Trends in Business Ethics

On October 26, 2011, in Business Ethics, Corporate, by Charles G

Commerce, a key aspect of global culture, is shaped by information technologies, environmental angst and
economic flux. By tradition, business owners focused exclusively on financial outcomes.  The new field of business ethics, however, has contributed ideas about the ‘greater good’ to owners, shareholders, consumers and other key players.

Companies that avoid paying taxes and reduce the wealth of the nation pose a dilemma. A change in values, resulting from current global actualities, appears to be in the works. Of course, many companies are already good citizens.  US cellular, a small US cell phone company, pays a hefty 31% in taxes while Starbucks  (where we can drink our coffees in good conscience!) pays 33%.

The ‘loopholes’ that corporations utilize to reduce taxes can simply be the tax exemptions or deductions that government puts into place to encourage or deter corporate behaviors.  Or they may be the boondoggles resulting from intensive corporate lobbying… Where  tax laws are abused reforms are indicated! In his article The Paradox of Corporate Taxes David Leonheardt  writes:

Over the last five years, on the other hand, Boeing paid a total tax rate of just 4.5 percent, …. Southwest Airlines paid 6.3 percent. …. Yahoo paid 7 percent; Prudential Financial, 7.6 percent; General Electric, 14.3 percent. http://www.nytimes.com/2011/02/02/business/economy/02leonhardt.html?_r=1

Many consumers, and some businesses, agree that environment matters and that the ethos of sustainability needs to be incorporated into business practices. Green companies themselves bring wealth to their communities and, as well, are unlikely to relocate offshore!  In a small town in Michigan, population 5000, Astraeus has found innovative ways of manufacturing wind components and were able to hire most of the one hundred workers let go as a result of the 2009 recession.

Green practices have also impacted many established companies. Cadbury was the first to mass market chocolate in the world using the brand Fairtrade cocoa, and brought the product into 30,000 UK stores. The world’s most sustainable companies according  to Forbes are General Electric and PG & E Corp.   (See table below).

Company Name Country GICS Ind. Group Global 100 Rank Energy Prod. (US$) Carbon Prod. (US$) Water Prod. (US$) Waste Prod. (US$)
General Electric Company United States Capital Goods 1 $3,004

$27,878

$3,88o

$729,685

PG & E Corp. United States Utilities 2 $26,749

$8,656

n/a

$1,773,779

Ranking The World’s Most Sustainable Companies   Helen Coster 

The formal study of business ethics has grown over the decades.  In their brilliant paper Towards a Unified Conception of Business Ethics  Donaldson and Dundee   argue that empiricism, the ‘is’ of business practices, are informed by ideas, drawn from the best thinkers over time, that ethics call prescriptive.  No amount of factual accuracy   “ can ever by itself add up to an ‘ought ’ ”.  The authors suggest that the two viewpoints must be integrated to put “the ‘is’ and the ‘ought’ in symbiotic harmony”.

I believe that, despite today’s global uncertainties, and for reason of environmental issues and the advent of the information age, the ongoing search for a new and viable business ethic remains critical.

 

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Policy and Fairness

On October 21, 2011, in Culture, Ideas, People Skills, Words of Wisdom, by clgordon

Life isn’t fair but it is just. My “lieblings” statement is an expression of a trade-off between short-run happenings and long run outcomes.  I don’t think there’s any empirical evidence to back up my belief, but history seems to bear witness to dictators getting their just desserts.

The inevitability of justice seems predicated on the idea that there are hidden forces at work, like a chemical reaction, striving for balance between the reactants. Human actors under influence, do the forces bidding.

As a person of faith, I’m prone to believe that hidden forces stand ready to defend widows and orphans. Yet, I think of the quote associated with Margaret Thatcher:

Pennies do not come from heaven. They have to be earned here on earth.

Therefore, we have a responsibility to do our part on earth to make sure organizational policies and rules are fair and not dependent on re-balancing from heaven.

In order to formulate a reference for thinking about good organizational policy, let’s fixate on the multiple dimensions of  fairness.

There are four dimensions to fairness as follows:

  1. Distributive – did I get something commensurate with my effort and/or needs?
  2. Informational – did I get full and complete disclosure?
  3. Interpersonal – how did the person implementing the policy treat  me?
  4. Procedural – did I get a chance to present my case to potentially influence the outcome?
The first dimension is evaluative, while the others deal with communication.
Joseph Guiltinan, in his paper on differential policies and seller trustworthiness, writes:

While perceived justice [fairness] may be a virtuous outcome of any transaction, its managerial significance is based on its potential consequences for customer relationships… the social justice dimensions have proven beneficial in understanding cognitive, affective, and behavioral reactions of employees to specific decisions as well as long-term attitudes towards organizations and towards the authorities in those organizations who made the decisions.

Given that employee attitude affects productivity. Fairness is more than being virtuous.

Based on my experience, most organizations are well focused on distributive and informational dimensions of fairness. Yet, lack clarity on interpersonal fairness and rarely engage procedural forms of fairness.

What’s the way forward?

I can envision a future when employees and employers engage in the co-creation of important organizational policies. There are many barriers to achieving full procedural fairness with co-creation. However, let me extend a short pith saying as a solution.

“Don’t focus on why your organization can’t, but how you can”

 

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“Work is an extension of personality. It is one of the ways in which a person defines himself, measures his worth and humanity.”
Peter F. Drucker, 1909-2005

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Using Your Intuition for Red Teaming- Part 1

On October 19, 2011, in Words of Wisdom, by Charles G

I’ve been in management circles that intentionally ridiculed the expression, “it’s a gut feeling.” In our zeal for articulating rational explanations and using 7 step models, we can overlook the role of intuition or guts in decision-making.

Perhaps, it’s the association with ancient practices of reading chicken entrails or discerning the future from tea leafs. Maybe the phrase conjures up a blanch fortune-teller gazing in her opaque crystal ball, speaking platitudes and generalities. After all, we have evolved technologically, right. Our chicken entrails and crystal balls have morphed into software algorithms that mine vast amounts of hard data in search of  the right decision trail.

Yet, I think we owe it to ourselves not to become sclerotic or set in our ways. What if we framed our gut feeling as red teaming, the expert panel that challenges plans, concepts and norms generated by more structured forms. In order to recapture the wisdom embedded in your unconscious, I’ll explore the concept of priming and its extension, implicit learning. One is a gateway to the more controversial other.

The priming effect is the label for unconscious processes that influence our behavior.  The first researchers to document the phenomenon of priming were Warrington and Weiskrant in 1968 (New method of testing long-term retention with special reference to amnesic patients. Nature, 217, 972-974).

The researchers worked with amnesic patients who lack the ability to form new memories as a result of damage to specific parts of the brain.

Warrington and Weiskrant found that after their amnesic patients studied a word like “drastic“, they could not recall or recognize the word. However, when the patients under study were asked to name any word starting with  “dra“, they were more likely to say “drastic” than chance would imply.

The well documented concept of priming is the gate way into understanding a more controversial idea implicit learning.  The concept of implicit learning captures the phenomenon of people acquiring new patterns of behavior without being aware of the patterns themselves.

A classic study found that subjects exposed to letter strings generated in line with a complex rule, classified new letter strings appropriately but where unable to articulate the rules that defined the category. In addition, related experiments on the control of complex systems found that subjects can learn to control input and output without being able to articulate the relationship between input and output.

Here’s my conclusion. If you have been actively involved  in a specific area for several years, use your gut as part of red teaming.