Does the Right Tone at the Top Guarantee Success? Part 1
Filed under: accountability, boards, CEOs, codes of ethics, employees, leadership, management, values |
Comments (1) I spent the morning today speaking at Centre for Accounting Ethics Symposium called “Accounting Ethics and Tone at the Top” (put on by the School of Accounting and Finance, University of Waterloo). I was part of a panel discussion that took on the provocative question of whether positive ethical tone at the top ensures success.
It’s a provocative question because the word “ensure” pretty much points to a negative answer. Success is never guaranteed in business. In fact, it is the constant fear of failure that drives competition, that drives the pursuit of efficiency, that drives innovation. Nothing – literally nothing – guarantees success. Will a killer product ensure success? Of course not! You need the right financial model, the right marketing channels, the right organization, and the right competitive environment too. Will a great team ensure success? No, of course not. Other organizations have great teams, too. You also need the right leadership, a product that consumers want, and so on.
So positive tone won’t guarantee success, but neither will anything else. The right tone won’t guarantee ultimate victory in the marketplace, but that’s hardly a criticism. The fact that a positive ethical tone won’t guarantee success doesn’t mean it’s not important, indeed, essential. Without it, an organization’s chances of long-term success – defined either in terms of integrity or in terms of the bottom line – are considerably diminished.
So what do we mean when we refer to “tone”? Tone is much more complicated than it sounds.
In this context ethical “tone” means the tone or tenor that a leader sets with regard to choices between right and wrong, between more and less admirable forms of behaviour. Tone is the signal that is sent from top to bottom within an organization about what kind of behaviour is to be admired and emulated, and what kinds of behaviour will not be tolerated. Ethical leadership means taking responsibility for the tone you set.
But tone takes many forms. It is crucial to see that setting the right tone means much more than just sounding ethical. It also means acting ethically, and being seen as acting ethically. Tone consists in the set of signals given through the words a leader says and the deeds she does and the attitudes she displays.
It means doing what you can to manage that elusive something called “organizational culture,” and knowing that culture trumps strategy every time.
In particular, setting the right tone means avoiding – in both words and deeds – excuses and rationalizations. Rationalizations (“I had no choice;” “No one was really hurt;” “It’s not my job;” “It’s a stupid rule anyway…”), are an absolutely key ingredient in a great many instances of wrongdoing. And we don’t generally make up rationalizations on our own and learn how to apply them from scratch. We learn them, unfortunately, from our role models, from people we look up to, from people we see as leaders. Leaders can and must set the tone, in neither helping themselves to such rationalizations, nor tolerating them when used by others.
Setting the right tone also means fostering open conversation about ethics, about the obligations of and obligations within your organization. It means putting ethics on the table. It means letting those who work for you know that it’s OK to ask questions about ethics, and to make values and principles an explicit part of their decision-making. A leader needs to build decision-making capacity and empower employees to take responsibility.
We can sum up the significance of tone this way: A great deal has been written about ethical leadership, and the significance of ‘tone at the top.’ That literature might be usefully summed up by two sweeping statements, two unavoidable truths:
1) Ethics must come from the top down. People take their cues from their leaders. Yes, people learn their basic values from their parents and other childhood role-models, long before they become employees. But they learn how to enact those values in a business context from their workplace mentors and leaders. All of us learn basic lessons about honesty and integrity from our parents. But few of us learn about technical concepts such as Conflict of Interest from our parents. They don’t teach us about the moral obligations embodied in fiduciary relationships, or about how to balance the various interests at stake in a quasi-adversarial relationship between buyer and seller. We need leaders – specifically business leaders – to teach us those things. So: Ethics must come from the top down.
The second grand lesson is this:
2) Ethics cannot come from the top down. It cannot be imposed. You need buy-in. You can lead a horse to water, but you cannot make it drink. You can hand every employee a copy of “their” brand-new code of ethics, commissioned by HR and endorsed by the CEO and the Board. But that doesn’t guarantee that anyone will read it, let alone take it to heart. A code won’t overcome an organizational culture that puts short-term profit-seeking above all else; or a culture where individuals put moral blinders on, focusing narrowly on their own jobs rather than taking responsibility for the ethically-significant elements of the organization’s mission. It won’t make up for a culture that tacitly endorses playing fast and loose with accounting rules. That’s why tone – not just sermons handed down from on high – is so important.
A focus on tone can of course easily become confused with a focus on words, and on the personal integrity that a leader takes him- or herself to have. We see this all the time. When the mayor of a major city prides himself on integrity, on wanting to “clean up City Hall” and to put an end to the “gravy train,” but then cannot recognize a blatant conflict of interest when he sees one, you see “tone at the top” gone awry.
In my next blog entry, I’ll continue this topic by addressing what it means to focus on “tone at the top” and whether it can ensure or at least contribute to success.
The Business Significance of the ‘Trolley Problem’
Filed under: accountability, codes of ethics, critical thinking, decision-making, ethics, excuses, values |
Leave a Comment 
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.
Cream, Sugar, and Choice
Filed under: consumers, decision-making, entrepreneur, food, health |
Comments (1) Is the customer always right? Is it more important to protect consumers, or to give them options and let them choose? This is a real-life dilemma that was posed to me recently. I’ve changed the names and some other details in what follows, but the basic dilemma is real.
Abe and Ben are starting a coffee shop together. Situated in a trendy neighbourhood, the shop will feature high-quality, fair-trade, organic coffees and a range of gourmet pastries from a local bakery. They’re in the process now of deciding on their menu, and on smaller details like the condiments (sugar, cream, etc.) that will be available for patrons. It is this latter issue that has brought Abe and Ben into conflict.
Abe contends that the only condiments they should provide are cane sugar, organic milk, and soy milk. Abe wants no white sugar or artificial sweeteners. After all, he says, the health of our customers matters, and white sugar and artificial sweeteners are unhealthy.
Ben says, Look, the customer is king. Some will appreciate cane sugar, sure, but some want the white sugar they grew up with, and some diet-conscious folks will want zero-calorie artificial sweeteners, and we should give them what we want. Who are we to tell them what to do?
So who is right?
I would say choice is a good thing. To the best of my knowledge, the evidence is very weak that “other” condiments are bad for you (especially in the relevant, tiny quantities). For that matter, if Abe is that concerned about his customers’ health, he should argue for not serving sugar at all. There’s plenty of evidence that that is bad for you. As a scientist friend of mine puts it: there’s much more evidence that sugar is bad for you than there is that artificial sweetener is bad for you.
Of course, if Abe and Ben decide to make “100% natural,” or something like it, a part of their branding — as many companies do — then it makes sense to offer only condiments that are consistent with that ethos. But there’s no reason to think of that as a more ethical policy.
Is Fare by Weight Fair?
Filed under: discrimination, energy, pollution, pricing, values |
Comments (1) Is it fair to charge airline passengers based in part on weight? That’s the plan recently announced by Samoa Air, and it’s a plan that is raising a few eyebrows.
Yes, it’s an ethical issue. But no, there’s no clear answer.
Interestingly, the mainstream media stories I’ve read about this thus far have made little mention of the obvious moral worry, namely discrimination. On the face of it, this looks like systemic discrimination against overweight and obese flyers. You and I could be in adjacent seats, booked seconds apart, but if you happen to be 20 pounds chubbier than me, you’ll pay more.
Whether being fat is sufficiently under personal control to make it a permissible basis for discrimination is hotly debated. But it’s worth noting that a weight-based policy also discriminates against those whose extra pounds are pure muscle. A heavyweight boxing champ would be about fifty pounds heavier than me, and would therefore pay more. The same goes for someone with the same build as me, who happens to be 4 inches taller. So if this is discrimination, it’s discrimination against those who are heavy, not those who are fat.
The other factor not mentioned in the few stories I’ve read about this is the environment. In aviation terms, weight translates into fuel, and more fuel burned means more environmental impact. So in charging by weight, an airline is basically levying a kind of carbon tax. And while how much you weigh isn’t fully within your control, the amount of luggage you bring with you is, and Samoa Air charges based on the total weight of you plus your luggage. Charging more on that total encourages people to carry less, and in principle might nudge frequent flyers, at least, to lose a few pounds. Such reductions eventually mean reductions in carbon emissions, and that’s a good thing. So even if there is a problematic form of discrimination going on here, there’s at least one factor on the other side of the moral equation.
Finally, it’s worth noting that to the extent that we’re worried about discrimination against bigger people (regardless of why they are big), being charged extra for their weight is far from the only price bigger people pay. Sufficiently large people also “pay,” for example, in the form of pain suffered by squeezing into airline seats not designed for people their size. That’s one of innumerable ways in which people who are outside the norm suffer in a world of products and services that are mass produced. But then, if the unusually large person pays a price for being squeezed into a seat designed for smaller folk, the person next to them pays a part of that price, too.
Of course, Samoa Air is a tiny airline, based in a tiny country. And commentators suggest that the company’s example is unlikely to be copied by major airlines. Indeed, it’s probably next to impossible: Samoa Air not only charges more to heavier passengers, it gives them more space — something likely impossible on standardly-configured passenger jets. But it is precisely for this reason that Samoa Air makes for a good case to use in ethics training and education. Before coming down on one side or the other, it’s important to tease out not just that there’s an ethical issue at all, but that there are in fact a range of ethical questions here.
The Paradoxical Anti-Keystone Billionaire
The role of wealth in politics, and in particular wealth derived from corporate sources, has reared its head again. It was recently reported that a US billionare is throwing a $5,000 per person fundraiser for President Obama. And it’s no secret that said billionaire, Tom Steyer, is an opponent of the Keystone XL pipeline, and is likely to use the opportunity to press Obama not to approve Keystone.
This story is noteworthy for a couple of reasons, beyond the mere fact that some pretty heavy hitters are weighing in on the Keystone issue.
The first of course is that Steyer himself made much of his money in oil. In particular, he was founder of Farallon Capital Management, and reportedly left the fund — “which had invested in a range of oil and pipeline companies, including BP, Nexen and Kinder Morgan, as well as an oil-carrying railway” — because those investments were at odds with his new-found environmental commitments.
It’s also interesting to wonder what psychological and moral tension created for the American left by the involvement of Steyer — a billionaire — in trying to influence policy. Not that there’s anything unusual about the rich trying to flex their muscles. But Steyer embodies something of a value conflict for the American left. Opposition to Keystone, after all, has come primarily from the left. But so has opposition to what is seen as the growing influence of wealth in American politics.
So it’s tempting to poke fun, here. What must be going through the minds of those who are both opposed to Keystone and opposed to the wealthy having disproportionate influence in politics? Can someone who went ballistic over the Citizens United decision really be happy to see a rich guy like Steyer using his wealth (and his wealthy friends) to try to influence the president? Of course it helps that Steyer is associated only with companies most Americans have never heard of. So when Americans hear that a rich guy is hosting a fundraiser for the president, at least it’s not a rich guy from General Motors, or from Walmart, or from Goldman Sachs. That would raise worries not just about the role of wealth in politics, but of specifically corporate wealth. But of course, Steyer’s wealth didn’t exactly come from running a successful paper route after school, or selling organic apples at the local farmer’s market. But for opponents of Keystone, at least he’s on the right side. So in effect what you have is a sort of Bruce Wayne figure, the billionaire businessman with a heart (not to mention wallet) of gold.
But the important lesson, here, isn’t about the role of wealth in politics. It’s about ideology. It is attractive — but a mistake — to believe that all points of view that are in any way ‘anti-business’ have to hang together. It is entirely consistent to want environmentalists to win over industrialists in matters of pipeline approval, and yet share a widely-held ambivalence about the pronounced role that the wealthy will inevitably play in shaping that debate. And it is dangerously polarizing to assume otherwise.
Rexall’s Dubious Homeopathic Offerings
The drugstore chain, Rexall, has been shaking things up a bit lately. Chain Drug Review recently posted a lengthy piece on how Rexall “aims to reinvent the drug store”. And a recent piece in the Ottawa Citizen says that the chain’s new products aim to make life better.
But not all of the attention lavished on Rexall has been so positive. Dr Terry Polevoy, an MD who runs the website Canadian Quackery Watch, recently showed me a highly problematic ad from a Rexall flyer inserted two weeks ago into his local newspaper, the Waterloo Record:
Trusted homeopathic remedies offer an alternative way to naturally treat symptoms. Speak to your local Rexall Pharmacist for more information or visit rexall.ca.
The problem, of course, is that homeopathy doesn’t work. Or, to be more precise, there’s no reliable evidence that it works, nor any plausible reason to think that it even could work. In commercial contexts, that’s pretty bad. And it’s worse still when the company selling the stuff is a company people rely on for competent health advice, and when that company leverages the credibility of a licensed health profession to promote bogus wares.
Rexall isn’t the only drugstore chain selling homeopathy and other ‘alternative’ healthcare products. A pharmacist friend who keeps his eyes open for such things tells me he’s seeing more and more of it. And last year, a class action lawsuit was filed against Shoppers Drug Mart and a company called Boiron, maker of a homeopathic preparation called “Oscillococcinum.” The suit alleges that Boiron breached several consumer protection statues in marketing Oscillicoccinum without evidence that it works.
But even if the suit against Shoppers fails, it’s worth remembering that what’s legal isn’t always ethical. It’s wrong to mislead consumers, even where doing so is legal. And the Rexall flyer is clearly misleading. Homeopathic remedies are incapable of treating symptoms — at least, unless the companies that make them have learned to violate the laws of physics and basic biochemistry. A homeopathic ointment may soothe skin because of the soothing properties of the non-medicinal cream on which it is based — if you take standard hand cream and add pixie dust it will now be “pixie dust cream,” but the fact that it makes your skin feel better won’t have anything to do with the power of pixies.
And then there’s the placebo effect, rooted in the well-documented fact that the power of suggestion can in some cases have real physical effects: if you believe a pill will cure your headache, then it just might. But such effects are quite hit-and-miss, and hard to predict, and in any case are predicated on a lie. Lying isn’t always illegal, or even always wrong, but when you lie in commercial contexts, both the law and society more generally takes a pretty dim view of it.
Now to be fair, I know that there are other products on drugstore shelves that raise questions about efficacy. Some studies have suggested that prescription antidepressants, for example, are no more effective than placebos. But the key is that there’s a rigorous (if imperfect) procedure for debating the effectiveness of prescription drugs. Yes, the makers of prescription drugs sometimes exaggerate the effectiveness of their products, playing fast-and-loose with the evidence. But the purveyors of ‘alternative’ therapies like homeopathy do that literally all the time.
When I asked him what he thought about this kind of marketing, Dr Polevoy said the following:
Rexall, like Shoppers Drug Mart, has one thing in mind when it comes to the marketing of homeopathic products. In my opinion, the bottom line — profits — is much more important to them than their customers, and whether or not these products work. Their customers are the ones who will ultimately pay the price, and the pharmacists have no power to warn their customers that homeopathy is bogus, and that they are wasting their money.
The commercial world is full of scams, and all too often people with something to sell have unwarranted faith in their products. Greed and ignorance are nothing new, but that that doesn’t mean they are excusable. Companies that claim not just to provide a product, but to educate and take care of consumers, ought to do better. They should do their best to sell only those products that they, and their customers, are justified in believing in.
Three takes on business ethics: Young academics hold court.
I recently spent a day acting as a Faculty Advisor at an event held by the Canadian Business Ethics Research Network (CBERN). The day involved listening to presentations by young PhD students in the field of Business Ethics and offering constructive comments on their research projects. The students presented on very different scholarly questions within Business Ethics, each drawing on his Doctoral research. It was interesting enough that a summary bears repeating.
The first presentation was by Sean Geobey from the Waterloo Institute for Social Innovation and Resilience. Geobey’s presentation was about a broad cluster of financial mechanisms known as “social finance” (which includes, for example, microfinance, social banking, and crowd-funding). The focus was on the degree, if at all, to which such innovations can serve as remedies to failures on the part of more traditional market- and government-based mechanisms.
When, for example, can microfinance remedy failures of traditional banking, and to what kinds of failure is microfinance in turn subject? The significance of this work is plain: it is increasingly clear that there is value to be found in open-minded innovation about the institutional mechanisms we use to supply goods and services, including finance. If social finance is to make good on its promise, we need sophisticated understandings of just what it can and cannot do.
Second up was Abraham Singer from the University of Toronto. His presentation was an exploration of the relevance of the political philosophy of John Rawls — the most important in his field of the 20th Century — to corporate governance. Singer’s conclusion was to cautiously assert that Rawls probably has relatively little to tell us about corporate governance. Rawls was primarily concerned with justice in what he called the “basic structure” of society, the key institutional mechanisms that make society what it is. That basic structure, according to Rawls, must be subject to principles of justice that would be acceptable to essentially everyone, regardless of their own particular vision of ‘the good life.’ And Rawls was clear in stating that beyond that basic structure, all of us must be permitted the freedom to live our lives as we see fit.
Singer argued convincingly that where the Rawlsian framework is concerned corporate governance is essentially a private matter, and so the specific principles of justice that Rawls advocated just aren’t relevant within corporations. That’s not to say that justice within corporations isn’t a concern; it’s just to say that the principles that apply there will be specific to the kind of institutions that corporations are, rather than being the principles that apply to how we organize society more generally.
And finally was a presentation by Hamish van der Ven, also from the University of Toronto. His work is on the factors that affect companies’ decision to “go green.” The standard assumption is that companies that take an environmentally-sensitive turn are likely to do so because they’ve become convinced of the business case for doing so. They may, for example, have realized that there are significant bottom-line benefits to energy conservation, and positive reputational benefits to being seen as sensitive to environmental concerns.
Van der Ven’s hypothesis—supported by limited but provocative data—suggests that what is much more important is whether a company’s senior executives have or have not had opportunities to associate with, and absorb values from, environmentalists and environmental organizations. What matters, in other words, is the processes of socialization that senior executives have been through.
Van der Ven argued that you can understand a lot more, for example, about Walmart’s relatively strong environmental performance (compared, say, to Costco’s) by looking at the experiences of certain key decision-makers, and by looking at the number of points of interaction (or lack thereof) between the companies and various environmental groups.
Interestingly, none of these three young scholars is from my own home discipline, namely philosophy, which is the traditional ‘home’ of academic business ethics. Singer and van der Ven are political scientists, and Geobey’s background is in economics and environmental studies. Small sample, to be sure, but this kind of diversity is as it should be. Business ethics is and must be a broad discipline. It needs to draw upon both theoretical and practical insights, and on scholarly methods from a whole range of humanist and social-scientific disciplines. Business ethics, in other words, is everybody’s business.
The Food Industry: When Ethics Just Isn’t Enough
Filed under: children, consumers, corporate citizenship, food, freedom, regulations |
Comments (2) The issue of ethics in the food industry never really goes away, but there are times when it garners more than its usual share of headlines. About a month ago, the New York Times published a lengthy piece called “The Extraordinary Science of Addictive Junk Food,” by Michael Moss, author of “Salt Sugar Fat.” The piece is a riveting look at the often-cynical moves made within the food industry within recent decades to use our tastebuds against us, to use our love of salt and sugar and fat to persuade us to buy products that are making us more overweight and less healthy.
The next headline had to do with NYC Mayor Michael Bloomberg’s attempt to push back by banning supersized sugary drinks. The move had many fans. Not among those fans: Starbucks, which said it simply would not comply, the American Beverage Association, and New York State Court Judge Milton Tingling, who accepted the ABA’s request to block Bloomberg’s plan.
Most recently, and related to all of the above, the New York Times recently ran an opinion piece on the need to impose stricter regulations on food companies in order to slow the industry’s otherwise seemingly inexorable march toward ever more addictive, and less healthy, prepared foods. The piece was written by a guy named Michael Mudd, a former executive VP at Kraft, no less.
Mudd’s key point is essentially that if the food industry is going to be reined in, government is going to have to do it, since the industry shows little interest in restraining itself. In other words, to borrow Mudd’s words, government is going to have to “force ethics” on the industry.
There are at least two significant problems with framing the issue this way.
The first problem has to do with chalking it all up to a lack of ethics. This is entirely the wrong diagnosis. Or, to be precise, even if the food industry suffers from an ethics deficit, that deficit is not necessarily the root cause of the problem. The unfortunate truth is that there are some problems for which “more ethics” simply is not a viable solution. Ethics is about finding rules that make social living better, but it assumes some overlap of interests. In particular, ethics only works where we have a shared sense that our lives—or our businesses—would go better if we followed a few rules. Ethics isn’t fundamentally about self-sacrifice; it’s about mutual restraint for mutual benefit. That’s why ethics is generally important in business: harmony is good for business. But it’s still a competitive game, and at the end of the day all the competitors want to win. Unless you can show the food industry that its interests will somehow be promoted by playing by a different set of rules, then an ethical solution just isn’t in the cards.
There’s a second reason why ethics isn’t enough. Ethics involves restraint on self-interested (or profit-seeking) behaviour. But the notion of restraint presumes some understanding of where to draw lines. But consider the dilemma faced by any company that sells a fundamentally sugary or fatty food, like Coke or Twinkies or Doritos. These products are delicious, and harmless if consumed as most of us consume them, namely in moderation. When the Coca Cola Company sells me a can of coke, it does absolutely nothing remotely unethical. I’m a grownup, well-informed about the nutritional characteristics of Coke, and besides this one coke is meaningless, health-wise.
But, yes yes, we all know that anyone drinking too much Coke is going to suffer ill effects, and a society that drinks too much Coke is going to suffer too. But how much is too much? No one can say. And simply imploring the Coca Cola Company to “be more ethical” is useless, here. True, we can implore them not to advertise in a way that targets kids, or not to promote ridiculously huge servings, but that leaves the fundamental paradox of their product untouched. Even a scrupulously ethical — indeed, saintly — Coca Cola Company would still find itself uncertain as to how to market its product. How would you sell a product that many people enjoy harmlessly, but that in the aggregate causes trouble?
Finally, the plea for “more ethics” in the food industry misses entirely the fact that that the food industry’s pattern of supplying us with excessive quantities of fat and sugar and salt constitutes a classic social dilemma, a situation in which each person’s (or company’s) behaviour is individually reasonable, but collectively disastrous. We’re poisoning ourselves with junk food for the same reason we’re burdening our atmosphere with giant quantities of carbon dioxide. Not because we’re stupid or unethical, but because my own efforts to reduce carbon emissions (or yours, or yours, or yours) are neither necessary nor sufficient to make a difference. Coke can’t solve the obesity problem. Nor can McDonalds. Nor Kraft. Nor… you get the picture.
So, yes, feel free to call for greater regulation of the food industry. But recognize that in doing so you’re not calling for more ethics. You’re admitting that even ethical companies can produce unwanted outcomes. A good understanding of the role of ethics in business must include some appreciation of the range of problems at hand, including the ones for which ethics is unnecessary, as well as the ones for which ethics simply is not enough.
Can SNC’s Reputation Recover?
Filed under: competition, compliance, corruption, crime, Uncategorized |
Leave a Comment Canadian engineering giant SNC-Lavalin continues to provide plenty of fodder for ethics classroom discussion, and making news in all the wrong ways. Over just the last three days, the company has made headlines for making over $1 million in illegal political donations in Quebec, for disguising dodgy payments to an agent in Angola, and for police searching the home of a former executive as part of a prosecution involving more than a dozen criminal charges.
Against this backdrop, slightly less attention has been paid to an announcement last week that the company had hired a former Siemens executive to take over the role of Chief Compliance Officer, a portfolio that ostensibly puts him in charge of ethics, too.
I was interviewed about this recently on BNN, (see video here) and the key question not surprisingly was whether having hired a new Compliance Officer is going to be enough to turn the company around, either in terms of ethics or in terms of reputation. In this regard, I think three key points need to be made.
First, a word about the relationship between ethics and compliance. The new guy SNC has hired (Andreas Pohlmann) is first and foremost in charge of compliance. Compliance with the law will of course be a very good start for SNC, but it’s just a start. Ethics has to be part of the picture. For that matter, even if Pohlmann’s only goal is to get the company consistently onto the right side of the law, there’s good reason he should pay attention to ethics, so that employees at SCN understand the ethical underpinnings of the laws the company has been breaking.
Second, the company needs to see that its reputation has to be built on more than its ability to pull off big engineering projects. SNC needs to be a company all stakeholders – including investors – can trust, because trust is the foundation of business. Given its track record so far, if I were looking for a big engineering contractor I wouldn’t put much trust in SNC at all. If they play fast-and-loose with the rules as much as they seem to, what’s to say they aren’t going to play fast-and-loose with their obligations to me, too?
Finally, the company needs to get past its apparent belief that bribery is just part of doing business. Bribery isn’t just illegal — illegal pretty much everywhere, even in places where it’s tragically common — it’s also bad business. And by “bad business,” I mean it is bad capitalism. It’s the opposite of free and open competition.
If SNC is going to regain its place as a rockstar Canadian company, it needs to show that it can go out there and compete and win on quality, rather than on its ability to bend and break rules.
Business Ethics Journal Review: Month 1 Summary
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.
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