investigations will be conducted properly,” 66% said they didn’t believe that disciplinary measures would be applied consistently, and 23% said that they feared “retaliation or negative consequences.”
There’s nothing surprising about those answers, but Clearview’s press release doesn’t make clear whether those answers were the ones given spontaneously by respondents, or whether they were on a menu of options provided for respondents to select from. Notoriously absent among them are other, seemingly likely factors, such as misguided loyalty or apathy, or the sort of tunnel vision that makes many of us focus on our ‘missions’ at all cost. Of course, most people are unlikely to give such answers, since they reflect as poorly on the respondent as they do on the wrongdoer. It is probably far easier to get people to admit to having seen wrongdoing, and indeed to having failed to report it, than it is to get them to admit having failed for truly blameworthy reasons.
No, Blacklisting Corrupt Construction Firms is Not Unfair
Under Quebec’s new Integrity in Public Contracts Act (Bill 1), companies that want to bid on government contracts must pass a fairly stringent legal and ethical sniff test. In the wake of the ongoing Charbonneau Commission (the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry, in Quebec) the government of Quebec has begun using Bill 1 to blacklist construction companies.
First on the chopping block was engineering firm Dessau. The company was blacklisted recently and so it won’t be able to bid on public-sector contracts in Quebec for the next five years.
Some say this is unfair. Dessau employs thousands of people, some of whom will surely be put out of work if their employer is unable to bid on big public contracts. And since the vast majority of those employees presumably have nothing to do with the company’s shady dealings, they are in effect being punished for someone else’s crimes.
There is undoubtedly some injustice, here. It is, on the face of it, a bad thing to suffer for someone else’s wrongdoing. But the question, really, is whether the loss that will be suffered by some Dessau employees is an intolerable injustice. And whether an injustice is intolerable or not very much depends on the qualities of the overall system under examination.
One of the key features of the legal status of modern corporations is that the liability of employees is limited. If the company you work for goes bankrupt, all you lose is your job. For most people, that’s not trivial, but it’s a far cry from having someone from the court show up to repossess your car or foreclose on your mortgage to help pay your employer’s debts. One of the things that makes large corporations — and hence, our entire economic system — viable is that in seeking employment with a corporation you are not thereby putting everything you own at risk. This makes the the legal situation of an employee quite different from that, say, of a partner in a firm. Partners are in principle personally liable for the financial effects of each other’s wrongdoing or mismanagement.
Second, it is worth considering that if injustice is being done to the employees of companies like Dessau, such injustice must be placed into perspective by comparing it to the prior injustice done by such companies to employees of other companies. When companies succeed through bribery and illegal political donations, they do so at the expense of honest companies and their employees. In order to understand the Quebec government’s penalties, you need to look not just to the interests of identifiable individuals like Dessau’s employees, but to the interests of the hard-to-identify individuals who are harmed by the corruption that penalties like this are intended to remedy.
Third, it is worth noting that the Quebec government’s decision here is not beyond appeal. There is a process for reinstatement, which includes things like a requirement stop (and presumably to show evidence of stopping) fraudulent practices, to dump executives implicated in wrongdoing, and to “implement sound management practices, good governance and an ethical framework.” So if jobs are in jeopardy, they are not in jeopardy forever. It depends on whether managers at Dessau can clean house, and do it quickly.
Ultimately, if the employees of companies like Dessau are being wronged, the blame lies at the feet of executives who mismanaged the company. And make no mistake: engaging in corruption is a form of mismanagement. It counts as mismanagement not just because it can result in legal penalties or because it can result in significant financial losses. Engaging in corruption counts as mismanagement because it amounts to an admission that managers were unable — insufficiently smart or talented — to win while sticking to the rules of the game.
Why Do Family Firms Thrive?
Family firms (or family-controlled corporations) are a bit of an outlier in the modern business world. Modern corporations are typically characterized by a “separation of ownership and control” — that is, companies are generally run by professional managers, who manage on behalf of a very large number of mostly-anonymous shareholders. Most people who own shares own them only indirectly through pension funds mutual funds, and so they have little direct input into the way the company is managed. This pattern is directly responsible for the modern focus on governance standards: when managers are given the task of managing on behalf of anonymous, disempowered shareholders, they have an ethical obligation to take seriously the obligations such an arrangement implies. The CEO has to remember that it’s not her company: she’s a guardian, managing on behalf of others. Modern governance standards take some of the relevant ethical obligations and enshrine them in laws, regulations, and ‘best practices.’
“Family” firms (or family-controlled corporations) are somewhat different. The sort of family firms I’m talking about here are not ‘mom-and-pop’ organizations, but rather large, publicly-traded companies in which a family owns a controlling interest (i.e., 30% or more of stock). So while such firms are typical, publicly-traded companies in some regards, they are unusual in important ways. The family in question may have not just a strong position in terms of the stock it holds; they may also bear the name that’s emblazoned on the company letterhead. And the company’s origins and evolution may be intimately bound up with the family’s own history. This adds up to considerable influence. Is that influence a good or a bad thing? In principle, at least, there’s a worry that the family’s influence might not always work in the interests of other shareholders. And this worry is exacerbated by the fact that family-controlled companies often don’t stick to widely-acknowledged best practices in terms of corporate governance.
To shed some light on this topic, my friends* at the Clarkson Centre for Business Ethics and Board Effectiveness have just released a new study Family Firm Performance Study. Their central finding?
“Canadian family-controlled issuers have outperformed their peers between 1998 and 2012. Moreover, family firms often appear best able to create value for their shareholders when they choose not to adhere to typical best practices in share structure and independence.”
It’s an intriguing finding. The study as a whole is worth reading. I want to comment on just a couple of issues, here.
First, a study like this casts doubt on the one-size-fits all approach to corporate governance. Best practices (such as standards for the number of independent directors on your board) and legal standards (such as the requirement to have an audit committee) typically prescribe how a corporation’s board should be composed and conduct itself, irrespective of the corporation’s history, industry, and so on. And, importantly, such standards don’t draw a distinction between family and non-family companies. And while such standards generally evolve (or are imposed) in response to emerging challenges and scandals, they are liable to be based on the average or typical company. But, of course, the average or typical company is a fiction. Every company is unique, and so one-size-fits-all may mean one-size-fits-none. At very least, it is worth acknowledging that a compromise is being made: uniformity in exchange for mediocrity. Best practices may not be best.
When I asked Matt Fullbrook, Manager of the Clarkson Centre, about this, he was cautious. There will be no immediate change in the way the Clarkson Centre itself ranks companies. He agreed, however, that it’s an open question: “we are actively asking ourselves about whether or not good governance might mean something different to family firms, and that’s the next place we hope to take our research.”
Second, a result like this immediately raises questions and generates hypotheses about why family-controlled firms work so well, despite their frequent violation of governance norms. One theory (alluded to in the Clarkson report) has to do with managing for the long run: a company rooted in a family’s history and tradition and reputation may well be less susceptible to the short-termism that is so notoriously a factor at most corporations today. Alternatively, does success come about precisely because family-controlled companies aren’t subject to the kinds of agency problems that other firms are subject to. Maybe having family members deeply involved keeps the company’s management honest. Or is it a matter of the way family firms cleave to a set of ethical values, in an attempt to safeguard the family name? It’s a question that bears more study.
Finally, it’s worth asking what ethical lessons can be learned by other sorts of companies — that is, by ones that are not family-controlled. If family-controlled companies do so well, should the be imitated? Lots of companies already use the rhetoric of family, encouraging employees to think of themselves as kin, as descendants of a proud lineage, and bound together by corporate “DNA.” To some, that’s a way of improving morale, and perhaps thereby improving performance. But if family control is itself a strength, that suggests another reason to think this way.
In sum, research like this is essential. Family-controlled corporations are already the subject of some ambivalence. On one hand, they evoke the traditional affection most of us feel for a family-run business. On the other hand, many of us mistrust dynasties in general, and the mismanagement and indeed malfeasance that nepotism can bring. But our attitudes toward them are more properly guided by research on whether (and how) they get the job done, than it is by emotion.
*Disclosure: I was a Visiting Scholar at the Clarkson Centre during the 2011-2012 academic year.
The Ethics of a Politician’s Speaking Fee
Justin Trudeau, leader of the Liberal Party of Canada, was recently asked by a charitable organization to give back a hefty speaking fee — $20,000 — after the event he spoke at took a loss. Not surprisingly, the dispute quickly became (and perhaps even started as) a political dustup.
Should Trudeau return the money, as he now says he will do? Should he have accepted it in the first place?
My first thought, upon hearing this story, was that it’s a great example of the close linkage between good ethics and good business practice. There would be no ethical question here if everyone involved had used good business judgment in advance. What kind of decision-making leads a charity into a situation in which it ends up feeling the need to reneg on a $20,000 contract? Did Trudeau do his due diligence in accepting such a large fee from a small organization that wouldn’t be able to absorb the expense if the event went poorly? Good business sense isn’t the same as good ethics, but sound business decisions are a pretty good start at avoiding ethical conflicts and dilemmas.
The question most people have focused on is whether Trudeau should have accepted such a speaking fee from a charity in the first place. Setting aside, for now, the fact that Trudeau is an elected official, we cannot reasonably assert that prominent persons generally should not take speaking fees from charities. Charities are businesses, and in the normal course of things they hire people, purchase goods and services, and pay bills. They don’t normally expect things for free, and charitable status doesn’t imply that an organization is off-limits as a business partner in the traditional sense.
And besides, to say that you can’t charge a charity a fee would be to limit the speakers to which charities have access, and thereby harm the interests of organizations that regularly make use of prominent speakers as a way of raising money. Anyone who does much public speaking (and I do a good deal of it myself) is liable to use a sliding scale. Well-heeled organizations may get charged more, and charitable organizations may get charged less or even nothing. But every speaker’s time is limited, and so not every charity can get things for free, and certainly not every time.
What about returning the money, as Mr Trudeau has now offered to do? This question reminds us of the important distinction between doing your duty, on one hand, and going above and beyond your duty, on the other. Often, we discuss ethics more starkly in terms of “doing the right thing.” But that implicitly binary way of talking blurs the gradations of “goodness,” if you will. It’s entirely coherent for us to think that returning the money would be a good thing to do, even if we don’t think he’s obligated to do so.
Finally, this kind of case highlights the fact that ethics is best thought of from the point of view of systems and institutions. While individuals may be the ones who struggle with particular ethical dilemmas, it is not necessarily at that level that structured thought about ethics can be the most helpful. Ethical problems are most tractable when they are of the form, “What kinds of rules should we follow?” “What would be an effective way of allaying this kind of worry in the future?” And so while we can squabble about just what Justin Trudeau should or should not do, our effort is much better spent thinking about the question one level up, as some commentators have already begun doing. Should sitting Members of Parliament like Mr Trudeau accept paid speaking engagements? If so, under what conditions and with what safeguards? Do paid speaking engagements risk jeopardizing the integrity of political decision-making? Worse, do they erode our confidence in particular decision-makers, or in political decision-making altogether?
Those sorts of questions are much more interesting and useful than questions about whether a particular politician should accept paid speaking engagements, and certainly more important than the borderline silly question of whether money that was accepted in good faith ought to be paid back.
The Business Ethics Blog 