The Business Ethics Blog

Providing services to the bereaved is a tricky business. You’re trying to make money, trying to make a living. Fair enough. So, you offer services. And you charge for them. Fair enough. And then you push your business one step too far.

Witness this sleazy marketing strategy, from Legacy.com. Legacy provides web-based obituaries for newspapers, including the Ottawa Citizen (and, apparently, many other papers). Place an obituary in the Citizen, and part of the package is an online obituary and online guestbook, where friends & family can leave their condolences. Nice feature.

What happens a year later isn’t so nice.

A year later, the clock runs out on the guestbook. OK, that’s reasonable. You’ve paid for a service, but not necessarily a perpetual one. But what does Legacy.com do next? They contact everyone who signed the guestbook, and ask if they would like to pay — $89 — to keep the guestbook going. You can imagine friends of the family everywhere doing a double-take, staring at the email. “Me? Do I want to keep the guestbook going?” Huh?

Now imagine the next-of-kin, humiliated at learning that Legacy.com is soliciting money from their friends, from the kind souls who offered their condolences in a time of grief.

Here’s a sample of the email Legacy.com sends out:

Hmm.
Well, maybe when this supportive friend-of-the-family signed the guestbook to start with, they somehow agreed to be contacted later?

Nope. Here’s what their guestbook looks like, just prior to signing:

Several checkboxes, but none that says “Yes, please feel free to contact me in a year to ask me for money.” The result is just an out-of-the-blue grab for cash, from confused-and-embarrassed friends of the dearly departed.

This is a great business ethics case. Legacy.com’s behaviour here is perfectly legal, as it should be. But it’s sleazy. And they should be told so. And the Citizen (and the other newspapers that deal with Legacy.com) should tell them so. Unsolicited commercial emails are bad. Unsolicited commercial emails to the friends and family of the bereaved? Shameful!
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Addendum
I’m having second thoughts about having asserted that what Legacy.com does is “perfectly legal” (but sleazy). It may not be legal after all. A couple of colleagues have pointed out that Legacy.com might be violating privacy legislation, including the Personal Information Protection and Electronic Documents Act . I’m no expert on privacy legislation, so I can’t say whether Legacy.com has violated PIPEDA. But they’ve certainly violated its spirit.

Two Harvard MBA students — Umaimah Mendhro and Abhinav Sinha — wrote the following, for Forbes: Three Keys To Staying Ethical In The Age Of Madoff.

The whole thing is worth a read. Here are the opening paragraphs:

What separates a Rod Blagojevich from a Patrick Fitzgerald? A Bernard Madoff from a Warren Buffett? What makes such people, at either extreme, so different from any of us? Everything–and not too much.

As citizens of Pakistan and India who are students at Harvard Business School, we spent a considerable amount of time over the past several months interviewing and drawing lessons from 12 leaders in Pakistan and seven in India who are carrying the torch of ethical business behavior. Come factory shutdowns, forced resignations or life threats, they’ve been standing up against corruption in environments where corruption is the rule.

Conventional wisdom and our own preconceptions hold that a mix of many complex, research-worthy characteristics and influences separates the highly moral from the corrupt. What we found suggested, to the contrary, that it all comes down to three simple things…

What 3 things? The authors distill the lessons learned from the execs they studied into the following 3 injunctions:

• “Call corruption corruption.” (Basically, avoid euphemisms for practices you know are corrupt.)
• “Enforce behavior that creates new values.” (This is essentially the Aristotelian point that what we do changes who we are.)
• “Give up on the security of wavering.” (Roughly: don’t let yourself get away with thinking there are lots of moral “grey zones.”)

Sounds like pretty good advice, over all. I’ll only comment briefly on the last point.

The authors applaud the executives they studied for their attachment to “moral absolutism.” If that means doing the right thing when the right thing is clear, then that’s a fine thing to praise. Showing some spine in the face of pervasive corruption is hard, and to be commended. That’s pretty much the definition of “integrity.” On the other hand, a lack of sensitivity to context isn’t a virtue. Pretty much all good rules are subject to valid exceptions. The tricky part is enunciating a clear conception of what those exceptions are, and making sure the exceptions apply to everyone, not just you.

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Thanks to Suzie and Gini for the article.

I’ve blogged before about the complex relationship between business and regulation. Most people assume business hates government interference, but it’s not uniformly true. Sometimes regulations make for a more level competitive playing-field, and in some cases clear regs make a business’s legal footing clear enough to permit investment.

Sometimes, an industry’s plea for regulation is less clearly benign. Check this piece by Emily Burke, writing for Maclean’s: “This isn’t illegal.”

The battle to keep kids from smoking just keeps getting stranger. A new study shows that making it illegal for kids to smoke can help to reduce youth smoking rates. But oddly, Canada’s convenience stores, which make a considerable chunk of their profits from selling cigarettes, support the study’s recommendation to ban youth smoking—while anti-smoking groups, such as Physicians for a Smoke-Free Canada, oppose it.

It’s worth making a distinction, here: what the industry is proposing is a limitation on someone else’s behaviour, namely that of consumers. But still, it’s a change that stands to lower demand for a profitable product.

Why does the physicians’ group oppose the move?

…Cynthia Callard, executive director of the anti-smoking advocacy group Physicians for a Smoke-Free Canada, says the very fact that the CCSA supports such a ban is evidence that it won’t work. “I can’t overstate how relevant it is that the only people who are pushing for youth possession laws are tobacco companies and tobacco retailers,” she says. “That should give anyone pause.”

Actually, it’s not evidence that it won’t work. Callard’s implication: Why would an industry promote a legal change that would reduce demand for its product? Well, as long as the law is enforced uniformly, no store will be at a comparative disadvantage, and perhaps they expect to make up the difference with sales of other products. And it’s at least possible that, under the current rules, there are store operators who would rather not sell so many cigarettes (or sell them at all), but who know that they’d be at a huge competitive disadvantage if they unilaterally stopped selling them.

But in the end, even if vendors want this legal change for the wrong reasons, is that enough reason to oppose a regulation that could save lives?

Corporate ethics rankings are a funny thing. Neat idea, in principle. But so much hangs on methodology. (I’ve blogged about such rankings here, here and here.) In fact — as it turns out — so much hangs on what you measure that one ranking organization’s villain can be another organization’s hero.

See this ranking, released last week by Multinational Monitor: The 10 Worst Corporations of 2008.

Of special note, General Electric is included on the list, due to its “creative accounting.”

In June, former New York Times reporter David Cay Johnston reported on internal General Electric documents that appeared to show the company had engaged in a long-running effort to evade taxes in Brazil. In a lengthy report in Tax Notes International, Johnston reported on a GE subsidiary’s scheme to invoice suspiciously high sales volume for lighting equipment in lightly populated Amazon regions of the country. These sales would avoid higher value added taxes (VAT) in urban states, where sales would be expected to be greater.

Johnston wrote that the state-level VAT at issue, based on the internal documents he reviewed, appeared to be less than $100 million. But, he speculated, the overall scheme could have involved much more.

Johnston did not identify the source that gave him the internal GE documents, but GE has alleged it was a former company attorney, Adriana Koeck. GE fired Koeck in January 2007 for what it says were “performance reasons.”

OK, so why have I singled out G.E., among the companies that Multinational Monitor includes on its list of corporate villains?

Well, as it turns out, G.E. was also included on Corporate Knights’ list of the
Best 50 Corporate Citizens 2008. In fact, G.E. was in the top 10!

Now, the Corporate Knights ranking has in its favour that it actually has (and states) a method: they look at a range of factors, and calculate a numerical score. As far as we can tell, Multinational Monitor is just picking companies with high-profile scandals. Having a clear method is good, both for consistency and for transparency. But of course, 2 years ago Corporate Knights’ ranking method put tobacco giant Rothmans Inc. at #2 on the list, and giving ethics kudos to a company that kills so many will strike many as, um, counterintuitive.

I’m not going to try to settle the fight. But Multinational Monitor and Corporate Nights probably ought to talk.

The controversy over corporate jets hasn’t died. (Back in November I blogged about corporate jets and moral outrage; then in early December I blogged about silly behaviour that outrage prompted on the part of certain auto execs.) Corporate jets are back in the news this week. See this story, from CNN Money, today: Bank CEOs Taking Commercial Flights, Amtrak To DC Testimony.

Here’s a good story summarizing the case to be made in defence of corporations making use of private jets, by Colin Campbell, in MacLean’s: In defence of the corporate jet. Here’s a good paragraph, quoting a certain business ethics blogger:

For a lot of companies, the benefits of the corporate aircraft far outweigh the costs. Wal-Mart, for instance, uses private jets, and is “probably the most penny-pinching, efficient company on the planet,” says Chris MacDonald an ethics expert and visiting professor at the Keck Graduate Institute in Claremont, Cal. Even companies that have taken public money aren’t necessarily engaging in unethical or inappropriate behavior by flying corporate jets, argues MacDonald. “If the decision to have an executive jet was the right decision last year when the company was beholden only to its shareholders, what would make it the case that it’s suddenly an unwise decision?” asks MacDonald. “At a well-governed corporation, those sorts of moves would be carefully thought out and cost-benefit analyses would be done.”

Boards of Directors ought to be ensuring that jets are really necessary; otherwise, shareholders are being poorly served. But it’s just silly to think that corporate jets are always a bad idea, or that they always represent some sort of corporate excess. Even when public money is being handed out, it’s not clear that the rules should change.

I’m not sure what’s more disconcerting, here: the discrimination aspect, or the superstition aspect. Discrimination, in the pejorative sense, always (by definition) involves treating people differently on some irrelevant ground. But when the grounds for discrimination are superstitious ones… oh, boy.

From the UK Daily Mail: We only employ workers born under specific star signs, says insurance company

A row has broken out in Austria after a company tried to recruit workers born under certain star signs.

The Salzburg insurance company posted an advert in major newspapers seeking employees for sales and management that were born under certain constellations, claiming statistics indicated that they were the best workers.

‘We are looking for people over 20 for part-time jobs in sales and management with the following star signs: Capricorn, Taurus, Aquarius, Aries and Leo,’ read the ad that appeared over the weekend.

It was followed by a wave of protests from equality groups and led to an investigation by the country’s anti-discrimination authorities.

OK, sure. The company says they’ve got good reason, based on a study of their own workforce:

A statistical study indicated that almost all of our best employees across Austria have one of the five star signs. [i.e., one of the five sought in their ad]

But seriously, how many employees can their company have? That likely makes for a very weak statistical result. Now, in fairness to the managers of this company, it should be noted that management is at least as much art as science. Managers very often have to make judgment calls based on less than robust statistical evidence. There’s an old saying that “you can’t manage what you can’t measure,” but that saying is entirely false. Management consists to a very large degree in managing things that can’t (easily) be measured. But weak statistics probably just give management decisions like this a misleading patina of scientific respectability.

Besides, we should be especially skeptical — they should be especially skeptical of their own data — given that there is good prior reason to think there’s no correlation: namely the fact that there is precisely zero evidence that astrological sign is correlated with any meaningful personality trait out in the rest of the world. They should be looking carefully for a more plausible, non-superstitious explanation of the pattern they think they see in their workforce. And unless they’ve done that, discriminating based on the signs of the zodiac should be relegated not just to the dust-bin of science (where it’s been for decades) but to the dust-bin of business ethics.

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Thanks to KM for the story.

Across the ideological spectrum(s), there is universal agreement that business ought to “play by the rules of the game.” The most ardent fans of free markets say, essentially, that that is the only ethical obligation businesses have, beyond the pursuit of profit. It is up to government (and perhaps society more broadly) to make the rules. It is up to business to play by them. Fair enough. But what ethical standards apply to the practice on the part of business of trying to influence the very rules to which they are expected to adhere?

See this story from a few days ago, in the NY Times: Geithner Sets Limits on Lobbying for Bailout Money

The new Treasury secretary, Timothy F. Geithner, announced on Tuesday that he would crack down on lobbying to influence the $700 billion financial bailout program by companies that are receiving billions in taxpayer money.

Mr. Geithner, who was confirmed on Monday, also said he would set new limits intended to prevent political interference with decisions about which companies received bailout money.

Among other steps, the Treasury department said it would make public a log of all contacts by public officials and bank officials regarding specific financial institutions.

(Here’s another take on it, from the Washington Post: Treasury Moves to Restrict Lobbyists From Influencing Bailout Program.)

For Mr. Geithner and the Obama administration, this is matter of ethics in government, and of public accountability. And it’s not an easy one. Certainly no one thinks that decisions about how to spend the bailout money ought to be influenced significantly by the fact that some senator had his or her ear bent for half an hour by a suave lobbyist acting on behalf of a well-heeled client. On the other hand, the right to petition one’s government and thereby to have a say in public policy is a fundamental democratic freedom.

But what does it look like from the point of business ethics? What ethical limits — if any — ought there to be on lobbying by businesses? If it’s true that corporate managers ought to pursue profits within the limits of the law, ought they also attempt to influence the law in ways that stand to enhance profits? Surely if they do that, it leaves the whole “we played by the rules” defence robbed of much of its normative force: it’s pretty easy to agree to play by the rules when you get to influence what those rules are.

I’ll offer just 2 factors relevant to the current issue:

1) This looks to me like a classic example of the kind of ‘social’ dilemma that economists & philosophers refer to as ‘the Prisoner’s Dilemma.’ It’s a situation where all (businesses) would be better off if they could all just keep their noses out of the process, but each business would do better (better for its shareholders) if it interferes. P.D.’s are notoriously hard for participants to resolve; it might be unreasonable to expect businesses to forego profit-seeking in this instance.

2) Lobbying for bailout money is in some ways different for other kinds of lobbying (say, lobbying for a change in health & safety regulations). In most regulatory matters, government suffers from a pretty serious information deficit: industry often knows much more about what sorts of regulatory standards are feasible, and which will achieve desired public policy goals. So, there’s a public-interest argument for allowing (even encouraging) industry to share information & points of view with government. The spending of bailout money, it seems to me, isn’t like that. I’m not an expert on finance, but I suspect that the U.S. government (via its various regulatory and taxation agencies) has all the information it needs, in this case. So there’s not much weight to the public-interest argument here.

The publicly-subsidized transit company in Halifax, Nova Scotia (the town where I live & work) is in the news today for its decision to reject what it considers “controversial” ads.

Here’s the story, from the Chronicle Herald: Metro Transit rejects Godless ad

Metro Transit will not allow an advertisement saying You Can Be Good Without God on its buses.

“We’re a public transit service first, and then we sell advertising on the side, and normally the standard procedure is we have a contracted agency who sells our advertising,” said Metro Transit spokeswoman Lori Patterson on Monday.

“If there’s something that’s viewed to be controversial, as part of our contract we get to see the messaging on it, and so they advise us if they think something’s going to be controversial and then we review the message.

“If we feel it’s going to be something that’s going to upset a number of people, we don’t choose to advertise it,” Ms. Patterson said.

Humanist Canada, the organization behind the advertisement, says on its website that it hopes to place the message in bus terminals and subway stations across Canada over the next few weeks.

“We want people to know that belief in a god is not necessary to live a full, moral and happy life. Humanists embody this concept every day,” Humanist Canada president Pat O’Brien wrote on the website on Friday.

Metro Transit doesn’t have a leg to stand on, here. They’re not wrong when they say that a number of people could be upset by the ad. But that’s a lousy criterion. In a society that values free speech, messages can’t be suppressed just because they might upset someone. (And for what it’s worth — though I think this is technically irrelevant — the message in question, here, is pretty inoffensive. Indeed, it’s a happy, hopeful message. And one that rings true. Readers of this blog will know that the arguments presented here never mention God. Ethical behaviour, and most ethical argumentation, does not have to be rooted in religious belief. Religious belief is a source of ethical inspiration for some, but religion is neither necessary nor sufficient for ethics.)

Private companies have more ethical leeway in terms of deciding what messages to broadcast. As I said three days ago, “When your local paper decides not to publish your letter to the editor, they’re not censoring you, they’re just not letting you use their privately-owned resources to make your point.” But Metro Transit is a public service, subsidized by tax-payers. It’s subject to a different standard.

Toronto has faced this issue, too. The Toronto Transit Commission did the right thing. Here’s the story, from City News:
‘No God’ Ads, Soon To Appear On TTC Vehicles, Spark Heated Debate

“There’s probably no God. Now stop worrying and enjoy your life.”

It’s certainly not everyone’s opinion, and it may or may not be yours – but if you’re a transit user in this city you’ll soon be seeing that message frequently.

It’s part of a controversial ad campaign by the Toronto-based Freethought Association of Canada that has been approved by the TTC to appear on buses and inside subway cars.

Let’s hope Metro Transit comes to its senses, and decides to be a little more open-minded and supportive of free speech.

Back in 2005 I wrote about “Bumvertising,” the unfortunate name given by Ben Rogovy to his company’s practice of hiring homeless people to hold placards with ads on them. The practice was roundly criticized — people thought it tasteless at best, and perhaps seriously exploitative. (I offered a limited defence: the name “Bumvertising is demeaning, but Rogovy was actually providing employment to people who desperately need it — which is more than most of us do for them.)

Now a Toronto radio station is playing on the same turf: an ad campaign for talk-radio CFRB has panhandlers holding signs that say “Should panhandling be illegal?” and prostitutes holding signs that ask “Should prostitution be legal?”

Here’s the story, from the National Post: Ad agency hires prostitutes for talk-radio stunt

As the snow fell Saturday night at the corner of Jarvis and Carlton streets, vehicles slowed to watch two sex workers on the corner. Some drivers honked. Others rolled down their windows to talk about the law.

The women held signs with a question: “Should prostitution be legal?”

The stunt is part of a controversial ad campaign created by the zig ad agency for CFRB 1010; it is its latest ploy to get people talking about issues in Toronto.

Again, as with Rogovy’s Bumvertising, I don’t see much of a problem here. Indeed, I can see even more plusses, here: the prostitutes in question were paid the “normal fee that they would get for a job,” for carrying a sign for an hour — in other words, they were paid the usual, to do a safer-than-usual job.

Now, the prostitutes involved clearly thought this was a good deal; advocates claiming to represent those same prostitutes disagreed, calling it exploitative. But as is so often the case, the charge of exploitation received no useful explanation: if “hiring” counts as “using,” then all employed people are being used. Is it “use” in the negative sense, just because they were being used to draw attention to an issue — and to provoke public debate? That doesn’t make sense: they were carrying signs asking a question that they have a legitimate stake in.

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Thanks to Paul for the story.