Should business survival trump ethics?
This is a copy of an email I sent to the author of a book on business ethics. What are your thoughts?
You wrote that: “Sustainability is important! An organization that goes bust can’t do much good for anyone”
Ah! Thanks for clarifying. You’ve put your finger on the intriguing point: Should an organization that destroys long-term societal value have a fundamental right to exist (even if it’s profitable)? An organization that goes bust can’t do much good, true. But that doesn’t mean that a company that survives will do enough good to justify its survival.
If a company fails to produce societal value–even if it’s making money–I’m not sure society is served by having that same collection of people continuing to produce the same products in the same ways in the same legal structure. They’ve shown that they simply can’t do a legal, ethical job. Yet because they’re profitable (as would be an assassination service, or a deceptive lending company), we simply grant them the right to exist.
There’s a position that some organizations deserve to fail (not be acquired… not reorganize… but fail, altogether). Those resources can then be much more usefully deployed in forming a different organization doing something of greater societal value.
If a person destroys someone else’s property, harasses them, or kills them, we lock that person up and remove their ability to function in society. When deceptive practices by energy companies (thinking back to California a couple of years ago) manipulate energy prices to severe societal detriment, or when tobacco companies knowingly market to people who can’t make an informed decision [teens] to get them hooked on a powerful, deadly narcotic, or when fast food companies spend hundreds of millions influencing the entire society to eat food that is known to cause heart disease, adult onset of diabetes, and obesity, we say, “Well, it’s good for business, and let the buyer beware.”
There is plenty of evidence saying the buyer can’t beware for psychological or structural reasons. Advertising works, even for informed consumers. Locking up all the roadside real estate for your restaurant works, even for people with dietary concerns.
Harvard Business School’s mission is: We aspire to develop outstanding business leaders who contribute to the well-being of society. It’s a mission I’ve adopted as my own. If we take that as the goal of all of us in the leadership fields, it seems that we have to be asking these questions. If we don’t, who will?
That is what I’d love to see you address. To address ethics in business starting from the premise that businesses should be sustained as the #1 consideration, in my mind, really short-circuits the discussion before it even begins. It essentially says, “let’s talk about specific ethical situations in a context where, at the end of the day, survival of the company trumps all else.” There’s a whole class of really interesting cases are precisely the ones where company survival and societal survival clash and there is no way to have both.
Realities about Human Nature. Neo-Cons, Take Notice!
Oh, boy. The papers today are full of reports that there’s a big terrorist strike planned for this summer. It’s scary that I catch myself wondering if this isn’t a tactic by the Bush administration to get people “safely” back into fear, and thus rallying around the administration’s policies. It sickens me that I could even suspect something like that, but given the torture, the misleading reasons for going to war, etc., I simply don’t trust the Bush crowd on any level. And I’m not sure if they could do anything to regain my trust. No matter how much I agree with anything they do going forward, I would never be sure their actions weren’t simply calculated to win my trust and then continue to press their agenda.
But let’s assume they genuinely invaded Iraq to make the world safer. It didn’t work. There’s big terrorism planned this summer. Furthermore, the wonderful war on Iraq made things worse, not better. The Guardian reports that our occupation has boosted Al-Qaida’s membership. Fancy that.
Now people, most of this was predictable from day zero. Let’s review some realities of human nature:
- Anger begets anger. When someone gets angry, the natural response is to lash back at them. It takes training and self-control to respond to anger with peace.
- Fighting doesn’t solve anything. I hate to say it, but it doesn’t. Al-Quaida blew up the World Trade Center to get us to leave Baghdad. It didn’t work. All it did was piss us off to the point of leveling one country and invading another. Is there any reason to believe that our attacking them is going to make them suddenly decide to resolve things peacefully?
- There are multiple points of view. We just bombed a religious house of worship, we may well have blasted a wedding into smithereens (including young children), and regardless of intent or chain of command, it seems we’ve tortured and humiliated prisoners in clear disregard of the Geneva convention. If someone did all that to Americans, we’d be livid. Maybe, just maybe, from their point of view, we aren’t all peaches and cream.
I don’t know how this mess can be resolved, or even if it can be. Get things hot enough and they’ll last past one generation. Once it becomes culturally ingrained, conflict is a tenacious bitch. Just look at the Israel and Palestine.
I do know one thing: the policies of this administration have kept the country (and possibly the world) steeped in terror. They have been inept at setting and enforcing a humane chain of command. They have show a distinct lack of forethought and an absurd disregard for thought and planning. For reasons far beyond my understanding, not only have they not been impeached and thrown into chains for using a dubious war to siphon off billions to their friends and business associates, but a remarkable percentage of this country actively supports their policies. Normally, I am content to let people suffer the consequences of their own poor decision-making. Unfortunately, this time the consequences will be born by all of us.
Oh, and by the way… Terrorism expert Robert Pape published a letter in the New York Times discussing that virtually all suicide terrorist attacks over the last 20 years were over issues of foreign occupation. Iraq, anyone?
Electronic Voting Machines are a Bad Idea. Period.
It seems that more and more elected officials across the country are realizing that we need paper trails to accompany our electronic voting machines. It’s really too bad that they just don’t get it.
The problem, you see, isn’t that people don’t have a receipt. It’s that fundamentally, any computerized process for tallying voting allows widespread manipulation of the vote in sufficient quantity to turn the results of an election. With paper ballots hand counted or counted by a simple mechanical optical scanner, the results of an election really will be accurately tallied (up to the statistical error margin of the counting process, that is). Paper ballots are verifiable and hard to forge in mass.
A computer program tally is impossible to prove correct. There’s nothing to prevent a computer program from printing a receipt for the vote you placed, but internally deciding to increment the vote for a different candidate. There’s no assurance that the receipt matches the tallied vote.
In a close election, only a small number of votes would need to be changed to tip an election one way or the other. In the 2000 election, for instance, a voting machine would have to falsify just a couple hundred votes for another candidate to win.
But wait, you say, that would mean that someone would have to maliciously write the software to fiddle with the votes. Why, in the world would someone do that? Um, aside from being able to seize control of the government of the most powerful nation in the world, I can’t think of a single reason. By the way, the President of Diebold, makers of many of the electronic voting machines in use, is a highly partisan Bush “ranger,” who has publicly said he would “deliver Ohio’s electoral votes to Bush.” He certainly didn’t mean to imply any shady dealings by Diebold, but I’d feel a lot better if the voting machines were made by a neutral third party.
Some folks say that revealing copies of the voting machine software to public scrutiny will be sufficient to insure accuracy. This is simply not true. If you believe source code lets you verify behavior, check out this famous article from the ACM showing how source code can be trivially made to look innocent and contain hidden sabotage.
So when electronic voting machines come to your neighborhood, just vote No. If we can spend $100 billion on a war to bring democracy to a dictatorship, we can certainly spend a few tens of millions paying to hand-count ballots. It’s worth it to preserve democracy. Besides, it would be good work for some of the 1.2 million people who have been laid off in the last few years.
Why do we care about Kerry’s vietnam medals?
This election boggles my mind. The two big items of the week: Kerry’s medals and the ongoing investigation of 9/11. Let’s take them one at a time.
First, who cares whether or not Kerry threw his medals 31 years ago? I mean come on, it was a really, really different world. And he’s probably a very different person now. So looking at his record since then might give a better idea of his character than focusing solely on Medal-gate.
The logic seems to be that we can tell something about his character from knowing whether he threw his medals. And if his character is found wanting (based on one event in the early 70s), well then, we certainly can’t elect him President, can we?
Yet at the same time, we have the 9/11 commission. Why? What’s the goal of that commission? Frankly, it seems shameful that 9/11 happened in the presence of early warnings signs, but get serious folks: when you’re a new administration running a country of 350 million people, there’s only so much you can pay attention to. Even if the Bush administration made a really bad call to put terrorism on the back burner, I can sort of understand it.
What I can’t understand is what happened after 9/11: the decision to start a war with Iraq with no clear plan, no clear motivation, and at incredible expense (in both dollars and lives). Why were those decisions made? Regardless of the quality of the intelligence, one thing seems clear: even the poor-quality intelligence didn’t point to a need for immediate war.
The part that scares me the most is that Bush and Cheney felt it necessary to testify together, not under oath, and with nothing being recorded. Think about that for a few minutes, people. Whether you’re pro-war or anti-war, whether you’re American or Islamic, something really stinks when the President can’t stand alone in front of a panel and testify under oath and in writing. The only reasons I can think of for joint testimony are that Bush and Cheney were afraid their stories wouldn’t match, or that Bush couldn’t actually answer the questions. The only reason I can think of for not recording the sessions and not being under oath is even scarier: so our President and Vice-President can lie with legal impunity and with little chance of being caught, even if it’s just by the historians. In my mind, that means Bush and Cheney aren’t trustworthy. And that scares me. A lot.
If we’re going to be judging fitness for presidential candidates based on ad hoc analysis of candidate actions, let’s look at relevant actions. Forget medals. Forget pre-9/11 events. Let’s look at recent decision-making on the parts of Kerry and Bush. Let’s find out how well they use data and how their actions reveal their principles (or lack thereof). And you know what? Let’s do it in writing, with tape recorders running, and under oath. Why? Just because that way, we can trust that at least a tiny bit of accountability can be had, even if only when the transcripts are released 100 years from now.
CEOs are still paid too much, period.
Am I the only person grossly offended by current executive pay? The Bank of America CEO Kenneth Lewis took home $20 million for the job he did last year. As consolation for the 12,500 people he’ll be laying off nationally, the $1,200 per person he’s pocketing would only have paid their salary for a week or so, so it’s really not that outrageous after all. Besides, reports UNC Professor Tony Plath, it’s really in line with other CEOs of similarly sized companies.
Why is this expected to make sense? My conclusion isn’t that he’s properly paid, it’s that the rest of them are vastly overpaid. And with pay packages like that, they all have tens if not hundreds of millions in the bank. If they’d all reduce their salaries to manageable levels, the averages would be lower, and perhaps some of that money could be returned to the people working their butts off to make the company succeed.
I’ve heard people cry, “But how could they survive on less? They have a lifestyle to maintain!” Uh, huh. You’re saying they’ve made choices that give them a run rate 1,000 times the run rate of an upper class member of society? Poor them. If that’s what they’ve done in their personal life, how many more billions could their companies be taking home with someone who knows fiscal responsibility at the top?
There’s always the argument that he met all his goals and surpassed them. So frickin’ what???? The average person meets their goals at work and their reward is that they don’t get fired at the next round of layoffs. If they exceed their goals, maybe they get a $500 bonus and a 7% raise at their next review.
What does a CEO get? Regardless of their performance, they get the ego blast that comes with the title. And the ego blastwhich no doubt extends to the size of their critical biological equipmentonly gets bigger if they head up a huge company.
The CEO is being paid a salary (over a million dollarsenough to support a family of four for 20 years at a decent standard of living) to meet their goals. That’s their job: meeting and exceeding their goals. An average employee must work for their money, while CEOs need ten million dollar bonuses to motivate them just to come in and do the job we’re paying them a salary for!
Anyone that unmotivated doesn’t deserve to be heading up a company to begin with. In fact, maybe the CEO job should be the lowest paid job at the company. Then the only job candidates would be people with genuine aptitude, who care about the company and/or the people, and who are deeply motivated wanting the job.
I guess all in all, it’s just me taking out a bunch of frustration on poor, misunderstood CEOs. I just finished reading parts of the GEO-3 report which reports that we have about 1.2 billion people who don’t get enough fresh waster to survive, and 2.7 billion who wallow in their own garbage for lack of adequate sanitation facilities, living on less than $1/day.
Rather than funneling resources to these people, we give them to CEOs whose only possible use for an incremental dozen million is to platinum plate their already gold-plated toilet seat.
Rather than promoting business practices that keep people employed and attempt to create a prosperous society, we’ve adopted a virtual religion of funneling productivity savings into the pockets of executives. Sadly, layoffs seem a de riguer part of productivity improvements, these days.
If we’re getting more productive, we could use that productivity to make everyone’s lives better. But we don’t. Rather than applying the extra money to shortening work hours, improving quality of life, or restoring our environment or the healthfulness of our food, we leave many people jobless, overwork others, and give the profits out as bonuses and option grants to executives.
Someone, somewhere, has to be the one to stand up and change the system. And it isn’t going to happen until one of those CEOs actually says “No, thank you, I have enough.” to their next over-the-top pay package. And keep in mind that “over-the-top” probably applies to salaries as “small” as $500,000/year (a mere 10 times what many people are using to support a family of four).
It isn’t going to happen as long as we judge the reasonableness of wealth distribution using Plath’s logic, which basically says that the way we (over)pay now justifies continuing the trend.
And since I’m not a grossly, obscenely overpaid executive, I can’t stand up and make that change. But I promise: if I’m ever a senior executive in a large company, I’ll refuse an obscene pay package and return the money to the people who made it, rather than laying them off to improve my bottom line. Or at least, I’m pretty sure I’ll do that. Well, I promise to do it after I have a safe $10 million in the bank. Or maybe $15 million. After all, a person has to keep a little saved away for a rainy day…
Why do we keep a sex offender’s registry?
It’s time to renew my driver’s license, and the form that came in the mail had a big black banner proclaiming that all sex offenders must remember to register with the local police department. Am I the only person who wonders about this?
Now, I’m no fan of sex offenders. In fact, criminals of all kinds make me a bit uncomfortable. Violent muggers leave a bad taste in my mouth, and drug-crazed murderers are distinctly not invited for brunch. But isn’t a pretty crucial part of our justice system the notion that once you’ve served your time, you have another chance to prove yourself?
Apparently not, so I’m in favor of registering everybody who’s ever been arrested for anything. In fact, let’s publish it in Excel. Using the convenient “Autofilter” capabilities, it would be a snap to sort by the type of crime. Since there are always a few who fall back to their wicked ways, you might be able to find good contacts to score some recreational drugs. Or you could sort by street address and send anonymous letters to serial killers, addressed from Jesus, to see if you can spark them on another rampage. The possibilites are endless!
I’m rushing to City Hall now to find out what it will take to get a referendum on the ballot.
Whoever thought a driver’s license renewal notice would spark social reform?